IKEA International Business and Management

IKEA Company Overview

IKEA is among the leading and largest furniture’s retail organization in the global setting. IKEA was established  in the year  1943 by  Ingvar Kamprad who  was  from  Swedish  national   origin when he   was  only  seventeen  years  old (IKEA, 2017).  The  corporation  started   with  the  sale  of  basic  appliances  for homes  which was  conducted  for  four  years and  the  sale  of  home  furnishings  started.  In  the  early  1953 the  corporation  made  the first  sale   of  a furniture  showroom.  With   the reasonable  furniture  prices  the  founder’s  adversaries  made  attempts  to  slow him  down through  introducing  bans  to  local  suppliers  from  offering  raw furniture  and materials from IKEA (IKEA, 2017).  This led to the creation of a creative model of conducting business by Kampard the founder.  IKEA started  to  learn  on making  their  own  furniture  designs, made  purchases  of  their  manufacturing  raw  materials  from  suppliers  who were polish and  developed  its  own  furniture exhibition.  In the year 1965, IKEA began their first most flagship store that was located in Stockholm.  The  corporation  currently  holds  more than  326 hundred  stores  in the  global market  which are  distributed across  over  thirty eight  nations (IKEA, 2017).

IKEA as  a privately owned  corporation  has  offered  employment  to more than  one hundred  thousand  staffs who provide  furniture’s  that are ready  to  be assembled.  The well  established  brand name  produced by IKEA developed  from a major marketing model concept  that  best  illustrates  its  strength (Lymbersky, 2008).  The  company  holds  a constant  strategy  of offering  good that are characterized  with  favorable  and affordable  cost  which is objected  at  attracting  more consumers  and thus  creating  a supreme  home  surrounding.  The advice  of the  corporation  to the consumers  is that  they  should  always be prepared  to  more and innovative  supplies.  IKEA generally support  the  strategy  of effective self service  which is an  important  aspect  of  creating  high  consumer’s  involvemen t(Lymbersky, 2008).

Throughout the period  that IKEA  has  been in  operation  it  has created  a furniture  market   that  is  characterized by creativity  and  innovative  designs  with  high  quality  and yet reduced  costs.  This  is  the  major  approach  that  the  corporation   has  implemented  its differentiation  in the market  in  creating a wider  market  with increased  value (Lymbersky, 2008).  IKEA  has  additionally  applied  the  product  and  cost of leadership  differentiation  approaches  quite effectively.  IKEA  is  therefore  able to  benefit  from  its  differentiation  since they  products  are  highly  valued  and  preferred  as their uniqueness stands out  among  all  the  conventional  products  that  the  market   has  to give.  The  market  has been defied  since the  design  and  the style  utilized  by the competitors  can be classified  as  simple  and  easy  to be imitated  since the  procedures  to  producing them is characterized  by lowered costs (Lymbersky, 2008).

Business Strategy

IKEA  can be described  as  a well  established  and highly popular  international  trend  that  through  the  utilization  of an innovative  business  model  and the  primary  focus  on processes, systems  and products  has  managed  to  overcome  competition  and remain  highly  competitive  in  the  retailing  furniture  business (Ireland, Hoskisson, & Hitt, 2012).  The  corporation   is  focused in  diversified  furniture  products  that  helps  it  in maintaining  truck of the  market and the  use  of  its  business  model  in  handling  real  issues  in the  market.  This   is  achieved  via innovative  or  fresh thinking  and the  utilization  of  its  low cost in   leadership, differentiation  and affordability  strategies with  further  success  drivers  such as  quality and scalability  focus.  The   company  has  been  able  to  get  into  various rising markets  where its  business  models  and products  are  likely  to acquire  success  since most  of the  furniture  market  has not  been tapped with  the utilization of innovativeness.  This   strategies   has  been  effective  in  increasing  the  general  ability  for  the  corporation  to grow  its  consumer  base (Ireland, Hoskisson, & Hitt, 2012).

Major Strategies Utilized By IKEA

IKEA Holds a unique  model  in business  the  connects  the  general needs  of  their  consumers  with  high possibilities  using the low cost  leadership  strategy (Ireland, Hoskisson, & Hitt, 2012).  With  increased  knowledge  that  regards  home  life  and the  involved  challenges  that  is experienced  by  consumers  globally  of  limited  money  and  home space  and yet the existence of big  dreams the  corporation  focuses  on  manufacturing  is  own  products  directly.  The production starting point for the products designers and developers is usually based on the price.  This involves  the  consideration  of  designs  and  shapes  for packaging, production  and transportation  to  be effective.  While   maintaining  focus  on the  materials development  so  that  resources  and products  can be  improved  much  resources  are saved (Ireland, Hoskisson, & Hitt, 2012).

The  low pricing  strategy  is IKEA  cornerstone  concept   that  is useful  in making consumers  to  wish  on buying  products from  the corporation. The  company generates  more  value  from  the idea because   its  general  costs utilized  in production  is also   very low.  The strategy of low prices  is  normally accompanied  with  increased  ranges  of  good  designs and  products  that  are fully functional (Kourdi, 2015).  IKEA’s  products  are  highly  preferred  since  they  serve  for  all the  life stages  and life styles  of their consumers who are  from  the  distinct  age  brackets  and  different  households.   This  is  a useful  strategy  given  that  the retail  sector  is one  that  is characterized  by depression  as  it increases the  potential  for  IKEA  to  expand.  The  corporation  is highly  focused in the generation  of better  living  for most  individuals  by placing   the  environmental  concern as the  core   of  its business  operations.  This   has been   the   case  since the  foundation  of the  business  as  its  concern  has always  been placed  on individuals  and the  surrounding.  With   the rise   of  consumers  concern  on the company’s  products  sustainability  held  in  its selection  of  stores, communication, suppliers  and product range the  company  has responded  positively (Kourdi, 2015).  This  has  been  achieved  through  the spotting  of  business  capability  via the provision  of  solutions  that are highly sustainable.  Its  concern  on the  wellness of the surrounding  and  persons  makes  an encouragement  of  improved utilization  of both  energy  as well as  materials.  This  strategy  is effective as  it  assists  the corporation  in  lowering  the  general  cost  thus  playing part  in increasing the  capability  of the corporation  in  attaining higher  green targets thus creating an overall  positive  environmental  impact (Kourdi, 2015).

In achieving its objectives the corporation utilizes a SWOT analysis as the strategic tool for planning.  This  tool  helps the  corporation  in focusing  on  issues  directly  before  getting  into  business ventures internationally  and  also locally.  The  strength  held by IKEA may  include  the  fact that the corporation  is a specialist  in the creation  of products  and marketing  specialist.  These  can be  categorized  as the aspects  of business  that increases  value  to the  company’s services  and  products (Kourdi, 2015).  The   corporation  is additionally  characterized  by a strong  presence  in the  global  market  as well as a strong  international  brand  which is effective in attracting  major  consumer categories.  In that, the  corporation  makes  a similar  promise on equal  ranges  and  global in the  global  market.  Based on its vision of generating better living for individuals each day it has created a positive concept internationally.  The  strength of the  concept  that  the corporation  utilizes  lies  on the capability of providing increased  selections  of   designs as well as  lowly priced functional  goods.  With  the democratic  design  that  reaches a significant  balance amid function,  design quality  and  prices  increases  consumer  loyalties (Kourdi, 2015).

So that the existing threats and weaknesses and be developed and managed effectively the corporation has acknowledged them. This helps in playing a primary role in the setting of aims as creating fresh strategies.  However,  with its  high scale  and internal  business size this  at  times  challenges the  general  capability   of the  corporation  in controlling quality  as well as standards (Kourdi, 2015).  The  need  for  products  that are  characterized  by  low  cost  results   in the  challenging  amid  balancing  costs  and the  products quality.  IKEA  is  highly  required  its  self as well as the products  completely from  those  by the competitors  that are easily  copied.  Moreover, the communication amid the corporation, shareholders and consumers in regard to environmental activities is weak. The business scale that is very wide presents increased challenges in communication management (Kourdi, 2015).

Some economic factors  are associated  with the slowdown  of purchases  since the  available  money  for  spending  is reduced  by other  increased  costs.  In addition  with   the high   increase  of consumers getting  into the market  it is more likely that  the  cost of their products will  be  reduced  further  in handling  competition since most organizations are utilizing  low cost  strategy  in sustaining   the leading  position (Ireland, Hoskisson, & Hitt, 2012).  The business however, utilizes its various strengths in obtaining higher focus as well as the creation of sustainability.  The  first  strength  is that  there is an increasing demand for products that are  characterized  by  green  or  those  that are friendly  to the environment.  In addition  consumers  are highly  demanding products with  low prices  which suits the  company’s leading approach of less  cost.  In addition  there are  increased  demands  for products  that favors  less  water  utilization  as well as  reduced  carbon prints  which favors the  corporation (Ireland, Hoskisson, & Hitt, 2012).

International Strategy:  Economic, Legal, and Cultural Strategies

IKEA  fully understands that in performing  in the  global market  diversification  is highly  required in products   in order to  fully fit the consumer’s tastes,  cultural value,  economic as well as legal  status  in different status.  The  corporation  utilizes   an economic strategy  through  favoring  reduced  costs on all  its  products so that  consumers  from  all  economic and  social  levels  can be attracted (Ireland, Hoskisson, & Hitt, 2012).  With  the conservation  and high concern  on the surrounding  and persons  the  company  focuses on  fulfilling all  its legal obligations by ensuring  that  that  it  corporate with all the  necessary requirements  that the governments necessitates  from them.  This  helps in improving  the condition  in  which  the  company  operates  and develops a more favorable  one that  grows  its  market, consumer loyalty  and sales. The  company operates in  states  that are characterized with  low  cultural  values  and  norms in  order  to  avoid  market sales  restrictions.  Different  cultures are characterized  with  distinct  preferences  and this may hinder  the capability  of person to  make purchases  in that the  products  may  not be adequate in  fulfilling  their  tastes generally.  The low cultural value strategy helps in sustaining its competing advantage and the capability of making increased sales (Ireland, Hoskisson, & Hitt, 2012).

            References

IKEA. (2017). IKEA Company’s History. Retrieved from https://www.ikeafoundation.org/history/

Ireland, R. D., Hoskisson, R. E., & Hitt, M. A. (2012). Understanding business strategy: Concepts plus. Mason, OH: South-Western Cengage Learning.

Kourdi, J. (2015). The Economist: A guide to effective decision-making. London: Profile Books.

Lymbersky, C. (2008). Market entry strategies: Text, cases and readings in market entry management. Hamburg: Management Laboratory Press.

Business and Management

Unit V

1. Perceptions on competence and performance for workers with disability and older workers is similar in that  workers in the two classes are considered as slow workers  who do not meet the  organization’s expectation compared with other workers. Disabled and old workers are the marginalized group and many organizations focus on age and physical disability rather than knowledge and skills (Bell, 2012). Both employees with disability and old workers are underrepresented in the employment sector as they are associated with poor performance. Both are discriminated in job appraisals and interviews as they are considered as incompetent, undesirable, resistant to change, less productive, absenteeism due to illness, poor investors and they spend high cost on special accommodation (Bell, 2012). Due to the negative perception, the two face similar employment experience   in deployment and retention. They experience ineffective management and live in non-accommodating environment. However, there is a difference in the two groups. Disabled workers lack the capacity to perform daily activities and old workers have low cognitive abilities. Workers with disability are more discriminated since they are paid low wages; they face dismissal, redundancy, harassed and victimized (Bell, 2012). Old workers have low cognitive abilities and for this reason they get low benefits and low protection compared with young workers. They do not receive training and development and in other cases they are employed simply because they not cause high damage and theft.

2. Both the American with Disability Act and the Rehabilitation Act of 1973 are civil rights laws. Both laws address the challenges facing the handicapped. Section 504 of The Rehabilitation Act eliminates education and community services barriers, creates accessibility and ensures equality in employment sector (Goren, 2006). ADA ensures all people with disability are protected and are included in the American society. There is a connection between ADA and The Rehabilitation Act in that ADA promises provide employment opportunities, inclusion and so on. The Rehabilitation Act plays a significant role in ensuring that the ADA promise is fulfilled. The comparison between the two laws is apparent since each law influences the other. When the Rehabilitation Act was established, the Congress required broader protection to the widespread discrimination since the Rehabilitation Act could not address the problems alone (Rief, 2005). ADA was added to the Section 504 of Rehabilitation Act. When ADA was reauthorized in 1992, Rehabilitation Act was influenced in that it adopted the principles and polices of ADA. This means that there is similarity between the two laws because their share principles and objectives. They both ensure that individuals with severe disabilities are employable.  In addition, they ensure there is not separate setting in the society and there is equality benefit between disabled and capable people (Rief, 2005). Both work together in that ADA intensifies the protective mandates of Section 504 of The Rehabilitation Act. In contrast, the two laws differ in different aspects. The main purpose of ADA is to broaden the civil rights of Section 504 and to include business agencies and ensure they follow non-discrimination law. ADA includes private entities which are responsible in providing public services (Goren, 2006).  In addition, ADA programs apply to local and state sectors. Thus, private and nonprofit entities are under ADA and they should ensure equality in provision of services. In employment provision, ADA does not allow the private sectors to create programs for affirmative action. On the other hand, The Rehabilitation act applies to agencies which receive federal fund (Goren, 2006). Unlike ADA, this Act allows federal executive branch to have a program for affirmative action which will support equality for qualified disabled people. Under Section 504, public and private entities which receive federal aid should provide free services to handicapped child (Rief, 2005).
4. Given that you are in a wheelchair, how do you think you’ll be able to do this job?

 This question is legal and it is applicable in Title I of the Americans with Disabilities Act. Employer is allowed to ask the applicant whether he has the ability to perform specific tasks.  This will help the employer understand the knowledge and skills with the applicant toward achieving business productivity (Goren, 2006). Note that this question is not about applicant’s medical condition but rather it is based on measuring the ability to do specific tasks. The applicant will have the opportunity to show his or her ability despite the physical or mental disability.  In dealing with diversity issues, the employer will understand whether the applicant values diversity with respect to his or her condition. On the same note, employer will understand the goals of the applicant and his ability to achieve them.  This question is important in that the disabled employee will show the courage and the potential ability to make difference in the organization (Goren, 2006).  The last important point as to why this question is legal is because the employee will evaluate the level of skills and   foster the working ability by offering training and development. However, you could ask, Do you have the ability to perform this job? Or how well can you perform this task?

1. How does your military experience relate to this job?

This question is legal according to ADA requirements.  First, this question is not offending the applicant. Second, it is important to understand how the experiences in other field will impact the current job. The question will help the employer get closer to the action and learn the passion and interests of the applicant (Goren, 2006).  Before assigning job, an employ will evaluate skills and provide a specific task which the applicant will perform best. According to ADA, a disabled applicant must meet the requirements needed in job application. In this case, education, skills and experience should be key elements (Goren, 2006). He or she should have the ability to perform fundamental duties.  This question can be rewritten and be presented as; did the education and training you received in the military have an impact on current position?

1. We are looking for seasoned professionals; you just graduated from college?

This question is legal under the ADA. The Act states that legal requirements such as education and experience are needed. Thus, employer is allowed to ask this question to understand whether the applicant has necessary experience needed in bringing organization productivity (Goren, 2006). Today, many people have degrees but lack experience. Thus, experience is connected with wealth and prosperity as the applicant will utilize the prior skills and experience in making difference not only the organization but also the economy (Goren, 2006).  Even though the applicants have a   degree, he or she may need experience to be regarded as qualified. This question can be asked as, we are looking for experienced workers in this job, are you a new graduate?

1. We are looking for someone who can effectively relate with college students; you are 47 years old?

 This question is legal and the purpose of asking about age is to evaluate whether the applicant will meet the organization’s goals.  Before interview, the employer may have evaluated the business operations and may see that there is gap which needs to be filled by matured employee (Goren, 2006).  For example, a mature worker may be needed to provide mentoring and share skills with college students.  In addition, it is legal to ask the age of employee since an organization may have less experienced workers and so mature aged workers will take full responsibility and meet the objectives.  This question can also be rewritten as; we are looking for someone who can effectively relate with college students, would you mind asking you age?

Unit VII

1. Beauty prejudice is a form of discrimination similar to other forms of discrimination like sexism and racism. This means that people in social setting or in organizations are treated different due to physical beauty. Attractive people are treated with respect and dignity than ugly people. In social interaction, those who are victims of ugliness experience distress and fear and they are underprivileged in promotional opportunities and employment (Berry, 2007). People who are more attractive earn higher wages as managers believe that beautiful workers are more productive. Today, ‘beauty based discrimination’ is profound and this has contributed to other form of bias such as disability bias. However, beauty prejudice does not pay and it does not bring productivity.  Beauty prejudice is similar to sexism or sex discrimination in that in social setting,   men and women are treated different due to gender difference (Berry, 2007).  For example, in work place, women are discriminated than men since they are referred as inferior. Other form of discrimination may be apparent in training,   glass ceiling and sex segregation. Even if men and women have the same level of education, in many organization men are ranked in managerial level than women. There is unfairness and inequality due to gender difference. In addition, beauty prejudice is similar with racial prejudice where people are   discriminated because of their color (Berry, 2007).  For example, racial prejudice is profound in Western society where ethnic minorities are discriminated because of their skin color.   Generally, Beaty relate to these forms of prejudice since people are discriminated due to their physical appearance.

2. According to Bell (2012), people can be overweight because they are poor and they can be poor because they are overweight. The first argument is that people are overweight because they are poor. With respect to modern studies on obesity, adults and children from low-income families are overweight than affluent families. For example, Bell (2012) states that Latinos, Blacks and people who are old are overweight compared with White and affluent people. In place of work, there is a negative perception that those who overweight are lazy and have undesirable behaviors. Such people in place of work remain poor due to discrimination in salaries and promotion. Other point is that overweight is contributed by diseases such as diabetes, high cholesterol and more (Heller, 2005). These diseases are as a result of lack of exercise, healthy food and higher medical costs. In addition, poor people lack the nutritional knowledge and so they consumer unhealthy meals.  According to findings from Food Research and Action, low-income people have high body mass index (IBM) than people from high-income families. This is because; poor people take excess caloric and lack physical activities. The second argument is that, people become poor because there are overweight (Heller, 2005).  When people become weight, they are discriminated in social setting. For example, in the place of work, overweight people are biased than normal people. They develop health problems such as sleep apnoea, absenteeism and presenteeism which affect the productivity. They end up being terminated and they live a poor life. Overweight children in the society are discriminated due to their size (Heller, 2005).  Due to psychological effects like social isolation, academic problems and low-self esteem, they lack quality of life and live a poor life.

Unit VIII

1. Both Unemployment and underemployment are a big challenge to the economy. The non-dominant groups’ standards of living will be affected and they will face financial trouble. Note that the standard of living is influenced by economic growth, gross domestic product and income (Maynard, 2011).  Without these factors, there will be no quality of life. There will be high level of poverty due to reduction in demand   poor economic development. Poor living standards will affect the country’s productivity in that there will be no demand for products and this will lead to heavy burden on assistance programs.  Unemployment and underemployment means that there is a higher level of unemployment and only few people are working. This indicates that there will a heavy burden on paying tax and country’s finance will be impacted due to less tax revenue (Maynard, 2011).  Given that there will be less demand for products, there will be slower economic growth and lower GDP as firms will reduce the production of goods and services. The country’s productivity will be affected by higher welfare costs. This means that the country will spend its money on benefit payments and neglect economic development.  In addition, rather than spending money on economy, the country will train the unemployed so that they can fit in modern economy (Maynard, 2011).  Due to low income, the country will ensure availability of inferior goods which people will afford. The high sales will increase sales revenue and no economic development.

2. Other than legislation, there are other ways which can be used to create an inclusive society. Social inclusion means that people should live in a society where they will access social opportunities and have a full participation in society activities such as political activities, decision making and more. The author asserts that in order to create an inclusive society, there must be a social cohesion which will join people together and allow all members to have a sense of belonging and legitimacy (Marc, 2010). With social cohesion, society respect diversity and avoid conflict and discrimination as well.  Members in an inclusive society are equal and everyone has roles and opportunity in social setting.  All human rights are respected and members enjoy fundamental freedom.  Other than legislation, a culture of diversity can be created through education (Marc, 2010).  Members will get an opportunity to learn other cultures and gain understanding of importance of diversity.   People from different cultures will respect other cultures and values and the marginalized groups will be empowered and engage in social activities (Marc, 2010). The key point in education is the history and culture so that people can understand the root of culture and value diversity.  A culture of diversity can also be created through effective leadership. Leaders should be accountable and show transparency in addressing society issues. They should   involve members in municipal issues so that members can offer their contributions. In other words, there should be civil society where members express their views and builds mutual trusts (Marc, 2010).  Leaders should ensure equitable distribution of resource, equal and universal access to services.

Reference

Bell, M. P. (2012). Diversity in organizations. Mason, Ohio: South-Western College.

Goren, W. D. (2006). Understanding the Americans with Disabilities Act. Chicago, Ill: ABA GP/Solo.

Rief, S. F. (2005). How to reach and teach children with ADD/ADHD: Practical techniques, strategies, and

interventions. San Francisco, Calif: Jossey-Bass.

Berry, B. (2007). Beauty bias: Discrimination and social power. Westport, Conn: Praeger Publishers.

Heller, T. (2005). Overweight: A handbook for teens and parents. Jefferson, N.C: McFarland & Company.

Maynard, D. C., & Feldman, D. C. (2011). Underemployment: Psychological, economic, and social

challenges. New York: Springer.

Marc, A. (2010). Delivering services in multicultural societies. Washington, D.C: World Bank.

 Capitalization

In the IRS uniform capitalization rules, there are both questions and answers for how to identify costs subject to capitalization. Still determining the capitalization requirement and determining which costs would be deductible are difficult at best. Everything depends on the how the corporation was formed or expanded and what combination of contributions or debt proceeds financed them (Simonds, 2006). In this paper, I will answer the questions; How is taxable income calculated with respect to capitalization of costs? What are the characteristics of an expense for it to be capitalized? What is the principle behind capitalizing expenses? Should you capitalize cost for the sole purpose of minimizing the organization’s tax burden?

How is taxable income calculated with respect to capitalization of costs?

When capitalizing the net operating income of an organization in the income approach, the flotation-cost adjustment may not apply to the cost of capital. The reason for that is because the advocate of its adjustment might be confusing or interfering with the conception of the allowable rate of return which arises from the invested capital (Simonds, 2006). This also is in line with the market-determined opportunities which determine the cost of the invested capital. Therefore, in computing taxable income with respect to the capitalization of costs, the following formula holds;

Taxable income = gross sales – (permissible deductions + other operating expenses)

What are the characteristics of an expense for it to be capitalized?

As much as capitalization is concerned, accepting the accounting principles demands the general capitalization of costs whenever the existence of future benefits was to be expected from expenditures. For example, in case a business organization decides to buy a building, the income to be realized from it is expected to increase in the future. Another characteristic is that any interest expense incurred in the production process is always capitalized on the balance sheet.

Conversely, since capitalization of a business enterprise begins with the valuation of the interest expenses incurred, this procedure only ends when assets are substantially valuated and readily available for the intended purpose (Pratt & Grabowski, 2011). Moreover, expenses are usually booked in case a business enterprise has no ability of capitalizing costs.

Additionally, capitalization of expenses usually has to meet relatively all the requirements of matching principle. The reason for that is because it assists in recognizing expenses as well as the revenues such expenses managed to generate.

What is the principle behind capitalizing expenses?

Typically, an expense is the monetary value which leaves a business organization. This includes things like payment of electricity and water bills, rent, and so on. As a result of that, during the application of the income capitalization procedure, it is essential to ensure that the estimation cost is adjusted so as to fit the floatation costs. Often, market value is represented by the future cash flow of present value (PV) of a business enterprise. The reason for that is because it is the one that represents or results to the zero net present value (NPV) investment following the allowable floatation costs and investment (Pratt & Grabowski, 2011).

In addition to that, matching principle of capitalizing expenses entails matching them with revenues. Consequently, the period of incurring costs ought to be matched with the assets. Furthermore, it should be noted that assets have usually had long lives hence in return generates revenue during the useful lifetime of an organization (Werner & Stoner, 2010). Likewise expenses ought to be amortized over a long period of time.

With respect to the capitalization principle and actual business operating period, direct costs, and indirect costs must be capitalized together during the pre-production and sale period. The reason for that is because direct and indirect expenses are basically capitalized for only the production period.

Should you capitalize cost for the sole purpose of minimizing the organization’s tax burden?

It is evident that costs can be capitalized for the sole purpose of minimizing the organization’s tax burden. As stated above, capitalization involves the recording of the items in the balance sheet account as compared to that recorded in the income statement (Werner & Stoner, 2010). Therefore, capitalized costs are normally recognized as being as being part and parcel of the fixed asset on a business enterprise’s balance sheet and not charged expenses for that operating period. Nonetheless, the reason for that consideration is because capitalization is mainly used whenever an item is perceived to be utilized over a prolonged period (Pratt & Grabowski, 2011). For instance, in case costs are to be capitalized, it means that they will have to be charged over a period of time through depreciation of the tangible assets and amortization of the intangible assets.

On the other hand, due to the fact that capitalization of costs is normally amortized or depreciated over several years, it implies that it will have a long-term impact on the profits to be realized for several reporting years into the future (Werner & Stoner, 2010). Regardless of that, the associated impacts of cash flow are deemed as being immediate if only the costs incurred are to be paid for up front. Consequently, subsequent amortization or depreciation becomes a non-financial expense of the organization

                                                References

Simonds, R. (2006). Income Capitalization, Flotation Costs, and the Cost of Capital. Journal of Property Tax Assessment & Administration, 3(4), 23-29.

Pratt, S. P., & Grabowski, R. J. (2011). Cost of capital in litigation: Applications and examples. (Cost of Capital in Litigation.) Hoboken, N.J: Wiley.

Werner, F. M., & Stoner, J. A. F. (2010). Modern financial managing: Continuity and change. St. Paul, MN: Freeload Press.

The Link between the Lack of HR Policies and Practices Fit With Arabs Values and Culture

Introduction

In the recent  years Arabs countries  and particularly  UAE have developed into the  dynamic  global economic  settings  with the arrival of foreign thoughts  and  practices  linked  to  technology  and  grown  by the internet.  Most of the  Arabs organizations  are  however, faced  with the issue  of staffs  retention which affects their  general  performance  as well as productivity (Afiouni, Karam & El-Hajj, 2013).  The  issue  is  mainly  facilitated  with  the lack of  fitting  HR practices  and policies  with  the  Arabian  values and  practices. HR policies and practices are highly needed since Human resource has to be managed.  Human’s nature  being  what  is  has  always been  there is always  a need  for  organizations developing,  enforcing  as well as  the communication  of  rules  set  for practices  and  policies that  are a reflection  of the  accepted behavior  standard.  Successful  practices   and policies approach  does  higher  than  boundaries  as  it  identified  and  handles  individuals  needs (Sidani & Thornberry, 2010). A set of  fit  HR practices  and policies  for the  Arabs culture  and  values  is  a major challenge that  affects  the  employees retention  ability. The research will seek to analyze the link between the lack of HR policies and practices fit with Arabs values and culture.

Literature Review

Individuals  require to  have  direct  and  clear  understandings  of their  responsibilities  and roles  within  the organization.  In  addition, directions  or guidelines along  with  specified  objectives  creates  an effective  work flow. The  definition of responsibilities  is  a foundation  of  creating  clear  expectations  on  individuals  performance  which  increases  production  and lowers the retention  rate (Al-Sarayrah, Tarhini, Obeidat, Al-Salti, & Kattoua, 2016). The attempt  to retain  employees  is  characterized  by numerous  challenges which grows  to become a rising  significant  aspect of creating  the  capabilities  of  an organization  in enhancing sustained  competitiveness.  The challenges are  essentially  associated  with  cultural  values,  infrastructural support, leadership styles  and remuneration  packages  within  organizations.  The  challenges  are  intensified  by  values  and  the culture  that  is  possessed  by  Arabs  organization since their  HR policies  and  practices  tends  to  uphold cultural  and religious  behavior  rather  than  creating  favorable  working places  for  increased production (Al-Sarayrah, Tarhini, Obeidat, Al-Salti, & Kattoua, 2016).

In such situation, the  challenges  increases their complication  since the  highly qualified  and experiences staffs  tends to transform  their jobs for  increased  financial  compensation  and improved  operating  conditions (O'Neill, Hodgson & Mazrouei, 2015).  Additionally,  highly  qualified  personnel’s  are  normally  poached  by  large  global  organizations that offers increased  compensations  and  higher  working benefits.  This particular factor is essential for Arab organization for instance those located in Oman, Jordan and UAE. Most of the  leaders  in the Arabs  organizations  fully  understands  the  challenge of  retaining  employees as well as  creating their commitment  for improved  production  and performance . however,  there  lacks fitting  HR policies  and  practices  models to  suit  the  Arabs culture  and  values  to be utilized  in the initiation  of  changes  that  can best  address the issue  of retention (O'Neill, Hodgson & Mazrouei, 2015).

Workers  replacement  costs are  normally  underestimated since  in most  cases  there  are  several  costs  that are hidden  and the  implication  of  work turnover. According to Rees & Althakhri, (2008), high  turnover  status  causes more  than just  monetary  effects  since  workplace  morale  as well as employees  motivation  is  also impacted. HR strategies  and policies  should be developed  which  should incorporate  training,  recruitment  as well as the  management  of  performance   that  best reflects the  corporations  principles  and beliefs  in sustaining  acceptable associations amid  staffs  and  the  managements.  However, most of  the Arabs  organizations merely  creates  policies  and effective  approaches in handling  existing  issues  as  well  as  modern businesses  necessities (Altarawneh, 2016).

It  has  been  argued  highly  by several  theoreticians  that HRs are the  primary  sources  of  achieving  sustainable organizations competitive  edges. According to Naoum, Alyousif & Atkinson, (2015), the systems of  HR are essential  in the generation  of  a workforce whose general contribution  are  unique, valuable  as well  as  challenging to  be  copied  by competitors.  In addition, HR practices  have been established  to  have  an impact  on the  outcomes  of the  company  via  shaping the staffs  attitudes as  well as  behaviors.  Employees in most  cases  makes  interpretation  of the company’s  actions  like HR practices and  management trustworthiness  as the  indication of the corporation  personal  pledge to them. Most of the  Arabs  companies  fails to incorporate  high  working involvement  which results  in the loss  of  morale  as well as  commitment which increases  the  level of retention (Sidani & Thornberry, 2010).

Research Objective

How does the lack of fit HR policies and practices with Arabs values and culture affects the ability of organizations to retain employees.

Research Question

What is the link amid HR policies and practices with Arabs culture and values?

In summing up, working values  that  are utilized  in Arabs  organizations differs  significantly  from the one that  are  present  in the  west  since they are primarily driven by  local  culture. Employee’s retention as the primary issue results to low productivity and performance due to the lack of commitment and motivation (Altarawneh, 2016).  Despite the  fact that  the Arabic culture  encourages the consultation with the subordinates  the organizations  and the  society  highly values  as  such and prefers  to develop personal  decisions that  best  benefits the  organizations. Islamic culture  and its  values  holds  great  impacts  on  HRM’s practices since justice is  considered first before the presence  of competence. Employee motivation  lacks  in the  organizations due to the  miss of  strategies  that  fits  with  the value and culture within the  organizations.

            References

Afiouni, F., Karam, C. M., & El-Hajj, H. (2013). The HR value proposition model in the Arab Middle East: identifying the contours of an Arab Middle Eastern HR model. International Journal Of Human Resource Management, 24(10), 1895-1932. doi:10.1080/09585192.2012.722559

Al-Sarayrah, S., Tarhini, A., Obeidat, B. Y., Al-Salti, Z., & Kattoua, T. (2016). The Effect of Culture on Strategic Human Resource Management Practices: A Theoretical Perspective. International Journal Of Business Management & Economic Research, 7(4), 704-716.

Altarawneh, I. I. (2016). Strategic Human Resources Management and its Impact on Performance: The Case from Saudi Arabia. International Journal Of Business Management & Economic Research, 7(1), 486-503.

Naoum, S. G., Alyousif, A. T., & Atkinson, A. R. (2015). Impact of National Culture on the Management Practices of Construction Projects in the United Arab Emirates. Journal Of Management In Engineering, 31(4), 1-10. doi:10.1061/(ASCE)ME.1943-5479.0000265

O'Neill, K., Hodgson, S., & Mazrouei, M. A. (2015). Employee Engagement and Internal Communication: A United Arab Emirates Study. Middle East Journal Of Business, 10(4), 3-28.

Rees, C. J., & Althakhri, R. (2008). ORGANIZATIONAL CHANGE STRATEGIES IN THE ARAB REGION: A REVIEW OF CRITICAL FACTORS. Journal Of Business Economics & Management, 9(2), 123-132. doi:10.3846/1611-1699.2008.9.123132

Sidani, Y., & Thornberry, J. (2010). The Current Arab Work Ethic: Antecedents, Implications, and Potential Remedies. Journal Of Business Ethics, 91(1), 35-49. doi:10.1007/s10551-009-0066-4

Capacity management refers to the process of designing the operations in an n organization so as to offer the appropriate and enough capacity that meets the changing needs or demand of customers. It involves both proactive and reactive measures that will align the business process and operations of an organization to the changing market landscape, in terms of business competition and changes in technology and the various dynamics that impact on growth and profitability of a business. The case of Colorscope involved a need to adapt to the changing environment , evidenced in business trends that involved price pressures resulting from cheaper Mac- based  and PC-based microcomputers, devices that were equipped with  sophisticated soft-wares  having improved functionality. It also involves evaluating the capacity of services offered by the firm against the customer requirements in the midst of significant changes in technology.

As a result of capacity management, Cha had had to capitalize on Colorscope employees who formed the biggest assets, were well trained and their team work was very effective in meeting deadlines. Through the use of such teams, Cha planned on increasing marketing efforts which could look for new businesses during lean months after a good business due increased demands for catalogs pre-press. The use of these teams would enable Colorscope to avoid running out of business during fall season before the start of holiday shopping. Though profits could not be improved, improvement on operational efficiency and cost containment were important in minimizing the amount of rework. The firm was also able to improve on product pricing as similar price per page were quoted for various customers. Hence, customers were able to place varying demands on resources of the firm.

Reference

Cha,J., Narayanan, V., (1996).Colorscope, Inc. Harvard Buiness School

Coffee Shop Business Plan

Executive Summary And Company Overview

Modern cultural  coffee shop  holds the determination  of becoming an actual  daily  persons addicts, a location to  dream  greater  as  one attempts to  run  from the  daily  discomforts and a place  to  chat with  friends,  read magazines, books  or  surf, all just in  one shop. With  the growing  necessity  of  gourmet  coffee that  is  characterized  by  high quality  as well as services  the  culture  of Modern  coffee bar will develop its  closeness to the  a local  centre  with  a higher populace.

The demand for quality relations with consumers requires the utilization of qualified and motivated employees (Valentine, Mathis & Jackson, 2013).  The  culture of the Modern coffee bar  will offer  much autonomy  and  motivation  to  the staffs to ensure  that they highly  connected to  work  in achieving the core goal of the organization.  Human resource in the case will be a primary priority with a clear employment structure and well targeted benefits for all employees.  50 percent of the starting capital will be acquired from a bank loan while the rest will be contributed by owners. The company will strive to sustain a 20 percent gross profit within the first two years in operation.

Objectives

1. To turn into the newest and best coffee bar
2. Generate profits from the first month of operation
3. Maintain a 20 percent profit margin

Major Success

1. Employees training as well as development that will ensure quality services
2. Create a free culture to create employees autonomy as a form of motivating them
3. A bar design that will increase efficiency, speed and attract more consumers
4. Utilize strong marketing approaches to build stronger grounds for consumer’s loyalty

      Mission          

      The modern coffee bar  will create  unique efforts  that are  aimed at  creating a favorable  surrounding for  all  employees  and  enjoyable to consumers. Profit will be invested in the creation of employee’s satisfaction for quality returns.

            Products

            Modern coffee bar will provide its consumers with the best tasting beverages of coffee in the location. This will  be accomplished  via the utilization  of  quality  ingredients and  quality  preparations by  the trained  personnel’s.  Espresso drinks will also be enlisted along tea, brewed coffee, salads, sandwiches, pastries and coffee beans for those wishing to prepare coffee from home.

            Market Analysis

            The United States coffee market has demonstrated drastic development with the increasing coffee demand (Musso & Druica, 2014).  This will  therefore, favor the corporation  while  striving  to attract  consumers by offering a conducive  relaxing surrounding as well as quality and tastier coffee which will be targeted  at reaching students and working class  individuals. Competition will mainly be achieved from café Roma and Starbucks.

            Summary

            The primary  rationale  for consumers  to  become loyal to a particular  coffee bar lies  behind  quality  taste, quick and efficient services,  favorable atmosphere and  highly motivated  employees (Musso & Druica, 2014).  The pricing of the coffee from the Modern bar will be structured competitively. The corporation believes that offering coffee that is characterized by great services and motivated employees will build a wider and loyal consumer base.

References

Musso, F., & Druica, E. (2014). Handbook of research on retailer-consumer relationship development.

Valentine, S., Mathis, R. L., & Jackson, J. H. (2013). Human resource management. Cengage Learning.

Principles of Business Management

 In global business environment, there is a dramatic change in technology, markets and products. For companies’ to manage change and gain competitive advantage in the competitive market, they must implement change (Cummings & Worley, 2013). In organization management, change plays a significant role in meeting customers’ needs, adopting new technology and expanding opportunities. Change in people and culture is very important in the process of organization change. Both internal and external environment is influencing the need for workforce change. This is because, there is a development of new jobs and technology and quality knowledge and skills are needed for task completion (Cummings & Worley, 2013).  Apart from offering education and training, organizations are forced to employee new workforce with the necessary skills for specific jobs. In 21^st century, many businesses are struggling to get a position in the competitive market (Cummings & Worley, 2013).  Thus, there is a need to restructure the organization and employ experts who will achieve goals and objectives.

In organizational change, culture transformation is an important process which involves the change in values, principles and leadership. It embodies the organization behavior and a positive culture is shaped by incentives. Culture is also dynamic-meaning that it changes with change in external and internal environment (Boonstra, 2013). In organizational change, innovation and expansion influences change and managers have to change working methods and system in order to align with international competition. To avoid future crisis, organization must change the culture and create a clear vision which will define the current situation and future direction. Culture change is also important in creating organization identity (Boonstra, 2013). It is the role of mangers to allow employees know the position of organization and the future.  Culture change is critical in that organization must create a healthy culture where employees will work in a friendly environment in order to promote a health competition. It is also important to create a culture with predefined policies so that employees can recognize their roles and responsibilities in accomplishing the goals (Boonstra, 2013). 

Reference

Cummings, T. G., & Worley, C. G. (2013). Organization Development and Change. Stamford, CT: Cengage

Learning.

Boonstra, J. J. (2013). Cultural change and leadership in organizations: A practical guide to successful

organizational change. Chichester: John Wiley & Sons.

Raising the Minimum Wage to $12 per Hour

Minimum wage increment proposal in Texas has created interesting debates among individuals.  The  proposal is objected  at  increasing  the  general wage for  individuals earning minimum as a way of boosting  economic  growth  and creating  income equality (Cooper 1).  Based on the proposal  the  ideas  behind is that  despite the fact that America is quickly  recovering  from the  global recession  most are still subjected  to low  income  which characterizes low  spending, income inequality and slow economic development (Change 1).  The  supporters of the  policy  asserts that the  proposal would  work  on  benefiting and supporting economic growth  and ensure  that   jobs obtained are not  lost.  On the other hand the opposition makes the claim that this would result in at least a decrease of job opportunities based on low turnover (Change 1).

Increasing the employees  minimum  wage  in Texas  would imply that  the  minimum  salary  workers  are  exposed  to more money for expenses  which  will directly increased  the rippled  money  throughout the state’s economy  since  the employees  have the  capability  of spending  even more (Cooper 1). This is  an opportunity  of creating increased  jobs  since with higher  spending of  minimum  salary staffs  will  result in high  earnings from businesses  and the  necessity  of hiring  additional workers  will  grow  due to the rise  of sales. In the past three or so decades the minimum wage has only been increased three times and the rise can be useful in controlling the occurrence of inflation (Cooper 1).

The  policy change  can  also lead  to the decrease of social  programs spending  due to  the  attainment of stability  for most  families.  Employees that  are  subjected  on minimum wages  are the  ones that   have to depend on social  programs  in supporting  their families  since the income  is insufficient (Cooper 1).  The raise of the income would therefore, develop a higher capability of persons on supporting selves without a dependence of social provisions. Taxation would therefore decrease since the funds required to suit the programs will be lower.  This is  a way of creating  equality  in the  communities  as   income  equality  supports social  as well as  economic growth  through  fairness. The turnover rate  will  also be lower since the workers  will be highly  motivated and satisfied  with  their  work which means that  quitting  will  not be  an option (Cooper 1).

However, the rise proposal is highly rejected by employers since it will increase their spending.  This implies that the policy amendment may result into high layoffs since most employers operate in tight budgets (Cooper 1). The raise  of wages  will hinder the ability  of businesses in compensating  the  same  employees number which may lade to layoff to accommodate  the designed  budget.  With the making of more money by some employees most of them will be left with no jobs.  In addition  products prices are likely  to increase  so that the  income increment  can be supported  which will lead to a higher expense  on the living  cost which will defiantly pressure an additional  wage raise.  There are likely to be lesser hiring since most of the businesses capability to hire additional staffs will be lowered (Cooper 1).  Employment competition is likely to intensify since even those that are highly qualified are likely to fight for minimum wages thus pushing those meant for the positions away.  The economy will definitely grow but in order to attain stability   many transformations must be acquired and this will take much time.

            Work Cited

Change, Inc. Raise Minimum Wage to $12 per Hour in Texas. 2017. Retrieved from https://www.change.org/p/texas-legislature-raise-the-minimum-wage-to-12-hour-in-tx

Cooper, David. Raising The Minimum Wage To $12 By 2020 Would Lift Wages For 35million American Workers. 2015. Retrieved from http://www.epi.org/publication/raising-the-minimum-wage-to-12-by-2020-would-lift-wages-for-35-million-american-workers/

Global Operations Management

Samsung, an electronic company started as a distribution company which was responsible for the supply of groceries in Daegu South Korea, in the year 1974 under Lee who was its managing director (Johnston & Davis, 2015). Lee was a very innovative man, and he later started a Woollen mill in the outskirts of Daegu. In the year 1960, the company entered into the electronic industry. It started by manufacturing a white and black television sets, and also started focusing on the production of semiconductors, hardware and telecommunication components (Michell, 2010). In the year 1980, the company started producing fax machines, telephones and switchboards. After venturing into the production of telephones and fax machines, the company was able to go beyond boarders thus becoming an international company.

The company mainly achieved its success due to the philosophy of its founder Lee which was large scale expansion and development. This consequently motivated the company to be able to invest in researching on how to improve and expand the quality of services that Samsung offered to its clients. The company therefore started setting up manufacturing plants in different places in the world such as Portugal, London and New York and Texas in the USA (Michell, 2010). Moreover, the company also ventured into the construction company, and it boasts constructing the tallest building in the world, Burj Khalifa in the United Arab Emirates and also Petronas Towers in Malaysia. The company therefore focussed on construction, chemicals and electronics as its main priorities (Tymes, 2015).

Moreover, the company was also focused on being the best producer of electronics in the whole world. This move consequently saw the company manufacturing the first Liquid Crystal Display (LCD) in the year 1995, which made the company to realize very huge profits, due to the royalties that other companies hard to pay it in order to use its technology in manufacturing LCD televisions. Due to the quality products that the company was manufacturing, it was able to overtake Nokia, in the year 2001, hence becoming the leading producer of mobile phones in the whole world (Johnston & Davis, 2015). This move saw the company making history since no other mobile phone manufacturing had dominated the world like Nokia. Good customers’ reviews, due to the quality of products that the company was producing really impacted the company positively, thus making it easily outsmart its main competitors Nokia. Furthermore, Samsung’s employees are taught how to conduct their work, before they are allowed to interact with the customers. This move has also seen the company being able to ensure all their employees provide the best services to the company (Michell, 2010).

Samsung was a company which was mainly focused in large scale expansion and development, and this therefore made the company to comply with the legal systems of the country in order to be able to sale its products at ease (Johnston & Davis, 2015). Moreover, the company was not in any way involved in any political biasness, thus making it to attract more customers. In addition, Samsung complied by the culture of each and every region that it opened its manufacturing plants. This consequently saw the company winning the hearts of many customers, simply because the company produced products which suited them. On the other hand, the economy was also their main concern, thus the company focused on producing products which economically friendly, thus allowing people from different classes to be able to access their products (Michell, 2010).

Reference

Johnston, C. J., & Hart-Davis, G. (2015). My Samsung Galaxy Note 4.

Michell, T. (2010). Samsung Electronics and the struggle for leadership of the electronics industry. Singapore: Wiley.

Tymes, E. (2015). My Samsung Galaxy S5 for seniors.

International Management

Q1

Different political systems and ideologies define the political climate of any given country. With hostile political climates, there is a great threat of doing business in the country despite the numerous opportunities for the MNCs (Luthans & Doh, 2012). With peaceful political systems MNCs have a better ground for conducting business in different countries. The governments of Russia and China have control over many industries compared to EU which is a high risk towards MNCs. The EU has challenges of fluctuating currency which is a risk to the MNC

Q2

Privatization of assets is as a result of finding a viable solution to state-owned assets that have been characterized with poor performance significantly high costs. The SOEs have excessive spending and the power to run them is invested in a few politicians whose interest is to gain support from labor unions and workers in order to be reelected resulting to misuse, misguide and unfair distribution of resources (Luthans & Doh, 2012).

Pros of FDI

1. It creates a competitive advantage for the business
2. It offsets volatility

• It raises the standards of living

Cons

1. There can be comparative advantage of there is much of foreign ownership
2. Business can be stripped of its value by the foreign investors making it unprofitable.

Q3

It can be learned that corruption has a severe effect on the economy as it hinders proper growth. When doing business in the US it is important to note the heavy penalty that can be fined (Luthans & Doh, 2012). Direct effects of corruption include slow economy while the indirect is that there is a relationship between corruption and the rate of growth in the country. An official should report the matter of the bribery and further investigations should be made

Q4

It is arguably true to say by getting involved in social responsibility by MNCs is both a sense of social responsibility as well as good business. They encourage environment-friendly practices to the community creating a gain of trust from the community which is a good business tactic.

Q5

Culture can be said to be the art of manifestation which is based on characteristics and knowledge of a given group of people which can be defined by race, language, and religion. An attitude such as centralized and decentralized decision making can be used to differentiate. Some organization structure requires the top management to make all the important decisions while in others all levels from the bottom to the highest are involved (Luthans & Doh, 2012). Attitudes vary in the US, Germany and even Japan resulting to different management. It is true to say that management style differs in that US has a decentralized approach, Japan a group oriented and Germany exercise a bureaucratic one.

Q6

Value can be considered to be something of importance, usefulness or worth. There are cultural differences in the world that differ from each other. Values do not easily change and they are known to promote harmony, individuality as well as consensus. Value has a direct connection with culture as it defines it (Luthans & Doh, 2012).

Q7

They include collective dimension, eating behaviors as well as dressing. Indian and China deeply culture in their food and dressing that greatly differ from that of America. America has an individualistic dimension while India and China have a collection one. America eating habits vary from others as they are not deeply cultured as they continue to evolve with time (Luthans & Doh, 2012).

Q8

Mexico

1. Multinational are interested in setting up operation in Mexico is that there is a productive workforce which will result in high-quality goods and second the economy is full of potential and it is growing.
2. Culture can be considered to be a key due to its sensitivity. Being new in Mexico, US can be considered to have a fewer problem compared to Europeans and worse for Japanese. The difference between the concept of time between Mexican and American can be a major hesitant block (Luthans & Doh, 2012).
3. It is important to study the cultural difference as it would help in identifying the differences and have a way of solving and addressing them so that they may not be a hindrance to the company operations. It will create a ground of understanding what the Mexicans are accustomed to creating a conducive environment (Luthans & Doh, 2012).

Q9

The US is more comfortable with the guided missile form of organizational culture. On the other hand, Japan feels comfortable with a family structure due to the value the place in relationships as their interest does not lay into seeking power (Luthans & Doh, 2012). It is important to understand organization culture as it is significant to the working formula that can best fit them creating a chance for the business to survive.

Q10

Negotiation is an important aspect as it will involve bargaining with the other potential partner in order to arrive at an agreement. The steps include planning, development of an interpersonal relationship, and exchange of information, persuasion and agreement. Negotiation should be done by the group as objectives will be identified. All the steps are done with all the sides being present as they will attain their goals.

Q11

China

1. The Chinese economy can be said that it will continue to grow a factor attributed to advanced technology and high levels of education. However, this can hurt the prospect by the through the continued attempt by the government of integrating socialist views, corruption, counterfeiting and well as the violation of human rights (Luthans & Doh, 2012).
2. This is because the trend is changing and there is also outsourcing by other companies. The issue of wage differentials may also disappear with time due to the changing human demands.
3. Contextual, indirect, and succinct are some of the effective approaches that should be used by the MNCs (Luthans & Doh, 2012). This will form a better understanding of the Chinese workers and the management through negotiations that will the works motivated and high productivity will be experienced resulting to quality goods which in return will yield great profits for the MNSCs.

Reference

Luthans, F., & Doh, J. P. (2012). International Management: Culture, Strategy and Behavior, Eight Editions. McGraw-Hill

Total Reward system

A generous benefit package and pay for performance act as a strategic investment and play a fundamental role in attracting and motivating employees. Since they act as employee incentives, they add a significant value to the business (Armstrong, 2007). When employees receive the benefits, they gain a sense of good will, a sense of belonging and happiness. It is important to note that employee increases their performance with respect to the amount of reward. This means that employees who are career oriented will   increase their performance and productivity in order to gain security and stability in the organization (Armstrong, 2007).

A generous  benefit package and  pay for performance  will increase employee morale in that  when employee receive benefits,  they will show commitment and be loyal to their employees. By acknowledging that they are valued by their employers, they will show their high potential and strive to achieve the set organization goals (Armstrong, 2007). The important point is that the company will have a loyal workforce as well as competitive advantage.

  Both reward system improve communication in that employees are motivated and more interested in developing organization growth.  They feel like they are part of the organization and for this reason, they hold discussion with employers in discussing goals and other important issues related to business (Armstrong, 2007).  Communication becomes strong in that employees and employees want to restructure the organization and a common culture. Employees are allowed to express their concern and their ideas toward organization’s growth are valued.

In my next position, I would like to have a benefit plan which is based on ‘pay for performance’. This future benefit will help in achieving my career goals in that pay for performance will be rewarded for my performance (Armstrong, 2007). This means that the benefit will motivate in improving performance. My higher performance will improve productivity in my position and achieve the career goals. I will also bring innovative ideas so that I can gain high compensation (Armstrong, 2007). Note that the purpose of benefit is not for making my own profits only but also for creating a competitive advantage in the organization.

Reference

Armstrong, M. (2007). A handbook of employee reward management and practice. Philadelphia: Kogan

Page.

Is it a wise decision?

            De Beer made a wise decision in using forward integration and establishing “De Beers Diamond Jewellers Ltd”.  Since the new company was established, it has led to establishment of many other stores in different countries. It is a wise decision because the company will have more control on value chain, production and distribution (HARRIGAN, 2003 p. 3).  The decision of vertical integration is best in that the company will control the cost in the distribution process. A single entity is important in that De Beer will optimize the utilization of resources and minimize the cost of transportation. The important part of the decision is that the company will enjoy the competitive advantage by directly entering in the competitive market and accessing customers (HARRIGAN, 2003 p. 4). On the same note, competitive advantage will be as a result of product innovation. It will be easy to generate products with respect to the technological changes. Given that the ‘mother’ company has more than 100years experience, it will assist the new companies with technological skills and ensure that they meet the customers’ need by selling beautiful diamond. The important thing is that the new companies will sell products under the brand name ‘De Beers’. The vertical monopoly is important mostly in driving demand. Note that forward integration creates a ‘supply of choice’ and the company is able to choose associates and customers who will abide with the principles (HARRIGAN, 2003 p. 4).  Rather than focusing on demand with prior practices, the company made a wise decision to meet demand through vertical integration. The company will be able to conduct product differentiation   and produce different products for specific markets. The different products will meet all needs locally and across the borders. In others words, the established companies will develop specialized assets and a high level of certainty.  

Work cited

HARRIGAN, K. R.(2003). Vertical integration, outsourcing, and corporate strategy. Washington, D.C.,

Beard Books.