Organization Administration and Management-Social Enterprises

i ORGANISATION ADMINISTRATION AND MANAGEMENT A Guided Vision for Social Enterprises FIRST EDITION ISBN: 9789970929900 GERALD KAKEETO ii All rights reserved. This book is protected under the copyrights law. Therefore, it should not be reproduced without consent from the author and any duplication is not allowed. © Gerald Kakeeto, 2020 Kampala, Uganda Tel: +256772719324 Email: kakeetogerald@gmail.com Nobles Publishers & Printing Consultants (u) Ltd Kampala Uganda Tel: +256 775 356622 / +256 200904359 Email: noblespublishers@gmail.com This book was funded by iii Table of Contents Table of figures .................................................................................................................................................... vii ABBREVIATIONS AND ACRONYMS ......................................................................................................................................................viii DEDICATION ............................................................................................................................................................................................. xi ACKNOWLEDGEMENT ............................................................................................................................................................................xii FOREWORD .............................................................................................................................................................................................xiii INTRODUCTION .......................................................................................................................................................................................xiv CHAPTER ONE ...........................................................................................................................................................................................1 ADMINISTRATION ......................................................................................................................................................................................1 Nature of Public Administration ................................................................................................................ 2 Scope of Public Administration ................................................................................................................. 4 Principles of Public Administration .......................................................................................................... 12 Background of Public Administration in Uganda .................................................................................................... 41 The Road towards the Independence of Uganda .................................................................................... 44 Public Administration Organs in Uganda ................................................................................................. 46 The Judiciary.......................................................................................................................................... 48 CHAPTER TWO .........................................................................................................................................................................................50 LEADERSHIP ............................................................................................................................................................................................. 50 Definition of Leadership.......................................................................................................................... 50 Leadership styles ................................................................................................................................... 50 Attributes of a leader .............................................................................................................................. 51 Leadership Theories............................................................................................................................... 52 Principles of Leadership ......................................................................................................................... 52 Personality Style .................................................................................................................................... 53 Qualities of a Good Leader ..................................................................................................................... 55 Leaders Vs Followers ............................................................................................................................. 57 Creating a Vision .................................................................................................................................... 57 Organization Meetings............................................................................................................................ 61 iv Management of Information and Technology .......................................................................................... 67 Organization Communication ................................................................................................................. 71 Organization Problem Solving ................................................................................................................ 76 STRATEGIC MANAGEMENT................................................................................................................. 79 Strategic Management Definition ............................................................................................................ 79 Origin of Strategy ................................................................................................................................... 82 Features of Strategy ............................................................................................................................................. 83 Organization Specifics............................................................................................................................ 86 Common Approaches to Strategy ........................................................................................................... 88 Types of Strategic Management ............................................................................................................. 89 Strategic Management Process.............................................................................................................. 90 Organization Environment ...................................................................................................................... 93 External Environment Analysis ............................................................................................................... 94 International Business Strategies ......................................................................................................... 110 Concentric Diversification ..................................................................................................................... 118 Legal Forms of Business ...................................................................................................................... 123 Ansoff Matrix ........................................................................................................................................ 123 Organic or Inorganic Growth: Routes to Strategic Growth ..................................................................... 125 Environmental Scanning ...................................................................................................................... 126 Steps in Strategy Formulation Process ................................................................................................. 128 CHAPTER FOUR .....................................................................................................................................................................................131 HUMAN RESOURCES MANAGEMENT (HRM).....................................................................................................................................131 Definition of HRM ................................................................................................................................. 131 Role of Strategic HRM.......................................................................................................................................... 131 Organizational and HRM Strategy ....................................................................................................... 133 Monitoring Programmes and Resources .............................................................................................................. 154 FINANCIAL MANAGEMENT (FM) .......................................................................................................................................................... 165 v Major Roles of financial management ................................................................................................... 165 Components of financial management and control ................................................................................ 167 Five Principles of Financial Transactions Management ......................................................................... 168 Financial Management Cycle ............................................................................................................................... 170 Types of Financial Planning.................................................................................................................. 171 Capital Expenditure .............................................................................................................................. 175 Budgeting............................................................................................................................................. 176 Accounting For Finances ...................................................................................................................... 178 Managing Risk with Legal Documentation ............................................................................................ 179 Evaluation And Reporting ..................................................................................................................... 181 CHAPTER SIX ......................................................................................................................................................................................... 185 MARKETING........................................................................................................................................ 185 Definition of Marketing.......................................................................................................................... 185 History of Marketing ........................................................................................................................................... 187 ‘ABCD’ household typology .................................................................................................................. 191 Marketing Orientations ......................................................................................................................... 193 Types of Marketing............................................................................................................................... 196 Developing a Marketing Strategy .......................................................................................................... 206 Market Research ................................................................................................................................................. 214 Advertising ........................................................................................................................................... 228 REFERENCES ......................................................................................................................................................................................... 247 INDEX .......................................................................................................................................................................................................263 vi Table of figures Table 1: Administration Vs Management Table 2: Separation of politics from administration Table 3: The problem-solving process Table 4: Goals and Objectives in the P-O-L-C frame Table 5: Workplan Table 6: Strategy Formulation Vs Implementation Figure1: Maslow’s Hierarchy of Needs Figure2: Winston Churchill & King Daudi Chwa Figure3: Buganda Kingdom Public Administration Figure4: Role of Information in decision process Figure5: Strategic Group Mapping Figure6: The Ansoff Matrix Figure7: Four-Stage Financial Management Cycle Figure8: Planning and Budgeting Process Figure9: Three-Tier Controlling Structure Figure10: Product Life Cycle Figure11: Siva Model vii ABBREVIATIONS AND ACRONYMS AGM – Annual General Meeting AV – Audiovisual BOD – Board of Directors CAS – Complex Adaptive Systems CBO – Community Based Organization CDs – Compact Discs CEO – Chief Executive Officer CPM – Critical Path Method DP – Democratic Party Dr. – Doctor EO – Entrepreneurial Orientation FAO – Food and Agriculture Organization FM – Financial Management GE – General Electric GM – General Motors HRM/HR – Human Resources Management IP – Intellectual Property KPAs – Key Performance Areas KPIs – Key Performance Indicators KRIs – Key Result Indicators KY – Kabaka Yekka LPC – Least Preferred Coworker scale MBO – Management By Objectives M & E – Monitoring and Evaluation MOSO – Managing Olympic Sport Organizations NGO – Non-Governmental Organization NPM – New Public Management NPG – New Public Governance NPA – New Public Administration NRM – National Resistance Movement PhD – Doctor of Philosophy PPP – Public Private Partnership PERT – Programme Evaluation and Review Technique PPBS – Programme and Performance Budgeting System PBTE – Performance – Based Teacher Education PIs - Performance Indicators RIs – Result Indicators R&D – Research and Development SAPs – Structural Adjustment Programmes SMART – (Specific, Measurable, Achievable, Realistic, Time-bound) viii TV – Television VI – Vertical Integration WCARD – World Conference on Agrarian Reform and Social Development WHO – World Health Organization Vs – Versus ix ABSTRACT This book is about proper administration and management whereby orders flow from Administration to the management wing for implementation. It covers six Chapters namely: Administration, Leadership, Strategic Management, Human Resource Management, Financial Management, and marketing of the organization. It emphasizes the main philosophy of “Goal Attainment” through competitive strategy. In Administration and Management of organizations you first consider the Executive Committee because it is the one that bears the Vision and Mission in Administration. Then later the Management wing where policies and orders flow from the Executive Committee (administration) to the Management Committees which are under the Human Resources Management. In the second chapter regarding Leadership, I concentrated more on “Self-Discovery” as an Administrator and Manager. At inception of the organization the Executive Committee has to adopt a Strategic Plan which is the roadmap for the Management Committee to implement. The organization must have a Financial Strategy on how to handle finances which is Financial Management. And finally, the organization must have sources of funds like income generating activities and other services which should be marketed in form of products and services offered. If the funds of the organization are still inadequate the organization can carry out fundraisings and project proposal writing to well-wishers and funders. x DEDICATION I dedicate this book to all well-wishers in philanthropy struggling to make change in vulnerable people’s lives by forming them into sustainable Community Based Organizations (CBOs) in form of Social Enterprises. This book is also dedicated to students doing Certificates, Diplomas, Bachelors, Masters,Consultants and all scholars. In a special way I dedicate this book to my late parents Bwanika John Bosco (father) and Najjuma Maria Gorrette (mother). xi i ACKNOWLEDGEMENT I recognize my editors including Professors, Doctors plus Researchers who contributed to this work and are mentioned in the main body of this book. I thank my friends who contributed funds which enabled me to meet the costs of compiling this piece of work like Mary Swartz, Jill Valentine, Henry Ddamba, and Klaus Schwaller. In a special way I thank Uganda Textbook-Academic and Non-Fiction Authors Association (UTANA) through Norwegian Non-fiction Writers and Translators Association (NFFO) for their training support and fully funding me to write this quality book. I thank God through our Lord Jesus Christ plus the intercession of Mother Mary for giving me the charisma to put across this transformational literature. The contribution from Ministry of Gender, Labour and Social Development through National Special Grant was a great support towards this work. xi FOREWORD It is an honor to write down a foreword to this book whose ideas and processes are a must-read for anyone curious about welfare work and public community organizing. It’s the book being expected within the area of community development and advocacy. I have been involved in community organizing through the formation of varied Community Based Organizations (CBOs) focused on rural socio-economic development, public health, environmental issues, renewable energy, education, and skills development. Much of my community organization work has been directed by “gut instinct” instead of science. I even have struggled to seek out a one-stop book that might introduce to me and community members the foundational ideas of community organizing, and also take us through the method of forming community organization in ways which have depth, are supported by science, and make sure for the continuity beyond the initial members. Mr. Kakeeto’s book does the needed diligence of providing social workers, scholars, and consultants the relevant information and processes necessary for building sustainable organizations. The book is written in a friendly language which is accessible to most readers curious about community work. The chapters incrementally repose on one another, weaving for the reader easy connections and a buildup of the reader’s knowledge. The book is often used for scholarly purposes, but it also can be used as a training manual for those curious about community organization work. I highly recommend this book to anyone who is people-focused, and is curious about building life-changing organizations which will continue on long after the first founders are gone. Rev. Fr. Dr. Fred Jenga, CSC PhD – Communication - The University of Texas at Austin MA – Communication Studies - San Francisco State University MA - Journalism and Communication – Makerere University xii INTRODUCTION The aim of this book is to help the vulnerable groups to realize their strategies through effective Administration and Management of their organizations. I want to begin by defining the title of this book as summarized below: Vision: - This refers to the roadmap that the promoters of the organization want to be in a given period of time normally 1 to 5 years or above. This is part of the strategic plan I will handle later in this book (Chapter 3). Administration and Management: - These two words have confused many people but I have simplified then in this book as follows: Administration: -Refers to the process of running an organization. This includes creating rules and regulations, making decisions, management of operations, creating organization of staff, employees, and people to direct activities towards achieving a common goal or objective. This is the work of the Executive Committee which holds the organization Vision, Mission, Objectives and Core Values. Management: -Is a process of planning, decision making, organizing, leading, motivation and controlling the human resources, financial, physical, and information resources of an organization to reach its goals efficiently and effectively. Social Enterprise: - This is an organization that applies business strategies to maximize improvements in the social, financial, and environmental well-being which mostly includes maximizing social impact alongside profits for the vulnerable members like children, persons with disabilities, youth, women and elderly. Common Project When an organization is at its initial stage, it needs a unifying project used to earn a living and this project must be operated by majority of the members (Comparative Advantage). CBOs operate simple projects needed for survival and skills acquisition for members. The members can decide to upgrade as NGO or Company limited by guarantee. The projects managed by an organization should have a financial strategy for accountability purpose which I will tackle later in this book (Chapter 5). This book contains Administration and Management which includes Organization of the Executive Committee, Strategic Management, Human Resources Management, Financial Management and Marketing. I will begin by giving the background of Administration and later Management of organizations. xiv Introduction I have travelled many places in Uganda and found out that Special Interest Groups are ignorant about formation of organizations and if they do then later fail in Administration and Management. “An organization is a living organism which can be Born especially during its formation, Fed which is proper Administration and Management, get Stuck like when members lose the morale and Die when members dissolve the organization - Prof. Umar Kakumba”. In this book I want to feed the organization through Administration and Management in order to stand the taste of time and serve vulnerable people and the public in general. Therefore, the title “Organization Administration and Management: A Guided Vision for Social Enterprises” means that people decide to join hands to form self-help projects in order to redeem themselves from poor conditions to realize their destiny depending on their strategies. This comes after failures to achieve individual goals hence decide to form a legally registered organization to address their problems using nonviolence means. In developing countries people have failed to embrace this gesture of pulling resources together for their own development. It’s very difficult for well-wishers or funders to give resources like money to an individual and leaves out an organization. I am going to use sophisticated business terminologies beyond the spirit of nonprofit Organizations because CBOs during their initial stages in developing countries focus on Income Generating Activities which are for profit (Social Enterprises) to uplift the standard of living for the vulnerable groups of people. The Book Rationale Reliable Source: “Kampala-The government announced that only 2,119 of the registered 14,027 NGOs were authorized to operate in Uganda following a validation exercise that started in November 2018 and ended in October 2019. While addressing journalists at Uganda Media Centre in Kampala the State Minister for Internal Affairs (Mr. Mario Obiga Kania) noted that, the validated NGOs were given permits by the National Bureau of NGOs, meaning that 11,908 NGOs are not allowed to operate and should close immediately”. The closure of these organizations depends on their failure to satisfy government on proper administration and management. Therefore, it is upon this background that I decided to write this book for future reference on how to handle administration and management of organizations in the category of Social Enterprises with the basis on Competitive Advantage to attain organization objectives. General Objective (Goal) of the book To empower organizations (Social Enterprises) to transform from hand-tomouth operations to successful organizations serving causes for vulnerable people and the public in general. xiv Introduction Specific Objectives of this Book  To serve as an introduction to administration and management.  To encourage self-discovery, record keeping and communication in leadership.  To formulate and implement a business strategy.  To guide on Human Resource Management.  To give guidance on proper Financial Management.  To provide an insight in managing Marketing. Advantages of legal organization  An organization is one of the legal ways to be recognized in society.  It is a form of Social Capital which is the network of relationships among people who live and work in a particular area.  It is also used to pull resources for Financial Capital which most commonly refers to assets needed by an organization to provide goods or services, as measured in terms of monetary value.  It promotes Social Security and this is “any government system that provides monetary support to people with an inadequate or no income”. Social Security provides you with a source of income when you retire or if you can’t work due to a disability. xv CHAPTER ONE ADMINISTRATION I have defined Administration in terms of Public Administration yet Social Enterprises are privately administered because all administration and management are decided by Public Administration through government policies and processes. Once you understand Public Administration, it’s very simple to practice Private Administration and the reverse is not true. “Administration cannot be carried out by one person but it’s valid when two or more people make a choice then we say administration has taken place and if Administration is the Car, then Management is the Driver - Dr. Stephen Bwengye’’. In order to avoid closure by government, administrators and Managers should know how government operates. This book is neutral because it tackles various forms of administration aiming at achieving the organization vision. Meaning of Public Administration There are two concepts in Public Administration namely, “Public and Administration”. In daily life administration is basic, which means that for the accurate functioning of any setting it must be clearly ruled or managed hence the notion for the existence of administration. The process of bringing an establishment under proper and fruitful management is what we call ‘Administration’ and when every work is completed with a particular objective then “Fruitful Administration’’ is realized. The type of administration or management which deals with the general public is Public Administration and by the term ‘public’ means all people living in a given society. It is true that when “the apolitical public bureaucracy functions within a political environment” then we call it public administration because it concentrates on matters of the State, the supreme will, public interests and laws which is the business side of the government and basically concerned with policy formulation and practical implementation. Public Administration entails all three branches of the government namely; Executive, Legislature and Judiciary, but mostly it tends to be focused on the Executive branch by ensuring regulatory functions to the public depending on the available Social Contract in order to attain the intended goal hence varies significantly from Private/Business Administration, especially in its emphasis on the public; and it draws upon other social sciences like politics, economics and sociology” Stephen Bwengye - PhD (Seminars and Lectures). Woodrow W. (1887:197-222), “Any rigor application of Law refers to Public Administration” which means every particular exercise of a law is an act of 1 Chapter One Nature of Public Administration administration. Prof. Woodrow Wilson is the father of Public Administration after various attempts to separate it from Political Science. Nicholas Henry, (2007:5) “Public Administration and Public Affairs” opines that, “Public Administration is the mechanism that brings together bureaucracy and equality”. In his explanation he meant that Public Administration covers the gap between government and the people it governs. L.D. White (1948: Pp. xvi, 612), Public Administration refers to the direction, coordination and control of people to realize the intended objective. These purposes are intended for the overall management and welfare of the society. Herbert Simon (1945) describes Public Administration as the activities of organizations cooperating to realize certain general goals. An institution is an entity in decision-making when the majority organize and they together delegate some of their decision-making power to a new entity or the organization (Government). The government ‘overtakes some of the individual decisional autonomy’ (1945: 7). The power of the government is manifested in the circulation and allocation of decision-making functions’ (1945: 305). Pfiffner and Presthus (1953: pp. viii, 626) recommended that “Administration is the organization and direction of human and material resources to achieve desired goals”. In this book I define Administration as “the promotion of unity for the long-term direction and management of the people in an organization to realize a specified vision”, or “The organization and coordination of the factors of production to attain organization objectives”. Nature of Public Administration “Any concern to the overall administration of the society as a whole is Public Administration but, in some cases, Public Administration could also be concerned with a specific segment of the society hence becomes public when it is aiming at the citizens advantage. In almost all states apart from the socialist or communist states, there are generally two types of administration where one is Public Administration and the other is administration of private institutions (Civil Society and Social Enterprises). Therefore, since Public Administration cares for the general public it is different from Private Administration. Public and Private Administration don’t overlap because they use different systems of administration but usually Private Administration falls within the dominion of Public Administration” - Dr. Stephen Bwengye (live lectures and seminars). L. D. White believes that Public Administration is the application of public policies articulated by government for practical implementation. The adoption 2 Chapter One Nature of Public Administration and implementation of government policy is the basis of Public Administration but while implementing government policies the real objective of the policy is at the centre. The term Public Administration becomes unclear when it entails the general public but in practical sense there is no room for the general public because it is fully controlled by the state through government. Therefore, “Government Administration” could be the accurate word for Public Administration but also Government includes many categories of employees or officials. Finally, since important bureaucrats are all-in-all given the fact that the contribution of other officials is so limited in decision-making then the proper word for Public Administration could be “Bureaucrats Administration”. In this statement I want to bring to your attention that the organization Patron might belong to the category of the important Bureaucrats. Public Administration caters for a basic number of utility services which may reasonably include like electricity supply, water, and other essential services but there is no country within the liberal democracies where the state takes responsibility of these services. So, Public Administration is carried out in a partial sense and may even be seen from another perspective which means an organization must formulate legal solutions to continue in existence is the major concern for this book. The Latin word “Ad and Ministare” gives birth to the concept of administration which means to care for or to look after the interests of the people. Public Administration is the management of affairs of an organization, the functions of a political state in discharging its responsibilities, and the body of people who administer an organization (Collins English Dictionary: 2009). In a nutshell the character of Public Administration possesses two views namely: Integral and Managerial views: • Integral view: Administration is the totality of all the activities such as; manual, clerical, managerial, Technical etc., which are undertaken to understand the objectives of the organization. Consistent with this view, all the acts of officials of the government from the attendant to the secretaries to the government and head of the state constitute Public Administration. Woodrow Wilson, L. D. White, Marshall E. Dimock, John Pfiffner and Percy McQueen supported this view. • Managerial view: This view of administration consists of only the managerial activities of people who are concerned with planning, organizing, commanding, coordinating and controlling (POCCC- According to Henri Fayol) constitute Public Administration. Therefore, Merson Herbert Simon, Luther Gulick, and Henry Fayol are the supporters of this notion. 3 Chapter One Scope of Public Administration Scope of Public Administration Scope of Public Administration is so extensive that it lacks consensus among scholars about its scope (Woodrow, 1887:1-222). However, its scope is often coined into three parts –  As an activity  As a profession  As a discipline There are mainly two different parts according to Herbert Simon namely, (i) As an activity whereby an individual linked with administration, carry out certain tasks that relate to the general management of the government hence an operative aspect of public administration. (ii) And also, as a discipline which is a topic of study even in political Science thus a tutorial part of public administration because it’s a topic or discipline like all other social sciences. As an Activity: Public Administration may be a worldwide phenomenon. Activity of Public Administration is so varied that the given statement is correct that, “Public administration starts at conception (womb) and ends into tomb.” For example; - everybody needs a birth certificate and likewise death certificate authorized by Public Administration. In conclusion every activity concerning our existence is monitored by the scope of Public Administration which entails all the activities of the government. In a state like Uganda, people expect various services like education, health facilities, sanitation, good infrastructure (roads) etc. and safety from the government hence public administration provides many welfares and Social Security services to the people. Besides, it manages government owned industries and regulate private industries i.e., run under PPP (public private partnership) model, etc. As a Profession: Public Administration as an activity may additionally come under Public Administration as a profession and the reverse is true. The subsequent points are convened into Public Administration as a profession:  Advising the political heads sort of a minister is assisted by the Permanent Secretary. Each ministry features a political secretary.  To cause change in technique of public administration so as to realize the three E’s – efficiency, economy & effectiveness.  Subordinate legislation wish to draft bill (upcoming laws).  Training, motivation and constant development of state institutions. As a DisciplineAs a discipline Public Administration borrows heavily from other disciplines like history, geography, sociology, so on and so forth. The scholars like P. McQueen, Henry Fayol, Gulick, Willoughby, Walker, Nigro F.M. Marx, Pfiffner and others deliberated on the scope of Public Administration as a discipline. 4 Chapter One Scope of Public Administration The scope of Public Administration as a discipline is often understood in many levels like – scholars view, traditional view, modern view and subject-matter view as explained below: Scholars View Since Public Administration lacks consensus about its scope, different scholarspresented its scope as below: Henry Fayol in his 1949 book “General and Industrial Management” gave five key areas of Public Administration – 1. Planning, 2. Organizing, 3. Commanding, 4. Coordinating, 5. Controlling Gulick & Urwick (1936:3-35), within the book “Papers on the Science of Administration” presented the POSDCORB view of the scope of Public Administration in support of Henry Fayol. POSDCORB means -: P -Planning: understanding in broad outline the items to be done. O -Organizing: establishing a proper structure of authority. S -Staffing: recruitment and training of workers and their conditions of labour. D -Directing: decisions and issuing orders and instruction. Co –Coordinating: inter-relating the work of varied parts of the organization. R –Reporting: informing the superiors within the organization. B –Budgeting: fiscal planning, control and accounting. McQueen (1942), consistent with him, people, material and methods are the explanations of Public Administration. Willoughby (1927) divided the scope of Public Administration into five categories namely: general administration, (comprising of the functions of direction, supervision, and control); organization, personnel, material, and supply and finance. He considered the scope of the general Public Administration into five divisions:  General administration: who is to execute the function of direction, supervision, and control over administration?  Organization: Put up hierarchical structures for the important performance of the executive work.  Personnel: Who are to manage various services?  Materials and supply: The instruments with which the work of administration is implemented.  Finance: Determination and making provision for the financial requirements of administration which is often the basis of all the abovementioned problems. 5 Chapter One Scope of Public Administration Traditional View This view of the scope of Public Administration is what the Executive branch execute, i.e., formation of policy, implementation of laws, and evaluation of organization which is the narrower view of the scope of Public Administration. Luther Gulick, Simon, & Thomson are the prominent supporters of this notion. Modern View All arms of the state are in action in this view, i.e., the acts of all the three branches of the government (legislature, executive and judiciary), comes under the scope of Public Administration which is the broader view of Public Administration. India has tried to use this perspective of the scope of Public Administration according to S. Polinaidu (2017):  Legislature supervises the control over administration to make sure that the policies are implemented basing on the objective of the policy.  Judiciary has the supremacy to control Public Administrators from unconstitutional, illegal, and arbitrary acts. Therefore, judiciary determines reasonably how public services are often rendered and under what conditions.  The legislature and courts determine the environment within which Public Administration must flourish. The Scope of Public Administration in India is so wide and inclusive. The democratic nature, welfare state policy and various problems facing the nation makes the intervention of state inevitable in all conditions. Furthermore, there is so much interaction and interdependence between three organs of Government so that the scope of Public Administration cannot be restricted to executive branch only. It must necessarily study and cover all the organs of Government (Legislature, executive and judiciary). A. Nigro and L.G. Nigro were the imperative supporters of this view. Subject Matter View The techniques like POSDCORB, responsibility, accountability, and transparency are not the only administrative methods of Public Administration, but also the substantive concerns of administration like defence, education, public health, welfare, agriculture, police, and fire protection and so on. If we are to take for example administration of Department of Defence or Education they have different systems of administration which must vary as a result since both have different administrative approaches in terms of the subject matter hence the prerequisites of that department are extremely vital for the effective administration of that department. In conclusion, also administrative techniques are basically employed within the substantive fields and have equivalent importance in public administration. The scope of Public Administration as a discipline is often perceived in several levels like scholars view, traditional view, modern view and subject-matter view 6 Chapter One Public Vs Private Administration as articulated above. However, largely, it contains the subsequent tradition also as emerging new areas of study: Administrative Theory: Is about projects, programmes and policies. Organization Theory: Deals with the operation of the formal structures generally and this supports the aim of this book in particular. Public Personnel Administration: Public personnel (personnel means Staff) administration, we study issues associated with recruitment, training, morale and motivation, discipline, retirement, etc. Public Financial Administration: It entails the study of budgeting process, control of public expenditure, accounting and auditing. It is a vital branch of public administration because no public programme can subsist without funds. Comparative Public Administration: This is international and inter-cultural administrative studies. It further includes ecological administrative theory (it is not possible to know public administration without understanding its operating environment i.e., anything manipulating administration). Development Administration: Third World countries (Developing Countries) have strange environment of development. Development administration is actually development theory of the Third World countries. The most challenges to development administration are: – Administration of Development - Developmental Administration focuses on the development of a country’s economy and civilization. Development of Administration - Refers to the difficulty of agencies, management systems, and processes a government employs to achieve its intended development goals. Public Policy Analysis: It is the study of the system of politics and effective policy application. Public Vs Private Administration The Differences: The following are some major differences between Public and Private Administration. Peter Drucker, Herbert A Simon, and Paul H. Appleby made a clear difference between Public and Private Administration as detailed below: – Definition- Public Administration focuses on public policies, state affairs, government functions, and provision of several services to the overall public; but Private Administration is concerned with the management and operations of individual organizations generally business entities. Scope - Public Administration operates within the governmental setting; while Private Administration functions within the non-governmental setting. Nature - Public Administration is very much related to the political course of action and sometimes conducts itself as part of the greater political system; while Private Administration concentrates on the commercial and business activities. Coverage - Public Administration in nature covers all the territory within the jurisdiction of the state; while Private Administration might willingly cover the 7 Chapter One Public Vs Private Administration multi-country operations or activities of a corporation, or only a really unimportant office: Timing - Public Administration naturally functions on a continuous basis; while Private Administration essentially functions on a periodic basis. Approach - Public Administration has a bureaucratic approach; whereas private administration features an egalitarian or democratic approach. Type of Activities - Public Administration consist many types of public services and governmental activities; while Private Administration include only with a limited set of activities as private organizations function on the idea of division of labour or core competency. Orientation - The general Public Administration is welfare centred and works with a service motive; whereas the Private Administration usually focuses on profits. Objective - Objective of Public Administration is to render the simplest service to the general public at large; while objective of Private Administration is shareholders’ wealth and profit maximization. Decision Making- Deciding within the public domain is usually pluralistic, transparent and subject to public scrutiny; but deciding within the Private Administration is monopolistic, discretionary and at times secretive. Accountability- Public Administration is answerable to the overall public at large or the representatives of the people with a Social Contract; while Private Administration is liable to the owners of the organization. Appointment – The Public Administrators are appointed through a competitive process; while the Private Administrators could be appointed on the idea of private choice. Qualification - Particular qualification is mandatory for Public Administrator or official; but any specific qualification cannot be a prerequisite for a Private Administrator. According to Paul H. Appleby (1949:11-28) suggested three major differences between private and Public Administration namely: Political character, Accountability and Scope. Josiah Stamp took a step and suggested three aspects of the difference through which public accountability is similar to Appleby’s work hence the following are the three differences according to Stamp (1964:10+):  Uniformity principle  External financial control principle  Service motive principle Herbert Simon opined the following differences:  Public Administration is bureaucratic while private administration is business like in nature.  Public Administration is more political while private administration is nonpolitical. 8 Chapter One  Public Vs Private Administration Public Administration contains red tape while the private administration is free from that problem. P. Drucker (1954:1974: 1-294), the management guru sums up the differences stating that while the Public Administration function on service perception the Private Administration follows the business perspective and they further have different purposes in serving different needs, values and objectives but both contribute to the society as well. The methods of measuring performance and results are different in public and private settings. Similarities between Public and Private Administration Scholars like Henry Fayol, M.P Follet, Luther Gulick, and Lyndall Urwick rejected the difference between Public and Private administration. They concluded that all administrative systems have to perform similar functions. The similarities between Public and Private administration are as below:Similarity in Functions: They are both governed by a number of general principles. Henry Fayol suggested the 14 principles which Luther Gulick called the general principle as POSDCORB (Planning, Organizing, Staffing, Directing, Coordination, Reporting, and Budgeting). Training: The similarity of training between the two kinds of administrations is to provide proper training to their staff for special administrative experience and skills through capacity building or in-service training. Service-Oriented: Private administration provide some activities similar to Public Administration which can touch public life in terms of service delivery like privately owned transport systems, power supply, etc. are as crucial as Public Administration these days. Group Efforts: The public and private types of administration encourage group effort, where various levels of employees strive for a particular objective through mutual interactions. Facing Problems: Public and Private Administrations face various specific challenges like problems in decision-making, problems in managing directormanagement relationships, problems in the manufacturing or supply of consumer goods and services but the form and character of the problem varies depending on the subject matter and the environment. 9 Chapter One Administration Vs Management Table 1: Administration Vs Management BASIS FOR COMPARISON MANAGEMENT ADMINISTRATION Meaning An organized method of managing people and property of a business organization is called the Management. The procedure of administering an organization by a group of people is known as the Administration. Authority Middle and Lower Level Top level Role Executive Decisive Concerned with Policy Implementation Policy Formulation Area of operation It works under administration. It has full control over the activities of the organization. Applicable to Profit making organizations, i.e. business organizations. Government offices, military, clubs, business enterprises, hospitals, religious and educational organizations. Decides Who will do the work? And How will it be done? What should be done? And When is should be done? Work Putting plans and policies into actions. Formulation of plans, framing policies and setting objectives Focus on Managing work Making best possible allocation of limited resources. Key person Manager Administrator 10 Chapter One Administration Vs Management BASIS FOR COMPARISON MANAGEMENT ADMINISTRATION Represents Employees, who remuneration. Function Executive and Governing work for Owners, who get a return on the capital invested by them. Legislative and Determinative. Functions Constituting Public Administration Basically, there are two functions performed within the administration of institutions which jointly constitute Public Administration as stated below: a. Generic Administrative Functions Cloete J.J.N (1967:58) suggested the functions of Public Administration in terms of the generic functions and by generic it means they are performed in any administrative organization which includes, policy making, organizing, financing, staffing, determining work methods, and controlling.  Policy Making: -Making rules and regulations for reference if the objectives were not met.  Organizing: - Establishing a proper structured system of administration.  Financing: - Containing the spending and controlling of public finances.  Staffing: - The role of Recruitment, selecting, placing, developing and utilization of personnel.  Determination of labour procedures: - It involves drafting specific instructions to be followed when handling a specific matter or a Human Resource Manual.  Controlling: - To monitor these functions effectively and efficiently to realize the intended objectives. b. Managerial functions This is mostly Human Resources Management which comprises:  Planning and coordination of administrative procedures and systems plus devising ways to make more efficient processes.  Do the recruitment and training of personnel plus allocating responsibilities and office space to employees.  The assessment of staff performance and provide training and guidance for the achievement of maximum efficiency.  Making sure that there is adequate flow of data within the organization to make it possible for other business operations. 11 Chapter One         Administration Vs Management The management of schedules and deadlines. Monitoring inventory of office supplies and therefore the purchasing of latest material attentively to budgetary constraints. The evaluation of costs and expenses to help in budget preparation. The supervision of facilities services, care for activities and tradespersons (e.g electricians). Organization and supervision of other office activities like recycling, renovations, event planning etc. Making sure that operations adhere to policies and regulations. Staying alert with all organizational changes and business developments. The significance of handling remuneration conditions. Principles of Public Administration Willoughby (1927:720), recommended the following principles: 1. Political supremacy of legislature: Parliamentary autonomy (also called parliamentary supremacy or legislative supremacy) is a concept within the constitutional law of most parliamentary democracies which confirms that the legislative body has complete authority and is absolute over all other government institutions, including executive and judicial bodies. 2. Public Accountability: This means the requirement to respond publicly or to report with a proper standard of response, for the discharge of responsibilities that affect the general public in significant ways which is a requirement to account for the responsibility conferred. 3. Rule of law: This is the mechanism, procedure, practice, or norm that supports the egalitarianism or equality and fairness of all citizens before the law. 4. Fairness and Reasonableness: Acting reasonably altogether in all the circumstances plus putting inclusiveness in mind by not discriminating directly against any citizen on grounds of race, gender, age, religion etc. 5. Balanced Decisions: This involves analysis and purely researched ideas to reach rational conclusions. Balanced deciding offers a chance for greater intellectual input within the decision-making process. 6. Thoroughness (Quality of work): Quality amount of care and a spotlight to the standard of work or the output by avoiding shoddy work. 7. Probity (Honesty and Decency): The private quality of decency is one among honesty, courtesy, and respect for people. Over time, decency has mentioned manners, but today decency is especially a robust sense of right and wrong, and a high standard of honesty. 8. Fundamental Human Rights: Include the right to life and liberty, freedom from slavery and torture, freedom of opinion and expression, the right to education, and lots of more rights which an individual is born with but not given. 12 Chapter One Approaches to the study of Public Administration 9. Effectiveness and Efficiency: Effectiveness is about accomplishing a task or producing a desired result. Efficiency is about performing a task in an absolute best manner. It focuses on achieving the target. It focuses on maximum result with least time and energy. Being effective means doing the proper things without minding about the cost (efficiency). 10. Legal rules or Legality: As implied warranty that the statutes of a specific jurisdiction are the idea for any act, agreement, or accept that jurisdiction which should be adhered to. Approaches to the Study of Public Administration There are mainly the subsequent approaches: Institutional Approach The theorists of the historical approach believe that knowledge of history Opens in new window is important for a radical study of any field. The historical approach sought to elucidate the executive institutions within the light of their past. It analyses the executive institutions by tracing their development within a specific time span. Therefore, this approach organizes and interprets the knowledge concerning administrative institutions during a chronological order. The father of the study of public administration Woodrow Wilson emphasized the historical and comparative methods because they are the two best methods for the study of Public Administration. A society provided with rich history would gain huge benefit employing this approach because the uniqueness of its administrative systems is thus identified. The sizable number of administrative organizations are usually comprehended within the light of their past by adopting this particular approach. As an example, it’s rather difficult to know the creation of Uganda into one country without going into her origin and her phases of development. This approach has four versions as outlined below: a. Normative Institutionalism: Normative institutionalism may be a sociological interpretation of institutions and holds that “logic of appropriateness” guides the behavior of actors within an establishment. It predicts that the norms and formal rules of institutions will shape the actions of those acting within them and it becomes their way of life which is culture. b. Historical Institutionalism: This version of institutionalism states that “history matters”. Paths chosen or designed early within the existence of an establishment tend to be followed throughout the institution’s development. Institutions will have an inherent agenda supported by their pattern of development, both informal (the way things are generally done) and formal (laws, rule sets and institutional interaction). A key concept is path dependency: the historical track of a given institution or political entity will end in almost inevitable occurrences. 13 Chapter One Approaches to the study of Public Administration c. Rational choice Institutionalism: Ken Shepsle may be a leading advocate for a rational-choice theory of institutions within politics. He identified organizations as exogenous and organizations as endogenous. The first conception takes the principles and practices of an establishment as fixed and external to the individuals who operate within them, while the second looks at the principles and practices as being intended results of the intentions and actions of these individuals themselves. On the second view, it’s hospitable that the individuals within an activity usually vary in the rules; and one set of rules will perhaps have better results for one set of interests than another. Therefore, the choice of rules in an activity is not a matter of unresponsiveness to the participants. Shepsle further distinguishes between structured and unstructured organizations a difference that other authors termed as “formal or informal”. The excellence has got to do with the degree to which the principles of the activity are codified and reinforced by strong external pressures. Shepsle recommends various informal solutions to joint action problems under the unstructured institutions solutions to a temporary problem (Shepsle, 1986:135-179). d. Empirical Institutionalism: This seeks to spot whether institutions make any difference in policy choices, or in political stability. For instance, one among the questions empirical institutionalism deals with is presidential or parliamentary system and whether it may be a better system or not. Legal Approach Legal approach is also termed juristic approach. The proponents of this approach sought to review public administration as a part of law and specialise in the formal legal structure and organization of public bodies. The primacy of the legal approach cares with power, its structure and functions. It lays emphasis on the formal organization of offices, official duties, and limitations of power and discretionary authority of administrators. Its source includes constitution, codes of law, office manuals of rules and regulations and judicial decisions. Some European countries, for instance, Germany, Belgium and France, are particularly known to possess and employ the legal approach to the study of public administration. There are two principal divisions of law in these countries, namely: constitutional and administrative. Constitutional law deals with the three main arms of the government, their interrelation and therefore the distribution of power among them; whereas Administrative law is especially concerned with the structure and functions of public bodies, departments and authorities. The legal approach is effective for the understanding of the legal framework within which the executive system operates. On the other hand, by neglecting the informal aspects operating within the organization (the psychological and sociological variables), it remains an incomplete approach to the study of public administration. Frank J. Goodnow is the main advocate of the legal view. 14 Chapter One Public Administration Theories Behavioural Approach: The behavioural approach also called the socio-psychological approach is essentially concerned with the scientific study of human behaviour in diverse social settings, being that it incorporates a diversity of perspectives like, the Simon’s Model of Decision-making, Human Relations Movement, Theory of Organizational Humanism, and Contingency Theory inclusive. The approach grew out of the criticism against the normal approaches which laid emphasis on descriptive analysis instead of substantive one. Robert A. Dahl (1947:1-11) was among the pioneers of this approach but further James Fesler (1980) mentions the subsequent characteristics as often ascribed to behavioural approach:  It entails the study of actual behaviour, usually taking the individual as the preferred unit of study.  It is multidisciplinary focused.  It involves ‘rigor’ within the use of scientific procedures.  It proscribes prescription (that is to say, it’s primarily descriptive in intent). Behaviouralists suggested that the application of administration is very much influenced by human sentiments, perceptions, and thus the environment during which administration operates. It is interdisciplinary in nature because it draws on sociology and psychology. Public Administration Theories These are theories that have tried to elucidate Public Administration namely: Classical theories, Neo-classical theories, and Modern theories Classical Theories Many believe that the classical school represents the primary source of the managerial process, within the late nineteenth century, while it had been considered a product of the interaction between the employers and therefore the capital control during that period. The main target in this period was the confirmation of the employer’s interest, and therefore the production process, whereby the classical school or traditional management includes three main theories: Scientific Management Theory In 1911 Frederick Winslow Taylor was one of the pioneers of those theorists who started the Scientific Management movement, and with his colleagues were the first people to evaluate the work procedure scientifically. They studied how work was carried out, and checked out how this affected worker productivity. Therefore, Taylor suggested the following four principles:  Evaluate each job or task scientifically to decide the “one best way” to perform the job which is an alteration from the previous “rule of thumb” system where employees used to devise their own means of doing the job. 15 Chapter One    Public Administration Theories Employ the exact workers for each job, and train them to perform at maximum efficiency. Supervise worker performance, and provide instruction and training when necessary. Segment the work between management and labor so that management can plan and train then workers can implement the tasks efficiently. Administrative Management Theory This concerns attempts to seek out a rational gratitude to design an organization as a whole according to Henri Fayol (1949:1+). The notion in general entails a formalized administrative structure, a transparent division of labour, and delegation of power and authority to administrators applicable to their areas of errands. Consistent with Henri Fayol, he proposed five functions of management as stipulated below: Planning: Managers must plan for future conditions, widen strategic objectives and secure the achievement of future goals. Consequently, managers should assess future contingencies affecting the organization, and form the long-term operational and strategic plan of the organization. Organizing: Managers must organize the workforce in an efficient way and structure plus aligning the activities of the organization. Managers should also train and recruit the proper people for the work, and always secure sufficiently skilled and educated employees. Commanding: Managers should supervise subordinates in their daily work, and encourage them to realize the company goals. Likewise, it’s the responsibility of managers to indoctrinate company goals and policies to subordinates. The commanding of subordinates should be according to company policies, and each manager must treat subordinates in line with the principles of the organization. Coordinating: Managers should harmonize the procedures and activities performed by the corporate, meaning that each activity of every organizational unit must complement and supplement the work of another. Controlling: Managers should make sure that company activities are in line with general company policies and objectives. It is also the duty of the manager to watch and report deviations from plans and objectives, and to form initiatives to correct potential deviations. Managerial qualities identified by Fayol  Physical qualities- Physical condition, strength of body and well dressed. This is where persons with disabilities are denied their rights basing on this quality.  Mental qualities - Capacity to know and learn, judgment, adoptability, mental rigors.  Moral quality- Fairness, willingness to simply accept responsibilities, initiative, loyal, intelligent and dignity. 16 Chapter One    Public Administration Theories Educational qualities- General knowledge about the organization. Technical qualities- Peculiar to the functions to be performed. Experience- Arises from work. Principles of Management of Henri Fayol The fourteen (14) principles of Management are statements that serve a fundamental truth. These principles of management function as a suggestion for decision-making and management actions. They are involved by means of observations and analyses of events that managers encounter in practice: 1. Division of labour: In practice, employees are specialized in several fields and that they have different skills. Different levels of experience are often differentiated within the knowledge areas (from generalist to specialist). According to Henri Fayol specialization promotes competence of the workforce and increases efficiency. The employees increase their accuracy and speed through specialization. The actions of both technical and managerial are valid for management theory of management. 2. Authority and Responsibility: In order to urge things done in an organization, management has the authority to offer orders to the workers and of course authority comes with responsibility. Accompanying authority with responsibility gives the management power to issue orders to the subordinates according Fayol. The responsibility is often traced back from performance and it’s therefore necessary to form agreements about this. In other words, authority and responsibility go together and that they are two sides of an equivalent coin. 3. Discipline: This third principle of management by Fayol is about obedience. It’s a requirement of the core values of a mission and vision to have good conduct and respectful interactions. This management theory is crucial and is viewed as the oil to form the engine of an organization to run properly. 4. Unity of Command: This principle means an employee must receive orders from one manager because it is not proper to give tasks and related responsibilities to the worker by more than one manager since it can lead to confusion and conflicts in the workplace. By using this principle, the responsibility for mistakes is often established more easily. 5. Unity of Direction: This management principle of management is about focus and unity. All employees render the same activities that can be linked to the same objectives. All activities should be carried out by one group that forms a team. These activities should be described in a plan of action. The manager is finally responsible for this plan and monitors the progress of the defined and planned activities. Focus areas are the hard works made by the employees and coordination. 6. Subordination of Individual Interest: There are always various types of interests in an organization for an association to function neatly, where Henri Fayol suggests that personal interests are subordinate to the 17 Chapter One Public Administration Theories interests of the organization principles. The major concern is on the objectives of the organization rather than those of the individual. This applies to all levels of the whole organization, with the managers inclusive. 7. Remuneration: Motivation and efficient work are interchangeably as far as the smooth running of an association is concerned. This management theory opines that the remuneration should be adequate to keep workers motivated and creative. Non-monetary (like a compliment, more responsibilities or credits) and monetary (like compensation, bonus or other financial compensation) are two types of remuneration. Eventually, it is about gratifying the efforts for the work done. 8. The Degree of Centralization: Management and the powers for decisionmaking method must be accurately balanced in an association. This relies on the size of an organization including its hierarchy. Centralization means the concentration of decision-making authority at the highest management (executive board). Basing on Henri Fayol the division of power for the decision-making course of action with lower levels (middle and lower management), is what he identified as decentralization. Henri Fayol opined that an organization should toil for a good balance. 9. Scalar Chain: Hierarchy manifests itself in any given organization. This varies from senior management (executive board) to the lower levels within the organization. The hierarchy view according to Fayol’s management theory states that there must be a proper channel within the area of authority from top to bottom and all managers in the lower levels. Every employee can get in touch with a superior in an urgent situation without challenging the hierarchy especially, when it focuses on reports about disasters to the immediate managers or superiors. 10. Order: According to this principle of management, employees in a corporation must have the proper alignment at their disposal in order to function well in an organization and in addition to social order which is the responsibility of the managers; the employment environment must be safe, clean and orderly. 11. Equity: The management principle of equity often takes place within the core values of an organization. Consistent with Henri Fayol, employees should be treated kindly and equally. Employees must be within the right place in the organization to try to do things right. Managers must supervise and observe this procedure and that they should treat workers fairly and with impartially. 12. Stability of Tenure of Personnel: This theory of management represents operation and managing of staff and this may perhaps be in balance with the service that is rendered from the association. Management of workforce is hard like to attenuate turnover rate and to possess the proper staff within the right place. Focus areas like frequent change of position and sufficient development should be managed properly. 18 Chapter One Public Administration Theories 13. Initiative: Henri Fayol suggests that with this management theory workers should be allowed to form new ideas which encourages interest and participation and develops added value for the organization. Employee initiatives are a source of strength for the organization consistent with Henri Fayol. This encourages the workers to be involved and interested. 14. Esprit de Corps: The principle of management termed ‘esprit de corps’ stands for striving plus the involvement and unity of the workers. Managers are responsible for the event of morale within the workplace individually and within the area of communication. Esprit de corps encourages the occurrence of a culture and develops an environment of mutual trust and understanding in the association. Bureaucratic Theory In 1904 Max Weber a German sociologist recommended that bureaucracy constitutes the leading efficient and rational move towards human activity which can be organized and that systematic procedures and planned hierarchies are crucial to preserve order, maximize efficiency, and eliminate partiality. Principles of Bureaucratic Theory The following are the principles: Task specialization: Tasks are divided according to simple, routine categories on the notion of competencies and functional specializations. All workers are liable for what they do best and exactly what is expected of them. By segmenting work on the notion of specialization, the association openly benefits. Each division has particular powers as a result of delineation of tasks and managers can approach their workers when the tasks are not clearly done. Each staff has a specific role to play within the association and is expected to only specialise in that area of expertise. In bureaucracy going beyond one’s responsibilities and taking over tasks of colleagues is not officially recognized. Hierarchical of authority: The overall performance of managers is determined through hierarchical layers, where each layer of management is liable for its employees. There are various hierarchical positions in bureaucratic formal structures which are essentially the trademark and foundation of a bureaucracy. The hierarchical authority is a system where various positions are interrelated and the best pronounced on the hierarchy has more power. The upper layers of bureaucratic formal structures usually provide supervision and control over bottom layers. Bureaucratic communication is manifested in these hierarchical lines hence the degree of delegation is achieved by visibly laying out how powers and responsibilities are alienated. 19 Chapter One Public Administration Theories Formal selection: The workers are selected on the notion of technical skills and competences obtained through training, education and knowledge. One of the core principles is that workers are hired for their services at the intensity of their salary depending on the position. The contract terms and conditions are resolute by formal rules and requirements hence the worker has no personal ownership of the organization. Rules and requirements: To make sure uniformity is achieved then formal rules and requirements are necessary in order for the workers to know accurately what is expected of them. It is during this process when these principles and requirements are normally predictable and all administrative procedures are laid down within the official human resource manual. The enforcement of strict rules in the association can more evidently achieve uniformity and it takes all staff efforts through coordination where official reports formalize the principles and requirements principle. When there is an amendment in rules and requirements, then the Top Management (Executive) is responsible for these new changes which should be officially communicated. Impersonality: The clearly articulated regulations and requirements that restrict impersonal dealings between workers in order to prevent nepotism which also Woodrow Wilson in 1887 called the ‘Spoils System’ and this is a common characteristic of bureaucracies. Interpersonal relationships are strictly regarded as a system of law and rules and requirements where official perspectives are free from personal influence, emotions and feelings hence decisions are made on the view of rational rather than personal factors. Career orientation: The workers of a bureaucratic formal association are selected according to their expertise which helps in the employment of the right people for proper positions and thereby optimally utilizing human capital in the long run. The idea of experience and expertise can be created and possible during a bureaucracy which can offer ‘lifetime employment’ as a result. The appropriate segmentation of labour within a bureaucratic setting also permits the workforce to specialize themselves further, in order that they will become experts in their own fields and significantly improve their performance. Neoclassical Theories This is where the behavioural sciences get integrated into management hence Neoclassical Theories are the extended version of the classical theories. Consistent with these theories, the organization as a social organization and its performance does get affected from the human actions. The prime factors in determining the efficiency of the organization, the classical theory put focus on the physiological and mechanical variables. But, when the efficiency of the organization was actually checked, it was acknowledged that, despite the 20 Chapter One Public Administration Theories positive aspect of those variables the positive response in work behaviour was not evoked and the following are the neoclassical theories: Human Relations Theory In 1920 Elton Mayo came up with this theory due to the issues caused by classical theories, the neoclassical theory was an effort aimed at integrating the behavioural sciences into management thought so as to disentangle the mechanistic tendencies of the classical theories. The premise of this inclusion supported the thought that the role of management is to use employees to urge things in organizations. Consistent with this theory, the organization is regarded as a social organization and its performance does get affected from the human actions. The basic features of Human Relations Theory approach are (Elton Mayo, 1920)  The organization may be a social system.  Human element is the most crucial factor within the social system.  It exposed the significance of social and psychological factors in shaping employee productivity and satisfaction.  The characters of a private individual are influenced by the informal group of being a member.  The general objective of management is to expand social and leadership skills in addition to technical skills.  The Morale and productivity go hand-to-hand in the organization. According to Elton Mayo the Hawthorne experiment led to the event of human relations approach. It made known the significance of social and psychological factors in shaping workers, productivity and satisfaction. This movement is manifested by informal alliance, informal relationship and leadership pattern of communication and philosophy of commercial humanism. The values of human relation are exemplified within the work of Douglas McGregor and A. H. Maslow. Human relation approach may be a social psychological approach and suggests that commercial enterprise may be a social organization during which group norms play a big role. Financial incentive was less of a determining factor on a workers output than were group pressure and acceptance and therefore the concomitant security. It ushered an era of organizational humanism. Managers would not consider the difficulty of organization design without including effects on work groups, employees’ attitudes, and manager-employee relationships. Elton Mayo, Mary Parker Follett and Douglas McGregor, Roethlisberger, Dickson, Dewey and Lewin, etc., were the most contributors that led to the event of Human Relations Movement. Hawthorne Studies or Human Relations Approach: The human relations proposed the subsequent points as a result of their findings of the Hawthorne experiments: 21 Chapter One Public Administration Theories Social System: The organization generally may be a social organization composed of various interacting parts. The social organization defines individual roles and establishes norms which will differ from those of the formal organization. The workers follow a social norm determined by their co-workers, which defines the right amount of labour, instead of attempt to achieve the targets management thinks they will achieve, albeit this is able to have helped them to earn the maximum amount as they physically can. Social Environment: It was discovered that the social environment on the work interrupts the workers and is additionally affected from them. Management is not the sole variable but the Social and psychological factors exercise an excellent influence on the behaviour of workers. Therefore, every manager should implement a sound human approach to all or any organizational problems. Informal Organization: Further it was suggested that informal organization also exists within the framework of formal organization and it affects and is affected by the formal organization. Group Dynamics: At the workplace, the workers- often don’t act or react as individuals but as members of groups. The group determines the norms of behaviour for the group members and thus exercises a strong influence on the attitudes and performance of individual workers. The management should affect workers as members of labour groups instead of as individuals. Informal Leader: There is an emergence of informal leadership as against to formal leadership and therefore the informal leader sets and enforces group norms. He/she helps the workers to function as a group and therefore the formal leader is rendered ineffective unless he/she conforms to the norms of the group of which he or she alleged to be in-charge. Communication: Two-way communication is important because it carries necessary information downward for the right functioning of the organization and transmits upward the emotions and sentiments of individuals who manage the organization. It will help in securing workers cooperation and participation within the decision-making process. Workers tend to be more productive once they are given the chance to precise their feelings, opinions and grievances. This also gives them psychological satisfaction. Non-Economic Rewards: Money is merely one among the motivators, but not the only motivator of human behaviour. The social and psychological needs are very strong determinants of the employees. So, non-economic rewards like praise, status, inter-personal relations, etc., play a crucial role in motivating the workers. Such rewards must be integrated with the wages and fringe benefits of the workers. Conflicts: The organizational goals and group goals can contradict which will harm the interest of workers if they are not handled properly. Conflicts are often resolved through improvement of human relations within the organization. 22 Chapter One Public Administration Theories Behavioural Management Theory When management investigation intensified within the 20 th century, questions arose regarding the relations and motivations of the individuals within organizations. Management principles that developed during the classical period were not so useful in handling many management situations and could not explain the behaviour of individual employees. In short, classical theories underestimated employee motivation and behaviour. As a result, the behavioural school was a natural outcome of this revolutionary management experiment. The behavioural management theory is on many occasions called the human relations movement because it addresses the human element of labour. Behavioural theorists believed that a better understanding of human behaviour at work, like motivation, conflict, expectations, and social psychology, improved productivity. The scholars who contributed to the current school perceived workers as individuals, resources, and assets that are not to be manipulated like machines, as it used to be in the past. Several individuals and experiments contributed to the current theory. Elton Mayo’s works were a product of the Hawthorne experiments, a series of studies that thoroughly used classical management theory just to disclose its shortcomings. The Hawthorne experiments consisted of two studies carried out at the Hawthorne Works of the Western power company in Chicago from 1924 to 1932. The main study was conducted by a group of engineers seeking to work out the connection of lighting levels to worker productivity. Astonishingly they discovered that employee efficiency increased because the lighting levels decreased that is until the employees were not capable to determine what they were doing hence performance naturally declined. A second group of experiments began a few years later. Harvard researchers Mayo and F. J. Roethlisberger supervised a group of 5 women during a bank wiring room. They accorded these women special privileges, like the right to leave from their workstations without consent, take rest leaves, have the benefit of free lunches, and have variations in pay levels and workdays. This experiment also resulted in significantly better rates of productivity. According to Mayo and Roethlisberger in this case they resolved that the increase in productivity resulted from the supervisory planning instead of the changes in lighting or other associated employee benefits. Because the experimenters were the first supervisors of the workers, the excessive interest they displayed for the workers was the idea for the increased motivation and resulting productivity. Essentially, the experimenters became close to the study and influenced its outcome. This is often the beginning of the term Hawthorne effect, which describes the special attention researchers give to the study subjects and therefore the impact that focus has on the study findings. 23 Chapter One Public Administration Theories The conclusive winding up from the Hawthorne experiments was those human relationships and that social needs of employees are vital aspects of business management. This principle of human motivation assisted to revolutionize theories and practices of management. Abraham Maslow’s Hierarchy of Needs Theory A practicing psychologist, developed one of the most commonly recognized need theory, a theory of motivation based upon a concern of human needs. His theory of human needs has three assumptions (Maslow, 1943: 370–396): Human needs are not at all completely satisfied.   Human behavior is persistent and is motivated by the need for satisfaction.   Needs can be classified basing on a hierarchical structure of importance, from the lowest to highest.  Figure 1: Abraham Maslow’s hierarchy of needs: Physiological needs: Maslow grouped all physical needs crucial for maintaining basic human well‐being needed for survival, such as food and drink, into this category. If the need is satisfied, hence it is no longer a motivator. Safety needs: These needs consist of the need for basic security, stability, protection, and freedom from fear. A standard state exists for a person to have all these needs normally satisfied. Otherwise, they turn out to be primary motivators. Social Needs (Belonging and love needs): After the physical and safety needs are satisfied and are no longer motivators, the need for belonging and 24 Chapter One Public Administration Theories love arises as a primary motivator. The individual tries to establish meaningful relationships with significant others. Esteem needs: An individual must develop self‐esteem and wants to achieve status, reputation, fame, and glory. Self‐actualization needs: Assuming that all the previous needs in the hierarchy are fulfilled, an individual feels complete realization of potential. Maslow’s hierarchy of needs theory helped managers realize employee motivation. Theory X and Y Douglas McGregor was greatly influenced by both the Hawthorne studies and Maslow. He believed that two basic types of managers exist. One type, the Theory X manager, has a negative view of employees and assumes that they are lazy, untrustworthy, and incompetent of assuming responsibility. The Theory Y manager on the other hand assumes that workers are not just trustworthy and capable of assuming responsibility, but also contain high levels of motivation. A vital aspect of McGregor’s innovation was his belief that managers who hold both set of assumptions can make self‐fulfilling prophecies that through their behaviors; these managers form conditions where subordinates act in behaviors that validate the manager’s original expectations. These theorists as a group revealed that people worked for individual satisfaction and not moneyoriented rewards, changing the core of attention to the role of employees in an organization’s performance. Modern Management Theories Peter Drucker was an Austrian-born American management guru who revolutionized the theory of business management. Drucker’s creative thinking altered management theory into a substantial discipline amongst sociologists, with the practice of business principles and morals high up on his priorities. Below, we look at the great man’s theory: Decentralization: A common subject across much of Drucker’s vast body of work was his firmly held belief that managers should delegate tasks in order to empower employees, the decentralization of management. As he saw it, many business leaders would attempt to take on all responsibilities to show power or to maintain a level of control with the idea that they were the only ones capable to carry out those responsibilities. In Drucker’s ground-breaking 1946 book, ‘Concept of the Corporation’, he stated decentralization was a good thing as it created smaller teams where groups would feel that they may possibly make an essential contribution. His proposal to attain this was to shift businesses away from having one office location toward having a number of more independent, smaller offices. 25 Chapter One Public Administration Theories MBO: MBO is an acronym for “Management by Objectives”, and was a slogan created by Drucker in his book of 1954 ‘The Practice of Management’. MBO is a measurement by which the performance of employees is estimated. The procedure involves superiors and their subordinates working jointly to identify common goals, defining each employee’s area of responsibility and predictable results, and using these as a plan for a team and to measure its performance. In this manner, an organization’s goals and plans flow top-down and those similar goals become personal objectives for each member of the organization. The method was formulated by Drucker but it was one of his students of the class he taught at New York University, George S. Odiorne, who further developed the initiative. It went on to be popularized by companies like Xerox, DuPont, Intel, and Hewlett-Packard, who all became grand advocates of the practice. SMART Method: After discovering the MBO, Drucker recommended the SMART method as ways of checking the validity of a planned objective. The first known to reveal this principle was in a 1981 issue of the ‘Management Review’ by George T. Doran. However, it was Peter Drucker who suggested that managers who are implementing MBO goals employ this criterion to verify that those objectives are specific in their aim, measurable in order to track progress, assignable to specific personnel, realistic in their attainability, and time-related to confirm when its completion should be expected. Knowledge worker: In his 1959 book, ‘The Landmarks of Tomorrow’, Drucker recommended “the most valuable asset of a 21 st century organization, whether business or non-business, will be its knowledge workers and their productivity”. More of a term than a theory, knowledge workers are workers whose importance is found in their expertise, such as architects, software engineers, lawyers, and those who take part in problem-solving or creative thinking. Whereas in the 20th century institutions or organizations focused on the productivity of manual work, Drucker predicted that in the future (from 1959) knowledge worker would become increasingly very important with a focus on handling and using information. He believed that by knowing the needs of the knowledge worker, managers can apply leadership practices that are both consistent and lasting. Even currently, Peter Drucker’s legacy lives on. It is evidence to his far-seeing ideas that they are still considered the standard practice in nearly every business in the world. Systems Theory A systems theory is a theoretical view that analyzes a phenomenon seen as a whole and not as simply the sum of elementary parts. The concern is on the interactions and on the relationships between parts in order to understand the entire organization, its functioning and outcomes. The Systems Theory consists of the following components (Katz and Kahn, 1966: 489):26 Chapter One Public Administration Theories Sub-System: Each part of the larger whole is a sub-system. These parts create the whole organization. Each sub-system is part of the bigger system which, in turn, is sub-system of a still larger system. For instance, department is a sub-system of the organization which is a sub-system of the industry, which is additionally a sub-system of the national economy and which is a subsystem of the world economy. Synergy: The summation of each part is less than that of the whole but if every department works independently, total output would be less compared to what is produced jointly. Synergy defines relationships among all parts of the organization for instance, if production and marketing departments comprise independent sub-departments to provide them finance or labour, it will be less efficient than when a system where both (production and marketing department) are linked with one finance or personnel department of the organization as a whole. Therefore, systems approach does not just talk about parts and their sub-parts but also with their arrangement. All the parts and sub-parts are arranged in such a way that output of the whole (achieved through coordination amongst sub-systems) is greater than the total of the output of individual parts. Open and Closed Systems: System could be open or closed. Open system actively interacts with the environment. It takes inputs as raw material, labour, capital, managerial and technical expertise from the environment and sells outputs (goods and services) to the public. The Government (making the policies and imposing taxes) and competitors also interact with business organizations. A closed system has no or very little connection with the environment. Almost, all organizations are open systems though degree of openness with the environment varies depending on the nature of their operations. A manufacturing organization, for instance, is far more open than a religious organization (a temple or a church). Flow: It represents the investment of inputs (men, material, money, machine etc.) into the system from the environment, then their conversion into outputs (goods and services) and supply of products to the environment or society. Feedback: Feedback mechanism aids in understanding whether or not output is embraced by the environment. The organization corrections and adjustments will depend from environmental assessment. Feedback is the response of the environment to the organizational outputs. System Boundary: Every organization has a boundary system that separates it from the environment. The world outside the boundary of the system is called the environment. This boundary is flexible in case of open system and not flexible in case of a closed system. The boundary flexibility of an organization depends on its relationship with the environment. System boundaries are increasingly flexible in the modern world today. 27 Chapter One Public Administration Theories Contingency Theory This Theory of Leadership suggests that a leader’s effectiveness is dependent upon how the managerial leadership style that suits to the situation (Leadership Theories). Therefore, the leader must discover what kind of leadership style and situation he or she thrives in. The Contingency Theory is concerned with the following:  There is no one accurate style of leadership (Fielder’s Contingency Model)  A leader is only effective when the style of leadership matches with the situation (Fielder’s Contingency Model) History of Contingency Theories Fred Fiedler in 1958 invented the Contingency Theory of leadership during his investigation into leader effectiveness in group situations. According to Fiedler, one’s effectiveness to lead depended on their control over a particular circumstance and the style of leadership. Different from the Situational Theory of leadership, leader effectiveness is subject on the leader’s style equated to the situation but not adapting to it (Fielder: 1958). This theory recommends that styles are fixed, and cannot be adapted or modified (Gupta, 2009). A leader is mainly effective when his or her personality and style of leadership is matched with the circumstances and environment around them (Gupta, 2009). How Fielder’s Contingency Theory Works This theory is not about having the leader adjust to a particular situation but rather the aim is to equate the leader’s style with a well-matched situation (Gupta, 2009) and further suggested that to create an appropriate application of this theory, it is crucial to discover what style a leader has which is done through the Least Preferred Coworker Scale (LPC) according to Gupta, 2009. The LPC is an inventory of questions intended to discover what kind of worker a leader would most likely to work with, and in turn portrays the leader’s style (Gupta, 2009). Fielder’s Contingency theory attempts to match the leader’s style using LPC to the condition in which they would flourish (Gupta, 2009).  High LPC Score– leader with good personal skills and relies on relationships with others to accomplish tasks or people-oriented.  Low LPC Score– leader that accomplishes goals through focus on the task and positional power or task-oriented. According to Gupta, 2009 task-oriented leaders are more effective when their positional power is high, as well as the task structure. People or Relationoriented leaders execute their best when the connection levels between themselves and stakeholders are at their greatest (Gupta, 2009). After finding the style of the leader, Fielder’s Model states that finding the best situation for 28 Chapter One Public Administration Theories the leader, also known as “situational favorableness” (Fielder’s Contingency Model). A situation is described by three factors in the contingency theory namely: 1. Leader-Member Relation: How the leader interacts with employees (Gupta, 2009). 2. Task Structure: How tasks are set up by the leader (Gupta, 2009). 3. Positional Power: The amount of power a leader has over subordinates (Gupta, 2009). These three factors jointly form the condition in which a leader’s style is effective or ineffective. If the three factors equal to the style of the leader, success is expected (Gupta, 2009). It is vital to keep in mind that the opposite can occur as well. If a leader is placed in a condition opposite to his or her favored task structure, member relation, and level of power, then failure is expected (Gupta, 2009). The three factors of contingency situation have less of an impact on leaders who are task-oriented, or score low LPC’s, than leaders who are people-oriented and score high LPC’s (Fielder’s). With the assistance of the results from the LPC to discover a person’s leadership style, and evaluating their favorite leader-member relation, task structure, and positional power, getting the right job or position for someone can be more accurately accomplished (Fielder’s Contingency Model). Contingency Theory Variables  The maturity levels of the subordinates or followers.  Whether the relationship between the leader and the followers is a positive one.  The clarity of the task at hand.  The amount of personal power held by the leader.  The level of power given by the leader’s position.  The culture of the organization.  The amount of time available to complete the task.  The speed at which the task must be completed. Rational/Public Choice Theory Public Choice theory refers to the use of economics to the study of public administration. Public choice is further described by Dennis Mueller as “the economic discourse of non-market decision making or simply the use of economics to political science” (Mueller, 2003:9-14). Assumptions of Public Choice Theory At the most general level public choice theory assumes: The first assumption is that the theory employs most appropriately formal and axiomatic thus was borrowed mainly from microeconomics. This theory is constructed deductively, and hence tested inductively. In accordance to the 29 Chapter One Public Administration Theories accepted propositions, political life is a result of an exchange activity between self-interested individuals acting in the environment of market transactions. The exchange is the basic unit of action and the individual is the basic unit of analysis. Exchanges are perceived for having effects on third parties or externalities, and they are presumed to take place rationally in accordance to rank-ordered preferences, despite the occurrence of inadequate information. The usual political individual becomes an efficient, rational maximizer of individual utilities, modeled after “homo economicus” (economic man) is the symbolic human being characterized by the endless ability to formulate rational decisions, who involves in strategic means-ends calculations of costs and benefits. Politics tends to be described as that activity in which aggregated utilities ends in a choice regarding provision of public goods. Analytically, policy is seen as emerging from a combination of individual preferences. It is not true that factors like power and institutions are disregarded by the most discriminating versions of this perspective. They tend to be reinterpreted according to the rational calculus of competitive advantage. It is due to the lack of a proper theory that public choice is perceived to be basically a method of analysis, that is, a particular set of concepts and techniques normally used in political research. At the stage of method, public choice functions with two distinctive assumptions. The first is an account of methodological individualism where all statements regarding collectivities and collective action can be summarized to statements about a model individual without contextually substantial loss of meaning. Methodological, conceptual, and a few would add ideological concern is assigned to an individual as the unit of analysis, while collectivities (or groups) are observed in terms of probabilities of individual choice and action. The second assumption concerns “rationality”. Ever since Arrow K. (1951, 1963) early notion of the “self-interest axiom”, this assumption has turned out to be one of the mainly well-known and widely discussed aspects of the public choice approach. In this situation, there is need just to acknowledge that the individual of public choice theory is presumed to be rational (i.e., selfinterested, purposive, and efficient) maximizer of utilities. This concept “rational individual” is presumed at any given moment in time to have rankordered preferences: if he or she prefers x to y, and y to z, then the assumption is to prefer x to z. The individual can’t also prefer y and or z to x. In this perspective, utility is defined as just a numerical symbol of this ‘preference’. And all preference-orderings must be symmetrical, complete and transitive for any given period of time. Put rather differently, rational choice here involves nothing except internal consistency. A person’s choices are considered ‘rational’ if and only if these choices can all be described in terms of some preference relationships consistent with the revealed preference definition (Voting on their feet). 30 Chapter One Public Administration Theories Public Choice Theory in detail is a body of theory invented by James Buchanan and Gordon Tullock to attempt to clarify how public decisions are made. It comprises the dealings of the politicians, the voting public, the bureaucracy plus political action committees. There are several divisions to this theory. (Buchanan J.M. and Gordon T., 1962) Other Scholars on Rational/Public Choice Theory Adam Smith is the proponent of the idea of “invisible hand” stirring free-market economies in the middle of 1770s and he is recognized as the major advocate of rational choice theory. Smith A. (1776) narrated the invisible hand theory in his book “An Inquiry into the Nature and Causes of the Wealth of Nations”. Assumptions of the Rational Choice Theory The assumptions made by rational choice theorists are so many but, Abell P. (1996; 2000: 518-523) noted the following assumptions developed by rational choice theorists. These assumptions comprise: Individualism: It is individuals who eventually take actions. These individuals, as actors in a particular society behave and act constantly as self-calculating, rational beings, self-maximizing, self-interested and, these individual social actions are the crucial source of the bigger social outcomes. From this first binding assumption produces the four other major assumptions mentioned below. Optimality: Individual actions are decided optimally, given their individual interests as well as the opportunities or threats with which the individual person faced. Abell (2000) describes optimality occurring when no other course of action would be favored by the individual person over the course of social action the individual has preferred. This doesn’t mean that the course of social action that the individual adopts is the best in terms of some purpose, and external judgment. The rational choice theory, thus presumes, that actors “do their best, given their conditions as they view them” (Abell, 2000). Structures: Structures and norms according to Abell further decided that a single course of social action is just unique case of rational choice theory. Therefore, the varieties of preferences in other conditions are different from preferences in a strong structural situation, where there can only be one preferred choice. Even though these structures may be harmful to the rational choice theory, people will usually get a way to practice action optimally, thus the rational choice theory may possibly not essentially show consensus, harmony or equality in courses of social action. Over again, structures, as we identify them, cannot be optimal from the point of view of an individual with limited resources, though, the rational choice model will try to give details on how this condition evolves and is contained through rational choices as below: 31 Chapter One Public Administration Theories Self-Regarding Interest: This assumption opines that the actions of the person are focused entirely with his or her own wellbeing. Abell (2000) further noted that so long as this is a main assumption in the rational choice model, is not as necessary to the theory as the assumption on optimality. Abell further noted that a variety of types of group divisions could subsist, such as unselfishness, charity, cooperation, which primarily may appear to be the opposite to individual optimality. Rational choice theorists possibly will recommend that these divisions can be integrated into the rational choice theory by observing that such divisions may eventually be intended at pursuing some form of self-interest. For example, charity movements which Abell opines that this could in the end be meant at making an individual feel excellent or could be a process of increasing one’s social esteem in the eyes of other actors. Rationality: This appears the most main assumption of the rational choice model. In accordance to this assumption all individuals act in processes that would be of advantage to them; each individual is most likely to assume courses of actions that they view to be the best option and one that would greatly be to their own benefit. Complexity Theory Complexity Theory enables us to deeply understand systems like cells, forest ecosystems, human beings, and organizations that are only partly seen by traditional scientific theories (Zimmerman et al. 2001). While it represents a relatively promising field of study, it spans across a wide variety of disciplines in the physical, biological, and social sciences, and has deep implications for the manner we think about and act within the current environment (Schneider & Somers, 2006). The Origins, Principles, and Implications of the Complexity Theory Complexity Theory evolved in the mid-late 20th century plus its connected concepts across numerous disciplines, (Schneider and Somers, 2006), while this collection of influences presents a challenge in tracing its origins where complexity theory can further be viewed by and large as the study of Complex Adaptive Systems (CAS). The term “complex” refers to diversity, through a large number, and broad variety of mutually dependent, yet independent parts. “Adaptive” refers to the system’s ability to amend, change, and learn from past experiences. The “system” means a set of interrelated, mutually dependent parts; a network when there is a great number of CAS which subsists at different scales hence complexity theory reveals that there are ordinary, interconnected principles which can be investigated across all CAS (Zimmerman, Lindberg and Plsek, 2001). 32 Chapter One Public Administration Theories CAS are contained and nested within other CAS: Take for instance, cells; while they can operate as independent agents, they can also gather together and self-organize to form more complex, multicellular life. Human beings, individually through CAS, can also jointly self-organize in the form of organizations, communities and groups, (Capra and Luisi 2014). CAS gains from diversity: A diversity of components in CAS is vital in providing a source of information, novelty, and innovation as the system evolves and gets familiar to its environment. This can be verified in the role that biodiversity plays in the flexibility and adaptability of forest ecosystems (Zimmerman, Lindberg and Plsek, 2001). CAS display decentralized, rather than centralized control: In CAS, there is no central method of control; it is distributed throughout the system through its individual agents. This permits the system to take action in response and adapt to a quicker and much larger extent than if there was only one source of control (Zimmerman, Lindberg and Plsek, 2001). CAS exhibit arising outcomes and behaviors: The outcomes of CAS come into view from a process of self-organization, rather than that of external design and control. This developing outcome is a result of the interactions and synergies between individual agents, and cannot be predicted by studying the properties of the individual component alone. For example, communities have often been observed to self-organize and respond in a coordinated manner, without a formal leader or directive, in response to major natural disasters. Studying the skills and resources available to each member could not have predicted this evolving group behavior and outcome (Zimmerman, Lindberg and Plsek, 2001). CAS focuses on the quality of relationships between parts rather than the properties of the parts themselves: The strengths of CAS, principles (3) and (4) especially, highly depend on the dealings between individual agents plus their capabilities and capacities to self-organize. For this reason, the quality and strength of relationships between individual agents will frequently predict the success of a CAS, more than an analysis of the traits of the individual agents can (Zimmerman, Lindberg and Plsek, 2001). The behaviors and outputs of CAS can be non-linear, and highly dependent on its history, context, and initial conditions: CAS demonstrates nonlinear behavior, meaning that the size of the outcome cannot be related to the size or intended direction of the input. In addition, the characteristics of the CAS are highly dependent on its background, history, and initial conditions; an intervention or strategy that worked for one organization may not work for another organization, and its outcomes are bounded by the history of how the organization came into existence (Zimmerman, Lindberg and Plsek, 2001). 33 Chapter One The paradigms or Evolution of Public Administration CAS thrive at the edge of chaos: CAS survives in areas of bounded instability, on the boundary between order and chaos. Here, there is enough stability to have recurring and predictive elements in the system, but just enough instability to generate novelty without creating disorder and dispersal (Zimmerman, Lindberg and Plsek, 2001). The Paradigms or Evolution of Public Administration Henry N. (2012: Chapter 2) “Public Administration and public affairs”. Public Administration has evolved as an academic discipline through a number of phases. These stages are termed as the paradigms. The Politics–Administration Dichotomy (1887-1926) This was a period when Woodrow Wilson advocated for the separation of politics from administration in his famous article, “The Study of Administration” in 1887. The table below shows separating administration from politics: Table 2: Separation of Administration from Politics POLITICS ADMINISTRATION Deals with political questions. Deals with business questions. Deals with the “expression of the will ofthe people”. Deals with the “execution of thewill of the people”. Deals with politicians and plays politicsof the politicians. Deals with civil servants/technocrats and playspolitics of the administrators One becomes a politician by one’s One becomes a civil servant byone’s popularity, either through positive or intelligence, experience and negative popularity. qualifications. One becomes a politician through election. One becomes a civil servant through selection and formal recruitment. Prior training is not given to Civil servants are professionals in politicians and their qualifications are various fields. of low standing. Power is the center of study in politics, i.e. process of capturing and retaining power. 34 Running administration successfully, efficiently and effectively is the central focushere. Chapter One The paradigms or Evolution of Public Administration Approve policies. Implement policies. Tell naked lies. Dress their lies with technicalities. Survive on talking loudly. Survive on writing a great deal. Rarely have a code of ethics. Governed by an ethical code of conduct. Principles of Public Administration (1927-1937) This stage emphasized the scientific study of Public Administration and scholars we inventing universal principles as shown below: Gullick and Urwick, presented the POSDCoRB which stands for planning, organizing, staffing, directing, coordinating, reporting and budgeting. Mooney and Reiley (1939) They gave particular attention to (1) the principle of co-ordination – the need for people to act together with unity of action: (2) the authority principle - the necessity for discipline; (3) the ranking or hierarchy of organization system, the ranking of duties and the process of delegation which is the scalar principle; and (4) the functional principle which entails specialization and the difference between different types of duties. Frederick Winslow Taylor’s book on the Principles of Scientific Management in 1911 identifies the application of four main principles to improve the efficiency of the organization. (i)The development of a true science of work, (ii) The Scientific selection, training, and progressive development of the workman, (iii) The close coordination between the science of work and the scientifically selected and trained men, and (iv) Equal division of work and responsibility. Henry Fayol suggested 14 principles for better outcomes from the administration. These are: Division of Work, Discipline, Unity of command, Authority and responsibility, Subordination of individual interest to general interest, Unity of direction, Remuneration, Centralization and Decentralization, Order, Stability of tenure of personnel, Equity, Scalar chain, Initiative, and Esprit De Corps. This period called for effective administration through training of civil servants in their administrative responsibilities. Era of Challenge (1938-1947) The major subject matter during this period was to advocate for “Human Relationship/Behavioural Approach” to the study of Public Administration. The 35 Chapter One The paradigms or Evolution of Public Administration idea of administrative dichotomy was rejected because it was not possible to separate politics from administration. Herbert Simon further challenged the politics-administrative principle as mere proverbs and proposed a behavioural approach as an alternative in support of Elton Mayo. Researchers such as Elton Mayo, concluded from their research that innovation of principles and its application alone do not lead to the improvement of production or production methods. The human component of management is also important. The human elements are taken to mean the work environment, the intentions of the manager and staff, satisfaction, and so on. Dahl R. (1947) stated that the paradigm of the science of public administration was delayed by three problems which had to be resolved:  The study of public administration should be established on some clarification of goals where the recurrent impracticality of excluding normative considerations from the problems of public administration.  The requirement to study certain aspects of human behavior limits the potentialities of the science of public administration. He criticized the tendency that existed to treat the organization in formal technical terms and to regard human beings who constitute organizations as more or less material.  The unscientific nature of the principles of public administration which were based on examples drawn from limited natural and historical setting. Identity Crisis (1948-1970) This period was seeking for the identity of Public Administration.  There was need to define the boundaries of the discipline for a concrete normative theory.  Public administration in this era lacked a proper home and no longer welcome in the house of its youth (political science).  In this process the scholars regarded management as an alternative for the survival of the discipline and the idea of generic management appeared as a new unified epistemology in the study of organizations.  The conference in 1968 for Public Administrationists and resolutions published in 1971 in the book titled, “The new Public Administration: The Minnowbrook perspective”. This conference de-campaigned the traditional aspects of economy and efficiency in Public Administration but instead the moral aspects were cherished. They discussed questions of values, ethics, and development of individual member in the organization. 36 Chapter One The paradigms or Evolution of Public Administration Public Administration as Public Administration (1971 onwards) By 1970 public administration had succeeded in establishing its identity but in this quest, they had taken two major directions in their definition of publicness: a. It had been using the Management-Administrative science route to study how and why organizations work the way they do; how and why people in organizations behave the way they do; how and why decisions are made. b. An attempt had been made to define publicness in public administration, with distinction between public and private being blurred. Administrationists argued that the “Public” in Public Administration means public interest. Public Administration to Public Management (1970 – 1990s) Before 1960s government was the sole provider of any society but by this period, mismanagement, nepotism, political patronage, large and rigid bureaucracy, and widespread corruption became the features of public administration machinery (Turner and Hulme, 1997).  There was a call for Public Administration to distance itself from politics and to answer this, it had to remain effective.  The need to inject an entrepreneurial spirit in the running of government using techniques and approaches borrowed from Business Administration hence a managerial approach began (Hughes, 2003:48).  This period regarded government a patient and private sector as the doctor thus the prescription to government were very clear: Liberalize, Privatize, and Stabilize in form of Structural Adjustment Programmes (SAPs).  There was a general trend advocating for more “Client” or “Customer” approaches, decentralization of authority and being more “business oriented” gained high momentum.  There emerged New Public Management (NPM) with their ideas grouped into two strands, namely: - (i) the ideas that derived from managerial (which emphasized management in government) (ii) the ideas emanating from New Institutional Economics (which emphasized markets and competition as a way of giving choice and voice). Public Management to Governance (From late 1990s to 2010) This period characterized by the belief that lack of “good governance” was the main hindrance to economic growth in Africa by the international community following a World Bank report published in 1989. By “governance” it meant the exercise of power to manage a nation’s affairs.  In the later part of the 1990s African governments were required to relinquish most of their traditional powers to individual citizens, engage in Public-Private Partnerships and the Civil Society hence the non-state actors were required to play a critical role in the delivery of public goods and services. 37 Chapter One    The paradigms or Evolution of Public Administration According to Hughes (2003:76) distinguished between government and governance. He suggested that government is the institution itself, whereas governance is a broader concept describing forms governing which are not necessary in the hands of the formal government hence concepts like corporate governance, Local governance, and Global governance emerged. Along this period there was also growing acceptance of the fact that different cultural and political circumstances required different approaches in contradiction to the notorious “one size for all” situation. Janet and Robert Denhardt in the late 1990s proposed a new model in response to the dominance of the New Public Management (Stone, 1995) termed the Post New Public Management approach. This model is built on work in democratic citizenship, organizational humanism, community and civil society and discourse theory. In this model public interest is seen as a result of a dialogue on shared values. In the governance era the movement associated with a range of connected and Information Technology emerged. This movement is the “Digital-Era Governance” (DEG) which involves three themes of; Reintegration, Needs-Based Holism, and Digitalization process. From Governance to New Public Governance (2010 to date) This new role of public administration in improving overall governance is carried out in the context of and in response to local, national, regional and global pressures, as well as challenges for survival, development and change.  According to Louw in her article, “From Public Administration to Governance: Science or Ideology”. She notes that within the changing context, another new approach to Public Administration emerged called, “New Public Governance” (NPG). This approach includes centralization of power; an increased number; role and influence of partisan-political staff; personal-politicization of appointments to the senior Public Service; and the assumption that the Public Service is promiscuously partisan for the government that has emerged (Peters, 2000)  Osborne (2010) suggests that NPM and Governance approaches fail to address the complex reality of the design, deliver and management of public services. He proposes a sophisticated understanding of public policy implementation and public service delivery. He further reports that NPG is presented neither as a normative new paradigm to supersede public administration and NPM nor as the “best way” to respond to the challenges Public Policy implementation and public service delivery. He finally suggested that if we are to develop NPG as a conceptualization of public policy implementation and public service management, it is necessary to move towards an integrated body of knowledge about NPG. 38 Chapter One The paradigms or Evolution of Public Administration Governance According to Prof. Sabiti Makara he noted that, “Let us make a distinction between Government, Governmentality and Governance”. He distinguished them as below: Government: Refers to a formal structure of the state for example the Three Arms of government, Local Government, Quaisi-governmental organizations e.t.c. Governmentality: This means the processes and linkages between various government departments and how they operate plus the linkage between government and society. It is government way of marketing to the public by using Covert power rather than overt power to implement the law. Governance: Is much broader than the above two (Government and Governmentality) because governance refers to the space that exist between government and its citizens. There are many authors who agree to the notion that, “Governance without government”. It is a situation in which the citizens devise their own means without government. According to World Bank: World Development Report 1989, “Entering the 21 st Century”; they preferred to add “good” to be termed “Good Governance” because of the good ideas to produce the desired outcomes. The World Bank argued that the reason why many Third World Countries are failing is because their institutions are inefficient, wasteful and unable to deliver services to the citizens. Thanks for the articulation of those three concepts by Prof. Sabiti Makara the Public Administration “guru” at Makerere University. Good Governance The procedures and institutions which create outcomes that match the requirements of society whilst making the proper use of resources at their disposal is Good Governance (World Bank, 1989). The concept of good governance applies to organizations, worldwide, national, local governance or to the connections within sectors of the society. It urges to reform governance through a variety of ways like comparative studies and democratization and decentralization, transparency and so on. All international organizations like the United Nations, International Monetary Fund & World Bank have put their weight behind this movement. The criticism it has invited is that these very same international organizations that are behind it should not arm twist governments in all countries especially underdeveloped and developing ones into following their ways of functioning because there is a sea of difference. New Public Management It proposes the integration of more management methods into public administration to reorganize it and make it more efficient. It proposes reforms 39 Chapter One The paradigms or Evolution of Public Administration such as incentives for administrators, deadlines and contracts outsourced and more public-private partnership. Although, it has drawn criticism hence there is need to be implemented with care particularly in countries where administrators have not yet evolved and will become more self-centered and would only be concerned about making profits. New Public Administration (NPA) NPA during the Minnowbrook Conferences was a response to the world wars and social disturbance in the 20th century and how classical public administration was not prepared to act in response to this and the societal needs. It places more emphasis on having values in public administration instead of only being concerned about production and profit making all the time and devise policies for the disadvantaged and society. It was a humanist method to classical Public Administration being applied at that time. Its themes are: Relevance: Classical Public Administration has little interest in present-day problems and issues. Social realities must be taken into consideration. Values: Value-objectivity in Public Administration is impracticality. The values being served through administrative action must be clear. Social Equity: The realization of social equity must be a main goal of Public Administration. Change: Uncertainty towards the deeply-entrenched powers invested in permanent institutions and the status quo. Client Focus: Proactive, Positive, and responsive administrators rather than unreachable and dictatorial “ivory tower” bureaucrats. In view of the fact that it was extremely prescriptive or instructive and not descriptive (detailed and practical) as incredibly preachy without any methods to practically implement them, it could not triumph for long or have a bang on impact as scholars were unsure and confused because of the above mentioned. It was criticized that though it brought Public Administration closer to political science, it was criticized as anti-theoretic (not having any theory and not following any pre-existing theory) and anti-management (not businesslike). Robert T. Golembiewski (2017: 527-541) describes it as radicalism in words and status quo in skills and technologies. Golembiewski calls it as shortterm and transitional phenomena. Additionally, it should be counted as just a brutal reminder of the vacuum in the field between aspiration and performance. Hence, NPA is crucial for the alteration in thought it brought about vis-à-vis the practice of traditional Public Administration. 40 Chapter One Background of Public Administration in Uganda Background of Public Administration in Uganda Typically, republics and kingdoms aren’t compatible and don’t coexist home ever, there are some notable examples around the world that are the exceptions proving the rule. A number of the well-known kingdoms that form a republic are those that are within the Republic of Uganda. The examples of these kingdoms are Buganda, Busoga, Bunyoro-Kitara, Toro and many others are traditional kingdoms of Africa that long enjoyed local and international acknowledgment, even by the advent of British colonial powers. Although these Kingdoms are fully acknowledged in law, they are not fully supreme politically. Though, they do have significant political pressure and frequently meet with government leaders. A case study of Buganda Kingdom administration structure was as below: Figure 2: Sir Winston Churchill and King Daudi Chwa II of Buganda (1907) It is true that various kingdoms came under one roof to form Uganda which was also named, “The Pearl of Africa” by Sir Winston Churchill (Former British Prime Minister). Photo: World War II Database Figure 3: The structure below of Public Administration applies to almost all the Kingdoms in Uganda before the coming of the British colonialists. The figure below is concrete evidence to show that where there are human activities Public Administration takes place automatically. 41 Chapter One Background of Public Administration in Uganda Bureaucracy in Buganda polity was beyond the limits of the pre-colonial, colonial and post-colonial era. During each era, the principles which strengthen the Weberian bureaucracy manifested in Buganda polity. The manifestation of Buganda bureaucracy before colonialism was in the chain of command through the kingdom structure; and centralized management by the King through the chiefs further consisted of duality within the chain of command and loyalty where chiefs worked for both the King and colonial administrators throughout the colonial era. In contrast to the pre-colonial time, laws were put on paper and a few workers openly under the colonial administration were employed basing on their technical competences and served with impersonality. Bureaucracy after colonialism was an annexure of the colonial bureaucracy although with more Weberian structure. Buganda’s position of being a state within a state and at that time the King had both political (president of Uganda) as a state and had the kingship of the monarch (Buganda) within Uganda. Abolition of monarchies produced a lull within the late 1960s to early 1980s. The coming into power of the NRM regime reinstated the monarchies although with more cultural authorization than political and administrative power. The bureaucratic privileges that Buganda enjoyed during the pre-colonial and colonial times are now contained within the Kingdom administrative chain of command. Buganda Traditional Public Administration The milestones of bureaucracy were the centralized order vested within the King consisted of centralized command and authority, plus appointments of subordinates. The service of the king consisted of four activities, appointing 42 Chapter One Background of Public Administration in Uganda Chiefs, judging legal cases, levying taxes, and waging war (Ray, 1991). Additionally, the king controlled the distribution of land. The major position of the Kabaka was supported by the very fact that the king appointed his subordinates right down to rock bottom level of administration (Ray, 1991). During this Sense, the king exercised almost full control over his kingdom. The Buganda administration consisted of a Katikkiro, who worked as the Prime Minister, a council of county and department chiefs called the Lukiiko, and a number of other levels of chiefs in addition to the powerful king (Ray Ibid). Instead of the bureaucratic principle of formal selection of chiefs on the basis of technical qualifications and competence verified by training, education or formal examination; the ranks in the hierarchy were determined by the authority granted by the king and measured by the number of individuals under the control of a chief. Apter 1967 noted that credit goes to social mobility; the peasants may possibly rise and get employed into the hierarchy supported by excellence in war. The very fact that the social and political organization accepted upwards and downwards mobility can successively explain the recognition of the Buganda kingdom among the Baganda, and their strong feeling of attachment to their king. Given the central role of the Kingship in the appointment of local chiefs or other high-level traditional authorities; the Kabaka had unrestricted powers to abruptly dismiss any official if the performance of their area of jurisdiction is not appropriate for instance if the collection was poor (Low, 1971). The exit from the present-day understanding of bureaucracy was that while the structures of administration were hierarchical, there have been inadequate delegated lines of authority where the King in some instances played the role of important person and implementer. Likewise, none of the actions were taken on the idea and recorded by the state based upon hierarchy of chiefs (Apter, 1961). During this course of action British imperialists used Baganda as fighters (Mutibwa, 1992). In exchange for Buganda’s collaboration with the British imperialists, the Buganda kingdom gained more independence than other kingdoms within the protectorate. Colonial bureaucracy in Buganda The backgrounds history suggests that Buganda institution before colonialism facilitated a big role in determining the colonial base upon which the Buganda Kingdom was governed. The important position of the Buganda kingdom within the country was instrumental during the colonial era when Buganda was acknowledged a British protectorate in 1894. There were various treaties that dignified the British rule over Buganda hence the demand for a higher degree of self-determination (Nicola, 2006). The British quickly expanded their control outside the territory of Buganda. British rule outside Buganda was branded by a robust continuity of pre-colonial institutions (Pratt, 1965) performed within the circumstances that the education systems which might produce highly trained bureaucrats were still in infancy. The consequences of change within 43 Chapter One Background of Public Administration in Uganda the system of administration with improved responsibility to the colonial administration had variety of positive outcomes. Essentially, historians state that such responsibility fostered modernization along two dimensions. It persuaded local chiefs at first to manage the affairs of their communities (Apter 1961) in so doing developing the introduction of modern agricultural technologies (Richards, 1960; Ehrlich, 1965), education and religion (Low ibid), and contemporary health facilities (Pratt ibid). Second, it improved coordination between local chiefs of various districts within the territory, who were the most accountable to the normal authority but with some level of answerability to the colonial administration. Possibly predictably, this second result increased the authority of centralized groups to make roads (Pratt Ibid) and to control epidemics (Low, Ibid). In sum, as stated by Mamdani’s (1996) “local accountability” view, during the colonial period modernization introduced an excellent deal of power to local traditional authorities. Yet, while in disjointed groups in other parts of Uganda especially the north and north east; unrestrained local chiefs misused this power, in centralized groups the normal system of checks and balances prohibited local chiefs from doing so. As a result, pre-colonially centralized groups were ready to implement modernization programs because in those groups a) the connection between local chiefs and native masses was less oppressive than in fragmented groups, and b) the efforts of local chiefs were coordinated to a greater extent. George, 2009 stated that bureaucracy constitutes the primary efficient and formally-rational way in which human activity can be structured, and thus is crucial to the modern world in service delivery came to abide during the colonial administration. The manifestation was that Buganda Kingdom developed much faster compared to other polities at that time. Although the impact of pre-colonial centralization was perhaps strongest within the colonial period, its effect remained significantly long even after independence. Therefore, historians confirm the continuing significance of pre-colonial institutions in the postcolonial period (Nicola, 2006). Buganda Kingdom reveals a clear continuity between postcolonial political leaders and pre-colonial rulers, as traditional patterns of politics influenced the character of the postcolonial Buganda (Potholm, 1977; Picard, 1987). Fascinatingly, Herbst (2000) noted that heads of postcolonial state frequently had to return to agreements with traditional power holders as seen within the Uganda People’s Congress led by Obote I government where alliance was sought with the King. The Road towards the Independence of Uganda A very important attribute over the years before independence was the demands made by Buganda to maintain the private position of authority. These continuous demands displayed Buganda’s purpose to go for secession vis-à-vis the rest of the protectorate, and consequently the fortification of the 44 Chapter One Background of Public Administration in Uganda institution of kingship (Oloka-Onyango, 1997). After the enjoyment of state power through which bureaucratic power was practiced, Buganda’s escalating demands led to the worsening of the connection between the colonialists and Buganda government when the pressure for African political participation became more manifested within the 1930s and 1940s. Sathyamurthy (1986) concluded that the colonial power realized that the method of indirect rule through the normal administration couldn’t be harmonized with popular participation. As a reaction, administrative and institutional reforms were adapted on how to organize the base for independence and self-government. British had predicted that the process of decolonialization would last for thirty years. But, due to popular demand and international stress, the move towards independence gained momentum to the extent that there was limited time to create and develop democratic rules and institutions. Mugaju (2000) discovered that the colonial power had been reluctant to allow political parties, arguing that multiparty politics would raise sectarianism, regionalism and instability. As a result, the main political parties were only established within the 1950s. The advent of partisan politics increased new methods to the struggle for Buganda’s welfare because the parties attended symbolize specific geological interests and only a restricted national focal point, they may not be described as mass-parties (Mittelman, 1975). Uncertainty towards political parties was also obvious among traditional authorities all over the country who feared that the new political leaders would undermine the position of traditional bureaucratic institutions once they took over power from British. This was obvious among the neo-traditionalists from Buganda who considered political parties to be enemies of the kingship, and feared that the Kabaka and the chiefs would lose power if elections were regularly held. As Independence approached in the 1940s-1950s, it was obvious that the Baganda wanted extensive independence in Uganda, and therefore the Buganda King’s party (Kabaka Yekka-KY) emphasized this desire. However, this was not welcomed by most Ugandans of other tribes and amongst some Buganda educated leaders who created an option party called Democratic Party (DP) to seek for national unity. Although DP was not popular in Buganda, it had widespread support in the rest of Uganda (Christopher, 2002:1-14). These measures were planned to safeguard the kingship. Kasfir (1976) noted that before independence Buganda kingdom became more determined within the demands for self- determination to the extent that it had been planned if the Kabaka would become the top of State of Uganda after independence then Buganda would secede. As stated by Rukooko (2001) the results were that the authority boycotted the independence elections as a result of only 3% of the Buganda population voted. In view of the lack of political parties with national support and the focus on questions concerning only on Buganda issues, the sub-national character of politics was confirmed 45 Chapter One Background of Public Administration in Uganda within the time leading up to independence. The scarcity of the specialised in national level can partly be explained by the character of the colonial policy which emphasized instead of removing differences. The districts, the units for local government in the Uganda protectorate, had no coordination as if they were independent of each other since this was the simplest way for British to divide and rule the protectorate. According to Karugire (1996) this predominantly affected Buganda where people felt emotionally attached to Buganda and manifested little loyalty to Uganda as a nation. The Uganda Independence Constitution of 1962 further confirmed the event of sectarianism. The elemental constitutional problems were to make a resolution on what form of government would be appropriate for an independent Uganda, and who should be the head of state. The various national kingdoms had more or less been governed as autonomous areas, and it was hence necessary to have a national system presided over by a universally accepted head of state. As a result, Odongo (2000) opined that the Independence Constitution provided for a semi-federal system. Buganda acquired a full federal status, while the other kingdoms of Ankole, Bunyoro, Toro and the territory of Busoga were granted a semi-federal status (Constitution, 1962: Article 2). The rest of the districts were given a unitary status with the central government. The 1962 Independence Constitution therefore incorporated the elements of federalism, unitarism, and semifederalism, considered as a complicated base for a peaceful and united nation (Mutibwa, 1992). Throughout this sense, the constitution surely supported the perception of Buganda as a robust entity within Uganda but with limited power compared to what the King had during the pre-colonial and colonial era. In 1963 the Independence Constitution was amended to allow the constitutional president of Uganda as head of state. In view of the fact that the president of state cannot be a commoner or a politician, the election was limited to traditional rulers and constitutional heads of districts (Mutibwa, 1990). Accordingly, Mutesa II was approved as king for Buganda, and President for the state of Uganda. This meant that the King maintained flexible powers to appoint traditional leaders (chiefs) through the Buganda bureaucracy while at the same time lead the formal government system where the bureaucratic apparatus set up by the British colonialists were functional. The following years the relationship between the President whose power was also derived from the normal systems of government and the elected Prime Minister with powers over government business to regulate the mainstream bureaucracy systems caused considerable antagonism. Public Administration Organs in Uganda Legal Structure The current Parliament of Uganda was created by the 1995 Constitution. It replaces a transitional body of appointees created by the National Resistance Movement (the NRM) following its victory within the war. Uganda now features 46 Chapter One Background of Public Administration in Uganda a mixed system with a robust president who is elected nationally and has the capacity to appoint ministers. Members of parliament are separately elected. The Executive The executive authority of Uganda is vested within the President and authority exercised in accordance with this Constitution and therefore the laws of Uganda unless otherwise. The President of Uganda is the Head of State plus being Commander-in-Chief of the Uganda Peoples’ Defence Forces and hence the Fountain of Honour. The Executive implements and maintains the Constitution and all laws made under or continued effective by the Constitution. The President whenever leaving Uganda, notify in writing the vice president, the Speaker and the Chief Justice. The election of the President is predicated on universal adult suffrage for a term of 5 years. The board comprises of the President, the vice president and such number of Ministers under the Prime Minister as may appear to the President to be reasonably necessary for the efficient running of the State. There is a secretary to the board who is appointed by the President in consultation with the general public Service Commission. The Secretary to the board is responsible of the board Office and responsible in accordance with such instructions as could also be given to him or her by the President, for arranging the business and keeping the minutes of the board and for conveying the choices of the board to the acceptable person or authority and perform such other functions because the President may direct. Roles of the Executive Organ of Uganda Uganda is a Sovereign State and a Republic. It’s a sitting member of the United Nations, African Union, The East African Community and thus the Commonwealth. Uganda is a Democratic government made up of three arms namely: The Executive: comprising of The President, vice chairman, Prime Minister, Cabinet; The Legislature: accommodates the Parliament; and thus, the Judiciary contains the Magistrates’ Courts, Supreme Court, and Court of Appeals (Constitutional Court). The Constitution of Uganda was promulgated on October 8, 1962 on the eve of Uganda’s Independence Day anniversary held annually on October 9 since 1962. During this context, the chief Executive consists of a leader(s) of an office or multiple offices. Specifically, the very best leadership roles of the chief executive branch may include: Head of state: The Chief Executive is the overall leader, president, chief public representative and living symbol of national unity. Head of government business: This is the prime minister, monitoring the administration of all affairs of the state. Defense ministry: Supervising the militia, determining military policy and managing external influences. Interior Minister: Monitoring the police forces, enforcing the law and managing internal safety matters. 47 Chapter One Background of Public Administration in Uganda Foreign Affairs Ministry: Managing the diplomatic corps, determining policy and managing foreign relations. Finance Ministry: Monitoring the treasury, determining economic policy and managing national budget. Justice Ministry: In charge of criminal prosecutions, corrections, enforcement of court orders. The Legislature (Parliament) The functions of the Parliament of Uganda are:  To pass laws for the good governance of the nation.  To grant, by giving legislative sanctions, taxation and attainment of loans for the means of carrying out the work of Government.  To check Government policy and administration through the following: i. Pre-legislative of the analysis of bills referred to the Parliamentary committees by Parliament ii. Assuring transparency and accountability in the use of public coffers iii. Supervising the implementation of Government programmes and projects to discuss matters of national interest generally manifested in the President's State of the Nation address. iv. To vet the appointment of personnel nominated by the President under the Constitution or any other ratification. The Judiciary The Judiciary is the 3rd arm of Government, under the dogma of separation of powers. The Lord Chief Justice who is deputized by a Lord Deputy Chief Justice heads the Judiciary thus the superior courts of Uganda ranges from are the magisterial courts, High Court, Court of Appeal and the Supreme Court. Therefore, following the enactment of the 1995 Constitution, the Judiciary structure has been amended to comprise of the following courts; Supreme Court; Court of Appeal or Constitutional Court; High Court; Chief Magistrate’s Courts; Grade I Magistrate’s Courts; Grade II Magistrate’s Courts; The Local Council Courts; Family and Children Courts and Land. The Judiciary is supposed to:  Manage justice through resolving disputes cases among citizens and between the State and citizens;  Constitutional Interpretation of the and the laws of Uganda; promote the rule of law and to contribute to the maintenance of order in society;  Safeguard human rights of individuals and groups;  Instigate, expand and implement training programmes for the development of the Judiciary staff;  Practice the enforcement of law and order;  Enrolment and licensing of Advocates;  Licensing plus discipline Court Brokers;  Keeping custody of laws enacted as well as publicize legal literature; 48 Chapter One   Background of Public Administration in Uganda Obtain Government revenue from courts; and Establish modalities for out of court dispute resolution mechanisms to reduce the burden of cases on the courts. Uganda has various ministries but CBOs/Social Enterprises operate at community level hence it depends on the vision of the organization that a line ministry is determined but mostly Ministry of Gender, Labour and Social Development is in charge of organizations in the categories of children, persons with disabilities, women, elderly and the youth. To reach NGO status an organization has to get clearance from Ministry of Gender, Labour and Social Development as a registered Company then given a recommendation to the NGO board in Ministry of Internal Affairs. It is a big task to comprehend all this material at once but it’s so crucial to have relevant information in the Administration and Management of organizations. The Line Managers will have specializations but the Administrator must have some prior knowledge in all the areas of specialization in the organization in order to give instruction when well conversant with the subject matter. 49 CHAPTER TWO LEADERSHIP Definition of Leadership This chapter is the practical part of chapter one on Public Administration because it’s putting into practice the administration of organizations. An easy definition of “leadership” is that, it is the art of motivating a group of individuals to act towards achieving a standard goal. Leadership may be a topic that has received much attention in management, business, and community organizations. Everyone knows that leadership exists, but few are ready to define it. Leadership involves influencing employees, members or “followers” of some sort to embrace the goals of the organization or group. According to the American Heritage Dictionary, leadership is “the knowledge, attitudes, and behaviours that influence people so as to realize a desired mission”. In other words, leadership is that the act of getting people to buy into a mission or vision in order to work make it happen. The key words during this definition are “people” and “mission.” This chapter mostly aims at “Self-Discovery” so as to administer and manage people properly. Leadership styles According to Lewin et al (1999/1939: 227-250) created this framework and it became the foundation of various methods that followed afterwards. He suggested three main styles of leadership: Autocratic style is one during which one person takes control and makes decisions, directing others in his or her chosen course of action. I acknowledged that this is often the foremost unsatisfactory leadership style within organizations. Democratic leadership style, one person takes control but allows a hospitable group input, often allowing the group to form decisions and collectively assign tasks. This leader guides instead of directing. This is the foremost popular leadership style in organizations. Laissez-faire approach, the person responsible steps back and does nothing. He or she provided no direction or guidance. The group is disorganized and unproductive. The psychologist D. Goleman (1995) suggested six different leadership styles, which he argues spring from different components of emotional intelligence: Commanding: Leaders demand immediate compliance Visionary: Leaders mobilize people towards achieving a vision Affiliative: Leaders develop emotional bonds and harmony 50 Chapter Two Attributes of a leader Democratic: Leaders create consensus through participation Pacesetting: Leaders desire excellence and self-direction Coaching: Leaders mentor people for the longer term According to Mind Tools, variety of other styles exist beyond those definitions, including: Bureaucratic leadership, is when leaders specialize in implementing every rule. This leadership style has proved to be effective for work involving serious risks or routine tasks, but is far less effective in teams and organizations that believe flexibility, creativity, or innovation. People-oriented leadership, where leaders are tuned into organizing, supporting and developing people on their teams. Transformational leadership: The leaders inspire by expecting the best from everyone and themselves. Transformational leaders possess integrity, and high emotional intelligence. They inspire people with a shared vision of the longer term, and that they communicate well. They are typically self-aware, empathetic, authentic, and humble. Transformational leaders motivate their team members because they expect the prosperity from everyone, and that they hold themselves accountable of their actions. They set smart goals, and that they have appropriate conflict-resolution skills. Attributes of a leader “Leadership translates vision into reality”. To influence followers to leap willingly into change, leaders need a selected set of competencies to guide their actions. These competencies are often thought of because the inner tools for motivating employees, directing systems and processes, and guiding the organization toward common goals that allow it to realize its mission. Attributes of a pacesetter fall under three categories: mental, physical, and emotional. This book addresses leadership competencies that’s to say; the knowledge and skills that are required to be not only a boss, but also a pacesetter. Particularly requires (Kragness, 1994: p. 35): Character: Enthusiasm, integrity, self-renewal; Analysis: Fortitude, perceiving judgment; Accomplishment: Performance, boldness, team building; Interaction: Collaborating, inspiring, and serving others. “Leaders are people who perform the proper thing while Managers are people that execute things the right way. — Warren Bennis, Ph.D., “On Becoming a Leader” (Warren, 1994) stated four competencies of leadership namely:Management of Attention, Management of Meaning, Management of Trust, and Management of Self.  Management of Attention refers to the capacity of a leader to persuade other people because of the convincing vision. These types of visions are evidently articulated in terms of goals which are fully adhered to by the leader. 51 Chapter Two    Leadership Theories Management of Meaning refers to the leader’s capability to get people buy into the vision. This attribute enables the leader to share the mind-set towards the goal and manipulate others to conduct themselves the same like the leader. Management of Trust is the trustworthiness that the leader emotionally portrays among the people. It means that they see him or her as someone they can count on despite of the situation. Management of Self is when leaders recognize their strengths and weaknesses. This perception of self enables the leader to change and use their skills well. Finally, the result of possessing these four competencies is regarded as empowerment. Leadership Theories According to Bernard Bass’ book, “From Transactional to Transformational Leadership: Learning to Share the Vision”, he sets out three basic ways on how people become leaders (Bass, 1990: 19-32):Trait Theory: At times personality traits lead people naturally into leadership roles, though this is often referred to as the “born leader” theory. There are really few people that have a natural talent of leading others. Great Events Theory: In a crisis situation or important event may bring out extraordinary leadership qualities in a standard person. Transformational Leadership Theory: People can decide to become leaders by learning leadership skills. This is often the foremost widely accepted theory today and therefore the premise on which this book is predicated. The person prefers to go for training in leadership and becomes a leader after learning from experienced leaders. Principles of Leadership When it involves good stewardship, good leaders know the principles inherent in these principles according to Leslie Pockell (2007), but I summarized the works of this great author as below: Know yourself and seek self-improvement. You will strengthen your leadership abilities by reading, self-study, taking appropriate classes, etc. Be technically proficient. As a pacesetter, you must know your job and have a solid familiarity together with your employees’ jobs. Seek and take responsibility for your actions. Look for ways to guide your organization to new heights. And when things fail, don’t blame others. Analyze the situation; take corrective action and advance to subsequent challenge. Make sound and timely decisions. Use good problem-solving, decisionmaking and planning tools before things run out of hand. Keep the people informed. Skills to speak with employees, senior management and other key stakeholders within the organization. 52 Chapter Two Personality Style Develop a method of responsibility among the people. Develop good character traits within your subordinates that will help them perform their professional responsibilities. Ensure tasks are properly understood, supervised and accomplished. Communication is the key to the contemporary responsibility. Train the people as a team. Although many leaders call their followers; organization, department, section, etc. a “team” in reality is a collection of individuals doing their job. Good leaders build solid teams. Use the appropriate capacity of the organization. By creating solidarity, the manager must be ready to employ the organization, department, section, etc. to its fullest capabilities. Be a role model. Be an honest model for the workers. They don’t need only to hear what they are expected to but see you doing it. Know the workers and appearance out of their well-being. This means understanding the significance of sincere caring for the welfare of the workers. Personality Style Everyone features a preferred way of behaving. However, preferred styles might not be the simplest things to answer a specific situation or person. “Style flexibility” refers to our ability and wish to use the design that best meets the requirements of a specific situation or person in order that we will be simpler as leaders. Personal style is the way we interact and answer people, things, situations and time, and the filter through which we see the planet . It’s important to assume that there’s no right and wrong way of being. People have differently “shaped” personalities even twins don’t share personalities. The Four Dyads This theory suggests that there are four primary dyads or divisions along which personality is made-up. Both “sides” of each of the following four pairs of components are present to some degree in all human beings. The extent to which each dyad is present varies. Each side of the dyad comes with its own strengths and weaknesses but together they make up an individual’s personality (Eysenk H.J., 1944) as stated below: Introversion/Extroversion: This dyad expresses how vital and influential people are to the individual. People that are more introverted than extroverted tend to form decisions fairly independently of constraints and stimulation from things, culture, people or things around them. They are quiet, diligent at working single-handedly and socially reserved. They will dislike being interrupted while working and tend to forget names and faces. Extroverted people are familiar to the culture, people and things around them, endeavoring to form decisions similar with demands and expectations. The extrovert is outgoing, socially free, and inquisitive about variety and in working with people. The extrovert may become impatient with long, slow tasks and doesn’t mind being interrupted by people. 53 Chapter Two Personality Style Intuition/Sensing: The intuitive person prefers possibilities, theories, gestalts (prefer organized whole than the sum of its parts), the general, invention and the new thus becomes tired of fundamental details, the concrete and actual, and facts unrelated to concepts. The intuitive person thinks and converses in spontaneous leaps of intuition which will skip and neglect details. Problem solving is easy for this person, although there could also be a possibility to form errors of fact. The sensing type is interested in the concrete, real, factual, structured, and tangible things. A sensing personality turns impatient with theory and therefore the abstract, mistrusting intuition. The sensing type thinks with careful, detail-by-detail accuracy, remembering true facts and making few errors of fact, but possibly missing a conception of the general. Feeling/Thinking: The feeler makes judgments regarding life, people, occurrences and things supporting sympathy, warmth and personal values. Consequently, feelers are additionally interested in individuals and feelings than in impersonal logic, analysis and things, and in conciliation and harmony quite in being on prime or achieving impersonal goals. The feeler gets on well with individuals usually. The thinker makes judgments regarding life, people, occurrences and things supporting logic, analysis and proof, avoiding the insanity of making choices supporting feelings and values. As a result, the thinker is additionally interested in logic, analysis and verifiable conclusions than in sympathy, values and personal warmth. The thinker might treat others’ feelings and needs while not realizing it, neglecting the need into considering the values of others. The feeler makes judgments concerning life, occurrences, people, and things supported empathy, heat plus individual values. Consequently, feelers are additionally interested in individuals and feelings than in impersonal logic, analysis and things, and in conciliation and harmony quite in being on prime or achieving impersonal goals. The feeler gets on well with individuals usually. The thinker makes judgments regarding life, people, occurrences and things supporting logic, analysis and proof, avoiding the insanity of making choices supported feelings and values. As a result, the thinker is additionally interested in logic, analysis and verifiable conclusions than in sympathy, values and personal warmth. The thinker might treat others’ feelings and wishes while not realizing it, neglecting the need into thought for the values of others. Perceiving/Judging: The perceiver is a gatherer of information, always yearning to know more before deciding. Consequently, the perceiver is flexible, open, adaptive, nonjudgmental, and then able to see plus understanding all sides of issues, and always welcoming fresh views and new information about issues. However, perceivers are also difficult to pin down and may be indecisive or unable to make up their minds and non-committal, becoming involved in so many tasks that do not reach closure and others around them may become frustrated at times. Even after finishing tasks, perceivers will tend to look back at them and speculate whether they are 54 Chapter Two Qualities of a Good Leader adequately done. The perceiver desires to roll with life rather than change it. The judge is decisive, firm and sure, setting goals and stick to them. The judger wants to close books, make decisions and get on to the next project as soon as possible. When a project is not yet complete, judgers will leave it behind and go on to new tasks without looking back. Qualities of a Good Leader Based on research by “Leading Effectively Staff” (2020) at Center for creative Leadership: What Are the Characteristics of a Good Leader? They discovered ten core leadership qualities: Integrity: The importance of integrity should be obvious. Although it might not necessarily be a metric in employee evaluations, integrity is crucial for the individual and the organization. It’s especially essential for top-level executives who are charting the organization’s course and making countless other significant decisions. The research shows that integrity may actually be a potential blind spot for organizations. Make sure that the organization embraces the value of integrity to leaders at all levels. Ability to Delegate: This is one of the basic responsibilities of a leader, but it can be complicated to delegate effectively. The aim is not only to free up the manager but it is as well to enable express reports, help teamwork, offer autonomy, lead to enhanced decision-making, and help the direct reports grow. In order to delegate properly, you also need to build trust with the team. Communication: Effective leadership and effective communication are intertwined. There is a need to be able to communicate in many ways, from transmitting information to coaching the people and the manager should be able to communicate with a variety of workers across roles and social identities. Self-Awareness: Whereas this is a more inwardly focused skill, selfawareness is vital for leadership. The more you understand yourself, the more effective you can be as a manager. Do you know how other people perceive the manager, or how the manager shows up at work? Gratitude: Giving thanks to the people for work done will actually make you a better leader. Gratitude can lead to increased self-esteem, reduced depression and anxiety, and even better sleep. Few people commonly say “thank you” at work, even though many people say would be willing to work harder for an appreciative boss. It is good to follow these tips for giving thanks and practicing more gratitude. Learning Agility: This is the ability to make a way where there is no way by a creative manager. When you are able to prosper in unfamiliar circumstances, you might already be learning agile. But anybody can advance learning agility through effort, practice, and experience. Try to find out how great leaders are great learners, with strong learning agility to get things started. Influence: To some people, “influence” looks like an obscene word. But having the ability to convince people using emotional, logical, or cooperative appeals is an aspect of being inspirational and effective leader. Influence is 55 Chapter Two Rulers Vs Leaders Somewhat not similar from manipulation, and it requires to be done authentically and transparently. It requires emotional intelligence and trustbuilding. Empathy: Empathy is connected with job performance and a decisive part of emotional intelligence and leadership effectiveness. If you show more compassion towards your direct reports, according to research it shows you are more likely to be seen as a better performer by your boss. Sympathy can be learned, and in addition to making you more effective, it will also progress work for you and those around you. Courage: It could be hard to speak up at work, whether you want to bring a new idea, provide feedback to a direct report, or raise a concern for someone above you. That is part of the reason courage is an important skill for good leaders. Instead of avoiding problems or allowing conflicts to worsen, courage enables leaders to raise their voices and move things in the right direction. Respect: Treating people with respect on everyday basis is one of the most significant things a leader can do. It will simplify tensions and conflict, create trust, and improve effectiveness. Rulers vs. Leaders Rulers Rulers are those who rule. Ruling is “to control, guide, direct” and to “impose rules” and “to dominate” and “to exercise overt power and authority over an area and its people.” In general practice, kings, presidents, queens, dictators, prime ministers, legislators, governors, and mayors are rulers. Ruler is not generally used to refer to smaller controllers and dominators, such as thieves, rapists, batterers, kidnappers, and murderers. An important difference within the concept of rulership is concerned with what is being ruled. Rulers claim rule over both people and their resources, but I don’t think that is necessary. It is frequently said that asset owners are rulers over their property, and while I think this is true but this does not mean that their rule extends to other people who are using their property. If I invite someone into my house, I am ruler over my house, but not ruler over him or her. This is time and again a point of attack against proletarian anarchists. Anarchism is the doctrine that rulers are unwelcome for a number of reasons, but this only applies to rulers of people, not rulers of property legitimately acquired basing on prevailing social norms. For an anarchist to oppose rulers of legitimately acquired property is in direct contradiction to his or her own life, and the property required to maintain it, both of which he claims to rule. Leaders Contrasted to rulers, leaders are those who lead. Leading is to guide and to go forth and direct on a course of action. In general practice, leaders include rulers, as well as parents, entrepreneurs, teachers, priests, tour guides, scientists, and so forth. As can be perceived, rulers are leaders, but again not 56 Chapter Two Creating a vision all leaders are rulers. Other types of leaders may also act as rulers, for instance parents and teachers, but that is not a compulsory component of the role. The difference on what turns a leader into ruler is when their control and guidance is forced on others hence Leaders have willing followers, while rulers have dominated subordinates. Anarchists and voluntarisms do not generally oppose leaders unless those leaders begin exercising coercion in some form, at which point they become rulers. Another related concept is authority. Rulers impose their authority. Leaders, further earn through their authority as a matter of expertise. The variation between rulers and leaders could be described in one word and that word would be “imposition” (Sutherland A. 2011). Final Thoughts In the manner in which this book is written it is much better to be a Leader than a Ruler because Leaders have their subordinates at heart and considering then as Stakeholders but a Ruler is mostly far from the grievances of the people and it becomes difficult to understand them. In conclusion according to chapter one a Ruler is related to Classical theories while a Leader relates more to Neoclassical theories. Leaders Vs Followers The focus is on us as leaders with the question, who am I? We further started to look at, who are you? In conditions of evaluating the personal styles of others. Subsequently we further investigate the question, who are you? While discussing about followers, and who are we together? Even though in some circumstances “follower” may have negative intention even in the Bible: Jesus stated, “I no longer call you servants but friends” (John 15:15) hence followers are key stakeholders in every successful business enterprise, organization and activity. A number of management authors have suggested that the word follower, as a broad term, has assumed such a negative tone that it would be better to use another term like “stakeholders”, community people in society work or partnership members in company work. Effective stakeholders intelligently, enthusiastically, and responsibly engage in the quest of organizational objectives. Good followers have to be independent and critical thinkers. They take steps for their activities, fix problems or brainstorm for better methods of doing things, and are dedicated to the organization or group goals. In various ways, followers have comparable characteristics to leaders. We are all followers and leaders. Right now, you are a follower in this learning activity; but you are not passive, unconcerned or sheepish. You are engaged, involved and working. It is very important to term Followers as “Stakeholders”. Creating a Vision Shared Vision Each of us has our own vision of how we imagine the world should handle a particular situation and how to create a healthy society. It is an important job of a leader to facilitate the creation of a shared vision, which is articulated in writing. This fits into the idea of transformational leadership (Carl P.L., 1997). 57 Chapter Two Formation of Executive committee Vision Statement The meaning of transformational leadership, vision, communication, planning, and creative action that has an affirmative unifying effect on a group of people around a set of clear values and beliefs, to achieve a smart set of measurable goals implies that the vision must come first and drive the organization. The vision itself when it results from an inclusive procedure will have a positive unifying effect on a group of people. It is from the vision that all achievements of leadership can be developed (objectives, goals, programs and positive outcomes). A good quality vision statement, according to Peters T. (1988) should be:  A beacon – Symbol of hope  A challenge  Inspiring/empowering  Short A vision statement is an influential motivating strength for a group. It is an imagination of what everybody is cooperatively working towards. It defines a cause that is larger than one person; it represents something that could not be accomplished alone. Vision statements should be exciting and modify as the shared vision changes. A vision statement answers the question who are we? It describes why people are working together and what they hope to achieve. The vision gives people control for what the organization is about. In creating a vision statement, it is vital that everyone has an opportunity to contribute if they choose. Good facilitators ensure that participation occurs. Formation of Executive Committee Habas, (2019) suggested the following structure of the executive committee:  Committee Chair/President: The chairperson leads the agenda during meetings and often has the final say in the organization.  Secretary: The secretary is concerned with creating and distributing meeting minutes and agendas as well as taking care of other paperwork.  Treasurer: The treasurer acts as the accountant for the board.  Committee Members: They contribute opinions on points of discussion and can lead a committee (Opinion Leaders). The organs of the organization mostly are; (a) The General Assembly. (b) The Executive Committee and Management Committee The General Assembly is the general leading body of the organization. This Organ calls the attention of all stakeholders to decide the fate of the organization Vision. It is the one that gives the Executive Committee powers to execute duties on behalf of the organization during the Annual General Meeting (AGM). The organization adopts a constitution or Bylaws within the jurisdiction of the national Constitution to avoid closure by the government. 58 Chapter Two Formation of Executive committee It is very good to have a Patron of the organization who is a person of high moral standing, integrity and competent as the members of the organization determine. The patron is ex-officio on the Executive Committee and General Assembly but the organization should write formally to the prioritized Patron for consent to stand with the organization. The reasons for a Patron are:  The organization needs “Political Will” in case of external threats like political interferences the Patron is a well-established person who will come in to help.  The Patron helps to solve internal conflicts before they leak to courts of law among the organization members.  The influence of the Patron can be used to carry out fundraising activities in order for the organization to acquire adequate funds for the projects. Composition, Duties and Responsibilities of the Executive Committee The executive committee of a starting organization normally comprises of the Following positions; (a) Chairperson (b) Vice Chairperson (c) Secretary (d) Treasurer (e) Publicity Secretary (f) Two Committee members (Opinion Leaders) (g) Patron (Ex-Officio) The Executive Committee comprise of the following duties;  Operate for and on behalf of the organization in its day-to-day functions.  Formulate and implement decisions and policies passed by the General Assembly.  Debate and decide on all essential matters affecting the organization and bear collective responsibilities of all matters discussed and agreed upon.  Mobilize and supervise organization funds and finances.  Create sub committees to carry out specific functions.  Have authority to suspend any of their members pending approval or otherwise of the General Assembly as provided for by the constitution and temporarily fill vacancies in the executive committee pending elections during the General Assembly. The Chairperson;  Be the general administrative head of the organization.  Call and control over the entire executive committee meetings and the General Assembly.  Convene all agent meetings of the organization each time deemed fit.  Synchronize all the activities of the executive board.  To be the principal signatory on the organization bank account. 59 Chapter Two Formation of Executive committee The Vice Chairperson; (a) Carry out the chairperson’s duties in his or her absence apart from withdrawing money on the bank account. (b) Execute duties as may be assigned to by the executive board or General Assembly. The secretary;  Keep updated register of all registered members of the organization.  Issue notice of meetings.  Take and keep minutes of all meetings.  Should be very technical enough to counsel the organization direction.  Perform other duties as maybe assigned by the Executive Committee or General Assembly.  Should be a signatory on the organization bank account. The Treasurer;  Present audited accounts and financial reports during Annual general assembly meetings.  Be accountable for the finances of the organization.  Carry out duties as may be assigned by the executive committee or General Assembly.  Keep accurate books of accounts, conserve the books and make them accessible for inspection by those approved to do so.  Obtain and disburse money belonging to the organization and receive receipts for all money paid out.  Gather all subscription and membership fees meant for contributions to the capital fund and all other money to which the organization is at liberty.  Should deposit cash and cheques of the organization to the bank as agreed upon by the General Assembly.  Must be a signatory to all financial documents of the organization. The Publicity secretary; (a) Mobilize and market the organization. (b) Give information to concerned members of the organization as per the scheduled meetings. (c) Perform the role of public relations. The two committee members Carry out any duty that may be assigned to them by the Executive Committee or General Assembly. Organization Elections This is part of showing a succession plan because according to this book am aiming at enabling the organization to stand the taste of time. Therefore, 60 Chapter Two Formation of Executive committee holding elections is a hope for the continuity of the organization in case the founders are “Promoted to Glory” or deceased and also one can become unsound or abuse of office. In a scenario like that, elections by consent of the General Assembly are organized as below:  Every Office bearer may hold such for a period not exceeding five years which means the term of office is five years. Many organizations may decide to keep the same people on the Executive and Management committees because they don’t have enough Human Resource for replacement but this can result to imposition. The companies have Directors who cannot be replaced through elections because that is private business or initiative the Board of Directors (BOD) decides, but in case of government, community organizations and so on with public interest, they need to have elections.  The framework through which elections of the office bearers are usually held during the General Assembly.  Basing on the provisions of the organization Constitution, the method of voting during Executive and General Meetings is usually by secret ballot.  The Executive board has authority to nominate competent persons to an extraordinary general meeting among whom the Presiding Officer for the general elections can be selected like one month before the elections are held provided that person has no dealings with or be part of the organization candidates in the race.  Handling over of offices can be done within agreed period of time from the date of elections.  The founder members have to be respected whether retired or resigned willingly. Organization Meetings The executive committee meetings follow the procedures below; (a) The executive committee can decide to meet either weekly or monthly to carry out business at such times and places the chairperson and Secretary chooses. (b) The quorum at the Executive Committee meeting should at least have two thirds of the members but depending on organizations. (c) The Executive committee may invite any persons of specialized training and knowledge to its meetings for purposes of advising the committee provided that such persons shall not have powers to vote. (d) Subject to the provisions of the organization constitution, the Executive Committee may regulate these procedures. The General Assembly The general assembly need to have the following; (a) Obtain and approving reports from the chairperson of the Executive committee on the activities of the organization for the previous year. 61 Chapter Two Formation of Executive committee (b) Obtain annual reports on projects. (c) Obtain and approving audited financial reports from the treasurer. (d) Discuss any issue, which may be raised by the members? Attendance at the general assembly; The annual general assembly should be attended by; (a) Executive Committee Members. (b) All organization members who registered. (c) All the stakeholders that may be sharing aspirations with the organization and are sympathetic to the aims and objectives of the organization at invitation of the Executive Committee provided that this grouping shall not have no voting powers. Extraordinary General Assembly; The extraordinary meeting of the general assembly to carry out urgent business may be convened by; (a) The Executive Committee chairperson. (b) One third of the quorum at the extraordinary general assembly of the registered members of the organization. (c) Depending on the provisions of the organization constitution, the extraordinary general assembly may regulate its own procedures. There can be general meetings organized in the following manner;  The organization can convene an annual general meeting to be known as the General Assembly and this could be specified in the notice calling the same.  During the general meeting, the general assembly shall be presided over by the chairperson of the Executive Committee.  The Secretary of the Executive Committee shall circulate the notice of the meeting and the agenda at least one month before the meeting.  Determination of any issue at the general assembly can be by a simple majority vote of the registered members. The chairperson may have a casting vote at the extraordinary general assembly in the event of a tie.  The quorum at any extraordinary general assembly should be at least one half of the total full numbers.  The general meetings or general assembly can take place anywhere and time and dates as the Executive Committee may appoint.  Subject to the provisions of the organization constitution, the general assembly may regulate its procedures. Meetings A meeting is the coming together of two or more people to share information in a planned way and articulate issues set out before them to reach decisions and solve problems. A meeting can be formal or informal. A formal meeting 62 Chapter Two Formation of Executive committee has rules for convening it, with a written record of its proceedings. It requires a notice which is a call and an invitation to attend it. It has an agenda, and the outcome is technically written in the form of minutes. An informal meeting can be convened without any written notice, for example a staff union meeting in the lunch room to discuss a picnic. A meeting has a convener who purposely calls it and a leader or chairperson who directs it to order (Gutmann, 2010) Types of meetings i. Informative: where the reason is to provide information to the participants about a new scheme, product, etc. ii. Consultative: To get member’s views through consultation to solve a problem. iii. Executive (Board): In which decisions are made by those empowered to do so. iv. Ad Hoc meeting: Occurs outside the normal recurring meetings. They are also identified as one-off meetings. Ad Hoc meetings are convened to handle a specific topic or dialogue versus a recurring meeting that takes place at usual intervals and has continuing, usual topics. In practice, most of the meetings provide more purposes than one. Some further classifications of meetings are for negotiation purpose, meeting for giving instructions, etc. Purpose of a meeting:  To reach a common decision or agreement.  To solve a particular problem.  To understand a phenomenon, exchange ideas and experiences.  To inform, explain, and present ideas.  To give and get feedback on new developments.  To give training to the people or employees.  To plan and prepare for the cause of action.  To resolve differences and misunderstandings among the members.  To generate enthusiasm and seek cooperation to harmonize the organization.  To review past performance and evaluate it for the better.  To form a feeling of continuity and solidarity in the organization. Advantages of Meetings 1. Save time: Since one can meet various people at a time interactively, a meeting can save time. 2. Addressing groups: One can divide the audiences basing to their background and need, and address them group by group for efficiency. 3. Cope with information explosion: New technology and new regulations are coming broad and fast. Meetings enable organizations to cope with technological changes. 63 Chapter Two Formation of Executive committee 4. Social and emotional support: Members get personal support from each other when they meet and exchange ideas. 5. Feeling of being consulted: Members of the organization get the feeling that they have been consulted and this is useful in getting their intelligence and willing collaboration. 6. Democratic functioning: Meetings are a source of Democracy which aims at achieving all people’s welfare by all people’s involvement. 7. Idea development: Ideas are automatically cross-fertilized, analyzed and improved by a group. 8. Defusing troublemakers: By the collectivity of constructive forces and ideas, troublemakers can be eliminated in a meeting and positive action got going. The opponents of a plan get a forum to voice their disagreement, which can be defeated by a group of supportive people. 9. Bolder decisions: Through collectively more adventurous decisions are made because of united strength. 10. Various interest groups represented: In a meeting more interest groups are represented and minorities can also be given due attention. 11. Preventing mistakes: A meeting helps to get rid of mistakes by a collective and many-angled focus on issues. Disadvantages:  Time-consuming: Meetings require majority of people to come together at the same time and place. This costs time because some work has to be set aside for the sake of the meeting.  Inability to arrive at a decision: There is a fact that, “two heads are better than one”, it is also true that “too many cooks can spoil the soup”. A variety of views and personal stubbornness of members may hinder a meeting from taking a decision which the Chairman may take alone.  Lack of seriousness: Many meetings are affected from the drawbacks when members come unprepared and feel that others will do the thinking and talking. They feel they can take a free ride equivalent to leisure time. “Everybody’s job is nobody’s job”.  Inexpert chairing: Like how an airplane is controlled by a pilot then a meeting is directed by the chairperson hence his or her lack of skill and personal failings or biases may fail a meeting.  Expensive: Meetings are very expensive to arrange because they require a place, paperwork, prior communication, and travelling to the venue by the attendees.  Open to disruption: A meeting can be disrupted by an aspect that is opposed to its objective. There are times when one passenger’s refusal to regulate himself or herself delays the entire flight so it is the same for meetings. The spirit of give-and-take may be missing in some participants of the meeting. 64 Chapter Two Formation of Executive committee Role of a Secretary in a meeting The role of the secretary in any formal group is to be the protector of the process of meetings. They are normally the people who make the preparations for the meetings, including AGMs, and keeps formal records of the organization process and decisions of the meeting. This may comprise keeping records of correspondence. This part focuses largely on the formal aspects of the secretary’s role and particularly that relating to meetings. Preparation: Before the Meeting There are a variety of things that the secretary requires to know before a meeting, most of which can simply be found out by inquiring from the person going to chair the meeting. The most important are: Who is going to make the arrangements for the meeting, including finding a venue and arranging for suitable refreshments and any Audiovisual (AV) facilities? This is often the secretary at work but just delegates where possible.  Who is answerable for preparing the agenda? Each chair will have his or her own preference, but this is also usually a secretarial responsibility working with the chair. There may be other people who have a right to add items to the agenda of the meeting.  The secretary has a responsibility of making sure that the agenda is not overloaded, which may entail discussing with the chair and others what could be postponed to a later date, and what could be incorporated in a written report.  Formal minutes that mention who said what and brief notes that record the approved actions the secretary has to specify the type of notes needed.  The urgency of the necessity for minutes to be produced and disseminated after the meeting to the stakeholders also matters.  The process for preparing the minutes for publication, where some chairpersons have a preference of approving minutes before they are sent further, while others prefer minutes to be disseminated to many key attendees at the identical time.  The secretary is answerable for sending out the papers for the meeting. This entails, but is not limited to, the agenda, the minutes of the last meeting, and papers for discussion or information. Meeting Day On the real day of the meeting, there are a number of things that the secretary needs to do:  Know who is expected to be attending the meeting. If the building has security guards, provide a list of attendees to the security personnel.  Get to the venue early enough and check if everything clear. Being responsible for the meeting preparations, make sure that everything is in 65 Chapter Two     Formation of Executive committee place, the venue is laid out correctly, all equipments are in place, there are enough chairs for the attendees, and any refreshments have arrived. Should know the sitting arrangement basing on who sit where and even mark the seating plan, as this makes a big difference to the way that the meeting runs. Ensure that the chair is sitting centrally and that the secretary is seated next to the chair. Make sure you keep more spare copies of papers for those who have not brought a copy. If there are more papers it may be appropriate to arrange them in a folder using page or section numbers so that attendees can easily find papers related to the current discussion. Badge names when being used, set them out in an alphabetical order on a table by the door, where participants can pick them up as they arrive. Reading of previous meetings: The Secretary has to start by reading minutes from the previous meeting for proof reading and solving matters arising then sealing the minutes. Taking the Minutes of a Meeting Welcome and Introductions: The minutes take into consideration of a full list of those present, and all who sent apologies. To save the secretary from scribbling frantically as people introduce themselves, circulate a sign-up sheet asking people to give their names, organizations and contact details. Note down likely apologies for failure to attend provided during introductions: people usually introduce themselves as “So-and-so’s replacement and, by the way, he or she sends their apologies”. The Main Business How notes are taken in the meeting depends on how formal the minutes need to be. If you are reporting a brief summary of the discussion, plus any action points, hence you can afford to listen to the discussion and then summarize it in note form. When you are expected to note down the key points made by individual speakers, then there is need to make a thorough set of minutes, consisting the speakers’ names or initials. Supporting the Meeting Process It is the role of the chairperson to control the procedure of the meeting, but there are several contributions that the secretary helps. These include:  Quietly pass a note to the chair noting any issues with the timing of the agenda, or slippage, or when coffee is about to arrive.  Recap and summarize the discussion. This is particularly needed when people are starting to make the same points again.  Ask for clarity on a particular point if it is not well articulated. The secretary needs to understand each point in order to be noted and put on record for future consumption.  Once an action has been resolved, check who is going to be responsible for it. It is not good for a meeting to concur that a certain action is 66 Chapter Three Management of information and Technology essential, and what that action is, without assigning it to the responsible person. Meeting Deliberations It is better to start writing minutes as soon as possible after the meeting. However transparent the notes seemed in the meeting, they won’t be nearly as clear 24 hours later, and if the secretary leaves them for two weeks the real meaning of the minutes in the meeting will somehow change. Minutes should flow with the order of the agenda. Even if someone evaluated a particular topic later on in the meeting, you should put that discussion under the original agenda item. Make sure that all the key points made in discussion are included, any decisions made and actions agreed, hence together with who is responsible for the actions. Minutes are almost written in the past tense, and usually in the passive voice (“X set out that y needed to happen hence it was agreed that Z would be responsible”). Use ‘would’ rather than ‘will’ for what is going to happen, particularly with formal minutes. It is a matter of technique whether the secretary uses surnames, first names titles plus, or initials to refer to those speaking. Check with the chair, or look at past minutes to see how things have been done before, and use the same approach consistently. Checking and Approving When the secretary is new to the role of minute taking, it could be much better to send the minutes to one or two trusted people to check and advise before being disseminated more widely. One of these people should be the chairperson, except if they themselves prefer to send the minutes to someone else first. Once the minutes have been officially approved by the chair, they can be circulated more widely to the participants. Be conscious that meeting participants may wish to correct some errors, and adjustments will need to be incorporated in the next set of minutes. The final approval of the minutes is done in the next Meeting. Meeting Conclusion At the end of the meeting, it is crucial to set “SMART” objectives to be achieved for the next meeting and to clearly define the action plans. The “SMART” objectives must be Specific, Measurable, Achievable, Realistic, and Timely. If an objective fulfils these criteria, thus it should be achieved without great difficulty. Knowing how to identify the hindrances that prevent the development of such objectives is essential. Management of Information and Technology Information is a vital resource in the running and management organizations. Timely accessibility of relevant information is vital for the 67 of Chapter Three Management of information and Technology effective performance of managerial functions like for example; planning, organizing, leading, and control. The information system in an organization is compared to the nervous system in the human body: it is the bond that connects all the organization’s apparatus together and provides for improved function and survival in a competitive environment. Indeed, it is evident that today’s organizations run on information. We have just concluded a section about meetings now it is crucial to see how the information can be stored. Information can be kept on CDs, Computers, Flush Disks, Phones, internet and much more storage. The term ‘Information system’ refers to a computer-based system, one that is designed to support the operations, management, and decision functions of an organization. Information systems within organizations give information support to decision makers. Information systems include transaction processing systems, management information systems, decision support systems, and strategic information systems. Information comprises of data that has been processed and are meaningful to the user. A system is a set of components that function jointly to achieve a common purpose. Thus, management of information system collects, processes, transmits, and stores data on an association’s programmes, resources, plus achievements. The system makes feasible the alteration of this data into management information for utilization by managers within the association. An organization information system, thus, creates information that facilitates the management functions of an organization (Lucas, 1990; Davis & Olson, 1985; McLeod, 1995). Basic concepts Data versus Information Data refers to unevaluated facts, raw, symbols, figures, objects, events, etc. Data may be a set of facts lying in storage, like minutes or other records. Information is data that have been put into a meaningful and useful environment and communicated to a recipient who uses it to make decisions. Information consists of the communication and reception of intelligence or knowledge. Information appraises and notifies surprises and stimulates, reduces uncertainty, reveals extra alternatives or helps reduce irrelevant or poor ones, and influences individuals and stimulates them to action. An element of data may comprise information in a specific context; for instance, when there is need to contact a friend on phone, his or her telephone number is a piece of information; otherwise, it is one element of data in the telephone directory. Computers have made the processing function easier. Large quantities of data can be processed fast through computers aiding in the conversion of data to 68 Chapter Three Management of information and Technology information. Raw data enter the system and are altered into the system’s output, that is, information to support managers in decision making and that is for big organizations but organizations need to store all the documents in files, computers, internet etc then when there is need for revisiting and auditing them, they can be retrieved easily. Characteristics of Information Information has the following characteristics: Understandable: Since information is already available in a summarized form, it must be understood by the receiver to be interpreted correctly. The receiver must be able to interpret any abbreviations, shorthand notations or any other acronyms contained in that information. Relevant: Information is excellent only if it is relevant. This means that it should be important and meaningful to the decision maker and should be in his or her area of responsibility. Complete: It should include all the facts that are essential for the decision maker to satisfactorily solve the problem at hand using such information. Nothing vital should be left out. Although not all information cans always be complete, hence every reasonable effort should be made to make it complete. Available: Information may be useless if it is not properly accessible in the desired form, when it is needed. Advances in technology have made information more reachable today than ever before. Reliable: The information must be consistent, trustworthy, accurate, with facts and verifiable. Inadequate or incorrect information generally leads to poor quality decisions. For instance, sales figures that have not been adjusted for returns and refunds are not reliable. Concise: Too much information is a huge burden on management and can’t be processed in time and accurately due to “bounded rationality”. Bounded rationality determines the restrictions of the thinking process which cannot sort out and process big amounts of information. Timely: Information should be given at the accurate time and the right place to the intended person. Untimely information can turn out to be out of date or be forgotten by the time it is actually wanted. Accordingly, to the period between collection of data and the presentation of the proper information to the decision maker must be summarized as much as possible. Cost-effective: The information is not attractive if the solution is more costly than the problem. The cost of gathering data and processing it into information must be evaluated against the benefits derived from using such information. Classification of Management Information Systems There are many types of management information systems. Mason and Swanson (1981) identified four groupings of management information systems namely: databank information system, decision-making information system, predictive information system, and decision-taking information system. The 69 Chapter Three Management of information and Technology categorization of information is focused on the level of support that the information system gives in the process of decision making. According to Sachdeva (1990) broadly suggests these four types of systems: Databank Information System: The responsibility of this information system is to examine, classify, and store any item of data which may be potentially useful to the decision maker. Examples of the kind of data that can be recorded in such a database for a given village, region, or area are as follows:  Number of organizations in the area  Average organization sizes in the area  Competences of the organizations in the area The second example of data that can be recorded in a database (this time involving data internal to the organization) is as follows: i. Number of staff by category and how they are assigned to a particular responsibility. ii. Number of working hours devoted by the staff. iii. Total salary costs and other expenses of workers in the organization. iv. Number of demonstrations conducted for preferred organization technologies. v. Number of radios, TVs, and print media releases by organizations in a given area. Figure 4: Role of information in the decision process Each of the above databases can be summarized and transformed to single tabular presentations of information of interest to management. When information from two or more time periods is compared, trends can be analyzed. 70 Chapter Three Organisation Communication Predictive Information System: This system moves ahead of pure data collection and the determination of trends over time. Predictive information systems present for the drawing of inferences and predictions that are important to decision making. If data from the above examples are to be used in this way, it is possible to get information useful for making predictions or for drawing inferences. For instance, tables containing the following information for a given village, region, or area may be produced:  The ratio between the number of farms and many categories of staff members.  The ratio between the amount of farmland and the various categories of the staff members.  Amount of financial operating resources allocated per year to selected organization problems or concerns.  Amount of financial resources, both salary and operating expenses, allocated per year to selected approaches to solving different organization problems or concerns. Information got from these kinds of analyses is normally summarized in a twoway tabular format. And likewise, the information usually is compared over time. Managers can then use such information to create predictions, for instance to forecast costs of particular undertakings for budgeting purposes or as a basis for predicting results if a particular change is made, such as change in the number of demonstrations with a given change in staffing. Decision-Making Information System: This system takes a step further in the process of decision making and integrates the value system of the organization or its criteria for selecting among alternatives. The organization's values are many and varied. They comprise concerns for resolving organization problems, increasing and providing for stability of employee incomes, and improving the quality of organization life. But they also contain an intent to provide well for staff members (training, adequate salaries, etc.) and to aid in the process of bringing about economic development. Organization Communication In the same way of defining communication study, many definitions of organizational communication exist. Though, for the rationale of this chapter, we want to define organizational communication so that there is ease of reference for understanding this chapter. This meaning is not ultimate, but creates a starting point for realizing this specialization of communication study. When individuals deliver and acquire messages within a specific setting to attain personal and common goals is referred to us Organizational communication. Organizational communication is very contextual and culturally dependent. People in organizations transmit messages through faceto face, written, and mediated channels (Katz, D., & Kahn, R. L: 1978). 71 Chapter Three Organisation Communication Organizational communication aids us to:  Attain tasks involving specific roles and responsibilities of services, sales, and production;  Familiarize to changes through individual and organizational creativity and adaptation;  Full duties and tasks through the maintenance of policy, processes, or regulations that encourage daily and constant operations;  Creates relations where human messages are aimed at people within the organization including their morale, attitudes, fulfillment and satisfaction (Goldhaber, 1974:20); and  Plan, coordinate, and control the functions of the organization in the course of management (Katz & Kahn; Redding; Thayer). Organizational communication is how organizations present, represent, and encompass their organizational setting and culture, attitudes, values and goals that differentiate the organization from its members. Organizational communication essentially concentrates on structuring interaction and connections within the internal organizational and interested external stakeholders. The first approach focuses on communication within organizations. The second approach is communication as organization meaning organizations are a product of the communication of those within them. Communication is not merely about sending messages between senders and receivers. Communication literally makes up our social world. Much of our communication contains sending and receiving relatively unproblematic messages and acting on that information. Sometimes things are a bit more complex, like when you need to solve conflict with a close friend or family member. There is much more going on in these phenomena than merely exchanging information. You are actually engaging in a complex procedure of meaning and negotiating rules created by the people involved. For organizations to be successful, they need to have competent communicators. Organizational communication study illustrate that organizations rely on effective communication and efficient communication skills from their stakeholders. A number of surveys (Gaut; Perrigo; and Kopka: 2005) revealed effective oral and written communication as the mainly soughtafter skills by those who run Organizations. The Public Forum Institute discovered that employees need to be skilled in public presentation, listening, and interpersonal communication to excel in an organization. The people who can follow and give instructions, listen accurately, give helpful feedback, network, get along with coworkers and customers, offer useful information, perform well in teams, and creatively and critically solve problems and present ideas in an understandable way is what the organization seek. Escalating organizational communication consciousness and effectiveness is more than having know-how or only knowledge. Efficient organizational 72 Chapter Three Organisation Communication communication constitutes knowing how to create and exchange information, work with different groups or individuals, communicate in complicated and varying circumstances, as well as having the ability or motivation to communicate in appropriate ways. The Genesis of Organizational Communication Communication study is deeply well-established within the oral symbolic traditions of ancient Rome and Greece. The East serves the origin of several of the first concepts that created this discipline with various founding principles of organizational communication. According to Murphy et al, 1997 stated that Chinese scholars concentrated on the problems of communication within the vast government bureaucracy and the people at the beginning of the fourth century and Krone et al, 1992 further stated that the early eastern scholars concentrated on message, information flow, fidelity, and quality of data within their governmental bureaucracy. These still are areas of focus for organizational communication. The work of P. E. Lull and W. Charles Redding (1983) at the University of Purdue like most of our field’s specializations, organizational communication began within the mid-20th century. During the economic age, the main target of organizational communication was on worker productivity, organizational structure, and overall organizational effectiveness. Through this work people were curious about higher profits and managerial efficiency. Follett has deeply contributed to the principles of management in organizations. For example, Fry, 2009 stated that the total separation of people from the practical problem is not possible according to Follett. Consequently, ethics are very important in management, mainly in the decision-making process (Fry, 2009: 11-19). As a specialty in this discipline, organizational communication can possibly be traced back to Alexander R. Heron writings in 1942 checked out manageremployee communication (Redding et al, 1983). Putnam and Cheney, (1985) opined that the specialty of organizational communication emerged out of three main speech traditions: persuasion, public address, and scientific research on interpersonal, small group, plus mass communication. Alongside with public-speaking preparation for executive boards as early as the 1920’s, works like Dale Carnegie’s method to Win Friends and persuade People in 1936 focused on necessary public speaking and written language skills for managers to achieve organization goals. According to Redding et al, (1983) identify three periods within development of organizational communication namely: - the During the era of Preparation between 1900 and 1940 much of the foundation was laid for this interesting discipline that we all appreciate today. Scholars emphasized the importance of communication in organizations. The 73 Chapter Three Organisation Communication first focal point during this point was on business writing, managerial communication, public address, and persuasion. The era of Identification and Consolidation 1940 to 1970 witnessed the early stages of commerce and industrial communication, with particular groups and organizational relations being recognized as significant. During the era of Maturity and Innovation (1970-present), investigation increased, accompanied by innovative efforts to create theoretical premises, concepts, and philosophical critiques (Redding et al 1983). Basing on other specialties over the 20th century, organizational communication has changed dramatically as a channel of discourse between business and academic settings. Redding et al, (1983) resolved that between the years 1967 or 1968, organizational communication had finally attained a minimum of a reasonable degree of success in two respects: breaking from its business and industrial chains and gaining an inexpensive measure of recognition as an entity that deserves serious academic study. Contemporary Organizational Communication Since communication is tremendously developing, research continues to expand, and organizational communication succeeds in its redefinition. Within the early stages, this area concentrated on leaders giving public presentations. More recently the importance has focused on all levels of interaction in organizations. Because interpersonal relationships are a vital part of organizational communication, an excellent deal of research concentrates on how interpersonal relationships are contained within the framework of organizational hierarchies. Contemporary organizational communication research has been summed into eight major traditions namely: Communication channels, Communication climate, Network analysis, Superiorsubordinate communication, information-processing perspective, rhetorical perspective, cultural perspective, and political perspective (Putnam and Cheney; Kim). In view of the fact that by the 1980s, this specialty has stretched to integrate work on power and conflict management, organizational culture, and organizational rhetoric. If a manager is in need of an organizational communication capacity building, much of the time will be on specializing in developing their skills in interviewing, organizational socialization, giving individual and group presentations, creating positive work relationships, performance evaluation, conflict resolution, stress management, deciding, and communicating with external publics. Types of Communication Verbal Communication This communication happens once we connect in talking with others. It is often face-to-face, over the phone, via Skype or Zoom, etc. Some verbal engagements are informal, like chatting with a lover over coffee or within the 74 Chapter Three Organisation Communication office kitchen, while others are more formal, like a scheduled meeting. In verbal communication it is not about the words but in addition about the caliber and complexity of these words, how we cord those words jointly to make an overarching message, also because the intonation (cadence, pitch, tone, etc.) used while talking. And when involving face-to-face, while the words are essential, they cannot be alienated from non-verbal communication. Non-Verbal Communication Non-verbal communication entails posture, facial expressions, eye contact, touch and hand movements. For instance, if you’re engaged during a conversation together with your boss about your cost-saving idea, it's important to concentrate to both their words and their non-verbal communication. Nonverbal cues like avoiding eye contact, sighing, scrunched up face, etc should be the same if the manager could be in concurrence together with employee idea verbally but not indicating something different. Written Communication Whether it’s an email, a memo, a report, a Facebook post, a Tweet, a contract, etc. all sorts of written language have an equivalent goal to disseminate information during a clear and concise manner, though that objective is usually not achieved. In fact, poor writing skills often cause confusion and embarrassment, and even potential legal jeopardy. One vital aspect to recall about written language, especially within this digital era, is that the message lives on, maybe in perpetuity or eternity. Thus, there are two things to remember: first, write well because poorly constructed sentences and careless errors cause you to look bad; and second, make sure the content of the message are some things you would like to market or be related to for the end of the day. Listening The act of listening doesn’t often make its way onto the list of sorts of communication. Active listening, however, is probably one among the foremost important sorts of communication because if we cannot hear the person sitting across from us, we cannot effectively engage with them. Believe a negotiation which is part of the method is to assess what the opposition wants and wishes. Without listening, it’s impossible to assess that, which makes it difficult to realize a win/win outcome. Visual Communication We are in a visible society where televisions are functioning 24/7, Facebook is visual with images, memes, videos, etc., Instagram is an image only platform, and advertisers using imagery to trade products and concepts. Believe from a private perspective that the pictures we post on social media are meant to convey meaning in order to communicate a message. 75 Chapter Three Organisation Problem Solving Organization Problem Solving In order to efficiently supervise and run a triumphant organization, leadership must direct the employees and create problem-solving techniques. The basic four-step problem-solving procedure and methodology outlined below (Okes, 2009). Table 3: The Problem-Solving Process Step Characteristics 1. Define the problem          2. Generate alternative solutions          4. Implement and  follow up on the solution   3. Evaluate and select an alternative   Distinguish fact from opinion. Identify underlying causes. Consult each party involved for information. State the problem purposely. Identify what ethic or expectation is violated. Determine in which procedure the problem lies. Avoid solving the problem without data. Postpone evaluating alternatives initially. Include all involved individuals in the generating of alternatives. Specify alternatives consistent with organizational goals. Specify short- and long-term alternatives. Brainstorm on others’ ideas. Seek alternatives that may solve the problem. Evaluate alternatives relative to a target standard. Evaluate all alternatives without bias. Evaluate alternatives relative to established goals. Evaluate both proven and possible outcomes. State the selected alternative explicitly. Plan and implement a pilot test of the chosen alternative. Gather feedback from all affected parties. Seek acceptance or consensus by all those affected. Establish ongoing measures and monitoring. Evaluate long-term results based on final solution. 1. Define the problem Diagnose the condition so that the concentration is on the problem, not just its signs. The crucial problem-solving methods entail using flowcharts to discover the predictable steps of a procedure and cause-and-effect diagrams to 76 Chapter Three Organisation Problem Solving evaluate root causes. The steps below assist in explaining main problemsolving procedures. These strides maintain the participation of interested parties, comparison of expectations to reality, use of factual information, and a concentration on root causes of a problem as explained below:  Reviewing plus documenting how procedures at present work like, who does what, using what tools, with what information, communicating with what organizations and individuals, in what time frame, using what format).  Analyzing the likely impact of new tools and amended policies in the improvement of the ‘what should be’ model. 2. Generate alternative solutions Postpone the application of one solution in anticipation of various problemsolving alternatives have been planned. Considering various alternatives could considerably enhance the value of your ideal solution. Once you have decided on the ‘what should be’ model, this aims standard becomes the foundation for creating a roadmap for evaluating alternatives. Brainstorming and team problem-solving methods are both vital tools in this phase of problem solving. Several option solutions to the dilemma should be created before final assessment. A frequent error in problem solving is that alternatives are analyzed as they are proposed, so the first suitable solution is chosen, even when it is not the best fit. If the concentration is on trying to get the outcome there is need for the potential for learning something unique that will consent for real progress in the problem-solving method. 3. Evaluate and select an alternative Skilled problem solvers employ a number of methods when selecting the correct alternative hence considers the extent to which:  A specific option will solve the problem without causing other unexpected problems.  Then all the individuals involved will accept the alternative.  Implementation of the alternative is possible.  The option fits within the organizational constraints. 4. Implement and follow up on the solution Leaders might be called upon to order subordinates to apply the solution, sell the solution, or smooth the progress of completion with the assistance of others. Engaging others in the implementation process is a successful method to gain support and reduce opposition to later changes. Regardless of how the solution is controlled, feedback methods must be built into the implementation which allows for uninterrupted monitoring and testing of real events against expectations. Problem solving, and the methods used to gain transparency are most successful if the solution remains in place and is restructured to react to future changes. 77 Chapter Three Organisation Problem Solving In this chapter two am aiming at defining the leadership structure, leadership qualities, roles, communication, problem solving and decision making. This is a crucial part of the organization life cycle. I once again emphasize that this chapter aims at defining “Self-Discovery” when a leader knows his or her weakness it becomes easy to adjust for organization harmony. 78 Chapter Three Elements of a Strategic Plan CHAPTER THREE STRATEGIC MANAGEMENT Strategic Management Definition We make use of the term “strategic management” frequently, but what exactly does it mean? Strategic management is an organization’s procedure of continuous planning, implementation, monitoring, and evaluating all that is essential for an organization to achieve its goals and objectives in pursuing for future direction. This entails decisions and actions that create the long-run performance of the organization. We have seen leadership in the previous chapter and after forming the Executive Committee, the board has to make a strategy with concentration on the work plan. When this concept is boiled down to the basics, “strategic management” means managing the strategic plan developed and monitoring performance during the process. Managing a strategic plan is not an easy task; there are various procedures functioning at once that require to be continuously monitored. Having insight into each of these processes, the resources they require and how they all work towards your organization’s mission and vision is a demanding task that can create stress and frustration for those in charge. Fortunately, there are established ways that professionals employ to manage the strategy fruitfully. Strategic Management Phases Strategic management does not look accurately similar for every business organization, but it does pursue a similar roadmap which can be broken down into six phases below: (Dwivedi, 2017)  Phase 1: Assess and Organize. This means evaluating existing strategic direction and capabilities of the organization and designing a suitable roadmap based on the assessment.  Phase 2: Environmental Assessment entails external analyses on macro and micro level trends that affect the organization’s internal analyses on the core competencies, where a PESTEL and SWOT evaluations based on these analyses.  Phase 3: Strategy Formulation phase is to identify the organization’s strategic direction and set up high-level strategies to attain preferred future state.  Phase 4: Strategic Planning phase identifies procedure flows as to create a long-term strategic plan to direct leadership’s decision-making and to create a nearer term strategic operating plan to guide staff’s execution.  Phase 5: Strategy Execution refers to aligning the organization behind the strategy and execute the strategic work plan through change 79 Chapter Three  Elements of a Strategic Plan management, effective communication, project management and risk management methods. Phase 6: Performance Management is to evaluate the functioning of the organization’s strategy, learn from feeble signals and smoothly adapt the plan to become a strategy centered organization which has strategic management as a continuing process. Elements of a Strategic Plan These elements are based on Dwivedi (2017) 1. Current state section Dwivedi (2017) starts by preparing a section on the company’s present status, which answers the question: Where are we? The present state section is about 15 to 20 pages in length and includes: i. An overview: Past milestones and accomplishments, existing products or services, markets, main competencies, sales performance, financial analysis, and trends in contemporary years, current key performance indicators ii. Analysis of the internal and external environments: This includes:  Current managerial structure, vision and mission statements and value chain  Department Challenges  The SWOT analysis stands for the strengths, weaknesses, opportunities and threats.  PESTEL analysis describing external or macro factors affecting the business (PESTEL is an acronym for political, economic, social, technological, environmental and legal)  Porter’s Five Forces the tool for analyzing the competition.  The 7-S Evaluation (review of the skills, style, strategy, staff, structure, systems and shared values)  BCG Growth Share Matrix (chart devised by Boston Consulting Group to show each strategic business area depending on the growth rate and market share) The appendix might be added at the end with further information, such as: Risks and barriers to implementation of which brief summary of the future and current state section explaining on how to address the risks and barriers. 2. Future state section This section mentions the preferred future state of the organization. This section is usually around 10 to 15 pages long and is based on workshops and interviews that Dwivedi held with main stakeholders. The future state section must include these essentials: - 80 Chapter Three        Elements of a Strategic Plan Strategic objectives Vision statement: Summarizing the company’s aspirations for the future Mission statement and core values and any anticipated changes Broad, high-level goals: Expressed in long-term statements Future business model: This can be described with a business model canvas Desired future value plan Aspiration statements that expand on the vision statement 3. Strategic plan section This section identifies how the organization will bridge the gap between its current state and the preferred future state. Dwivedi carried out various workshops and interviews on strategic planning with key stakeholders to brainstorm ideas on how to attain the organization goals. These sessions typically lead to a list of five to 10 views to research further. Based on the organization’s capabilities, these should be lessened down to three or five initiatives that will lead the business to attain its goals in a sustainable and profitable manner. Throughout the procedure, the entrepreneur and the team work directly with the consultant. Strategic planning is the ability of stating no frequently rather than the ability of stating yes, Dwivedi says. As a business, you can do many things. The reason the entrepreneur is frequently running in circles is they don’t know what to work on. Strategic planning is about discovering a selection of the highestimpact projects. It is a filter. This part is usually 10 to 15 pages long and includes these elements:  Corporate directions: A broad outline of what is needed to achieve vision  Strategic priorities: A list of main projects  Details on actions required for each strategy  Financial projections by market, product plus other potential categories  Action plan: This is a spreadsheet listing each action, responsible person for carrying it out and otherwise involved a timeline for its completion and a key performance indicator to monitor progress. The action plan is an easy summary of the whole plan and should be referred to continually by the team to make sure that daily actions add up to the strategic plan, (Dwivedi, 2017). 4. Executive summary Executive summary is usually a one or two paged according to how Dwivedi used to work with his stakeholders or clients. Even though it’s written last, the executive summary is presented first in the final report. ‘Think of it as creating 81 Chapter Three Origin of Strategy a book summary: You can simply do it if you have read the entire book,’ (Dwivedi, 2017). The executive summary entails the organization’s vision and mission statements and a very brief description of these elements:  Organization and its products or services  Strategic objectives  Major internal and external challenges  Financial overview  Strategic priorities: Projects require to attain the objectives  Action plan: Specific steps in each project. It is also be constructive to take account of a few findings or observations about the organization and its goals. Dwivedi further shares some extra guidelines about how strategic plans should be written as detailed below: The presentation of a final strategic plan is in reverse order In order to craft them more actionable, strategic plans are frequently presented in reverse order as compared to the order in which each area is mentioned above in the strategic planning exercise. In the reversed final plan, the sections appear in this order:  Executive summary  Future state plan  Strategic plan with action plan Current state Executive summary and the future state plan appear first in the plan because we want to highlight the purpose of the whole business, which is creating a roadmap to achieve the goals (Dwivedi, 2017). One can fail to move forward to the future state if the present condition is not accurate. Be clear and concise The plan is supposed to be clear and concise. It is constructive to present it as a PowerPoint document, which gives a visually accessible format for ease of reference. The most favorable length is about 40 to 70 pages. To avoid the risk of skipping important information the plan should not be too brief; and not too longer which may get bogged down in excessive detail, making it harder and boring to implement. Origin of Strategy The concept strategy is derived from the Greek word ‘stratçgos’; stratus (meaning army) and ‘ago’ (meaning leading or moving). Strategy is the action that managers use to attain the organization goals. The further definition of a strategy is an “overall direction set for the organization and its various components to achieve a desired vision’’. Strategy evolves from the detailed strategic planning process. A strategy is about integrating organizational activities, allocating and utilizing the scarce resources within the organizational setting so as to attain the organization objectives. While planning a strategy it is vital to consider that 82 Chapter Three Origin of Strategy decisions are not taken anyhow to the extent that any action taken by an organization is possible to be criticized by those affected, customers, competitors, employees or suppliers. Strategy is also understood as knowledge of the goals, the vagueness of events and the need to take into contemplation the actual behaviors of the members. The preparation of decisions in an organization which exemplify its objectives and goals, reduces the main policies, and plans for meeting these goals, and identifies the business that the organization is to carry out, the type of economic and human organization it aspires to be, and the effort it plans to make to its shareholders, and society at large is a strategy. Features of Strategy 1. Strategy is essential because it is not possible to predict the future without a perfect foresight, so the Organizations must be ready to deal with the uncertain events which comprise the business environment. 2. Strategy relates with long-term developments rather than routine operations. For example, it deals with probability of innovations or new products, new methods of productions, or new markets to be developed in long run. 3. Strategy takes into account the possible behavior of stakeholders and competitors. Strategies dealing with workers can forecast the employee behavior. Strategy is further a well-defined roadmap of an organization. It bears the overall mission, vision and direction of an organization. Maximization of an organization’s strengths and minimization of the strengths of the competitors is the major aim of a strategy in business. Strategy, in short, joins the gap between “where we are” and “where we want to be”. Components of a Strategic Statement The strategic statement of an association sets its long-term strategic direction and wide policy directions. It gives the organization a clear sense of direction and a proposal for the organization’s activities for the upcoming years. The primary components of a strategic statement are as follows: Strategic Intent The organization’s strategic intent refers to the reason for its existence and why it will persist for existence, given that it maintains a competitive advantage. Strategic intent gives a picture concerning what an organization must get into directly in order to achieve the organization’s vision. It motivates the organization stakeholders. It clarifies the vision of the organization. 1. Strategic intent helps management to highlight and concentrate on the priorities. It is also the engine for influencing an organization’s resource base and core competencies to achieve what at first may seem to be 83 Chapter Three Origin of Strategy unattainable goals in the competitive environment. A clearly expressed strategic intent must direct the development of strategic objective or the formulating of goals and objectives that makes possible the organization’s competencies to be controlled in order to achieve maximum value. 2. Strategic intent is the direction of organization’s concentration towards the call for of winning; encouraging individual and teamwork as well as contribution; stimulating people through informing them that the targets are important; and utilizing intention to direct allocation of resources. 3. Strategic intent and Strategic fit are not similar because strategic fit concentrates on utilizing available resources and potentials to the external environment, strategic intent concentrates on acquiring new resources and potentials so as to create and take advantage of future opportunities. Mission Statement Mission statement refers to the statement of the function by which an organization intends to serve its stakeholders. It elaborates why an organization is operating and hence provides a structure within which strategies are formulated. It further describes what the organization does (present capabilities), whom it serves (stakeholders) and what makes the organization unique (reason for existence). A mission statement distinguishes an organization from other organizations by defining its broad scope of activities, products, and technologies it employs to attain its intended objectives. It shows an organization’s present (about where we are). Microsoft’s mission for instance is to assist people and businesses internationally to realize their full potential. To offer ordinary people the chance to buy the same things as rich people, is Wal-Mart’s mission. Mission statements subsist at top level of an organization after the Vision, but may also be made for each organizational department. The Chairperson plays an important role in formulation of mission statement. Once the mission statement is created, it serves the association in the long run, but it may become unclear with organizational development and innovations. In today’s changing and competitive environment, the mission may need to be redefined. However, precaution must be taken about the redefined mission statement because it should have original fundamentals or components. According to Barry Bozeman in his dimensional approach he proposed the ‘bottom-line’ concept in 1984 where he stated that, we may forget everything but concentrate on the original philosophy on which the organization was created (reason d’état). Mission statement has three basic components namely; a statement of mission or vision of the organization; a statement of the core values that shape the acts and behaviour of the workers; plus a statement of the goals and objectives. 84 Chapter Three Origin of Strategy Features of a Mission  Mission should be feasible and attainable.  Mission should be clear enough so that every action can be taken.  It should be inspiring for the management, staff and organization at large.  It should be precise enough that is to say neither too broad nor too narrow.  It should be unique and distinctive to leave an impact in the stakeholder’s mind.  It should be analytical i.e., it should evaluate the key components of the strategy.  It should be credible, i.e., all stakeholders should be able to believe the mission. Vision A vision statement identifies where the organization intends to be in future or where it should be to best suit the needs of the stakeholders. It evaluates dreams and aspirations for the future. A vision is the potential to observe things ahead of themselves. It answers the question, ‘where we want to be’ and it gives a reminder about what we aim at developing. A vision statement is for the organization and its stakeholders, unlike the mission statement which is concerned with customers or clients. It adds value to effective decision making as well as effective business planning. It incorporates a shared perceptive about the nature and aim of the organization and utilizes this view to direct and guide the organization towards a better purpose. It identifies that on achieving the mission, how the organizational future would appear. An effective vision statement must have following basic features It should be unambiguous.  It should be clear.  It should harmonize with organization’s culture and values.  The dreams and aspirations must be rational or realistic.  Vision statements should be shorter in order to be easier to memorize. In order to realize the vision, it should be deeply indoctrinated in the organization, being owned and shared by everyone involved in an organization. Goals and Objectives A goal is a desired outcome or objective that an organization tries to achieve. Goals specify in particular what has to be done if an organization is to attain its mission and vision. Goals make mission more outstanding and concrete. They coordinate and integrate a variety of functional and departmental areas in an organization. Well-made goals have the following features They are precise and measurable.  They look after critical and significant issues.  They are realistic and challenging.  They must be achieved within a specific time frame. 85 Chapter Three  Organisation Specifics They include both financial as well as non-financial components. Objectives Refer to goals that an organization wants to achieve over a period of time. They are the foundation of planning. Policies are created in an organization so as to achieve the objectives. Formulation of objectives is the role played by the top-level management. Effective objectives have the following features. They are not single for an organization, but multiple.  Objectives must be both short-term as well as long-term.  Objectives should respond and react to changes in environment, i.e., they must be flexible.  They should be feasible, realistic and operational. Organization Specifics Strategic management is a continuous process which starts by defining the vision, mission, objectives, and goals of the organization. Vision Vision stays at the top in the main hierarchy of strategic intent. It describes what an organization ultimately wants to achieve in the long term. Alex Miller and Gregory Dess further defined a vision as, “the grouping of intents that are broad, inclusive and onward thinking. (Gregory G.D and Miller A, 1993) Advantages of a Vision John Kotter describes the vision as, “The statement of the organization in the future.” According to Kotter the vision serves 3 purposes as below: (Kotter, 1996) identifies the overall direction for change. This makes decision making simple when in depth discussions arise later on and it assist to reduce disagreements and confusion when individuals work to understand the direction of change.  Inspires individuals to take action in the right direction including understanding why they should work through their own personal short-term pain. Seeing and understanding the long- term view gives them somethingto fight for.  Coordinates the actions of individuals involved which in turn diminishes waste and costs. Asking the question ‘Is this in line with the vision?’ allows people to quickly return their focus to the change effort. Kotter notes that from his experience, creating a vision is an exercise of both the head and the heart which takes some time and always involves a group of people for its formulation. Mission Mission statement is concerned with the role an organization plays in the community. A few definitions of a mission are as stated below: 86 Chapter Three Organisation Specifics The purpose or reason for the organization’s existence (Wheelen T. and Hunger D, 1983) John L. Thompson, (2010) opined that a mission is the vital purpose of the organization, concerning mainly why it is in existence, the nature of the business it is in, and the customers plus stakeholders it seeks to serve and satisfy. Objectives and Goals Objectives tell us about the crucial end results the organization wants to achieve by making a strategy for a selected duration of time. Goals include a wide category of financial and non-financial issues that an organization wants to achieve in a given period of time. Objectives are ways that specify how the goals of the organization shall be achieved. Importantly, objectives are the manifestation of the goals even when it is not stated (Carpenter & Sanders, 2009). Differences between Goals and Objectives  Goals are a wide category while objectives are concise and specific.  Goals are normally set for a relatively longer future than objectives.  Goals are normally actions that are more influenced by the external environment. ● Goals are never measured but objectives are always quantified. P-O-L-C Framework Goals and objectives are a vital element of management, equally in terms of planning and in terms of the wider planning-organizing-leading-controlling (PO-L-C) framework. It is regrettable because the role P-O-L-C and significance seem obvious, they further tend to be left out in managerial practice or inadequately aligned with the organization’s strategy. You can imagine why this may be problematic, particularly since one of a manager’s duties is to analyze employee performance which would be nice if workers could be measured based on how their attainment of personal goals and objectives contributes to those sensitive to the organization’s survival and success. Table 4: Goals and Objectives in the P-O-L-C Framework This table clearly shows the process of stating the shared vision by the leaders or promoters of the organization and this becomes the “Core Business”. 87 Chapter Three Common Approaches to Strategy A proper formal definition tells us that the strategic management process “is the process by which a firm manages the formulation and implementation of its strategy” (Carpenter & Sanders, 2009). Core Values The core values of an organization are the beliefs that are cherished and form the foundation on how the members perform work and conduct themselves. There are various values on earth, but some of them are so crucial and vital to us that throughout the changes in government, society, technology, and politics they are still the core values cherished. In the changing world, core values are constant. Core values are not descriptions of the work done or the strategies employed to achieve the mission. The values underlie the work, interact with each other, and which strategies to be employed to fulfill the mission. The core values are the vital elements of how work is done. They are the practices used every day in everything done in the organization. Table 5: Work Plan This is part of the strategic planning because it shows how the activities will be carried out. The table below shows the Work plan. KPIs – Key Performance Indicators Objective 1 Key Action steps Timeline Outcome Resources Needed Person Responsible KPIs Comments Objective 2 Key Action steps Timeline Outcome Resources Needed Person Responsible KPIs Comments Common Approaches to Strategy Richard P. Rumelt Rumelt’s definition of strategy comprises the following steps (Rumelt, 2011):  Diagnosis: What is the problem to be addressed? How do the vision, mission and objectives of an organization involve its actions?  Guiding Policy: What according to the organization’s approach will be the framework to resolve the problems? 88 Chapter Three  Common Approaches to Strategy Action Plans: How the operations should look like (in detail)? How can the processes be implemented to match with the policy guidelines and to resolve the issues available in the diagnosis? Michael Porter In 1980, Michael Porter identified the following four key elements that need to be considered while forming a competitive strategy:  SWOT, especially the strengths and weaknesses of the organization  Ethical standards or personal values of key executives (management or the board)  The opportunities and threats in the industry  Wider societal and stakeholder expectations Henry Mintzberg Mintzberg (1996) recommended five essential approaches, usually known as 5Ps that can help in creating a robust business strategy.  Strategy as plan: Strategy is an intended course of action to arrive at the intended set of goals; these are similar to the different strategic planning concepts.  Strategy as pattern: Strategy arises from a consistent pattern of earlier organizational behavior. A strategy is continuous over time rather than being planned.  Strategy as position: This consist the standing of products, brands, or the business entities within the market and industry concerning the conceptual framework of the firm’s consumers or other stakeholders.  Strategy as ploy: This is a particular plan and exploitation intended to outwit a competitor.  Strategy as perspective: This kind of strategy is based on the “theory of the business” or it may be a natural extension of a given mindset or ideological attributes of an organization. Types of Strategic Management In a stable and expected setting, strategic planning can enable an organization to manage, achieve, and maintain success. But in real-world situations, a few organizations and their executives experience a perfectly stable and predictable condition. That is the reason it is essential to grasp the concepts of emergent, intended plus realized strategies. In the same way, Realized and Non-realized strategies are important as well. Intended Strategy An intended strategy concerns with the intentions of the organization. It is the strategy that a business entity in the market hopes to implement. Consequently, intended strategies are usually described in detail in the organization’s strategic plan. A strategic plan made for a newly formed firm is known as a business plan. This plan is a rough approach that intends to keep the organization on track. It is hence, an intended strategy. 89 Chapter Three Strategic Management Process Emergent Strategy An emergent strategy is the strategy that emerges with time. It is a strategy that is unplanned which is created by an organization while acting in response to various unexpected threats, opportunities and challenges. Emergent strategies are dynamic in nature. Emergent strategies can end up in both achievement and failure depending on the effectiveness of the strategy. Realized Strategy A realized strategy is the actual and real practical strategy. It is the strategy that an organization really follows. Realized strategies are usually a byproduct of an organization’s intended strategy (organization plans), the firm’s deliberate strategy (portions of the intended strategy that an organization entity continues to follow persistently), and its emergent strategy (what the organization does in reaction to unexpected opportunities and challenges). In some instances, organization’s original intended strategies are misplaced during its journey whereby the deserted sections of the original and intended strategy are known as Non-realized strategy. Strategic Management Process The procedure of assessing the main initiatives that contain resources and performance in the external environments, which a firm's top board manages on behalf of the company owners, is Strategic management. The Five Steps of Strategic Management Strategic management is a very big, complicated, and always-evolving endeavor. Therefore, it is useful to group it into a set of solid steps to explain the process of strategic management. The most commonly used frameworks of strategic management include five steps namely; Goal-setting, Analysis, Strategy Formulation, Strategy Implementation, and Strategy Monitoring (Performance Measures). I have grouped these processes into two general stages − Formulation and Implementation. Formulation  Analysis: Analysis includes comprehensive market, financial and business research on the external and competitive environments. The procedure entails conducting Porter’s Five Forces namely; threat of new market players, threat of substitute goods, power of customers, power of suppliers, industry rivalry, and Market attractiveness); PESTEL, SWOT, and value chain management assessment and combining expertise in each business are part of the strategy.  Strategy Formation: After analyzing internal and external environments, the organization reaches at a generic strategy (for example, low-cost, differentiation, etc.) which is based upon the value-chain implications. It is made for deriving and maximizing core competence and prospective competitive advantages.  Goal Setting: This is the next step of strategy formation. When the defined strategy is in hand, management tends to find out and communicates the 90 Chapter Three Organisation Performance goals and objectives of the organization that are linked to the predicted results, strengths, and opportunities. Implementation  Structure: This implementation phase has the fundamental function of structuring the management and operational processes. As there is a strategy in place, the business now wants to harden the organizational structure and leadership patterns (making many changes if required).  Feedback: This is the final stage of strategic management process. In this final stage of strategy, all the budgetary figures are gathered and disseminated for evaluation. Financial ratios calculation and performance reviews are delivered to appropriate managers, executives and concerned departments. Organization Performance This is a multidimensional concept intended for businesses. Organization performance means how much an organization tallies its goals, mission and vision. Assessment of organizational performance is a core to strategic management. Managers have to understand organization’s performance to discover whether strategic alterations, if need be. The two vital considerations for assessment are as below:  Performance measures and  Performance referents Performance measures are a kind of metrics with which organizations can be measured. Profits, stock price, and sales performance are the common factors to understand how well an organization is competing in the market, and to predict future outcomes. Performance referents are benchmarks or standards used to match an organization’s position along a performance measure. Balanced Scorecard Professor Robert Kaplan and Professor David Norton of Harvard University invented a tool called the “balanced scorecard.” The balanced scorecard tracks a small number of major measures that collectively refers to these four dimensions:  Financial measures  Customer measures  Internal business process measures  Learning and growth measures Financial Measures These measures are linked to organizational effectiveness and profits. Examples comprise financial ratios like the return on assets, return on equity, and return on investment. Some other common financial measures are profits and stock price. Such measures help organizations assess and answer the 91 Chapter Three Organisation Performance key question, How do shareholders see us? Financial measures are so fundamental to a business’s core existence and have long been a matter of significance to senior managers and investors. Customer Measures These measures are customer attraction, satisfaction, and retention. These measures answer the key question, How do customers view us? Examples may be the percentage of new customers added. Internal Business Process Measures These measures are linked with organizational efficiency. They aid to respond the main question stating, what must we excel at? Examples are circumstances of manufacturing the goods or delivering a service. The time an organization takes to manufacture a new product and makes it available in the market is also an example of this measure. Learning and Growth Measures These measures relate to the future. Such measures offer a deep insight to answer the question, Can we continue to improve and create value? Learning and growth measures usually center on the aspect of innovation. An example of this measure is the percentage of new skills learnt by employees every year. Tripple Bottom Line Ralph Waldo Emerson opined that doing well is the result of doing well. That is what capitalism is all about. The balanced scorecard offers a good framework to help executives realize an organization’s performance; the other frameworks concentrate on areas, including social responsibility. (Emerson, 1904/1909) One this framework, the triple bottom line, emphasizes the three Ps, people (ensuring that the actions are socially responsible), the planet (making sure it promotes environmental sustainability), and profit (traditional organization). Entrepreneurial Orientation (EO) The level at which a firm is entrepreneurial is commonly known as, Entrepreneurial Orientation (EO) in the business and academic world. The EO concept gives a great momentum in concentrating not just on entrepreneurship, but on the increase from management and reaching marketing to health care. EO is measured by the following basic factors. (Covin & Lumpkin, 2011; Lumpkin & Dess, 1999)  Risk-taking: This is a key characteristic linked with entrepreneurship. It is the risk that people take by working for themselves rather than being employed. It is the tendency to take the unknown path of being AvantGarde or innovative in building a strategy.  Pro-activeness: Is the illustration of the nature of entrepreneurial procedures to measure the future opportunities, both in regard to products or technologies and in sync with markets and consumer demand. 92 Chapter Three    Organisation Performance Innovativeness: This refers to the introduction of different types of products or services in the market. Entrepreneurs are creative by the very fact of their entry into the market. In the EO concept, innovativeness primarily emphasizes the significance of technological leadership to the firm, and also some changes in the firm’s product lines. Competitive aggressiveness: This is a firm’s action of engaging with its competitors. It distinguishes between the firms that withdraw from direct competition from the firms that insistently competes in their competitors’ target markets. Autonomy: This refers to the self-sufficient action of an individual or a team in bringing forward an idea or a vision and carrying it through to completion without being demoralized or dominated by overly stringent organizational bottlenecks. Conscious Capitalism This concept takes into consideration to serving all stakeholders involved comprising their employees, humanity, and the environment not just only management shareholders. The conscious capitalism notion was invented by Whole Foods co-founder John Mackey and marketing professor Raj Sisodia. (Mackey and Sisodia, 2013) Principles of Conscious Capitalism Higher Purpose: A company that concentrates on the ideology of conscious capitalism focuses on a foundation beyond pure profits hence inspires its key stakeholders. Stakeholder Integration: Businesses have multiple stakeholders consisting of customers, employees, suppliers, investors, among others. Some firms focus on return to their shareholders to the exclusion of everything else. A conscious business, also concentrates on the whole business ecosystem to construct and optimize value for all of its stakeholders. Conscious Leadership: “We” is the emphasis given by Conscious leaders rather than a “me” mentality to steer the business to success. By doing so, they work to indoctrinate a culture of conscious capitalism in the enterprise. Conscious Culture: Corporate culture is the summation of the values and principles that contain the social and moral fabric of a business. When the policies of conscious capitalism fill the enterprise, fostering a spirit of trust and cooperation among various stakeholders is what we call a conscious culture. Organization Environment The external environment constitutes of the factors outside the organization that influence the organization’s ability to function. There are some factors of the external components that are manipulated and managed by company marketing while others need the organization to create adjustments. It is of the essence to scrutinize the core components of a company’s external environment, and continue being alert all times. If the company cannot 93 Chapter Three Organisation Performance evaluate its external environment, then it may fail to meet the market demands. The Five Components of the Organization’s External Environment The following are the five components of external environment (Don et al, 2007; Jennings & Lumpkin, 1982: 791–803):Customers: These clients can attempt to pressurize through marketing and strategic release of company information. However, finally a firm’s relationship with the customers is based on finding ways to let them purchase the services or products. Market research is the apparatus for shaping the effectiveness of the company’s marketing communication, and to formulate a decision about what changes should be made to forthcoming marketing programs to increase sales. Government: Government regulations, especially connected to product development, packaging and shipping play a significant role in the cost of doing business. It also influences the ability to develop into new and emerging markets. The government can enact new regulations on how a company must package the products for shipment, which can enhance the unit costs affecting the profit margins. International legal rules make processes that the company must follow to get the product marketed in foreign markets. Economy: The Company should be good at monitoring the economy and reacting to it, rather than trying to manipulate it according to its needs. Economic factors affect how the products are marketed, the amount of money used on business growth and the nature of target markets the company will follow. Competition: Competition affects how a company functions in business and how it addresses the target market. It is a strategy to discover markets with less competition, or the company may make a decision to compete directly in the same target market. The achievement and failure of competitors affect marketing planning, as well. For instance, if a long-time competitor decides to quit marketing due to financial losses, then it would be vital to adjust the planning to take advantage of the situation. Public Opinion: Scandals can be dangerous to the organization’s image. The public view about an organization can affect sales. It may decrease if it’s negative, or it can boost sales with positive company news. An organization can persuade the public opinion by releasing strategic information through press release. However, it is also very crucial to monitor and judge public opinion to attempt and resolve potential issues before they go out of control. External Environment Analysis External environment analysis is a crucial part of strategic management. (Jennings & Lumpkin, 1982). 94 Chapter Three Organisation Performance PESTEL Analysis PESTEL analysis entails the Political, Economic, Social, Technological, Environmental plus Legal assessments. The external environment analysis is for conducting a strategic analysis or carrying out market research. It offers a certain overview of different macro-environmental factors that the company has to consider.  Political factors analysis is associated with how and to what extent a government interferes in the economy through labor law, political factors include tax policy, trade restrictions, environmental law, tariffs, and political stability. Political factors may also be connected with goods and services which the government allows (merit goods) and those that the government does not allow (demerit goods). The government can have a great influence on the general health, education, and infrastructure of a country.  Economic factors include factors such as economic growth, interest rates, exchange rates and the inflation rate. These factors can have an influential effect on how the businesses operate and make decisions. For instance, interest rates can affect the firm’s cost of capital and thus influence business growth and expansion. Exchange rates can affect the costs of export, the supply and price of imports.  Social factors comprise issues like population growth rate, health consciousness, age distribution, career attitudes plus emphasis on safety. Trends in the social factors can affect the demand for a company’s goods plus services and how the company operates. For instance, ageing population leads to smaller and less-willing workforce (and increases the cost of labor). In addition, companies may change various management strategies in connection with the social trends (such as recruiting more females).  Technological factors comprise ecological and environmental aspects, such as Research and Development activity, automation, technology incentives and the rate of technological change. They can manipulate the minimum efficient production stage, barriers to entry, and influence outsourcing decisions. Additionally, technological shifts can affect quality, costs, and lead to innovation.  Environmental factors are the conditions like weather, climate, and climate change, which can especially influence tourism, farming, and insurance sectors. Increasing awareness to climate change is escalating the interest in how companies operate and what products are offered.  Legal factors constitute laws pertaining to discrimination, consumer affairs, antitrust, employment, and health and safety. These factors can influence the operations, costs, and the demand for the products. Legal factors can also affect the brand value and reputation of a company. When governmental bodies establish legislature and policies that influence how businesses operate thus Legal factors interconnect. 95 Chapter Three Organisation Performance Industry Judgement Judging the industry is a significant strategic function. Without the proper consideration of the industry, it is difficult to take strategic decisions regarding the products and services. Therefore, the industry can be judged as below: Market Size: It is crucial to know how large the market is and why it’s worth going after. This means finding the number of customers and what are the revenue possibilities in the market? Industry Forces and Trends: There will be need to outline what is happening in the industry. PEST and Porter’s analysis can help in this process. PEST Analysis  P - Political factors: What is the government role played?  E - Economic factors: What is the current state of the economy in the country?  S - Social factors: What are the trends, consumer attitudes demographics, buying patterns and opinions?  T - Technological factors: What is the consequence of changing technological trends on your industry? Porter’s 5 Forces Analysis      Threat of New Entrants: How difficult or easy it is for someone to enter the industry? If it is very easy then it will be crowded with competitors. Threat of Substitute Products (or Services): If another product or service decrease the demand or displace the company, there is a risk. Bargaining Power of Customers: In terms of pricing and terms, how much power does the customer poses? Are they organized to exercise the purchase power? Bargaining Power of Suppliers: If it’s difficult or nearly impossible for the company to switch, that means the suppliers have the upper hand. Competitive Rivalry of the Market: Factoring the first four forces, the company can arrive at a good understanding of the playing field of the game against its rivals. Competition Once the size of the market has been found and gained knowledge about the competitors in the industry, then the company is going to have to start dropping names and point out the major competitors. For this, a SWOT analysis is important. SWOT Analysis   S – Strengths: What do competitors have which is unique, i.e., technology, brand, people, or lean value chain? W – Weakness: Is there lack of knowledgeable management, unreliable customer service, and poor customer retention? 96 Chapter Three   Organisation Performance O – Opportunities: The advantages accruing from environmental trends or changes that may benefit organization? T – Threats: What is the kind of threats that keeps the company and competitors worried? Porter’s three Generic Strategies    Cost Leadership: This refers to having the capacity to scale operations in order to offer lower and best prices on the market. Differentiation: This is where the product or service offers something distinct or unique than those of the current cost leaders and outstanding based on the “newness” factor. Focus or Segmentation: This is about the focus on a specific or “niche” target market and focus on building traction with a smaller market demand in the first place. Mapping Strategic Groups Strategic Mapping is a process to measure the competition and relative position of an organization in the industry. (Hunt, 1972) Market Perspective on Other Players The concept of strategic group as used in strategic management refers to group organizations within an industry that have related set of strategies or similar business models. To be profitable and make a change in the market, select the top five other players in the same strategic group and make a list, then develop a profile for each, pinpointing the following:  What services are offered by the competitors?  Which beneficiary group are they conniving with?  What is their probable impact on the market?  What future plans do they have? How the relationship with them lets your company provides better services? Apart from understanding these players, it is also very essential to know about the marketplace the group players work in and how this could impact future strategies. Think about the two most important factors that can drive success (or ensuring outcomes) for the users or beneficiaries of your organization. Following are examples of these factors:  The ability to get the service immediately.  One stop service for all the needs.  A tailored service depending on the stakeholders’ unique needs. After picking the top two factors as appropriate, draw up a matrix showing each factor as illustrated in the following example: 97 Chapter Three Organisation Performance Figure 2: Strategic Group Mapping The technique which businesses are using to allow them to look at how rivals are competing in the same market is termed Strategic group mapping. To run a prosperous business, it’s vital to know where the competitors stand (Hunt, 1972). Create your own strategic group map Place the selected players in your organization’s strategic mapping group on the above matrix. Draw a circle for each that offers idea about their comparative performances. Draw a circle for your organization there as well. Are there some gaps? Are there some overlaps? Are there some options for change? Resource Based Theory The containment of adequate strategic resources enables an organization with a suitable opportunity to expand the competitive advantages over its competitors is what the Resource-based theory contends (Barney, 1991: 99120). Types of Resources The tangibility of a company’s resource is a vital consideration within resourcebased theory. Resources that have a physical presence are Tangible resources. A company’s property, plant, and equipment, as well as cash, are tangible resources. In contrast, intangible resources are not physically present like services in form of knowledge and skills of employees, a company’s reputation, and a firm’s culture are intangible resources. Capabilities are an additional key concept. Resources refer to what an organization owns, capabilities refer to what the company can do. Capabilities 98 Chapter Three Organisation Performance often arise over time while the company takes actions that build on its strategic resources. Some firms build up a Dynamic Capability, where a firm has a unique ability of creating new capabilities to keep pace within the changing environment. A resource is important because it helps a firm make unique strategies that capitalize on opportunities and minimizes threats. A resource cannot be altered when alternative measures to attain the benefits that the resource offers is impossible to obtain and a rare resource provides strategic advantages to the firm which owns it. Business competitors find it hard to duplicate resources that are difficult to reproduce. Some of these are protected by a variety of legal means, including trademarks, patents, and copyrights. Resource-based theory also concentrates on the merit of an old proverb; “the whole is greater than the sum of its parts”. Strategic resources are produced by several strategies and resources, joining them together in a method that cannot be copied. Distinguishing strategic resources from other resources is significant. Cash is a vital resource. Tangible goods like car and home etc are as well imperative resources. The Importance of Marketing Mix Leveraging resources and capabilities to produce desirable products and services is significant. The marketing mix also identified as the four Ps of marketing provides vital insights into how customers are convinced to purchase the goods and services. The real function of the marketing mix is not to trick but actually to provide a strong combination between the four Ps (product, price, place, and promotion) to offer customers a useful and persuasive message on the market. Intellectual Property Intellectual Property (IP) refers to creations of the brain power for which a right is given to the creators or inventers by law. The rights that protect trademarks may include music, literature, plus other artistic works; discoveries and inventions; and words, phrases, symbols, and designs. Intellectual Property (IP) contains the creation of a knowledge-based product. One can’t ‘own’ ideas in the head but they must be in a tangible form, such as drawings, reports, plans, or specifications. Then they are an intellectual property protected by laws of a particular country (Merges, 2004). This can help Social Enterprises in their projects when they develop products on the market hence they register with Uganda Registration Services Bureau to enjoy these rights which takes the following forms:  Patents: The inventor must be identified, but the ownership may be assigned to another person. For example, if something is invented while in work term 99 Chapter Three         Organisation Performance and the employer patents it, the employee is the inventor, he or she owns the invention and patent (also applies to copyright). Contracts: Employer’s IP policies, which are usually stipulated in the employment contract, are useful. In many companies, employees sign a contract where all Intellectual Property rights are owned by the employer at the workplace. Industrial Design Rights: An industrial design right safeguards the visual design of objects. An industrial design can consist of a shape, configuration or composition of pattern or color, or mix of pattern and color in 3D form that has an artistic value. Plant Varieties: Plant variety rights are the rights to commercially use an innovated variety of a plant. The variety must amongst others be a fact and distinct. Trademarks: A trademark is a sign, design or expression which distinct from other products or services of a particular trader from similar objects of others. Trade Dress: It is the uniqueness of the visual appearance of a product or its packaging that signify the source of the product to consumers on the market. Trade Secrets: A trade secret could be a formula, practice, process, design, instrument, pattern, or compilation of information which is not yet known or ascertainable. Recognizing the Contributors: Whoever owns the IP, contributors must be given appropriate recognition. In case of reports or drawings, the contributor’s name should appear in the documents. However, for technical manuals, software, or advertising copies, it could be odd for the inventor to be identified. Exception Cases: If an invention is developed while working on an employer’s invention, disclose this information and the employee invention must be excluded from the employment contract. IP rights breach, also known as ‘infringement’ of patents, copyright, and trademarks, and “misappropriation” of trade secrets, is a violation of civil law or criminal law, based on the type of intellectual property engaged, jurisdiction, and the nature of the action employed. Value Chain The value chain concept is based on the procedure view of organizations. In consideration of a manufacturing (or service) organization as a dynamic system, made up of several subsystems where each one has inputs, transformation processes and outputs. The inputs, outputs, and transformations need the acquisition and consumption of business resources, such as money, materials, equipment, labor, land, buildings, administration plus management. The management procedure of carrying out value chain activities determines the costs and impacts the profitability of organizations. Organizations in the real world connect in hundreds, even thousands of activities whereas converting their inputs to outputs depending on the majority 100 Chapter Three Organisation Performance of these entities. These activities are classified as primary or support (secondary) activities. Michael Porter (1985) suggested the following primary activities:  Inbound Logistics: This comprises all of the activities required to receive, store, and distribute inputs which are part of the circumstances with the suppliers.  Operations: Refers to the whole activities required to transform a variety of inputs into outputs (the products and services).  Outbound Logistics: Comprises of all sets of activities required to store, collect, and disseminate the output.  Marketing and Sales: Marketing and sales comprises of the activities to inform buyers concerning the products and services, persuade the buyers to purchase them, and enable their procurements.  Service: Service refers to the activities required to maintain the product or service functioning effectively after it has been sold and delivered. Secondary activities include the following:  Procurement: The acquisition of inputs or the various resources for the company.  Human Resource Management: The activities comprised in recruiting, training, improving, compensating and also dismissing the personnel.  Technological Development: This is about equipment, hardware and software, processes and technical knowledge concerned with transformation of inputs into outputs.  Infrastructure: The functional organization departments such as accounts, legal, finance, planning and executing, public affairs and public relations, government relations, quality management and general management of the organization. Other Performance Measures: There are four types of performance measures:  Key Performance Indicators (KPIs) portrays what to do to increase performance dramatically.  Key Result Indicators (KRIs) gives an overview of the past performance. They communicate how management has done on a balanced scorecard perspective.  Performance Indicators (PIs) offer an idea to the staff and the management on what to do.  Result Indicators (RIs) articulate about what the staffs have done. Key Performance Indicators (KPIs) KPIs are a set of actions that focus on the aspects of organizational performance that are mainly needed for current and future achievement of the 101 Chapter Three Organisation Performance organization (Weiss, 1998). There are a few KPIs in an organization, and they have specific characteristics as shown below:  They are non-financial process of procedures.  They are done regularly or frequently.  They are endorsed by the CEO and the senior management.     They are acknowledged by the staff. They are stakeholders’ responsibility. They affect the organization significantly. They also have a positive impact on other measures. Key Result Indicators (KRIs) KRIs are performance measures dissimilar from KPIs. KRIs include:  Customer satisfaction  Net profit before tax  Profitability of customers  Employee satisfaction  Return on capital in use Performance Indicators and Result Indicators There are many performance measures falling between KRIs and KPIs are performance indicators and result indicators (PIs and RIs). The performance indicators are significant but they are not the solution to the business. The PIs boost teams to align themselves to the organization’s strategy. PIs complement the KPIs and they are exposed with KPIs on the organization, department and team scorecards. The following are some PIs:  Percentage increase in sales to the top 10% of customers or clients.  Number of employees’ suggestions implemented of recent.  Customer complaints from key customers.  Sale calls organized for the next one to two weeks.  Late deliveries to key customers. The following are some RIs −  Net profit on key product lines  Sales made yesterday  Week’s sales to key customers  Debtor collections in week The 10/80/10 Rule of Performance Measures An organization must have around 10 KRIs, up to 80 PIs and RIs, and 10 KPIs. No more than these are actually used, but in many instances fewer measures are desirable. (Maxwell, 2014: Sequeira et al, 2009). 102 Chapter Three Organisation Performance Organization SWOT Analysis SWOT Analysis refers to a strategic planning method used to approximate the strengths, weaknesses, opportunities, and threats of a project or business entity. It comprises finding out the objectives of the business enterprise or project, and also analyzing the internal and external factors that can be favorable and unfavorable to achieve objectives. SWOT analysis must start with the definition of a desired outcome or objective. It is sometimes included into the strategic planning model.  Strengths: Characteristics that offer an advantage over others in the industry.  Weaknesses: Characteristics that are a disadvantage and undeserved.  Opportunities: External possibility to improve in the organization environment.  Threats: External fundamentals that could cause trouble for the business. SWOT Analysis Breakdown Strengths Strengths should consider what the organization can do with the internal resources. All organization assets might be grouped as strength, but the extent of contribution to the competitive advantage of the business can fluctuate greatly. The reputed popular customer service, brand-name, and restricted access to systematic supply chain network are strengths. Weaknesses Where the organization lacks strength it shows weakness like outdated production equipment, poor product positioning, and poor customer service are weaknesses. High employee turnover that leads to collapse of talent is a major weakness of the company. Opportunities In a general sense, any change in the external environment that may support the company is an opportunity to the company. Weakening of competitors by for example a poor cash-flow position is an opportunity to capture market share. Similarly, changes in tax structure, progress in economic trends, or the enactment of favorable laws are all opportunities. Threats Threats stem from a scarcity of opportunities or from the strengths of competitors. The alterations in new competitor innovations, consumer preferences, restrictive regulations, and other unfavorable trade limitations or barriers are all examples of threats. Different Types of Strategic Management Business level strategies comprise of the plans or methods a company may use to perform various functions in operating their business. More business strategies are needed in case of large businesses since more departments with dissimilar business functions exist in them. Though, small businesses 103 Chapter Three Organisation Performance may also implement these strategies. Business-level strategies are usually used to give guidelines for owners, managers and employees. Types of business level strategies Coordinating Unit Activities: The coordination of various individual unit activities found in a business is a regular strategy. These unit activities can be differentiated by departments, sections of the department and individual positions of work. The coordination is normally done by a manager or supervisor. The manager is responsible to unite employees on the same platform and helping them on accomplishing various goals or objectives of the company. Allocating resources must also be a prime duty of the manager. Utilizing Human Resources: Utilization of the existing human resources and the overall economy is a must for business success. Some variety of human labor to accomplish business goals and objectives is always needed. Companies normally develop a business-level strategy to make sure that the organization has sufficient human labor to produce specific goods and services. This business-level strategy is also destined to ensure that the correct type of human labor is acquired. An analysis to observe if skilled or unskilled labor is required to complete business functions is a usual part of the strategy. Developing Distinctive Advantages: Distinctive core competencies or competitive advantages are necessary for success of a company. Core competencies represent the activities or abilities that a firm holds for better output than another company. These strategies may comprise acquiring economic sources cheaper than others, more efficient and effective production, unique goods or services and a better cost-effective supply chain. Identifying Market Niches: Market niche identification usually consist economic analysis and finding a specific consumer demand that is unmet or where there is inadequate supply to fill the demand. Other niches may comprise modifying products, targeting specific demographic groups, etc. Monitoring Product Strategies: Review of business level strategies comprised in the operation of an organization is compulsory. Evaluation of the acquisition process, the equipment, and the business facilities as well as administrative costs for adequate rate of return are needed to stay on track. Reviewing business level strategies help to remain flexible in business and make necessary changes when needed. Cost Leadership Cost leadership is a concept invented by Michael Porter (1985), which illustrates a method to confirm and manage the competitive advantage. Cost leadership, mainly, refers to the lowest cost or price of operation on the market. The upshot of company size, efficiency, scope, scale, and accumulated experience or learning curve is the cost leadership. The cost leadership strategy aims at utilizing scale of production, well identified scope and other economies like an excellent purchasing strategy, using modern and up-to-date technologies, and producing highly standardized products. In the recent years, an increasing number of companies have selected a strategic mix to achieve market leadership. The mixture of these patterns reflects 104 Chapter Three Organisation Performance concurrent effects of superior customer service, cost leadership, and product leadership. This battle of prices employs the following strategies: Price leadership This is a unique concept. A company might become lowest cost producer, yet not the cost leader. A company may have a higher-than-average profitability in case of price leadership. The cost leaders don’t battle just on price and are very effective in competition, but having a low-cost structure and management is another issue. Niche Differentiation The term niche differentiation which is also known as niche separation, niche segregation, and niche partitioning, applies to the discipline of ecology as well and refers to the procedure by which competing forces use the environment differently in a way that helps them to jointly coexist. Differentiation This strategy means making an organization or brand stand out on the market by giving unique features, benefits, services or other basics of the business. This strategy refers to identifying the most significant criteria used by buyers in the market and then designing product, service or other offerings in the best achievable way to meet those criteria. Offering the best quality product, the finest solution, an exclusive or modern feature or tool, and organic materials are examples of differentiation. Differentiation strategies are further considered along with higher price points than low-cost providers as extra money is required to offer a better overall solution. Depending on the valueadded basics before going for the low-cost options is key. Differentiation Focus Differentiation focus depends on one or a small number of target market segments. In some industries, different market segments require different types of products or services. By means of a differentiation focus, the business entity focuses on one or more given segments with which the company’s strengths best align. This more focused approach allows maximizing the hard work in marketing to the preferred segments and lets the organization to invest the resources to influence the segments of the brand’s superior benefits. Low-Cost Limitations Typically, there is always more opportunity for differentiated business strategies than for low-cost strategies. Eventually, just one company emerges as the accurate low-cost provider in the market. Being the second-lowest or third-lowest provider doesn’t make the game change. In various settings, many firms’ battles to be low-cost providers, but only one company stands out and limited profits are spread around. Thus, the companies that don’t want to engage in a high-risk battle of cost leadership must choose to go for a differentiated approach. 105 Chapter Three Organisation Performance Porter’s Model According to Porter, 1985, he mentioned the famous four main competitive advantage strategies and by stating five forces of competition models of differentiation. They comprise differentiation and differentiation focus, which are two alike but distinct differentiation strategies. Porter noted five competitive forces namely; rivals, new entrants, suppliers, buyers, and substitutes. Focus Strategies Cost leadership strategy and differentiation strategy share one vital feature whereby both are employed to attract customers. The policies that call for extensive markets can be contrasted with strategies that target a quite narrower niche of potential customers. These strategies are identified as focus strategies and they are applied to both cost leadership and differentiation as mentioned below:  Focused Cost Leadership Strategy: A focused cost leadership strategy requires competing based on price to pursue a niche market. An organization following it cannot charge the lowest prices in the industry. Instead, they might charge low prices relative to other organizations in the industry. The nature of the shallow target market varies across businesses that employ a focused cost leadership strategy. Sometimes, the target market is identified by demographics. In all other instances, the target market is identified using the sales channel.  Focused Differentiation Strategy: A focused differentiation strategy provides unique features that accomplish the demands of a shallow segment of business market. Companies employing a focused differentiation strategy apply the efforts on a particular sales channel, like as selling products online only. Others target particular demographic niches. A differentiation strategy consists providing unique features to persuade a variety of customers. However, the requirement to satisfy a narrow market demand means that the ambition of uniqueness is taken to the “next level” by companies in a focused differentiation strategy. Therefore, the unique elements of a focused differentiation strategy are often specialized. Advantages of the Focused Strategies  In case of focus differentiation, high prices can be charged. Definitely, these companies often price their goods far above the ordinary, in pursuit of a differentiation strategy.  Companies frequently develop exemplary expertise about goods and services that they offer in focused strategies. In the markets where product knowledge is crucial, rivals and new entrants discover it hard to compete with the companies that follow a focus strategy. 106 Chapter Three Organisation Performance Disadvantages of the Focused Strategies  The limited demand available within a niche becomes a problem. First of all, the growth ambitions can get obstructed. When its target market is served well, extension might be the only way to grow, and this requires a new set of skills.  The niche could get weak or be taken over by superior players. For instance, many gun stores have gone out of business because Wal-Mart and sporting goods stores started carrying an impressive arrangement of firearms. Best-Cost Strategy A best-cost strategy relies on offering customers best value for money by focusing both on low cost and upscale difference. The fundamental aim of the best-cost strategy is to maintain costs and prices lesser than other providers of the same products with the same quality and features. Challenges of Best-cost Strategy Some organizations struggle basing on offering either low prices or unique features. Other organizations want both to be effective in their strategy. Companies that offer products or services in low prices and also offer considerable differentiation are said to be following the best-cost strategy. This strategy is relatively hard to execute as inventing some unique features and then communicating the value of these features raises the costs of doing business. Product development and advertising are costly. On the other hand, organizations that are capable to manage and implement an effective bestcost strategy achieve success beyond the ordinary. Target Best Cost Strategy Target appears to be following a best-cost strategy. The firm charges prices that are relatively low among retailers while at the same time attracting trendconscious consumers by carrying products from famous designers. Best-cost Strategy and Low Overhead Business Model A best-cost strategy can assist the organization to apply a business model with incredibly low fixed costs and overhead in comparison to the costs its competitors are incurring. The Internet has made this achievable for some organizations. Amazon, for instance, charges lower costs as it does not tolerate the operating expenses that “brick and mortar” retailers such as WalMart. Considering that alone, this would be a low-cost strategy but Amazon also gives an unmatched collection of goods. This blend makes Amazon the unquestioned leading e-commerce in North America. Adopting a best-cost strategy by considerably reducing the expenses is also possible. Restaurant operations pose significant overhead costs, comprising of rent and utilities. Some intelligent chefs evade such costs by selling their food on the streets. 107 Chapter Three Organisation Performance People vending products at cheaper prices on streets are becoming a popular trend today. Moves in Strategic Management A move is a way of creating competition in the business market. There are Competitive and Cooperative moves as detailed below:Competitive Moves Organizations can adjust to a variety of different strategic moves to form a competitive advantage in its niche market. The main aim is to make a clear and recognizable difference that possibly will be significant to the customers, and it must be impressive which the competitors cannot match. A competitive advantage can be modified by creating a strategy of leadership concentrating on operational and functional features such as cost, innovation, quality, and customer experience. However, it is true that an organization can identify a single factor that it is extraordinarily good and then concentrate on the right strategy depending on the identified factors below: Knowledge A variety of information systems strategy can let an organization contain a strong competitive advantage by making it possible to capture and share the knowledge of the experts in the company. By utilizing the knowledge-capture software or a safe and devoted forum where one can ask the experts to advice on the best practice, information on various essential business processes. Giving out the knowledge can reduce costs or develop performance and efficiency in the areas of competitive advantage, like product development, production, engineering and customer service. Cost Costs can be a vital competitive advantage. By being a low-cost manufacturer, an organization can give customers the best prices that the competitors can’t match. Offering low prices while maintaining the quality together can strengthen the competitive advantage. There are a variety of strategic moves that can be implemented to reduce costs, comprising making an investment in efficient equipment, outsourcing production to a low-cost manufacturer, or in cooperation with suppliers to develop the supply-chain efficiency. Innovation Innovative strategy gives a competitive advantage by developing goods and services that differentiates the company or firm and solves the customer demands more effectively than competitors. The product development plan must focus on features that give customers some outstanding value or a unique contribution. These resourceful features give a strong advantage due to the fact that competitors find it hard to copy these strategies or to give substitutes of the same value. Partnership A partnership strategy can give competitive advantage. Suitable business contacts can provide access to strategically essential skills, components and 108 Chapter Three Organisation Performance many other resources that can allow the organization to innovate and differentiate. Integrating the operations with business allies in the supply chain area can also help in getting a competitive advantage. It can give exclusive access to main supplies and may considerably create limits to entry for competitors. Customer Experience Research shows that knowledge of customers and providing crucial detailed service are the single most sustainable type of competitive advantage. There are four main areas considered:  Customer research;  Quality of customer experience and customer service;  Sales channels giving huge customer information; and  Marketing material by means of customer information to create important personalization. Cooperative Moves While competition is vital and unavoidable, cooperation can occasionally be profitable. Cooperative moves permit organizations to take pleasure in improved success that might be unapproachable otherwise. Cooperation enables companies to share the resources and to benefit from each other’s achievements. Cooperative organizations take on risks, consisting losing control over operations, possible secret leaks, and accepting partners to take advantages. The following are examples of the Cooperative moves:Joint Ventures The joint venture is a combined and special arrangement between two companies that involves each contributing to the development of a new entity. Joint venture allies share decision-making power, operation control, and profits of the joint venture. Usually, two companies enter a joint venture to gain from an opportunity. In some instances, a joint venture is intended to respond to a shared threat. Strategic Alliances Strategic alliance is a joint venture but it doesn’t create a new entity. It is a cooperative deal between two or more companies. Collocation Collocation is the provision of goods and services under different brands that are situated close to one another. Theatres and art galleries usually get clustered in one neighborhood. Customers get various choices in case of collocation. Furthermore, a set of collocated companies can attract a larger customer base collectively than the added sum of individual locations. Competitor’s Moves Apart from identifying operational strategies, organizations further should make a decision on how to react to moves made by rivals. There are three factors that create the response to a competitive move: capability, and awareness, motivation. These factors in combination decide the level of competition tension that exists amidst rivals. The outcome of a series of 109 Chapter Three Organisation Performance moves and countermoves could be very difficult to foresee and importantly, miscalculations can be costly enough. Quick Reaction Companies may require reacting in response to various situations, for example such as head-to head advertising campaigns, price cuts, and attempts to snatch key customers. Quick reaction is important. A long retardation in response provides the attacker with an upper hand. Coopetition (by Raymond J. Noorda, 1990) This a strategy that employs insights attained from the game theory to understand when it is proper for competitors to work jointly. Coopetition games are calculative models that are embraced to examine which avenues collaboration among competitors can yield profits to all players and enlarge the market. The summary about Coopetiton is as follows:  The act of cooperation amongst competing companies by forming a joint strategic alliance designed to help both companies.  Entails a mixture of cooperation with suppliers, customers, and companies manufacturing related products.  It is usual in the technology industry, especially between software and hardware companies. No Hesitation It is simple to become puzzled by the overwhelming sets of competitive and cooperative moves available. As more industries get fast-paced, hesitation can bring disaster. Occasionally, competition gets altered into hypercompetition, requiring very quick and random moves that can weaken the competitive advantages. Consequently, it is frequently better to react quickly rather than waiting to take a step after long-timed examination and hesitation to shake hands. International Business Strategies Competing in global markets is one of the most essential activities for a country’s economy. Though, as with any other field of business, there are various advantages and disadvantages of the process. Types of International Business Strategies An international company can use a number of business strategies, based on its situation. New companies will face different challenges than companies that are old. Consequently, the strategies they will implement are often different from the ones of key competitors. There are essentially four types of business strategies a company may choose employ. Growth Strategy A growth strategy is the adding of new products or finding and develop new features to existing products. At times, a company may be forced to adapt or 110 Chapter Three Organisation Performance increase its product line to struggle with its competitors. Otherwise, clients can shift to a new technology of a competitive company. For instance, mobile phone companies have need of adding new features or inventing new technology. Those who don’t keep up with consumer demand will go out of business almost immediately. A growth strategy may also be implemented by choosing a new market for the company’s products. Sometimes, it can happen by accident. Product Differentiation Strategy Product differentiation strategy can be able to give a competitive advantage to companies, such as advanced quality or service. For instance, an air purifier producer may differentiate from competitors with a superior engineering design. Product differentiation strategy is normally used to set a company apart from key competitors. It is established that product differentiation strategy can also aid a company develop brand loyalty. Price-Skimming Strategy A price-skimming strategy is the charging of higher prices for a product in relationship to competitors, particularly during the introductory phase. A company may use a price-skimming strategy to rapidly gain its production and advertising costs. On the other hand, there must be something special about the product. For instance, a company may bring a new type of solar panel on the market. If the firm is the only one that is selling the product, then customers may pay the higher price. One of the disadvantages of this strategy is that it persuades competition relatively as quick as possible. An innovative individual who poses technological knowledge may see the high profits the company is gaining and launch their own products. Acquisition Strategy A company with enough capital may use an acquisition strategy for competitive advantage. Purchasing a new company or more product lines of another company is the main policy in such a kind of strategy. For instance, Facebook’s amalgamation of WhatsApp is a part of Facebook’s merger and growth strategy. Competition in International Markets There are basically five options for competing in international markets as detailed below: These are (1) exporting, (2) creating a wholly owned subsidiary, (3) franchising, (4) licensing, and (5) creating a joint venture or strategic alliance. The alternative to choose depends on how much control a firm wants to contain over its operation, the magnitude of risk involved, and the share of the operation’s profits the company gets to keep. 111 Chapter Three Organisation Performance Exporting This entails producing goods in the home country and then exporting them to another country. Once the products arrive at the foreign shores, the exporter’s duty is over. A local company then sells the goods to local customers. Once the exported products are discovered to be available in a given nation, exporting often becomes unwanted. An exporting company loses control of management and operation of goods’ sales once they are turned over to a local company for sale. Further, an exporter earns money when it sells its goods to a local firm, but it cannot get any profit when the end users buy the goods. The easiest way of entering an international market is through exporting but too risky. Wholly Owned Subsidiary A wholly owned subsidiary is a new business in another country owned by the foreign company. It can be good for business enterprise which means that the company builds up the entire operation by itself and the other possibility is purchasing an existing operation. Having a wholly owned subsidiary is a good alternative as the company poses complete control over the operation and gets all the profits. It can be relatively risky, however, as the company must pay for all of the expenses required to set it up and operate it. Franchising Franchising involves a company (franchisor) granting the rights to utilize its brand name, products, and processes to other companies (franchisees) in lieu for a fee (franchise fee) and a pre-set proportion of franchisees’ revenues (a royalty fee). Licensing This entails permitting a foreign company the right to produce a company’s product within another country in return for a fee. The products are usually manufactured using a patented technology. The firm entity that grants a license avoids many types of costs, but also the profits are limited. The firm further loses control over the use of its technology. Joint Ventures and Strategies Alliances In a Joint Venture (JV), the involved companies contribute to the development of a new entity. In such an arrangement, companies work cooperatively, but a new company is not created. The company and its partner shares decisionmaking, control over the operations, and the profits. JVs are particularly attractive when a company thinks that working closely with ordinary locals will provide it essential knowledge, increase acceptance by government officials, or both. 112 Chapter Three Organisation Performance Advantage of International Business  Earning valuable foreign currency: International business empowers a country to earn important foreign currency by promoting and exporting its goods to partner countries.  Division of labor: Competing in international markets fosters specialization in the production of goods and services. For that reason, quality goods are produced by the best players.  Optimum utilization of available resources: International marketing reduces wastage of national resources. Every nation tends to create the most favorable use of its natural resources.  Benefits to consumers: Consumers become the superior due to global business. Better quality goods are available at reasonable prices.  Encouragement to industrialization: In global marketing, the exchange of technological knowledge enables less developed and developing countries to set up new industries.  Economies of large-scale production: Production on a bulky scale becomes a standard because of extensive demand. The value of largescale production becomes available to all participants on global marketing.  Stability in prices of products: International business diminishes the wide fluctuations in the prices of products. It further offers stabilization of prices worldwide.  Enlarging the market for products: International marketing expands the market for products all over the world with the escalating scale of operation, and the profitability of the business increases.  Providing employment opportunities: International marketing leads to a boost in employment opportunities. It further raises the standard of living of the host nations. Disadvantages of International Business  Adverse effects on the economy: One country’s calamity affects the economy of the partner country. In addition, large-scale exports diminish the development of importing countries. Consequently, the market of the importing country possibly will suffer.  Competition from developed countries: International business hinders the growth and development of developing countries, if international business is not regulated and controlled.  Rivalry amongst nations: This is the competition and tendency to export more merchandise can increase the rivalry between countries. This can interrupt international peace and progress.  Colonization factor: The importing country may become a settlement due to economic and political dependence, and industrial backwardness.  Exploitation or Hegemony: International business may result into exploitation of developing countries by the developed countries. The influential and main economies regulate the economy of poor nations. 113 Chapter Three     Organisation Performance Publicity of unwanted fashion: International business may lead to advertisements which may not be suitable for the atmosphere, culture, tradition, etc for the developing countries. Language barriers: Several languages and cultures in different countries form limits to establish trade agreements. Dumping strategy: The Developed countries may begin dumping their products to developing countries below the cost of production. As an outcome, industries in developing nations may get evicted. Adverse effects on domestic industry: Survival of infant and growing industries is endangered due to international business. Imports that are not monitored thus dumping may lead to collapse of domestic industries. Drivers of Success and Failure When a domestic company wants to be successful on the international market, it’s probabilities of success is shaped by four factors:  Demand conditions within in the home country.  Factor conditions of the home country.  Related and supporting industries inside the home country.  Strategy, structure, and rivalry amidst domestic competitors. Demand Conditions The demand conditions describe the nature of domestic customers. It is frequently a common thought that firms benefit when the domestic customers have a tendency of purchasing inferior products. It is a faulty belief! As an alternative to such beliefs, it has been found that firms benefit when the domestic customers have high expectations. Factor Conditions Factor conditions are linked with the nature of raw material and other resources that companies need to manufacture goods and services, including labor, land, capital markets, plus infrastructure. When the firms entities have proper access to factor conditions they excel, and face challenges when they do not have good quality factor conditions. Companies in the United States, for instance, have abundant natural resources, a skilled labor force, advanced transportation systems, and sophisticated capital markets to be flourishing. Chinese manufacturers have benefited in part by the accessibility of cheap labor. Related and Supporting Industries Supporting industries indicate the extent to which the company’s domestic suppliers and other related industries have developed and helpful. Italian cobblers or shoe makers such as Salvatore Ferragamo, Prada, Gucci, and Versace benefit from the accessibility of top-quality leather in their home country. In case, these cobblers need to depend on imported leather, they would be unable to get the advantage. 114 Chapter Three Organisation Performance Firm Strategy, Structure, and Rivalry This concept of firm strategy, structure, and rivalry identifies how challenging it is to survive the domestic competition. Companies that endure severe competition in the domestic markets, they are more likely to have formulated strategies and structures for competing in international markets. In contrast, if domestic competition is very weak; a company can have high profits within its home market but the lack of competition means the firm will have to struggle to reach its potential in creativity and innovation. This decreases the company’s ability to compete overseas. Concentration Strategies Concentration strategies are destined to struggle in one, single market. There are four sub-strategies that make up concentration strategies namely: product development, market penetration, horizontal integration, and market development. However, a company can use one or all aspects of these strategies to try to stand out within an industry. (H. Ansoff, 2007) Market Penetration Market penetration means attaining additional share of a company’s existing markets by utilizing available products. Advertising is a core method to attract customers within the existing industry. Market Development Market development refers to trade existing products in latest business markets. A typical way to reach a new market is by joining a new retail channel. Product Development Product development entails building and selling new products to previously existing markets. In the 1940s, Disney created its products within the film business venturing out of cartoons and including movies featuring real actors. Horizontal Integration Expanding by means of acquiring or merging with one of the rival organizations is known as horizontal integration. An Acquisition takes place when a company buys another company and usually, the acquired company is smaller than the buyer firm. A merger connects two companies into one. Mergers happen with similar sized companies. Horizontal integration is preferred and attractive for many reasons. Horizontal integration can lower costs by attaining a greater economy of scale. Fitting horizontal integration in conjunction with Porter’s five forces model, it means that such moves also lessen the intensity of rivalry and can make the industry additional profits. Horizontal integration can further offer latest distribution channels, where a firm may produce or acquire production units that are similar either complementary or competitive. (Colangelo, 1995: pp. 323-337) 115 Chapter Three Organisation Performance Vertical Integration (VI) Strategies This integration is employed strategically to contain control over the industry’s value chain. The vital issue to consider is, whether the firm participates in one activity (one industry) or many activities (various industries). For instance, a company may decide that it just manufactures its products in retailing and after-sales services as well. Two issues have to be put into consideration before integration: (Colangelo, 1995: pp. 323-337)  Costs: A company must amalgamate vertically when costs producing inside the company are less than the costs of availing that product in the market.  Scope of the company: It is crucial to think over the fact, whether moving into new industries would not weaken its current competencies. New activities are often difficult to manage and control. These factors add to a decision if a firm will either pursue none, partial or full VI. Types of Vertical Integration There are normally two types of VI namely; Forward and Backward integration as detailed below: (Colangelo, 1995: pp. 323-337) Forward Integration Joining sales or after sales in industries for a manufacturing firm, is a forward integration strategy. This strategy is used to attain higher economies of scale and larger market share. Forward integration strategy is facilitated by internet. Many firms have built their online stores and began selling their products directly to consumers, bypassing retailers. Forward integration strategy is effective when:  A small number of quality distributors exist in the industry.  When the profit is high for distributors or retailers.  When distributors are very expensive, unreliable or unable to offer quality service.  When the industry is going to grow significantly.  When stable production and distribution is feasible.  When the corporate has vast resources and capabilities to manage the new business. Backward Integration When an organization begins manufacturing intermediate merchandise for itself or influences its previous suppliers, this is often a backward integration strategy. It used to have stable input of resources and become more resourceful or efficient. Backward integration strategy is most helpful when: (Colangelo, 1995: pp. 323-337)  Existing suppliers are untrustworthy, expensive or unable to provide the required inputs. 116 Chapter Three     Organisation Performance Only a few little suppliers but several competitors exist in the industry. The industry is in rapid expansion mode. The price and inputs become unstable. Suppliers earn extremely high profit margins. A company must have the required resources and capabilities to maintain the new business. Advantages of VI Strategy  Lower costs as market transaction costs are reduced.  For greater quality of supply of goods.  VI can generate critical resources available.  Proper coordination in supply chain becomes achievable.  Provides a larger market share.  Secured distribution more channels.  The strategy enhances investment in specialized assets (site, physicalassets and human-assets).  New competencies accrue. Disadvantages of VI Strategy  High prices, in case, the corporate can’t run new activities expeditiously.  It may result in lower quality merchandize and reduced potency as competition recedes.  It further reduces flexibility because of magnified forms and better investments.  There is higher potential for legal repercussion because of size.  The new competencies and old ones could collide and result in competitive disadvantage. Diversification This Diversification strategy is used to expand the company’s product lines and operate in several different markets. The common strategies entail concentric, horizontal and conglomerate diversification. Every strategy concentrates on a specific technique of diversification. The employment of concentric strategy is when a company wishes to amplify on its products portfolio to consist like products produced within the same company, the horizontal strategy is implemented when the firm wants to manufacture new products in a similar market, and the conglomerate diversification strategy is applied when an organization begins operating in two or more unconnected industries. Diversification strategies support the increasing elasticity or flexibility and maintain profit during slow-moving economic periods. 117 Chapter Three Organisation Performance Types of Diversification Concentric Diversification This diversification strategy helps an organization to add more similar products to an already recognized business. Concentric strategies are employed when for instance a computer company manufacturing personal computers using towers begins to produce laptops. The technical knowledge for new and innovative venture comes from its current source of skilled employees. Horizontal Diversification This diversification helps a firm to begin exploring other zones in terms of product manufacturing. Companies depend on present market share of loyal customers in this strategy. Horizontal diversification happens when for instance a TV manufacturer starts producing freezers, refrigerators, and washers or dryers. A downside refers to the firm’s dependence on one group of consumers. The corporate has leverage on the brand loyalty related with current products. This is hazardous since new products may not get the same favor as the corporate other products. Conglomerate Diversification This refers to strategies that a corporate will look for to enter a previously unexploited market. This is usually done using mergers and acquisitions. Shifting into a new industry is highly risky, due to unfamiliarity with the new industry. Brand loyalty may also be condensed when quality is mismanaged. Though, this strategy provides rising flexibility in reaching new economic markets (Colangelo, 1995: pp. 323-337). For instance, a corporate into automotive repair parts may enter the toy production industry. Each organization permits for a broader base of customers. There is a chance of income when one industry's sales weaken. Downsizing Companies usually need to downsize themselves to be bending and compete better against rigid competition. The appropriate plan is to make a better productive corporate incur lesser costs. There are mostly two proper ways to downsize namely; Retrenchment and Restructuring. Retrenchment During the early 20th century, battles in First World War occurred in a series of parallel trenches. When an attacking army compelled the enemy to abandon a trench, the defending soldiers used to retreat to the next trench. The helpful substitutions were far more preferable to losing the battle completely. Retrenchment is a common business strategy today, tracing its origin to this trench warfare. Organizations of firms that pursue retrenchment strategy usually shrink one or more business units. Retrenchment is often escorted by laying off employees. This diminishes the general cost of management and 118 Chapter Three Organisation Performance provides a better method to manage the employees more efficiently. This kind of strategy is more applied to a saturated and low margin market like groceries where retailers strive to add non-food products to their stocks to improve the bottom line. Restructuring A number of better and more effective strategies are required for a corporate to survive and become victorious in the future. Divestment refers to selling off a portion of a firm’s operations. At times, divestment normally reverses a forward vertical integration strategy, like in the case where Ford sold Hertz. Divestment can further lead to repeal backward vertical integration. For instance, General Motors (GM), once twisted their parts dealer, know as Delphi Automotive Systems Corporation, from the original GM supplementary into a newly created and independent corporate. This was done by means of a spin-off, which includes innovation for a completely new corporate the stock of which is owned by investors. This usually follows stock splits for large corporate. Divestment can also assist the corporate to revise diversification strategies. Companies that have applied unconnected diversification find the diversification strategies useful. Investors still usually find it difficult to understand the procedure of diversified companies, and this can result into relatively poor performance by the stocks of such corporate. This is referred to as diversification discount. Executives at times break up diversified firms to gain the stock value. Occasionally, the operations of a company have no value at all. When sale of a part of business is not applicable, the best opinion may be liquidation. Through liquidation, the parts that create no value are simply shut down, often at an incredible financial loss. GM liquidated its Geo, Saturn, Oldsmobile, and Pontiac brands. Such moves are hurting as big portions of investments are written off, but becoming “leaner and meaner” may at least save the company from becoming obsolete or outdated. Portfolio Planning This is a very useful tool which is a method that helps the corporate executives to evaluate their forecast for a winning share within each of its industries. It also provides suggestions about what to do within each industry, and lets the managers have views on how to allocate resources across industries. Portfolio planning determines the corporate position within the industry. The management in charge of big corporate that is involved in various businesses must discover how to manage such portfolios. For instance, General Electric (GE) has a very broad variety portfolio of industries, consisting of financial services, insurance, electricity generation, light bulbs, television, theme parks, robotics, medical equipment, railroad locomotives, and aircraft jet engines. GE executives, thus, must make a resolution about 119 Chapter Three Organisation Performance which units to grow, the ones to shrink, and the ones that needs to be discarded. Organizational Structure The framework that firms use to outline their management authority, internal and external communication procedures is termed as organizational structure. The structure consists of policies, duties and responsibilities for each and every individual in the company. Organizational structure is affected by several factors which are internal and external. Business managers are responsible for innovation of the organizational structure framework of their firm through the following ways (Miles et al. (1978, p. 547); Anderson & Zbirenko, 2014: 7-10): Size: Size is one of the motivating factors for a corporate organizational    structure. Smaller businesses do not require a vast structure but larger business organizations usually need a more intense framework. Companies need more managers for supervising workers if the employee base is huge. Highly specialized businesses need a more formal and specialized organizational structure. Life Cycle: The organization’s life cycle affects the growth of an organizational structure. Business managers who typically tend to grow and expand their operations expand an organizational structure to achieve their business mission, vision and goals. Businesses that reach the top performance usually have a detailed and more sophisticated organizational structure. This happens due to the fact that chain of command goes on increasing from the top to bottom. Organizational structure can further be a tool to improve efficiency and profitability. Such developments may be needed as more competitors enter the marketplace. Strategy: Business strategies influence the progress of organizational structure. High-growth companies usually have smaller organizational structures to quickly acclimatize to changes in the business environment. Business managers are often hesitant to reduce managerial control in operations. Smaller companies looking to demonstrate their business strategy may often delay creating an organizational structure. Business managers are found to be progressively more interested in creating business strategies rather than setting an internal business structure. Business Environment: The external business environment impacts the organizational structure of the firm. Dynamic environments having quick and constantly changing consumer behavior are usually more confused and shaky than stable environments. Corporate that aims at addressing the consumer demands can strive while creating an organizational structure in a quickly changing and dynamic environment. More so time and capital can also be spent in dynamic environments. (Miles et al. (1978, p. 547); Anderson & Zbirenko, 2014: 7-10) Creating an Organizational Structure A good organizational structure allows its employees to focus on innovating quality products and proper services. Creative organizations offer 120 Chapter Three Organisation Performance opportunities to their employees to create and use new skills. This allows constant development in business operations and ensures that the corporate maintains an edge to sustain in a dynamic international marketplace. The following are the steps to keep in mind while creating an organizational structure: Step 1: Analyze the plans, policies and procedures. Structure the management framework to assist in efficient production processes. Align a variety of groups’ performance goals with the corporate strategic objectives. Develop and revise the organization’s mission, vision and goals. Keep accounts of social and economic dynamics taking place in the external environment. Step 2: File or keep records about the organization’s hierarchical structure and don’t forget to publish it for public consumption where necessary. This helps all stakeholders in the organization to see the reporting structure, the roles and responsibilities. Step 3: Utilize the available human resources provided by for instance the previous company information or record to keep track of industry trends. Ensure that the business sticks to the rules and regulations, such as annual leave laws or hours of rest required by law. Step 4: Annual survey is a crucial part. Instigate anonymous response by the workers to measure environment support for workers. A survey allows evaluating employee perceptions regarding the company and its operations. Annual surveys help to compare results from year to year. Step 5: Identify the areas that need speedy improvement to keep a company healthy and safe for employees. Online apparatus, such as the Mind Tools Problem Solving Techniques website, can help managers create cause and effect diagrams to identify problems as cited in 2020. Step 6: Employee motivation is crucial to adapt to change by communicating frequently. Make sure that all of the workers respect and support the stakeholders. Facilitate cultural diversity, intervene in workplace conflict and respond to time management policies. Professional development further enables employees to act and react properly in case of turbulences. Step 7: Encourage workers to share skills and knowledge. Provide meaningful relationships with people who may not work in the same location. Step 8: Allow personnel to obtain knowledge and mentoring to advance their careers. A good company acknowledges and motivates for value of individual achievements. By giving feedback and advice, new personnel can be inspired to take on more responsibilities. Step 9: Encourage performance-based management. Evaluation of workers depending on their capacity to attain their own goals affirms their personal accountability. By retaining and nurturing motivated workers, the organization can keep its competitive advantage intact. Step 10: Use professional and personal skills development programs to assist the workers to perform their jobs better. Encourage the workers to 121 Chapter Three Organisation Performance enroll and have clear performance related studies linked with professional credentials. Organizational Control Systems This system is vital to know how best the organization is performing, identifying areas of interest, and then taking a proper action. There are three primary sorts of control systems used by executives: behavioral control, output control, plus the clan control as below: (Anthony, 1965) Output Control Output control zeroes in on quantifiable outcomes within a company. In output control, executive committees must decide the appropriate level of performance, communicate the all-purpose expectations to the workers, track whether the performance values meet up the expectations, and then make any required changes. Behavioural Control Behavioural control usually focuses on controlling the actions unlike the outcomes in case of output control. In general, specific rules and processes are employed to structure or to dictate behavior. For instance, companies having a rule that needs checks to be signed by two people to try to prevent employee corruption. Clan Control Clan control is not a standardized type of control. It focuses on shared traditions, expectations, values, and norms. Clan control is frequent in industries where creativity is vital, such as many high-tech businesses. Management Fads The management fads are many that have been closely related to organizational control systems. Management fads is a concept used to define a change in philosophy or operations employed by company management on behalf of its worker, with little or no consultation from the stakeholders like the employees (Ponzi & Koenig, 2002). Management by objectives (MBO) is a practice where managers and workforce toil together to create and attain goals. A quality circle is a formal employee cluster that usually meets frequently to brainstorm a variety of solutions for company problems. As the term “quality circle” suggests, discovering behaviors that would aid to improve the quality of products and the operations management processes that create the products was the formal charge of this circle. Sensitivity training groups (or T-groups) were used in various organizations during the 1960s. It entails roughly 8 to 15 people convening to openly discuss their emotions, feelings, beliefs, and biases about workplace cores. It didn’t have the rough nature of MBO, but the T-group consist freeflowing conversations. These deliberations lead individuals to nurture a 122 Chapter Three Organisation Performance greater understanding of themselves as employees and others stakeholders. The expected outcomes comprised enlightened employees and a far more mutual understanding, and an enhanced teamwork. Legal Forms of Business There are typically three types of business organizations in terms of law. While the needed legal processes and required documents differ in case of each form of business, all of these types of businesses are normally intended at being profitable in the short and long term. Sole trader: The businesses are the easiest to set up because the business and the owner are the same person in law. The sole trader does not have any limited liability, meaning that they are accountable for all the debts incurred while conducting business. The sole trader needs to form an annual accounting return that stipulates the income and losses apart from profits and taxes payable. Partnership: Businesses are formed by a Deed of Partnership which is a document created by the partners having a witness (a solicitor). This deed shows the legal relationship between the partners, for example, profit sharing, responsibilities of partners etc. In conventional or traditional partnerships, the partners normally have an unlimited liability, i.e. they are equally responsible for the debts of the business. Some partnerships, like accountancy firms can have limited liability. Companies: Are distinguished entities in law from the shareholders of the business. This means that the shareholders are only accountable for debts that go up to the sum they have contributed to the firm. Companies Act states the ways in which companies should conduct their affairs. A variety of documents must be registered with Registrar of Companies consisting a Memorandum and Articles of Association showing the internal relationships within the company, and the common external affairs with third parties. Ansoff Matrix Introduction Igor Ansoff the well-known management guru gave a roadmap for firms to grow basing on whether they are beginning new products or entering new markets or a mixture of these options. This method has been modeled in the form of a Matrix that has four quadrants with the axes of products and markets being the determinants of the strategies. As observed from the figure after this section, the combinations of the two axes show the companies with opinions that they can utilize in search of market share. The four quadrants are relevant to increasing market share through market penetration, going into new markets with the existing products or market development, and producing new products in existing markets through product development, and 123 Chapter Three Organisation Performance lastly, diversification while firms look for ways to enter new markets with new products. (Ansoff, 1958:392-414) Figure 5: The Ansoff Matrix Market Penetration As can be observed from the figure above, market penetration takes place when the existing products are marketed in a manner to boost the market share of the firm. This is a negligible risk strategy as all that a firm has to execute is to increase its marketing efforts and get better on its market share. In other words, the firm has to ensure that it leverages the current resources, capabilities, and drives towards a growth-oriented strategy. On the other hand, market penetration has its boundaries and these manifests when the market is saturated hence growth diminishes for the products. Examples of market penetration would include the Television Channels and Media Houses trying to maintain their existing features in the existing markets and ensuring that they grow because of the growth in size of the market or due to providing a value proposition that is better than their competitors. Market Development When firms search various avenues to expand into new markets with their existing products, market development takes place. This is appropriate for firms that have the capabilities and the resources to enter new markets in search for growth. More so, the company’s core competencies must be united with the products rather than the markets and where the company senses a chance in the new markets for its existing products. Market development is made riskier than market penetration as the company is entering new situations and thus, it is in the interests of the companies to do their due diligence before entering new markets. Examples of mobile telephony companies like Vodafone and Nokia entering African markets where these markets are yet to be tapped and where these firms can leverage their existing expertise to enter these markets this is called market development. Product Development When companies seek to introduce new products in existing markets, product development takes place. This strategy can be helpful when the companies have already entered in the existing markets and all that they require to do is to launch latest products, which leverage the brand image and the brand value 124 Chapter Three Organisation Performance and win the expectations of the customers or clients in the existing markets. For example, whenever giant consumers like Unilever and Proctor and Gamble (P&G) introduce new products in existing markets, they poses the advantage of a stronger brand value and top of the mind recall amongst the customers about them, which thus help them to acquire market share. When compared to the previous two strategies, this strategy is riskier as it is not sure whether the transfer of customers from the existing products to the new products would happen as seamlessly as the firm’s strategists believe. Diversification When companies launch new products in new markets, diversification takes place which consist both new products to be developed and new markets to join. This is the most unsafe of the four quadrant strategies in the Ansoff Matrix as basically the companies are not only testing the waters in new market but they are also launching or launching new products that may or may not be well consumed by the customers. Certainly, diversification is a risky strategy and is only acceptable when there are possibilities of high returns for the company. Examples of diversification would comprise companies such as Reliance venturing into mobile telephony and retail segments where they only don’t have to move away from their core competencies but also have to introduce and launch new products targeted at the new customer segment. Management experts propose diversification only when the companies are having enough cash and other resources, as the companies require having deep pockets to compete favorably. More so, they also suggest companies with existing customer loyalty and customer base as the cross exodus from one segment to another takes place only when the customers are assured of getting value for their money. For example, the TATA group in India is viewed as delivering good value and this helped them to garner or gather market share when they diversified into new markets and new products. Organic or Inorganic Growth: Routes to Strategic Growth Organic Growth Organic growth in management refers to the expansion of a corporation that happens naturally. In other words, if a corporation grows through increased revenues and increased profitability on its own without resorting to mergers and acquisitions, then it’s known to grow organically. Corporations like Infosys for instance are known to evade mergers and acquisitions and instead, put concentration on growing through expansion of its business. The most advantage of organic growth is that it helps companies specialize in their core competencies and avoid the traps of cultural clash and differing value systems that happens when two firms merge and also organic growth is natural as clarified earlier which suggests that the management of the company can feel comfortable about the expansion prospects by doing what they are good at (Common Project or Business). 125 Chapter Three Organisation Performance Inorganic Growth On the opposite hand, inorganic growth refers to the expansion of rock bottom line through mergers and acquisitions (whether they are friendly takeovers or hostile takeovers). The most advantage of inorganic growth is that it helps companies with large cash reserves to take a position in productive mergers and acquisitions that help rock bottom line of the corporate. Inorganic growth further helps in consolidation of equating strategic imperatives and business drivers. Of course, when a corporation grows inorganic it is to travel through all the thrill and perils that mergers entail during a way that is almost like how couples undergo once they marry. Inorganic growth on a vital note assist firms to beat the downturn as was obvious within the merger between American Airlines and US Airways. The merger that was actualized as this text is being written points to the necessity for consolidation within the aviation industry, which is leaving many airlines within the red. Which is Preferable? The answer to the question on which type of growth is preferable depends on the strategic intent of the businesses involved. If the driving force of strategy is increased market share alone, then inorganic growth is sensible. If operational imperatives are engaged on the opposite hand, inorganic growth results into friction and mismatch between organizational cultures and the two companies. Aside from this, when the target is to stay the two companies distinct and therefore the merger is merely to consolidate operations, there's an opportunity that inorganic growth might work. Organic growth finally assists the identity of the organization whereas when businesses grow inorganically, there is a likelihood of the amalgamated organization losing its identity. Difference between Strategy Formulation and Strategy Implementation Talking about strategy, there is an important difference within the terms strategy formulation and strategy implementation. Mintzberg et al (1998) researched extensively and located that in most cases, strategy formulation and strategy implementation are entirely different aspects. The difference is that meanwhile planners plan strategy and formulate it; managers execute strategy and implement it. Hence, there is the aspect of two different elements of the organizational structure that is involved in planning and execution of strategy. Indeed, in many organizations, there exists an ingenious tension between the planners and therefore the implementers and the way during which the organizations resolve this aspect makes the difference between organizational transformation and organizational failure that is at the guts of Mintzberg’s configuration model of strategy. Environmental Scanning Organizational environment comprises of both external and internal factors. In order to resolve development and forecasts of factors that will manipulate organizational success, environment has to be scanned. The control and utilization of information about occasions, patterns, trends, and relationships 126 Chapter Three Organisation Performance within a company’s internal and external environment is called Environmental Scanning. It aids the managers to make a decision the future path of the company. The threats and opportunities within the environment must be identified by Scanning. Whilst strategy formulation, a company must take advantage of the opportunities and minimize the threats. A threat for one company may be an opportunity for another. Internal evaluation of the environment is the primary step of environment scanning. Companies should observe the internal organizational environment. This comprises worker’s interaction with each other, worker’s interaction with management, manager interaction with other managers, and management interaction with shareholders and stakeholders, access to natural resources, brand awareness, company structure, main staff, operational potential, etc. Also, discussions, interviews, and surveys are used to evaluate the internal environment. Analysis of the internal environment assists in identifying strengths and weaknesses of a company. When a business turns out to be more competitive, and there are fast changes in the external environment, information from external environment contributes crucial elements to the effectiveness of long-term plans. As the environment is changing and it becomes vital to classify competitors’ moves and actions. Companies have further got to update the core competencies in the internal environment plus external environment. Organization should be vigilant to accept and adjust to the environmental changes since environmental factors are infinite. Monitoring indicates that an original forecast of the costs and raw materials that are involved in the product are no longer credible, which might entail the need for more thorough scanning, forecasting and analysis to develop a more trustworthy prediction about the input prices. In the same manner, there can be dynamics in factors such as competitor’s technology, activities, market, tastes and preferences. In the external analysis there are three correlated environments which should be studied and analyzed:  Industry environment   National environment or setting   Broader socio-economic environment and macro-environment Evaluating the industry environment requires a review of the competitive structure of the firm’s industry, including the competitive position of a particular organization and its main rivals. It is crucial to assess the stage, nature, dynamics and history of the industry. It also means evaluating the effect of globalization on competition in the industry. Analyzing the national environment requires an appraisal of whether the national framework assists in achieving competitive advantage in the globalized environment. Macroenvironment analysis entails exploring macro-economic, government, legal, technological, social, and international factors that may manipulate the environment. The evaluation of company’s external environment opens  127 Chapter Three Steps in Strategy Formulation Process opportunities and threats for a company. Strategic managers must also be able to foresee the future positions but not only be familiar with the present situation of the environment and their industry. Steps in Strategy Formulation Process The process of choosing the most suitable course of action for the realization of company goals and objectives and thereby attaining the company vision is identified as Strategy formulation. The procedure of strategy formulation mostly entails six main steps. Even though these steps do not follow an actual chronological order, however they are so rational and can be easily presented in this order. 1. Setting corporate objectives: The key element of any strategy statement is to set the long-term objectives of the company. It is clear that strategy is by and large a medium for realization of firm’s objectives. Objectives articulate the position of being there whereas Strategy concentrates upon the procedure of reaching achievement. Strategy entails both the obsession of objectives as well the procedure to be used to achieve those objectives. Hence, strategy is a bigger term which concentrates in the method of deployment of resources so as to attain the objectives. 2. Defining the organizational objectives: This is essential that the factors which influence the choice of objectives must be analyzed before the approval of objectives. Once the objectives and the factors affecting strategic decisions have been identified hence, it is easy to take strategic decisions. 3. Analyzing the Organizational Environment: Is the next step to evaluate the general economic and industrial environment in which the organization functions. This comprises a review of the company’s competitive position. It is vital to conduct a qualitative and quantitative assessment of company’s existing product line. The aim of such a review is to make sure that the factors vital for competitive success in the market can be discovered so that the management can discover their own strengths and weaknesses plus their competitors’ strengths and weaknesses. 4. After defining the strengths and weaknesses: A company must keep a track of competitors’ moves and actions so as to discover probable opportunities of threats to its market or supply sources. 5. Formulating Quantitative Targets: In this step, a company should practically fix the quantitative target values for some of the company objectives. To determine with long term customers and stakeholders in order to analyze the engagement that might be made by various product zones or operating departments the logic behind this Strategy Formulation Process. 6. Aiming in setting with the divisional plans: The work done by each department or division or product category within the company is described and accordingly strategic planning is done for each subunit. This needs a cautious evaluation of macroeconomic trends in this process. 128 Chapter Three Steps in Strategy Formulation Process 7. Performance Analysis: This includes inventing and analyzing the gap between the planned or preferred performance. A serious assessment of the company’s past performance, present situations and the favorite future conditions should be done by the company. This important evaluation describes the magnitude of gap that persists between the actual reality and the long-term aspirations of the company. An effort is made by the company to estimate its possible future condition if the current trends persist. 8. Choice of Strategy: Is the definitive step in Strategy Formulation. After considering organizational goals, potential, strengths, and limitations as well as the external opportunities is in fact it is the best course of action to be determined. Meaning and Steps in Implementing a Strategy Strategy implementation is the conversion of preferred strategy into company action so as to attain strategic goals and objectives. Strategy implementation is also described as a way through which a company should develop, utilize, and amalgamate company structure, control systems, and culture to follow strategies that will lead to competitive advantage and a better performance. Organizational structure distributes particular value increasing tasks and roles to the workers and shows how these tasks and roles can be interconnected so as to maximize quality, efficiency, and customer satisfactions which are the pillars of competitive advantage. But company structure is not adequate in itself to motivate the workers. An organizational control system is also required. This control system empowers managers with motivational incentives for workers as well as feedback on workers and company or organization performance. Organizational culture is identified as the specialized collection of values, attitudes, norms and beliefs shared by organizational members and groups in general. The following are the basic steps in implementing a strategy:  Building an organization is having the potential of carrying out strategy successfully.  Spending of abundant resources to strategy necessary activities.  Formulating strategic policies that are encouraging.  Applying proper policies and programs for constant improvement.  Connecting reward structure to achievement of results. Excellently formulated strategies will be unsuccessful if they are not properly implemented. Strategy implementation is not feasible unless there is stability between strategy and each corporate dimension like organizational structure, reward structure, resource-allocation process, etc. New power relations are predicted and accomplished. New groups (formal as well as informal) are created whose values, attitudes, beliefs and agendas may not be known. With alteration in power and status roles, the managers and workers may carryout confrontation behaviour. 129 Chapter Three Steps in Strategy Formulation Process Table 6: Strategy Formulation vs Strategy Implementation (Differences) Strategy Formulation Strategy Implementation Strategy Formulation includes planning and Strategy Implementation decision-making involved in developing entails all those means organization’s strategic goals and plans. related to implementing the strategic plans. In brief, Strategy Formulation is placing the Forces before the action. In brief, Strategy Implementation is managing forces during the action. Strategy Formulation is the Entrepreneurial Strategic Implementation is Activity based on strategic decision-making. mainly an Administrative role based on strategic and operational decisions. Strategy Formulation emphasizes on effectiveness. Strategy Implementation encourages on efficiency. Strategy Formulation is a rational process. Strategy Implementation is basically an operational process. Strategy Formulation requires co-ordination among few individuals. Strategy Implementation requires co-ordination among many individuals. Strategy Formulation needs a great deal of creativity and logical skills. Strategy Implementation needs specific motivational and leadership character. Strategic Formulation precedes Strategy Implementation. Strategy Implementation follows Strategy Formulation. 130 CHAPTER FOUR HUMAN RESOURCES MANAGEMENT (HRM) Definition of HRM One of the most important developments in the field of organization in recent times is the increasing reputation given to human resources. More and more attention is being given to motivational aspects of human personality, particularly the need for self-esteem, group belonging, and self-actualization. This new arousing of humanism and humanization all over the globe has in fact enhanced the scope of applying principles of human resource management in all organizations. The progress of people, their competencies, and the development process of the total organization are the main focus of human resource management (Pareek & Rao, 1992). In this chapter I want to concentrate on who can do the job in question better for the organization to achieve the intended goal. Organizations in Third World countries face the major problems of professional incompetence and are short of motivation among their workers. Further, many of the organization departments of these countries do not have a well-defined system of human resource management. Proper planning and management of human resources within organizations is vital to increase the capabilities, motivation, and overall effectiveness of the personnel. Keeping this in view, this chapter discusses the various dimensions of human resource management as applicable to organizations: human resource planning, job analysis, recruitment and training of personnel, performance appraisal, supervision, management of rewards and incentives, enhancement of the quality of work life, and organizational development. Strategic human resource management aims to help the organization in meeting worker’s needs. Human resource management (HRM) is tasked with training, benefits, hiring and firing, pay and administration issues. The HR department also approves vacations and sick leaves, safety procedure information plus work incentives. (Pareek & Rao, 1992). Role of Strategic HRM Strategic HRM develops the human resource capital of an organization. It largely focuses on the long-term human issues of an organization and aids to create an organizational structure to adjust to changes like mergers, acquisitions and downturns. Strategic HRM also deals in emphasizing on application and betterment of the ethical standards, apart from managing the special effects that the business processes are going to have on the society at large. 131 Chapter Four Human Resource Planning Strategic HRM includes:  Strategies for the Organizational Leadership: Leaders and company executives play a pivotal role in achieving the goals of the organization. The selection and management of all the employees is done by the HR department. Hence, HRM plays a vital role in helping the business goals of the organization.  The Strategies for Talent Growth: Human capital talent is extremely the most essential asset of the organization. It is the work of the human resource management for retaining and recruiting the best talented. Constant development and training of the workers is also a pivotal duty of HRM.  Strategies for the Promotion of High Performance: Defining the performance procedures is a significant part of the success of an organization. The workplace culture has a main impact on the failure or success of an organization. HRM strategies are destined to offer the leaders a role to come up with an organizational culture.  Planning Strategies: Strategic planning is the main rationale for success of the organization. Strategic HRM is very crucial for laying the foundations of strategic planning. HRM performs a vital role in retaining top talented ones and identifying the satisfaction of customers by means of employee satisfaction measurement processes. Strategic HRM deals in: Human Resource Planning: Small organizations lack the resources in comparison to larger organizations. HR managers need to plan well in accordance to the budget and availability of resources. Instead of the profit and training programs in smaller organizations, it should offer an on-site training program for the workers.  Employee Development: Employee development is a significant role of strategic human resource management. It begins with new employees’ recruitment. It is crucial to eliminate the applicants that are not eligible for the organization.  Employee Training: Effective mentoring and training program is vital in building up and orientating the new workers. Organizations need to make use of coaching, regular assessment and continual training programs to improve worker performance.  Improving Employee Performance: HR department that concentrates on the development of the human capital of the organization is a very crucial part of an organization. It aids in improving worker satisfaction and performance. 132 Chapter Four Human Resource Planning Organizational and HRM Strategy Connecting the organization’s HR strategy to the organizational strategy makes proper business sense for a number of reasons as below: (Armstrong, 2003) Strategic Alignment of HR HR executives are at times left to the duty of dealing with only administrative functions, such as recruitment, performance measurement, training and compensation. These procedures are crucial, but on their own, they do not illustrate how an organization should plan for the human resources to deliver on its plans and ambitions. Strengthening the HR department can add value to the organization’s business strategy as it undertakes the functional activities in a way that supports growth and success. Delivering the Strategy An effective HR strategy which has clear connection to the business strategy can improve the organization to align its activities better with its human resources. An HR department that knows the demands of the business strategy can help the organization stay on track. Effective Training and Development Organizations are affected by various external and internal factors that can change the nature of individual job duties and need for skill sets. An HR strategy connected to the organizational strategy is better placed to predict any such change. Improved Recruitment and Retention Workers who are supported and trained in their jobs tend to be better-off and more productive. Additionally, organizations with a positive status face fewer hurdles to effective recruitment. These factors are vital elements in knowing why HR strategy must connect to organizational strategy. HR Drives Strategy HR strategy is at the core of an organization’s general capacity and capability. Having a clear concept of the workers and their various skills can help an organization have the needed development and growth. Organizations view HR as a main driver of strategy and integral to their future success. Impact of HRM on Performance The idea of organizational performance entails both the ‘What’ and ‘How’ of attainment of purpose. There are several means to evaluate organization’s performance, such as key performance indicators (KPIs), which are normally to do with financial outputs (profitability) or productivity. Evaluating the “how” is harder as it relies on qualitative aspects of assessment of effectiveness. 133 Chapter Four Human Resource Planning Below are the four factors which are more key reasons why HRM should be connected with organizational performance: Roles People should have a clear view of their roles and others in an organization. Every flourishing team has a well-defined position for its members. Everyone is sensitive of what he or she has to do, how to do it and how the performance can affect the organization. In business, this implies there is need to have clear reporting structure. It is the role of HRM to identify and set out rules for the workers. Rules When there is a clear set of behavioral expectations it is significant to encourage contributing good behavior only as an employer. Setting clear and specific rules creates a framework for spotting and mitigating violations of behavioral standards. Loosely identified general standards lead to violations in the workplace. The outcome of such vagueness is often litigation. HRM plays a major role in defining the company standards and minimizing violations. Consequences It’s essential to clearly state the penalties for violations of behavioral standards. More so, clear penalties help to ensure that options for dealing with violations are not limited. To put in place the standards and violation penalties, it is vital to identify ahead of time whether employee actions need an immediate firing. The HR is tasked with drawing these fine lines. Likewise, HR managers understand what performance issues may qualify for a more progressive disciplinary approach, and they identify the steps taken in such an approach. HRM hence plays a disciplinary role as well, which is essential for organizational performance. Tools Tools are crucial not just to assist avoid litigation, but also to reduce the duration of time it takes for the business owner to deal with non-productive people issues instead of core business processes. Human Resource Planning Human resource planning predicts the future personnel needs for organizations. With the fast changes in technology, needs of workers, market situation, and competitive environment, planning for human resources has become a vital, challenging task. Human resource planning contains plans for future wishes of personnel, the essential skills, recruitment of employees, and development of personnel (Miller, Burack, &Albrecht, 1980). Human resource forecasting and human resource audit are the two most important mechanisms 134 Chapter Four Human Resource Planning of this type of planning. Human resource forecasting refers to predicting an organization’s future demand for number, type, and quality of numerous categories of employees. The assessment of future requirements has to be based on analysis of present and future policies and growth trends. The techniques of forecasting entail the formal expert survey, statistical analysis, Delphi technique, budget and planning analysis, and computer models. The human resource audit gives an account of the skills, abilities, and performance of all the workers of an organization (Werther & Davis, 1982). Job analysis Job analysis traditionally is done for purposes related with recruitment, pay, administration, and supervision. But the increasing difficulty of work has made job analysis an important instrument for developing people in organizations. Job analysis needs a methodical collection, evaluation, and organization of information about the job. This information is collected through interviews, observation, mailed questionnaires, study of records, and similar methods. The collected information becomes a basis for formulating job descriptions and specifications. The job description, or job profile, is a written statement which comprises detailed specifications of duties to be performed, responsibilities, and working conditions and specifies what is anticipated of a job holder. A job specification is a requirement of the human characteristics needed for the job, for example education, training, skills, experience, and physical and mental abilities (Werther & Davis, 1982). Organizations in developing countries do not have clearly well-defined job descriptions or job specifications for personnel. The training significantly improves the preparation of job charts, work plans, and time-bound work for different categories of personnel. However, the actual utility of job descriptions in organizations is complex by factors such as work overload, seasonality, and distribution of service over a large area (Hayward, 1966:115-134). Studies analyzing the role of managers reveal that they face work-related problems such as role ambiguity and lack of job authority, expertise, and accountability (Vijayaragavan & Singh, 1989:1-12). This shows that job analysis is needed to improve the performance and effectiveness of workers. Job analysis can more effectively contribute towards the development of workers by adopting the following procedures which include identifying key performance areas (KPAs) and critical attributes. Key Performance Areas for Various Personnel Categories A job description consists of many facts, but does not specify key areas which need attention. Further, it gives the details of what is anticipated from the current jobholder. Key performance areas on the other hand are specific and display the critical functions relevant at present and for the future to achieve the objectives (Pareek & Rao, 1992). The identification of key performance 135 Chapter Four Human Resource Planning areas aids in role clarity as well as in delegation of functions. This in turn helps in performance appraisal and training and usually four or five key areas for a job are identified. The essential personnel of developing countries consist of Community workers, subject-matter specialists, and supervisory staff or Officers. Examples of key performance areas of central personnel are given below: Community Workers: - People in this category (1) undertake educational activities in the form of meetings, campaigns, demonstrations, field days, training sessions, and exhibitions; and (2) provide advisory services to stakeholders and solve their problems. Subject-Matter Specialists: Their role is to (1) keep well-informed of current recommendations and findings related to projects by maintaining continuous contact with organization research stations; (2) provide feedback to the research system about project difficulties which need solutions; and (3) train and backstop stakeholders on the latest technology and support them in solving field problems. Supervisory Staff or Officers: People holding these positions (1) plan, organize, coordinate, and implement programmes and activities; (2) supervise and monitor the work of field staff, providing guidance, motivation, and performance evaluation; and (3) programme coordination with inter-and intradepartmental agencies. Critical Attributes for Personnel The key performance areas indicate the vital roles and contributions of different categories of personnel. Once the roles are defined, they can be analyzed to indicate the features which can discriminate an effective from an ineffective role occupant. These serious attributes entail the qualities such as educational qualifications, experience, skills, physical characteristics, mental abilities, attitudes, and values. The critical attributes needed for Community Workers and Supervisory Staff are essential formal training, practical skills and experience on the job, and knowledge of modern job practices. Abilities in group dynamics, human relations, and communication are also vital. Basic skills correlated to management and leadership are needed by supervisors. Values and attitudes such as faith in people, commitment to development, and concern for the whole community are important for all personnel (Gupta, 1963; Bhasin, 1976). The importance of evaluating personal and professional attributes for selecting productive personnel has been reported by several researchers (Gupta, 1963; Perumal, 1975). Assessment is important because an unsatisfactory educational level of staff is one of the most serious problems in countries like Bangladesh, Botswana, Kenya, Malaysia, Sudan, and Zambia (Blanckenburg, 1984) I include Uganda as well. 136 Chapter Four Human Resource Planning Recruitment and training of personnel Recruitment is significant in selecting the right kind of personnel. Since the job of a personnel demands for technical skills as well as commitment and willingness to educate the workers, a suitable selection system is crucial to ensure the right selection. The success depends heavily upon selection of qualified and motivated workers. Organizations in Third World countries use two main sources of recruitment: from outside (external) and from within (internal). Entry-level positions such as Community Workers (volunteers) and other highly qualified officers are occupied by external recruitment, using the services of government placement agencies. Other channels of recruitment are advertisements, professional search firms, private placement agencies, and educational institutions. Most of the departments in developing countries have the policy of promoting or recruiting within for middle-level and top-level positions. For instance, in India, positions like deputy director, joint director, e.t.c. are filled through promotion (Vijayaragavan, 1994). The major advantage of this policy is that it encourages loyalty and provides opportunities for existing workers to get high-level positions. However, its greatest disadvantage is that it prevents the lateral admission of talented personnel and promotes complacency because seniority ensures promotion. In Uganda it is the same case because management needs people with enough knowledge to help the organization develop but it’s unfortunate that their managerial skills cannot support the organization to realize their objectives. Methods and Techniques for Selecting Staff The selection of the staff starts with creating the job opportunities known to all potential applicants through advertisement. This is followed by screening applicants to shortlist suitable candidates and by evaluating potential candidates through various tests. A typical selection process consists of the following steps (French, 1982):  Completed job application,  Initial screening - to determine a job applicant’s qualifications.  Testing - pre-employment tests or employment screening tests  In-depth selection interview,  Physical examination  Job offer In general, organizations in developing countries use a humble knowledge test and a brief interview to select personnel. By using the above method, it is impossible to discriminate an effective candidate from an ineffective candidate, because selecting personnel demands thorough, in-depth testing of cognitive and non-cognitive abilities. Testing cognitive ability entails knowledge test, skill or ability test, and an aptitude test. A non-cognitive test is a measure of behavioural dimensions which are vital for field-level personnel, including concern for and commitment to the people, empathy, problem-solving 137 Chapter Four Human Resource Planning orientation, high motivation to impact and educate workers, ability to work under unsupervised and difficult conditions, patience and persistence, and team spirit. The Assessment Centre Approach, originally used during World War II, can be used to select personnel. In this approach, organizations develop internal resources for evaluating new staff. The candidates to be employed go through a number of testing exercises, and an expert evaluates their behaviour. The techniques employed are a psychological test, role play, in-basket exercise, group discussion, projective test, knowledge test, and interviews. Training and Development The training of the personnel contributes directly to the development of human resources inside organizations. Training programmes are focused on maintaining and improving up to date job performance, while development programmes concentrate on developing skills for future jobs (Stoner & Freeman, 1992, p. 388). Training has to begin with the identification of training requirements through job analysis, performance appraisal, and organizational analysis. Once the training needs of the personnel have been identified, the next step is to organize training programmes. Methods such as games, role playing, simulation exercises, and case study can be used in the organizations to generate learning situations based on experience (Lynton & Pareek, 1990). Training concentrating on real field experience should be emphasized. Emerging new technologies call for actual field experience. Workers need training not only in the technological aspects but also in human relations, problem solving, sensitivity towards disadvantaged groups, and the basic concepts of management (Hayward, 1966). Management Development Programmes Management development programmes are destined to improve the managerial skills of senior-level officers and to prepare them for future roles. There is a great need for management development programmes in organizations because they face complex situations due to changing scenarios. Further, managers have to be exposed to modern management techniques and approaches. Management development programmes have to be well-matched to the needs of top-level managers and should be based on needs analysis. Methods like coaching, job rotation, training sessions, classroom instruction, and educational institute-sponsored development programmes are used to train managers. In India, a distinct institute called MANAGE has been developed to train senior managers in managerial skills and human relations. Performance appraisal In the previous sections, we discoursed how personnel are recruited and trained and become part of a work group. Though, the ultimate measure of 138 Chapter Four Human Resource Planning effective human resources within an organization is the performance of the personnel. As a result, performance appraisal is vital for effective human resource management. Performance appraisal is a procedure of evaluating employee performance in order to direct and develop the employee’s potential. In several organizations which are government departments, the performance appraisal is nothing more than a confidential judgement of work done and a character report used to simplify disciplinary action or promotion. The workers do not acquire feedback about their performance. Organizations need to have an open appraisal system to deliver feedback and opportunities for open discussion with employees on their performance, because they have huge potential to grow and develop hence this system can form a healthy working environment and employee motivation. The performance appraisal which aims at helping employee development has the following major purposes: (1) to provide feedback and guidance, (2) to set performance goals, (3) to identify training needs, and (4) to offer inputs for management of pay administration, rewards, and promotion. The steps contained in effective performance appraisal are namely; identification of key performance areas and setting yearly objectives under each KPA, identification of critical attributes for effective performance, periodic review of performance, discussion of performance with employees, and identification of training and developmental needs (Pareek & Rao, 1992). Potential Appraisal The potential appraisal is a future-oriented assessment by which the potential of an employee to occupy higher positions and to assume higher responsibilities is evaluated. The potential appraisal can help the staff to know their strengths and weaknesses and can motivate them to further develop their skills. Consequently, the potential appraisal helps in planning general career development of employees. A number of techniques used for the appraisal are peer rating, self-appraisals, management by objectives (MBO) approach, psychological test and simulated work exercises, case analyses, and leadership exercises. Performance Review and Counselling A crucial purpose of the performance appraisal is to advice and guide workers towards greater job effectiveness. Thus, a system of performance counselling is needed in organizations. Performance counselling is provided by the manager to the subordinates to support them in the analysis of job performance, identification of training needs, and finding solutions to the problems which delay job effectiveness. Counselling is an art of communication including two people - manager and employee. Counselling varies from training in that the former involves a dyadic relationship and creates more mutuality and confidentiality. The triumph of performance counselling depends upon the climate of openness and mutuality, worker’s 139 Chapter Four Human Resource Planning interest, and the counselling process. Managers can use nondirective, and cooperative counselling (Werther & Davis, 1982). directive, Supervision The two major functions of supervision are task orientation and concern for employees. Therefore, direction and organization of activities, motivation of employees, and management of work groups are the important functions of supervisors. Direction and Organization Supervisors have to plan the work and sustain a high standard of performance. The entire process of job analysis, identification of key performance areas, and performance appraisal will support in planning and organizing the work. The training and visit system introduce mechanisms for defining goals, planning, and scheduling work at the field level with provisions for monitoring and evaluation. Some of the management techniques used by organizations in general planning and management of programmes are the programme evaluation and review technique (PERT/critical path method (CPM) (Wiest & Levy, 1982), the management by objectives (MBO) (McConkey, 1983), the programme and performance budgeting system (PPBS), and time management techniques. These techniques have been practiced by organizations in Asian and African countries with varying achievements. Personal computers offer good scope for managers to increase certain managerial skills. Motivating the Personnel The work motivation and morale of the staff, as reported earlier, are very meager in many countries. The bureaucratic structure of administration, lack of rewards and incentives, poor facilities, poor promotional avenues, and the low esteem given to workers are the major causes of poor motivation and confidence. Supervisors should have the ability to motivate and lead the workers to perform more than routine jobs, and supervisors should be involved in achieving excellence in the work. This calls for managers having an understanding of numerous theories of motivation as applicable to frontline workers. Therefore, a knowledge of major theories of motivation for example as Maslow’s hierarchy of needs theory, Herzberg’s two factory theory, McClelland’s need theory, theory X and theory Y, and expectancy theory of motivation is crucial (Stoner & Freeman, 1992). Special training for developing motivation amongst workers has to be undertaken by supervisors. Work-Group Management Every organization has formal and informal groups. Formal groups are established by the management, while informal groups are artless and developed to satisfy mutual interest of the members because work groups 140 Chapter Four Human Resource Planning have a substantial persuasion on the work circumstances, supervisors should be careful to the needs of the group and develop skills to direct and attain the organization’s goal, which will benefit the organization and the members. Effective supervision can use work groups in problem solving because they can provide many creative resolutions. One way to improve supervisory effectiveness in work is to develop a leadership style which represents the workers’ group interest at the advanced level of organization. This will amplify the confidence and morale of the work group. An understanding of group dynamics and their implications for increasing work-group performance is essential for supervisors. For example, in the “Hawthorne Effect” amplified performance due to special treatment of the group can be effectively used in organizations (Honadle, 1982:29-45). Studies have pointed out that welldeveloped group dynamics result in increased performance (Leonard, 1977). Management of rewards and incentives An important feature of human resource management which needs special attention in organizations is the development of a reward system which will entice, retain, and motivate personnel, as well as provide training and promotional opportunities. Organizations in Asian and African countries have a meager reward system (Vijayaragavan, 1994; Swanson, Farmer, & Bahal. 1990). The workers are not only poorly paid but are paid late and after reminders or visits to head-quarters (Wiggins, 1986). Most of the services are delivered by government agencies and operate under rules and regulations of public administration. These rules don’t have requirements for rewarding superior performance or for a wage system based on merit. Promotion standards are based on seniority and length of service. Thus, the bureaucratic structure of services is a basic hindrance to designing a better reward system. Among a number of the government departments have low public esteem and poor quality pay structure (Vijayaragavan & Singh, 1992). The rewards and incentive scheme can be improved in several processes. Rewarding Superior Performance: Organizations have developed a reward system which encourages superior performance so that pay and wage administration will be a valuable tool to support performance, motivation, and satisfaction. A clear job description, performance standards, and performance appraisal will help in evaluating work and rewarding people for meritorious service. Ways and procedures have to be found within the existing framework of administration basing on performance pay. For example, workers on the basis of their performance can be sent for higher education. Non-monetary rewards like recognizing the good ideas of workers or giving honourable titles can also help in improving performance. The personnel may also be encouraged to form professional duties to develop and communicate high standards, as well as to recognize superior performance. A professional 141 Chapter Four Human Resource Planning monthly journal or newsletter can help workers to communicate innovative ideas and reinforce superior performance. Enhanced Working Conditions at the lower Level: The reward system must also be internally reasonable. The comparative significance of field-level functionaries has to be realized in terms of compensation pay and other amenities. Lower-level workers often work under unpleasant and isolated conditions. A vigilantly planned system of field allowance can compensate this (Baxter, 1990). The living conditions of workers must be improved by providing adequate facilities for housing, transport, medical and educational allowances for children. Career Planning and Development for the Personnel: A career means all of the jobs that people hold during their working lives. Career planning is the procedure by which workers plan their career goals and paths. Career development means all of the technical and managerial skills workers acquire to attain their career plans. Career advancement, gives a picture of future opportunities in terms of promotion, is a motivating aspect for performance and development of skills. Unfortunately, no career structure exists for personnel in many organizations. In developing countries like India, there are many cases where one joins as a village worker and retires in the same position after serving thirty to thirty-five years. As part of improving the rewards and incentives system, extension organizations have to develop suitable career paths and advancement for different categories of personnel on a systematic basis. As part of career development, personnel should be provided with opportunities to develop their technical and managerial skills to enable them to occupy higher positions. Personnel must possess a remuneration structure as well as promotion opportunities comparable to other professions like health or engineering. In Kenya, the pay and career opportunities of workers are comparable to other government employees (Onyango, 1987:148-162). Improvement of the quality of work’s life: The past approach to human resource development concentrated on individual development through training and appropriate supervision. Nevertheless, with the rising complexity of organizations and society, it was soon realized that training individuals plays a limited role in the development of organizations. The requirement for improving the quality of work life through making the job more satisfying and productive has been very much felt. Factors like the nature of the job or the role and involvement of employees in work decisions are important for improving the quality of work life. The approaches employed to do so are job design, job enrichment, and role interventions (Pareek, 1993). An understanding of these methods and their application in organizations are essential for managers to improve the performance of workers. Studies have 142 Chapter Four Human Resource Planning shown that the work environment of organizations is poor and needs improvement (Jhamtani & Singh, 1989:53-58, 1992). Job Enrichment and Job Design: The detailed analysis of the work to know the factors which make it a satisfying experience is referred to as Job enrichment. Job enrichment applies the job as the medium of developing workers and changing organizational practices. Some of the factors which enhance job satisfaction are recognition for the job, a sense of achievement in the job, nature of the work itself, and opportunities to learn new things and grow. The principles of job enrichment by Herzberg (1966), states that removing controls while retaining accountability, introducing new tasks, giving a complete unit of work, accepting job freedom, and assisting workers to become expert in their tasks. These principles can be practiced by extension managers to increase the quality of work and job satisfaction among the personnel. Job enrichment programmes were thriving in developing the quality of work and job satisfaction. Although, it was revealed that job enrichment had inadequate view of the job, and the prerequisite for greater prominence on human values was realized which led to the concept of job design referring to structuring a job to satisfy the technical, social, organizational, and human requirements of the person performing the work (Davis & Taylor, 1979). Job design is concerned with increasing the quality of work life through treating the workers as human beings and emphasizing their development and involvement in work decisions basing on the humanization of work. It emphasizes the use of extrinsic and intrinsic job factors, worker participation in management, autonomy, adaptability, and variety. The concept of job design can be used by managers to increase participation of the personnel in the planning and management of programmes, which will improve the quality of their work life. Role Interventions: The study of roles, which are the positions workers hold in an organization, as indicated by the expectations of important persons and the individuals occupying the positions, is a comparatively neglected aspect of organizations. Roles are a significant dimension in increasing organizational effectiveness. Through these roles, people are connected with the organization. This linkage develops organizational effectiveness by uniting individuals with the organization. Such union creates mental well-being and personal effectiveness (Pareek, 1993). The reason of role-based intervention is to amplify the mutuality of roles in organizations. Role-based responsiveness is done through learning situations such as process laboratory, group discussion, and use of questionnaires and schedules. Rolebased responsiveness in organizations results into increased work commitment, motivation, creativity, and team spirit. 143 Chapter Four Organisational Development Organizational Development An efficient organization needs to develop the capability of responding to changes in relation to its environment. Organizations have to cope with changes within and outside the organization, such as changes in technology, communication methods, needs of stakeholders, rural situations, export and import of the company, and market economy. Organizational development encourages planned changes in the organization’s tasks, structure, techniques, and people. Attitudes, values, and practices of the organization are altered so that it can cope with varying situations. The workers also gain greater skills to deal with new problems. Also concentrating on team building and conflict management (Chattopadhyay & Pareek, 1982), organizational development is a deliberate effort and is done with the aid of an external expert in the behavioural sciences. The procedure consists of diagnosis of the problem, data collection, feedback of data to the organization, introducing specific interventions, evaluation, and follow-up. Techniques for instance transactional analysis, sensitivity training, and team-building exercises are used to create interpersonal relationships. Organizational development is an effective approach that can be used by organizations to bring about planned changes and to increase the interpersonal relationships among the employees. Training and Professional Development The method of acquiring specific skills to perform a job better is termed as training (Jucious, 1963). It assists people to become skilled and proficient in doing some jobs (Dahama, 1979). In general, an organization encourages the worker’s learning through training so that their modified behaviour adds to the achievement of the organization’s goals and objectives. Training is the practice of informing, teaching, or educating workers in order to become as well skilled as possible to do their job, and they may become technical to perform in positions of greater difficulty and responsibility according to Van Dersal, 1962. The difference between education and training is putting these at the two ends of a continuum of personnel development ranging from a general education to specific training (Flippo, 1961). Meanwhile training is concerned with those activities which are designed to improve human performance on the job that employees are at present doing or are being hired to do, education focuses on increasing general knowledge and understanding of the whole environment. Education is the development of the human mind, and it enhances the powers of observation, analysis, integration, understanding, decision making, and adjustment to new circumstances. 144 Chapter Four Organisational Development Learning theories and training Learning theories are the essential materials which are normally applied in all educational and training activities. The more an employee appreciates learning theories, the better he or she will be able to make decisions and apply them to attain the objectives. The behaviourists, the cognitivists, and the humanists encourage various aspects of the teaching-learning process in their approaches. Meanwhile the behaviourists suggest external conditions (environment) resulting in observations and measurable changes in behaviour, the cognitivists are more focused on how the mind works (mental processes such as coding, categorizing, and representing information in memory). The humanists, on the other hand, encourage the affective aspects (e.g., emotions, attitudes) of human behaviour that affect learning. In large systems, effective training must be able to take care of all the theories of learning in order to amend the action, belief, and knowledge components of a learner simultaneously. Andragogy which is a theory of adult learning is usually used rather than Pedagogy is a theory of child learning in training. Training approach There are mainly three methods to training namely: traditional approach, experiential approach, and performance-based approach (Rama, Etling, & Bowen, 1993). Traditional approach, the training staff formulates the objectives, contents, teaching techniques, assignments, lesson plans, motivation, tests, and evaluation. The center of focus in this model is intervention by the training organization staff. Experiential approach manipulates experiences where the learner becomes active and influences the training process. Unlike the academic approach inbuilt in the traditional model, experiential training encourages real or simulated conditions in which the trainees will finally operate. The trainers and trainees in this model are jointly determined by the objectives and other elements of training. Trainers basically serve as facilitators, catalysts, or resource persons. The goals are evaluated through achievement of a given level of proficiency instead of the passing grades of the trainees in the performance-based method. Emphasis is awarded to acquiring specific visible skills for a task. Performance-based teacher education (PBTE) model which is typically task or skill oriented and is also appropriate to non-formal educational organizations (Elam, 1971). Types of training Training broadly can be categorized into two types namely: pre-service training and in-service training. Pre-service training is so academic in nature and is obtained by formal institutions following exact curricula and syllabuses 145 Chapter Four Organisational Development for a definite duration to offer a formal degree or diploma. On the other hand, In-service training is awarded by an organization from time to time for the development of skills and knowledge of the staff: Pre-service Training: The course of action through which individuals are equipped to enter a certain kind of professional job is referred to as Pre-service training. Preservice refers to academic actions which take place before a person takes up a job which needs specific training, i.e. before a person ‘enters service’. It requires primary, secondary, Certificate, Diploma, Bachelor’s Degree, Masters and PhD or a Professor. It will depend on which level is required for the job by the Human Resource Management because Organizations cannot employ a person who is too qualified for the job. In-service Training and Staff Development: The practice of personnel development for the reason of developing the performance of a member of staff holding a position with assigned job responsibilities is In-service training. It promotes the professional growth of individuals which is a program intended to support the competencies of staff while they are on the job (Malone, 1984, p. 209). In-service training is learner-oriented, problem-centered, and time-bound sequence of activities which gives the prospect to develop a sense of rationale, broaden insight of the clientele, and increase capacity to gain knowledge and mastery of techniques. There are five different categories of In-service training namely: foundation training, induction or orientation training, refresher or maintenance training, on-the-job training, and career development training. For the proper development of the personnel throughout their service life all these types of training are necessary. Induction or Orientation Training: This kind of training is provided straight away after employment to introduce the new workers to their positions. It starts on the first day the new member of staff is on the job (Rogers & Olmsted, 1957). This form of training is meant at acclimatizing the new staff with the organization and its personnel. Induction training of all new workforces must develop a mind-set of personal dedication to the service of the people and the organization whereby every new personnel might have had this kind of preservice training (Halim and Ali, 1988). According to Van Dersal (1962) the comparison to the distinctiveness of a fresh employee when the workers start to work in an organization for the first time, they are enthusiastic to know what sort of setting they are getting into, what they are supposed to do, and whom they will partner with frequently at work. They are more likely to be thoughtful and open-minded than experienced workers. In reality, the most favourable time for getting employees’ attention and for molding good habits among them is when they are still new to the job. Foundation Training: This is the type of in-service training which is also suitable for newly recruited employee. Besides expert competence and regular instruction about the organization, every employee requires some professional knowledge about various rules and regulations of the government, financial 146 Chapter Four Organisational Development transactions, administrative capability, communication skills, leadership ability, coordination and cooperation amongst institutions and their connected mechanism, report writing, and so on. Foundation training is availed to workers to empower the foundation of their service career. This training is normally given at an early stage of service life. Refresher Training: This is also called maintenance training which is meant at updating and maintaining the specialized subject-matter awareness of the staff. Refresher training gives the specialists, administrators, subject-matter officers, supervisors, and frontline workers updated and encourages them to include to the knowledge and skills they have already. This training commonly deals with new information and new methods, plus the review of older materials. To keep both workers at the climax of their potential production and to check them from getting into a rut this type of training is required (Van Dersal, 1962). On-the-Job Training: This is where fortnightly training under the Training and Visit system of workforce, and is offered by the superior officer or the subjectmatter specialists to the subordinate staff which is an ad hoc or repeatedly scheduled training. This type of training is often hard because it is short and entails a lot which may include informal discussion, formal presentations, and opportunities to try out new skills and knowledge in the field in shortest time possible. Managers, superiors, or subject matter experts in each department must play a key role in providing on-the-job training for workers as they go about their normal daily activities. Career or developmental training: This type of on-the-job training that aims to enhance the knowledge, skills and abilities of employees and help them take on greater responsibilities in higher positions. Training is established within the department for successful employees at all levels to ensure their continuity in education and professional development. Services that give all employees the opportunity to develop professional training programs will reap the benefits of longer tenure and more satisfied employees, which will improve the effectiveness and efficiency of services (Malone, 1984). Malone further noted that professional development is an act of obtaining information and resources which encourages people to plan lifelong learning plans related to their work and life (p. 216). Although employees are responsible for designing their own professional development education, organizations sometimes set standards and provide opportunities for employees by providing options. Training phase Training is a cyclical process, starting from the determination of requirements, after a series of steps, and ending with the evaluation of the training activities. Any changes or deficiencies in the pace of the training process will affect the 147 Chapter Four Organisational Development entire system, so the trainer must clearly understand all the stages and steps of the training process. From the most extensive review, the training process is divided into three stages, namely: planning, implementation and evaluation. (McGhee and Thayer, 1961) Planning Stage The planning phase includes a number of activities, two of which are very important for determining training needs and curriculum development. Determination of training needs: Training needs refer to the situation where there is a gap between “what is now” and “what should be” in terms of knowledge, skills, attitudes and behaviors of incumbents at a specific moment and under specific circumstances. This gap is called a “problem” and usually occurs when there is a difference between “expected performance” and “actual performance”. The needs identification process helps trainers ensure that they have tailored training plans for training issues. For example, if officials have been training workers, but the performance of workers has not improved. The reasons may be:  The officials lacked understanding of the subject matter.  Officials are not well trained.  The training center lacks training facilities.  Workers are disorganized and cannot work normally until their requirements are met by the organization. The first two problems are related to knowledge and skills and can be effectively solved through training programs, but the third and fourth problems need to be addressed by the organization. The training needs can be determined through different analysis procedures. The main procedures used to determine training needs are as follows: Organizational evaluation determines where training concentration ought to be placed within the organization and based on the objectives of an organization. Concerning what one should do in analyzing an organization, McGhee and Thayer (1961) suggest four steps: a. Stating the goals and objectives of an organization. b. Analyzing the human resources. c. Analyzing efficiency indices. d. Analyzing the organizational climate. The outcomes of these analyses are then correlated with the objectives of the organization. These correlations spot to specific areas in which training is needed. Individual evaluation aims at defining specific training requirements for an individual or group of workers so that training can be modified to their needs. This center of analysis on individuals and their specific requirements regarding the knowledge, skills, or attitudes they must gain to perform the 148 Chapter Four Organisational Development given tasks. The achievable methods or techniques for individual analysis consist performance appraisal, interviews, questionnaires, tests, analysis of behaviour, informal talks, checklist, counseling, critical incidents, recording, surveys, and observations. Group analysis consist a number of techniques in which a group of well-informed workers discuss various aspects of the organization, the workers, and the tasks to identify the main discrepancies in getting predetermined targets for each of them with a purpose of evaluating training necessities as differentiated from other necessary changes for eliminating these setbacks. The main techniques which are used in this method are brainstorming, buzzing, card sorts, advisory committee, conferences, problem clinic, role playing, simulation, task forces, workshops, and so forth. Many problems continue existing in an organization, but some problems cannot be solved by training alone. After staging preliminary needs analysis, which gives feasible causes and solutions, the outcomes should be evaluated by the personnel of the organization to establish whether training is a proper action to solve that problem. Curriculum Development: This is the most fundamental part in a training programme after a prerequisite for training has been defined. The curriculum stipulates what will be taught and how it will be taught and it provides the framework and foundation of training. The first phase of curriculum development influences what will be taught, that is, the training content. Once the training needs have been defined and training activities have been determined as part of the solution, a needs analysis should be completed to determine knowledge, skills, and attitude requirements and performance difficulties. The needs analysis process comprises breaking down the “training problem” into its vital parts in different successive phases to define and understand the significant components in each phase. Eventually it leads to setting and understanding the training content. The training requires analysis procedure that can be grouped into three distinct analytical phases: job analysis, task analysis, and knowledge and skill-gap analysis. A) Job analysis: Job analysis is a process of defining main areas of tasks where training may be required. It consists the bisection of a job into its component parts. This analysis permits a trainer to better understand what a worker does in an organization. Job analysis has the “task identification” of a particular job (Wentling, 1992). The techniques employed in task identification entail job questionnaire, interview, participant observation, work sampling, job audit, and small-group discussion. The following steps may give a guide for completion of job analysis: Describe the job that is to be the subject of the analysis. This entails identifying the focal point for the job analysis. It may consist of the whole job of a group of the workers or only a specific segment of their job. 149 Chapter Four Organisational Development Organize a list of tasks which can be done following various approaches and methods. Four approaches can be used to categorize job tasks: (1) experts identify and list critical tasks, (2) observations and interviews are conducted with employees, (3) meetings are held with group leaders, and (4) a tentative list of tasks is prepared by workers and their supervisors. Verify the tasks. The draft list of tasks should be approved by experts, workers, and supervisors in the analysis procedure. This can be completed through expert review, small-group discussions, and interviews. When the tasks are established, a final list of job tasks is prepared. Determine the frequency. The workers and their supervisors can fill in a form indicating how often each task in a job is performed. Different scales like, seldom, occasionally, weekly to monthly, daily to weekly, and daily can be used to measure the strength of a task achieved. Determine the importance. Not all tasks are similarly vital to a job. An infrequently performed task may be very vital. Consequently, a relative significance rating is useful along with frequency rating. A scale like “marginally important”, “moderately important”, and “extremely important” may be used to identify the relative significance of the job tasks. Estimate the learning difficulty. An approximate of learning is hard in another dimension of the job-task analysis. It indicates the trainer-employees’ view of difficulty, which may be different from the trainer’s own view. A scale like “easy”, “moderately difficult”, “very difficult”, and “extremely difficult” may be employed to determine the difficult indices of job tasks. Calculate the total score. This can be done by simply adding up the scores for frequency, significance, and learning difficulty for each task. The column for total score in a worksheet shows the precedence tasks for training if these are training problems. Review the findings. The outcomes of the job-task analysis should be presented to the significant people in the training system, including government leaders, programme directors, and others interested in interconnected training. B) Task analysis The result of the job analysis is a list of broad job tasks, based on significance, learning difficulty, and frequency of performing the task. Each task is a complex set of procedures in itself, and therefore it needs further analysis to find out which specific segment of the task is critical in designing a training programme. To do this, it is essential to follow a procedure called ‘task analysis’, which is similar to job analysis. The method that comprises 150 Chapter Four Organisational Development preparing a blank task analysis worksheet, then noting down the name of the job at the top of each sheet, and then making copies is Task analysis. Each of these forms will be used for breaking down and analyzing each of the most important job tasks. Writing one key task identified for training on each of the task analysis worksheets and to list all component parts of each task on its own task analysis worksheet is crucial for that reason. This is escorted by the steps used for job analysis to find out the frequency, importance, and learning difficulty for each step of the tasks. Then the score for each component part is put in the total score column, and the outcomes are discussed with focal personnel in the organization. The job analysis and task analysis procedures are similar to each other, so the model for both worksheets is the same. The major difference between these two strides of analysis is that, job analysis gives us the insight to identify main blocks of content to entail in training; the task analysis aids us understand what comprises an individual block (Wentling, 1992). Both are very crucial to the curriculum development procedure. What requires to be taught and what steps are comprised in the process are completed by these analyses and involve the major steps in curriculum development. C) Knowledge and skill-gap analysis. The knowledge or skill-gap analysis is a process of identifying the training needs of individual workers in relation to the vital tasks-steps or components of tasks branded for training. The skill-gap analysis determines how technical or proficient individual recruits are on these components or tasks-steps, how much individuals are special from desired performance, and whether or not they require training. It would be a squander of resources and frustration to the trainer and trainees to plan and deliver training on topics and skills where the trainees are already able and proficient. A preference list of the tasks identified for training according to the total score in the job analysis is confirmed. Then, the steps or components that were described on each task analysis worksheet are noted on the skill-gap analysis worksheet. This is escorted by rating each step-component in terms of the trainee’s present proficiency on a scale of 1 to 5, as observed in the legend of the worksheet. Describing the steps-components that come into view to have low proficiency is wanted since there is a gap between what is desired and the current situation. After all this, an assessment is done to consider whether the gap can be abridged or removed through training or if training is the most appropriate method. There might be some steps-components for which actions other than training are more proper. At this stage, focal personnel such as subject-matter specialists, supervisors, and training experts should discuss the findings before finalizing the curriculum. This helps to describe different views and to avoid unobserved mistakes or biases in curriculum development. The training requirements analyses give many things to a trainer. The analyses identify the training contents and how deficient the trainees are in 151 Chapter Four Organisational Development these contents, and the sequence of tasks gives the sequence of training activity. Training Method Selecting A training programme has an enhanced chance of success when its training procedures are carefully selected. A training method is a strategy that a trainer uses to deliver the content so that the trainees achieve the objective (Wentling, 1992). Selecting an appropriate training method is maybe the most considerable stride in training activity once the training curriculum is defined. There are a variety of training methods, but not all of them are equally appropriate for all topics and in all circumstances. To attain the training objective, a trainer should select the most proper training process for the content to entail the trainees in the learning procedure. There are 4 major factors that are considered when approving a training process: the learning objective, content, trainees, and practical requirements (Wentling, 1992). Bass and Vaughan (1966) opined that training processes are believed to be selected on the cause of the degree to which they do the following:  Permit active involvement of the learners.  Assist the learners rearrange learning experiences from training to the job situation.  Offer the learners with knowledge of outcome about their attempts to progress.  Give some ways for the learners to be reinforced for the proper behaviour.  Present the learners with a chance to practice and to repeat when required.  Inspire the learners to develop their own performance.  Aid learners increase their willingness to embrace change. These criteria show that a single training method will not support the objectives of the training programme. A diversity of training methods is obtainable by a trainer. The most usually used methods include: 1. Instructor presentation. The trainer verbally presents new information to the trainees, generally through lecture. Instructor presentation may comprise classroom lecture, seminar, workshop, and so forth. 2. Group discussion. The trainer heads the group of trainees in discussing a particular topic. 3. Demonstration. The trainer reveals the correct steps for finishing a task, or shows an example of a correctly completed task. 152 Chapter Four Organisational Development 4. Assigned reading. The trainer provides the trainees reading assignments that give new information. 5. Exercise. The trainer allocates problems to be solved either on paper or in real situations related to the topic in question in the training activity. 6. Case study. The trainer provides the trainees information about a situation and directs them to come to a decision or solve a problem about the situation. 7. Role play. Trainees try out an act of a real-life situation in an instructional setting. 8. Field visit and study tour. Trainees are offered the chance to monitor and interact with the problem being solved or skill being studied. Implementation Stage Once the planning phase of a training programme is achieved, then it is time to execute the course. Implementation is the point where a trainer detonates the training plan, or it is the process of putting a training programme into action. The opening step towards execution of a training programme is ‘publicity’. Most of the well-established training centers create training brochures which enclose course descriptions, prepare a yearly calendar of training opportunities, and inform focal organizations, agencies, or departments well ahead of time about their training plans. Once the training centre plus the responsible organizations agree to execute the training, the next step is to arrange existing resources such as adequate funds for the course and facilities for food, lodging, transportation, and recreation. All the resources required to be properly managed and coordinated to run the programme smoothly. Evaluation Stage Evaluation is a procedure to define the relevance, effectiveness, and impact of activities in light of their objectives. In evaluating a training programme, one requires to emphasize that most training activities exist in a larger setting of projects, programmes, and plans. Hence Raab et al. (1987, p. 5) opine training evaluation as, a systematic procedure of collecting information for a training activity which can then be used for guiding decision making and for analyzing the relevance and effectiveness of different training components. Kirkpatrick (1976) proposed four criteria to evaluate training programmes namely: reaction, learning, behaviour, and results. Each principle is used to evaluate different aspects of a training programme. Reaction assesses how the trainees enjoyed the programme in terms of methods, content, trainers, 153 Chapter Four Monitoring Programmes and Resources duration, facilities, and management. Learning assesses the trainees’ skills and knowledge which can able to absorb at the time of training. Behaviour is an emphasis on the extent to which the trainees were able to relate their knowledge to real field situations. Results are the tangible impact of the training programme on individuals, their job environment, or the organization in general. Types of Evaluation On the foundation of the time dimension, evaluation may be categorized as (1) formative evaluation and (2) summative evaluation. Formative evaluation consist the collection of relevant and useful data meanwhile the training programme is in progress. This information can describe the drawbacks and accidental outcomes and is helpful in revising the plan and structure of training programmes to suit the necessities of the situation. Summative evaluation on the other hand is done at the end of the programme and makes an overall evaluation of its effectiveness in relation to attaining the objectives and goals. Raab et al. (1987), identified evaluation into four major types: evaluation for planning, process evaluation, terminal evaluation, and impact evaluation. Evaluation for planning: This provides information with which planning decisions are made. Training contents and procedures (methods and materials) are normally planned at this stage in order to select or guide the development of instructional materials and strategies. Process evaluation: This is conducted to forecast defects in the procedural design of a training activity during the implementation phase (Raab et al., 1987). Through this process the main elements of the training activities are methodically monitored, problems are observed, and attempts are made to correct the mistakes before they become serious. Process evaluation is occasionally conducted throughout the entire period of the programme. Terminal evaluation: This is conducted to discover the effectiveness of a training programme after it is accomplished. The objectives of terminal evaluation are to establish the degree to which desired benefits and goals have been attained, along with the causes of failure, if any. Impact evaluation: This illustrates changes in on-the-job behaviour as an outcome of training efforts. It gives feedback from the trainees and supervisors about the results of training. It measures how proper the training was in changing the behaviour of participants in real-life situations. Monitoring Programmes and Resources The Global Consultation on Agricultural Extension exposed that monitoring and evaluation are crucial yet often deserted functions in several organizations (FAO, 1990, p. 27). In the global survey of national systems, it was discovered that only about one half of all national systems have some type of monitoring 154 Chapter Four Monitoring Programmes and Resources and evaluation (M & E) capacity. The consultation resolved that in many instances the M & E units are weak and are limited to ad hoc studies. Normally, these M & E units are deserted when project funding ceases. Monitoring and evaluation in various organizations have a negative image since these units can concentrate on problems, exposing weaknesses and failures. Instead, monitoring and evaluation should be used in a positive way to improve performance and increase the efficiency. Hence, attitudes about and uses of M & E must be altered if this capacity is to be used as advantage in strengthening performance and impact (p. 27-28). The consultation suggested that national systems should be powerfully encouraged to set up and use monitoring measures and evaluation studies both to improve performance and to communicate the results of the programmes to policy makers and clientele being served (p. 29). National systems require focusing on monitoring, management information needs, sources of information, and a management information system. The word “monitor” originated from the Latin word meaning to warn, and “evaluate” rises from the word value (Hortan, Peterson, & Ballantyne, 1993, p. 5). Monitoring is an essential part of a management information system. Managers need information to keep track of programme activities and to guide its course of action. Management information consists of six kinds of information namely: Diagnostic information (why a situation is as it is), Implementation information (physical and financial or input information), Utilization information, Impact information (Murphy, 1993, p. 5-6), Situation information, and Information for review. Sources of information involve a range of sources which supply information to management, ranging from informal (unscheduled encounter) to formal sources (sample survey). Management should be alert to receive feedback on programmes activities on whatever the source. A management information system is a system by which the “right” information is got in the right amount at the right time and is made accessible to the right person or persons (Bloom, 1980, p. 28). An information system is normally created in modem organizations to provide for the information needs of management. Monitoring Conceptual Framework A conceptual framework for monitoring comprises of four key components namely: an organization, a monitoring and evaluation (M & E) unit, information needs matrix, and a monitoring and evaluation cycle. Top management gets information from the monitoring unit and from other formal and informal 155 Chapter Four Monitoring Programmes and Resources sources. This impact on programme implementation leads to better programme planning, and ensures sustainability of programmes. Eventually this leads to Institutional development, which is identified as “the procedure of improving the ability of institutions to make effective use of existing human and financial resources” (Israel, 1987, p. 3). Approaches to monitoring Numerous approaches to monitoring are available. They arose, especially during the 1980s, as a response to the call for action to improve performance. Basically, these approaches differ considerably in their emphasis. All of them promote simplicity and timeliness, vital requirements of good monitoring. Half a dozen approaches are stipulated briefly below. Traditional (Administrative) Approach Basing on routine administrative reporting, this approach focuses on physical and financial achievements in a programme. Its primary weaknesses include multiplicity of reports by programme personnel and absence or neglect of beneficiary contact. It has been increasingly replaced by other approaches. Zones-of-Concentration Approach In 1977 Cernea and Tepping approach was introduced which relies on three zones: Visits, as the final outcome of efforts; Recommendations, as the content of the visit and means towards the conclusive benefits; and Yields, as the ultimate consequence of the development attempt (Cernea & Tepping, 1977, p. 19-20). Methodological Approach In 1981 Slade and Feder approach was discovered which builds upon the zones-of-concentration approach opines a monitoring survey early in each cropping season, a monitoring-cum-evaluation survey in every cropping season at the time of reaping, specific indicators, and reporting. Working manuals are a typical feature of this approach (Slade & Feder, 1985). Expanded Monitoring Approach Casley and Kumar suggested in 1987 an expansion of the monitoring function to cover not only physical and financial information, but also beneficiary contact information and project diagnostic studies (p. 5). Under this approach, there is greater emphasis on monitoring and less on evaluation. Project diagnostic studies are a novel feature of this approach. Adoption Rates Approach Murphy and Marchant opined in 1988 an approach which focuses on adoption rates as key indicators. This approach shifts away from trying to monitor results and focuses on directly monitoring the provision and response to 156 Chapter Four Monitoring Programmes and Resources project services (p. 11). Beneath this approach, service is taken to be the “medium” and the recommendations as the “message”. Marketing Approach Lee (1990) has identified an approach which is based on market segmentation, a standard technique in marketing. Beneath this approach, the need and likely demand for new technology are first assessed, and then target market segments are predicted. Among these approaches, Lee’s approach has much to commend it, because it is based on careful assessment of the need for new technology, an exercise rarely undertaken by organizations. Operationalizing the definition of monitoring Monitoring is critically specialized, dynamic, semi-autonomous, and institutionalized management resource and preferably it is computerized. Monitoring helps to ensure the implementation of programmes in accordance with their design, and takes into account the interests of various stakeholders. The identification of monitoring can be operationalized by establishing principles to follow like; setting up a data collection system; establishing relationships among the monitoring unit, management, the staff, and clients; and making proper use of nongovernmental organizations (NGOs). Principles of monitoring Basing on the past experience in monitoring and its approved role, it is possible to lay down the following ten principles of monitoring: 1. Simple. A complicated monitoring system is so self-defeating. The main task of monitoring is to simplify the lower-level complexity, sifting the more vital concerns from the less important. 2. Timely. Timeliness is of concern in monitoring. Management needs input from the monitoring system so that timely action may be taken. More so, timeliness is closely related to the credibility of monitoring. 3. Relevant. It must focus only with parameters which are relevant to programme objectives. This also encourages that monitoring doesn’t generate information that is not usable by management. 4. Dependable. Management will focus on monitoring findings only when the information is believed to be reasonably accurate. 5. Participatory. Effort is ought to be made to ensure participation by all concerned with stakeholders like field-level personnel, subject-matter specialists, or clients. 6. Flexible. It is repetitive in nature by getting acclimatized with the passage of time. This feature should not, however, lead to rigidity. 7. Action oriented. Monitoring usually leads to action. Therefore, it should follow practical approaches, keeping the needs of clients uppermost in view. Creating information for which there is no planned use which should be constantly avoided. 157 Chapter Four Monitoring Programmes and Resources 8. Cost-effective. Monitoring costs money and time. Therefore it is vital to make it cost-effective. While principles of simplicity, time-lines, relevance, and accuracy will lead to cost-effectiveness, computerization also can aid to make monitoring more cost-effective by reducing staff hours in data processing. 9. Top management oriented. Monitoring units requires keeping in mind the needs of top management when designing and operating a monitoring system. Yet at the same time, monitoring must take into consideration the fact that those who give information to the system also should benefit or the quality of the information provided will decline. 10. Specialized undertakings. Monitoring is not merely focused with the gathering and analysis of data, but with diagnosing problems and considering alternative practical solutions. Frequency of monitoring Monitoring is an ongoing and continual exercise. Data collection involving production should be undertaken twice or more in a given period: at the time of initiating the programme to obtain standard information and again at the time of achievement. The period of recall for collection of data should not exceed a month. Monitoring unit The monitoring unit must be staffed by technical personnel with specialized skills. The staff usually consists of specialists, economists, sociologist or anthropologists, statisticians, computer programmers, and supporting staff. The head of the monitoring unit should come from any of these disciplines. The leader of the monitoring unit should report to one of the top managers in the organization in the hierarchy. Monitoring indicators These indicators are variables that support to evaluate changes in a given situation (ACC, 1984, p. 37). They are apparatus for monitoring and evaluating the effects of an activity. Certainly, indicators are the primary methods by which a monitoring entity keeps track of programme capability, effectiveness, and efficiency. Any monitoring system will thus incorporate the use of proper indicators in these two aspects. There are the two approaches to indicator development namely: the inductive and the deductive. In the Inductive Approach, a scheme of social, economic, and demographic statistics is formed and a wide range of indicators is developed on the source of the statistics available. This is the method encouraged in the case of United Nations Social Indicators (FAO, 1988, p. 5). Then in the Deductive Approach, the fields of interest are first identified, and the obligatory indicators are developed whereby this method of socioeconomic indicators was used by 158 Chapter Four Monitoring Programmes and Resources WCARD - World Conference on Agrarian Reform and Social Development (FAO, 1988, p. 5). In monitoring, jointly the inductive and the deductive approaches are contained namely; indicators are developed on the basis of available statistics, and some like performance indicators are developed as an outcome of specially collected data. There are various types of indicators, for instance, development indicators, socioeconomic indicators, e.t.c. They range from general to specific indicators. Indicators can be classified into direct and indirect or proxy indicators (Clayton, 1983; ACC, 1984); single and unitary or composite indicators; quantitative and qualitative indicators; primary, core, and supplementary indicators (FAO, 1988); input and output indicators; and monitoring and evaluation indicators. The process of selecting indicators bases on the purpose, resources, and time available. Therefore, the following criteria are usually recommended: 1. Simplicity: This indicator must be simple enough to be understood by all stakeholders (FAO, 1988, p. 8). 2. Unambiguous definition: Must be clearly defined to avoid confusion (Casley and Kumar, 1987, p. 59). 3. Ready determination: This data can be got without unnecessary difficulty (WHO, 1989, p. 11). This is means timely (ACC, 1984, p. 38) and feasible (FAO, 1988, p. 8; and Gha, Hopkins, & McGranahan, 1988, p. 11). 4. Accurate measurement: Casley & Lury, 1982: p. 32 stated that this indicator should be measured correctly, which is typically not easy when dealing with communities. 5. Validity: The indicator must actually measure what it is intended to measure (ACC, 1984, p. 38; FAO, 1988, p. 7. 6. Relevance: Must be adapted to the specific needs of decision makers (Petry, 1983, p. 38) and be applicable to project objectives (ACC, 1984, p. 38). 7. Specificity: This must reveal changes only in the circumstances concerned (WHO, 1989, p. 19) and must measure specific conditions that the project aims to change (Casley & Kumar, 1987, p. 59). 8. Consistency: The significance of indicators must continue constant so long as they are gathered in identical conditions, no matter who collects it (Casley & Kumar, 1987, p. 69). Indicators must be objective and verifiable (FAO, 1988, p. 8). 9. Sensitivity: Indicators must be quick to respond to changes in the situation being observed (ACC, 1984, p. 38). They must be sensitive enough to reflect changes in the situation (FAO, 1988, p. 8). 10. Prioritization: This is where indicators must be prioritized and a minimum feasible list developed (Gha et al., 1988, p. 11). 159 Chapter Four Monitoring Programmes and Resources Capability, Effectiveness, Efficiency, and Impact These four concepts are essential to monitoring and evaluation. They correspond, respectively, with the operational environment, and operational efficiency (e.g., the number of visits, meetings, demonstrations, and trials, per worker), technical efficiency (e.g., the number of output, and value added), and induced changes (e.g., production, productivity, income, and income distribution) (Ruthenburg, 1985, p. 120). Capability, effectiveness, and efficiency are comprised in the monitoring domain but Impact falls in the evaluation domain. Capability: Is the authority that a worker has over the physical, financial, and human resources, to enable the worker deliver services to clients. It is manifested by outreach, intensity, technical competence, and physical and financial resources. Performance depends largely upon its capability. Effectiveness: Is defined in a handbook on productivity management as, the degree to which goals are achieved (Prokopenko, 1987, p. 9). Efficiency: In work is normally evaluated by the rates at which employees adopt recommended practices. Adoption rates of various degrees of complexity can be conceived (Casley & Lury, 1982, p. 37). Impact: Work can be evaluated by a simple indicator, like by constructing simple productivity indices. Such indicators provide ultimate tests for the success of programmes. Impact is the manipulation of an action or phenomenon for attainment of results. Monitoring Indicators Monitoring indicators can be put into two categories: (1) capability indicators, and (2) performance indicators. Both must be generated by the monitoring unit. Capability Indicators Capability Indicators must be evaluated often not only to know the status of the capability at a certain point in time, but also to establish changes in it over time. These indicators must be calculated yearly. They entail only desk work because they are based on in-house data. Performance Indicators Performance Indicators reflect an employees’ operational and technical efficiency. They can be grouped into two classes namely; Effectiveness Indicators and Efficiency Indicators  Effectiveness Indicators: These indicators can again be classified into two subcategories: (1) single indicators and (2) unitary or composite indicators. By definition, a single indicator will reveal an aspect of performance, while a unitary or composite indicator will reveal two or more aspects of performance. It might be useful to construct a unitary or 160 Chapter Four Monitoring Programmes and Resources composite indicator to provide a consolidated perspective of effectiveness to management, since management is usually interested in having an overall perspective of effectiveness. Therefore, these indicators reflect cooperational efficiency.  Efficiency Indicators: These indicators are based on embracing rates of suggested practices and reflect technical efficiency. Performance Indicators, as recommended here, must be calculated separately for contact workers, other (noncontact) workers, and all (contact and noncontact) workers. Evaluation Indicators Are measurable indicators used to identify if a program is executed as expected and achieving their objectives. Not only can indicators assist in understand what happened or changed, but can also help you to ask further questions about how these changes happened as mentioned below: Action plan and chain of events Monitoring needs collection of data and its analysis. Hence, an action plan in a monthly, quarterly, and annual timeframe is crucial. Data collections will need choosing proper methods, which will depend on the monitoring unit’s time, physical and financial resources such as computerization and trained technical personnel for gathering and analyzing data. Monitoring methodologies can be viewed as a chain of differentiable and sequential events comprising (1) planning and design of the study, (2) desk research, (3) selection of methods, (4) data compilation and analysis, (5) report writing, (6) report presentation, and (7) follow-up action. A detailed study programme must be prepared within the proper time limit. A collection of methodologies is available, ranging from casual, informal interactions to highly structured sample surveys, plus emerging methodologies of rapid appraisals. These methodologies can be classified into two categories: informal and formal. Informal Methods These methods comprise of participant observation, case studies, key informants, individual interviews or discussions, group interviews or discussions, oral testimonial and life histories, longitudinal studies, crosssectional studies, interdisciplinary terms, reconnaissance or investigation survey, diagnostic studies, rapid rural appraisal, and participatory rural appraisal (Casley and Lury, 1987; Nichols, 1991; Pratt and Loizos, 1992; Hildebrand, 1981; FAO, 1992; Beebe, 1987; Kumar, 1993). Formal Methods Formal methods further include using the population and project census; sample surveys such as random sampling, including simple, systematic, 161 Chapter Four The Rise Of The Millennials stratified, cluster, and multistage; nonrandom sampling, including purposive, quota, and accidental (Shaner, Phillipp, & Schmehl, 1982); plus special studies. The Rise of the Millennials The previous chapter articulated the varied aspects of strategy and the way businesses can use different strategic options to reply to the multifarious needs of the 21st century business landscape. An aspect that is of importance is that the increase of the millennial generation or those born between 1980 and 1995. Businesses need to strategize on ways and means to adapt to the present generation when this generation enters the labor force and becomes a consumer segment in itself hence. These strategies typically involve workplace adaptation, targeted marketing, and other societal aspects of reaching out to these Millennials. Marketing to Millennials If we take the first aspect, marketing to Millennials are often quite challenging as they need attention spans within the seconds instead of the minutes that earlier generation won’t have when viewing advertisements or making up their minds. This suggests that marketers need to affect the concept of packing in the maximum amount of information as possible within the 30-second slot for adverts and make sure that the message is conveyed. This in addition means marketers need to make sure that their message is not drowned out in the information overload that the Millennials are exposed to. The Millennials and the Workforce The second aspect of creating changes within the workplace for the Millennials is that they are far more tuned to technology and social media especially and therefore the expertise that they admire with technology means that companies are required to become high-tech themselves if they are to contain the Millennials. As an example, it’s the case that a lot of organizations use technology largely. On the other hand, the crucial aspect here is that organizations require starting to use social media also extensively if the workplace is to be challenging to the Millennials. In other words, the organizations need to move beyond Web and mere IT and use tools like computer game to make sure that they are ready to attract and retain the Millennials. In other words, they need breathing space according to their generation in order to perform well. Millennials Future Jobs The 3rd aspect relates to the extremely essential aspect of societal forces being more agreeable to change and that too at a rapid pace. We have seen how the millennial generation is hitting the streets in protest across the planet once they aren’t satisfied with a specific outcome whether it’s associated with business or politics. Concentrating on business alone, we discover that the 162 Chapter Four The Rise Of The Millennials Millennials are feeling disappointed by the shortage of job opportunities and therefore the prevailing gloomy economic scenario. Therefore, the duties before business leaders and CEOs are to make as more roles as possible for this generation to make sure that their energies are channelized towards a positive behavior rather than during a negative manner. Long Term Strategizing This topic discusses the ten qualities needed for companies to remain in the competition and win the race for the market within the next decade as below: Adaptable: The conquerors of tomorrow are going to be those organizations that are best at identifying and anticipating market shifts and managing difficult and multi-company systems. The necessity for shorter cycles and faster response time is bigger because the pace of change is rapid and only those companies which will adapt thereto will succeed. Global: It is an incontrovertible fact that everybody is competing with everyone from everywhere. This suggests that the longer-term markets for growth in Asia would take many business leaders out of their comfort zones. Hence, what works in Munich won’t add Mumbai and thus there’s a requirement to know the fluid marketplace. Connected: As the world gets smaller due to greater integration and better communications technologies, there are changes within the realm of strategy, which the business leaders of tomorrow must embrace. This suggests that the businesses of tomorrow must affect newer sorts of customer behavior and newer business models. Sustainable: With the ever-looming threat of global climate change and environmental catastrophe, businesses got to pursue growth strategies that are sustainable and make sure that they use limited resources more efficiently. These strategies cause all round stakeholder development rather than profits for the firms alone. Customer First: For companies to realize greatness, they need to develop deep and lasting emotional bonds with their consumers. They have to rework consumers into repeat buyers and in some cases, they have the purchasers to be brand evangelists which suggests that the purchasers are the simplest source of advertising for the businesses. Fit to Win: The art of implementation is one of the core motivators of competitive advantage and the justly great companies strategize in a way that motivates progress in the vital areas identified for success. These companies have flat and responsive structures that expedite the flows of information, improve decision-making, plus sophisticated pricing models. Value-Driven: It is an incontrovertible fact that companies must create value for all their stakeholders, this is often something that is ageless, and timeless which makes the businesses and their legacies enduring for all stakeholders. The worth that a corporation creates has two components, which are earnings and growth. It’s impossible to separate these two and since they add value, 163 Chapter Four The Rise Of The Millennials the worth that the corporate creates must be both short-term profits and longerterm success. Trusted: Though trust doesn't appear on a company’s record, it's the foremost valuable asset for the businesses. Hard to create and harder to sustain also as easier to squander, trust reposed by the purchasers determines how successful a corporation is over the long run. The digital revolution gives never before chances to expand and accelerate reputational aspects of the businesses. Bold: If companies don’t evolve with the days, they run the danger of becoming redundant. The companies have to be forward looking and reinvent themselves to stay at pace with their competitors. These companies wouldn’t be blindsided and outpaced by competition. This suggests that companies must experiment on a continuing basis and not be afraid to embrace radical change from outside and from within. Inspiring: Finally, the business leaders of tomorrow are inspirational figures much within the mold of spiritual and mythological figures from history. This shows that ambitious leadership is necessary from the leaders of tomorrow as they are going about setting the agenda that their followers can adapt and emulate, if possible that translates into a resourceful workplace also as external respect. In this section you have seen how to handle Human Resources. This is a vital section for the management of organizations. Every person is gifted differently so you must utilize this transformational literature to improve your organization but if you have no skills, please call Volunteers on board to help you. 164 CHAPTER FIVE FINANCIAL MANAGEMENT (FM) Management of Olympic Sport Organizations - MOSO (2007), by International Olympic Committee is the main reference for this chapter, Financial Management is a vital activity in any organization. This is a process which entails planning, organizing, controlling and monitoring financial resources with a perspective to attain organizational goals and objectives. This is a perfect method for controlling the financial activities of an organization such as utilization of funds, risk assessment, procurement of funds, payments, accounting, and every other thing related to funds. In other conditions, Financial Management is the employment of general principles of management to the financial wealth of an enterprise. Appropriate management of an organization’s finance provides a momentum for service to ensure efficient functioning. If finances are not appropriately dealt with, an organization will face restrictions that may have severe repercussions on its growth and development. In this chapter the Treasurer for finances should be very knowledgeable about financial management. Major Roles of financial management Financial decisions and controls: The financial managers in financial management have a crucial role in making financial decisions and exercising control over finances in the organization. They make use of techniques like financial forecasting, ratio analysis, profit and loss analysis, etc. Financial Planning: The finance managers are in charge for the planning of financial activities and resources in the organization. To this end, they utilize available data to understand the requirements and priorities of the organization as well as the overall economic circumstances and make plans and budgets for the same. Capital Management: It is the conscientiousness of financial management to guess the capital necessities of the organization from time to time, determines the capital structure and composition and makes the option of source of funding for the capital needs. Proper Allocation and Utilization of financial resources: Financial management makes sure that all financial resources of the organizations are utilized and invested effectively and efficiently so that the organization is profitable, sustainable, and viable in the long-run. Cash Flow Management: It is exceedingly important for organizations to have satisfactory working capital and cash flow to meet their operational expenses and emergencies. Financial management tracks account payable and receivable to ensure there is adequate cash flow available at all times. 165 Chapter – Five Major Roles of Financial Management Disposal of Surplus: The decisions on how the surplus or profits of the organizations are utilized are taken by the financial managers of the organizations. They make a decision if dividends should be distributed and how much as well as the fraction of profits that must be retained and ploughed back into the business. Financial Reporting: Financial management contains all compulsory reports related to the finance of the organization and employs this as the database for forecasting and planning financial activities. Risk Management: Resonance financial management prepares the organization to forecast risks, put in place alleviation plans as well as to meet unforeseen risks and emergencies effectively. To be a sustainable organization, it is not enough to merely monitor and evaluate the projects, personnel, strategic processes, and knowledge. It is fundamental as well to monitor and evaluate the operational and organizational budgets. Having a continuous flow of income and making the most of it is an essential element of the steadiness of the organization’s work. In doing so, cost efficiency and effectiveness are significant to keep in mind along with the allocation of specific financial resources to monitoring, evaluation and learning activities. In a nutshell, financial management comprises planning, organizing, controlling, monitoring and evaluating the financial resources of an association to attain its overall objectives. In this section I want to concentrate on Financial Management Cycle. Important Definitions The following are some of the key definitions for the good of this chapter but one of the main milestones towards good financial management is to have apparent understanding of what is being decided when finances are being reviewed. It is consequently important to ensure that everyone with financial responsibility in an organization keeps in mind the following terms. (Management of Olympic Sport Organizations - MOSO (2007)  Assets: A property of an organization which can also be current assets owned for a short time like cash or a fixed or long-term asset, like a building owned by an organization. • Liability: Something owed or payable to someone else; liabilities refer to the debts of the organization. Yet again, these can be current liabilities, which have to be paid within a reasonably short time, such as the money owed to travel agencies, or long-term liabilities, such as the money owed to a bank for a mortgage on the organization. • Overheads: The costs considered necessary to manage organization daily operations which are not service or project specific and include the cost of electricity, rent and so on. • Surplus: When the income is over expenditure. • Deficit: When the expenditure is over income. • Liquidity: The total sum of money that can be accessed immediately to pay your debts. 166 Chapter – Five • • • • • Components of Financial Management and control Reserves: The sum of unspent finances at any given point in time. Balance sheet: The inventory of all assets owned and liabilities owed by the organization at a given period. It is a snapshot of the organization’s financial position at a particular point. Profit and loss account: A record kept about income generated and expenditure incurred over a given period of time. This account shows whether your organization has a surplus or a deficit. Capital expenditure: The expenditure that turns into the acquirement of fixed assets, such as a building. It can as well be expenditure on a progress in the earning capacity of a fixed asset, such as an extension to a building that can be hired out. Revenue expenditure is the expenditure incurred on the functions of the organization or on maintaining the earning capability of fixed assets, such as maintenance on a building that is hired out. Components of financial management and control According to Ministry of Finance (North Macedonia) the components of financial management and control are:  Control Environment;  Risk Management;  Controls;  Information and Communications, and  Monitoring. Control environment The foundation of the entire system of internal controls is the control environment. It provides discipline in the organization and climate that affect the general quality of internal controls. It affects the determination of strategy and objectives, ie the control activities of the organization. The tone to the organization and effect to the consciousness of employees about the importance of control is given by Control environment. The control environment entails: philosophy and style of operation of the head, organizational structure, personal and professional integrity and ethical values of the manager and employees in the subject, practice and policy of managing human resources and key competence of employees. Risk Management Risk management is the process of identification and analysis of relevant risks that may adversely affect the objectives of the organization and determine appropriate measures against. The risk assessment comprises of identifying the risks, their evaluation, ranking of risks and determining responses to risk, like the establishment of controls. Controls Controls are based on policies and measures are introduced and implemented to make sure attainment of objectives or management risks. They consist of 167 Chapter – Five Types of Financial Management measures for approval, procedures for the provision of power and responsibilities, dual signature system, separation of duties, procedures for comprehensive, rules that ensure the protection of property information, accurate, and correctly keep the records of all business transactions; measures for managing human resources. Information and Communications Effective information plus communication are fundamental for maintaining control of the operation. Managers must offer reliable, relevant, and timely communication with related internal and external developments. The ability for making appropriate decisions depends on the quality of information which should be relevant, timely, valid, accurate and accessible. Monitoring Internal control is a changing process that must repeatedly adjust to the risks and the dynamics facing the budget user, monitoring and evaluation method of internal controls compulsory to ensure the observance with changing goals, standard, resources and risks where Monitoring and evaluation is a routine of activities. Five Principles of Financial Transactions Management There are 5 generally approved principles to managing the financial transactions of funds. Policies and procedures within Research Accounting Services are developed in support of those principles. The timeliness, justification, documentation, consistency, and certification are the 5 principles. (Sheridan et al, 2017) Consistency: Transactions must be handled during a consistent manner. That is, policies and procedures are established to deal with similar sorts of transactions during a routine manner. Timeliness: Transactions must be handled within an inexpensive period of your time according to time frames. Justification: There ought to be a cause for the transaction that is in inline with the project’s goals, and adheres to guidelines outlined. Documentation: Sufficient documentation to support the transaction must exist. The documentation must be retained, organized, and complete enough to face up to an audit. Certification: Transactions and dealings must be approved and carry all the right authorizing signatures. Types of Financial Management The activities that involve investing, borrowing, lending, budgeting, saving, and forecasting which is management of money is called Finance. There are three main types of finance namely: personal, corporate, and public or government. This guide will unload the question: what is finance? 168 Chapter – Five Types of Financial Management Personal finance is the method of planning and managing personal monetary actions such as investing, income generation, saving, spending, and protection. The course of managing one’s personal finances can be summarized in a budget or financial plan. This conduct will examine the most common and significant aspects of individual financial management. Corporate finance comprises of the capital structure of a business, containing its funding and the actions that management takes to amplify the value of the corporation. It further entails the apparatus and analysis employed to prioritize and dispense financial resources. The eventual intention of corporate finance is the maximization of value of a business entity by means of planning and implementation of resources, while harmonizing risk and productivity. Public finance refers to the management of state expenditures, revenue, and debt load through a variety of government and quasi-government institutions which provides an outline on how public finances are managed, what the various mechanisms of public finance are, and how to simply understand what all the numbers mean is given by this guide. A country’s financial position can be assessed in much the same way as a business’ financial statements. Treasurers have a critical role in formulating realistic budgets and containing them under control. The treasurer, who in many organizations is an elected member of the Board, must be the principal contributor to the financial planning process and the architect of financial planning. The Queensland Government Sports and Entertainment Initiative (2006) describe the treasurer’s duties as follows: Maintain accounts and all financial transactions  Assist in budgeting  Monitor income and expenses, including expenses as owner of the signatory  Prepare bank account reconciliation statements regularly submitted to the board of directors  Prepare and present financial statements regularly to board meetings  Recommend and manage investment strategies for surplus funds  Process employee salaries and income tax payments, if applicable  Prepare all necessary financial reports to be included in annual report  Ensure annual reports and audited financial statements (if applicable) are submitted to the relevant government departments. Although the board and employees must work together to operate the organization effectively, at the end the treasurer for the organization's revenue and spending takes a leading decision. A good treasurer will ensure that the organization remains solvent, increases the organization's assets, and achieves a healthy balance in the organization's annual cash flow. Financial management is the responsibility of the entire organization; however, ultimate 169 Chapter – Five Financial Management Cycle responsibility rests with the financial supervisor and the relevant financial staff. If the organization encounters a problem, don’t be too quick to determine that the root cause of the problem is a financial problem. Financial problems can be a symptom of more difficult governance or philosophical problems. However, since power is related to money, good financial practices can help maintain a good power structure and thus contribute to the governance of the organization. Therefore, don’t try to solve the problem by increasing expenses; having a lot of money without a financial plan can empower the problematic person or philosophy in your organization system. How and when does an organization strike a balance between what it wants to do and how to do it? The answer is: How does the organization decide how to spend money to develop financial plans related to its mission and beliefs,  How the organization budgets and its ability to realize a concept financially through funding and implementation,  How the organization accounts for spending its money carefully by being accountable to stakeholders, and  How the organization evaluates and reports spending, which will reflect the integrity of its governance system. Roles and Responsibilities for Financial Management The FM’s specific tasks might be to: Identify an organization’s financial risks and ensure controls are in place to mitigate and reduce them;  Write policies and procedures ensuring the organisation has control over its income, expenses and assets;  Maintain accurate accounts, overseeing all financial transactions and communicating these regularly;  Lead in preparing budgets, bringing together all budgets are to build and maintain the anticipate of an organisation’s current and future activities; Lead in financial forecasting; prepare and present accurate and regular financial statements of performance and position for the Board, Secretary General, senior management team, annual audit and annual report  Recommend and manage investment strategies for surplus funds; oversee payroll and income tax payments; and ensure annual returns and audited financial statements are filed with relevant authorities, and that the organisation abides by the law. Financial Management Cycle Financial management cycle is divided at the macro level into 4 stages namely: planning, budgeting, implementation and accounting, and evaluation and reporting. The first two stages concern primarily the Organization Board and lead to the latter two stages, which concern the Organization’s stakeholders. The figure below illustrates the four stages of the cycle, each 170 Chapter – Five Financial Management Cycle driven by a commitment to the vision, mission and objectives of the organization. The prosperous execution of the first stage of planning, requires a holistic approach, one that is somewhat intangible but comprehensive in nature. It facilitates functionality, increases performance and is inextricably linked to other aspects of the organization, such as mission, programming and governance. It is essential that your vision, mission and objectives are in place in order for any spending to occur, because these will show you where to place your funds. (Engelbrecht et al 2002) Figure 7: Four-stage financial management cycle Financial Planning Is the assignment of deciding how an organization will manage to attain its strategic goals and objectives? Typically, an organization makes a Financial Plan right away after the vision and objectives have been set. The Financial Plan describes each of the activities, equipment, resources, and materials that are necessary to accomplish these objectives, as well as the timeframes contained. Types of Financial Planning There are 3 types of financial plans namely;  Short-term financial plan is arranged for maximum 1 year. This plan looks after the working capital needs of the business entity.  Medium-term financial plan is organized for a period of 1-5 years. ...  Long-term financial plan is arranged for a period of more than 5 years. Financial planning procedure is a logical six-step procedure:  Analyzing the current financial situation  Formulate financial goals and objectives  Discovery alternative courses of action  Evaluating other alternatives  Developing and implementing a financial action plan.  Reevaluating the action plan Organization Assets Your organization is likely to have various assets that have the potential to generate revenue. Some of the assets will be current and others will be fixed, and the ratio between these needs to be carefully managed so that there is enough cash to run the organization and deal with any emergencies that arise. Cash Vs Value In-Kind Assets: Current assets identified in two broad categories: cash and value in-kind. Cash assets are those that arrive to the 171 Chapter – Five Financial Management Cycle organization in the form of cash, cheque or bank transfer and can be used to buy products or services in support of a given activity. The organization should distinguish between cash provided for a specific purpose and cash provided for general use. Cash issued for a specific purpose have to be spent accordingly to avoid engagement in misappropriation. In order to alter the method in which for instance cash is used, there is need to receive written consent from the investor. Infrastructure: There are other forms of assets that might be in an organization’s possession, such as built infrastructure, that have monetary value as a fixed asset. These assets are of less importance to the discussion in this chapter because it is principally concerned with cash and in-kind assets that are moving in and out of an organization annually. However, remember that liquidity is always more than what the organization has in the bank, and your organization might be confronted with the need to sell fixed assets to pay debt. If the cash flow has been monitored carefully, though, this will rarely be needed. Sources of Income All organization requires money to manage daily operations, even a nonprofit. With an income flow, nonprofits can spend on equipment, office space, and employees to maintain daily operations. Funds that are generated (Generated Funds) as well pay for travel and marketing costs related to getting the word out about what you are doing. How nonprofits make money is extremely applicable to whether any profits earned are subjected to tax. If the funds come from activities connected to the mission of the nonprofit, it’s generally considered nontaxable income. Interrelated profits can comprise ticket sales from fundraising events, donations, and item sales to generate money for organization activities. Fundraising Sources for Nonprofits Personal donations are the apex source of income for nonprofits, making up 70% of all giving. Other significant sources of fundraising are corporations, foundations, and bequests from individuals. This means a large portion of the work done is in drumming up support from the general public. Dees & Emerson, 2001 in their work on social entrepreneurship, opined the need to appreciate both the donor value proposition and the beneficiary value proposition. How organizations get on with generating that financial support depends closely on the nonprofit itself. The organizations can also come up with their own additional income generators, including producing making crafts, tailoring knitting, agriculture and so on. Many nonprofits generate money by holding special events like dinners where high-profile community members pay for a seat at a table. 172 Chapter – Five Financial Management Cycle Nonprofit Salaries If you are eager for an occupation that will put you in a life of luxury hence you might want to consider another line of work. Nonprofit careers are perfected for the kind of person who needs to know their work is making a difference. In view of the fact that nonprofits concentrate on supporting a cause rather than turning a profit which as well means salaries are generally kept as low as necessary to pull towards your talent. Nonprofits and Ethics Let us face it now: You need money to support nonprofit activities. As you reach ideas to bring in those funds, although, it is significant that you maintain rigor ethical standards. A statement of values can assist to set guidelines for what the organization will and won’t do in order to fundraise for funds. Ethics exceed misappropriation of funds, however. Tainted funds can as well be a concern. If a source of income can support the organization, yet it comes from a source that goes against your organization’s core values, you may find that rejecting the money is the right thing to do. When personal salary with a nonprofit is too much, you may also find that you encounter backlash or reaction from the public and volunteers, as well as dealing with your own individual ethical standards. Main Concepts in Financial Planning A lot of factors are significant in financial planning, and some of these are outlined here. The objective is not to offer a financial plan; such a plan will be affected by the environment and is consequently something that only the organization can form. On the other hand, the points do highlight a number of factors that need to consider regarding the handling of funds as mentioned below: Finance as an Extension of Planning Eventually, financial planning is an addition of an organization’s broader planning course of action. Financial planning should be linked to the design and implementation of the organization’s objectives; or else spending will run the risk of putting the organization into deficit. A proper strategic plan will work as a guide for managing finances more effectively. Time Frame This is determined by the agenda outlined in an organization’s strategic plan. Organizations might desire to work on a 4-year cycle in line with quadrennials; organizations might find an annual planning cycle to be more suitable. Though, all finances must be monitored regularly and ought to be reported at least annually. Certain items have to be prioritized before others, whilst others are more difficult and need more funding, and those should be the items for which the organization seeks funds most energetically. It is sensible that organizations working on a 4-year cycle search to implement programmes in 1 173 Chapter – Five Financial Management Cycle or 2-year time blocks, unless there are convincing reasons not to do so. This will permit regular assessment in the 4-year cycle. Still in the event of a longterm development initiative, it is generally practical to break down the larger time block into minor components, such as a period. Cost Estimating Once you have decided what the organization wants to do, you have to decide how much it is going to cost. To estimate costs accurately, you should think about every possible scenario in the organization’s programmes and have a corresponding budget line. If you fail to do this, when an issue arises for which, there is no budget line, you will be stuck with the problem of reallocating resources. It is much better to run to a surplus than a deficit at the end of the year, even though doing this too frequently will call into question the correctness of budgeting. The balance of funds can be returned to funders, or with their consent it could be redistributed towards the cost of other programmes or carried over within the same budget line for the next fiscal year. Distribution of Resources Distribution of resources ought to as well be resolute by the strategic plan, which, if the plan is reasonable, will ensure an extensive base of investments. The most essential resources are those that go towards initiatives designed to meet organizational objectives and, in the long-term, the mission of the organization. It therefore may not be appropriate for an organization to alter its mission leaving the original mission of the organization. Types of Expenditure Expenditure represents an imbursement with either cash or credit to purchase goods or services. Expenditure is recorded at one point in time (the time of purchase), compared to an expense which is to be paid or accrued over a period of time. This reviews how a variety of types of expenditures are employed in accounting and finance. To record the incidence of an expenditure, an accountant has to show evidence of the transaction happening. For example, a sales receipt will show proof of an over-the-counter sale, while an invoice will specify a request for payment for goods and services. The documents subsist to facilitate organizations to preserve a tight control over their transactions. Typically, the goal is to predict profits and losses while still keeping track of revenues. Expenditure vs Expense It is vital to understand the distinction between expenditure and expense. Even though they look alike, they are in fact different and have some vital nuances to be known. Expenditure: This refers the total purchase price of a good or service. For illustration purpose, an organization buys a $10 million piece of equipment that 174 Chapter – Five Financial Management Cycle it estimates to have a useful lifespan of 5 years. This would be categorized as a $10 million capital expenditure. Expense: This refers to the amount that is recorded as a counterbalance to revenues or income on a company’s income statement. For instance, the same $10 million equipment with a 5-year lifespan has a depreciation expense of $2 million per year. Types of Expenditures in Accounting In accounting expenditures comprise of two extensive categories namely: capital expenditures and revenue expenditures Capital Expenditure An organization injects a capital expenditure (CapEx) when it buys an asset with a useful lifespan of more than one year (a non-current asset). In many instances, it may be an important business extension or an acquisition of a new asset with the hope of getting more revenues in the long run. Such an asset, thus, needs a considerable amount of initial investment and continuous repairs after that to keep it fully functional. As an outcome, many organizations usually finance the project with either debt financing or equity financing because investment is a capital expenditure, the profits of the business will come over many years. As a result, it can’t subtract the full cost or price of the asset in the same financial year. Hence, it spreads these deductions over the useful lifespan of the asset. The value of this asset will be illustrated on the balance sheet, under non-current assets, as part of plant, property, and equipment (PP&E). Example 1: Company Y deals with iron sheet production. Due to the increased demand for its high-quality iron sheets, the company executives come to a decision to buy a new minting machine to revamp production. They assume the new machine will be able to progress production by 35%, hence closing the gap in the demanding market. Company Y makes a decision to get the equipment at the price of $100 million. The useful lifespan of the machine is predicted last for ten years. In a situation where it is evident that the benefit of getting the machine will be greater than one year, so a capital expenditure is injected. Over time, the company will devalue the machine as an expense (depreciation). Revenue Expenditure A revenue expenditure happens when a company incurs money on a shortterm benefit (i.e., less than one year). Naturally, these expenditures are used to fund continuing operations which, when they are expensed, are termed as operating expenses. It is not until the expenditure is recorded as an expense that income is impacted in any way. 175 Chapter – Five Financial Management Cycle Difference between Capital Expenditure and Revenue Expenditure Capital Expenditure is connected to long-term spending or a major investment, while a revenue expenditure is linked to short-term operating expenses. They are together recorded in the same financial year as they are incurred, and cannot be forwarded to the next financial year. Example 2: After the buying of the minting machine, the company makes a decision to hire a new lead engineer collectively with seven other technicians to run the new machine. An elementary role of this team is keeping the equipment running throughout the production cycle. Other minor tasks may entail Monitoring production, installation of new parts, and continuous maintenance. The hiring of the engineer and technicians is considered revenue expenditure. Deferred Revenue Deferred revenue expenditure, or deferred expense, refers to an advance payment for goods or services. This is a higher form of prepaid expenses. The arrangement is typically an agreement that the company will get a service or goods in the future but it pays for the goods or services in advance. As an outcome, the company treats the transaction as an asset until it receives all the profit of the purchase. In chapter, the arrangement doesn’t affect the business’s profitability because the company is yet to get the asset and doesn’t yet receive the profits of the asset. The company charges the result of the transaction to the profit or loss account over a specified timeframe. Example 3: We assume that Paul specializes in the production of refrigerators. Despite his production inputs ship from abroad. Due to the susceptible nature of the manufacturing, Paul needs a consistent, high-quality, dependable supplier of raw materials. Consequently, he reaches out to his distributor X, who supplies him with condensers and compressors. But Paul is required to pre-pay for the goods. Also, according to the terms and conditions, he must wait for his supplies for three years. Paul pays for his supply in advance thus in his books of accounts, he will state the arrangement as a deferred payment until he gets his shipment. Obviously, in accounting, such a financial settlement is indicated as an asset. Budgeting This is the procedure of creating a plan on how to squander the money. This type of spending plan is called a budget. Creating this kind of spending plan allows determining in advance whether there is enough money to do the things needed to do or to be done. Budgeting is just balancing your expenses with the income. If they do not balance and you inject more than you make, you will have a loss. A number of people don’t realize that they spend more than they earn and slowly sink deeper into debt annually. 176 Chapter – Five Financial Management Cycle Planning and Budgeting Process Planning and Budgeting is the investigative application that aids to set topdown targets and generate a bottom-up budget, which is at the basis of the organization's functions. It helps management assess business alternatives and set financial targets, and it enables the company to work jointly and efficiently through the budgeting iterative procedure revising expenses and revenue estimates; altering start and end dates; and change objectives. Planning and Budgeting supports all the departments to use well-matched tools based on very similar assumptions. By introducing a shared business model with role-based, every member can interact with his or her portion of the business plan or budget at any time, from any global location through quick response and efficiency to the changing business environment. Through analysis and modeling, you can create headcount changes, expense control strategies, and capital investment plans before execution. Marketing instability and other deviations from the unusual plan can be handled proactively, in actual time, rather than once a year. Use Planning and Budgeting to:  Develop proper planning targets.  Access and analyze historical and existing data.  Connect strategic objectives with the daily processes.  Link top-down targets with bottom-up budgets.  Integrate and update financial statements as business circumstances change.  Conduct continuous forecasting or foreseeing.  Carry out real-time, multidimensional modeling of the planning and budgeting data. Like other laypeople soft applications, Planning and Budgeting stores data in relational database tables. It’s possible to extract, view, analyze, and modify this data and then put it back into the original tables. Appreciating the concepts following this procedure and the tools that facilitates the manipulation of the data helps to perform the function in the planning and budgeting process in the organization as an entity. Figure 8: Planning and Budgeting process The flowchart below demonstrates the Planning and Budgeting procedure which entails formulating budget objectives; analyzing historical and actual data; creating a base budget; preparing, reviewing and refining a budget; posting and reporting outcomes; and monitoring progress and amending the budget. 177 Chapter – Five Financial Management Cycle Types of Budgets The three main categories of budgets the treasurer must assist in developing are the annual budget, project budgets and capital budgets as shown below: Annual Budget The annual, or operating, budget is the total anticipated cost of running an organization and its programmes in a particular financial year. The annual budget is comprised of several project budgets plus the overhead of running the organization. It consists of income, expenditures and the net sum calculated. Project Budget This Budget is a tool used by project managers to anticipate the total cost of a project. A project budget template consists of a detailed estimate of all costs that maybe incurred before the project is completed. Bulky commercial projects can have project budgets that are several pages long. Such projects usually have a big number of costs connected with them, such as labor costs, material procurement costs, and operating costs. The Project Budget has a changing document which is continuously updated over the course of the project. Capital Budgets When there is need to spend more substantial funds, a capital budget for a definite period of time, such as a four- y e a r period subject to annual review, can be used. This capital budget is developed for developments of facilities that are put out for hire to raise revenue. Therefore, this budget entails maintenance items, such as painting, it is a capital budget item because the expenditure will improve the revenue-earning capacity for an organization like conference halls. Accounting For Finances The implementation of a budget means raising and spending the money included in it. Accounting is the procedure of tracking and categorizing the income and expenditures. This accounting provides the information without difficulty retrievable in the future. It is part of good financial management, but it is as well part of sensible risk management. A critical reason to record all 178 Chapter – Five Financial Management Cycle income and expenditure is so that other individuals or organizations can see that the organization spends its resources according to its expressed intent. Hence, transparency, risk management and functionality are all vital to the accounting process. Managing Risk with Legal Documentation The risks that vary from minor legal disputes to death are part of sound financial management to accept these risks and take prudent measures to control them in advance. An organization’s primary concerns are to minimize the potential for lawsuits that could bankrupt it and its Board members and to conduct business in a manner consistent with the law. The principles of risk management particularly recorded by the use of a risk register. There are, other tools that are valuable, and hence these are presented next: Insurances This is an important measure to mitigate risk when having insurance policies. There are at least two categories of insurance to consider in an organization. One insurance category limits the liability of the Board of Directors, which runs the organization. Members of any Board have a responsibility to their organization that includes its financial solvency. Therefore, protection of individual Board members’ personal financial assets is part of sound financial management. If possible, an organization should consider taking out a policy of Directors and Officers Liability Insurance (DOLI) in order to protect the Board members from financial ruin. DOLI further secures a pool of money for legal fees in the occurrence of a lawsuit. Conflicts of Interest To reduce the risk of being charged with financial mismanagement during the implementation of finances, you need to make sure you are not operating with a conflict of interest. Such conflicts occur in several situations. Of primary concern are those that arise out of financial interests between members of the Board of Directors of an organization and anyone providing contracted services. For example, if a Board member owns a clothing company, it would be a conflict of interest for that member to decide which company should supply team uniforms. Financial conflicts of interest may exist where a Board member or other stakeholder (known as an “interested party”) of the organization directly or indirectly profits as a result of a decision, policy or transaction made by your organization. Indemnification and Waivers If possible, in your legal system, every contract you sign should indemnify your organization of any illegal behaviour on the part of a contracted service provider. Therefore, it is useful to permit membership to people who concur in writing to an indemnification clause. Similarly, you might require members to sign waivers of liability before participating in your organization’s activities. 179 Chapter – Five Financial Management Cycle Unfortunately, if you don’t take these actions, you may put your organization at risk. Financial Record Keeping Accounting is the method by which an organization records all transactions, principally payments and investments, and classifies or files them such that they are easily retrievable in the future. They can be retrieved later on for various purposes, such as audits, reports or investor relations. It is crucial for your organization to maintain nationally and internationally acceptable accounting procedures so that your financial management is transparent and auditable. Without good accounting procedures firmly in place, your organization will be undermining its financial stability from the inside out. Unless you maintain future accessible records, you will not be able to demonstrate that resources have been spent according to intent, and funding sources might begin to withdraw their support. Generally Accepted Accounting Principles The procedure of filing and reporting financial transactions depend on the development and adherence to the Generally Accepted Accounting Principles (GAAP). GAAP are financial principles established by your organization that are in conformance with the laws in the country in which the organization is officially registered. These principles consist how to set up the profit and loss accounts, where income and expenditure are reported, and the step-by-step procedure for cataloguing financial transactions for internal or external review. If the operation is under GAAP, the accounts and financial practices will be consistent over time. This will make it possible to compare performance annually since GAAP will take the following forms: Receipts: The majority of accounting is about keeping legally acceptable receipts of transactions on record. The term “legally acceptable” varies from country to country, but for the most part it is good practice to have a receipt from a vendor that indicates the vendor’s name, address, telephone number, vendor number (as registered with the government), and date and type of transaction. The receipt ought to specify the kind of payment used and the amount of change given if any. It is the responsibility of the team manager to ensure that the appropriate paperwork is collected and passed on to the accountant. Currency Conversion: When travelling in a foreign country, one often has to deal with currency conversions. This can be puzzling since the conversion rates change daily, and at times people spend more than they think they are spending. Sometimes, delegations run out of money and need an expensive wire transfer through Western Union or a local bank to correct this. Thus, a good delegation head will stay on top of the spending and collect receipts from the delegates daily in order to avoid running out of cash. In due course, the financial controller will establish the worldwide acceptable conversion rate to 180 Chapter – Five Financial Management Cycle use in the final classification, but when delegations are in the field it is good to use Internet-based conversion software or a local bank to help in the track spending. When converting currencies, indicate the date on which the funds were really spent so that the correct conversion rate for the corresponding date is used and the calculation is accurate. Auditing Accounts It is in line with the principles of proper financial management and governance to have accounts audited annually. This should be done by an external, independent individual or organization. For larger organizations, this may involve an auditing company, whilst organizations may ask a member who is not involved in the operation of the organization to audit the accounts. If your accounting system is accurate, the audits will be straightforward, simple and nothing to fear. If there is a poor accounting system, an audit will identify this and recommendations will be made on how to improve the accounting processes. Remember, it is not the end of the world if you fail an audit; it is simply an opportunity to implement changes that will ultimately strengthen your organization. Auditing is crucial for producing a credible annual report to stakeholders. If you cannot afford an independent auditor, you should at least have internal audits produced by your treasurer and approved in writing by every member of the Board. Unfortunately, the difficulty with internal audits is that they are considered less reliable by funding sources, and their formats can be inconsistent from year to year. If you have limited financial resources, you can try to find a certified public accountant (CPA) to contribute your audit for free (perhaps someone who enjoys your programmes), but be certain that CPA is licensed so that the audit is credible. Evaluation And Reporting Reporting is a two-step process. First, you need to evaluate the organization’s activities and spending to determine if the cost benefit ratio was favourable. You need to ask whether the result of the efforts and spending was worth the investment. The evaluation variations can give quantitative data that can be joined with qualitative data. Once there is a good picture of the outcomes of the efforts, then a need to put everything together in a report that is available to the stakeholders. Certain financial parts of that report must be audited so that it is credible to readers. The final product must also be easy to read and entails some form of journalistic highlights to provide the report flavour and make it enjoyable to readers, especially past and future investors. This section considers how to evaluate the activities and then report the evaluation. It outlines the role of reports and final accounts and then concludes with an illustration of how the organization reports its activities. Evaluation All the way through the period of operations, one must have been in control of the budget through good accounting. Department managers are supposed to 181 Chapter – Five Financial Management Cycle provide monthly reports, and the Board should have viewed monthly and yearly reports. The objective of evaluating your work is to determine whether the money spent achieved the objectives. In order to perform a solid evaluation, you should first write up a summary of the objectives, activities to be evaluated and budget lines supporting those activities. There are many areas of an organization to evaluate, and these should all be included on the list. The evaluations must be both quantitative and qualitative in nature and must be joined to generate information indicating the degree of success or failure in the initiative. Financial data is part of the quantitative aspect of the evaluation because it comprises numbers that express a quantity of money owed or owned by your organization. These data are hard realities, but not subjective indicators. Qualitative data may include feedback, suggestions and complaints. For example, assume your organization is developing a new project and has launched a test phase for introducing the project at the community level. There will be several areas to evaluate qualitatively, such as media coverage to support the initiative, stakeholder satisfaction. These factors can be analyzed through interviews and questionnaires. Reporting Reporting is essential to good financial management. There are several levels and kinds of reporting that take place. At the project phase, project managers must report monthly to the division heads about the financial standing of their projects. The sensitive information in these monthly reports is whether the venture is on budget. Consequently, these reports comprise a financial summary table showing the expenditure for any given month compared with the year expenses to date and the original budget. The divergence between year-to-date expenditure and the budget is referred to as the variance and is represented as a percentage. In monetary conditions, this communicates to a positive cash surplus or a negative deficit. The information provided to the department heads or project managers is passed to the financial staff within the organization. They thus classify and file the information so that it is easily accessed in the future. Monthly reports ought to be supported by receipts plus other financial records for the month and must continue throughout implementation of a project. When a project is terminated, it is crucial for the project manager to write the final project report. The report consists all evaluations and a summary table consisting the financial status of the project. The level of detail in a final report should always be comprehensive and include qualitative and quantitative information. Reports must also be easy to read and comprise the most vital information up front in summary form. This means that there should be an easily readable spreadsheet or financial table summarizing all cash flow and including a consolidated budget. You can also contain an assessment summary in table format across a variety of categories to give the reader a quick idea of a contented report. Below is the Three-tier controlling and reporting structure: 182 Chapter – Five Financial Management Cycle Figure 9: Three-tier controlling and reporting structure MOSO (2007) Final Accounts Thus far we have reviewed information on how an organization can develop, budget, account for and report on its financial plans. The ultimate stage in this procedure is the preparation of annual, confidently audited, final accounts. The two major accounts that require to be submitted to the General Assembly are the operating statement and the balance sheet. These accounts will give members a feel for the financial stability of the organization. Operating Statement Also known as the profit and loss account, the operating statement is an analysis of how the capital or net worth of an organization has changed over a given period. It is a record of income generated and expenditure incurred over a given period, which is the operating statement of the organization. The account shows whether the organization has more income than expenditure, that is, a surplus or a deficit. These accounts must show the following: Turnover, Income from rents, Income from investments, Equipment hire charges, Depreciation charges and how they are arrived at, Auditor remuneration, Interest on loans, Tax charge (if applicable), Transfers to and from reserves and any exceptional accounting adjustments. Balance Sheet A balance sheet is the list of assets and liabilities an organization has at a given time. When reading, interpreting and explaining a balance sheet is not solely the domain of trained accountants, and you should be able to articulate the meaning of a balance sheet. The purpose of a balance sheet is to put a value on the net worth of an organization. To do this requires a list of those 183 Chapter – Five Financial Management Cycle things of value (assets) that the organization owns, such as buildings and cash, and a list of those things that the organization owes to others (liabilities), such as loans. The difference between these two figures is the net worth, or equity, of the organization. In a nutshell managing financial resources of the organization, one need to do the following: 1. Open up a Bank Account which will prevent the Signatories from keeping organization money in their hands and the bank can issue a financial statement where need be for accountability purpose. 2. The organization must have a cash book which is a financial periodical that contains all cash receipts and disbursements, consisting of bank deposits and withdrawals. Entries in the cash book are further posted into the general ledger. 3. You must have a Treasurer with a background of financial management or accounts. This is not a command because organizations lack such technical people but I recommend you to have at least an Accountant to volunteer and assist the Treasurer on the board. 184 CHAPTER SIX MARKETING Definition of Marketing Marketing is the study and management of exchange relationships. The American Marketing Association opines that marketing is the set of institutions, activities, and procedures for creating or innovating, delivering, communicating, plus exchanging offerings that have value for clients, customers, partners, and society in general. Marketing mentors the customer, keeps the customer and satisfies the customer. With the customer as the concern of its activities, it can be concluded that Marketing is one of the leading components of Business Management and the other being Innovation. The Human Resources, Accounting, Operations (Production), Law and Legal aspects can be ‘bought in’ or ‘contracted out’ as extra services. The Chartered Institute of Marketing defines marketing as the management procedure accountable for identifying, predicting and satisfying customer needs. A comparable concept is the value-based marketing which narrates the role of marketing to add the increasing shareholder value. In this perspective, marketing is defined as the management procedure that seeks to maximize returns to shareholders by creating relationships with valued customers and establishing a competitive advantage. Marketing practice typically tended to be seen as an innovative industry in history, which comprised advertising, distribution and selling. Although, because the academic study of marketing makes wide use of social sciences, psychology, sociology, mathematics, economics, anthropology and neuroscience, the profession is now extensively recognized as a science, allowing various universities to offer Bachelors, Master, and PhD programmes. The overall procedure begins with marketing research and goes through market segmentation, business planning and execution, ending with pre- and post-sales promotional actions or activities. It is also connected to several creative arts. The marketing literature is also skillful at re-inventing itself and its vocabulary depending on the times and the culture (Fischer, 2000). Marketing Concept Marketing concept refers to the fundamental principle of modern marketing. This concept opines that in order to satisfy the organizational objectives, an organization should predict the requirements and wants of consumers and satisfy these more effectively than competitors. Marketing and marketing concept are directly connected. The marketing concept further refers to the philosophy that firms must evaluate the needs of their customers and develop ways to satisfy those needs, better than the competition. Nowadays the 185 Chapter Six Definition of Marketing majority of organizations have adopted the marketing concept, but this has not always been the case before. In 1776 in The Wealth of Nations, Adam Smith noted that the needs of manufacturers must be measured only with regard to meeting the needs of consumers. Therefore, this philosophy is reliable with the marketing concept, it was not much recognized widely until nearly 200 years later. To properly appreciate the marketing concept, it is helpful to put it in the standpoint by reviewing other philosophies that once were leading. Meanwhile these alternative concepts persisted during various historical time frames; they are not limited to those periods and are still practiced by some companies today. Production Concept The production concept persisted from the time of the industrial revolution until the early 1920’s. This concept has the view that a company should focus on those products that it could manufacture most efficiently and that the setting of a supply of low-cost products would create the demand for the products. The main questions that a company would ask before producing a product were:  Can we produce the product?  Can we produce enough of it? The production concept during that time worked quite well because the goods that were produced were essentially those of basic need and there was a fairly high level of unfulfilled demand. Almost everything that could be produced was sold without difficulty by a sales team whose job was simply to implement transactions at a price determined by the cost of production. The production concept persisted into the late 1920’s. Sales Concept By the early 1930’s though, mass production had turned out to be commonplace, competition had amplified, and there was little unfulfilled demand. Companies roughly during that time started to practice the sales concept (selling concept), under which business entities not only would produce the products, but also would try to convince customers to purchase them in the course of advertising and personal selling. Before producing a product, the major questions were:  Can we sell the product?  Can we charge enough for it? The sales concept gave little attention to whether the product really was needed; the goal just was to beat the competition to the sale with little concern to customer satisfaction. Marketing was a concept that was practiced after the product was created and produced, and various people came to connect marketing with hard selling. Still today, so many people use the word ‘marketing’ when they really mean only sales. 186 Chapter Six History of Marketing Marketing Concept After World War II, the diversity of products amplified and hard selling no longer could be relied upon to generate sales. With better flexible income, customers could afford to be selective and buy only those products that exactly met their changing needs, and these needs were not instantly clear. The main questions became:  What do customers want?  Can we produce it while they still want it?  How can we maintain our customers satisfied? In rejoinder to these sensitive customers, companies started to approve the marketing concept, which involves:  Concentrating on customer desires before developing the product.  Aligning all operations of the business entity to focus on those needs.  Attaining a profit by successfully satisfying customer needs over the long-term. When companies first started to approve the marketing concept, they classically set up separate marketing departments whose objective was to satisfy customer needs. Frequently these departments were sales departments with extended responsibilities. While this extended sales department structure might be found in some firms today, various companies have prepared themselves into marketing organizations with a company-wide customer focus. While the entire organization exists to quench customer needs, nobody can ignore the customer issue by declaring it a marketing problem where everyone must be concerned with customer satisfaction. The marketing concept depends upon marketing research to describe market segments, size, and their needs. To satisfy those needs, the marketing team suggests decisions about the convenient parameters of the marketing mix. History of Marketing The learning about history of marketing, as a discipline, is considerable because it aids to describe the baselines upon which change can be attained and understand paradigm shift of the discipline in response to those changes. The practice of marketing is known for millennia now, but the concept “marketing” used to define commercial activities buying and selling products or services came into limelight use in the late nineteenth century. The learning of the history of marketing as an educational field developed in the early 20 th century. Marketers usually differentiate between the history of marketing practice and the history of marketing thought: a. The history of marketing practice is an investigation into the methods that marketing has been practiced; and how those practices have 187 Chapter Six History of Marketing progressed over time as they respond to changing socio-economic conditions. b. The history of marketing thought is an assessment of the procedures that marketing has been studied and taught. Even though the background of marketing thought and the history of marketing practice are distinct fields of study, they interrelate at various junctures. Marketing practitioners connect in innovative practices that impress the attention of marketing scholars who codify and publish such practices. Similarly, marketing academics usually develop new research methods or theories that are accordingly adopted by practitioners. Therefore developments in marketing theory update marketing practice and vice versa. The history of marketing will remain partial if one eliminates academia from practitioners. In 1960 the publication of Robert Keith’s article, “The Marketing Revolution”, was a ground-breaking work in the study of the history of marketing practice. Then, in 1976, another publication of Robert Bartel’s book, The History of Marketing Thought, made a turning-point in the understanding of how marketing theory has changed since it first emerged as a separate discipline around the late 20th century. (Bartels R. et al, 1976/2001) Marketing History: An Overview Etymologists suggest that, the term ‘marketing’ was first used in dictionaries in the 16th century where it was identified as, the process of buying and selling at a market. The current definition of ‘marketing’ as a procedure of moving goods from the producer to consumer with an emphasis on sales and advertising first occurred in dictionaries in 1897. The concept, marketing, is originated from the Latin word, ‘mercatus’ meaning market or merchant. Historians of marketing usually fall into two different branches of marketing history namely: - the history of marketing practice and the history of marketing thought. These branches are usually deeply divided which have very different roots. The history of marketing practice is concerted in management and marketing studies; meanwhile the history of marketing thought is concentrated in economic and cultural history. This means that they inquire very different types of research questions and use different research tools and frameworks. Historians of marketing have undertaken substantial investigation into the evolution of marketing, yet there is little consensus about when marketing first began. Some researchers state that marketing practices existed in ancient times while others suggest that marketing, in its modern form, emerged in conjunction with the rise of consumer culture in 17 th and 18th centuries in Europe while yet other researchers suggest that modern marketing was fully realized in the decades that followed the industrial revolution in Britain from where it then spread to Europe and North America. Hollander’s work 188 Chapter Six History of Marketing according to Brian Jones, D.G. and Keep, W. (2009) opined that the different dates for the evolution of marketing can be described by problems surrounding the method that marketing has been defined, whether with reference to ‘modern marketing’ as a planned, programmed repertoire of professional practice comprising activities like segmentation, product differentiation, positioning and marketing communications versus ‘marketing’ as a mere form distribution and exchange. Marketing in the Middle Ages In England and Europe throughout the Middle Ages, market towns developed rapidly. Some analysts have stated that the term, ‘marketing’, may have been first used in the setting of market towns where producers used the term to identify the process of carting plus selling the produce and wares in market towns. Blintiff investigated the early Medieval networks of market towns and concluded that by the 12th century there was a rise in the number of market towns and the surfacing of commercial circuits as traders manufactured excess from lesser regional, different day markets and resold products to larger centralized market towns (Blintiff, 1997). Braudel and Reynold made a systematic analysis of these European market towns between the 13th and 15th centuries (Review by: A. W. Lovett, 1983: pp. 747-753). Their investigation reveals that in regional districts markets were conducted once or twice a week while daily markets were normal in bigger cities. Slowly over time, stable shops started to open daily and supplanted the periodic markets. Peddlers covered the gaps in delivery of goods by travelling door to door selling produce and wares. The physical market was comprised by transactional exchange thus the economy was characterized by local trading. Braudel states that, in 1600, goods travelled fairly short distances like grain 5–10 miles; cattle 40–70 miles and so forth. Even though, following the European age of invention, goods were brought from afar like calico cloth from India, porcelain, silk and tea from China, spices from India and South-East Asia and tobacco, sugar, rum and coffee from the New World markets. As trade between nations or regions grew, companies needed information on which to base business decisions. Individuals and firms carried out formal and informal research on trade conditions. Johann Fugger in 1380, travelled from Augsburg to Graben to collect information on the international textile industry. He received detailed letters on trade situations in relevant areas. During the early 1700s British industrial houses were pressurizing for information that could be used for business decisions (Streider, 2001). During this era, Daniel Defoe, a London merchant, as cited by (Lund, 1973/1998) wrote information on trade and economic resources of England and Scotland. Defoe was a prolific writer and among his many writings includes titles dedicated to trade consisting of namely; Trade of Britain Stated, 1707; Trade of Scotland with France, 1713 plus the buy and sell to India seriously and evenly considered, 189 Chapter Six History of Marketing 1720; all books were highly popular with merchants and business houses of the period. Meanwhile such activities were recognized in marketing research, at that time they were identified as ‘commercial research’ or ‘commercial intelligence’ and not seen as part of the repertoire of activities that make up modern marketing practice. Marketing in Seventeenth and Eighteenth Century Europe Scholars described specific instances of selling practices in England and Europe within the 17th and 18th centuries. During the 1700s, as England began to take advantage of trading opportunities with South-East Asia, industrial houses demanded more detailed information, on the way to base their marketing decisions. At this point, English trader and prolific author, Defoe prepared variety of publications providing information on the state of trade in England, Scotland and India - information used afterward to make business decisions. English industrialists, Josiah Wedgewood and Matthew Boulton, are usually seen as fathers of recent mass marketing methods (McKendrick, 1960). Wedgewood’s acknowledgement was a result of using marketing techniques like spam, travelling salesmen and catalogues within the 18th century. Wedgewood also administered serious investigations into the fixed and variable costs of production and recognized that increased production would cause lower unit costs. He also inferred that selling at lower prices would cause higher demand and recognized the worth of achieving scale economies in production. By subsidizing costs and lowering prices, Wedgewood was prepared to generate higher overall profits. In the same way, one among Wedgewood’s generation, Matthew Boulton, influenced early production techniques and merchandise differentiation at his Soho Manufactory in the 1760s. He as well practiced planned obsolescence and understood the meaning of celebrity marketing that is supplying the people of valor often at prices below cost and of obtaining royal patronage, for the sake of the publicity generated. Proof of early marketing practices has also been noticed across Europe. Other works have documented the utilization of persuasive advertising practices in eighteenth century Italy, England and France as early because the 1600s. Marketing outside Europe The rise of consumer culture and marketing in England, the US and Europe has been extensively studied, but less is understood about developments elsewhere. Nevertheless, recent research suggests that China exhibited an upscale history of early marketing practices; including branding, packaging, advertising and retail signage. From as early as 200 BC, Chinese packaging and branding was able to place names and merchandise quality, and therefore the use of government-imposed product branding was used between 600 and 900 AD. Eckhart and Bengtsson in their publication in 2010 argued that in the 190 Chapter Six History of Marketing Sung (960–1127), Chinese society developed a consumerist culture, where a high level of consumption was attainable for a good sort of ordinary consumers instead of just the elite (p. 212). The increment of consumer culture led to the profitable investment in carefully managed company image, symbolic brands, retail signage, trademark protection and therefore the brand concepts of hao, gongpin, lei, baoji, pinpai, plus piazi which approximately equate with Western concepts of quality grading, family position, and maintenance of customary Chinese values (p. 219). Eckhardt and Bengtsson’s investigation recommends that brands evolved in China as a result of the social requests and tensions innate consumer culture, during which brands provide social station and stratification. Consequently, the evolution of brands in China stands in sharp distinction to the West where producers pushed brands onto the market so as to differentiate, enhance market share and eventually profits (pp 218–219). Marketing in the 19th and 20th Centuries In anticipation of the 19th century, Western economies were characterized by undersized regional suppliers who sold goods in an area or regional basis. Although, as transportation systems enhanced from the mid-19th century, the economy became more united allowing firms to distribute standardized, branded goods at national level. This gave rise to a broader mass marketing mindset. Manufacturers attended to enforce strict standardization so as to realize scale economies with a view to keeping production costs down and also to achieving penetration within the early stages of a product’s life cycle. The Model T Ford was an illustration of a product being produced at a price that was reasonable for the burgeoning middle classes. In the early 20th century, as market size improved, it became a more commonplace for manufacturers to supply and spread of models pitched at different quality points intended to satisfy the requirements of different demographic and lifestyle market segments, giving increase to the extensive practice of market segmentation and merchandise differentiation. Within little quite a decade, Paul Cherington had invented the ABCD household typology which is the primary socio-demographic segmentation tool (Cherington, 1920). ‘ABCD’ household typology Paul Cherington invented the ABCD household typology which is the primary socio-demographic segmentation apparatus. With acceptance into group level data only, brand marketers reached the task from a tactical point of view. Thus, segmentation was essentially a brand-driven process. Until quite of recent, most segmentation methods have sustained this tactical view in which they address urgent short-term decisions; like describing the recent “market served” and are focused on informing marketing mix decisions. Though, with the arrival of digital communications and mass data storage, it has been likely for marketers to envision of segmenting at the level of the individual consumer. 191 Chapter Six Market Segmentation Strategy Widespread data is at present obtainable to support segmentation at extremely small groups or single customer, allowing marketers to plan a customized offer with an individual price which can be disseminated via realtime communications (Cherington, 1920). Market segmentation strategy A key reflection for marketers is whether to segment or not to segment. Concerning the philosophy of the organization, product type or market characteristics, resources, a business can develop an undifferentiated approach or differentiated approach. In the undifferentiated approach (or mass marketing), the marketer take segmentation for granted and develops a product that meets the needs of the leading number of buyers. In a differentiated approach the business entity aims at one or more market segments, and develops different offers for each segment. In consumer marketing, it is rare to find circumstances of undifferentiated approaches. Even goods like salt and sugar, which were once treated as commodities, are at the moment highly differentiated. Consumers can purchase a variety of salt products; cooking salt, table salt etc. When Wendell R. Smith wrote his classic article, Product Differentiation and Market Segmentation as Alternative Marketing Strategies in 1956, he wrote that he was just compiling marketing practices that had been analyzed at time and which he identified as a “natural force”. Other theorists believe that Smith was just codifying understood knowledge that had been used in marketing and brand management from the early 20th century. As industry grew, the need for expert business professionals also grew. To meet this need, universities started offering courses in commerce, economics and marketing. Marketing, as a discipline, was first trained in universities in the very early 20th century. Though, researchers only paid attention to investigating the history of marketing in the mid-20th century. From the beginning, researchers tended to categorize two strands of historical research; the history of marketing practice and the history of marketing thought which was basically focused on the rise of marketing education and bisecting the way that marketing was taught and studied. Early historical studies were mainly descriptive. The Criticisms of market segmentation The restrictions of conventional segmentation have been properly documented in the literature. Recurrent criticisms consist:  It is not better than mass marketing at developing brands.  When in competitive market, segments don’t often show major differences in the way they use brands.  It fails to explain sufficiently narrow clusters. 192 Chapter Six Functions of Marketing  The geographic and demographic segmentation is excessively descriptive and lacks sufficient insights into the motivations essential to drive communications strategy.  The difficulties with market changes, predominantly the instability of segments over time and structural alteration which leads to ‘segment creep’ and ‘membership migration’ as individuals move from one segment to another. Market segmentation has various critics in spite of its limitations but it is still one of the lasting concepts in marketing and continues to be largely used in practice. Marketing Orientations An orientation, in the marketing setting, relates to a view or attitude a company holds towards its product or service, in essence regarding consumers and endusers. There subsist several common orientations as mentioned below: Product Orientation: A company employing a product orientation is mainlyfocused on the quality of its own product. A company would also suppose thatas long as its product was of a high standard, people would buy and consumethe product. This works most effectively when the company has good insightsabout customers and their needs plus desires, as for instance in the case of Sony, Walkman or Apple iPod, whether these draw from intuitions or research. Sales Orientation: A company using a sales orientation concentrates primarilyon the selling or promotion of a particular product, and not determining new consumer demands as such. Therefore, this consists simply selling an already prevailing product, and using promotion techniques to obtain the highest sales feasible. Such an orientation may fit conditions in which a company holds dead stock, or otherwise sells a product that is in high demand, with small probability of changes in consumer tastes decreasing demand. Production Orientation: A company concentrating on a production orientation specializes in producing as much as possible of a given product or service. Hence, this shows a company exploiting economies of scale, until the minimum efficient scale is achieved. When a high demand for a product or service subsists a production orientation may be applied, coupled with a good belief that consumer tastes and preferences do not rapidly change like, sales orientation. Marketing Orientation: The marketing orientation is maybe the most frequent orientation used in modern marketing. It concerns a business entity essentially basing its marketing plans around the marketing concept, and thus supplying products to fit new consumer tastes and preferences. A company would for instance apply Research and Development (R&D) to develop a product attuned to the revealed information, market research to gauge consumer 193 Chapter Six Functions of Marketing desires, and then employ promotion techniques to guarantee customers know the product subsist. The marketing orientation usually has three main facets, which are:  The Customer Orientation is when a business entity in the market economy can continue to exist by producing goods that customers are willing and able to consume. For that reason, ascertaining consumer demand is essential for a company’s future feasibility and even existence as a going concern.  Organizational Orientation in this sense, a company’s marketing department is usually seen as a solution of significance within the functional level of an organization. Information from a company’s marketing department would be used to direct the actions of other departments within the company. For instance, a marketing division could ascertain through marketing research that consumers wanted a new type of product, or a new practice for an existing product. With this in view, the marketing department would inform the R&D department to innovate a prototype of a product or service based on consumers’ new demands. The production department would then start to produce the product; meanwhile the marketing department would concentrate on the promotion, distribution, pricing, etc. of the product. In addition, a company’s finance department would be consulted, with respect to securing proper funding for the development, production and promotion of the product. Inter-departmental conflicts possibly will occur, should a company adhere to the marketing orientation. Production may resist the installation, support and servicing of new capital stock, which may be required to produce a new product. Finance may be against the necessary capital expenditure, since it could undermine a healthy cash flow for the Organization.  Mutually Beneficial Exchange: - In a transaction in the market, company gains revenue, which hence leads to more profits, market share or sales. A consumer on the other hand benefits the satisfaction of a need or want, utility, reliability and value for money from buying a product or service. As none has to buy goods from any one supplier in the market economy, companies must attract consumers to buy goods with modern marketing ideals. Customer Orientation: A company in the industry can survive by producing goods that persons are willing and able to buy. Therefore, ascertaining consumer desires is crucial for a company’s future viability and even existence as a going concern. Functions of Marketing The crucial endeavor of marketing is the exchange of goods and services from producers to consumers in an approach that maximizes the satisfaction of 194 Chapter Six Functions of Marketing customer’s desires. Marketing functions start from identifying the consumer demands and end with satisfying the consumer needs. The universal functions of marketing comprise buying, selling, transporting, storing, standardizing and grading, financing, risk taking and securing marketing information. Therefore, contemporary marketing has some other functions such as collecting the market information and evaluating that information, Market planning and strategy formation. To help in product designing and development also comes under the marketing functions. The marketing functions have been exhausted here briefly: Market Information To specify the needs, wants and demands of the consumers and then evaluate the specified information to reach at different decisions for the successful marketing of a company’s products and services is one of the most significant functions of marketing. The evaluation consists judging the internal weaknesses and strengths of the company as well politico-legal, social and demographic data of the specific market. This information is then used in market segmentations. Market Planning Market-planning aims at achieving a firm’s marketing objectives. These objectives may comprise increasing market presence, dominate the market or boost market share. The market planning function involves aspects of production levels, promotions and other action programmes. Exchange Functions The buying and selling contain the exchange functions of marketing. They guarantee that a company’s offerings are accessible in sufficient quantities to solve customer demands. The exchange functions are backed by advertising, personal selling and sales promotions. Product Designing and development The product design aids in making the product attractive to the specific market. In contemporary competitive market environment not only cost matters but also the product design, suitability, shape, style etc. matter a lot in influencing production decisions. Product or Physical Distribution The physical supply or distribution functions of marketing involve transporting and storing. The transporting function comprise moving products from their points of manufacturing to locations suitable for purchasers and storing function which entails the warehousing products until needed for sale. Standardization and Grading Standardization involves producing goods at predetermined specifications. Standardization makes sure that product offerings meet recognized quality 195 Chapter Six Types of Marketing and quantity. It aids in attaining uniformity and consistency in the output product. Grading is categorization of goods in various groups based upon certain encoded characteristics. It entails the control standards of size, weight etc. Grading assists in pricing decisions as well. The higher the quality goods and services the more they attract higher prices. Financing The financing functions of marketing comprise providing credit for channel members or consumers. Risk Taking Risk taking is one of the very essential marketing functions. Risk taking in marketing means the uncertainty about the consumer purchases which is a result of creation and marketing of goods and services that consumers may purchase in future. Packaging, labelling and branding Packaging comprises designing package for the products, labeling means putting information required or specified on a product’s covering. Packaging and labeling act as promotional tools in modern marketing, Branding distinguishes the generic commodity name to a brand name. For instance, Wheat Flour is a general name of a commodity while “Ashirvad Aata” is a brand name. In service industry, branding matters so much. Customer Support Customer support is a crucial function of marketing. It entails presales counseling, after sales service, handling the customer complaints and changes, credit services, maintenance services, technical services and consumer information. For instance, a water purifier comes with an onsite service warranty of seven years aids in marketing and is a vital marketing function as well. Types of Marketing For a business entity to win market share and remain relevant, they require to consider many types of marketing strategies. Every marketing strategy can commune to a specific market for the benefits and features of a product. Marketing strategies can also commune an overall value to their customers. In many instances, this is the core of creating equity or good will in the particular markets. Apple, for instance, has invested in producing commercials for television, billboards, and magazines that display their products in such a way that their customers feel a sense of resemblance towards Apple’s products (Kotler, P. et al, 2010). Cause Marketing: Identifying a cause both the customers and the company cares about can generate magic for the business. This needs internal knowledge about what the company cares about and who they want to support 196 Chapter Six Types of Marketing in the world. A nice example of this is Toms Shoes. As an alternative of doing the traditional “buy one get one free” advertising, Toms created a strong customer base and reputation for giving back by giving away a free pair of shoes to someone in need for each shoe bought by their customers which is part of Corporate Social Responsibility. Close Range Marketing (CRM): The use of bluetooth or Wifi by sending promotion messages about the products and services to customers’ smartphones and tablets at close proximity. Close Range Marketing is also defined as Proximity Marketing. Relationship Marketing: Various firms concentrate on establishing relationships with their customers as an alternative of always being exclusive in trying to sell them something (transactional marketing). Customers who care for the brand more will also spend more money with the brand. Numerous traditional retailers have discovered this to be true. Walgreens has discovered that customers who buy from all of their purchasing channels (store, web, mobile, etc) purchase up to 6 times more than the average customer that simply buys in their store. Transactional Marketing: Driving sales can be difficult, particularly for retailers that have to time and again sell products in high volume to consumers. In order to keep the desire of investors, retailers have to persuade consumers to purchase using coupons, discounts, liquidations, and sales events. High volume big-box retailers are continually running promotional events in order to acquire interested consumers into their stores. Scarcity Marketing: In some markets it is vital to control how much product is available at a time. In many instances this is done because of the complexity of acquiring raw materials or higher quality of the product. A firm may decide to make the products available to only a few customers. Rolls-Royce unleash of their Chinese edition car called Phantom sold fast. Meanwhile the cost of the car was higher than most cars because the scarcity drove the desire and the price. Word of Mouth Marketing: Word-of-mouth Marketing is the transitory of information from person to person by oral communication. Customers are so eager to share with the world the brands they love. Many consumers witness meaning in sharing testimonies of their favorite products and services. Word of Mouth is one of the primal ways people learned about what to buy in the market. Modern marketers have discovered how to create authentic word of mouth for their companies and the products they represent. Call to Action (CTA) Marketing: CTA Marketing means the ways of converting web traffic into leads or sales on websites using text, graphics, or other elements of web design. Conversion strategies aid to develop the 197 Chapter Six Types of Marketing percentage of online visitors who become customers and joined the mailing list. Viral Marketing: Cult Brand marketers are continually developing new business ideas that keep their products in the heart and minds of the worldwide consumer. Every time a new product is developed, customers have to be given a cause to dream about their future purchase. Occasionally marketers of Cult Brands hit on something so amazing that people cannot help but share with others. Getting the customers talking about the products and services is very vital to growing awareness for that business. Diversity-Marketing: Develop a modified marketing plan by evaluating various customer segments based on cultural differences comprising of tastes, expectations, beliefs, world views, and specific needs. Undercover Marketing: At times not telling everyone everything can become a great source of noise. Think about a movie trailer that got you very excited to go see the movie. Meanwhile not presenting all the aspects of the movie, the promoter can create enough conspiracy to drive viewers to want to see more. Mass Marketing: Major companies need to drive huge numbers of purchasing of their products in order to continue to exist and grow. Meanwhile mass marketing may appear like a shotgun approach to marketing this is far from the truth. Large businesses spend much money in interpreting big data which provides them an insight to where to place media for their potential customers who buy their products and services. Wal-Mart is an instance of effective crowd market retailer. As the leading retailer in the world, they are so smart about their mass marketing efforts, usually giving their customers a feeling of locality and warmth. Seasonal Marketing: Seasonal events offer a great method to meet new consumers. At times these events can be real changes of weather or national holidays. For a retailer such as Hallmark, Valentine’s Day represents a huge portion of their business. By tuning into several seasons that are vital to the customers you can become more significant in their lives. Public Relations (PR) Marketing: PR is one of the most crucial marketing strategies where a variety of effective marketers work with the media to bring attentiveness to their products and the profit their products put forward. Further, in many instances where things go wrong, a good Public Relations marketing strategy is vital. When Apple’s founder Steve Jobs was still alive, Apple held a main press conference to publicize every new product and this custom is now continued by their new Apple CEO. Online Marketing: As commerce has evolved to the Internet, a new form of marketing has come up. From online banners to those disgusting pop ups, 198 Chapter Six Types of Marketing online marketers have attempted to have their customers attention in any way possible. Most online strategic marketing efforts nowadays are a mix of growth hacking strategies and a variety of responsiveness tactics that drive attention. A very successful online marketer is the insurance company Geico who immediately asks their users to enter their zip code for an instant quote on a better savings. Email Marketing: As soon as customers shifted into the online world, Internet marketers have attempted to gather and organize emails for potential forecast. Several business-to-business marketers depend on email marketing as a main method to connect with customers. At manufacturing tradeshows, IBM consultants can usually be seen exchanging email information with their prospects. Evangelism Marketing: Develop wild fan customers (called Brand Lovers) who become promoters of the brand or product, and who symbolize the brand as if it was part of their own identity. Event Marketing: Creating events is an immense way to drive sales. Customers usually need a reason to shop and events can often offer the perfect reason. Macy’s Thanksgiving Day Parade has turned out to be part of American culture by connecting two events together that consumer’s love: Thanksgiving and shopping: (Macy’s Thanksgiving Day Parade, 1924) Offline Marketing: With mass acceptance of the Internet, many companies are finding new methods of integrating offline marketing with new technologies to create more engaging customer experiences. The Coca-Cola Company has invented vending machines that call customers to hug them. This continues to bind the Coca-Cola brand to the core emotion of happiness, but also persuade customers to experience the true product offline. Outbound Marketing: At times it is vital for companies to allow potential customers know they exist. By creating a list of forecast a company can start to reach out to their individual specific groups in order to find new customers. When Microsoft was selling their accounting software they used outbound marketing to describe potential targets before trying to invite the companies for an in-person meeting. Direct Marketing: To communicate openly with customers and prospects through mail, email, texts, fliers plus other promotional material. Inbound Marketing: Companies usually have customers inviting them for various reasons. This can present a great chance to sell customers additional products and services they at present don’t have. When business customers call to check their balances, the business bank chase usually takes the chance 199 Chapter Six Types of Marketing to ask if they are interested in a credit line, or a number of other services the bank offers. Freebie Marketing: Advertise free give always or sell the products and services sold at low rates to enhance the sales of other related products or services. Newsletter Marketing: The Fun way to promote a business is to put in writing an account that highlights a number of the interesting things that have happened for the organization. The Motley Fool have been sharing their investment insights with their community for several years. These newsletters produce a way of inclusion and participation with their members and have provided a key driver for their unbelievable growth. Article Marketing: In industries wherever experience is very valued, articles can give a strong tool to showcase your data and experience. Some innovations are shared within the type of articles or white papers wherever technical data must be conveyed to specialised customers. Amazon.com has dedicated a part of their web site for white papers on technical ability on cloud computing. This is often an awfully subtle type of promoting for specialised patrons. Content Marketing: Write and publish content to teach potential customers regarding your product and services. For the suitable businesses, this will be an efficient means of influencing them without using direct selling strategies. Tradeshow Marketing: Many products ought to be knowledgeable to be bought. There are a few customers who are willing to purchase a new automobile while not doing an excellent deal of analysis and test-driving the car first. Tradeshows are trade gatherings wherever customers are invited to sample all that the company provides. To introduce their new lines of product, Ford Motor Company spends an excellent deal of your time putting in operation their booth at the international client motorcar shows annually. These motorcar trade shows offer reporters and shoppers an opportunity to expertise cars first hand. Search Marketing: These days, once customers have queries, they typically don’t raise their friends; they are going straight for Google. In fact, Google is therefore sensible at responding to queries that have huge number of people daily looking for answers on this leading net search web site. One ought not to look so much to ascertain the ability of search marketing. Google has formed the trade for several years currently and has helped hundreds of shops grow their businesses whereas several businesses want to advertise in their local yellow pages, as less consumer consult their local physical directory, this channel becomes more and more less effective per year. 200 Chapter Six Types of Marketing Direct Marketing: Advertise and promote the products and services to customers applying a variety of digital devices together with Smartphones, computers, and tablets. Web or internet marketing is a vital practice in Digital marketing using a mass-message nature. Niche Marketing: Finding a distinct segment and filling it might be described as a secret formula for growth in over-crowded marketplaces. Take the shoe business, for instance, there’s an excellent demand for shoes within the world then several high corporations have evolved to satisfy most of the immediate shoe desires within the marketplace. The shoe space might look crowded, however shoe producing company Vans detected an underserved customer: the skater. By specializing in this niche market Vans has developed a thriving business. Drip Marketing: This type of marketing may perhaps be a communication strategy that sends, or drips, a pre-written set of messages to customers over time. These messages usually take the shape of email promoting, though alternative media shops may be used moreover. Community Marketing: Engage an audience of existing customers in a lively dialogue, chatting with them about wants and needs of this explicit client cluster. Rather than specializing in generating subsequent dealing, community marketing promotes bigger loyalty and better levels of engagement at intervals with an existing brand community. Learn how to create brand communities. Community marketing can as well lead to word-of-mouth marketing. Social Media Marketing: Social media sites like Facebook and Twitter provide a singular chance for businesses willing to take a position in client engagement. Social media marketing is still in its early years but however growing up quickly. Firms like Southwest Airlines have departments of over thirty individuals whose primary responsibility is to actively interact with customers on social media. Cross-Media Marketing: Provide customers data through multiple channels like email, physical mail, websites, and print and on-line advertisements to cross promote their products and services. Business-to-Business (B2B) Marketing: This is the type of marketing where marketing observance of people or organizations which includes commercial businesses, governments, and alternative institutions. It permits businesses to sell products or services to alternative firms or organizations that successively sell an equivalent product or services, use them to enhance their own product or services, or employ them to maintain their internal operations. International Business Machines may be a standard B2B merchandiser. IBM’s business has matured as a result of taking a really intelligent approach at promoting their product to alternative business and governments round the world. 201 Chapter Six Types of Marketing Promotional Marketing: Promotional promoting may be a business promoting strategy designed to stimulate a client to require action towards a buying call. Promotional Marketing may be a technique that features numerous incentives to shop for, such as:  Contests - We have a tendency to all get pleasure from winning one thing for free. Contests provide a pretty promoting vehicle for little business to accumulate new purchasers and build awareness.  Coupons - Marketers issued 302 billion coupons in 2007, a 6% rise over the previous year. Over 76% of the population use coupons, in keeping with the Promotion Marketing Association (PMA) Coupon Council. Coupons still work and supply an inexpensive marketing strategy for emerging business.  Sampling - Test before you buy. Giving a product for free may seem profitlimiting; however, consider giving your customers a little taste will cause a giant purchase. Retail genius Publix supermarkets share samples of their victory (award) key lime pie not as a result of individuals question the goodness of the pie however to urge their customers to buy more.  Ambush Marketing - The advertiser employs this marketing strategy to hook up with specific events and brands minus paying sponsorship fees. This permits the business to exploit these events or influence the brand equity of the opposite business, which has the potential result of lowering the worth or value of the original event. B2C Marketing: The ultimate goal of B2C marketing (business-to-consumer marketing) is to convert shoppers into consumers as sharply and systematically as attainable. B2C marketers use mercantilism activities like coupons, displays, store fronts (both real and online) and special offers to provoke the target market. The B2C marketing campaigns area units centered on a group action, are shorter in duration, and want to capture the customer’s interest. These campaigns typically supply special deals, discounts, or vouchers that may be used each on-line and within the store. Cloud Marketing: In cloud marketing, all promoting resources and assets area units brought on-line as a result customers or affiliates will develop, use, modify, and share them. Consider however Amazon.com gets customers to purchase digital books, movies, and televisions shows in a digital library that is available in the customer’s online account or on the digital device like their Kindle Fire. Mobile Marketing: This marketing means using a mobile device like a smart phone. This kind of marketing will give consumers with personalised data that promotes merchandise, time and location sensitive, ideas, and services. Alliance Marketing: A venture is made between two or extra businesses to pool resources in an endeavour to press on and sell products and services. 202 Chapter Six Types of Marketing Reverse Marketing: In reverse selling, the thought is to induce the client to hunt out the business instead of marketers seeking the client. Usually, this is often done through traditional means of advertising like; TV advertisements, print magazine advertisements, and on-line media. Whereas traditional selling in mainly deals with the vendor finding the correct set of shoppers and targeting them, reverse selling focuses on the client approaching potential sellers World Health Organization is also able to provide the required product. In 2004, Dove launched the Dove Campaign for Real Beauty that specialize in the natural great thing about girls instead of advertising their product. This operation campaign caused their sales to soar on top of $1 Billion and caused Dove to recreate their whole around this strategy. Though undefeated, this campaign caused a great deal of argument and discussion because of what individuals saw as an advertisement with a contradictory message. Telemarketing: will play a very important part in merchandising the product to customers and it should not be unknotted as several firms consider it to attach with customers. This marketing sometimes referred to as within sales, or telesales within the UK and Ireland, may be a technique of marketing within which a salesman solicits prospective customers to shop for product or services, also over the phone or in the course of a subsequent face to face or internet conferencing appointment scheduled throughout the decision. Marketing may embody recorded sales pitches programmed to be competing over the phone via automatic dialing. Marketing has come back vulnerable in recent years, being viewed as associate degree annoyance by several people. Free Sample Marketing: Unlike gift selling, this is often not passionate about complementary selling, however rather consists of giving freely a free sample of the merchandise to influence the customer to create the acquisition. Direct Mail Marketing: A channel of advertising that permits businesses and nonprofits organizations to speak directly with the client, using advertising techniques that may embrace text electronic messaging, email, interactive shopper websites, on-line show adverts, fliers, catalogue distribution, promotional letters, and outside advertising. Marketing messages emphasize attention on the client, data, and answerableness. Characteristics that distinguish marketing are:  Marketing messages area unit addressed on to the customer(s). Marketing depends on having the ability to deal with the members of a target market. Addressability comes in a style of forms together with email addresses, movable numbers, application cookies, fax numbers, and communication addresses.  Direct selling seeks to drive a selected “call to action.” as an example, an advert might raise the prospect to decide a free number or click on a link to a web site. 203 Chapter Six  Types of Marketing Direct selling emphasizes traceable, and measurable responses from customers in spite of the medium, Direct selling is practiced by businesses of all sizes from the tiniest start-up to the leaders within the Fortune five hundred. A well-executed direct effort will prove a positive outcome on investment by showing what number of potential customers is well-versed with a transparent call-to-action. General advertising calls-for-action in favor of messages that try and build prospects’ emotional awareness or engagement with a whole. Even well-designed general advertisements seldom will prove their impact on the organization’s bottom line. Database Marketing: Is a type of direct marketing by means of databases of customers to generate personalized messages in order to encourage a product or service for marketing purposes. The means of communication can be addressable to any medium, as in direct marketing. The difference between direct marketing and database marketing stems mainly from the attention given to the evaluation of data. Database marketing focuses on the use of statistical techniques to develop models of customer behavior, which are then used to choose customers for communications. As a result, database marketers also tend to be intense users of data warehouses, since having a greater amount of data about customers enhance the likelihood that a more accurate model can be created. There are mainly two main styles of selling databases: (1) client databases and (2) business databases. Client databases area unit primarily back-geared towards corporations that sell to shoppers, typically abbreviated as (businessto-consumer) - B2C or BtoC. Business selling databases area unit typically more advanced within the data that they will give. This can be principally as a result of business databases which aren’t restricted by constant privacy laws as client databases. Personalized Marketing: Personalized Marketing (also referred to as personalization, associated typically referred to as matched marketing) is an extreme type of product differentiation. Whereas product differentiation tries to differentiate a product from competitors, personalization tries to create a singular product providing for every client. Nike ID may be a widespread whole that has developed a robust business around this personalization selling thought. Affinity Marketing: Create strategic partnerships that square measure dependent by forming alliances with complementary brands. Additionally, referred to as partnerships promoting within this strategy where one completely generate sales whereas the opposite creates new customers and builds complete awareness. Cult-tural Marketing: A cult may be a self-identified cluster of individuals that share a passion or associate in an interest. The proposition of cult promoting holds reign upon the notion that some ways to convert and excite customers is 204 Chapter Six Marketing Strategy by victimisation unaltered human behavioural drives found in spiritual cults where nothing is extra permission, buzzwords and one-to-one-based than a central ideology with a similar social universe made with customs. Cult promoting may be a bright spot within the list of new promoting templates, one that applies unaltered social-science principles in an exceedingly powerful means. To the list of new promoting buzzwords, let’s add the term cult. Humanistic Marketing: Human wants to square measure “a state of felt deprivation.” They distinguish between physical wants (food, shelter, safety, clothing), social wants (belonging and affection), and individual wants (knowledge, self-expression). Guerrilla Marketing: Grass root, non-traditional, and inexpensive ways that found involve power, huge crowds of individuals, and also the part of surprise to promote a product, service, brand, event, or new launch. Brand Lover Marketing: Brand Lover promotion may be a promoting construct that’s meant to exchange the concept of ancient complete promoting. Completes square measure running out of juice and Brand Lovers square measure what's required to rescue brands. However what builds loyalty that goes on the far side reason? What makes a really nice complete stand out? Complete Lovers bring brands to life. For a complete to elevate itself into the “Cult Brand” class, it’s to convey customers a sense of happiness whereas generating robust feelings of affection for its customers. Making loyalty on the far side reason needs emotional connections that generate the very best levels of affection and a way of happiness for the complete. Marketing Strategy Marketing strategy has the elemental goal of accelerating sales and achieving a proper competitive advantage. Marketing strategy includes all basic, short term and long-term activities within the field of promoting that wear down the analysis of the strategic initial scenario of an organization and also the formulation, analysis and choice of market-oriented methods and thus contribute to the goals of the corporate and its selling objectives. Marketing Management Vs Marketing Strategy The distinction between “strategic” and “managerial” marketing is usually to distinguish two concepts having totally different goals and supported by different abstract tools. Marketing Strategy offers the analysis of policies aiming at raising the competitive position of the business entity, taking into account of challenges and opportunities projected by the competitive atmosphere. On the opposite hand, Managerial Marketing is the social control selling concentrated on the implementation of specific targets. 205 Chapter Six Marketing Strategy Developing a Marketing Strategy Marketing Strategy usually begins with a scan of the business atmosphere, like internal and external environment, which incorporates understanding strategic constraints. It’s typically necessary to undertake to know several aspects of the external atmosphere, together with technological, economic, cultural, political and legal aspects. Goals not properly selected can then affect the selling strategy or selling arrangement. This is often evidence of what specific actions are going to be seized in time to attain the objectives. Plans are extended to hide a few years, with sub-plans for every year. Although, the speed of amendment within the marketing atmosphere quickens, time horizons are getting shorter. Ideally, methods square measure each dynamic and interactive, partly planned and partly unplanned, to alter a firm to react to unforeseen developments whereas attempting to stay targeted on a selected pathway; typically, an extended time-frame is most popular. There square measure simulations like client lifespan price models may facilitate marketers conduct “what-if” analyses to forecast what might happen supported attainable actions, and gauge however specific actions may have an effect on such variables because the revenue-per-customer and also the churn rate. methods usually specify the way to alter the selling mix; companies will use tools like selling combine Modelling to assist them decide the way to apportion scarce resources for various media, further as the way to apportion funds across a portfolio of brands. Additionally, companies will conduct analyses of performance, client analysis, contender analysis, and target marketing research. A key side of promoting a strategy is commonly to stay marketing within a company’s overarching mission statement. Marketing strategy must not be puzzled with a selling objective or mission. as an example, a goal could also be to become the market leader, maybe in an exceedingly specific niche; a mission could also be one thing on the lines of “to serve customers with honor and dignity”; in distinction, a selling strategy describes however a firm can win the expressed goal in an exceedingly method that is in keeping with the mission, maybe by careful plans for the way it would build a referral network, as an example. Strategy varies by form of market. A well-established firm in an exceedingly mature market can doubtless have a unique strategy than a start-up. Plans typically involve observation, to assess progress, and strengthen oneself for contingencies if issues arise. You must conjointly write a selling strategy once beginning your own business. Types of Marketing Strategies Customized Target Strategy The requirements of individual client markets square measure distinctive, and their purchases decent to form viable the planning of a brand new selling combined for every client. If an organization adopts this kind of market strategy, they style a separate selling combined for every client. 206 Chapter Six Marketing Strategy Differentiated strategy Specific selling mixes are developed to attractiveness to all or some of the segments once market segmentation reveals many potential targets. Diversity of strategies Marketing methods might disagree depending on the distinctive scenario of the individual business. However, there square measure varies depending on categorizing some generic methods. A quick description of the foremost common categorizing schemes is given below: Strategies based on market dominance: In this system, business entities are classified based on their market share or dominance of an industry. Typically, there are four types of market dominance strategies: Leader, Challenger, Follower, and Nicher. Market leader Market leader is leading in that industry. It has considerable market share and widespread distribution planning. It is normally the industry leader in creating innovative new products and business approaches. Of the four control strategies, it has the majority elasticity in defining strategy. Though it is in a very observable position and can be the objective to competitive threats and government anti-combines actions. Research according to the Project Management Institute study in the 1970s recommended that market leadership was the most advantageous strategy in most industries. Today we identify those other strategies can as well be effective. The major options available to market leaders are:  To expand the whole market by discovering new users or new uses of the product.  To expand the entire market by encouraging more practice on each use occasionally.  To protect market share by creating new product ideas, improving customer service.  To advance distribution effectiveness.  To intensify market share by targeting one or more competitors. Market challenger This is an association which is well-built but not a dominant position that is following an insistent strategy of trying to add market share. It normally targets the industry leader. The key principles involved are:  Evaluate the strength of the target competitor.  Appreciate the amount of support that the target might gather together.  Select only one target at a time.  Determine a weakness in the target’s position.  Reflect on how long it will take for the target to realign their resources so as to reinforce this weak spot. 207 Chapter Six    Growth Strategies Instigate the attack on as narrow a front as possible. While a defender must protect all their borders, an attacker has the advantage of being able to focus their forces at one place. Initiate the attack quickly, and then consolidate. A number of options open to a market challenger are:  Discounting or price subsidization  Manufactured goods line extensions  Introduction of a new product  Product quality increment  Service improvement  Finding new supply channels Improving and intensifying promotional action Market follower This is an organization in a strong, but not central position that is accurate to continue at that position. The basis is that by creating strategies equivalent to those of the market leader, they will add a good share of the market whereas being exposed to very little risk. This is a “play it safe” strategy. The advantages of this strategy are:  No costly Research and Development (R&D) failures  Being able to take advantage of the promotional activities of the market leader  small risk of competitive attack  Save funds avoiding a head-on battle with the market leader Market specialist or nicher The firm in this niche strategy concentrates on selecting few target segments. This is also called a focus strategy. The objective is concentrating on marketing efforts on one or two constricted market segments and couture the marketing mix, the organization can better meet the needs of that target market. The firm normally looks to achieve a competitive advantage through effectiveness moderately than efficiency. The most triumphant nichers tend to have the following distinctiveness:  They have a tendency to be in high value-added industries and are able to obtain high margins.  They have a propensity to be highly focused on a specific market segment.  They have a propensity to market high end products and are able to use a premium pricing strategy. Growth Strategies Growth of a business entity is vital for business victory, as a result using strategies such as vertical integration, horizontal integration, diversification and intensification will all benefit a business’s enlargement, be it long term or short term. Refer to “Ansoff’s Matrix” for a simpler rationalization of the different growth strategies if those mentioned below are difficult to appreciate. 208 Chapter Six Growth Strategies Horizontal integration Some of the benefits of a horizontal integration strategy are that it facilitates a rapidly changing work environment and provides a broad knowledge base for companies and employees. An elevated level of horizontal integration leads to a lofty level of communication within the company. Another advantage of using this strategy is that it provides a larger market for the combined business and it is easier to build a good reputation for the company using this strategy. A disadvantage of using a horizontal integration strategy is that it limits the areas of interest to which companies can extend new products. Horizontal integration can affect a company’s reputation, especially after a merger has happened between two or more companies. The reputation of the merged company has three main advantages. Larger companies can help improve reputations and increase the severity of punishment. As well as post-merger information fusion, which increased their knowledge of the business and marketing areas they focused on. The last benefit is that there are more opportunities for deviations in established companies than in independent companies. Vertical integration Vertical integration refers to the expansion of a business through the vertical production line of a business. An example of a vertically integrated company might be Apple. Apple owns all of its software, hardware, design, and operating system, rather than relying on other companies to provide them. By having a highly vertically integrated business, this creates a different economy, which creates a positive performance for the business. Vertical integration is considered a business that controls the inflow of supply and output of products and the distribution of final products. Some of the benefits of using a vertical integration strategy are that due to lower transaction costs, including finding, selling, monitoring, recruiting, and negotiating with other companies, costs can be reduced. In addition, by reducing the inputs of external firms, the efficient use of business inputs will be improved. Another benefit of vertical integration is that it improves the exchange of information at different stages of the production line. Some competitive advantages may entail: improving business marketing intelligence, avoiding foreclosures, and opening opportunities to produce different products for the market. Some of the disadvantages of using a vertical integration strategy include internal company costs and the business will fight through this strategy. There are also disadvantages of competition, including: creating business obstacles and inability to access supplier and distributor information. Diversification Diversification is an area included in the Ansoff matrix strategy and is the biggest risk a company faces. This is due to the use of new products that are being introduced into new markets, so there is no longer any target market or competition. There are two kinds of diversification namely; vertical and 209 Chapter Six Growth Strategies horizontal. Horizontal diversification refers to the introduction of new products but not to the contribution to the existing product line. This means that horizontal diversification focuses more on products that companies understand, while vertical diversification focuses more on introducing new products into new markets, and companies may have less understanding of the market. One of the benefits of horizontal diversification is that it is an open platform for companies to expand and establish themselves outside of the existing market. One downside to using a diversification strategy is that it can take a while for the benefits to start showing, which can lead the company to believe that the strategy is not working. Another downside or risk is that the use of horizontal diversification has been shown to be detrimental to the value of stocks, but the use of vertical diversification has the best effect. Strategic Models Marketing companies often use strategic models and tools to analyze marketing decisions. There are three main models that can be applied and used within the company to achieve better results and achieve business goals. These include: The 3C`s 3C`s stands for: customers, companies and competitors. It is a strategic model that uses these three key factors to guide a sustainable competitive market. This strategy was developed by a Japanese strategy master named Kenichi Ohmae. Each factor is the key to the success of this strategy; company factors mainly focus on maximizing business advantages. Through these advantages, companies can influence related areas of competition and thus achieve success in the industry. Customers are the foundation of any business. Without clients, you have nothing to do since these are the most significant factors of the business and the wants, needs and requirements that the company must satisfy to attract buyers. The game can be viewed in several different ways, such as: acquisition, design, image, and maintenance. The more unique steps a company takes the less competition it faces in the field. Ansoff Matrix The Ansoff matrix model was invented by H. Igor Ansoff. It is a model that focuses on four main areas: market penetration, product development, market development and product / market diversification. Then divide them into two other areas, called “new” and “current”. From this strategy, the company can determine product and market growth. This is done by paying attention to whether the market is a new market or an existing market, and whether the product is a new market or already existing. Market penetration covers products that are already on the market and familiar to consumers. Since the products have entered the mature market, the risk is low. Product development is the introduction of new products into existing markets. This can include modifications to existing markets to create products that are more 210 Chapter Six Growth Strategies attractive in the market. Market development, also known as market expansion, is the introduction of existing products into new markets to identify and establish new customer groups. This may include new geographic markets, new distribution channels, and different pricing policies. The last area, diversification, is the riskiest area for a company. This is where new products are sold to new markets at the same time. There are two types of diversification; ‘Related’, which means that the business is still in the same industry that they are familiar with. The other is ‘No relationship’, that is, the business has no relationship or market experience before. Marketing Mix Model (4P’s) 4P`s, also called price, product, Place, and promotion, is a strategy derived from simple P, which represents price. This strategy is intended as an easy way to put the marketing plan into practice. This strategy is used to find and meet the needs of consumers, and can be used for long-term or short-term purposes. The proportion of the marketing mix can be changed to meet the different requirements of each product, similar to changing the ingredients when baking a cake. Real Life Marketing Real life marketing revolves mostly around the function of a great deal of common sense, dealing with an inadequate number of factors in an environment of imperfect information, limited resources, uncertainty, and time constraints. In these circumstances, the use of classic marketing techniques is inevitably one-sided and uneven. So, for example, many new products will emerge from unreasonable processes, and a reasonable development process (if any) can be used to rule out the worst non-brokers. Advertising and packaging design will be the result of the creative minds used, then management will generally filter the “intuitive responses” to make sure it is reasonable. For most of their time, marketing managers use intuition and experience to analyze and deal with the complex and unique situations they face; there is no simple theoretical reference. Usually it is a “back and forth reaction” or “intuitive reaction”, the general strategy, together with the knowledge of the customer almost absorbed by the infiltration process, will determine the quality of the marketing used. This almost instinctive management is sometimes referred to as “crude marketing”; to distinguish it from the exquisite and beautiful form favored by theorists. With a few notable exceptions, “real life marketing” (if this is not a term fabricated by news) is based on instinct, rather than being trained, censored, and supported by high-investment data, and marketing discipline. Strategic marketing is easy to be misunderstood because of its complexity. Many entrepreneurs and small businesses think that they can manage this without training, which will harm their business. An organization’s strategy combines all its marketing goals into a comprehensive plan. A good quality 211 Chapter Six Growth Strategies marketing strategy ought to be derived from market research and center on the product mix in order to attain the maximum profit and maintain the business. The marketing strategy is the groundwork of a marketing plan. Marketing Mix (The 4P’s of Marketing) Professor Neil Borden of Harvard’s business school states that, a performance behavior of a company that can affect consumer decisions to buy goods or services that I identified the number. Borden suggests that all the company’s shares represent the “Marketing Mix”. At Michigan State University, at the beginning of the 1960s, Professor E. Gerome McCarthy, the Marketing Mix included four elements: products, prices, places and promotion. Marketing decisions are usually classified into four controllable categories: Product/service, Price, Place (distribution), and Promotion (McCarthy, 1960: Borden, 1957/1987) The term “Marketing Mix” has been extended after Neil H. Borden announced his article 1964, “marketing mix concept”. Borden started applying words in his works at the end of the 1940s after James Culliton defining the marketing manager as a ‘mixer of ingredients’ (Culliton, 1948). The ingredients of the Borden Marketing Mix include product planning, prices, brands, distribution channels, personal sales, advertising, promotion, containers, exhibition, service, physical processing and data surveys and analysis. After E. Jerome McCarthy, these ingredients are grouped into four categories namely; Product, price, places and promotion. The goal is to create a perceptual value and create a positive response to a client centered on four Ps in the target market as mentioned below:Product determination The term “product” refers to tangible, physical and services which comprises:  Name of the brand: manufacturer products  Features: Identify the characteristics of the product and allow users to have a series of functions and purposes.  Packaging: wrapping material around a consumer product  Repairs and Support: Technical Assistance to customers regarding the product  Warranty: Duration of product safety when used by the consumer.  Accessories and services: understand consumer trends and needs, as well as maximize profits and market share. Pricing decisions Some examples of pricing decisions include:  Pricing strategy (degreasing, penetration, etc.)  Suggested retail price  Volume discount and wholesale prices  Cash and prepayment discounts 212 Chapter Six     Growth Strategies Seasonal prices Packaging Price flexibility Price discrimination Distribution (place) decisions Distribution involves bringing products to customers. Some examples of distribution decisions include:  Distribution channels  Market coverage (including, selective or exclusive distribution)  Specific channel members  Inventory management  Warehousing  Distribution center  Order processing  Transportation  Reverse logistics Promotion Decision In the context of the marketing mix, promotion represents all aspects of marketing communication, that is, the dissemination of product information with the aim of generating positive responses from customers. Marketing communication decisions include:  Promotion strategy (push, pull, etc.)  Advertising  Personal sales and sales force  Promotions  Public relations and advertising  Marketing communications budget Limitations of the marketing mix framework The marketing mix structure was mostly useful in the early days of the marketing concept, when material products accounted for the majority of the economy. Today, as marketing is increasingly integrated into the organization, there are more and more types of products and markets, some authors try to expand its practicality by proposing the fifth P, such as packaging, personnel and processes. However, today, the most common marketing mix is still based on the 4 P`s. Despite its limitations, perhaps due to its simplicity, the use of the framework is still powerful, and many marketing textbooks have been organized around it. 213 Chapter Six Marketing Environment Marketing Environment The term “marketing environment” refers to all factors (whether internal, external, direct or indirect) that affect the company’s marketing plans/decisions. The company’s marketing environment includes two main areas, which are:  Macro environment  Micro environment Macro environment The macro marketing environment of the company is made up of several external factors that appear on a large (or macro) scale. They are usually economic, social, political or technological phenomena. The common method to evaluate the macro environment of the company is through PESTLE analysis (political, economic, social, technical, legal, ecological). In the PESTLE analysis, the company will analyze the political issues, culture and climate of the country, key macroeconomic conditions, health and indicators (such as economic growth, inflation, unemployment, etc.), trends / attitudes social and the nature of technology to the society and to society Business processes. Micro environment The microenvironment of a company includes factors related to the company itself or to its stakeholders. The micro environment of a company usually includes:  Customers / consumers  Employees  Suppliers  Media Compared to the macro environment, organizations have a greater degree of control over these factors. Market Research Market research is a process or set of processes that connects manufacturers, customers, and end users with marketers through information. Information used to identify and define marketing opportunities and problems; generate, improve, and evaluate marketing activities; monitor marketing performance; and improve understanding of marketing as a process. Market research specifies the information needed to solve these problems, design methods for collecting information, manage and implement data collection processes, analyze results, and communicate survey results and their impact. It is the systematic collection, recording and analysis of qualitative and quantitative data on issues related to product and service marketing. The goal of marketing research is to identify and evaluate how changing elements in the marketing mix affect customer behavior. The term is often interchanged with market research; however, skilled professionals may wish to make a distinction, 214 Chapter Six Marketing Environment because market research specifically addresses the market, and market research specifically addresses the marketing process. Market research is usually divided into two classification pairs, or by target market:  Consumer market research and  Business-to-Business (B2B) marketing research. Or, or by approach of methodology:  Qualitative market research, and  Quantitative market research. Consumer market research is a form of applied sociology, which focuses on understanding the preferences, attitudes and behaviors of consumers in a market economy, with the aim of understanding the effects and success of marketing activities. As a statistical science, the field of consumer market research was pioneered by Arthur Nielsen when he founded ACNielsen in 1923 as cited in Marder’s book of 1997. Therefore, market research can also be described as the systematic identification, collection, analysis and dissemination of information and the objectification of information. The purpose of assisting management in making decisions related to identifying and solving marketing problems and opportunities. Purpose of Market Research The purpose of Market Research (MR) is to provide management with relevant, accurate, reliable, effective and updated market information. The fiercely competitive marketing environment and the increased costs caused by decision-making errors require market research to provide good information. Proper decisions are not based on burn up feeling, intuition, or even pure judgment. Managers create numerous strategic plus tactical decisions in the course of defining and gratifying customer needs. They make decisions on potential opportunities, target market selection, market segmentation, marketing plan and implementation, marketing performance and control. These decisions are complex by the interface of convenient marketing variables such as price, product, promotion, and distribution. Other complex factors are made more complicated by uncontrollable environmental factors, such as general economic conditions, technology, public policies and laws, political environment, competition, and social and cultural changes. Another factor in this combination is consumer complexity. Market research assists marketing managers to attach marketing variables to the environment and consumers. It helps eliminate some uncertainty by providing relevant information on marketing variables, the environment, and consumers. In the absence of relevant information, it is impossible to reliably or accurately predict the consumer’s response to the marketing plan. Continuing market research programs offer information on convenient and inconvenient factors and 215 Chapter Six Marketing Environment consumers; this information enhances the effectiveness of managers’ decisions. marketing Customarily, marketing researchers are accountable for providing appropriate information, and marketing decisions are formulated by managers. Nevertheless, the roles are altering: Marketing researchers are ever more occupied with decision-making, and Marketing Directors are all the time more engaged in research as well. The use of the ‘DECIDE’ model framework further explains the role of market research in management decision-making. The DECIDE model is the short form of six particular actions required in the decision-making procedure: D-define the problem, E-establish the criteria, Cconsider all the alternatives, I-identify the finest option or alternative, Ddevelop and implement a preparation of action, and E-evaluate and supervise the resolution and feedback when required. (Guo & Kristina L. PhD, 2008: p 118-127) Characteristics of market research First, market research is systematic. Therefore, systematic planning is required at all stages of the market research process. The actions taken at each stage are methodologically reasonable and well documented, and they plan ahead as much as possible. Market research applies scientific procedures to gather and analyze data to examine previous concepts or hypotheses. Market research experts show that, compared with research with a single dominant hypothesis, research with multiple hypotheses usually conducted in competition will produce more meaningful results. Market research is objective. Try to provide accurate information that reflects the true situation. It must be done fairly. Although research is always influenced by the research philosophy of the researcher, it must not be influenced by the personal or political biases of the researcher or management. Investigations for personal or political interests involve violations of professional standards. Such research is deliberately biased to lead to predetermined results. The objective nature of marketing research emphasizes the importance of ethical considerations. In addition, researchers must always remain objective when selecting the information to be included in the reference text, because such literature must provide a comprehensive view of marketing. However, research shows that many marketing textbooks do not include important principles in marketing research. Classification of Marketing Research There are two reasons for organizations to engage in marketing research: one is to identify, and the other is to solve marketing problems. This distinction is the basis for dividing marketing research into problem identification research and problem-solving research. 216 Chapter Six Marketing Environment Problem Identification Survey Helps identify problems that may not be obvious on the surface but that exist or may appear in the future, such as company image, market characteristics, sales analysis, short-term forecasts, long-term forecasts, and business trend research. Such research can provide information about the marketing environment and help diagnose problems. For example, the results of problem-solving research are used to make decisions to solve specific marketing problems. On the other hand, the Stanford Institute conducted an annual consumer survey, which is used to divide people into homogeneous groups for segmentation purposes. Standardization service is research conducted for different client companies, but in a standard way. For instance, processes for measuring advertising effectiveness have been standardized so results can be compared between studies and evaluation criteria can be established. Starch Reader Survey is the most widely used service for evaluating print advertising; another well-known service is Gallup and Robinson Journal Impact Research. These services are also sold together as cited by Ohmer, 1991: pp. 3-28.  Custom Services Provides a variety of custom market research services to meet specific customer needs. Each market research project is treated uniquely.  Limited-service providers focus on one or more stages of market research projects. The services provided by such providers are divided into on-site services, data entry and coding, data analytics, analytics services, and branded products. The field service collects data through the Internet, traditional mail, personal or telephone interviews, and companies that specialize in interviews are called field service organizations. These organizations can range from small proprietary organizations operating locally to large multinational organizations with dedicated online interview facilities. Some organizations have extensive interview facilities across the country to interview shoppers at shopping malls.  Data entry and coding services include editing completed questionnaires, formulating coding schemes, and transcribing data to floppy disks or tapes for computer input.  Analytical services include the design and pre-testing of questionnaires, determining the best method for collecting data, designing sampling plans, and other aspects of research design. Some complex market research projects require knowledge of complex procedures, including specialized experimental design and analysis techniques, such as conjoint analysis and multidimensional scaling. This experience can be obtained from companies and consultants that specialize in analytical services.  Data analysis services are provided by companies (also known as token companies) that specialize in computer analysis of quantitative data (such as data obtained in large-scale surveys). Initially, most data analytics companies only provided lists (frequency counts) and cross tabulations 217 Chapter Six  Marketing Environment (Describing the frequency counts of two or more variables at the same time). With the popularization of software, many companies now have the ability to analyze their own data, but data analysis companies are still needed. Brand marketing research products and services are data collection and analysis programs developed specifically to solve specific types of marketing research problems. These programs are patented, have brand names, and are sold like any other branded product. Types of market research There are many forms of market research techniques, including:  Customer Feedback and Tracking is continuous or Periodic market research to monitor brand performance using indicators such as brand awareness, brand preference, and product usage (Dotson & Hyatt, 2000)  Advertising research: used to predict the effectiveness of any media copy test or tracking advertising, measured by the ability of the advertisement to attract attention (measured by tracking attention), convey information and build image brand. And encourage consumers to buy products or services. (Dotson & Hyatt, 2000)  Brand awareness research: the extent to which consumers remember or recognize the brand or product name.  Brand Association Research: What is the connection between consumers and brands?  Research on Brand Attributes: What are the key characteristics that describe brand promise?  Customer Perception: How do consumers think about product names in brand testing?  Buyer’s decision-making process: Determine people's motivation to buy and the decision-making process they use; in the past ten years, neuromarketing has emerged from the convergence of neuroscience and marketing, and its purpose is to understand the consumer's decisionmaking process.  Eye tracking business research-check advertisements, packaging layouts, websites, etc. Analyze the visual behavior of consumers.  Consumer acceptance: Proof of concept to test the acceptance of the concept by target consumers.  Cool Hunt (also known as trend detection) to observe and predict changes in new or existing cultural trends in the fields of fashion, music, film, television, youth culture and lifestyle  Proof of testing: By analyzing the audience’s attention level, brand connection, motivation, entertainment and communication, as well as decomposing the attention flow and emotional flow of the advertisement, predict its market performance before the advertisement is broadcast. (Dotson & Hyatt, 2000) 218 Chapter Six               Marketing Environment Customer satisfaction research: Quantitative or qualitative research can understand customer satisfaction with transactions. Demand estimation: Determine the approximate level of demand for the product. Distribution channel audit: assess the attitudes of distributors and retailers towards products, brands or companies Internet strategic intelligence: search for customer opinions on the Internet: chat, forums, web pages, and blogs hence people can freely express their opinions Product experience and become a powerful opinion leader. Marketing Analysis and Efficiency - Create models and measure results to determine the effectiveness of individual marketing campaigns. Mystery Consumer or Mystery Purchases: An employee or representative of a market research firm communicates anonymously with a vendor and indicates that they are purchasing a product. The buyer then records the entire experience. This method is generally used for quality control or competitor product research. Positioning research: How does the target market see the brand in relation to the competition? What does the brand represent? Price elasticity test: determines the customer’s sensitivity to price changes. Sales Forecast: Determine the expected level of sales based on the level of demand regarding other factors, such as advertising expenses, promotions, etc. Segmentation Investigation: Determine the demographic, psychological, cultural, and behavioral characteristics of potential buyers. Online group: A group of people who agree to respond to online market research. Store audit: Measure the sales of products or product lines in a sample of statistically selected stores to determine market share or determine whether retail stores provide adequate services. Trial marketing-a small-scale product launch used to determine the likely acceptance of the product when it is introduced into a larger market. Viral Marketing Research: Refers to marketing research that aims to estimate the probability that a specific communication will be transmitted through a personal social network. The Estimated Value of Social Media Potential (SMP) is combined with the Estimated Value of Sales Effectiveness to estimate the Return on Investment (ROI) for a specific message and media mix. All of these forms of market research can be classified as problem identification research or problem-solving research. There are two main sources of data: primary and secondary. Elementary or Primary research starts from scratch which is original collection to solve the problem at hand. 219 Chapter Six Marketing Environment The secondary study already exists because it has been collected for other purposes. It is executed on previously published data, usually by others. The cost of secondary research is much lower than that of primary research, but it is rarely presented in a way that fully meets the needs of researchers. There is a similar distinction between exploratory research and conclusive research. Exploratory investigation provides information and understanding of a problem or situation. You can only draw clear conclusions with extreme caution. The conclusive study concluded that the study results can be generalized to the entire population. Exploratory investigation consists of exploring a problem to gain a basic understanding of the solution in the preliminary stage of the investigation. It can be used as an input for a conclusive investigation. Exploratory research information is collected through focus group interviews, access to literature or books, and discussions with experts. This is unstructured and is qualitative in nature. If the secondary data source cannot achieve the purpose, a suitable sample can be collected on a small scale. A conclusive study was conducted to draw some conclusions on the subject. It is essentially a structured and quantitative investigation, the result of which is the entry of the Management Information System (MIS). Exploratory research is also used to simplify conclusive or descriptive research results if these results are too difficult for marketing managers to interpret. Market research methods In methodology, market research uses the following types of research designs: Based on questions  Qualitative market research is generally used for exploratory purposes where a small number of respondents cannot be generalized to the entire population without calculations hence statistical importance and trust is not calculated for examples focus groups, in-depth interviews, and screening techniques.  Quantitative market research commonly used to draw conclusions, using random sampling techniques to test specific hypotheses in order to infer a population from a sample, involving a large number of respondents, such as surveys and questionnaires. Techniques include selection modeling, maximum difference preference scaling, and analysis of covariance. Based on observations  Ethnographic research: qualitative in nature, researchers observe social phenomena in the natural environment; Observations can be crosssectional (one observation) or longitudinal (observation takes place over various periods of time), examples including analysis of product use and traces of computer cookies. See also observational techniques and ethnography. 220 Chapter Six Marketing Environment  Quantitative experimental techniques. Researchers create a quasiartificial environment to try to control false factors and then manipulate at least one variable-examples include buying laboratories and testing markets. Researchers often use more than one research design. They may start with a second survey to obtain background information, and then conduct a focus group (qualitative research design) to explore the problem. Finally, they can conduct comprehensive surveys (quantitative research design) at the national level in order to design specific recommendations for clients. Market Segmentation This segmentation entails of taking the whole diverse market for a product and dividing it into a number of sub-markets or segments, each of which tends to be homogeneous in all important aspects. The Purpose of Market Segmentation Market segmentation has two main purposes, including:  Better allocation of the company's limited resources.  To better satisfy the most diverse tastes of contemporary consumers. The company only has a certain amount of resources. Therefore, you must make decisions (and understand the associated costs) when serving specific consumer groups. Additionally, with the diversification of modern consumer tastes, the company began to see the benefits of serving multiple new markets. Overview of the segmentation process The segmentation can be defined according to the abbreviation STP, which stands for segmentation, Target, and Position. Segmentation Segmentation involves the initial division of consumers into groups of people with similar tastes. Four commonly used criteria are employed for segmentation, including:  Geography (country, region, city, town, etc.)  Psychology (for example, personality traits or personality traits that affect consumer behavior).  Demographics (for example, age, gender, socioeconomic class, education, etc.)  Behavior (for example, brand loyalty, usage rate, etc.) Target Once a market segment is determined, the company must determine which target is favorable for their service (Drummond, Ensor & Ashford, 2008: pp.41,177,185). The acronym DAMP (which stands for Distinguishable, Accessible, Measurable, and Profitable) is used as a measure of the viability of the target market. DAMP will be explained in more detail below: 221 Chapter Six     Marketing Environment It is possible to Distinguish how a segment is distinguished from other segments. Access on how to access market segments through marketing communications produced by the company. Measurable: can the segment be measured and its size determined?  Profitable - can an adequate return on investment be achieved from a segment’s servicing? The subsequent step in the targeting procedure is the level of differentiation involved in a segment serving. Three modes of differentiation subsist, which are usually practical by firms. These are:  Undifferentiated: Where a company produces similar product for all of a market segment.  Differentiated: In which a business entity produced slight modifications of a product within a segment.  Niche: Is when an organization forges a product to please a specialized target market. Position Positioning concerns how to position a product in the minds of consumers where a firm often performs this by producing a perceptual map, which denotes products produced in its industry depending on how consumers view their price and quality. From a product’s placing on the map, a business entity would mold its marketing communications to match with the product’s perception among consumers. Marketing Communications Marketing communications is described by measures a firm applies to communicate with end-users, consumers and external parties. Marketing communications contains four distinct subsets, which are: (Drummond, Ensor & Ashford, 2008) Personal Sales Verbal presentation given by a wholesaler who approaches individuals or a group of possible customers:      Live, interactive relationship Personal interest Attention and response Interesting presentation Clear and thorough 222 Chapter Six Marketing Environment Sales Promotion Short-term incentives to persuade the buying of products: (Drummond, Ensor & Ashford, 2008: p.285)  Instant appeal  Anxiety to sell  An instance is coupons or a sale. People are given an incentive to purchase, but this does not build customer loyalty or promote future repeat buys. A main drawback of sales promotion is that it is simply copied by competition. It cannot be used as a reliable source of differentiation. Public Relations Public Relations (PR) is the use of media apparatus by a firm in order to encourage goodwill from an organization to a target market segment, or other consumers of a firm’s good or service. PR emerges from the fact that a firm cannot seek to provoke or arouse its market base, due to incurring a narrowed demand for its good or service. Business entities undertake PR in order to guarantee consumers, and to prevent negative perceptions towards it. PR can cover:  Interviewing  Presentations or Speeches  Business literature, such as financial statements, brochures, etc. Publicity entails getting space in media, without paying directly for such coverage. As an instance, an association may perhaps have the launch of a new product covered by a newspaper or TV news segment. This profit the firm in question since it is making consumers attentive about its product, without automatically paying a newspaper or television station to cover the event. Advertising Advertising happens when a business entity directly pays a media channel to broadcast its product. Common instances of this include TV and radio adverts, billboards, branding, sponsorship, etc. Marketing communications “Mix” Marketing communications is a sub-mix within the advertising feature of the marketing mix, as the correct nature of how to use marketing communications depends on the environment of the product in question. Consequently, a given product would oblige a unique communications mix, in order to express successful information to consumers. Some products may need a stronger focus on personal sales, while others may require more emphasis on advertising. Marketing Planning The area of marketing planning entails forging a plan for a business marketing activity. A marketing plan can as well be appropriate to a specific product, as well as to an organization’s general marketing strategy. (Drummond, Ensor & Ashford, 2008: p.241-252). Normally speaking, an organization’s marketing 223 Chapter Six Marketing Environment planning procedure is resulting from its general business strategy. Therefore, when top management is devising the business strategic direction or mission, the proposed marketing activities are integrated into this plan. Marketing Planning Process Surrounded by the general strategic marketing plan, the phases of the procedure are listed below:  Mission Statement  Corporate Objectives  Marketing Audit  The SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis.  Assumptions emerging from the Audit and SWOT analysis.  Marketing objectives resulting from the assumptions.  An assessment of the anticipated results of the objectives  Detection of alternative plans/mixes.  The budgeting for the marketing plan  A 1st year implementation program.  The levels of marketing objectives within a business entity As affirmed before, the senior management of a company would devise a broad business strategy. On the other hand, this broad business strategy would be interpreted and applied in several settings throughout the firm. Corporate Marketing Corporate marketing objectives are normally broad-based in nature, and relate to the common vision of the company in the short, medium or long-term (Drummond, Ensor & Ashford, 2008: p.127). Strategic Business Unit (SBU) SBU in this instance, means strategic business unit. An SBU is a contributory within a company, which participates within a given market or industry. The SBU would integrate the corporate strategy, and adjust it to its own particular industry. For example, an SBU may contribute in the sports goods industry. Hence it would determine how to accomplish additional sales of sports goods, in order to satisfy the general business strategy. (Drummond, Ensor & Ashford, 2008: p.245) Functional Stage The functional stage relates to divisions within the SBUs, such as finance, marketing, HR, production, etc. The SBU strategy could put into practice and decide how to accomplish the SBU’s own objectives in its market and this is the functional stage. To employ the instance of the sports goods industry again, the marketing division would draw up marketing plans, strategies and communications to assist the SBU attain its marketing goals. 224 Chapter Six Marketing Environment Product Life Cycle A new product advances through a series of stages from introduction to growth, maturity, plus decline. This evolution is identified as the product life cycle and is connected with alteration in the marketing condition, as a result impacting the marketing strategy plus the marketing mix. Product revenue and profits can be plotted as a function of the life-cycle phases as exposed in the following graph: Figure 9: Product Life Cycle Introduction Stage In the Introduction stage, the company seeks to create product alertness and increase a market for the product. The impact on the marketing mix is as below:  Product branding and quality level is recognized and intellectual property safety such as patents plus trademarks are achieved.  Pricing may be low penetration pricing to create market share quickly, or high skim pricing to improve development costs.  Place/Distribution is selective in anticipation of consumer’s acceptance of the product.  Promotion is intended at innovators in addition to early adopters. Marketing communications seeks to create product awareness and to edify potential consumers about the product. Growth Stage In this growth stage, the company seeks to create brand favor and increase market share.  Product quality is contained and extra features and support services may be additional. 225 Chapter Six    Customer Focus Pricing is contained as the company enjoys growing demand with small competition. Distribution ways are added as demand raises and customers accept the product. Promotion is intended at a wider audience. Maturity stage At maturity, strong sales growth weakens. There may be competition between similar products. The main goal right now is to defend market share and maximize profits.  Product features can be enhanced to distinguish products from competing products.  Pricing tends to be lower because of the new competition.  Distribution becomes more intensive, and incentives can be provided to encourage preference for competing products.  Promotions emphasize product differentiation. Decline stage As sales decline, the company has several options:  Maintain the product, possibly by adding new features and finding new uses to rejuvenate it.  Harvest products, reduce costs, and continue to provide them to loyal market segments.  Discontinuities of the product, liquidate the remaining inventory, or sell it to another company that is willing to continue producing the product. The marketing mix decision in the recession phase will depend on the chosen strategy. For example, if the product is rejuvenating, the product may change, and if it is harvesting or liquidating, the product may remain the same. If the product is harvested, the price can remain the same, if it is liquidated, the price can be significantly reduced. Customer Focus Today, many companies are customer-centric (or market-oriented). This means that the company focuses its activities and products on the needs of consumers. Generally speaking, there are three ways to do this: customeroriented methods, awareness of market changes, and product innovation methods (Dev & Schultz, 2005). In the consumer-driven method, consumer desires are the drivers of all strategic marketing decisions. There is no strategy which is pursued until it passes the trial of consumer research. All aspects of a market offering, comprises the environment of the product itself, is driven by the desires of possible consumers. The initial point is always the consumer. The rationale for this method is that there is no point spending R&D resources innovating products that people will not purchase. History attests that numerous products that were business failures despite of being technological breakthroughs. 226 Chapter Six Customer Focus A formal method to this customer-focused marketing is identified as SIVA (Solution, Information, Value, and Access). This system is essentially the four Ps renamed to give a customer focus. SIVA Model The SIVA Model gives a demand or customer centric version option to the wellknown 4Ps supply side model (product, price, place, promotion) of marketing management (Dev & Schultz, 2005) Figure 10: Siva Model Product Focus In a product innovation process, the business pursues product innovation, and then tries to expand a market for the product. Product innovation steers the procedure and marketing research is carried out mostly to ensure that beneficial market segment(s) subsist for the innovation. The basis is that consumers may not know what choices will be offered to them in the future so we should not imagine them to tell us what they will purchase in the future. Nevertheless, marketers can insistently over-pursue product improvement and try to overcapitalize on a niche. When pursuing a product innovation method, marketers must make sure that they have a different and multi-tiered method to product innovation. It is claimed that if scholars depended on marketing research, they would have produced more products. A lot of firms, like research and development focused companies, productively focus on product improvement. A lot of purists doubt whether this is actually a type of marketing orientation at all, because of the ex-post position of customer research hence a number of them even query whether it is marketing.  An up-and-coming discipline of study and practice focus on internal marketing, or how workers are skilled and managed to convey the brand in a method that absolutely impacts the attainment and retention of customers which is employer branding.  Diffusion of innovations research explores how and why people accept new products, services and thoughts.  A comparatively new type of marketing applies the Internet and is called Internet marketing or affiliate marketing, desktop advertising, online marketing or e-marketing. It tries to put right the segmentation strategy employed in traditional marketing. It targets its audience more accurately, and is at times called one-to-one or personalized marketing. 227 Chapter Six     Advertising With customers eroding awareness duration and willingness to provide time to advertising messages, marketers are rotating to types of permission marketing such as custom media, branded content and reality marketing. The application of herd or guide behavior in marketing. The Economists convened a conference in Rome on the subject matter of the reproduction of adaptive human behavior. It shared mechanisms to enlarge desire for buying and get people to purchase more by playing on the herd instinct. The fundamental thought is that people will purchase more of products that are seen to be well-liked, and numerous feedback mechanisms to get product reputation information to customers are mentioned, consisting of smart-cart technology and the application of Radio Frequency Identification Tag technology. A swarm-moves model was introduced by a Florida Institute of Technology researcher, which is alluring to supermarkets because it can boost sales without the need to offer people discounts. Marketing is further applied to encourage business products and is a great method to support the business. Advertising This is an audio or visual type of marketing message that applies an overtly sponsored, nonperson message to encourage or sell a service, product or idea. Funders of advertising are frequently businesses who wish to encourage their services or products. Advertising is distinguished from public relations in that an advocate typically pays for them and has control over the communication which is distinguished from personal selling in that the message is nonperson, i.e., not guided to a particular individual. Advertising is communicated through a variety of mass media, comprising old media like Television, Radio, newspapers, magazines, direct mail or outdoor advertising; or new media like search results, websites, blogs or text messages. The real presentation of the communication in a medium is referred to as an advertisement. Profit-making adverts frequently seek to create amplified consumption of their products or services through branding, which acquaintances a product name or image with particular qualities in the minds of consumers. Alternatively, adverts that aim to attain an instant sale are known as direct response advertising. Non-profit-making advertisers who squander money to advertise items other than a customer product or service comprise interest groups, religious organizations, political parties, and governmental agencies. Nonprofit organizations may employ free modes of influence, like a public service announcement. Advertising could as well be used to assure workers or shareholders that a business is viable or successful. 228 Chapter Six Advertising History of Advertising The Egyptians used papyrus to create sales communication and wall posters. Political campaign and profitable messages displays have been set up in the ruins of Pompeii and ancient Arabia. Lost and found advertising on papyrus was frequent in ancient Greece and Rome. Rock or wall work of art for profitable advertising is another demonstration of an ancient advertising type, which is of recent in several parts of Africa, South America, and Asia. The application of wall painting that can be traced back to Indian rock art paintings that dates back to 4000 BC. In prehistoric China, the most primitive advertising known was oral, as recorded in the tradition of poems between 11 th -7th centuries BC of bamboo flutes played to vend candy. Advertisement frequently takes in the type of calligraphic signboards and inked papers. The copper printing platter dated back to the Song empire used to design posters in the shape of a square piece of paper using a rabbit sign with “Jinan Liu’s Fine Needle Shop” and “We purchase high-quality steel rods and make fine-quality needles, to be ready for use at home in no time” written above and below is considered the world’s earliest recognized printed advertising medium. As the towns and cities of the Middle Ages began to develop in Europe, and the overall populace was incapable to read, instead of signs that read miller, cobbler, tailor, or blacksmith, images connected with their businesses would be used such as a boot, suit, hat, clock, diamond, horse shoe, candle or even a bag of flour. Vegetables and fruits were sold in the city square from the backs of wagons and carts and their proprietors used street callers or town criers to publicize their location for the convenience of the consumers. The earliest collection of such advertisements was gathered in “Les Crieries de Paris”, a 13th century poem by Guillaume de la Villeneuve. In the eighteenth-century advertisements began to come into view in weekly newspapers in England. These first print advertisements were applied mostly to encourage books and newspapers, which became progressively more inexpensive with advances in the printing press; and medicines, which were ever more sought after as the disease ravaged Europe. Though, fake advertising and so-called “quack” advertisements became a difficulty, which ushered in the guideline of advertising substance. Classification of Advertising Advertising can be categorized in several ways, consisting of style, medium, geographic scope, target audience, or purpose. For instance, in print advertising, categorization by style can contain display advertising or adverts with design elements sold by size versus classified advertising or adverts without design elements sold by the word or line. Advertising can be international, national, or local. An advert campaign might be aimed towards customers or to businesses. The reason of an advert could be to raise 229 Chapter Six Advertising awareness (brand advertising), or to bring out an instant sale or direct response advertising. Traditional Media Virtually any medium can be applied for advertising. Profitable advertising media can comprise billboards, wall paintings, printed flyers and rack cards, street furniture components, radio, web banners, cinema and television adverts, mobile telephone screens, shopping carts, web popups, bus stop benches, skywriting, human billboards and forehead advertising, newspapers, magazines, sides of buses, town criers, banners attached to or sides of airplanes (logojets), in-flight advertisements on seatback tray tables or overhead storage bins, taxicab doors, roof mounts and passenger screens, subway platforms and trains, musical stage shows, doors of bathroom stalls, elastic bands on disposable diapers, stickers on apples in supermarkets, the opening section of streaming video and audio, shopping cart handles (grabertising), supermarket receipts, posters, and the backs of event tickets. Any place an ‘identified’ funder pays to convey their communication through a medium is advertising. Television Television advertisement is the coverage of television programming produced and paid for by a business entity which sends a message at promoting and aiming to market, a product or service. Radio Radio advertisements are transmitted as radio waves to the air from a transmitter source to an antenna and hence to a receiving gadget. Airtime is bought from a radio station in exchange for being aired live. Whereas radio has the inadequacy of being limited to sound, proponents of radio advertising frequently refer to this as an advantage. Radio is an increasing medium that can be found on air, and also online. Online Online advertising is a type of promotion that applies the World Wide Web and Internet for the articulated reason of delivering marketing communication to attract consumers. Online adverts are offered by an ad server. Domain Names Domain name advertising is commonly done in the course of pay per click web search engines; though, advertisers regularly rent space directly on domain names that generally illustrate their products. When an Internet consumer visits a website by typing a domain name straight into their web browser, this is identified as ‘direct navigation’, or ‘type in’ web traffic. Occasionally they will similarly do the same with ‘.org’ or a country-code Top Level Domain (TLD such as ‘.co.uk’ for the United Kingdom or ‘.ca’ for Canada). When Internet consumer type in a general keyword and add .com or an added top-level domain (TLD) ending, it produces a targeted sales lead. Product Placements Covert advertising is when a product or brand is rooted in entertainment and media. For instance, in a movie, the Main Actor can use an item to advertise a 230 Chapter Six Advertising brand, as in the film Minority Report, where Tom Cruise’s character John Anderton owns a phone with the Nokia symbol evidently written in the top corner, or his watch imprinted with the Bulgari logo. Print The Print advertising defines advertising in a printed means such as a magazine, trade journal or newspaper. This comprises the whole thing from medium with a very wide circulation base, such as a main magazine or national newspaper, to more narrowly targeted media such as trade journals and local newspapers on extremely specific topics. Outdoor Billboards are huge structures situated in open places which exhibit advertisements to passing motorists and pedestrians. Most frequently, they are situated on main roads with a big amount of passing motor and pedestrian traffic; though, they can be placed in any locality with bulky amounts of audience, such as in shopping malls or office buildings, on mass transit vehicles and in stations, and in stadiums. Point-of-sale In-store advertising refers to any advertisement positioned in a retail stockpile which comprises putting a product in an observable location in a store, like at eye level, ends of aisles and near checkout counters a.k.a. POP - Point of Purchase display, advertisements in such locations as shopping carts and instore video displays, and eye-catching displays promoting a specific product. Novelties Advertising in print on little tangible items like T-shirts, coffee mugs, bags, pens, and so on is referred to as novelty advertising. Some printers concentrate in printing novelty items, which can then be disseminated openly by the advertiser, or items may be circulated as part of a cross-promotion, such as adverts on fast food containers. Celebrity branding This type of advertising concentrates upon using celebrity influence, fame, money, popularity to gain acknowledgment for their products and encourage specific stores or products. Advertisers time and again advertise their products, for instance, when celebrities share their preferred products or wear clothes by specific brands or designers. The celebrities are normally concerned with advertising campaigns like television or print adverts to promote specific or general products. The use of celebrities to promote a brand can have its downsides, though; one error by a celebrity can be harmful to the public relations of a brand. Aerial Using balloons, aircraft, or airships to create or exhibit advertising media. Skywriting is a notable example of aerial advertising. Rise in new media With the Internet came a lot of new advertising opportunities like Facebook, Intagram, WhatsApp, Flash, Popup, banner, Popunder, advergaming, and 231 Chapter Six Advertising email advertisements all of which are frequently unwanted or spam in the case of email are now common place. Niche marketing A new important tendency concerning future of advertising is the rising significance of the niche market using niche or targeted advertisements. In addition, brought about by the Internet and the theory of the long tail, advertisers will have an escalating capability to get in touch with specific audiences. Crowd sourcing The notion of crowd sourcing has specified way to the trend of user-generated advertisements. User-generated adverts are formed by people, as opposed to an advertising agency or the company themselves; regularly resulting from brand funded advertising competitions. Global advertising Advertising has evolved through five major phases of development: domestic, export, international, multi-national, and global. For global advertisers, there are four (4), potentially competing business objectives that must be unbiased when developing universal advertising: creating a brand while communicating with one voice, maximizing local effectiveness of adverts, developing economies of scale in the creative process, and escalating the company’s speed of implementation. Born from the evolutionary phases of global marketing are the three primary and fundamentally different approaches to the development of global advertising executions: producing local executions, exporting executions, and importing ideas that travel. Purposes Advertising is at the forefront of delivering the appropriate message to consumers and potential clientele. The rationale of advertising is to induce consumers that a company’s products or services are the best, improve the reflection of the company, point out and build a need for products or services, reveal new uses for recognized products, publicize new products and programs, emphasize the salespeople’s individual communication, draw consumers to the business, and to grasp existing customers. Sales promotions and brand loyalty Sales promotions are an extra method to advertise. Sales promotions are twofold purposed because they are used to collect information about what kind of clientele one draws in and where they are, and to jump initiate sales. Sales promotions comprise things like sweepstakes, contests and games, product giveaways, loyalty programs, samples coupons, and discounts. The eventual goal of sales promotions is to arouse possible customers to action. One method to create brand loyalty is to remunerate consumers for utilizing time interacting with the brand. This technique may come in numerous forms like rewards programs, rewards card, and samplings. 232 Chapter Six Brand Awareness Gender Effects in the Processing of Advertising According to 1977 research by David Statt, females process information lengthily, while males process information through heuristic devices like methods, procedures or strategies for solving problems, which could have a consequence on how they understand advertising. According to this research, men have a preference to have existing and evident cues to understand the message, while females connect in more associative, imaginative, imagerylaced understanding. Later study by a Danish team establishes that advertising attempts to influence men to improve their manifestation or performance, while its method to women aims at conversion toward an unfeasible ideal of female presentation. In (Ullah & Khan, 2014) article, ‘The Objectification of Women in Advertising’ he identified the unconstructive impact that these women in advertisements, who are too perfect to be real, have on women in real life which gives men and young men a slanted and unrealistic expectation of women. Brand Awareness Brand Awareness Refers to the degree to which customers can remember or recognize a brand. Brand awareness is a key consideration in consumer behavior, advertising management, brand management and strategy formulation. The consumer’s ability to recognize or remember the brand is critical to making purchasing decisions. Unless the consumer first knows the product category and the brand in that category, the purchase cannot continue. Awareness does not necessarily mean that consumers should be able to remember a particular brand name, but they should be able to remember enough distinctive features to continue buying. For example, if a consumer asks a friend to buy him/her a “blue pack” gum, then a friend should know which gum to buy, even if both friends do not remember the exact brand name. Different types of brand awareness have been identified namely; brand recall and brand awareness. Leading researchers believe that these different types of consciousness operate in fundamentally different ways, which has important implications for the purchasing decision process and marketing communications. Brand awareness is closely related to concepts such as sets of triggers and sets of considerations that describe specific aspects of consumer purchasing decisions. It is believed that consumers will consider three to seven brands in a wide range of product categories. Consumers usually buy one of the top three brands in their consideration. Brand awareness is a key indicator of brand performance in the competitive market. In view of the importance of brand awareness in consumer purchasing decisions, marketers have developed a series of indicators to measure brand awareness and other brand health indicators. These indicators are collectively referred to as the Awareness, Attitude, and Use (AAU) indicators. 233 Chapter Six Brand Awareness To ensure the success of a product or brand in the market, the level of knowledge must be managed throughout the product life cycle from product release to market collapse. A lot of marketers regularly monitor brand awareness levels, and if they fall below a predetermined threshold, advertising efforts have increased and awareness is expected to return to the preferred level. Types of brand awareness Marketers generally recognize two different types of brand awareness: brand recognition (also known as secondary brand recall) and brand recall (also known as standalone recall or occasional spontaneous recall) hence these types of awareness operate in completely different ways and have important implications for marketing and advertising strategies. Brand Recall Brand recall is recognized as an artless or unassisted recall and refers to the ability of customers to correctly infer the brand name from memory when stimulated by the product category. Brand recall indicates that the link between grouping and brand is relatively strong, while brand awareness indicates a weak link. Brand Recognition Brand Recognition, also known as auxiliary recall, refers to the ability of consumers to correctly distinguish between brands when they come into contact with them. This does not necessarily require consumers to identify the brand. Rather, this means that consumers can recognize the brand at the point of sale or after seeing its visual packaging. Unlike brand recall, few consumers can spontaneously recall the brand name in a given category. When prompted to enter the brand name, more consumers can usually recognize it. Top-of-Mind Awareness Consumers usually buy one of the top three brands they consider focusing on. This is called higher level consciousness. Therefore, one of the goals of most marketing communications is to increase the likelihood that consumers will include the brand in their consideration. Top-of-mind awareness is the first brand that comes to mind when a purchaser is asked a spontaneous question about a certain category. Top-of-mind awareness is more important when talking about top-of-mind awareness among larger groups of consumers than among individual consumers - Often defined as a brand with a premium reputation is often considered a real purchase option, provided consumers have a good impression of the brand name. Top-of-mind insights are appropriate when consumers make speedy choices between competing brands in low-engagement categories or impulse purchases. 234 Chapter Six Brand Awareness Marketing implications of brand awareness Obviously, the brand awareness is intimately associated to the concepts of the Evoked Set (defined as the brand set that consumer can extract from memory when considering a purchase) and the Consideration Set (defined as “small set of brands which consumers pay close attention to when making a purchase decision”). One of the core functions of advertising is to create brand awareness and brand image to increase the likelihood of the brand being included in the predisposing factors. Consumers don’t just learn about products and brands through advertising. After searching for a certain category of information, consumers may notice more brands, which are collectively referred to as Awareness Set. Therefore, as consumers acquire new information about the brand or product, the Awareness set may change. A review of empirical research in this field shows that the set of considerations may be at least three times the set that was triggered. Knowledge alone is not enough to trigger a purchase, and consumers must also have a good impression of the brand before considering realistic purchase options. The process of transforming consumers from brand awareness and positive brand attitudes into actual sales is called ‘conversion’. Although advertising is an excellent tool for building brand awareness and attitude, it usually requires the support of other elements of the marketing plan to transform attitudes into actual sales. Other promotional actions, like telemarketing, are far advanced to advertising in generating sales. Therefore, as part of a comprehensive communication strategy, advertising messages may try to direct consumers to direct sales call centers. A lot of different methods can be employed to convert interest into sales, containing special offers, attractive trade terms, special promotional offers or guarantees. Percy and Rossiter (1992) believe that very few buyers use lists, which are of great significance to purchase decisions and advertising strategies. The way it works is in the purchase decision. For daily purchases, such as Fast-Moving Consumer Goods (FMCG), few shoppers carry shopping lists. For them, displaying the brand at the point of sale is like a visual reminder and triggers demand for the category. In this case, brand awareness is the main cognitive model. To shop without a brand, the first category of consumer experience then requires researching the memory of the brand in that category. Many services, such as cleaning, gardening, pizza delivery, fall into this category. In this case, the demand for the category proceeds is the awareness of the brand. This type of purchase is based on memory and consumers are more likely to choose one of the brands in memory. When brand memory is dominant, consumers don’t necessarily like the advertising, but they must like the brand. On the contrary, when the goal of communication is brand awareness, 235 Chapter Six Brand Awareness consumers should like advertising. The dissimilarity between brand recall and brand recognition has vital implications for advertising strategies. However, when the communication objective is based on brand recall, creative execution should promote the close connection between the category and the brand. Advertisers also use advertising words, mnemonics, and other devices to promote brand recall. The brand advantage appears during the brand restoration test, and most consumers can only name one brand from a certain category. Brand Advantage is defined as a person selecting only certain brands in relevant categories during the brand recovery process. While brand advantage can become an ideal goal, overall advantage can be a doubleedged sword. When a brand becomes so well known that the brand becomes synonymous with the category, the brand is called “universal or generic”. Brands that are well known to most individuals or families are also known as household names and can be an indicator of the success of the brand. Sometimes a brand is so successful that the brand becomes synonymous with the category. For example, the British often say “Hovering the house”, but in fact they mean “emptying up the house”. (Hoover is a brand name). When this happens, the brand is said to have “gone generic”. Examples of brand generics are; facial tissues, Cellotape, Nescafe, Aspirin and Panadol. When a brand becomes generic, it may present marketing challenges because when customers want a well-known brand at the retail point of sale, they may get a competitor’s brand. For example, if a person walks into a bar and needs “rum and cola”, the bartender might interpret it to mean a rum and cola-flavored beverage, paving the way for the outlet to provide a cheaper option mixer. In such a situation, Coca-Cola Ltd, who after investing in brand building for more than a century, is the eventual loser because it does not get the sale. Measuring Brand Awareness When various kinds of brand awareness can be acknowledged; there are various methods for measuring awareness. Normally, researchers use surveys, carried out on a sample of customers asking about their acquaintance of the focus brand or category. There two types of recall test used to measure brand awareness:  The Unaided recall tests: is when the respondent is offered with a product category and asked to suggest as numerous brands as possible. The unaided recall test consequently, provides the respondent with no clues. Unaided recall tests are employed to test for brand recall.  Aided recall test: is when the respondent is well conversant with a brand name and asked whether they have seen it or heard about it. The respondent in a few aided recall tests, might as well be asked to give details what they know about the brand e.g. to explain colour, package, logo or other distinctive features. Aided recall tests are employed to test for brand recognition.  Other brand-effects tests: In toting up, to recall tests, brand research often employs a series of tests, such as brand alliance tests, brand image, 236 Chapter Six  Brand Awareness brand dominance, brand attitude, brand salience, brand value, and other procedures of brand health. Even though these tests do not openly measure brand awareness, they offer overall measures of brand health and regularly are used in conjunction with brand recall tests. Gauge brand awareness for instance, scholars place products on a shelf in a supermarket, giving each brand equivalent shelf space. Consumers are shown photographs of the shelf exhibit and ask customers to name the brands noticed. The pace at which customers name a given brand is a sign of brand’s visual salience. This type of study can give important insights into the success of packaging design and brand logos. A number of profit-making research firms examine brand effects for key international brands and the top line survey results are broadly published in business press, trade press and online. It is important noting that these commercially compiled lists are not reputation contests, but use clearly expressed methodologies to compile lists based on customer responses composed in planned research. Though, these listings use a mixture of metrics, so the results are not honestly comparable and it cannot be assumed that they measure brand awareness. As with the understanding of all investigations, it is considerable for readers to acquaint themselves with the methodologies used in order to clarify what exactly is being measured and how the data was collected. Obviously, most marketers aim at building high levels of brand awareness within applicable market segments, giving rise to a continuing interest in developing the correct metrics to determine brand effects. Metrics used to gauge brand effects are jointly termed AAU metrics (Awareness, Attitudes and Usage). Brand Awareness and the Hierarchy of Effects Brand awareness is a typical feature of a group of models recognized as hierarchy of effects models. Hierarchical models are the linear sequential models built on an assumption that customers move through a sequence of cognitive and affective phases starting with brand awareness or category awareness and culminating in the purchase decision. In these models, advertising and marketing exchanges function as an external motivation and the purchase decision is a customer response. There are various hierarchical models that can be found in the literature including DAGMAR and AIDA. In a survey of more than 250 papers, Vakratsas and Ambler (1999) discovered small experiential support for any of the hierarchies of effects. Despite that, some authors have argued that hierarchical models continue to take over theory, mainly in the area of marketing communications and advertising. The hierarchy of effects in 1961 was discovered by Lavidge which is one of the original hierarchical models. It proposes that consumers develop through a 237 Chapter Six Brand Awareness series of 6 stages from brand awareness through to the buying of a product. (Lavidge, 1961) Stage 1: Awareness - The customer becomes aware of a category, product or brand (generally through advertising) ↓ Stage 2: Knowledge - The customer learns about the brand (e.g. sizes, colours, prices, availability etc) ↓ Stage 3: Liking - The customer develops a favourable or unfavourable character towards the brand ↓ Stage 4: Preference - The customer starts to rate one brand above other comparable brands ↓ Stage 5: Conviction - The customer demonstrates a wish to purchase (via inspection, sampling, trial) ↓ Stage 6: Purchase - The customer acquires the product Hierarchical models have been extensively adapted and several variations can be found, though, all follow the essential sequence which entails; C- Cognition, A- Affect, B- Behaviour, and for this reason, they are occasionally known as CA-B models. A number of more recent adaptations are intended to accommodate the customer’s digital media habits and opportunities for social influence. Selected alternative hierarchical models follow:  Basic AIDA model: Awareness→ Interest→ Desire→ Action  Modified AIDA model: Awareness→ Interest→ Conviction →Desire→ Action  AIDAS Model: Attention → Interest → Desire → Action → Satisfaction  AISDALSLove model: Awareness→ Interest→ Search →Desire→ Action → Like/dislike→ Share → Love/ Hate  Lavidge et al's Hierarchy of Effects: Awareness→ Knowledge→ Liking→ Preference→ Conviction→ Purchase  DAGMAR Model: Awareness → Comprehension → Attitude/ Conviction → Action  Rossiter & Percy’s communications effects: Category Need → Brand Awareness → Brand Preference → Purchase Intent→ Purchase Facilitation. (Percy, L. & J.R. Rossiter, 1980) The hierarchy of effects (awareness→ knowledge→ liking→ preference→ conviction→ purchase), they depend on several sources of information to cram about brands when consumers reallocate throughout. While key media advertising is helpful for creating awareness, its capacity to convey long or 238 Chapter Six Brand Awareness difficult messages are restricted. In order to obtain more thorough information about a brand, customers rely on dissimilar sources such as expert opinion, product reviews, word-of-mouth referrals and brand or corporate websites. As customers move nearer to the real purchase, they begin to depend on more individual sources of information like recommendations from friends and relatives or the counsel of sales representatives. The belief of an important blogger For instance, might be sufficient to shore up preference or conviction while a salesperson might be essential to close the real purchase. All hierarchical models suggest that brand awareness is a required prerequisite to brand attitude or brand liking, which serves to emphasize the significance of creating high levels of awareness as untimely as likely in a product or brand life-cycle. Hierarchical models give marketers and advertisers with essential insights about the nature of the target audience, the most favorable message and media strategy indicated at dissimilar junctures throughout a product’s life cycle. The key advertising for most recent products intention should be to form awareness with a wide cross-section of the possible market. The publicity effort should reallocate to motivating interest, desire or conviction when the mainly required levels of awareness have been achieved. The number of possible purchasers reduces as the product moves through the natural sales cycle in an effect likened to a focus. Later in the cycle, and as the number of predictions becomes lesser, the marketer can use more tightly targeted promotions like personal selling, direct mail and email directed at those individuals or sub-segments likely to display an authentic interest in the product or brand. Creating and Maintaining Brand Awareness Brand advertising can enhance the likelihood that a consumer will include a given brand in his or her consideration set. Brand-related advertising expenses have a positive effect on brand awareness levels. Virtually anything that exposes customers to a brand increases brand awareness. Repeated brand publicity in stores enhances customer’s ability to identify and recall the brand. Improved exposure to brand advertising can increase consumer awareness and facilitate consumer processing of the incorporated information, and by doing this it can intensify customers brand recall and attitude towards the brand. Brand marketers must believe how to manage awareness throughout a product’s entire life-cycle. To enlarge the probability of a product's recognition by the market, it is important to create high levels of brand awareness as early as matter-of-fact in a product or brand’s life-cycle. To attain top-of-mind awareness, marketers have by tradition, depended on thorough advertising campaigns, particularly at the time of a product launch. To be victorious, thorough campaign utilizes both broad reach or exposes more people to the message, and high frequency or expose people multiple times to the message. Advertising, particularly key media advertising, was seen as the 239 Chapter Six Brand Awareness most cost-efficient means of connecting large audiences with the comparatively high frequency required to create high awareness levels. On the other hand, exhaustive advertising campaigns can become very costly and can infrequently be continued for long periods. As new products go into the market growth phase, the number of competitors tends to enlarge with implications for market share. Marketers may require maintaining awareness at some determined level to make sure of steady sales and stable market share. Marketers usually depend on rigor and ready ‘rules-of-thumb’ to guess the amount of advertising expenses necessary to attain a given level of awareness. For example, it was frequently held that to amplify brand awareness by just 1%, it was essential to double the amount of funds spent on advertising. When a brand becomes recognized and achieves the preferred awareness levels as outlined in the marketing plan, the brand advertiser will move from an exhaustive advertising campaign to a reminder campaign. The purpose of a reminder campaign is just to keep target audiences aware of the brand’s subsistence and to establish new life into the brand offer. A reminder campaign usually maintains broad reach, but with condensed frequency and as a result is a less costly advertising alternative. Reminder advertising is employed by recognized brands, regularly when they are inflowing the maturity phase of the product lifecycle. In the decline phase, marketers frequently move to a caretaker or continuance program where advertising outflow is cut back. The increase of digital media and social networks is altering the way that customers search for product information. While advertising remains significant for creating awareness, a number of changes in the media setting and to customer media habits have abridged the dependence on main media advertising. As a replacement, marketers are seeking to put their brand communication across a much larger variety of platforms. An escalating amount of customer time and awareness is dedicated to digital communications devices - from computers and tablets to cellphones. It is now likely to engage with customers in a more cost-efficient way using platforms such as social media networks that grasp huge audiences. For instance, Facebook has become an exceedingly significant communications channel. In addition, social media channels permit for two-way, interactive connections that are not paralleled by long-established main media. Interactive communications give more opportunities for brands to attach with audience members and to move ahead of simple awareness, brand conviction, facilitating brand preference, and eventually brand loyalty. The increase of social media networks has enlarged the opportunities for opinion leaders to play a responsibility in brand awareness. In supposition, anyone can be an opinion leader e.g. journalists, celebrities, or public figures, but the increase of the digital setting has changed our perceptive of who is a potentially useful influencer. Certainly, the digital atmosphere has shaped more opportunities for bloggers to become significant influencers because they are seen as accessible, authentic and normally have loyal followings. Bloggers have 240 Chapter Six Multicultural Marketing become key influencers in essential customer goods and services comprising fashion, food and beverage, cooking, consumer electronics, restaurant dining and bars. For instance, current surveys have discovered that when it comes to product endorsements digital persuaders are more well-liked than celebrities. Multicultural Marketing Multicultural marketing also referred to as ethnic marketing or cross-cultural marketing is the practice of marketing to one or more audiences of a particular ethnicity normally an ethnicity outside of a country’s popular culture, which is at times called the “general market”. Usually, multicultural marketing takes benefit of the ethnic group’s dissimilar cultural referents such as traditions, celebrations, religion, language, and any other concepts to communicate to and convince that audience. Multicultural marketing acknowledges differences in motives, perception, and beliefs among customers with dissimilar cultural backgrounds, utilizes cultural norms of numerous cultures to exploit publicity of the businesses product or services by indicating interest and positive reception of different cultures (De-Mooij, 2015). For a multicultural marketing strategy to be successful, cultural differences must be understood, recognized, and respected. Businesses must communicate on different ‘wavelengths’ and adjust to different markets around the world (Wilkinson & Cheng, 1999). Global marketing usually works with nationwide level data (De-Mooij, 2015). Global marketer analyses countries with respect to education levels, GNI/capita, social media used, available mass media, retail infrastructure and product category data, all at the national level (De-Mooij, 2015). Application of cultural values at the same national level is helpful for understanding differences in customer product brand preferences, ownership, and motives. This can’t be recognized by dissimilarities in income or other demographic distinctiveness, but may be described by cultural uniqueness (Demangeot, Broderick & Craig, 2015). Cultural value data tends to be evaluated by means of either primary or secondary data. Primary data is obtained openly from evaluating values through surveys or experiments. Secondary data entails scores of scopes of national culture. For personal level studies data is gathered and analyzed at the personal level and tied to the personal level outcome. For evaluating culture at the national level, personal data are united by country and connected to the country-level outcome or pre-existing country-level measures. (Demangeot et al., 2015) Multicultural marketing applies unique marketing techniques to enter the ethnic market. Ethnic market refers to cultures other than the popular culture in business home vicinity. Multicultural marketing strategies engage recognizing a culture’s beliefs, traditions, norms, values, language, and religion plus 241 Chapter Six Multicultural Marketing application of those aspects to market to that culture’s requirements. (Rugimbana & Nwankwo, 2003). History of Multicultural Marketing Multiculturalism was regarded difficulty, and in Australia attempts were made to decrease cultural heterogeneity by restricting immigration to white Europeans (Wilkinson & Cheng, 1999). This suggestion was quickly deserted. Incorporated issues further adjusting to the traditions and customs of new nations, tensions between ethnic communities of historical origins (Wilkinson & Cheng, 1999). The focus of recent has changed to the benefits of multiculturalism, and how it can potentially improve domestic and global brand recognition (De Mooij, 2015). Political, Economic, and social suggestions of this cultural mix cannot be unobserved and has become broadly acknowledged, for instance the Australian broadcasting Commission in 1995 took an important step in ensuring that numerous cultures were taken into consideration and permitted for the best television programs to be sourced from around the globe to cater for the requirements of different cultural groups, airing programs from Asia and Europe, this openly manipulated its ratings and attained bigger audiences (Wilkinson & Cheng, 1999). A variety of products and services have been created or adapted for the multicultural local market. Multicultural Markets There are two types of wants in a multicultural domestic market that must be measured. Firstly, the desires of people with diverse cultural settings and secondly, the requirements resulting from these perceptions, values, and preferences of cultural groups in the role products and services play in their lives (Demangeot et al., 2015). Multicultural markets symbolize an essential focal lens for worldwide marketing and cross-cultural customer research, in view of their emergent economic significance of their theoretical disparity from other types of marketplaces. Alterations in technology, economic development infrastructure, and customer mobility have enlarged cultural interactions accordingly hence an increase in multicultural market demand. Marketing investigation conventionally was based on inert values; marketing is now seen as more dynamic (Demangeot et al., 2015). Multicultural marketing is becoming a focal spot of marketing studies (De-Mooij, 2015). Multicultural Marketing Strategy Marketing strategy is centered on an aim of rising sales and attaining a competitive advantage, marketing strategies can be short and long term (Kotler, Burton, Deans, Brown, & Armstrong, 2013). Multicultural marketing strategies center on adapting business value propositions to particular cultural groups to institute a multicultural target market (Demangeot et al., 2015). The marketing mix and the 4Ps (product, price, promotion and place (channels) play a crucial role in establishing a marketing strategy (Kotler et al., 2013). 242 Chapter Six Multicultural Marketing A marketing mix allows you to center on goals and establish channels to communicate with the target market of the product or service. For a multicultural strategy to be successful, numerous factors should be addressed as well as creating a brand message that appeals to people of numerous different cultures and ethnicity by means of the available promotion channels that are touch points for the target market (including television, social media, radio, and websites) (Burrell, 2015). The formation of a good quality multicultural marketing strategy is also significant to work with persons and agencies that appreciate the targeted customer’s lifestyles. Multicultural thinking must be integrated into core general brand strategy to value cultures and build mutual trust (Burrell, 2015). Customer purchases are prejudiced by social, cultural, personal and psychological influences (Kotler et al., 2013). These factors can’t be restricted but they can be accounted for while coming up with a marketing mix (Kotler et al., 2014). Culture is the foundation of a person’s needs and behaviour. Growing up in the social order, a child learns basic values, wants, perceptions, and behaviours from their family and various role models. Marketers make a decision to which degree they adapt their product and marketing programs to meet the distinctive cultures and requirements of customers in various markets. Advertising wants to be in the background of today’s social and cultural differences. Companies can become accustomed to the same promotion strategy to the domestic market or adapt for each local market. Communication recognition of the product entails modification of the message so that it fits with diverse cultural settings (Kotler et al., 2013). Product adaptation is altering the product to meet local desires, condition or needs or creating something innovative for the forging market is Product intervention (Kotler et al., 2013). Multicultural Advertising Reasons The expression “multicultural” is including several people who have diverse customs and beliefs and multicultural customer is any customer who has two or more cultural or ethnic settings or affiliation; actually, they display a background cultural identity that allows them to show different features of lifestyle, culture, etc. Consequently, marketers have to mark that they must expand their method to account for this dynamic and fluid identity (Perez & Frank, 2011). While general principles for a “good advert” are similar across groups, cross-cultural customers in fact require individual relevant to create adverts more attractive with them. Multicultural settings, in general make up of society are varied, influencing the call for a multi-cultural approach to marketing strategies (Rugimbana & Nwankwo, 2003). The saying “one size fits all” no longer applies and strategies must be recognized to productively communicate with all cultures through marketing techniques. ‘Culture’ has a huge pressure on marketing 243 Chapter Six Multicultural Marketing strategies as it affects communication channels, customer behaviour and advertising principles and norms. (De-mooij, 2014). De-mooij also acknowledges that customers are not the same internationally, and their notion patterns and purchasing decisions vary depending frequently on general wealth of the nation and other socio-economic factors, Multicultural marketing strategies adaptation as well allows businesses to achieve a unique competitive advantage. It has been confirmed that customers make purchasing decisions based on personal, social, cultural and physiological factors (Kotler, Burton, Deans, Brown, & Armstrong, 2013). Once these factors are acknowledged and the marketer knows what factors attract a multicultural customer to purchase, strategies can be executed to appeal to the market through their physiological needs. Multicultural Marketing Value There are 3 major values of Multicultural Marketing (Rayo & Artieda, 2011). Firstly is innovation: gratitude for this type of marketing, the marketer and the companies have to be always imaginative to find a new solution, create new products and marketing strategies. Then the second value of multicultural marketing is growth: this is the rising in sales and marketplace for the brand. Finally, collaboration can be measured as the third value of cross-cultural marketing, which can convey people jointly and promote the brand. Skills Required It is recommended that the following skills are necessary in the field of multicultural marketing.  To mark patterns that allows subcultures to be grouped jointly, so that a familiar marketing strategy may be comprehensive to several subcultures in a group (transcultural marketing).  To create a diverse marketing strategy for each subculture, if there is a drastically distinct cultural dimension that is significant to the specific culture (multicultural marketing).  To promote segment audiences in a subculture, if required, in terms of cultural identity, acculturation level or cultural affinity (tactical adaptation within a subculture).  To build up parameters of culturally acceptable marketing stimuli; and  To set up a procedure for measuring cultural effectiveness of the stimuli. Creating and Refreshing a Multicultural Marketing Strategy Creating a Multicultural Marketing Strategy Multicultural marketing concentrates on customizing messaging and marketing channels for each target group, as opposed to just translating a broad message into different languages, or including token illustration of diverse ethnic groups in metaphors (Stachura & Murphy, 2005). A triumphant multicultural marketing strategy should be: realistic, multifaceted, and implemented always over time. Additionally, there are four rules 244 Chapter Six Multicultural Marketing to make a cross-cultural marketing strategy: make your marketing bilingual – in global market in general and some big market in particular, most of the customers are speaking more than one language, make sure digital marketing strategy match values and behavior, employ amusement and music as marketing apparatus, and create cohesive content and programing (Wright, 2015). There are five orders for explanation of marketing plan: detail particular activities that are anticipated to be undertaken, recognize the target audience for each activity, specify how to gauge achievement, be elastic enough for permitting adjustments, and lastly, specify who is responsible for each activity (Klausner, 2013). There are numerous strides to develop a multicultural marketing strategy (Rayo & Artieda, 2011). The first phase is to recognize objectives and markets, and the target consumer and their uniqueness. Secondly, the strategy ought to identify potential customer touch points like language or tradition, comfort zone, culture, etc. The next step is to recognize the media that makes sense for the marketing goals. Fourthly, the marketer must estimate the method and learn from others’ faults. Finally, the strategy must attach to the culture by appreciating and respecting consumers culture and tradition, structure trust and relationship with them in suggestive ways, then making the brand multicultural welcoming. Multicultural Marketing Strategy Refreshment The most rising populace subdivision is multicultural audiences with growing cultural viewpoint that direct to the call for refreshing multicultural marketing approach from companies to target products and services on this new growing populace (Vachet, 2015). In 2013, Forbes presented five tips to refresh a crosscultural marketing approach namely: socialize and mobilize – as the multicultural audiences is most important in social media usage and mobile technology, the marketer as well ought to be socialized and mobilized; secondly, thinking multiculturally mean being multicultural is one of the leading mistakes, in fact, marketers do not have to be in a particular ethnicity to think as the above-mentioned community. The next incline is prioritizing the multicultural plan which means cross-cultural mind have to be integrated into the core strategy and the multicultural consumer should be the target in general brand strategy. Additionally, accepting all meanings of “multicultural” is measured as the fourth incline as marketers must contact all the potential consumers. 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Hillsdale, NJ: Erlbaum. 262 Index INDEX A G ABCD, 191, 264 Administration, vii, viii, x, xiv, 1, 2, 3, 4, 5, 6, 7, 9, 10, 11, 12, 13, 15, 34, 35, 36, 37, 39, 40, 41, 42, 46, 49, 50, 247, 248, 249, 250, 252, 253, 255, 257, 258, 260, 262, 264 Administrative theory, 7 Advertising, 115, 211, 213, 218, 223, 228, 229, 231, 232, 233, 239, 243, 255, 258, 261, 264 Governance, viii, 37, 38, 39, 264 H Human Resource Planning, 132, 264 L B Leadership, x, 28, 50, 51, 52, 55, 93, 97, 104, 106, 132, 247, 248, 255, 258, 260, 262 legal organization, xv British Rule, 264 Budgeting, vii, viii, 5, 9, 176, 177, 264 Buganda, vii, 41, 42, 43, 44, 258, 264 M C Management, vii, viii, x, xiv, xv, 1, 5, 10, 11, 15, 16, 17, 18, 20, 22, 23, 25, 26, 35, 37, 38, 39, 49, 51, 52, 58, 61, 67, 69, 79, 80, 89, 90, 101, 103, 108, 122, 125, 138, 140, 141, 146, 155, 157, 165, 166, 167, 168, 170, 185, 205, 207, 220, 247, 249, 250, 251, 252, 253, 254, 256, 257, 258, 259, 260, 261 Monitoring, viii, 12, 47, 48, 90, 104, 127, 154, 155, 156, 157, 158, 160, 161, 167, 168, 176, 249, 253, 257 Multicultural, 241, 242, 243, 244, 245, 250, 254, 259, 262 Conscious Capitalism, 93, 260 D Development, viii, ix, 7, 39, 49, 95, 101, 115, 124, 132, 133, 138, 142, 144, 146, 149, 159, 193, 208, 247, 248, 250, 252, 253, 254, 255, 257, 260 Diversification, 117, 118, 125, 209, 250, 253 E O Environmental, 79, 95, 126, 127, 249 Executive, viii, x, xiv, 1, 6, 10, 11, 20, 47, 58, 59, 60, 61, 62, 63, 79, 81, 82 organizations, x, xii, xiv, 2, 7, 8, 10, 13, 14, 21, 23, 26, 27, 32, 33, 36, 37, 39, 49, 50, 51, 55, 61, 63, 66, 67, 68, 69, 70, 71, 72, 73, 74, 77, 84, 89, 91, 97, 100, 106, 107, 109, 115, 120, 122, 123, 126, 131, 132, 133, 134, 135, 137, 138, 139, 140, 141, 142, 143,144, 145, 148, 153, 154, 155, 157, 162, 163, 164, 165, 166, 169, 172, 173, 174, 175, 179, 181, 184, 186, 187, 201, 203, 214, 216, 217, 228, 246, 254 Orientations, 193 F Financial Management Cycle, vii, 166, 170, 264 263 Index 132, 133, 210, 211, 224, 248, 251, 252, 253, 254, 257, 261 P Problem-Solving, 76 Public Administration, 1, 2, 3, 37, 252, 260 T Theory, 15, 16, 19, 21, 23, 24, 25, 26, 28, 29, 31, 32, 52, 98, 247, 248, 249, 250, 251, 252, 257, 258, 259, 260, 261 Traditional View, 6 R Recruitment, 11, 133, 137 Resources, viii, x, xiv, 11, 88, 98, 104, 154, 164, 174, 185, 247, 264 V S View, 5, 6 Strategic, vii, x, xiv, 79, 80, 81, 82, 83, 84, 86, 89, 90, 97, 98, 99, 103, 108, 109, 125, 128, 130, 131, 264