Channels of Distribution and Logistics

Chapter 6 Channels of distribution and logistics LEARNING OBJECTIVES By the end of this chapter you will: n n n n omprehend key elements and decisions in distribution channel design be able to evaluate different configurations of channel structure be familiar with recent trends and developments in channels of distribution appreciate the importance of managing the physical flows of products, services and information into, through, and out of the organization to its customers n grasp the meaning and scope of physical distribution and logistics management n be aware of developments and trends in production and manufacturing, particularly the growth of ‘lean manufacturing’ and implications for logistics n recognize the role of Information Technology and marketing in logistics Channels of distribution and logistics 191 INTRODUCTIONThis chapter deals with the ‘place’ element of marketing strategy (i. e. ‘placement’ of goods and services from their res pective providers into the hands of customers). Before we discuss the structure of marketing channels, followed by logistics, it is useful that we look at their emergence and the functions that channels perform. THE CONSUMER WANTS CYCLE The word ‘channel’ has its origins in the word for canal, which for marketing can be interpreted as a route taken by products as they flow from production to points of intermediate and final use. Marketing is a key factor in a continuous cycle that begins and ends with consumer wants. It is the role of he marketer to interpret consumer wants and combine them with empirical market data such as location of consumers, their numbers and preferences, to establish the starting point for manufacture. On completion of manufacture, the finished product is moved to the consumer and the cycle is complete when he or she obtains satisfaction resulting from product ownership. THE PRODUCER–USER GAP Despite the growth of direct marketing (to be d iscussed in Chapter 10) in today’s complex economy, most producers still do not sell directly to final users. Between them and consumers lie marketing intermediaries. A distribution channel bridges the gap between user and producer, and so plays an integral role in the operation of the marketing concept. Relationships among channel members are influenced by the structure of the channel.Marketing channels can be described as sets of interdependent organizations involved in the process of making a product or service available for use or consumption. DEMAND STIMULUS In addition to marketing channels satisfying demand by supplying goods and services in the right location, at the correct quantity and price, they should stimulate demand through promotional activities of retailers, manufacturers and wholesalers. In this way, a marketing channel should be 192 Channels of distribution and logistics viewed not just as a demand satisfier, but as an orchestrated network that creates valu e for consumers through the generation of form, possession, time and place utilities.We start by examining ways in which distribution systems are designed and how channel policy is determined, depending on the degree of market exposure sought by a company. DISTRIBUTION SYSTEM DESIGN The starting point for marketing channel design is the end consumer. Although an understanding of consumer purchasing patterns is essential, there are other factors that influence channel organization: n n n n n There may be a restriction in choice of outlets available to suppliers, e. g. retail outlets may already have been secured by established manufacturers. Channel design will be influenced by the number, size and geographic concentration of consumers.If customers are few in number, but large and geographically concentrated, it may be that direct channels will be suitable. If customers are dispersed, the mechanics of direct channels become increasingly difficult and there will be a need for a large number of intermediaries. Product characteristics affect channel design. Industrial goods manufacturers tend to use direct channels, but there are other factors that influence the decision. Perishable goods, for example, need to be turned over quickly so direct methods are often applied. Non-perishable, non-bulky goods can be handled via indirect channels. Some products are more suited to indirect channels because of environmental characteristics.For example, in some countries shopping is seen very much as being a leisure activity especially for items like clothing and furniture, so much so that companies such as the Swedish company IKEA have made this a central part of their business model. Some organizations have limited discretion over marketing channel choice owing to economic conditions and legal restrictions. In certain of the Eastern European and Baltic countries such as Estonia, Latvia and Uzbekistan there is still restricted choice in terms of the range and scope of retail outlets for marketers. Any channel decision will have long-term implications for the company, e. g. price will be affected depending on the number of levels between the manufacturer and the end user.A decision to change channels is likely be long term so it is important that existing channel structures are constantly reviewed to exploit opportunities. STRATEGIC CHANNEL CHOICES An important consideration when formulating channel policy is the degree of market exposure sought by the company. Choices available include: Channels of distribution and logistics 193 n n n Intensive distribution where products are placed in as many outlets as possible. This is most common when customers purchase goods frequently, e. g. household goods such as detergents or toothpaste. Wide exposure gives customers many opportunities to buy and the image of the outlet is not important.The aim is to achieve maximum coverage. Selective distribution where products are placed in a more limited number of outlets i n defined geographic areas. Instead of widespread exposure, selective distribution seeks to show products in the most promising or profitable outlets, e. g. high-end ‘designer’ clothes. Exclusive distribution where products are placed in one outlet in a specific area. This brings about a stronger partnership between seller and re-seller and results in strong bonds of loyalty. Part of the agreement usually requires the dealer not to carry competing lines, and the result is a more aggressive selling effort by the distributor of the company’s products, e. g. n exclusive franchise to sell a vehicle brand in a specific geographical area, in return for which the franchisee agrees to supply an appropriate after sales service back-up. We can see that there are several key decisions to make when determining the company’s distribution system. Its importance is underlined by the fact that the choice of distribution channel has an effect on all elements of the marketi ng mix and these are long term. TYPES AND CLASSIFICATION OF CHANNELS Marketing channels can be characterized according to the number of channel levels. Each institution that works to bring the product to the point of consumption is included. The number of intermediaries involved in channel operation determines on how many levels it operates.There are four main types of channel level in consumer markets as shown in Figure 6. 1. The first three levels (zero, one and two) are self explanatory. The three level channel includes a ‘jobber’, or merchant Zero level channel manufacturer Consumer One level channel manufacturer Retailer Consumer Two level channel manufacturer Wholesaler Retailer Consumer Three level channel manufacturer FIGURE 6. 1 Wholesaler Jobber Retailer Consumer Channel relationships 194 Channels of distribution and logistics wholesaler who intervenes between the wholesaler and retailer. It is the jobber’s role to buy from wholesalers and sell to small er retailers, who are not usually serviced by larger wholesalers.Within each channel, intermediaries are connected by three types of flow: 1 Physical flow describes movement of goods from raw material that is processed in various stages of manufacture until it reaches the final consumer. In the case of a towel manufacturer raw material is cotton yarn which flows from the grower via transporters to the manufacturer’s warehouses and plants. Title flow is the passage of ownership from one channel institution to another; when manufacturing towels, title to raw materials passes from the supplier to the manufacturer. Ownership of finished towels passes from manufacturer to the wholesaler or retailer and then to the final consumer. Information flow involves the directed flow of influence from activities such as advertising, personal selling, sales promotion and publicity from one member to other members in the system.Manufacturers of towels direct promotion, and information flows to retailers or wholesalers, known as trade promotion. This type of activity may also be directed to end consumers, i. e. ‘end user’ promotion. 2 3 Conventional marketing channels comprise autonomous business units, each performing a defined set of marketing functions. Co-ordination among channel members is through the bargaining process. Membership of the channel is relatively easy, loyalty is low and this type of network tends to be unstable. Members rarely co-operate with each member working independently of others. Decision makers are more concerned with cost and investment relationships at a single stage of the marketing process and tend to be committed to established working practices.Most food grocery products in the European Union are marketed through conventional marketing channels; independent food and grocery producers are responsible for growing, rearing and manufacturing products and brands. These are sold through a series of wholesalers and retailers such as Sainsbury’s, Aldi, Lidl, Tesco or Carrefour each operating as independent businesses in the chain and selling to their own customers. Vertical marketing systems are in contrast to conventional channels where members co-ordinate activities between different levels of the channel to reach a desired target market. The essential feature is that participants acknowledge and desire interdependence, and view it as being in their best longterm interests.For the channel to function as a vertical marketing system, one of the member firms must be acknowledged as the leader; typically the dominant firm, which can be expected to take a significant risk position and usually has the greatest relative power within the channel. An example of a vertical marketing system is that of franchising. The franchiser, usually on the basis of having a powerful brand or perhaps a patent/copyright, for a fee, allows franchisees to produce or distribute the product or service. The franchiser effectively c ontrols the channel, including aspects such as product ingredients, advertising and marketing, pricing, etc. through formal and legally enforceable agreements. Franchising is an example of what are termed contractual vertical marketing systems which we consider again shortly.Corporate vertical marketing is when a company owns two or more traditional levels of the channel. In many economies corporate vertical channels have arisen as a result of a desire for growth on the part of companies through vertical integration. Two types of vertical integration are possible with respect Channels of distribution and logistics 195 to the direction within which the vertical integration moves a company in the supply chain: when a manufacturer buys, say, a retail chain, this is referred to as forward integration with respect to the chain. Backward integration is moving upstream in the supply chain, e. g. when a retailer invests in manufacturing or a manufacturer invests in a raw material source.Alt hough the end result of such movements is a corporate vertical marketing channel, often the stimulus to such movement is less to do with channel economies and efficiencies, and more with control over access to supply or demand, entry into a profitable business or overall scale and operating economies. Much vertical integration activity which took place during the 1990s in many economies resulted in lower overall profitability levels, and in some cases, the demise of companies involved, as companies overextended themselves and/or moved into areas where they had little expertise. Because of this, many companies have now turned their attention towards contractual systems for achieving growth and more control through the vertical marketing system.Many of the large oil companies are examples of corporate vertical marketing. They prospect for oil, extract it, process it, distribute and retail it through their petrol stations. Other companies operate partial corporate vertical marketing sy stems in that they integrate only one way. Zara (the clothing retailer) is integrated vertically backward with manufacturing facilities. Firestone (the tyre manufacturer) on the other hand, is vertically integrated forward owning its own tyre retailers. Many companies formalize their obligations within channel networks by employing legitimate power as a means of control achieved by using contractual agreements.Nearly all transactions between businesses are covered by some form of contract, and as such the contractual agreement determines the marketing roles of each party within the contract. Indeed, the locus of authority usually lies with individual members. The most common form of contractual agreement are franchises and voluntary and co-operative groups. Franchises are where the parent company grants an individual person or relatively small company the right or privilege to do business in a prescribed manner over a certain time period in a specified place. The parent company is r eferred to as the franchiser (or franchisor) and may occupy any position in the channel network. The franchise retailer is termed the franchisee.There are four basic types of franchise system: n n n n Manufacturer/retailer franchise, e. g. service stations where most of the garage petrol stations such as Shell and Esso are franchisees of the large oil exploration and refining companies. Manufacturer/wholesaler franchise: e. g. Coca-Cola sell drinks they manufacture to franchised wholesalers, who in turn bottle and distribute soft drinks to retailers. This type of arrangement is common in the food and drinks markets with many of the large companies franchising part of their manufacturing and or wholesaling activities to others. The wholesaler/retailer franchise. Many retail chains are franchisees of large wholesalers.These wholesalers saw the value of securing a measure of control, and of course a share of the retail profits, from marketing their products and brands. The most notable example is ‘Spar’ which advertises itself as ‘Spar, your 8. 00 till late shop’, and of course all retail members must abide by this promise. The service/sponsor retailer franchise e. g. McDonald’s, Kentucky Fried Chicken, Subway, Car Rental companies like Avis and Hertz and services like DynoRod and Prontaprint. This is the best known and certainly most ubiquitous of franchising arrangements and it has enabled many organizations to rapidly expand their global operations. 196 Channels of distribution and logistics There are different types of franchise arrangement, e. g.McDonald’s insists that franchisees purchase from official suppliers; they provide building and design specifications, help locate finance for franchisees and impose quality standards to which each unit must adhere in order to hold its franchise. Rigorous inspection through ‘secret shoppers’ (explained in Chapter 12) ensures franchise ‘rules’ are being obeyed. Franchises share a set of common features and operating procedures: 1 2 3 4 A franchise essentially sells a nationally, or internationally, recognized trade name, process, or business format to the franchisee. The franchiser normally offers expert advice e. g. location selection, capitalization, operation and marketing. Most franchises operate a central purchasing system at national or international level to enable cost savings to be made at the individual franchise level.The franchise is subject to a contract binding both parties that normally requires the franchisee to pay a franchise fee and royalty fees to the franchiser, but the franchisee owns the business as opposed to being employed. The franchiser often provides initial and continuous training to the franchisee. 5 Contractual vertical marketing systems like franchising have been one of the fastest growing areas of marketing and distribution. Substantial advantages derive from the franchising system. From a system t hat essentially involves two independent parties voluntarily agreeing to contract with each other, advantages accrue to both the franchisee and franchiser. Advantages to the franchisee are: n n n n n n The franchisee gains the benefit of being able to sell a well-known product or service which has been market tested and known to work.The franchisee enjoys access to the knowledge, experience, reputation and image of the franchiser. Because of this the franchisee is able to enter a business much more easily than setting up from scratch. The learning curve is shortened, expensive mistakes can be avoided, and there is less chance of business failure. Although the franchisee has the backing of what is often the large organization of the franchiser, the franchisee is still essentially an independent business with all that this implies for motivation to succeed. The franchisee is often helped by national or international advertising and promotion by the franchiser which would be beyond the means of a small independent business.The franchisee enjoys the use of the franchiser’s trademark, continuous research and development and market information. The franchiser will normally provide a system of management controls such as accountancy, sales and stock control procedures. Advantages to the franchiser are: n Finding and recruiting a network of franchisees enables rapid growth as wider distribution can be achieved with less capital. Channels of distribution and logistics 197 n n n n The individual franchisee is more motivated than a hired manager might be. The franchiser secures captive outlets for products or services, especially in the case of trade name franchising and private labels. Franchise and royalty fees provide a regular stream of income for the franchiser.The terms of the franchise contract normally give the franchiser substantial control over how the franchise is operated and normally the franchiser can terminate a contract should the relationship turn out to be unsatisfactory. The costs of such terminations are likely to be less than if the franchiser was operating a corporate owned facility with staff on the payroll. Normally, terms and restrictions on location and sale of the business by the franchisee ensure that the franchiser is able to maintain territorial exclusivity for its franchisees. There are disadvantages, but the franchise relationship combines the strengths of both small and large scale businesses. The franchisee is the small business person who is able to respond to local market conditions and offer personal services to customers.The franchiser passes on economies of scale in national advertising and bulk purchasing. For a franchise to be successful both parties need to work towards a common goal and avoid conflicts which requires frequent and open communication between partners if the system is to meet changing market conditions while maintaining its integrity. What constitutes the main disadvantages of franchis ing depends from whose perspective we are looking; the franchisee or the franchiser. The main disadvantages of franchising from each perspective are: Disadvantages to franchiser: n The franchiser loses some control over the provision and marketing of the brand. Poor service on the part of the franchisee can result in problems for brand image. Ideas and techniques can be copied even if seemingly well protected by patents and copyright arrangements. n Some proportion of profit has to be foregone. n There may be less commitment and enthusiasm from the franchisee. n Often franchisees lack business skills or experience. Disadvantages to the franchisee: n lack of support from franchiser; n franchiser may go out of business; n lack of flexibility/scope to use initiative; n close control from franchiser. Franchising is not solely confined to consumer products like fast food. It is used for a wide range of products and services in both consumer and industrial markets. Voluntary and co-operat ive groups emerged in the 1930s as a response to competition from chain stores.The scope of co-operative effort has expanded from concentrated buying power to the development of programmes involving centralized consumer advertising and promotion, store location and layout, financing, accounting and a package of support services. 198 Channels of distribution and logistics Generally, wholesale sponsored voluntary groups have been more effective competitors than retail sponsored co-operative groups. Primarily this is because of the difference in channel organization between the two. In the former, a wholesaler can provide strong leadership, because it represents the locus of power within the voluntary system and this is normally supported by a brand name like ‘Spar’.In the latter, power is diffused throughout the retail membership and role specification and allocation of resources are more difficult to accomplish. The principal purpose here is in bulk purchasing. In volunt ary groups, retail members have relinquished some of their autonomy by making themselves highly dependent on specific wholesalers for expertise. In retail co-operative chains, individuals retain more autonomy and this tends to depend much less strongly on the supply unit for assistance and direction. This type of organization is not to be confused with the Co-operative movement that was founded in 1844 by the Rochdale, Lancashire, Society of Equitable Pioneers who were a group of 28 weavers and other workers.As mechanization of the Industrial Revolution pushed more and more skilled workers into poverty, tradesmen banded together to open their own store selling items they could not otherwise afford. Over four months they pooled together ? 28 of capital. They opened their store with a basic selection of dry goods and foodstuffs and quickly moved into higher quality unadulterated produce. They devised the internationally famous Rochdale Principles: 1 2 3 4 5 6 7 open membership; democr atic control (one person, one vote); distribution of surplus in proportion to trade; payment of limited interest on capital; political and religious neutrality; cash trading (no credit); promotion of education.Administered vertical marketing systems (VMS) do not have the formal arrangements of a contractual system or the clarity of power dependence of a corporate system. It is a co-ordinated system of distribution channel organization in which the flow of products from the producer to the end user is controlled by the power and size of one member of the channel system rather than by common ownership or contractual ties. Member organizations acknowledge the existence of dependence and adhere to the leadership of the dominant firm, which may operate at any level in the channel. Large retail organizations like Marks & Spencer typify this system. In administered systems like Marks & Spencer, units can exist with disparate goals, but there is informal collaboration on inclusive goals.Dec ision making occurs by virtue of interaction between channel members in the absence of a formal inclusive structure. However, the locus of authority still remains with individual channel members. As in conventional channels commitment is selforiented and there is a minimum amount of system-wide orientation among the members. As McCammon1 observes: Manufacturing organizations . . . have historically relied on administrative expertise to coordinate reseller marketing efforts. Suppliers with dominant brands have predictably experienced the least difficulty in securing strong trade support, but many manufacturers with Channels of distribution and logistics 199 fringe’ items have been able to elicit reseller co-operation through the use of liberal distribution policies that take the form of attractive discounts, financial assistance, and various types of concessions that protect resellers from one or more of the risks of doing business. An example of a successful administered VMS in is that of the furniture/lifestyle retailer, IKEA who has developed close working relationships with its suppliers. Acting as the channel co-ordinator, IKEA is committed to cost-effective supply and their suppliers benefit from the channel leadership of an effective and marketing-oriented retailer. Administered VMS are one step removed from conventional marketing channels. In an administered system, co-ordination of marketing activities is achieved by the use of programmes developed by one or a limited number of firms.Successful administered systems are conventional channels in which the principles of effective inter-organizational management have been correctly applied. Before we discuss how such marketing channels are co-ordinated, it is important that we discuss their structure. STRUCTURE OF MARKETING CHANNELS The marketing channel has two basic aspects: 1 2 the placement of intermediary types of channel in relation to each other i. e. the order in which they occur; the number of different intermediary levels or stages in the channel i. e. how many different separate types of intermediary are involved, so types of intermediary and number of levels determine the structure of a marketing channel. There are several types of channel structure, dependent on the type of goods.An example of a structure for consumer goods such as food and clothing is shown in Figure 6. 2. This figure is based on three assumptions: 1 2 3 The channel consists of complete organizations. Manufacturers’ agents and selling agents are included with the merchants even though they do not take title to the goods. Physical movement follows exactly the movement of ownership. We must understand the underlying reasons for the emergence of channel structures. Four logical steps can be identified: 1 2 3 4 The efficiency of the process can be increased via an intermediary. Channel intermediaries arise to adjust the discrepancy of assortments through the performance of the sorting processe s.Marketing agencies remain together in channel arrangements to provide the routine of transactions. Channels exist to facilitate deliveries and to avoid inventory stock-outs. 200 Channels of distribution and logistics 1 M 2 M 3 M 4 M 5 M 6 M 7 M 8 M 9 M C W R A R W W A C W W C R W W W C C C R C R C R C R C M = Manufacturer W = Wholesaler A = Agent (sells for manufacturers) R = Retailer C = Consumer FIGURE 6. 2 A typical example of structure for consumer goods Rationale for intermediaries As numbers of transactions increase, the need for intermediaries becomes greater. The marketing channel is a ‘canal’ which contains the physical flow of products.Because of the complex array of intermediaries operating within a channel, which may be involved in one or all aspects of channel function, the channel may also be visualized as a chain-link arrangement where each intermediary unit is effectively a link. Manufacturers are dependent on the effectiveness of their intermediaries if their channels of distribution are to meet their marketing goals. Intermediaries of a channel specialize in more than one function. Their inclusion primarily depends on their superior efficiency in the performance of basic marketing tasks. Such intermediaries, through their experience, specialization, contacts and scale of operation, offer other channel members more than they can achieve on their own. However, this type of specialization leads to some important behavioural concepts. Position and role Each channel member chooses a position or location in the channel. Role’ refers to the functions and degree of performance expected of the firm filling a position. Channel intermediaries perform the distribution function at a lower unit cost than the manufacturer who is the intermediary most distanced from the consumer, and they balance the production efficiencies of the supplier to the purchasing needs of the customer. Another reason is to break down large volumes into smalle r quantities, termed ‘breaking bulk’, e. g. a furniture retailer places an order for 100 tables, but the individual buys only one. When we consider the selling process, the number of intermediaries can reduce the number of transactions Channels of distribution and logistics 201 ontained within the selling process. See Figure 6. 3. Figure 6. 3 shows that there are four manufacturers and ten retailers who buy goods from each manufacturer. Here the number of contact lines amounts to 40 (i. e. 4 10). If all four manufacturers sell to 10 retailers through one intermediary, the number of contacts is reduced to 14 (i. e. 4 10). The number of contacts increases as the number of intermediaries increases, e. g. when the number of wholesalers is increased to 2, contacts will increase from 14 to 28 (i. e. [4 2] [10 2]). Thus, greater numbers of intermediaries result in diminishing returns per contact. (a) Selling directly ManufacturersRetailers 40 contact lines (b) Selling through one wholesaler Manufacturers Wholesaler Retailers 14 contact lines (c) Selling through two wholesalers Manufacturers Wholesalers Retailers 28 contact lines FIGURE 6. 3 The economics of intermediary systems 202 Channels of distribution and logistics Assortment and sorting In addition to increasing the efficiency of transactions, intermediaries smooth the flow of goods and services by creating what economists refer to as ‘possession’, ‘place’ and ‘time’ utilities. This smoothing requires that intermediaries perform a sorting function to overcome the discrepancy that arises between goods produced by manufacturers and goods demanded by the consumer.In addition, intermediaries bring together a range of similar or related items into a large stock, thus facilitating the buying process. A supermarket will buy in thousands of lines to provide shoppers with choice, and a builders’ merchant will provide everything from sand and gravel to light fitt ings that the builder can use. In this way, intermediaries play an important role in facilitating the flow of products from the manufacturer to the consumer. Routine transactions The cost of distribution can be minimized if transactions are routinized. In effect, through routinization, a sequence of marketing agencies is able to hang together in a channel arrangement or structure.A good example is automatic ordering, whereby the cost of placing orders is reduced when retail inventory levels reach the necessary re-order point. Searching Buyers and sellers are often engaged in similar activities within the marketplace. There is a degree of uncertainty if manufacturers are unsure of customer wants and needs, and consumers are not always sure what they will find. In this respect, marketing channels facilitate the searching process in two ways: 1 2 Wholesale and retail institutions are organized by different product groups; for example, fashion, hardware, grocery. Many products are widel y available from wide ranging locations. FLOWS IN MARKETING CHANNELSWhen we discuss marketing flows, there will be times when the word ‘function’ could be used, but here we refer to marketing ‘flows’ in channels as a better method of describing movement. In this way, we can show that various intermediaries that make up a marketing channel are connected by several distinguishable types of flow, summarized in Figure 6. 4, which depicts eight universal flows. The figure shows that physical possession, ownership and promotion are typically forward flows from producer to consumer. Each of these moves is ‘down’ the channel; a manufacturer promotes the product to a wholesaler, who in turn promotes it to a retailer, and so on. Negotiation, financing and risking flows move in both directions, whereas ordering and payment are backward flows.Financing is the most important of these flows; at any one time, when stocks are being held by one member of the ch annel, financing is in operation. When a wholesaler takes ownership and physical Channels of distribution and logistics 203 Physical possession Ownership Promotion Producers Retailers Negotiation Financing Rising Ordering Payment Wholesalers Customers: household and industrial FIGURE 6. 4 Marketing flows in channels Woolly Thinking Under the auspices of the Confederation of British Wool Textiles (CBWT), groups of British wool textile manufacturers exchange information and ideas. The Confederation is organized into distinct groups in the industry with each group representing a particular stage in the manufacturing and processing of wool.For example, there is a group representing ‘Raw Fibre Producers’, another representing ‘Spinners’, another representing ‘Fabric Manufacturers’ and one representing the interests of ‘Dyers and Finishers’. possession of a portion of the output of a manufacturer, the wholesaler is essentially financing the manufacturer. This notion is apparent if the costs of stock are considered. Stock held in stores as dormant stock is ‘dead money’, but if this is freed via a wholesaler, this ‘dead money’ is available for reinvestment. The furniture industry exemplifies the flow. Traditional furniture retailers operating on a sold-order basis do not participate in the backward financing flow.However, ‘warehouse type’ furniture retailers participate in this flow directly, and receive benefits from manufacturers in the form of lower prices and preferential treatment. This backward flow of financing is not solely associated with stockholding, another example being prepayment for merchandise. The problem is that in the event of any downturn in sales the warehouse type retailer with large sums of money tied up in stock is very vulnerable to cash flow and liquidity problems. To underline this, blaming the downturn in the UK housing market in July 2009, the UKâ₠¬â„¢s second largest carpet retailer, Allied Carpets, called in the receiver. 204Channels of distribution and logistics Forward flow of financing is more common. All terms of sale, with the exception of cash on delivery and prepayment, may be viewed as elements of the forward flow of financing. In addition to these flows there is information flow. Typically, information regarding product attributes is passed ‘down’ the channel, often with the dominant channel member having greater influence on this function. Marketing information is passed ‘back’ up the channels. In addition, information flows horizontally, i. e. with intermediaries operating at the same level, such as fibre manufacturers, communicating for mutual benefit.CHANNEL CO-ORDINATION However well designed a marketing channel may be it is important that it is organized and coordinated, otherwise activities and flows will not operate effectively, and the full potential of the system will not be real ized. Emphasis should be placed on understanding behavioural dimensions of inter-organizational relationships, because through such understanding, the manager can organize, manipulate and exploit available resources. The long-term objective of channel management is to achieve, at a reasonable cost, the greatest possible impact at the end user level, so that individual members of the channel can obtain satisfactory returns (e. g. rofits, market share) as compensation for their specific contributions. The behaviour of intermediaries within any given structural arrangement should thus be directed towards achieving high yield performance. Once the marketing management of an organization isolates the market targets to attack, and the products and services which it must supply in order to satisfy needs and wants in those various segments, the question of how best to make products and services available for consumption arises. Figure 6. 5 identifies four major steps that represent the co-o rdination process. The first step is to determine the level of service outputs demanded by end users of the commercial channel system.Service outputs that are among the most significant in distribution are, for example, lot size. Some companies insist on a minimum order level. Under this limit they will not accept the order. In contrast, often smaller companies are unable or unwilling to supply orders over a certain size. A second type of service output is delivery or waiting time, or how long it takes from order to delivery. A third service output relates to market decentralization or spatial convenience, namely, to where the provider will deliver. For example, some suppliers will only deliver locally whereas at the other extreme some will undertake to deliver anywhere in the world. Finally, there is breadth and depth of product or service assortment.This refers to whether or not the provider is able to supply a full range of products and services or only a selected range, i. e. a ‘one -stop shopping’ facility. The second step involves identifying the marketing tasks that need to be carried out in order to achieve the service outputs, and which channel members have the capability to perform the tasks. Management must then determine whether, through the use of channel control strategies, they will be able to control the behaviour of existing channel members or be compelled to integrate channel flow vertically so the required service outputs are provided to end users. Channels of distribution and logistics 205 Step 1 Determine service output levels required by customersStep 2 Analyse the roles which channel members must perform to assure delivery of the required service outputs Step 3 Use economic and other power bases to motivate channel members to carry out their assigned roles Step 4 Devise mechanisms for dealing with conflicts that occur within the channel FIGURE 6. 5 Stages in the channel co-ordination process For example, if a desired level o f service output is that orders must be fulfilled within five working days then the channel and logistics system must be designed to reach this service level. If intermediaries in the channel are unwilling or unable to meet this service output then alternative channel arrangements must be found.Without effective channel management and control there is no guarantee that the desired service outcomes will be achieved, so a major issue in channel management relates to where, and to what extent, marketing flow participation should be assumed to generate the desired service outputs; e. g. if a car buyer needs finance, the manufacturer, the retailer or an outside intermediary should provide it, but lending services must be readily available if the consumer is going to feel comfortable in considering a specific purchase that requires finance. In a situation where no channel intermediary is willing to accept the risk of financing, the initial supplier may have to assume this, i. e. it would prefer to specialize in those flows that it can perform at a comparative advantage.The third step in the co-ordinative process is to determine which strategies should be used to achieve the desired results, irrespective of whether management decides to invest in integrating functions or whether it deals with independent companies. Essentially this is an issue of where and how ‘power’ is applied in the channel. Power is the ability to get somebody to do a task. In the context of a marketing channel it can be defined in terms of how one channel member can exert influence on another channel member. For example, due to their size and purchasing power, many retail multiples in the UK like Marks & Spencer are able to exercise substantial power over their suppliers.Power is the mechanism by which congruent and effective roles become specified, roles become realigned when necessary, and appropriate role performance is enforced. There are several bases of power, which include re ward, coercion and expertise. 206 Channels of distribution and logistics The fourth step involves setting up mechanisms to deal with conflict issues that may arise so that the channel will continue to provide the desired service outputs even if channel members disagree. Very often channel members perform unique roles. Thus, manufacturers specialize in production and national promotions, while retailers specialize in merchandising, distribution and promotion at a local level. This specialization means that channel members become reliant on each other to achieve objectives.There has to be co-operation between channel members, as without it, the task will not be completed. Such co-operation does not always come easy and needs to be cultivated. CHANNEL CONFLICT There is a danger that there will be conflicts of interest and distribution channels will exhibit levels of conflict. For example, suppliers may want to deliver weekly to a retailer, but the retailer wants to hold less stock, so may want daily deliveries. Ideally, channel members should attempt to coordinate their objectives, plans and activities with other intermediaries such that performance of the total distribution system to which they belong is enhanced.Evidence supports the view that such integrated activity throughout the length of the marketing channel is rare and channel participants are not too concerned with transactions that occur between each of the various channel links. Channel intermediaries are more concerned about dealings between channel members immediately adjacent to themselves, from whom they buy, and to whom they sell. Channel intermediaries do not function as component members of a distribution system, but operate independently, making decisions concerning their own methods of operation, functions performed and clients served as well as deciding their own objectives, policies and programmes.Therefore, a marketing channel should be a set of interlocking and mutually dependent elements and it is in the interests of all channel members for there to be a substantial degree of co-operation, but an almost inevitable feature is potential conflict between members which should be taken into account when making channel arrangements. It is possible that healthy competition can lead to conflict and management should seek ways to reduce this conflict. Conflict in distribution channels can occur in different forms as follows: 1 2 Horizontal conflict – is related to competition among similar types of intermediaries at the same level in the channel – e. g. two household textile stores in competition with each another.Intertype conflict – refers to competition among different types of intermediaries at the same level in the channel. This kind of competition has intensified since the advent of ‘scrambled merchandising’ by retailers (where retailers add new product lines that are unrelated to their normal lines of business) e. g. supermarkets hav e added homewares and clothing to their product lines, offering consumers a wider product range and attaining higher margins. Intertype conflict is significant as it reflects a way in which industries remain efficient and respond to changing market conditions. Vertical conflict – refers to competition among different levels in a channel.Such problems can be damaging to existing co-operative relationships e. g. in recent years some of the major car producers have been in conflict with their distributors over matters like pricing and discount policies, stockholding levels and exclusivity agreements. 3 Channels of distribution and logistics 207 Stress and conflict can be in a dormant state; times of change cause existing stress to peak, leading to hostility among channel members. Some conflict is inevitable in channels and may even be positive in that it can prompt needed changes. The earlier example regarding retailers selling manufacturers’ brands at lower prices than m anufacturers wish is an example of vertical conflict.Selling of brands like Levis and Calvin Klein at prices lower than those recommended by manufacturers has given rise to vertical conflict in the channel. Other examples of this type of conflict in the UK recently have been the selling of discounted books and discounted pharmaceutical products by the large retail supermarket groups. Goal incompatibility Channel members appear to share a common goal – maximizing the efficiency and effectiveness of the total system. However, each firm exists as a separate legal entity, each with its own employees, owners and other interested parties who help shape its goals and strategies. Some firms’ goals may be incompatible with the aims and objectives of other channel members.This incompatibility can be a primary cause of stress which will ultimately result in conflict. The distribution of channel profits is a typical example. Each institution will desire the highest possible profit for the whole channel and the natural tendency will be towards co-operation to achieve maximum profit levels. However, each individual firm can be expected to desire the largest obtainable share of total channel profits. The predictable result is conflict over the allocation process. Even if goals are compatible, there may be disagreements about methods employed: all channel members may agree that increases in volume of a product are desirable, but may disagree on the means employed to accomplish it.Wholesalers may desire more shelf space for better positioning of products in retail stores; retailers may feel that more advertising and promotional effort by the manufacturer would accomplish the objective of an increase in sales. The result is conflict over which method to use. Position, role and domain incongruence In a channel consisting of a manufacturer using only wholesalers who sell to retailers, there will be a realignment of the roles and domains of each party. By serving lar ge retailers direct, positions will be re-specified. Changes in position specification, or poorly defined positions, can precipitate conflict among channel members, so the manufacturer must anticipate and understand the expected behaviour of such members. In situations where consensus does not exist, conflict can be expected.Because each role represents a code of conduct defining the channel member’s expected contribution, adequate performance is critical to maintaining harmony within the channel system. Inadequate performance, or failure to behave in the prescribed manner, frustrates attempts by one firm to predict what the other will do and such frustration is a major cause of channel conflict. Conflict may also arise when there is lack of agreement concerning who is the channel leader (termed the ‘channel captain’). If channel members disagree on the domain of firms in the system, there will be conflict and an inability to achieve goals. If domains overlap, an d two or more firms lay claim to the same functions, products or customers, disagreement might lead to hostility.The conflict between car producers and their distributors just described, in part stems from the issue of 208 Channels of distribution and logistics who controls the channel. In the past it has been the car companies who have been channel captains but market and legislative changes have shifted the balance more towards distributors, giving rise to conflict. Communication breakdown Communication breakdowns may cause conflict in two ways: 1 The failure of one firm to pass on vital information to other channel members. A manufacturer wishing to maintain a competitive advantage may decide not to announce a new product until a national distribution programme has been developed.Retailers, on the other hand, need information about new products as soon as possible to prepare their own strategy for the introductory period. Distortion within the message process is called ‘noi se’ that often arises from confused language nuances. When channel members attach different meanings to language and terminology (e. g. if their roles are unclear and confused) stress results and there is potential for conflict. Speculation surrounding the health of Apple boss Steve Jobs caused problems for the company and its distributors. In January 2009 the annual MacWorld conference normally used to announce new products and developments was cancelled.This caused speculation in the trade about whether or not Jobs would continue. The problem was not so much Jobs’ illness bur rather the rumours about it. In July 2009 it was announced that Jobs was making a good recovery from a liver transplant. 2 Communication breakdowns are common in specialist business areas. Noise arises when functional specialists develop terminology that means little to those outside that business environment. Unclear communication with non-specialists can play a part in developing conflict so t he specialist should ensure that communications have been understood. Differing perceptions of reality Different solutions to mutual problems can lead to confliction behaviour.Even when channel members have a strong desire to co-operate and goal agreement exists, conflict can occur when perceptions of the real facts differ. Bare Bellies Update Dear all, further to my e-mail yesterday, I’ve had clarification that a new system for producing bare belly information will be in place. Please note there will no longer be blank bare belly sheets available in departments. Confused? So was this organization’s staff who received this e-mail. The e-mail was from the organization’s publicity department and was sent to all staff. ‘Bare bellies’ is a term used by printers to denote blank sheets to be printed on. The e-mail related to the production of company promotional material. Channels of distribution and logistics 209Each channel member brings to the relation ship different backgrounds and prejudices; facts are likely to be interpreted according to prior experience. All members may agree that the channel is not functioning as effectively as desired; each channel member may perceive a different reason for this lack of effectiveness. Manufacturers may feel that a retailer’s lack of stock is due to failure to maintain adequate safety stock levels and realistic reorder points. The retailer may feel that inventory policies are realistic and that the problem is caused by the manufacturer’s inability to meet scheduled delivery times. Each party is interpreting the situation based upon experience and natural prejudices associated with its own position and role. Ideological differencesSometimes there may be a fundamental ideological conflict in channels which stems from big business and small business perceptions of management, particularly concerning the appropriate level of sales effort. For example, a manufacturer may be so satis fied with the performance of a wholesaler in a given territory that pressure is exerted on the wholesaler to expand the line of products on offer, whereas the wholesaler may be satisfied with allowing the business to continue to run in its present form. In this way, pressures exerted by the manufacturer will lead to stress and conflict in the relationship. If this is an established channel, it is in the interests of everybody to settle the dispute or misunderstanding quickly.There are several methods of resolving conflict, and it is a task of management to seek ways in which to manage it to avoid it becoming dysfunctional and to harness the energies in conflict situations to produce solutions. Depending on which underlying cause is identified, different strategies can be employed in isolation. Another important factor in the resolution of the conflict will be the weight of power of the channel member seeking to resolve the conflict. Problem solving Adopting superordinate goals is a method that refers to goals that are desired by all members caught up in the conflict. Often such goals cannot be achieved by individual channel members, as concerted efforts of all parties are required.Such disputes become more pronounced when the channel is confronted by an external threat, and conflict only dissipates when alternative channel systems emerge. The threat to existing channel members of new channel arrangements for car retailing in the UK has brought about a reduction in conflict between traditional channel members. Car manufacturers and dealers were challenged by the fact that consumers were increasingly purchasing new cars through a variety of new channels including sourcing them from countries where prices might be lower, the growth of ‘car hypermarkets’ where cars are sourced on the ‘grey market’ and through the Internet.The result has been for existing traditional channel members to adopt superordinate goals and this has resulted in a r eduction of conflict between them in an effort to survive. Permanent conflict resolution requires an integration of the needs of both sides to the dispute so they find a common goal without sacrificing their basic economic and ethical principles. The problem is developing a common goal on which all parties agree. 210 Channels of distribution and logistics A solution exists to alleviate communications noise in distribution channels. A more efficient flow of information and communications in channels permits members to find solutions to their conflict based on common objectives. Channel communication efforts should be designed to decrease or avoid conflict, e. g. sing sales representatives to convey information from wholesalers or retailers implies that the manufacturer is trying to encourage the attainment of both individual and common goals; the function of the sales representative in such cases is that of ‘problem solver’. Persuasion This implies that institutions invo lved draw on their leadership potential. If effective channel management is to be achieved, it is often the case that there will be a need to locate an institution or an agency within the system that is willing to assume this role. Channel leadership is the intentional use of power to affect the behaviour of other channel members and cause them to act in a manner that contributes to the maintenance or achievement of a desired level of performance.Often channel control results from channel leadership and like channel power, the level of control achieved by one firm over others in a channel may be issue specific, e. g. while the manufacturer may have control over pricing, retailers may have control over stock levels. Whether or not control can be exerted depends on the power base of each channel member. By its nature, persuasion involves communication between conflicting parties. Emphasis is on influencing behaviour to resolve conflict; the primary intention is to avoid or reduce conf lict concerned with domain or sphere of influence. Persuasion allows members to reach a consensus resulting in agreement without formal bargaining. Some years ago a well-known company launched its own brand of cola. The new brand was eagerly tocked by many leading grocery supermarkets who were persuaded to make space for the new brand on their shelves. Inevitably this meant less shelf space for existing brands including some of the best known cola brands in the world. As if this loss of shelf space was not bad enough, the world’s leading cola brand claimed bitterly that at first glace the new Virgin cola looked remarkably like their own cola brand. They subsequently asked Virgin to withdraw the new brand in its present form and at the same time asked their supermarket customers not to stock it. Needless to say, there were protracted discussions, but after a little time all parties were persuaded to come to a compromise which avoided costly litigation and loss of face.The new cola was altered slightly in appearance, some of the lost shelf space was restored and the new brand gradually made inroads into the market. Bargaining/negotiations The difference between bargaining and persuasion is that in the bargaining process stress continues to exist in the system long after agreement is reached. In negotiation, no attempt is made to fully satisfy a channel member. Instead, the objective is to reach an ‘accommodation’ to stop conflict among members. Such a compromise may resolve the episode, but not necessarily the fundamental stress over which the conflict erupted. If stress continues, it is likely that some issue will cause conflict again at some later date. Compromise is a means by which bargains can be reached in the channel.Each party gives up something it desires to prevent or end conflict. Often compromise is necessary to reach domain consensus where persuasion and negotiation draw on abilities of parties involved to communicate. Channels o f distribution and logistics 211 Politics Politics refers to resolution of conflict involving new organizations in the agreement-reaching process. Mediation involves a third party, usually to secure settlement of a dispute by persuading the parties to continue negotiation or consider recommendations made by the mediator. Mediation involves understanding the conflicting views of parties in such a way that opportunities are perceived that otherwise may have been missed.The fact that solutions are being offered by a mediator, i. e. somebody external to the dispute, can often lead to a settlement if both parties deem the solutions acceptable. Effective mediation keeps the parties together and clarifies facts so the communication process does not break down. While mediation offers solutions to disputes, channel members are not obliged to accept the solutions. In arbitration, however, the solution suggested by the third party is binding upon the conflicting parties. Arbitration can be com pulsory or voluntary, and when it is the former, parties are required by law to submit their dispute to the third party and be bound by the decision.Voluntary arbitration is a similar process whereby parties are bound by the decision, but the dispute is settled voluntarily. The question of relying on law enforcement to settle disputes in distribution is imprecise as it is doubtful whether solutions enforced by law can be applicable to future channel disputes in different circumstances. In purely domestic channel management, these mechanisms are not greatly used because of the inability to find a neutral third party whose decision will be accepted by everybody involved in the dispute. However, arbitration is a normal and accepted part of international channel management and is part of the contractual agreement between the parties in channel activities.For example, if an exporter feels that an overseas agent has not fulfilled the terms of an agreement between him or herself and the pr incipal, but the two parties cannot agree as to the remedies for this, then normally the terms and conditions for instituting an arbitration process are written into the original contract and will be instituted to resolve the problem. Diplomacy Channel diplomacy is the normal method by which inter-organizational relations are conducted, adjusted and managed by ‘ambassadors’, envoys or other persons operating at the boundaries of member organizations. Normally channel members rely on diplomatic procedures, especially in nonintegrated systems. Channel diplomats should be the ‘eyes and ears’ of the firms they work for, and should report anything that may be of interest. Such ‘diplomats’ are commonplace in distribution channels at executive level.In this way, the diplomat’s power base is such that it is obvious to the parties with whom the diplomat will interact. Effective channel management strategies provide for more rational decision maki ng within the channel. THE DYNAMIC NATURE OF CHANNELS Marketing is characterized by constant change, and there is a need for the marketer to adapt to these changes, making marketing channels subject to change and innovation. Channels represent a 212 Channels of distribution and logistics dynamic area of marketing as they are constantly evolving to meet changing customer and market needs which reflect underpinning wider changes and trends in demography and lifestyles. Marketers must be aware of the changing nature of channels and respond to them.An example of recent developments that are indicative of the innovation and changing nature of this area is the growth of multi-channel systems of direct marketing and Internet marketing which are dealt with in Chapter 10. The growth of multi-channels Companies now use a variety of channel arrangements to reach their target customers. Once, companies tended to use only one type of channel configuration in their marketing; now they use several . The use of multi-channel systems can be for a number of reasons: n n n to increase market coverage by reaching new customers; to reduce costs of selling to certain customers where for example such customers require less service than that provided through the company’s normal channels; to achieve a more customized service to particular customers than would be available through the company’s normal channels.In multi-channel marketing, a company might sell to one group of customers using telephone selling and no intermediaries, while another target group may be marketed to through a network of dealers, since these customers require after-sales service and technical advice. Although there are advantages to be gained through using several different channel configurations to different target customers, multi-channels can give rise to increased costs if not controlled. They can also give rise to problems of conflict between different channel members where several channels a re used, particularly where one type of channel member feels that their contractual rights are being infringed. An example is where the marketer uses a system of ‘appointed’ distributors for the company’s products.In return for being granted ‘exclusive’ distribution rights in a particular g

Accounting & information Technology Essay

How the process of computerising accounting information systems (AIS) and telecommunicating accounting information over the web actually help the accounting functions in an organisation operating globally? However, the counter-claim is that the breaching of the security of such systems will be a great risk that needs to be properly managed in various ways. The purpose of the essay is to identify how the process of computerising accounting information and telecommunication accounting information over the web can help the accounting functions in an organisation operating globally and to find out how large firm can protect their system and information by using different methods. Also, in this assignment the main function of computerizing accounting information system (AIS) and telecommunicating accounting information over the web will be discussed along with successful examples and failure examples. Also, it will link and explain why these functions will help the accounting functions to operate globally. Also, in this assignment it will explain the main threats of using such system and will point out how large organisations able to manage these potential threats. See more: Strategic Management Process Essay Accounting Information System is vital to all organisations (Borthick and Clark, 1990). The process of computerizing accounting information systems (AIS) is a system of collection, storage and processing of financial and accounting data that is used by decision makers. The result can be used internally by management or externally by other interested parties including investors and creditors. Organisations depend on information systems to stay competitive, they see information as important as a resource such as plant and machines. Therefore, in order to stay competitive, organisations may have to computerising their AIS, to make the process automatic in order to; reduce effort, save time, improve efficiency and reduce labor cost. However, many organisations are not enjoying the benefit of computerization of accounting system as they have continued to be inaccurate due to increased number of interruptions due to system failure or breakdown and untimeliness with its reliability left in the question. So how computerising accounting information system helps the accounting functions in an organisation operating globally? In a computer system, processing is carried out electronically, usually with little or no intervention from a human user. The components of a computer system include hardware and software. Hardware describes the physical components of a computer system. Example: Monitor, bar-code reader, Web camera and speakers. And software is a series of detailed instructions that control the operation of a computer system. Software exists as programs that are developed by computer programmers. Example: systems software and applications software. (Khaled Abdala, Financial accounting & information technology, p.510). But how they actually help the accounting functions in an organisation operate globally? When a firm has grown globally, they then have to deal with billions of information per day from many different countries, and the only way they can process the information is by using computer system, today’s computer system come in variety of sizes, shapes and computing capabilities. Categories such as mainframe, midrange and microcomputer systems are still used to help an organisation which operates globally, such as IBM, to express the relative processing power and number of end users that can highlight the major uses of particular types of computers. Telecommunications is on a national or global scare, in order to allow telecommunications to operate it consist both software and hardware to set up these links. Hardware include; satellite and microwave transmissions. Telecommunications help the accounting functions in an organisation operating globally by enable a business that operating from different locations to run as a single unit. . (Khaled Abdala, Financial accounting & information technology, page. 571). This means that the information can be managed centrally and control maintained from a central location. Also, an organisation can use telecommunications to collaborate with other companies such as their suppliers by using electronic data interchange or web-based e-procurement with partners. One of the main advantages of using telecommunication is improving the communications within and outside a business. Due to poor communication, diseconomies of scale maybe appear where there is too much information to deal with at the same time and leading to some information are being ignore. This will then increase the cost per unit and may pull down the shareholder’s interest and may lead to a business failure. Also Electronic business (e-business) and Electronic commerce (e-commerce) are also included in the telecommunication, where the term e-business is credited by the former IBM CEO Lou Gerstner. E-business involves several key activities: improving business processes, enhancing communications and providing the means to carry out business transactions securely. And e-commerce is not only a type of industry where buying and selling of product or service is conducted over electronic systems such as the internet and other computer networks also e-commerce encompasses the entire online process of developing, marketing, selling, delivering, servicing, and paying for products and services transacted on internetworked, global marketplaces of customers, with the support of a worldwide network of business partners. (James A.O’Brien, management information systems. P.284). A great example of e-business and e-commerce is ASOS.com, ASOS is the UK’s largest online-only fashion and beauty store. ASOS is a global online fashion and beauty retailer and offers over 50000 branded and own label product lines across women wear, menswear footwear, accessories and jewelry. ASOS has websites targeting the UK, USA, France, Germany, Spain, Italy and Australia and also ships to over 190 other countries from its central distribution in the UK. (Online, Available at: http://www.asosannualreport2008.com/Doc/pdf/AnnualReport2008.pdf). Without a single shop, they able to automating many of the administrative tasks associated with ordering, supplying and delivering goods, therefore the cost of a typical business transaction can be reduced significantly. Also, due to operating their business through internet, they are able to operating at any time of the year, this then lead them to have an advantage of having a much flexible time and place to sell their products than the tradition international organisation such as Topshop. However, is there only advantage of using AIS and telecommunicating accounting information for organisation to operate globally? Is there anything stopping organisations using it? Yes, is the answer. There is no question that the uses of information technology in an organisation presents major security challenges, poses serious ethical questions, and affect society in significant ways. (James A.O’Brien, Management information systems, p.439). Computer crime is a growing threat to society caused by the criminal or irresponsible actions of individuals who are taking advantage of the widespread use and vulnerability of computers and the internet and other networks. Also, natural disasters can also be a great risk to a system. All information systems are susceptible to damage caused by natural phenomena, such as storm, lighting strikes, floods and earthquakes. For example, in Japan and the United States took the great care to protect critical information system from the effect of earthquakes. There are five major categories of controls that can be applied to information systems. There are: physical protection, biometric controls, telecommunications controls, failure controls and auditing. (khaled Abdala, Financial accounting & information technology, page. 627) Physical protection is simple, this involves the use of physical barriers intended to protect against theft and unauthorized access. Lock, barriers and security chains are examples of this form of control. Secondly, biometric controls, these type of controls make use of the unique characteristics of individuals in order to restrict access to sensitive information or equipment, this can be achieve by using scanners that can check finger-prints, voice prints or even retinal patterns. Thirdly, the telecommunications controls, this type of control involve identity of a particular user. Common type of communications controls includes passwords and user validation routines. As an example, when a new network account is created for a given user, they may be asked to supply several pieces of personal information. The fourth control is failure control, failure controls attempt to limit or avoid damage by the failture of an information system. Typical examples include recovery procedures and regular backups of data. The last type of control is auditing, Auditing involves taking stock of procedures, hardware, software and data at regular intervals. With regard to software and data, audits can be carried out automatically with an appropriate program. Auditing software works by scanning the hard disk drives of any computers, terminals and servers attached to a network system. In conclusion, we can see that organisation have to be carefully managed with their AIS and information due to natural disasters and individuals who are taking advantage of the widespread use and vulnerability of computers, because if you don’t take care of your accounting information system, others will take care of it for you. But if can be carefully manage, we can say that computerising accounting information systems (AIS) and telecommunicating accounting information over the web can actually help the accounting functions in an organisation operating globally, with great example of ASOS. References: 1. Borthick, A.F.; Clark, R.L. (1990). Making accounting information systems work: An empirical investigation of the creative thinking paradigm. Journal of information System, p. 48-62 2. Khaled Abdala, Financial accounting & information technology. Page. 284) 3. (Khaled Abdala, Financial accounting & information technology, page. 571) 4. (Online, Available at: http://www.asosannualreport2008.com/Doc/pdf/AnnualReport2008.pdf) 5. (James A.O’Brien, Seventh edition, Management information systems, p.439) 6. (Khaled Abdala, Financial accounting & information technology, page. 627)

Public International law Assignment Example | Topics and Well Written Essays - 500 words

Public International law - Assignment Example Thus, it becomes cheap to import from other nations via international trade. Additionally, international trade facilitates maximum utilization of resources and proper disposal of surplus produce. Countries are pressured to fully exploit their resource for maximum economic benefit since the market is available. In addition, market for surplus produce is available to other countries. This reduces wastage and under utilization of resources. International trade also fosters peace and unity among nations. The economic interdependency among the trading nations creates friendship thus reducing international skirmishes. Free trade encourages innovation and competition ( DeCarlo 23). This is because free trade avails a variety of goods and services to the customers. This spurs competition between companies and various producers enhancing innovation among the producers and companies in their effort to develop better products for the competitive market. Free trade discourages growth of infant industries. To be precise, newly initiated companies find it difficult to survive in the international competition created by free trade. In fact, free trade eliminates the chances of protecting developing industries in a competitive market structure. Additionally, free trade reduces government earnings in that export duty is not levied. Consequently, free trade may result to dumping thereby reducing profits. Free trade is a set up than eliminates most tariff barriers and tax on the movement of goods and services between members while Custom union is an agreement among a group of countries to charge a common set of tariffs to the outer world and grant free trade among the members of the union. Most Favored Nation Principle is a status given by one nation to another to offer the most favorable terms and regulatory treatment to the goods or services during import or exports of similar products to all other nations. There can

Radiation and Cancer or Causes of Cancer Research Paper

Radiation and Cancer or Causes of Cancer - Research Paper Example Acquired or hereditary abnormalities in the regulatory genes cause development of cancer. However, only 5-10% of cancer is hereditary. Cancer may be detected from symptoms or radiology findings. Definitive cancer diagnosis however requires a biopsy specimen for microscopic examination. Today, many types of cancer can be treated through radiotherapy, chemotherapy, and surgery. The extent of the disease and type of cancer commonly influence prognosis. According to the World Health Organization (WHO) (2010), cancer accounted for about 13% (7.9) million deaths worldwide in 2007 alone. With changes in lifestyles as the world develops and changes that occur due to old age, cases of cancer are fast increasing which means that the disease will continue to claim more lives with time (WHO, 2010). Causes of Cancer Chemical and Physical agents Environmental factors accounts for about 90-95% causes of cancer according to Jemal, (2011). Chemicals are the main causes of cancer. Pathogenesis of canc er can be traced back to mutations of DNA that cause metastasis and cell growth. Mutagens are substances that cause mutations of DNA. Tobacco smoking accounts for 25-30% of cancer and is also associated with many forms of cancer. It also causes about 89% of cancer of the lungs. Alcohol is a chemical carcinogen which is not a mutagen whereas tobacco is both a carcinogen and a mutagen. In Western Europe, alcohol causes 10% and 3% of cancers in males and females respectively (Jemal, 2011). Sasco, (2004) observes that in every three deaths of cancer, tobacco accounts for one death in economically developed nations, and about one for every five in the entire world. In spite of these facts, smoking rates are fast increasing world wide leading to the â€Å"tobacco epidemic† as some organizations describe it. Physical agents also cause cancer through their physical effects on cell. For example, prolonged exposure to mineral fibers and asbestos are major causes of cancer. Physical car cinogens must get into the body and one has to be exposed for years for cancer to develop. Diet and Lack of Physical Exercises Poor diet and lack of physical exercise is another cause of cancer, accounting for approximately 30% of cancer cases. In the US, excessive body weight is believed to develop many forms of cancer and accounts for 14-20% of cancer deaths (WHO, 2010). WHO also notes that lack of physical activities also increases body weight besides negatively affecting endocrine production and the body’s immune system. Diets that lack whole grains, fruits and vegetables, and those rich in red meat and highly processed foods are also linked to cancer. A diet high in salt causes gastric cancer while aflatoxin B1 causes liver cancer. The high risk of immigrants developing cancer in relation to the risk in their new country shows the relationship between diet and cancer according to WHO (2010). Infections It is estimated that about 18% of worldwide cancers are caused by inf ectious diseases (WHO, 2010). This proportion varies with the part of the world. For example, WHO estimates that 25% of cancer cases in developing nations and 10% in developed nations are caused by infections. Cancer is normally caused by viruses, bacteria and other pathogen or infectious agents. Cancers that are caused by viruses include (oncovirus) cervical carcinoma, hepatocellular carcinoma and T-cell leukemia among

Automotive production levels Research Paper Example | Topics and Well Written Essays - 1000 words

Automotive production levels - Research Paper Example Details Quarter ending 31st August 2012 Quarter ending 31st August 2011 1 Production levels 9.026 million Units 8.385 million Units 2 Inventory levels $ 14.32 billions $ 12.13 billions 3 Operational costs $ 144.62 billions $ 130.50 million 4 Sales $ 150.30 billions $ 135.40 billions 5 Price $ 16,650.00 $ 16,150.00 1. Demand -supply analysis Price $ 5,000 $ 10,000 $ 15,000 $ 20,000 Units sold 15,000 12,000 10,000 8,000 The above table shows different units that customers are wishing to buy at different prices. Given a price of $5,000, customers are willing to purchase 15,000 units, and this number reduces to 8,000 units given a price of $ 20,000. Graphical representation Price 20,000 f a? g ?e 15,000 ? Equilibrium point (e0) 10,000 h ? ? 5,000 c ? ?b j k 0 5,000 10,000 15,000 20,000 Quantity demanded The above graph slants downwards from left to right. Notably, as price reduces, quantity of automobiles demanded increases and it turns the vice versa when the price increases. 2. Equilib rium price and quantity The point (e0) gives the equilibrium price of $ 12,250 and quantity $ 12,000 units. This point represents the favorable price that the buyers are willing to pay for a certain car model they buy from the company. Any point above the equilibrium price represents a higher price with corresponding lower quantities of automobiles sold. On the other hand, any point below the equilibrium point represents a lower price at which the buyers would buy more of automobiles. According to the data collected for General Motors, the above graph shows that the company is selling at high prices, which results to reduced quantity demanded. The company is offering its automobiles at an average price of $ 16,550, whereby 9.026 million units are sold. To maximize the number of units sold, the management should consider lowering the price in response to the market forces of demand and supply, up to $ 12,250 in order to achieve equilibrium. At this point, the quantity demanded will i ncrease by 2.974 million units. This action will make General Motors automobiles cheaper than those of the competitors, thereby increasing their demand. Interestingly, the demand will continue to grow and will eventually lead to increased production that will enable the company to enjoy increased economies of scale from the suppliers of raw materials (Arribas et al., 2009). Since General Motors is a global company, the increased demand will cause internal advantages to the firm, as well as result to the establishment of additional subsidiaries across the globe. 3. Price Elasticity of Demand Price elasticity of demand refers to change in quantity demanded as a result of significant change in price. To derive price elasticity of demand, the following formula is used: Price elasticity of demand = (Q1-Q2)/ (Q1+Q2) (P1-P2)/ (P1+P2) The demand is said to be elastic if the price elasticity is greater than 1. This implies that the quantity demanded changes faster than the price. On the othe r hand, if the price elasticity of demand is lesser than one, the price elasticity is said to be inelastic implying that the quantity demanded changes slower than the price. Lastly, if price elasticity arrived at is equal to one, then this is referred to unitary condition, which shows that quantity demanded and price changes at the same rate (Freeman, 1977). Computation of price elasticity of demand for GM P1- $ 12,250 P2- $ 16,650 Q1- $ 12,000 Q2- $ 9,026 Therefore, Price elasticity

Proceedings on the Impeachment of Richard Nixon Essay

Proceedings on the Impeachment of Richard Nixon - Essay Example tions to be considered in this study would be, Can the situation presented in the opening statement be considered as rhetoric with reference to the concept presented by Bitzer in his theory of rhetorical situation? Do the assumptions of the Neo-Aristotelian Criticism define the opening statement as rhetoric? On which grounds does it criticize the opening statement when illustrating it as a rhetoric situation? Thesis Statement The essay to the conducted henceforth intends to present a critical overview of a literature, i.e. the opening statement of Barbara Jordan presented to the House Judiciary committee in response to the impeachment related proceedings executed against the then President Mr. Richard Nixon. With this concern, the essay would attempt to utilize the assumptions presented by Bitzer in relation to the concept of rhetoric situation. Another theory that would be taken into account is the Neo-Aristotelian Criticism which shall assist in scientifically analyzing the opening statement. Justification of the Study Based on two of the most prominent theories, i.e. Bitzer’s rhetorical situation and the Neo-Aristotelian Criticism, the essay shall provide a comprehensive account of the literature selected as the opening statement of Barbara Jordan. With this concern, the study shall elaborate on the then political scenario with the intention to learn the background, influenced by which, the opening statement was framed. Preview of the Topic During the impeachment of Richard Nixon, Congresswoman Barbara Jordan gave an opening statement in the House of Judiciary Committee in order to criticize the proceedings taken by the ministry concerning the conspiracy related with the Watergate Scandal. Barbara Jordan, through her speech, intended to criticize the impeachment... The essay to the conducted henceforth intends to present a critical overview of a literature, i.e. the opening statement of Barbara Jordan presented to the House Judiciary committee in response to the impeachment related proceedings executed against the then President Mr. Richard Nixon. With this concern, the essay would attempt to utilize the assumptions presented by Bitzer in relation to the concept of rhetoric situation. Another theory that would be taken into account is the Neo-Aristotelian Criticism which shall assist in scientifically analyzing the opening statement. Based on two of the most prominent theories, i.e. Bitzer’s rhetorical situation and the Neo-Aristotelian Criticism, the essay shall provide a comprehensive account of the literature selected as the opening statement of Barbara Jordan. With this concern, the study shall elaborate on the then political scenario with the intention to learn the background, influenced by which, the opening statement was framed. D uring the impeachment of Richard Nixon, Congresswoman Barbara Jordan gave an opening statement in the House of Judiciary Committee in order to criticize the proceedings taken by the ministry concerning the conspiracy related with the Watergate Scandal. Barbara Jordan, through her speech, intended to criticize the impeachment articles put forward during the investigation of Watergate conspiracy which was further observed to be misinterpreted as a verbal (written) declaration agreeing with the president’s removal.

Interview methods for children as eyewitnesses Essay

Interview methods for children as eyewitnesses - Essay Example The special circumstances under which children may be interviewed such that their testimony yields credible, admissible evidence requires special support in recent legal reforms. For this reason, advances in legislation in many countries have greatly improved the manner in which children are interviewed in court.1 This is because young children above the age of 5 are highly susceptible to suggestive influences that may affect the credibility of their testimony in court. Suggestibility of very young children Bruck, Ceci, Francoeur & Barr 2 studied the influence of postevent suggestion on children’s accounts of their visit to the doctor. After their DPT shots, children were given one of three types of feedback: (1) that the shot hurt (pain affirming); (2) that it did not hurt (pain denying); and (3) that the shot is over (neutral). One year after, the children were again visited, and were again given either pain denying or neutral feedback in three separate visits. They were als o given either misleading or non-misleading information about the actions of the nurse and doctor. Children given pain denying feedback reported that they did not cry or hardly at all, and said the shot did not hurt, or at least hurt less than the children who received neutral feedback. Also, children who were given misleading information about the actions of the nurse and doctor made more false allegations about their actions than children not given misleading information. ... The study showed that timing of the misinformation affected the memories of single and repeated events, depending on the combination of event-misinformation and misinformation-test delays rather than overall retention interval. In the study by Milne and Bull,4 and that of Holliday,5 the objective was to examine if the cognitive interview would enhance the recall of events when used with children, and whether the cognitive interview increased children’s resistance to suggestive questions. (The cognitive interview focuses on the cognitive processes respondents use to answer survey questions, and the interview is held in some private location such as a laboratory environment.6) In the experiment, eight to ten year old children were shown a video recording of a magic show. The following day they were interviewed individually, some using cognitive interview and some using structured interview. A pre-set list of leading or suggestive questions was given to the children either before or after the interview. The findings were that the children who were interviewed using the cognitive interview had a better and more accurate recall of significantly more details. They were also more resistant to suggestive questions subsequently asked. The study established that the cognitive interview was found to comprise a reliable interviewing technique that enhance recall and enables children to be more resistant to the influence of misleading and suggestive questions. There were implications in other studies. For instance, it was found that both true and false memories tended to increase with age, but did not differ for children who were maltreated as against those who were not.7 Also, suggestibility effects were

Hajj Essay Example | Topics and Well Written Essays - 500 words

Hajj - Essay Example The Hajj is believed to have originated from the Prophet Abraham, and serves as a penance, intense sanctity, dedication, and ultimate clemency for sins. According to the Koran, Ibrahim, Arabic for Abraham, was instructed by Allah to take Hagar his wife and their child Ishmael to Arabia from Palestine, to protect them from the jealousy of Ibrahim’s first wife, Sarah (Kamil N.p). Faced with famishment and thirst, Muslims believe that Hagar prayed to Allah in the desert to which Ishmael struck the ground with his foot causing a spring of water to form. The spring is known as the Zamzam well and the water that is believed to have saved Hagar and Ishmael’s life is called the Zamzam water, where after Hajj, the Hajjis take home a permitted amount of the Zamzam. The Koran later says Ibrahim built a shrine at the well, a stone structure; cube also known as the Kaaba, which is designed to be the gathering site for all believers. Therefore, each year during the month of Dhul Hijjah, the 12th month of the Muslim calendar, between the 8th and the 13th dates, believers or pilgrims perform the Hajj (Kamil N.p). One must first enter into a purity state, ihram where men don two white sheets wrapped around the body. After which the pilgrim proceeds to Mecca to await the start of Hajj. On the 7th of Dhul Hajjah, pilgrims are reminded of their duties and the rituals commence on the 8th. The pilgrim then goes to the valley of Arafat to stand in the open praising Allah. It is believed that the Prophet Muhammad delivered his last sermon at mount Arafat, and it also symbolizes judgment day, standing in the midday sun of Arabia at the valley. Next is returning to another valley, Mina valley, where pilgrims throw stones at pillars called Jamraat, a symbolic ritual symbolizing the stoning of Satan prior to which one has to collect 49 or 70 small pebbles. A sacrifice called Qurbani is made in which a lamb or sheep is slaughtered, and the meat is distributed to the poor. That is

Career Information #2 Essay Example | Topics and Well Written Essays - 500 words

Career Information #2 - Essay Example (US Bureau of Labor Statistics) In order to pursue a career in carpentry in general it is necessary to have a â€Å"preference for physical work†, to know how to read and interpret blue prints and to have an â€Å"interest in working with power tools.† (Today’s Military) A military carpenter is referred to as a Construction Specialists and this job entails the construction of foundations, floor slabs, walls, food framing, roof laying, tile laying, step and stair construction and the construction of â€Å"temporary shelters.† (Today’s Military) The military provides training which combines carpentry with masonry. (Today’s Military) In any case training is gained by virtue of hands-on experience and â€Å"advanced courses.† (Today’s Military) Civilian carpenters are required to have at least three to four years on the job experience as well as course training to qualify as a carpenter. (Occupational Outlook Handbook, 2008-2009) Carpenters can become certified with sufficient training as journeypersons, scaffold building, pump work or high torque bolting. (Occupational Outlook Handbook, 2008-2009) While there is an obvious need for carpenters in the military since they continuously construct temporary shelters for storage and other military needs, civilian demand for carpenters will correspond with construction activities. The more construction that takes place the greater the need for carpenters. (Occupational Outlook Handbook, 2008-2009) Likewise the demand for carpentry corresponds with the size of the population in any geographical area. For example a highly populated area will likely have a greater demand for carpentry than a sparsely populated area. (Occupational Outlook Handbook, 2008-2009) The home construction carpenter earn the highest hourly wage at US$17.38 in 2006. (Occupational Outlook Handbook, 2008-2009) â€Å"Foundation, structure, and building exterior contractors† earned US$17.03

Explain religious teaching about what it means to be a human Essay Example for Free

Explain religious teaching about what it means to be a human Essay Human has a embodied spirit who thinks, act, speaks and desires. Religious teachings say that humans are created in the image of god. They are different from animals because humans have the ability to love, be moral and have free will. Humans life is a gift from god. We must value life. God created us as intelligent beings with the ability to control our actions, urges and emotions. Christian teaches that free will is given by God. By free will, we shape our own lives. Bible says Humans are creation of God. God desired humans to exist. God gave us the ability to reason, speak and to live a moral life. Humans are mixture of earth and divine breath. Bible teaches that we are the incarnation of the divine and part of us is drawn from the earth. Everything created by god is perfect and it was intended. Of all the creatures in Gods creation, Humans are the only ones who enter into a dialouge with God which is by prayer. Most christians believe that humans are distinct from the animal word, and that the most important differences between animals and humans have is soul – a divine spark that sets them apart from other living things. This asserts that Christians do not treat animals as their equals, as only humans were made in the image of God. Christians believe in the sanctity of life, that there is something special and holy about life. Christians believe that humans have a soul which lives on after the body has died, this soul will then be judged and then can join God in heaven. God gave humans dominion over the non-human life, E.g. in Genesis Let them rule over the fish of the sea and the birds of the air suggesting human life has a higher value than non-human life, this shows God has given humans a big responsibility to life which exempliflies the value. God made man in his image many christians believe that God gave them the brains and the abilities to find cures for humans by experimenting on animals and not to use these abilities would be denying Gods plan for them. Some christians say that this gives them the right to use animals in  experiments because humans are of more value. As well in Genesis God said to Adam Rule Over all living creatures suggesting animal testing is acceptable. However, Some christians may be very much against this, as when God created the world, he saw that all that was in was good. Some say this means we should not experiment on animals because they are wonderful part of Gods creation. The earth is the Lords and everything in it, the world, and all who live in it. Human lives are special because it is a gift from God. Human lives distinct from any other creatures and are in higher positions. Humans have sanctity which relates to their dignity, which has both natural dimension, in terms of rational thought and moral decision-making powers. â€Å"Human beings have complete control over their own life and destiny.† (15 marks) How far might a religious believer agree with this statement? Everyone has a purpose of being in this universe because we all have a special position that is created by God. Humans make their own choices and lead on their life. But, God is always there to show people the right path. Only God has control over peoples lives. He decides when we die and when we born. Everything is in Gods hand as religious believer will say God created the world. Gods choices are always right. He is capable of carrying out any project to a successful conclusion without the possibility of fault or failure. Nothing in His universe happens by chance or accident. For every effect there is a cause. God is in control. We have freedom to choose within the constraints of who we are and the circumstances we find ourselves in. Yet while God controls those circumstances but does not control us. While God is able to control us, and if he wanted to he could override our freedom, he chooses not to. The concept of the control of God over everything is called the â€Å"sovereignty† of God. Nothing gives us strength and confidence like an understanding of the sovereignty of God in our lives. God’s sovereignty is defined as His complete and total independent control over every creature, event, and circumstance at every moment in history. Subject to none, influenced by  none, absolutely independent, God does what He pleases. God is in complete control of every molecule in the universe at every moment, and everything that happens is either caused or allowed by Him for His own perfect purposes. Religious believer might say that God is directing your steps down to the smallest details. He can make things happen that you could never make happen on your own. He is for you, on your side, and what He has purposed for your life will come to pass.

Human Resource Strategy Of The NHS

Human Resource Strategy Of The NHS Tameside Hospital NHS Foundation Trust is located at the Tameside General Hospital in Ashton-Under-Lyne. The organisation was formally authorised as a Foundation Trust on 1 February 2008. The Trust was formerly known as Tameside Glossop Acute Services NHS Trust. Employing approximately 2,300 staff, the hospital provides the wide array of services one would associate with a general hospital, including Accident and Emergency services, general and specialist medicine, general and specialist surgery and full Consultant led obstetric and paediatric hospital services for women, children and babies. The Trusts clinical services are provided in a number of different specialties and departments. These are organised into four Divisions. Situated at the foot of the Pennines, eight miles to the east of Manchester the Trust services a population of over 250,000. The population is concentrated in the largely industrialised areas of the eight townships of Tameside, which comprises Tameside Metropolitan Borough Council. The Trusts overarching purpose is to become the local Hospital of Choice for patients, the public and staff. The Trust will continue to play its part in the local community, and to seek to build strong and enduring partnership relations throughout 2010/11 and beyond. The Trust is committed to building on its achievements of 2009/10 and continuing to improve the care the hospital provides and the way we work. Tameside appears to have a very positive future ahead as we have recently undergone extensive building work under a PFI (private finance initiative) Project where we have had  £120 million investment. The Health Investment in Tameside (HIT) Project is the biggest investment and most extensive site improvement Tameside hospital has seen for decades. It will result in new Acute and Mental Health facilities with a construction programme which started in autumn 2006 and will be completed by the end of 2011. The organisations expenditure consists of around two thirds on its workforce. The approach in the way the hospital manages staff is crucial and is key to delivering the best possible care to patients. Staff have the opportunity to develop their skills, knowledge and attitudes and engaging staff in this way will the lead the organisation through a very difficult economic climate. Tameside Hospital like other hospitals is dominated by a mainly female workforce and this is impacting on a previously male management culture and there is a competitive edge now between the existing male workforces in similar organisations. The financial and economic outlook for the coming three years is very challenging and the demands on healthcare services are likely to rise at the same time as available funding becomes more constrained. Improving productivity will be a key focus of the Trusts work over this period, but this will not be allowed to come at the expense of the quality of healthcare services. The Trust Board recognises the challenge of maintaining an accessible and comprehensive range of clinical services for the population of Tameside and Glossop in the current economic climate, and acknowledges that this may be more readily achieved through both innovation and scale. The potential to work collaboratively with another organisation in the development of a hospital group to ensure the continued delivery of quality and productivity is being actively explored. The key aim of such collaboration would be to achieve additional efficiency and quality gains, without the need for major structural change (merger). The Trust already has an active programme for the involvement of patients, the public and staff in its work. Website http://www.tamesidehospital.nhs.uk/Documents/AnnualPlan201011.pdf Accessed 30.03.11. However, it remains the view of the Trust that there are additional benefits to be gained from developing wider and deeper involvement. The Trusts staff also will need to feel empowered to seek out ways to achieve quality gains whilst also delivering productivity improvements, such that the Trust can secure financial and service stability going forwards. As stated above, the Trusts Stakeholder Engagement and Communications Strategies will set out the Trusts plans to enhance the involvement and engagement of key stakeholders. Staff involvement plays a major part in delivering the high quality services expected by such a large community like Tameside and as such the organisation invests heavily in staff development. There is a direct link to the performance of staff and the organisations HR strategy. Unfortunately in the current economic climate this couldnt be further from the truth as staff morale and motivation is certainly not what it was as job cuts is the focus of every member of staff at the Trust. Current Challenges in Strategic Priorities The HR function at Tameside Hospital has become the forefront of driving change within the organisation. The workforce strategy (see Appendix 1) links back to the Trusts Mission Statement (See Appendix 2) for being the hospital of choice for the people of Tameside and Glossop. The Trust wants to use this to underpin the strategy and link it to its business performance. To define human resources and human resourcing strategy Human Resources Human Resourcing Strategy The efforts, skills or capabilities that people contribute to an employing organisation to enable it to continue in existence The general direction followed by an organisation in how it secures, develops and, from time to time, dispenses with human resources to help it continue in the long term Leopold et al (1999) Since the recent change in government and the plans reform the NHS, HRM has become more prevalent to everyone working at the Hospital and what the unknown aims and objectives will be in the coming years. The much criticised Nick Clegg at the Liberal Democrats conference in Sheffield recently has been humiliated by his own party after passing a motion that our family GPs will be in control of commissioning services. Paul Burstow the Health Minister was quoted saying There will be no US-style privatisation of the health service on our watch. Sunday Times 13.03.11. The truth is that nobody really knows what the future holds for the NHS and whether the future reforms will be successful. Mr Burstow also told delegates stripping out layers of needless management and capping administrative costs (means) well be able to make  £5bn of savings over the next four years all of which we will plough straight back into patient care. www.bbc.co.uk. The strategic HR priorities of the NHS as a whol e will be on how these cuts will affect staff and the services they deliver and also how with a significant number of job losses the business is expected to continue with delivering the adequate patient care required. The Independent predicts that union leaders have also indicated that a loss of 50,000 jobs could be lost to due to efficiency savings. www.independent.co.uk. Inevitably this type of reform is going to lead to failures on the frontline with the loss of nursing staff delivering the patient care which is so widely criticised. The focus in our organisation currently is efficiency and effectiveness as there is a significant hole in the purse which funds the whole organisation. We are currently nearly  £2 million in deficit and this is predominantly the case for many public sector organisations where cuts are being made within the existing workforce to combat the financial deficit which hospitals, police and local councils are declaring at the current financial year end. The role of Human Resources is also changing not only as a result of a coalition government but also as a result of globalisation and the expectations of stakeholders and how the rapid development of technology impacts on HRM. Within a change in environment, the HR professional has to evolve to become more strategic and a change mentor within the organisation. People Management (January 2011) suggests that in many Asian companies the positioning of HR is best placed as a business function with a leadership role and operating at a very transactional level and they tend to think less about HR strategy but focus directly on growth. This indicates that the UK can learn from the way their HR leaders operate. They have: Faster implementation cycles Asian leaders have a much more fluid interpretation of HR structures and that a rigid definition of business partner, specialist and HR services can create silos and slow response times. Putting insight at the heart of the function HR leaders are savvy and they use this to drive business growth strategy. Pull the purpose lever they create a sense of purpose by harnessing the press, the project and the organisation behind a big idea. True Engagement they use the three As accountability, authenticity and adaptability. It could soon mean that the UK is struggling to keep up with the way HR is responding to competition and change. In order to succeed in the UK, HR must be a business driven function with a thorough understanding of the organisations bigger picture and be able to influence key decisions and policies. In general, the focus of todays HR Manager has to be on strategic personnel retention and talents development. HR professionals will be coaches, mentors and succession planners to help motivate organisations members and their loyalty. The HR manager will also promote and fight for values, ethics and beliefs within their organisations, especially in the management of workplace diversity. Leopold et al (1999) states that strategy makers are seeking to achieve a fit between HR Strategy and the broader business strategy and ultimately this should contribute fully to the achievement of business objectives. Whittingtons (1993) fourfold typology shown below is extremely useful and helps to understand the complexity and the multidimensional ways in which strategy might be conceived. It is based upon outcomes and how they are perceived purely between either profit-maximising or pluralistic and whether the strategy is either deliberate or emergent. Processes Deliberate Classical Systemic Outcomes Profit-Maximising Pluralistic Evolutionary Processual Emergent Whittingtons typology of strategy Marchington et al (2008) Mabey et al (1999) suggests that the National Health Service has been exposed to decentralization and division into profit-responsible divisions. The organisations workforce strategy is also expected to deliver the employer of choice and the domains for this method are as follows: Employee Resourcing The focus for Tameside is workforce planning and contingency staffing, managing change, modern recruitment and selection practices, new roles and job redesign and developing shared services. Workforce/HR Planning This is essential to any organisation in ensuring we get the right caliber of staff, with the right skills. As an integral part of the business planning process it involves recruitment, retention, development strategies and the provision of workforce information to managers. Effective workforce planning ensures you will have a workforce of the right size, with the right skills, organised in the right way within the budget that you can afford, delivering services to provide the best possible care. www.healthcareworkforce.nhs.uk There are four categories of staff that are important in human resources planning: Exisiting staff New recruits Potential staff Leavers Marchington et al (2008) suggests when the world markets were much more stable and predictable, HR planning was prominent in HRM, personnel management and labour economics. HRM texts have discussed whether HR planning is still worthwhile. In some new organisations HR planning conveys images of bureaucracy, rigidity and a failure to comprehend the limitations of planning in an uncertain environment. Tamesides Workforce Strategy focuses on tactical adjustments to address unknown forces in relation to high demand of services from our commissioners and also the public. Tamesides workforce planning is flexible in nature which allows the organisation to respond effectively to the peaks and troughs of activity. This is through the use of agency and temporary staff which relieves some of the pressure associated with peak times of the year like winter. Skill mix is another focus for the organisation to ensure staff can work across all divisions which gives increased flexibility to the staff we have and which departments they can work. Changes over the next 5 years are projected in our Workforce Strategy. The reductions in staff are significant and this will be managed through effective strategic planning and the deployment of HR interventions such as stringent vacancy controls, allowing for natural wastage, effective redeployment and a planned approach to contingency staffing. Beardwell et al suggests that the Markov model is something which should be used by manpower planners in addressing internal factors that need to be considered in the development of a manpower plan. Recruitment Retention Staff are the most valuable asset in an organisation. Their performance determines whether the organisation achieves its goals and expected results. As a manager you need to create and maintain an environment in which your staff are motivated to perform well. The Trust is developing Recruitment Retention strategies locally, nationally and internationally to help fill vacant positions and hard to fill posts across the Trust. We are seeking to recruit returners back into nursing, midwifery, professions allied to health and medicine. In addition we monitor the reasons for staff leaving and have developed an exit questionnaire to ascertain the main reasons why staff leave. The NHS as a whole advertises through a centralised internet site http://www.jobs.nhs.uk/ this enables the organisation to attract a wide variety of candidates for any single advertisement. We also use techniques such as talent banking and generic recruitment campaigns. The trust aims to ensure that the recruitment and selection of employees and volunteers is always carried out in a fair, timely and cost-effective manner. Poor staff retention has many consequences including cost of staff turnover, loss of company knowledge, and decreased morale. These things can all be detrimental to your business. The retention of key employees is critical to the long-term health and success of any business. Organisations need to try to do what they can to retain their best employees to ensure customer satisfaction, product sales, satisfied co-workers and reporting staff, effective succession planning, and deeply embedded organisational knowledge and learning. www.health4work.nhs.uk Tameside is considering undertaking the introduction of assessment centres, psychometric testing and competence-based selection methods for all vacancies within the organisation. This approach will underpin our commitment to delivering dignity in care by ensuring a workforce hard wired with the requisite behaviours and values. The induction process is also being reviewed and it will be mandatory for staff to be re-inducted every 2 years. Essentially Tameside is aspiring to be as modern with its recruitment process as possible as well as cost efficient. The Trust marks itself to be able to attract and retain the best possible staff but Torrington et al (2005) suggests that this varies over time as labour markets become successively tighter and looser depending on economic conditions. Because an organisation may have to bring about a cultural shift within the company in order to improve employee retention, you may be faced with some resistance to change from some members of staff. Resistance can take many forms ranging from the subtle undermining of change initiatives or withholding of information, to active resistance including strikes. Poor communication has been linked to issues surrounding the effectiveness of change management because imposed change can lead to greater employee resistance. Reward and Recognition Through communications, pay modernisation-benefits realisation and staff recognition schemes Tameside audits itself to ensure the workforce is fully engaged with the delivery of the corporate objectives. Benefits realisation of the recent new pay systems so we can continuously improve productivity. There are schemes which recognise staff commitment which reinforces values and behaviours: Chairmans Prize for Service Improvement, Teamwork and Innovation Above and Beyond Award Caring for Those Who Care Award Long Service Award 100% Attendance These schemes motivate staff and contributes to wider organisation performance and links back to Tameside being the Local Hospital of Choice. Succession Planning Ideally an organisation would not want one talent to replace another but to develop a pool of talent. This is a more dynamic approach to succession planning and gives individuals the chance to put themselves forward to a talent pool. One of the key features of a structured management development system is a succession plan. Cole (2002:390) Succession planning is typically defined as a process by which one or more successors are identified for key posts (or groups of similar key posts), and career moves and/or development activities are planned for these successors. In other words, succession planning is about preparing organisations for likely or inevitable changes now, in order to minimise challenges later. www.idea.gov.uk Some large organisations develop schedules for their succession planning but Tameside does not have such an elaborate schedule. Succession planning is a very informal discussion between managers identifying potential candidates who would be suitable for roles which are about to become vacant from retirement, voluntary leaving, dismissal or sickness. Strategically the NHS has a workforce review team (WRT) but at local levels like District General Hospitals it is more difficult to implement workforce planning effectively. With an organisation such as Tameside a more formalised approach to succession planning would be advisable to build a pool of staff rather than assessing staff within your own department. For workforce planning to be successful it requires accurate data, modelling, continuous and iterative planning, specialist skills, scenario building and stakeholder involvement. Talent Management Develop leadership and staff empowerment, talent spotting and succession planning. Performance Management and Monitoring with HR Metrics, Performance Monitoring and External Benchmarking. Tameside recognises the importance of a positive approach to the management of unsatisfactory work performance to enable the Trust to deliver quality services. Unsatisfactory performance by individual employees for whatever reason is detrimental to the service and Trust as a whole. As well as reducing standards of patient care and service delivery, poor performance by individual members of staff has a demotivating effect on other employees. The hospital operates a rigorous Capability Policy for managers to use when assessing individuals who require performance monitoring. It also ensures individuals are treated fairly, sensitive and in a consistent manner. It is the responsibility of managers to ensure when recruiting that the right candidate is selected and they can perform the role they are applying for. Managers are given full support from their individual HR Managers to ensure the policy is adhered to. There are 4 stages to the Capability Policy: Stage 1 Informal monitoring, coaching and counseling Stage 2 Formal meeting Stage 3 Formal meeting Stage 4 Formal hearing stage This is a lengthy process and on occasion has been known to take 12 months to redeploy or dismiss an employee who is not performing their role. Performance Management takes the form of a continuous self-renewing cycle, as illustrated in the figure below: The performance Management Cycle Armstrong et al (2009) There is a lot of red tape to the current performance management technique. If a staff member is unable to perform the role to the required standard the process is so long that nobody really bothers to use it and usually waits for the individual to leave. This workforce strategy was produced in 2007 and was scheduled to be periodically reviewed over the course of 5 years. Leopold et al (1999) suggests that the correct definition for Human Resource Strategy is personnel strategy. Organisations which do not concentrate on attracting and retaining talents may find themselves in a very vulnerable position, as competitors may be outplaying them in the strategic employment of their human resources. With the increase in competition, locally or globally, organisations must adapt themselves to become more resilient, agile, and customer focused to succeed. Human resource management challenges cost your organisation money, time, resources, lost opportunities, and reduced productivity, to name but a few. Organisations need to rethink their strategic HRM and think more about strategic recruitment. www.strategic-human-resource.com Cole (2002) suggests that there should be strategic long-term goals when it comes to a HR strategy which includes: Ensuring the HR needs for the next five years are met Maintain wage and salary levels sufficient to recruit, retain and motivate staff at all levels in the organisation. Give priority to the development of leadership skills Ensure effective training and development opportunities Effective communication systems between management and other employees Provide mechanisms to cope with the human consequences of change This is certainly reflected in Tamesides Workforce Strategy. How Human Resources Management (HRM) contributes to the achievement of organisational objectives. HR Consultant Louise Allen suggests there are key steps in the quest to delivering a successful HR strategy that links to the organisation objectives of the business. Aligning business and HR needs The business goals sit at the heart of any HR strategy and in order to align business and HR needs can your organisations internal capability deliver its business goals? A HR strategy which is aligned with the business strategy is about the growth of the organisation by increasing the performance of the employees and keeping budgets under control. The process of the alignment of the HR strategy with the business strategy is about going deeper and finding the real root of the successful human capital management in the organisation. Developing your HR strategy It needs to understand your business goals and the business model can identify any potential threats and opportunities in the quantity and quality of human resource required by your organisation. It is critical the HR team as a whole has a high level of knowledge and expertise in aligning HR interventions and how this impacts on business performance. Organisational performance This is the process by which business goals and objectives are cascaded and managed across and down an organisation. It provides a rationale for all other HR activity and directly impacts the business success, enhancing HRs reputation and contribution. Organisation culture Culture commonly described as the way we do things round here www.thetimes100.co.uk Organisations tend to create their own culture and this gives the business a sense of identity. The organisation culture encapsulates what it is good at and what has worked for the business in the past. These values can often be acknowledged and accepted without question by long-serving members of the business. In re-aligning an organisations culture there can be real benefit and competitive advantage through improved service. Changes to the Organisations Current HR Strategy The fundamental change to our Workforce Strategy is that it needs updating. The current strategy differs somewhat to where we are currently. The change in government is not something that was envisaged and the impact of this change and how it would affect the Trust. I understand this would be difficult to envisage but all eventualities should be considered in a HR Strategy which has a 5 year plan. There isnt a one-size-fits-all and your HR strategy may change as the business evolves. www.humanresourcesiq.com The organisation needs to create a robust performance management process that sets out performance objectives for all levels of staff within the business. This is an opportunity to develop line managers skills in being able to disseminate and set stretch targets for their business. Another element is a personal development review process where individual strengths and weaknesses are identified for the purposes of assessing and meeting organisational development needs. Evaluation of the impact of SHRM on the business Even though HR professionals like Guest and Legge are convinced that their efforts add value to the organisations bottom-line, frequently there is little evidence to demonstrate such belief. www.allbusiness.com Improvements could be made to our HR department but it seems to be a consistent trend throughout the organisation with regards to funding and resources which would enable you to deliver those objectives. A prominent guru of HRM, David Ulrich discusses the role of HRM moving from a functional to a more operational role and involves partnership rather than being resource based. He describes HR as being a four sided partnership consisting of: Strategic Partner Change Agent Employee champion Administrative expert This allows the challenge of change to be more transparent and enables a strategic involvement from the beginning involving all stakeholders from the macro and micro environment. The employee champions act as an advocate for the employees and protects them throughout the process of change. The administrative expert is a flexible role within Ulrichs model ensure the maximum possible quality service is delivered at the lowest possible cost to the organisation. The Ulrich model relates very closely to how Tameisde will require support in the future developments and changes within the organisation. Competitive Advantage There is evidence to suggest that HR practices have a direct link to sustaining a competitive advantage in any organisation. Leopold et al suggests that in order to gain human resourcing advantage there should be a combination of efforts towards generating both human capital advantage (by recruiting and retaining outstanding people) and human process advantage (instigating difficult-to-imitate, socially complex, historically evolved processes such as learning, co-operation and innovation). There is also evidence to suggest that mixing human resourcing activities inevitably presents HR planners with a major challenge. To help with this, the notion of horizontal integration, this relates to the degree to which different aspects of HR are compatible with each other. Porter has argued that employers have three basic strategic options in order to gain competitive advantage: Cost Leadership Differentiation Focus www.business-fundas.com Porters five forces model (Appendix 4) provides a simple perspective for assessing and analysing the competitive strength and position of an organisation. This model can be used alongside other models like SWOT and PESTEL with good analytical effect. More recently Michael Porter has been working with Elizabeth Teisbery to revolutionise Healthcare reform in the United States. The Economist (Aug 2008) suggests that Porter effectively redefined the way that businessmen think about competition Conclusion After reviewing the HR strategy for Tameside Hospital it is clear that as an organisation we have yet to deal with any real human resource issue that leads to any disciplinary action. Our paperwork trail is not fluent and procedures are followed in a haphazard way. Due to a significant cut in resources even before the new round of government cuts it is difficult to follow out-of-date policies effectively. There is a real need for training and education on Human Resource Management as Tameside is leaving itself wide open to legal disputes. Clear guidelines need to be in place to protect the workforce and also the employees and organisations interests. The succession plans of the business are also ineffective. There are no established structured channels for promotion for staff within the business which are committed to their own self development. With the future of the Primary Care Trusts diminishing and the commissioning role transferring to the responsibility of the GPs, Tameside will come under increasing pressure to have their policies and protocols up-to-date which are adhered to by staff at every level.