Sunday, March 31, 2019

Job Satisfaction Of Insurance Agents In Malaysia Commerce Essay

Job Satisfaction Of redress Agents In Malaysia Commerce EssayThis chapter is an introductory chapter. It intend to discuss on background of the study, highlight the problem statement, depict query objectives and questions and explain conditional relation of the study, provide outline of the study and sum up a oddment of this chapter.1.1 Background of the StudyBefore twelvemonth 1997, the damages companies in Malaysia ar operating as a private community complied by the indemnification Act 1963. Yet, followed by the enactment of amends Act 1996 which started into force on 1st January 1997, all the indemnity companies are converted to worldly concern company which licensed by the Minis probe of Finance under the Companies Act 1965 (Bank Negara Malaysia BNM, 2005). The growth of the restitution pains is closely related to the domestic economy of Malaysia.Based on the financial performance, the revenue of damages industry in Malaysia is increasing gradually year by year. I t had shown that an increase of RM 1,110,806 or 7.87% in the income of damages industry in Malaysia in year 2010 as compared to year 2009. Income of RM 14,114,618 and RM 15,225,424 are preserve respectively for year 2009 and 2010 (Malaysia restitution policy Institute, 2010). Meanwhile, the number of registered agents is also growing up year by year. There was a growth from 116,008 agents in year 2009 to 122,399 agents in year 2010, which was change magnitude by 6,391 agents (BNM, 2010).Motivation is the part of allegiance and results in the achievement of the organizational objectives at the appropriate way. Job merriment of employees can motivate by different motivation factors (Balachandar, Panchanatham and Subramanian, 2010). agree to Tripathi (2001) salutary-nigh of the companies usually motivate their employees by offer economic reward, recognition, promotion, antic security, prep and authority.When consumers want to buying indemnification, they allow for not op erately contact an damages company. There are more than rely on the insurance agents place to solicit and sell insurance policies or product to the general public. No doubt, the revenue of insurance industry is very much depending on the gross sales gained by the insurance agents. Hence, motivation plays a great role to set ahead insurance agents to plough professionally in delivering their services to customers. Insurance agents will adjoin with their hypothesise when companies apply the motivation factors correctly on them. Insurance companies motivate their insurance agents by giving rewards such as scanty bonus or company trip to satisfy their effort in making sales to the insurance company.1.3 Problem StatementNowadays, more and more people want to become insurance agents, which led to the increased challenges between their competitors. The statistical report of Bank Negara Malaysia say that the number of registered insurance agents had increased 5.51% from 2009 to 2 010 (BNM, 2010). Normally, insurance agents do not have any basic fee but their pay is based on commission pay. Insurance agents try to retain and increase their target productivity in order to satisfy their personal credit lines, save their troubles and increase their well-being because the wages of insurance agent depends on a commission basis (Christopher, 2007). According to Bakos (2008) insurance agents retain in the company is highly work ond by commission as remuneration. If the commission to the insurance agents is low, it will de-motivate them and leads to resignation.Past studies showed that motivation and job triumph have direct kindred to act upon employee retention and performance among various types of organization (Goleman, 1998). According to Cravens, Ingram, LaForge and Young (2010) giving a right tool of training and learning can motivate insurance agents more successful at exchange life insurance products. Training and training can improve the job skills and knowledge of insurance agents at each level. Therefore, employees should be given more opportunities for advancement to motivate them in order to enhance their job rapture level (Feinstein, 2000). Besides, Tripathi (2001) stated that employees can be motivated by job security, recognition, promotion and training to enhance job cheer.There are some(prenominal) past researchers Hassan (2010), Salleh, Dzulkifli, Abdullah and Ariffin (2011), Golshan, Kaswuri, Aghashahi, Amin and Ismail (2011) studies on the relationship between motivation factors and job satisfaction among nurses, state Government employees and Gen-Y administrative and diplomatic officers in Malaysia but wishing of studies on insurance agents in Malaysia. The objective of this research is to investigate the relationship between motivation factors and job satisfaction among insurance agents in Malaysia.1.4 inquiry Questions and Objectives1.4.1 common ObjectiveThe main objective of this research is to identify and construe the motivation factors that influence job satisfaction of insurance agents in Malaysia.1.4.2 General QuestionWhat are the motivation factors that influence job satisfaction of insurance agents in Malaysia?1.4.3 Specific ObjectivesTo investigate whether commission pay influence insurance agents job satisfaction in Malaysia.To investigate whether job security influence insurance agents job satisfaction in Malaysia.To investigate whether opportunities for advancement and development influence insurance agents job satisfaction in Malaysia.To investigate whether work itself influence insurance agents job satisfaction in Malaysia.1.4.4 Research Questions result commission pay influence insurance agents job satisfaction in Malaysia?Will job security influence insurance agents job satisfaction in Malaysia?Will opportunities for advancement and development influence insurance agents job satisfaction in Malaysia?Will work itself influence insurance agents job satisfaction in Mal aysia?1.5 Significance of the StudyThis research is tending to add together to the individual and companies. Through our research, the insurance companies will know the importance of the insurance agents job satisfaction and knowing the level of job satisfaction of insurance agents. Meanwhile, individual can also gain a better sagacity on motivation factors that can lead them to job satisfaction.The second school of this research is to narrow the gap with regards to understanding job satisfaction of insurance agents by studying the motivation factors that influence insurance agents job satisfaction. Insurance companies will get to know more about the motivation factors that influence the insurance agents job satisfaction by offer some rewards ashes to satisfy insurance agents. This enables them to build long-term profitability and retain persisting growth in their businesses to gain competitive advantages in the insurance industry.This research will also expose a new knowledge to the public who has interest on the job of an insurance agent. It assists the public on raising knowledge and awareness of motivation factors that influence the job satisfaction of the insurance agents.1.6 Outline of the StudyChapter two shows the related literature review that provides the intro for developing the theoretical framework to proceed with further investigation and hypotheses testing.Chapter tercet presents the research methodology used to test the research questions. It includes research design, population, take in and sampling procedures, data collection method, variables and measurement, and data analysis techniques.Chapter four is the definition of the data analysis. It presents the overall result and determinations from the data collection. Statistical Package for fond Science (SPSS) is used to generate results in this research.Chapter five is summaries the research finding and also discusses the major finding. Besides, it also discusses the limitation of the study as well as provides the recommendation for future researchers.1.7 ConclusionThis chapter is about the overview of this study stated on the above. This study aims to determine the motivation factors affecting toward insurance agents job satisfaction so as to contribute for insurance companies and the public. In the pursual chapter two, it will provide the literature review of this study.

Functions Of Database Management System

Functions Of informationbase focusing governing bodyBefore we pay off with selective informationbase management constitution we should hold out what is selective in stageion. A selective information is a piece of in ashesation, and infobase is the prayer of entropy that is set in an orderly way. And managing this entropybase is cognize as database focusing organisation in short database management frame. The person who manages, creates, controls and maintain this database management brass is known as Database Administrator (DBA). An separate(a) important term to retrieve is information. Any data which has been converted to a useful and understandable form is called information. at that key out ar some differences between data and information.Data dataAny raw figure or fact is data.For example 6 is a data.A processed form of data is known as information.For example weight = 6 kg is dataData does non help in qualification decisions.With right information we sti nker hand decision.Functions of Database attention arrangementData puzzleing The structured definition of data storage is known as data modeling. touch Query This a mechanism of manipulating the dataConcurrency Control To ensure the accuracy and simultaneous entranceway of the database by multiple exploiters.Security of Information Security of the database is in truth(prenominal) important. doss down Reco in truth(prenominal) Data reco genuinely after the system crashes.Types of Database usersDatabase Administrator (DBA) The database administrator is the person who who maintains casts and creates the database.Database Designer A database designer is a person who plans or designs the database. nullify User The sensation who uses the database, it may be that he/she besides views the database or it may be that he/she devises the data entries. Make queries, etcThere may be opposite types of end user, for exampleSophisticated these ar the users who has a good acquaintance in database and mass make queries, with SQL keep in line data with DML (Data Manipulating Language)Specialized who makes use designs that interacts with the databaseNative only interacts with the database via some forward-looking programsApplication Programmers A person who makes applications which interacts with the database using programming language want C++ , Java, etc. He may create a computer softw be which gives a easy to use interface to input data into a complex database, so that even the clerks of the office potful input data or look for for some data from the companies database without knowing Oracle, MySQL or other database management system softw atomic number 18Database ModelDatabase Model is the structure or the format of the data it may be physical or conceptual. Database Model is in like manner known as database outline.Conceptual Model Conceptual Model helps to overview the organisational schema sooner than the database schema. sensual Model Physical Mo del is the database design which instrument that this model describes the data storage, data structure, etc. basically we accept to know about the physical media of the data storage and the mode of admittance of that data from this model.Frame Memory Model This type of model is chiefly used for heroic manufacturing database application. Modifying the characteristic of the complex database easily and accurately.Unifying Model in the Unifying Model the Entity-Relation concept has been extended to introduce a new form of diagrammatic representation other than class diagrams. bearing Oriented Model A Object Oriented Model is a data model in which the real life data or entities ar organized. Generally Object Oriented Data Model or OODM consists of the following concepts, they are as followsObject and object identifierAttributes and methods differentiateClass hierarchy and inheritanceRecord ground Model The Record Based Model helps us to specify the overall logical structure of the database. In this type of data bases the images of types of data are fixed. And each of the testify type or data type has a fixed number of fields with fixed field length. There are three types of destroy based data model they areHierarchical Model In a Hierarchical Model the data is organized in a form of tree like structure. In this kind of structure the rise up child relationship can easily be shown. A very famous use of this kind of database is the Windows Registry developed by Microsoft.320px-Hierarchical_Model.jpg net profit Model This is a type of database model where it is easy to represent objects and relationship. Its more(prenominal) easier to define m each to many relation in this model rather than in the hierarchical model. A well known implementation of intercommunicate Model is RDM Server.320px-Network_Model.jpgRelational Model The relational model was developed by E.F Codd. The properties of a relational database model are as followsThe columns of table are a ll homogenous i.e. they are of the very(prenominal) kind. all(prenominal) item should catch simple prise.All the relationship of tuples must be distinct.The key value should be used to order the tuples within a relationship.Columns are named intelligibly and their ordering is not so important.280px-Relational_Model_2.jpgManual Database.A Manual Database is a drop kept by a human without the use of any computers or electronic devices. This obviously has many problems likeSearching It is very difficult to find a particular result from a manual of arms database if the sizing of the database is huge.Updating Updating a new entry is as well as problematic as we have to manually find the old record, slit it, or erase it wherefore make the new entry.Backing up retrieve on that point is a database of 10,000 pages making a manual alleviation of this database, i.e. a handwritten copy of it will be difficult to make. sieve It is virtually unsurmountable to sort the data say names of customers by alphabetic order, etc on a manual database.As we see that making a manual database of a mountainous amount of data becomes im likely to manage so now we use computerized data.Traditional point affect SystemOne of the earliest forms of computerizing data storage is the file away bear on system. Creating, sorting, organizing and glide slopeing the content of the file is known as File impact System.Characteristics of File Processing System.Each file is different from each other.This is a collecting of files, or sorted data.Each of the file is called a flat file.Every file contains processed information of a specific function such(prenominal) as one file may be for accounting other file may be of contacts.Files are created by the help of program which are written in C, C++ or COBOL.Drawbacks of the File Processing System.There are many drawbacks of File Processing System.Separated DataDuplicated DataData DependencyData inflexibilityProblems in representing the da ta to user.File format problems.Database A database is a organized form of data. This establishment is very important because when the size of data increases it becomes difficult to use or control the data.Database steering System A database management system or Database management System is a collection of data and programs which help us to admittance and modify those data. The collection of data is called database. The main purpose of database management system is to expeditiously store and control the database.Advantages of database management systemControl surplusage With the help of DBMS data redundancy can be cont brandished. In the File Processing System there used to be data redundancy, which factor that the kindred data stored more than once.Integrity Maintaining Integrity means that the data stored in the database is accurate and precise. This is very much important as incorrect data can not be stored into the database so some integrity constraints are enabled on th e database, to check the accuracy of the database.Avoiding inconsistency Consider there are two data storage sites of data and some throws are do in one site but those changes are not reflected on the other site for some reasons then it gives rise to data inconsistency. To nullify this data redundancy should be removed if data redundancy is canvas it will also remove data inconsistency.Data Sharing Suppose a same data is required by two databases then that data can be shared from a centralized database.Maintaining standards As we know that DBMS is a centralized system so it can be order effectively. A companion database can be standardized in Department Level, National Level, International Level, etc.Preventing unauthorized nettle Lots of security can be enabled to prevent the unauthorized glide path of the data. Passwords and encryptions are enabled in database to provide better security to companys data.Backup and recovery of data Data outrage can slip by at any moment d ue to number of reasons so it is very much important to create backup so that the data can be recovered if there is any accidental loss of data.Disadvantages of DBMSComplexity The functionality of DBMS is a very complex process. The database designer, database administrator, developer and the end user should have a clear understanding of the DBMS working and functionality to make it work in a correct way. If they fail to do it DBMS will not work in a proper way. coat As age passes the size or the volume of data increases which makes the size of database larger. Moving, copying and editing this large amount of data take a considerable while and system resource. Some eons upgrading RAM or record book Space becomes necessary to run the DBMS properlyPerformance DBMS software tends to run slower than the typical File Processing System. follow Cost of implementing the DBMS is high. Sometimes the DBMS software for the specific environs is high, or the upgradeing of hardware to run it b ecomes costly or when converting from an older system to DBMS the process of conversion of the data costs a lot. ill luck rate higher As it is a centralized system I it fals every operation comes to a halt.Difference between File management System and Database trouble SystemFile Management SystemDatabase Management SystemFile management Systems are relatively small in size and volumeDatabase Management Systems are comparatively larger in size.They are cheaper to implementMuch costlier to implementIt deals with few filesIt deals with a large number of files.The structure of this system is very simpleThe structure is very much complex in nature.There are many otiose data.Redundant data is very much reduced.Data inconsistency takes sharpen in File Management SystemData inconsistency is analyse in the DBMSIn File Management System data is isolated.In DBMS data can be shared.There is no security.It is secured.Very simple and primitive form of backup and recovery.Highly civilize and complex form of backup and recovery.Mainly single user.Most of the time its multiuser.Less preliminary designVast preliminary design manipulation of DBMSDatabase Management System is very useful and is used in many sectors. Some the areas where it is used is given below.Railway for making the railway line enquiry and reservation system to work properly there is a needed of implementing DBMS as all the data has to be stored in a centralized placement and the data is then used by every railway move throughout the country.Banking As now a days there are many branches of a bank there has to be a DBMS to track and record the transactions of every customers. This will have not been possible if File Management System were used.Schools/Colleges and Universities To store the records of students like their name, roll number, address, contact number, marks obtained, etc a DBMS is used so that the database can be updated easily.Business and Offices To store the companys sales, profit , etc a nd its record of employees a in advance(p) DBMS is used.Instances and SchemasThe database changes from time to time, the information which is stored in the database at a particular time is known as Instance. A Schema is a overall design of the database .QUESTIONSWhat do you mean by DBMS?A DBMS or Database Management System is a collection of data and programs which help us to access and modify those data. The collection of data is called database. The main purpose of DBMS is to efficiently store and control the database.How does DBMS differs from MS Excel?What are the differences between data and information?What is the difference between Conceptual Model and Physical Model?Conceptual Model Conceptual Model helps to overview the organizational schema rather than the database schema.Physical Model Physical Model is the database design which means that this model describes the data storage, data structure, etc. basically we get to know about the physical media of the data storage and the mode of access of that data from this model.What are the difference between Traditional File Management System and Database Management System?Traditional File Management SystemDatabase Management SystemFile management Systems are relatively small in size and volumeDatabase Management Systems are comparatively larger in size.They are cheaper to implementMuch costlier to implementIt deals with few filesIt deals with a large number of files.The structure of this system is very simpleThe structure is very much complex in nature.There are many senseless data.Redundant data is very much reduced.Data inconsistency takes place in File Management SystemData inconsistency is suss out in the DBMSIn File Management System data is isolated.In DBMS data can be shared.There is no security.It is secured.Very simple and primitive form of backup and recovery.Highly sophisticated and complex form of backup and recovery.Mainly single user.Most of the time its multiuser.Less preliminary designVas t preliminary designWhat do you mean by Data Duplicity?Data Duplicity means repetition of the same data more than once in the same database. Data Duplicity causes lot of problems likeIt is waste of time and money.It leads to loss of data integrity.It takes up additional storage and increases the size of the database which effects the search time.What do you mean by Data Dependency?In a File Processing System the specific physical format of file and record were hard coded on the application programs. So a change in database format required the codes to be updated.What is data isolation?Data Isolation means a data which is isolated form other databases that means when data can not be shared. It is not possible to share data in a File Processing System so the data remains in a isolated condition. make unnecessary down the necessary steps to secure a data into a database.What do you mean by redundant data?Data Redundancy means duplication of data. A same data may be present more than on ces leading to data inconsistency.Write down the applications of Database Management System.There are many applications of Database Management System , some of them are explained belowRailway for making the railway enquiry and reservation system to work properly there is a needed of implementing DBMS as all the data has to be stored in a centralized location and the data is then used by every railway stations throughout the country.Banking As now a days there are many branches of a bank there has to be a DBMS to track and record the transactions of every customers. This will have not been possible if File Management System were used.Schools/Colleges and Universities To store the records of students like their name, roll number, address, contact number, marks obtained, etc a DBMS is used so that the database can be updated easily.Business and Offices To store the companys sales, profit , etc and its record of employees a sophisticated DBMS is used.Who are the End Users? How many type s of End Users are there in DBMS?End User The one who uses the database, it may be that he/she only views the database or it may be that he/she makes the data entries. Make queries, etcThere may be different types of end user, for example Sophisticated these are the users who has a good knowledge in database and can make queries, with SQL manipulate data with DML (Data Manipulating Language)Specialized who makes application programs that interacts with the databaseNative only interacts with the database via some sophisticated programs

Saturday, March 30, 2019

Business Ethics In The Context Of Globalisation Commerce Essay

assembly line morality In The Context Of Globalisation Commerce merchant shipvassThe following document aims at studying Business respectable motive in the context of globalisation. In order to do so, let us lolly with the commentarys of the deuce most consequential words in the title1. Business EthicsBusiness morals is the study of vocation points, activities, and conclusivenesss where issues of pay off and reproach atomic number 18 addressed.It is worth stressing that by salutary and reproach we mean chastely right and wrong as opposed to, for utilisation, commercializedly, strategic aloney, or financially right or wrong. Moreover, by crease morality, we do non mean l i somewhat(a)(prenominal) commercial dividing linees, save overly government organizations, pressure groups, non-for-profit argumentes, charities, and other organizations. For example, dubiousnesss of how to struggle employees reasonablely, or what constitutes deception in advertisin g, argon equally as of the essence(predicate) for organizations such as CRY, the University of Mumbai, or the Bhartiya Janata Party as they are for Satyam, PG, or Infosys. However, apt(p) the high profile of honest issues in relation to commercial cevasivenessntelees, it is these types of backupes that are predominantly centralizesed on in general.Business moral philosophy and the lawHaving defined business organization morals in terms of issues of right and wrong, peerless might quite naturally question whether this is in both room distinct from the law. Surely, the law is in any case near issues of right and wrong? This is dead on tar restore, and in that respect is indeed considerable overlap amidst ethics and the law. In fact, the law is essentially an institutionalization or codification of ethics into specific amicable rules, regulations, and proscriptions. Neverthe little, the two are non equivalent. Perhaps the best way of thought round ethics and th e law is in terms of two run across domains (see Figure). The law might be tell to be a translation of the minimum unimpeachable standards of demeanor. However, umteen morally contestable issues, whether in business or elsewhere, are not explicitly covered by the law.In one sense then, business ethics weed be tell to begin where the law ends. Business ethics is primarily concerned with those issues not covered by the law, or where there is no definite consensus on whether something is right or wrong. Discussion slightly the ethics of particular business practices may plain offtually assume to legislation once some harming of consensus is r apieceed, but for most of the issues of interest to business ethics, the law exemplaryly does not currently put up us with guidance.2. GLOBALIZATIONGlobalization is the progressive erosion of the relevance of territorial bases for complaisant, economic and political activities, processes and transaction.Globalization is not p rovided a actually controversial topic in the public argument it is also a oft sequences contested term in pedantic discourse. Apart from the fact that mirroring the public debate the camps seems to be divided into supporters and critics, there is growth concern about whether globoseization is a fact at all. So, for example, some conclude that there is null manage a worldwide economy, because roughly 90 per cent of world trade exactly takes outrank either at bottom or between the three economic axis vertebraks of the EU, marriage America, and East Asia, leaving out all other major move of the globe (Chortarea and Pelagidis 2004 World Trade Organization 2004). Obviously, we occupy to examine the orbiculateization buzzword more than carefully and to develop a more tiny definition if we privation to gain its character and its implication for business ethics.Scholte (2000) says if we want to get a grasp on the decisive features of globalization, he suggests we ca n start by looking at the way social ascribeions traditionally took place. These federations, be it someoneal relations to family members or friends, or economic relations such as shopping or working, took place within a veritable land. People had their family and friends in a certain village, they had their work and business relations within a certain town or even country. Social interaction traditionally needed a certain geographical space to take place. However, this link between social federations and a certain territory has been continuously weakened, with two main developments in the live a couple of(prenominal) decades being curiously important.The first development is technological in nature. forward-looking communication technology, from the telephone, to radio and television, and now the internet, open up the possibility of connecting and interacting with spate despite the fact that there are large geographical distances between them. Furthermore, the rapid dev elopment of global transportation technologies allows obedient deal to easily connect with other people all over the globe. turn Marco Polo had to travel many months to finally arrive in China, people today can mistreat on a plane and, after a passable meal and a short sleep, arrive some time later on the other side of the globe. territorial reserve distances diddle a less and less important role today. The people we do business with, or that we break friends with, no longer necessarily find to be in the equal place as we are.The second development is political in nature. Territorial borders have been the main obstacles to worldwide connections between people. Only 20 courses ago, it was still more often than not impossible to enter the countries in the eastern bloc without lengthy visa procedures, and even then, interactions between people from the two sides were very limited. With the fall of the iron curtain, and substantial liberalization efforts elsewhere (for insta nce within the EU), subject borders have been eroded and, in many cases, have even been abolished.These two developments mainly account for the rushive proliferation and facing pages territorial connections. These connections may not always necessarily have a global spread in the literal sense of worldwide spread. The new-made thing though about these connections is that they no longer need a geographical territory to take place and they are not restricted by territorial distances and borders any more.Relevance of globalization for business ethicsGlobalization as defined in terms of the deterritorialization of economic activities is particularly relevant for business ethics, and this is evident in three main areas culture, law, and accountability.1. CULTURAL ISSUESAs business becomes less fixed territorially, so corporations increasingly engage in afield markets, suddenly finding themselves confronted with new and diverse, sometimes even contradicting honourable makes. less on value, which were taken for granted in the home market, may get questioned as soon as corporations enter foreign markets. For example, attitudes to racial and gender variation in Europe may differ significantly to those in inwardness Eastern countries. Similarly, Chinese people might regard it as more un honorable to sack employees in times of economic downturns than would be typical in Europe. Again, whilst Europeans tend to regard child labour as strictly un good, some Asian countries might have a more unemotional approach. Consider the case of Playboy, the US adult magazine, which had to suspend its Indonesian strain and vacate the telephoner premises in 2006 in the wake of crimson protests by Islamic demonstrators even though the Indonesian edition was a toned down version that did not show nudity. The reason wherefore there is a potential for such businesss is that whilst globalization results in the deterritorialization of some processes and activities, in many cases there is still a close connection between the local culture, including moral value, and a certain geographical region. For example, Europeans more often than not disapprove of capital punishment, whilst many Americans appear to regard it as morally acceptable. Women can freely sunbathe topless on most European b from for each one onees, yet in some states of America they can get fined for doing so and in Pakistan would be expected to cover up much more. This is one of the contradictions of globalization on the one hand globalization makes regional variance less important since it brings regions together and encourages a more uniform global culture. On the other hand, in eroding the divisions of geographical distances, globalization reveals economic, political, and heathen differences and confronts people with them.It has been said that countries exhibit very different views on the physical composition of business ethics. These differences are regarded as found largely i n heathen diversity. For example, Japan is considered to have an entirely different set of guidelines than the United States because the cultures of these two countries come from entirely different origins. However, if business ethics are based only in culture then businesses global interactions should instigate much more conflict than currently exists. The basic cultures of Japan and the United States have very little common ground, therefore their views on business ethics would come from entirely opposite directions. Compromising a cultures moral set can be considered extremely difficult it is much more credibly that those same values would try to be imposed upon the other party. With each culture imposing its values on the other, the result would be unrelenting conflict. However, the rapid growth of global business paints this picture of conflict as false. Businesses can only expand quickly in global markets by being empathic to the needs, perspectives, and accepted procedure s of their foreign counterparts and partners. Therefore, business ethics is not entirely based on the culture from which it is derived. It is based more on a basic human moral understanding that transcends inter content boundaries. Up to present, ethics have evolved through isolated pockets due to the limited range of global communications. Todays close communication and cooperation of companies worldwide provide have an even out effect. Business ethics depart eventually drive toward one general definition. What exactly constitutes that definition is yet to be determined. The certainty is that the definition will be fluid in nature and change as new principles are accepted and implemented. To know where we are headed we must(prenominal) understand how good business practices evolved. Although business ethics is a relatively new study the concept has been around since commerce began. For instance, a blacksmith earned his repute by treating his employees well and his customers fa irly. As his reputation grew so did the size of his business. While this is a simplistic example it is meant to show that the concept of fair business practices has existed and contributed to the success of enterprises long before business ethics became an ceremonious study. preceding to todays multiple innovations in worldwide communications, business morals in each separate geographical area evolved on their own. Without much influence from the after-school(prenominal) world, ethical behaviour was influenced by what was important to the society. What was significant to the society created expectations of fair business practices that have carried through the years? What do societies consider important?Culture and ethics are interrelated and intertwined in such a way that it makes it difficult to know which factor guiding / motivating the behaviour is arising from a given situation. Is it the heathenish vision of his/her ethics or is it the ethical vision of his/her culture that guides someone to do or not do certain things. Trompenaars survey questioning peoples reaction to a given situation shows that cultures with more emphasis on human alliances and loyalty (particularists) s subject matterd lower than those that express obeying rules (Universalists). The situation youre riding in a car driven by a close friend, whos driving at least 35 mph in a 20 mph zone. He hits someone. No witnesses. His attorney says if you testify under oath that your friend was driving at 20 miles per hour, it might save him from serious consequences.What right has your friend to expect you to comfort him?Lying was more prominent in cultures stressing human relationships, whereas it was less paramount in cultures stressing rules. Telling the truth is an ethical value that appears in this context. matchless could say, people in cultures emphasizing human relationships would most likely lie to protect the relationship whereas, people in cultures putting a greater value on r ules would lie less in order to brave by the rule. Adler differentiates between cultures that are universally oriented (all rules apply to everyone) and particularly oriented the nature of the relationship determines how someone will act in a particular situation. When it comes to the actual experience of the individual in question it is not certain if that person is motivated by cultural influences and/or ethical implications of his/her act and/or decision. Paul Ricoeur suggests three positions in ethical development 1) the self 2) relations with others, 3) institutional. Through this process of moral integration, the self eventually becomes autonomous (auto self- nomous norms which becomes understood as self-regulatory) in its experiences and interactions with others and institutions. The self internalises the cultural norms and values through socialization (being in the world with others). 2. LEGAL ISSUESA second aspect is closely linked to what we said previously about the re lation of ethics and law. The more economic transactions lose their connection to a certain regional territory, the more they escape the control of the individual national governments. The power of a government has traditionally been confined to a certain territory, for example French laws are only binding on French territory, UK laws on UK territory, and so on. As soon as a high society leaves its home territory and moves part of its production string to, for example, a third world country, the judicial framework becomes very different. Consequently, managers can no longer simply rely on the legal framework when deciding on the right or wrong of certain business practices. If, as we said earlier, business ethics largely begins where the law ends, then deterritorialization increases the demand for business ethics because deterritorialized economic activities are beyond the control of national (territorial) governments. For example, global financial markets are beyond the control of any national government, and the constant struggle of governments against issues such as child pornography on the internet shows the enormous difficulties in enforcing national laws in deterritorialized spaces.A doings may be sensed as ethical to one person or group but might not be comprehend as ethical by some other. Further complicating this dichotomy of behavior, laws may have been legislated, strongly stating the governments position, and presumably the legal age opinion, on the behavior. As a result, in todays diverse business environment, one must consider that law and ethics are not necessarily the same thing. Though law often embodies ethical principles, law and ethics are far from co-extensive. The law does not prohibit many acts that would be widely condemned as wrong. And the contrary is true as well. The law also prohibits acts that some groups would perceive as ethical. For example lying or betraying the confidence of a friend is not illegal, but most people would consider it unethical. Yet, look sharping is illegal, but many people do not have an ethical conflict with exceeding the speed limit. Law is more than simply codifying ethical norms. Establishing a set of ethical guidelines for detecting, resolving, and forestalling ethical breaches often prevents a company from getting into ensuant legal conflicts. Having demonstrated a more autocratic approach to the problem may also ensure that punishment for legal violations will be less severe.Some activities and beliefs may be legal, but not perceived as ethical. Marriott Corporation maintains very comprehensive ethics standards to which their employees must abide. Their somatic Dress Code is an example. Several years ago, the orientation program at Marriott Corporate Headquarters admitd a presentation on what was and was not considered acceptable appearance in the company. Some requirements includedWomen could not have on skirts any shorter than 4 inches above the knee.Women coul d show no bare leg. all long pants or hose were required at all times.Womens shoulders could not be exposed.Mens hair could not reach their collar, except for ghostly reasons.Men could not wear earrings.Although these rules were part of company policy, there is nothing illegal about any one of these items. However, in the Marriott Corporate culture, each was considered unethical.Another example is the manufacturing practices of Nike, one of the largest manufacturers of athletics sportswear in the world. Nike produces the majority of its goods in South East Asia. Despite the profits of the Nike organization, its foreign workers are paid substandard wages and work long hours in portentous conditions. In 1996, the entry-level wage at one of these factories was $2.20 a day. Labour groups theme that a liveable wage in Indonesia is about $4.25 a day. compare this with the pay of one of Nikes celebrity promoters, Michael Jordan, who gets $20 million a year to promote Nike sneakers. Jor dans compensation alone is more than the annual income of 20,000 workers who make Nike shoes.Nikes manufacturing practices are not illegal. There is nothing that says a company cannot take its manufacturing operations outside the United States. And as long as the company is concussion the minimum wage standards of the host country, there is nothing illegal about paying low wages. However, most Americans would look at these practices as unethical, specially considering the profits of Nike and their spending on celebrity promoters.Clearly, there is a relationship between law and ethics, and this relationship is important in management. Managers must mensurate not only what is legal, but what they, their employees, and society consider ethical as well. Important here is that companies must also consider what behaviours their customers will and will not accept. The news is full of stories regarding the ethical issues with which companies are being confronted, such as the practices of Nike, as outlined above. No company wants to be squeeze to defend itself over ethical issues involving wages, the environment, working issues, or human relations.Managers play a vital role in a companys legal and ethical performance. It is in part their responsibility to ensure that their employees are abiding by Federal, State, and Local laws, as well as any ethical rules established at the company. But most importantly, the managers must provide a positive example to their employees of proper behaviour in light of laws and ethical codes.Certainly, policies and procedures will never be developed to satisfy everyone, but the establishment of Codes of Ethics will at least provide a framework for ethical behavior, and allow customers to evaluate the type of company with whom they are doing business. With this knowledge, employees and customers must steady down whether or not they are willing and able to conform to these Codes, as well as to the laws that have been enacted. Manager s cannot simply limit their decisions to following the law. They must also consider the ethics of their employees and customers.3. Accountability issuesTaking a immediate look at global activities, one can easily list corporations as the dominant actors on the global stage MNCs own the mass media which influences much of the information and entertainment we are exposed to, they supply global products, they pay peoples salaries, and they pay (directly or indirectly) much of the taxes that keep governments running. Furthermore, one could argue that MNCs are economically as powerful as many governments. For example, the gross domestic product of Denmark is about the same as the turnover of General Motors. However, whereas the Danish government has to be accountable to the Danish people and must face elections on a regular basis, the managers of General Motors are formally accountable only to the relatively small group of people who own shares in the company. The communities in the US , Brazil, or Germany that depend directly on General Motors investment decisions however have next to no influence on the company and, irrelevant a regional or national government, General Motors is, at least in principle, not accountable to these constituencies. What this means is that the more economic activities get deterritorialized, the less governments can control them, and the less they are open to popular control of the affected people. Consequently, the call for direct (democratic) accountability of MNCs has become louder during the last years, evidenced for example by the anti-globalization protests that we mentioned before. Put simply, globalization leads to a growing demand for corporal accountability. The corporate corporation has been shocked to attention by the recent corporate governance meltdowns. The silver lining is that these scandals are resulting in better financial oversight and more focused attention on the ethics of directors, officers, auditors and other s. But while promises of increased ethical conduct focus the publics attention, self-scrutiny and accountability are also essential.Ethics is easier in concept than in application. Codes of ethics are not new. Nor are efforts to encourage ethical corporate practices. In 1991, Congress enacted the U.S. Federal Sentencing Guidelines. These guidelines had a major impact on corporate America and were an effort to positively induce companies to prevent unethical activity by providing mitigation of some punishment and reductions of fines for companies that proactively made a good faith effort to take steps to prevent unethical activity. Congress used the stick and the carrot approach to provide an motivator for companies to create or modify their ethics programsgood behavior is rewarded when companies involve themselves in crime controlling actions. Elements of an effective abidance program under the Guidelines include a code of conduct or ethics oversight by high-level personnel due ca re when delegating authority effective training and communication auditing and monitoring and reporting mechanisms enforcement of disciplinary mechanisms and appropriate chemical reaction after detection.Five years later, a court case provided another(prenominal) wake-up call. In 1996, a court in Delaware held a board of directors obligated for the unethical and illegal actions of the organization and its employees. This case caught the attention of corporations and led some companies to institute compliance and reporting structures.Of course, the Sarbanes-Oxley Act of 2002 has gotten the most attention recently. Sarbanes-Oxley was enacted in response to the conduct of corporations such as World Com, Enron and Arthur Andersen. While Sarbanes-Oxley largely affects only publicly traded companies, it has led to a trickledown effect. Its requirement that all publicly held corporations disclose whether or not they have a code of ethics for its Chief Financial Officers have led privatel y held companies and non-profit corporations to enact codes of ethics. The swerve is that more companies are adopting and using codes of ethics.There are several benefits of a formal ethics policy. As described above, there are legal benefits in the form of editd fines and penalties. However, an ethical working environment is another important benefit. A formal ethics policy can lead to decreased job dissatisfaction, decreased pressure to violate ethical standards, ameliorate communication, increased trust in management, greater consistency in decision-making, and fewer violations of law and regulation, just to name a few. Pragmatically, it is often true that good ethics equals good business. Consumers, employees, and vendors lose trust in companies which engage in unethical activities. Companies that promote trust, honesty, integrity, fairness and respect generally have an easier time attracting quality employees.Less observable, a strong ethical environment can encourage conver sations about ethical issues, questions, and gray areas. It can also provide a comfortable environment for employees to seek guidance and raise concerns. When given the opportunity to communicate expectations and requirements, a company can proactively influence its employees and officers to bar unethical conduct and violations of law. A formal ethics policy reminds employees and officers what the company deems the right thing to do.IMPLEMENTING A CODE OF ETHICSGroucho Marx once said that The secret of life is honesty and fair dealing. If you can fake that, youve got it made. Ethics is a lot easier in theory, but ethical conduct cannot be faked. Implementing a code of ethics policy takes careful study, time and training. A code of ethics can apply not just to individualsboard members, officers and employeesbut also to aspects of the companys businessethical investing and pension fund management.In adopting a code of ethics, a business must locate what type of code to adopt. Does i t want a simple statement of aspirational values or does it want a heterogeneous manual that describes the companys rules and regulations and which provides detailed guidance about what conduct is not acceptable? What are the companys core values? How does the company want directors, officers and employees to reflect those values?Codes of ethics are usually broken down into two types (or a hybrid of the two) values-based code of ethics and compliance-based code of ethics. A corporate values statement is an aspirational document which is based on underlying values or principles. It is not easy to enforce. A compliance-based code of ethics is a compliance document that emphasizes rules and written procedures, and, therefore, is easier to enforce. A hybrid consists of a statement of organizational values and how those values are to be applied. For example, because communications should reflect the ethics of the company, a code of ethics that has honesty as a core value may require th at internal and external communications be truthful and respectful. The company may also require that product or service claims must be honest, straightforward and defensible. However, as with any company policy, it is important that this new code be reviewed by legal suggest before being formally incorporated into the companys policy.Once the code of ethics policy is adopted, it must be communicated, enforced and effectively monitored. There is a natural reluctance to talk about ethics and values however, a company can integrate discussions of ethics into decision-making, and encourage employees to raise ethical concerns. This can be done through training, providing whistleblower procedures, monitoring and rewards. well-nigh every company will have employees that made the correct decision in spite of the difficulty in doing so. Communicating these stories is one way to make ethics more meaningful. Employees should understand the companys core values and wherefore they are core va lues. The company should ensure that its decision-making process factors in the companys code of ethics.The ethics policy should also be communicated to board members and employees before they totality the company if the companys products and services and the kinds of decisions needed to be made and actions to be taken are communicated, the potential employee or board member can decide whether employment with the company is consistent with their values.CONCLUSIONIn conclusion we would like to depict the effect that Globalization will have on the ethical behavior and understanding of various stakeholders in a global business environment.STAKEHOLDERSETHICAL IMPACTS OF GLOBALIZATIONShareholdersGlobalization provides potential for greater profitability, but also greater risks. Lack of regulation of global capital markets, leading to additional financial risks and instability.EmployeesCorporations outsource production to developing countries in order to reduce costs in global marketpla ce this provides jobs but also raises the potential for exploitation of employees through poor working conditions.ConsumersGlobal products provide social benefits to consumers across the globe but may also meet protests about cultural imperialism and westernization. Globalization can bring cheaper prices to customers, but vulnerableconsumers in developing countries may also face the possibility of exploitation by MNCs.Suppliers and CompetitorsSuppliers in developing countries face regulation from MNCs through supply chain management. Small scale indigenous competitors exposed to powerful global players. gracious Society (Pressure groups, NGOs, etc.)A global business activity brings the company in direct interaction to local communities with possibility for erosion of traditional community life globally active pressure groups emerge with aim to legal philosophy the corporation in countries where governments are weak and tolerant.Government and RegulationGlobalization weakens governm ents and increases the corporate regulation for jobs, welfare, maintenance of ethical standards, etc. Globalization also confronts governments with corporations from different cultural expectations about issues such as bribery, corruption, taxation, and philanthropy.

Friday, March 29, 2019

Different Types Of Diversification Strategies Marketing Essay

Different Types Of variegation Strategies Marketing EssayExpanding a allot organisation can be quite hard so channel owners and their teams lam to use a variegation system to be adequate to add-on their gross sales and be successful in their blowup.The logical argument variegation scheme is what companies do (increasing the sales volume) in order to increase their pro survives.The increase in the volume of sales can be d single by develop spic-and-span harvest-tides and targeting rising marketplace. The variegation dodge can be utilize at the unit level of a stemma as salutary as in their corporate level. In a ac corporation expansion in unit level of a business, the schema can be a modernistic segment idea that is cerebrate exactly to the exist business. For the corporate level, the saucy business can be without relation to the alive business.Different Types of variegation StrategiesThere ar three basic types of diversification strategies that whitetho rn composed of several plans that range from the designed and development of refreshing products to the licensing of these new technologies. They whitethorn too be a combination of these plans with two or much of it holdd. They argon the coaxal diversification where the technology endure the same while its exchange plan alters significantly. The technical fill inl boundary is an edge when it comes to this type of dodge.The next ane is called plane diversification. In this type, the technology use is mosthow far from the exist business. Though the new products atomic number 18 non tie in to the existing sensations, the customers who are loyal still patronized the products. This is really effective when a business eat up many loyal customers. persist scarce non the least is the lateral diversification. This strategy is almost analogous to the horizontal diversification. The only thing that dissimilariates it from horizontal diversification is that later al strategy targets new customers instead of targeting their existing loyal customers.Diversifications Advantages and Dis returnssWhen using the business diversification strategy, you mustiness consider some things to succeed. Diversification can really benefactor businesses achieve its full potential in the market. It helps the society increase their customers by attracting new wholenesss and retaining loyal sensations. Further much, it enhances the product portfolio of the business by launching products which congratulate their existing products in the market. Nevertheless, the company must hire or take sufficient familiarity about diversification so that no trouble can arise in the future. The vigilance team of the company must be sanitary trained and educated about the processes that must be followed. Lack of in versionation and knowledge about the latest trend in the market can really be upsetting in your business goals. You must ensure that all are taken care of an d you prevail the capability and capability of handling those things. If not, hire someone who is a victor in this kind of situation.Types of DiversificationThe several(predicate) types of diversification strategies include the modernisation and development of new products, updating the market, new technology licensing, distribution of products by other company and even the alliance with the said company.The three types of diversification strategies include the concentric, horizontal and amass.Diversification is a method of danger worry that involves the channelise and implementation of dissimilar coronations stated in a specialised portfolio. This is practices be possess of the rationale that a portfolio containing a variety of investments can yield higher(prenominal)(prenominal)(prenominal) profits and serve as a lower risk to the independent investments in the same portfolio. It is only done investing much tighten that the benefits of diversification may be full y reaped. Investment finished unconnected securities may withal reap benefits because of the decreased correlation mingled with devolveical anaesthetic investments.The concentric diversifications specify that there exists similarities mingled with the industries in terms of the expert standpoint. It is through this that the dissolute may compare and apply its technological know how to an wages. This is through a careful change or alteration in the trade strategy performed by the business. This strategy aims to increase the market nurture of a particular product and therefore gain a higher profit.The horizontal diversification tackles products or operate that are in a sense, not related technologically to certain products but still injure the interest of authoritative customers. This strategy is more effective is the current concern is loyal to the existing products or services, and if the new additions are well priced and adequately promoted. The newest additions are marketed in the same appearance that the previous ones were which may cause instability. This is because the strategy increases the new products dependence on an existing one. This integrating unremarkably make outs when a new business is introduced, however unrelated to the existing.Conglomerate or lateral diversification is where the company or business promotes products or services with no relation commercially or technologically to the existing products or services, however still interest a number of customers. This type of diversification is unique to the current business and may prove quite risky. However, it may also prove very successful since it independently aims to improve on the profit the company accumulates with regards to the new product or service.At quantify there are certain defensive actions that may promote to the risk of contraction within the market, or that the current product market seems to have no more increment opportunities. This must also be cons idered in the beginning initiating a certain type of diversification strategy. Another factor is the import of the chosen diversification strategy. The expected emergence is expected to generate a profitability growth that will complement the ongoing activities within the company.Diversification strategies are utilize to refine fasts trading operations by adding markets, products, services, or stages of return to the existing business. The purpose of diversification is to allow the company to enter chores of business that are different from current operations. When the new venture is strategicalally related to the existing lines of business, it is called concentric diversification. Conglomerate diversification occurs when there is no universal thread of strategic fit or relationship between the new and old lines of business the new and old businesses are unrelated.variegation IN THE CONTEXT OF GROWTH STRATEGIESDiversification is a form of growth strategy. maturement strat egies involve a significant increase in mathematical operation objectives ( normally sales or market share) beyond past levels of performance. Many musical arrangements pursue one or more types of growth strategies. cardinal of the primary reasons is the view held by many investors and executives that bigger is unwrap. Growth in sales is ofttimes used as a measure of performance. Even if profits remain steadfast or decline, an increase in sales satisfies many people. The assumption is a good deal made that if sales increase, profits will at long last follow.Rewards for managers are usually greater when a firm is engage a growth strategy. Managers are often paid a commission based on sales. The higher the sales level, the full-grownr the compensation received. Recognition and business office also settle to managers of growing companies. They are more oft invited to speak to professional groups and are more often interviewed and written about by the press than are managers of companies with greater rates of return but slower rates of growth. Thus, growth companies also become better known and may be better able, to attract quality managers.Growth may also improve the military posture of the organization. Larger companies have a number of advantages over littler firms operational in more curb markets.Large size or openhanded market share can lead to economies of scale. Marketing or product synergies may result from more efficacious use of sales calls, lessen travel time, reduced changeover time, and longer output runs.Learning and father curve effects may produce lower costs as the firm gains live in producing and distributing its product or service. Experience and large size may also lead to improved layout, gains in wear out ability, redesign of products or production processes, or large and more suffice staff incisions (e.g., marketing research or research and development).Lower reasonable unit costs may result from a firms ability to deal administrative expenses and other overhead costs over a larger unit volume. The more capital intensive a business is, the more important its ability to spread costs across a large volume becomes.Improved linkages with other stages of production can also result from large size. Better links with suppliers may be attained through large orders, which may produce lower costs (quantity discounts), improved delivery, or custom-made products that would be unaffordable for smaller operations. Links with distribution take may lower costs by better location of warehouses, more efficient advertising, and shipping efficiencies. The size of the organization relative to its customers or suppliers influences its bargaining power and its ability to influence price and services provided.Sharing of information between units of a large firm allows knowledge gained in one business unit to be applied to problems universe come acrossd in other unit. particularly for companies relying heavi ly on technology, the reduction of RD costs and the time undeniable to develop new technology may give larger firms an advantage over smaller, more specialized firms. The more similar the activities are among units, the easier the rapture of information becomes.Taking advantage of geographic differences is possible for large firms. Especially for multinational firms, differences in wage rates, taxes, energy costs, shipping and freight charges, and trade restrictions influence the costs of business. A large firm can sometimes lower its cost of business by placing multiple plants in locations providing the terminal cost. Smaller firms with only one location must operate within the strengths and weaknesses of its single location.CONCENTRIC DIVERSIFICATIONConcentric diversification occurs when a firm adds related products or markets. The goal of such diversification is to achieve strategic fit. Strategic fit allows an organization to achieve synergy. In essence, synergy is the abilit y of two or more separate of an organization to achieve greater total effectiveness together than would be experienced if the efforts of the independent parts were summed. Synergy may be achieved by combining firms with complementary marketing, financial, operating, or management efforts. Breweries have been able to achieve marketing synergy through national advertising and distribution. By combining a number of regional breweries into a national network, beer producers have been able to produce and sell more beer than had independent regional breweries.Financial synergy may be obtained by combining a firm with strong financial resources but limited growth opportunities with a company having great market potential but weak financial resources. For example, debt-ridden companies may seek to acquire firms that are relatively debt-free to increase the lever-aged firms borrowing capacity. Similarly, firms sometimes attempt to stabilize shekels by diversifying into businesses with diff erent seasonal or cyclical sales patterns.Strategic fit in operations could result in synergy by the combination of operating units to improve overall efficiency. Combining two units so that reproduction equipment or research and development are eliminated would improve overall efficiency. measuring rod discounts through combined ordering would be another possible way to achieve operating synergy. Yet another way to improve efficiency is to diversify into an field of honor that can use by-products from existing operations. For example, breweries have been able to convert grain, a by-product of the fermentation process, into feed for livestock.Management synergy can be achieved when management experience and expertise is applied to different situations. Perhaps a managers experience in working with unions in one company could be applied to labor management problems in another company. Caution must be used, however, in assuming that management experience is universally transferable . Situations that appear similar may overtop significantly different management strategies. Personality clashes and other situational differences may make management synergy difficult to achieve. Although managerial skills and experience can be transferred, individual managers may not be able to make the transfer effectively.CONGLOMERATE DIVERSIFICATIONConglomerate diversification occurs when a firm diversifies into ambits that are unrelated to its current line of business. Synergy may result through the application of management expertise or financial resources, but the primary purpose of conglomerate diversification is improved profitability of the acquiring firm. Little, if any, concern is given to achieving marketing or production synergy with conglomerate diversification.One of the most vulgar reasons for pursuing a conglomerate growth strategy is that opportunities in a firms current line of business are limited. Finding an attractive investment opportunity requires the fir m to consider alternatives in other types of business. Philip Morriss acquisition of moth miller Brewing was a conglomerate move. Products, markets, and production technologies of the brewery were quite different from those necessary to produce cigarettes.Firms may also pursue a conglomerate diversification strategy as a means of increasing the firms growth rate. As discussed earlier, growth in sales may make the company more attractive to investors. Growth may also increase the power and prestige of the firms executives. Conglomerate growth may be effective if the new area has growth opportunities greater than those available in the existing line of business. in all probability the biggest disadvantage of a conglomerate diversification strategy is the increase in administrative problems associated with operating unrelated businesses. Managers from different divisions may have different backgrounds and may be unable to work together effectively. Competition between strategic busin ess units for resources may entail shifting resources away from one division to another. Such a move may create rival and administrative problems between the units.Caution must also be exercised in entering businesses with seemingly promising opportunities, especially if the management team lacks experience or skill in the new line of business. Without some knowledge of the new industry, a firm may be unable to accurately evaluate the industrys potential. Even if the new business is initially successful, problems will eventually occur. Executives from the conglomerate will have to become involved in the operations of the new enterprise at some point. Without adequate experience or skills (Management Synergy) the new business may become a poor performer.Without some form of strategic fit, the combined performance of the individual units will believably not exceed the performance of the units operating independently. In fact, combined performance may deteriorate because of controls p laced on the individual units by the resurrect conglomerate. Decision-making may become slower due to longer review periods and intricate reporting systems.DIVERSIFICATION GROW OR BUY?Diversification efforts may be either cozy or external. Internal diversification occurs when a firm enters a different, but usually related, line of business by developing the new line of business itself. Internal diversification frequently involves expanding a firms product or market base. External diversification may achieve the same result however, the company enters a new area of business by purchasing another company or business unit. Mergers and acquisitions are common forms of external diversification.INTERNAL DIVERSIFICATION.One form of congenital diversification is to market existing products in new markets. A firm may elect to broaden its geographic base to include new customers, either within its home country or in world(prenominal) markets. A business could also pursue an internal dive rsification strategy by finding new users for its current product. For example, Arm Hammer marketed its bake soda as a refrigerator deodorizer. Finally, firms may attempt to change markets by increasing or decreasing the price of products to make them attract to consumers of different income levels.Another form of internal diversification is to market new products in existing markets. Generally this strategy involves using existing channels of distribution to market new products. Retailers often change product lines to include new items that appear to have good market potential. Johnson Johnson added a line of baby toys to its existing line of items for infants. Packaged-food firms have added salt-free or low-calorie options to existing product lines.It is also possible to have conglomerate growth through internal diversification. This strategy would entail marketing new and unrelated products to new markets. This strategy is the least used among the internal diversification str ategies, as it is the most risky. It requires the company to enter a new market where it is not established. The firm is also developing and introducing a new product. Research and development costs, as well as advertising costs, will likely be higher than if existing products were marketed. In effect, the investment and the probability of failure are much greater when both the product and market are new.EXTERNAL DIVERSIFICATION.External diversification occurs when a firm looks outside of its current operations and buys access to new products or markets. Mergers are one common form of external diversification. Mergers occur when two or more firms combine operations to form one corporation, perhaps with a new name. These firms are usually of similar size. One goal of a nuclear fusion is to achieve management synergy by creating a stronger management team. This can be achieved in a merger by combining the management teams from the merged firms.Acquisitions, a second form of external growth, occur when the purchased corporation loses its identity. The acquiring company absorbs it. The acquired company and its assets may be absorbed into an existing business unit or remain intact as an independent subsidiary within the parent company. Acquisitions usually occur when a larger firm purchases a smaller company. Acquisitions are called friendly if the firm being purchased is receptive to the acquisition. (Mergers are usually friendly.) incompatible mergers or hostile takeovers occur when the management of the firm targeted for acquisition resists being purchased.DIVERSIFICATION VERTICAL OR HORIZONTAL?Diversification strategies can also be classified by the direction of the diversification. tumid integrating occurs when firms approach operations at different stages of production. Involvement in the different stages of production can be developed inside the company (internal diversification) or by acquiring another firm (external diversification). Horizontal integr ation or diversification involves the firm moving into operations at the same stage of production. Vertical integration is usually related to existing operations and would be considered concentric diversification. Horizontal integration can be either a concentric or a conglomerate form of diversification.VERTICAL INTEGRATION.The steps that a product goes through in being transformed from raw materials to a finished product in the possession of the customer constitute the mingled stages of production. When a firm diversifies surrounding(prenominal) to the sources of raw materials in the stages of production, it is following a backward vertical integration strategy. Avons primary line of business has been the selling of cosmetics door-to-door. Avon pursued a backward form of vertical integration by entering into the production of some of its cosmetics. Forward diversification occurs when firms move closer to the consumer in terms of the production stages. Levi Strauss Co., traditio nally a manufacturer of clothing, has modify frontward by opening retail stores to market its textile products sooner than producing them and selling them to another firm to retail.Backward integration allows the diversifying firm to exercise more control over the quality of the supplies being purchased. Backward integration also may be undertaken to provide a more right source of needed raw materials. Forward integration allows a manufacturing company to assure itself of an outlet for its products. Forward integration also allows a firm more control over how its products are sold and serviced. Furthermore, a company may be better able to differentiate its products from those of its competitors by forward integration. By opening its own retail outlets, a firm is often better able to control and train the personnel selling and inspection and repair its equipment.Since servicing is an important part of many products, having an excellent service department may provide an coordinat ed firm a competitive advantage over firms that are strictly manufacturers.Some firms employ vertical integration strategies to eliminate the profits of the middleman. Firms are sometimes able to efficiently bunk the tasks being performed by the middleman (wholesalers, retailers) and receive additional profits. However, middlemen receive their income by being competent at providing a service. Unless a firm is evenly efficient in providing that service, the firm will have a smaller profit margin than the middleman. If a firm is too inefficient, customers may reject to work with the firm, resulting in lost sales.Vertical integration strategies have one major disadvantage. A vertically integrated firm places all of its orchis in one basket. If demand for the product falls, essential supplies are not available, or a substitute product displaces the product in the marketplace, the earnings of the entire organization may suffer.HORIZONTAL DIVERSIFICATION.Horizontal integration occurs when a firm enters a new business (either related or unrelated) at the same stage of production as its current operations. For example, Avons move to market jewelry through its door-to-door sales force involved marketing new products through existing channels of distribution. An alternative form of horizontal integration that Avon has also undertaken is selling its products by mail order (e.g., clothing, malleable products) and through retail stores (e.g., Tiffanys). In both cases, Avon is still at the retail stage of the production process.DIVERSIFICATION STRATEGY AND MANAGEMENT TEAMSAs attested in a study by Marlin, Lamont, and Geiger, ensuring a firms diversification strategy is well matched to the strengths of its top management team members factored into the success of that strategy. For example, the success of a merger may depend not only on how integrated the joining firms become, but also on how well suited top executives are to manage that effort. The study also suggests t hat different diversification strategies (concentric vs. conglomerate) require different skills on the part of a companys top managers, and that the factors should be taken into consideration before firms are joined.There are many reasons for pursuing a diversification strategy, but most pertain to managements desire for the organization to grow. Companies must decide whether they want to diversify by going into related or unrelated businesses. They must then decide whether they want to expand by developing the new business or by acquire an ongoing business. Finally, management must decide at what stage in the production process they wish to diversify.FURTHER READINGAmit, R., and J. Livnat. A invention of Conglomerate Diversification. Academy of Management Journal 28 (1988) 59304.Homburg, C., H. Krohmer, and J. Workman. Strategic Consensus and mathematical operation The Role of dodging Type and Market-Related Dynamism. Strategic Management Journal 20, 33958.Luxenber, Stan. Diver sification Strategy Raises Doubts. National Real Estate Investor, February 2004.Lyon, D.W., and W.J. Ferrier. Enhancing Performance With Product-Market Innovation The decide of the Top Management Team. Journal of Managerial Issues 14 (2002) 45269.Marlin, Dan, Bruce T. Lamont, and Scott W. Geiger. Diversification Strategy and Top Management Team Fit. Journal of Managerial Issues, Fall 2004, 361.Munk, N. How Levis Trashed a Great American Brand. Fortune, 12 April 1999, 830.St. John, C., and J. Harrison, Manufacturing-Based Relatedness, Synergy, and Coordination. Strategic Management Journal 20 (1999) 12945.