Graduate School of Business

MBA Program
Final Assessment
Cases and Assignments

Course Title: Contemporary Management

Lecturer: Dr. Hazem Rasheed

Answer the following questions:

Note: In your answer try to use examples wherever applicable.

1) Give an example of a company that followed a retrenchment

strategy after the Covid 19 crisis. Discuss the reasons of this
retrenchment and how was it conducted.
A- Definition

- A retrenchment strategy is followed when a company shrinks the business size by laying off a
number of employees and liquidating or selling one or more of the business unites or selling the
entire business to restore their high performance.An example of a company that followed a
retrenchment strategy after the Covid 19 crises is Trip advisor, which is an American online travel
company that operates a website and mobile app with user-generated content and a comparison
shopping website.
Reasons of the retrenchment:
Due to the severe beating that the travel sector experienced during of the lockdown restrictions
worldwide, Trip advisor reported a $73 million net loss the quarter that ended 2020 Dec. 31, and
a 65 percent drop in revenue compared to the prior-year period, and the share price dropped
from $110 to $29 in 2020 Feb. So it was essential that Trip advisor applies the retrenchment
strategy to stabilize their performance and to attempt to restore profitability after of COVID-19
pandemic circumstances. How the retrenchment was conducted: The initial phase of corona
virus response was cutting the discretionary spending. but as the pandemic worsened, this
measures were not enough to sustain the company. So they applied additional cost saving
measures, as follow:
1-Reducing staff by 900 employees who represents 25% of TripAdvisor’s global workforce,
including more than 600 employees in the U.S. and Canada whose roles are being eliminated.
2-Engaging 300 workers in a consultation processes to determine their future employment
status.
3-Salaried employees were asked to work four days a week and take a 20% pay cut in order to
save about 100 jobs.
4-Closing San Francisco and downtown Boston offices, allowing remaining employees to work
remotely or from the Needham, Massachusetts. office, respectively.
5-Reducing expenses by 32 percent from the previous year.
6-Closing open roles that aren’t deemed an immediate or essential need.
7-Kaufer, Trip advisor CEO forgo his salary from March 2020 to December 2020, which is close
to $2 million according to the company’s most recently available financial statements.

2) Discuss two examples of companies that apply each of the

following three global strategies:
● Globalization
● When an organization chooses a strategy of globalization, it means that its
product design and advertising strategies are standardized throughout the world.
● This approach is based on the assumption that a single global market exists for
many consumer and industrial products. The theory is that people everywhere
want to buy the same products and live the same way. People everywhere want
to drink Coca-Cola and eat McDonald’s hamburgers.
● A globalization strategy can help an organization reap efficiencies by standardizing
product design and manufacturing, using common suppliers, introducing products
around the world faster, coordinating prices, and eliminating overlapping
facilities.
● For example, Gillette Company has large production facilities that use common
suppliers and processes to manufacture products whose technical specifications
are standardized around the world.
● Globalization enables marketing departments alone to save millions of dollars.
One consumer products company reports that, for every country where the same
commercial runs, the company saves $1 million to $2 million in production costs
alone.
● More millions have been saved by standardizing the look and packaging of brands.
The Globalization and Ideology of Apple Inc.
Brief introduction to Apple In.
Apple Inc. is an American high-tech multinational corporation engaged in researching, designing
and producing electronic technology products (Wikipedia, 2013). In 2007, the company
changed the name from Apple Computer Inc to Apple Inc. headquartered in Cupertino,
California (Wikipedia, 2013). The company was established on April 1st, 1976 by Steven Paul
Jobs, Stephen Gary Wozniak and Ronald Gerald Wayne (Wikipedia, 2013). Apple Inc. is popular
for its unique innovation and mind-boggling development rate. The products include the
Mac line of computers, the Apple TV device, the iPhone smartphone, the iPod music player and
the iPad tablet computer (Wikipedia, 2013). In addition, Apple Inc. has developed over 850,000
kinds of unique App software (Apple Inc., 2013), two practical online shops (iTunes Music Store
and Apple App Store) and simple operating systems (OS X and iOS) for customers. In recent
years, Apple has been a hot topic of concentration for people all over the world. In this essay,
I’d like to explore why and how Apple has become a successful media institution through
analysis of the globalization and ideology of Apple. Furthermore, I will discuss the situation of
Apple in China.

The Globalization of Apple

Croteau, Hoynes and Milan (2011) say globalization “involves a number of ongoing interrelated
processes, including the internationalization of finance and trade (p. 326).” Due to the
development of globalization, Apple increased its profits. In America’s earlier years, the car was
a key to the U.S. economy. Today ,a new economy structure has emerged in part due to Stew
Jobs (former CEO of Apple) who helped lead the U.S. technology market to the top (The New
York Times, 2011). In the global market, Apple has succeeded exceptionally in terms of
advanced strategies, which utilize most frequently on foreign outsourcing, importing and
exporting (Lo, 2008).

As of July 2013, Apple has developed 417 retail stores in 13 countries and an online
store available in 38 countries with global sales of $16billion dollars in merchandise in 2011
(Wikipedia, 2013). As a multi-national corporation, Apple Inc has realized the significance of
globalization by spreading all over the world.

In the first two quarters of the 2013 fiscal year, revenue of Apple has grown
at14.73% to $98.115 billion dollars (Leitao, 2013). We can see by referring to
on the left graph that the percentage of recognized revenue contributed by each
of Apple’s six regional revenue segments in the first six months of the current fiscal
year are widespread (Leitao, 2013). Only 35% of Apple’s recognized revenue was
sourced in America. Except in retail stores, Apple’s revenue highly depended upon
performance in overseas markets.
 Moreover, Apple is good at seizing opportunities in the global market. For example,
Apple and China Mobile (the world’s largest mobile carrier with 740 million subscribers)
have been working on an iPhone distribution agreement for more than six years
(DeWitt, 2013). They promise to make an agreement in order to collaborate with the
iPhone5C although Apple has already worked with the second and the third biggest
China mobile carrier- China Unicom and China Telecom for several years. If Apple
cooperates with China Mobile, the revenue of Apple will grow much faster, and Apple
will benefit more in the global market.
The Globalization Effect of Apple

Apple Inc. is a creative corporation, not a production company. Although Apple has profited
over $400,000 dollars for each employee in 2011, it has provided few opportunities to work in
America (Bello, 2012). For example, Apple mainly relied on foreign outsourcing in order to
market the iPod (Lo, 2008). In 2006, Apple employed nearly twice as many people outside of
America to produce iPod. The workers were 13,920 in the United States, and 27,250 abroad;
12,270 were in China and 4,750 were in the Philippines (Freeland, 2011). Apple has gradually
become a visional company that offers work to people outside of America. On the other hand,
those 13,920 American workers earned nearly $750 million, but the 27,250 employees outside
of American Apple took less than $320 million (Freeland, 2011) home. Thus, in this institution,
the biggest winners are Apple and Apple’s shareholders who earned significant money from
globalization.
In addition, there are almost half of the iPod overseas workers (12,270) are in China (Freeland,
2011) This is because Apple favored China with large amounts of cheap and disciplined labor.
However, based on Marxism, which is the theoretical root of ideological analysis, the core of
capitalism is exploiting workers in order to maximize profits (Croteau et al., 2011). In order to
find more efficient and cheap forms of production, Apple bargains hard to allow its contractors
to have slim profits. This often leads to suppliers often cutting corners by using cheaper
alternatives and exploiting laborers’ interests. One former Apple executive said, “If you squeeze
margins, you’re forcing them to cut safety” (Bello, 2012). A number of workers have to face
security and survival problems because they have to work in an unsafe working environment
with gradually increasing workload and less remuneration, including explosion, poisoning and
suicide.
 The Nobel economics laureate A. Michael Spence explains the same phenomenon:
“Globalization hurts some subgroups within some countries, including the advanced economies.
The disparities in income becomes much and employment has been reduced across the U.S.
Highly educated workers enjoy more opportunities and workers with less education are facing
declining employment prospects and stagnant incomes” (Freeland, 2011).

● Multidomestic Strategy

A multidomestic strategy is used by companies to make their product more

responsive to local needs. The Buzzle article will explain to you what
multidomestic strategy means in business, along with its advantages and
disadvantages.

“Small businesses selling in foreign markets are 20% more productive, have
20% greater job growth, and are 9% more likely to stay financially solvent, in
comparison to companies that sell only in the domestic market.”

Companies Using Multidomestic Strategy

Yum!
The world’s largest fast food restaurant company Yum! own brands like KFC,
Taco Bell, and Pizza hut. It has a global presence in more than 125 countries,
and it customizes its products accordingly. KFC adapts local responsiveness to
suit customer preferences in the Asian markets by providing tempura crispy
sticks in Japan, spicier chicken in China, and local rice preparation in Thailand
and India.

McDonald’s
This is one of the most famous examples of a company employing
multidomestic strategy. The world’s largest hamburger fast food restaurants
has made changes to its burgers and menus to suit local choices―it serves
kosher meat in Israel, no-beef or veggie burgers in India, prawn burgers in
Singapore.
Nestle – Maggi
Nestle Maggi has innumerable products tailored to meet customer
preferences. The brand offers different products in India, Malaysia, and
Singapore, keeping in mind the local tastes.

General Motors
The American multinational manufactures vehicles and vehicle parts all over
the world, and has involved local manufacturers and R&D to adapt and tailor
its vehicles extensively to meet the local market preferences. These
international manufacturing units operate as independent entities.

• Transnational Strategy
•
• A transnational strategy seeks to achieve both global integration and national
responsiveness. A true transnational strategy is difficult to achieve, because one goal
requires close global coordination while the other goal requires local flexibility. However,
many industries are finding that, although increased competition means they must
achieve global efficiency, growing pressure to meet local needs demands national
responsiveness.
• One company that effectively uses a transnational strategy is Caterpillar, Inc., a heavy
equipment manufacturer. Caterpillar achieves global efficiencies by designing its products
to use many identical components and centralizing manufacturing of components in a
few large-scale facilities. However, assembly plants located in each of Caterpillar’s major
markets add certain product features tailored to meet local needs.

● Unilever, the parent company for over 400 brands like Klondike, Lipton Tea,
Dove, Axe, and Vaseline, operates in 190 countries. They embody the idea of
“thinking globally, acting locally” when it comes to their operations, hiring local
managers to run their in-country operations and manufacturing facilities, and
dividing the company based on the product offering. Their network of brands
puts them in a strong position in nearly every market, focusing on the products
that play best in that particular sphere (such as marmite in Australia and
mayonnaise in the United States.)
● Nike sneakers and sports apparel can be found in over 170 countries. Nike’s
marketing strategy included adopting social media, e-commerce, and
sponsorships for elite athletes in foreign markets early on to great success. With
 a network of influential sports celebrities from soccer phenomenon Cristiano
Ronaldo to basketball star LeBron James and tennis champion Rafael Nadal.
● Samsung, the Korean electronics company, now operates in 74 countries.
With a global design for their phones and computers, they adapt each product to
local markets. For example, they offer a Smart oven designed explicitly for yogurt
fermentation for Bulgaria, a bespoke kimchi refrigerator for South Korea, and
embossing the character for luck, 福, on the back of PC monitors for China.

3) Discuss an example of a company that applies a cost

leadership strategy. How did it succeed in doing this strategy?

A cost leadership strategy is the set of measures that a company carries out, with the aim of
having lower production costs than the competition. Under normal conditions, and if things are
done right, you will have a competitive advantage that will serve to increase product sales and
increase profits quickly.
there are several ways to implement the cost leadership strategy and it will depend,
fundamentally, on two factors. First, the size of the company that will allow you to implement
certain measures by size; On the other hand, the branch of activity is fundamental to know
which the ideal strategy is, it does not serve in the same way a method for clothing businesses,
for example, as opposed to fast food businesses.
Cost reduction in strategic products
In some cases, there are products that do not allow a cost leadership strategy, because
otherwise, the company would sell below cost price. However, there is the possibility of
compensating with an aggressive cost strategy in complementary products.
Restaurants are a common case. While there may not be much margin in the star product,
there are possibilities in beverages, so a cost leadership strategy in that area will be interesting
and effective.

Economies of scale
This is the most common strategy in large companies because, in order to be cost competitive,
a considerable volume of purchase is essential. In this case, the company sells cheaper because
it buys cheaper, and can afford to maintain the same profit margins.
This is probably the most aggressive cost leadership strategy there is because if you take the
ultimate consequences, you could lower the profit rate of competition to zero.
Do not spend on advertising
It is important to say that this assumption has become very relativized in recent years, but
there are large food or fashion chains that do. In this way, they can use the excess margin to
offer better prices. However, although you can save on advertising, there are few businesses
that spend absolutely nothing. Even if the CFO doesn’t pay for media ads, they will probably
have a community manager for social networks and sponsor offers.
Reducing quality
A common case is that of companies that sacrifice part of the quality in order to offer the
lowest price. This logic can be applied in large chains or in popular shops, although experience
shows that it is not the same for all products or in all sectors of activity. For this reason,
the CFO must be very subtle and study the company’s case well before cutting the budget to
ensure the best product quality.
As a general principle, reduce quality should be used in the following terms. When a high
volume of product is going to be sold, and when the customer values the price over other
considerations, even though he knows that the quality is inferior, he will take advantage of the
offer because it saves money, as an example of this we can observe the Chinese portals that
compete with Amazon, with more accessible prices in products of inferior quality.
The truth is that it cannot be said that the strategy of cost leadership will always be positive
because, in addition to the size of the company and the type of activity, it is necessary to take
into account market trends.
What in some segments of the population may be interesting, in others may be obsolete.
Therefore, implementing a cost leadership strategy should be the result of prior reflection
and study, never improvisation.
Advantages
There are three basic benefits to a cost-leadership strategy that need to be considered when
starting to work with it. Remember that they will not be the same in every company. The first is
obvious; you will be able to sell the products at lower prices than the competition. Under
normal conditions, this point is essential to increase the rate of sales and, in the medium term,
the profits of the company.
The second benefit is that if a supplier increases the costs of purchasing an input, the company
will be able to respond better without affecting the customer. Although in contexts of economic
expansion this aspect is given less importance, in times of crisis or in very mature markets this
makes the difference.
In extreme cases, the competition could be surpassed with enormous advantage and thus
make it disappear or reinvent itself and leave us a captive market because it is not capable of
remaining on the game board. Now, to do this you have to secure a dominant position because
otherwise, it is very likely that our company the injured party.
Inconveniences
It is important to consider the possible drawbacks of these strategies, especially if they are not
planned meaningfully. Among the most problematic aspects, it should be noted first of all that
in order to achieve excellence when it comes to small businesses, an exhaustive control of all
the phases of the manufacturing process is required. The problem is that sometimes that is
within everyone’s reach.
The second aspect to bear in mind is that there is the possibility of an imitation effect of
competitors, in which profit margins are reduced to a minimum. This can mean, in some cases,
compromising the viability of the business and getting the CFO into trouble, which will now
have to handle much tighter accounts, without having perceived a tangible profit in sales.

Cost leadership examples #1: Walmart

Next on our list of Cost Leadership examples is Walmart.

Walmart is a US multinational retail corporation that operates 11,484 supermarkets and

discount stores across 27 countries. Its competitive advantage strategy is based
on selling branded products at low costs, attracting the largest number of customers
possible.

The company has been very effective at establishing a competitive advantage in costs
in multiple ways, including:

• Achieving low operational costs through automation & technology;

• Minimized spending on human resources (including very low wages);
• Working closely with suppliers that dominate industry brands;
 • Own fleet of 3,000 trucks & 12,000 trailers, cutting on outsourcing costs;
• And even meeting with vendors to help them cut their own costs, building a
win-win relationship;
Additionally, Walmart implemented a satellite network system to share information
through the company’s network of stores, distribution centers, and suppliers.

This system also helped them consolidate orders for goods, enabling Walmart to buy
larger quantities at lower prices.

Cost leadership examples #2: McDonald’s

Of course, there can’t be a list of Cost Leadership examples without one of the most
famous brands in the fast food industry – McDonald’s. But how does the company
achieve its competitive advantage?

Let’s take a look:

• Rapid delivery of food – McDonald’s has optimized the processes of cooking

food, making them simple and easy to learn by all employees, reducing the
learning curve as much as possible.
• Training – additionally, the company has a division of labour that allows them to
recruit and train freshers as opposed to hiring already trained cooks, which
allows them to pay low wages.
• Vertical integration – compared to competitors, McDonald’s owns the facilities
that produce the the ingredient mixtures for their products, further minimizing its
costs.
In other words, the company manages to cut costs not only when it comes to raw
materials and optimized human resources, but also by high asset utilization – yes, the
one we saw in the previous point.

Because they are able to produce and deliver the food as fast as possible, they are
able to serve more clients as opposed to their competitors in the same amount of time.

Cost leadership examples #3: IKEA

Needless to say, the famous Swedish furniture retailer has absolutely revolutionized the
furniture industry.

By producing huge quantities of standardized products that people can actually

assemble themselves, IKEA has gained a significant competitive advantage with its
cost leadership strategy. Today, the multinational group operates 433 stores across 52
countries.

IKEA is an absolute leader in the furniture industry when it comes to low costs, and here
is why:

• Standardized products – as opposed to competitors, IKEA doesn’t offer

personalized products. Practically all of them are standardized, which allows the
company to produce them in huge quantities for all of its stores worldwide. And
achieve economies of scales that smaller competitors are just not able to.
• Self – assembly – the retailer seeks for suppliers who are able to manufacture
quality subassemblies at the lowest costs possible, with customers having to
assemble the furniture themselves. Which is one reason why their prices are so
low, as IKEA doesn’t spend budget on employees for the assembly process. You
could hire them additionally, but they are not included in the basic product price.
• Outsourcing – as many other companies do, IKEA also outsources the
manufacturing of its products in low-wage countries, which allows them to cuts
on costs additionally.
Interestingly enough, IKEA also follows a differentiation strategy to a certain extent,
along with its cost leadership advantage. The company practically invented a
completely new and innovative business model that people instantly loved.

4) Discuss how can the organization that you are working in it make its
human resources involved in the execution of its strategy.

Involving employees in strategy execution is crucial for successful strategy

formation. Successful strategy formulation and implementation requires the
involvement and commitment of managers and employees on all levels. A failure to
involve key people often results in implementation failure.

During the whole strategy formulation and execution process it is essential to involve middle
managers and key lower level employees in decision-making about the strategy and its
execution. Successful strategy formulation and implementation requires the involvement and
commitment of managers and employees on all levels. In the end, employees are to ones who
have to execute the strategy. Top management may develop the strategy but needs to spend
significant amounts of time discussing it with managers and employees at lower levels within
the organization.
A failure to involve key people often results in implementation failure. One of the most
effective aids to implementation is to involve people early on in the development and debate of
a strategy. The strategy process should invite the participation of those affected by the changes.
It is essential that leaders stimulate continuous participation in the process of everyone who is
capable of contributing. Research has found that involving employees in decision-making has
many advantages: better quality of decisions, better understanding of the strategy, better
organizational learning, higher commitment to the strategy and organization, higher job
satisfaction, less resistance to change and better adaptability of the strategy. My own research
found that involving organizational members has the following five positive influences on
strategy execution.
Participation increases the quality of the strategy. After the strategy is developed, it must
be discussed with those who have to execute it, such as middle managers and key employees to
assess whether the strategy is sound, realistic and feasible. A strategy that is formulated without
much employee involvement is more likely to have major flaws. Employee participation allows
top management to tap into the specialized knowledge of lower-level employees. Lower-level
employees have specific knowledge about operational and day-to-day activities. This can
improve the strategy and the way in which implementation tasks are performed.
Participation increases employee commitment to the strategy. Commitment of those
who have to implement the strategy can be enhanced by their involvement and participation.
Commitment to a strategy is essential. A common cause of failure in strategy implementation is
that affected managers and employees are not involved from the start in the strategy formation
process. The extent to which team members are committed or agree and cooperate with a
strategy has a large influence on the manager’s ability to implement that strategy. By sitting
down with employees and explaining the strategy to them and asking for comments increases
their understanding of the strategy and their commitment to it. When employees feel that they
have significant input in the strategy and see that certain ideas of their own have become part
of the strategy they tend to be very committed to that strategy. The classic study of Coch and
French (1948) found that stakeholders react more favorably and become more committed if
they participate in the change process. Research has shown that organizational members accept
a negative decision outcome more when they have a voice in the decision making process (Davy
et al., 1991). This is especially important when the new strategy involves negative consequences
for employees or other stakeholders such as layoffs, restructuring, closing down facilities or
outsourcing of production.
Participation increases the self-confidence, motivation and performance of
employees. A strategy that is developed without the involvement of relevant employees is
likely to be resisted during implementation by the affected employees. By involving middle
managers and employees, top management can try to formulate a strategy in which the goal
alignment of the organization and employees is as high as possible. People are motivated more
by their perceived self-interest than by the goals of the organization unless they coincide.
 Therefore, if the perceived degree of goal alignment is low, the individual’s commitment to the
strategy will be low, and as a result, the amount of effort the employee would be willing to
invest in implementing that strategy will also be low. When employees are involved in decision-
making they get the feeling that they are taken seriously and that their opinion matters. This has
a very positive influence on their self-confidence, which increases their motivation and work
performance. My research suggests that organizational members become more motivated
when they have more control over their job.
Participation allows management to stay in touch with lower levels of the
organizations. It is important for top management to know what is happening in the
organization on all levels. By allowing employee participation, management may find out where
there is support for the proposed strategy and where resistance can be expected. This can be
helpful for communicating the strategy to the organization and obtaining organizational
member commitment to the strategy.

Involve external stakeholders in the strategy process. Not only employees need to be
involved but external stakeholders as well. Besides managers and employees there is a potentially wider
range of organizational stakeholders who may have vital and legitimate interests in the direction and
extent of strategic and organizational change, such as customers, suppliers, investors, unions and
governments. Consensus must often be achieved both within and outside of the organization in order to
successfully implement a strategy. The organizations’ failure to at least ‘satisfice’ external constituencies
such as governments, unions and other relevant stakeholders can seriously jeopardize an
implementation effort if the constituency has the power to block or delay key elements of the strategy.
Involving employees and stakeholders takes time. Involving organizational members during
the strategy process has many positives influence on implementation performance. However,
involvement tends to take considerable time. Involving employees leads to more effective
implementation but slows down strategy implementation. This combination of implementation
effectiveness with slower implementation speed suggests that it takes more time to do something well.
Therefore, such a participative strategy process may be more suited for relatively stable environments.
A top-down strategy process with little employee involvement may be more suited for turbulent
environments or when an organization is in crisis and something must be quickly. Top down strategy
formation is less likely to be hindered by organizational politics, resistance, and alternations between
the old and new ways of doing things. Top-down strategy formation with a short horizon may encounter
less resistance, bring about more decisive transformations, and result in performance improvements
faster than participative approaches. Hence, a top down strategy process may apply when the
organization is clearly out of fit, or when the environment changes radically, and for the organization to
survive, fit must be achieved in a short period.
HOW TO INVOLVE EMPLOYEES IN STRATEGY FORMATION

Organizations that excel at strategy execution place great emphasis on strategic involvement. These
organizations use the following practices to involve organizational members in decision-making
concerning the strategy.

Combine top-down and bottom-up strategy formation. My research and experience suggest
that a combination of top-down and bottom-up strategy development and execution works best. Most
effective is a leadership style that embraces the paradox of top-down direction and upward influence.
Top management advocates the overall strategic direction but learns from the feedback of those lower
in the organization and adapt the strategy of its execution when needed.
Involve employees in strategy formulation. This can be done by involving key employees in a
sounding board group during the formulation of the strategy. Members of such a sounding board group
do not have any decision-making authority but are involved to point out potential flaws in the strategy,
provide a realism check of the feasibility of the strategy and to assess the support among employees for
the proposed strategy. Another way to involve employee is to allow them to develop and submit
proposals, which can become part of the strategic plan. Employees within the departments are allowed
to come up with initiatives, which are communicated to higher management by department heads.
Subsequently, management decides which proposals become part of the new strategy. After this
organizational members are to implement the proposals. The ability to propose such initiatives often
greatly increases their commitment to the strategy.
Discuss the strategy with employees. During regularly held formal sessions, higher management
explains the strategy, asks employees for comments, and gains feedback on the strategy. When
management perceives that these comments can improve the strategy or the organization, they are
taken into consideration. Informal meetings, such as personnel parties and company drinks are even
more effective than formal ones in soliciting the views of middle managers and employees. During
informal meetings management explains the strategy and asks comments from employees. During such
formal an informal meeting it is important to stress that it is a proposed strategy. This gives employees
the feeling that the strategy is not finalized and that their input is not relevant anymore. If that happens
it is often viewed as a strategy which is developed and executed in a top-down fashion. This greatly
reduces the commitment of employees. By stressing that it is a proposed strategy, top management
may convey that the opinion an input of employees is values and that valuable contributions will be
taken into account.
Increase organizational member participation slowly. Organizational members are not
always used to participate is decision-making and taking co-responsibility for decisions. Employees in
centralized organizations with an authoritarian management style are often not used to be involved in
decision-making. In this type of organizations people tend to think in a hierarchical way indicating that
management should make the decisions, not employees. It can be hard for organizational members to
abandon their old beliefs and values about decision-making, which may result in a very reactive stance.
Furthermore, organizational members tend to be skeptical of empowerment efforts of managers.
Participative execution not suitable in all contexts. My research found that a participative
implementation style may not be as suitable to other contexts as one may think. In some cultural
contexts organizational members may not always be willing or able to participate in decision-making.
My research found that there are organization cultures in which people are reluctant to make mistakes,
take initiative, voice their opinions, and thus participate. In such a context, management needs to invest
a lot of time and energy in organizational members to make them participate. Employee involvement
needs to be implemented in a gradual and deliberate way. When organizational members are involved
too quickly it is likely that they will not participate. By gradually involving organizational members, they
become more accustomed to participation. Participation needs to be maintained for a long time to be
effective. However, in time, when participation efforts are genuine and maintained for a considerable
time, organizational members overcome their initial reluctance and often become very enthusiastic
about participation and come to view it as very important.
Tackle complainers and cynics. When invited to participate in decision-making there are often a
few individuals who complain a lot and do not provide constructive criticism. Employees can come up
with a mountain of small problems when they are allowed to voice their opinions. When this happens,
management must be steadfast in focusing on the bigger issues. Others will use the opportunity to vent
personal problems or openly display cynicism about the new strategy. When this happens management
must take these individuals very seriously and sincerely listen to them. If they are not dealt with in a
respectful way, other more timid employees will not participate and voice opinions that may differ from
those of management. However, if such cynics continue to argue against the strategy but do not come
up with valid arguments they must be swiftly dealt with. A few cynics can really undermine the support
of a work unit toward a strategy.
Avoid the trap of top-down strategy formation. Despite the widely accepted and apparent
advantages of involving middle managers and employees in strategic decision-making, many
organizations continue to develop and execute strategies in a top-down way. This approach is supported
by the dominant view in the strategy literature to treat the strategy process as a rational and top-down
process in which the strategy is implemented with the use of a diverse set of control mechanisms. The
top management team formulates the strategy and then delegates implementation responsibilities
throughout the rest of the organization. Strategy implementation views as a rather centralized process,
in which the CEO, or top management team, conceives the strategy and imposes its implementation on
the rest of the organization.
A major limitation of top-down strategy formation is that the approach fails to involve organizational
members in the strategy formulation and implementation processes resulting in low employee
commitment to the strategy and its implementation. Successful strategy implementation or
organizational change is increasingly reliant on generating employee support and enthusiasm for
proposed changes, rather than overcoming resistance to change. Employees with low or negative
commitment to the strategy formulated by senior management create significant obstacles to effective
implementation. Uncommitted members of a decision-making team can delay or even sabotage the
execution of a strategy. This can result in strategic problems, as even slight delays can prove critical in
highly competitive and dynamic environments.

5) From your extensive reading about Porters’ model for

competitive strategies, discuss how companies can
protect themselves from the threats of new entrants.
You can use examples to demonstrate your answer.
• Michael E. Porter studied a number of business organizations and proposed that business-
level strategies are the result of five competitive forces in the company’s environment.
As below
• 1- Potential new entrants.
• 2- Bargaining power of buyers
• 3- Bargaining power of suppliers
• 4- Threat of substitute products
• 5- Rivalry among competitors
Barriers to New Entry

The Threat of New Entrants depends on the barriers to entry. The barriers
refer to the existence of high costs or obstacles that can deter new
competitors from entering the industry.

Barriers to entry include:

• Economies of scale
o This can take multiple forms: spreading fixed costs over large volume,
bargaining power over suppliers, more efficient technologies at scale
 • Brand loyalty: Customers in the industry show a strong preference for the
products and/or services of existing companies.
• Cost advantages: Existing companies can easily produce and offer their
products and/or services at a lower cost/price than that of new entrants.
• Government regulations
• Capital requirement: A high fixed cost to enter into an industry, e.g.,
telecommunications.
• Access to suppliers and distribution channels: Existing companies
own exclusive rights to suppliers and distribution channels.
• Retaliation: Existing companies may collude and deter new entrants

High Threat of New Entrants When:

• Low brand loyalty in the current industry

• Current brand names are not well-known
• Low initial capital investment required
• Access to suppliers and distribution channels is easy to obtain
• Weak government regulations
• No threat of retaliation
• Proprietary technology is not required

Low Threat of New Entrants When:

• High brand loyalty in the current industry

• Brand names are well-known
• High initial capital investment required
• Little to no access to suppliers and distribution channels
• Strong government regulations
• Threat of retaliation from existing competitors
• Proprietary technology is required to be successful
Barriers to Entry and the Threat of New Entrants:

A low threat of new entrants makes an industry attractive – there are high
barriers to entry. Therefore, existing companies are able to enjoy
increased profit potential.

Hight Barriers to Entry =Low Threat of new Entrants=Increase Profit Potential

A high threat of new entrants makes an industry less attractive – there are
low barriers to entry. Therefore, new competitors are able to easily enter
into the industry, compete with existing firms, and take market share.
There is a reduced profit potential as more competitors are in the
industry.

Low Barriers to Entry= Hight Threat of new Entrants =Reduced Profit Potential

Example Analysis

Let us consider whether JetBlue, a company in the airline industry, faces a

high or low threat of new entrants.

New entrants to the airline industry pose a very low threat to JetBlue. First,
the barriers to entry are remarkably high, as several airplanes are
required to compete in the airline industry. Operating costs are massive
and there are major government regulations for companies in the
industry. Therefore, it is safe to say that the threat of new entrants in the
airline industry is low as barriers to entry are high.

However, the threat of new entrants alone does not determine the overall
attractiveness of an industry. The remaining forces (bargaining power of
buyers, rivalry among existing competitors, bargaining power of suppliers,
and the threat of substitutes) must be taken into consideration when
determining overall industry attractiveness.
6) Give examples of the different types of control (Feedforward,
concurrent and feedback)
that your organization is applying..
The meaning of control
∙ Organizational control refers to the systematic process of regulating organizational
activities
to make them consistent with the expectations established in plans, targets, and
standards of performance.

Organizational control focus

∙ Control can focus on events before, during, or after a process. For example, a local
automobile dealer can focus on activities before, during, or after sales of new cars. ∙
Careful inspection of new cars and cautious selection of sales employees are ways to
ensure high quality or profitable sales even before those sales take place. Monitoring
how
salespeople act with customers would be considered control during the sales task.
Counting the number of new cars sold during the month or telephoning buyers about

their satisfaction with sales transactions would constitute control after sales have occurred. These
three types of control are formally called feedforward, concurrent, and feedback, and are
illustrated in the following figure:

1- Feed forward Control

∙ Control that attempts to identify and prevent deviations before they occur is called
feedforward control. Sometimes called preliminary or preventive control, it focuses on
human, material, and financial resources that flow into the organization. Its purpose is to
ensure that input quality is high enough to prevent problems when the organization
performs its tasks. ∙ Feedforward controls are evident in the selection and hiring of new
employees. Organizations attempt to improve the likelihood that employees will perform
up to standards by identifying the necessary skills, using tests and other screening devices
to hire people who have those skills, and providing necessary training to upgrade
important skills.
Examples .
 1- Hiring process in my company
2- Review Monthly forecast before issued production plan
3- Review cash flow before issued checks .
4- Review stock levels before issued sales orders and purchased orders.
5- Preparing Budgeting . (CAPEX,OPEX)
6- Hiring plan .

2- concurrent Control.
Control that monitors ongoing employee activities to ensure they are consistent with
performance standards is called concurrent control. Concurrent control assesses current
work activities, relies on performance standards, and includes rules and regulations for
guiding employee tasks and behaviors.
∙ Many manufacturing operations include devices that measure whether the items being
produced meet quality standards. Employees monitor the measurements; if they see
that
standards are not met in some area, they make a correction themselves or signal the
appropriate person that a problem is occurring. Technology advancements are adding to
the possibilities for concurrent control in services as well. For example, use cash register
management software to monitor cashiers’ activities in real time and help prevent
employee theft. Trucking companies use computers to track the position of their trucks
and monitor the status of deliveries.
∙ Other concurrent controls involve the ways in which organizations influence
employees. An
organization’s cultural norms and values influence employee behavior, as do the norms
of an employee’s peers or work group. Concurrent control also includes self control,
through which individuals impose concurrent controls on their own behavior because of
personal values and attitudes.

Examples-

1-Follow up Cash flow GL and compare it with projection.

2-follow up actual production Rats achieved and compare it by production plan .
3-follow up Daily expenses and cash and where it Spend.
4-follow up Quality control inspections reports for Raw material received and goods
produced .
 3- feedback Control
Sometimes called post-action or output control, feedback control focuses on the
organization’s outputs—in particular, the quality of an end product or service. An
example of feedback control in a manufacturing department is an intensive final
inspection of a refrigerator at an assembly plant.
∙ School administrators conduct feedback control by evaluating each school’s
performance
every other year.
∙ They review reports of students’ test scores as well as the school’s dropout and
attendance
rates. The state rewards schools with rising scores and brings in consultants to work
with
schools whose scores have fallen.
∙ Performance evaluation is also a type of feedback control. Managers evaluate
employees’
work output to see whether people are meeting previously established standards of
performance.
∙ Besides producing high-quality products and services and meeting other goals,
businesses
need to earn a profit, and even nonprofit organizations need to operate efficiently to
carry out their missions. Therefore, many feedback controls focus on financial
measurements. Budgeting, for example, is a form of feedback control because managers
monitor whether they have operated within their budget targets and make adjustments
accordingly. Most organizations also have outside audits of their financial records.

Feedback control model

∙ All well-designed control systems involve the use of feedback to determine whether
performance meets established standards. In this section, we will examine the key steps
in the feedback control model and then look at how the model applies to organizational
budgeting.

Steps of Feedback Control

1- Establish Standards of Performance
2- Measure Actual Performance
3- Compare Performance to Standards
4- Take Corrective Action
Examples-
1- Discuss monthly & quarterly & annually financial Statements (income statement - cash
flow – Balance sheet) and compare it with budget.
2- Discuss internal audit report for every department and cost center.
3- Discuss External audit reports, and management letters.
4- Review achievement targets and compare it with plan.
5- Fiscal count for cash and inventory and fixed assets monthly, quarterly and annually
and compare it with registers.
6- Review customer feedback about product reports , and track it by batch number and
tack corrective actions .
7- Review company expenditures by cost center and compare it with budget.

After closing year and compare actual resalts with plan for every function we take
corrective actions.

Best Regards,