Global Business Cultural Analysis: France Essay

This paper will focus on the many elements and dimensions of France and the affect it has on the business that takes place locally and internationally. There will be constant comparisons and contrasts between France and the United States of America taking place throughout this entire research article. I will focus on how the elements and dimensions of the culture separately are adapted by the locals and integrated into everyday life and business. I will also give insight on how to conduct business in France for other countries, mainly the United States, by talking about the countries imports and exports and certain important factors that outside business should know in order to successfully enterprise. The information and suggestions offered in this paper will range from communication and business dress attire, to social structures and Geert Hofstede analysis; all of which should improve the knowledge of foreign businesses and help them adapt in order to maintain and/or obtain success internationally in the country of France.? Global Business Cultural Analysis: France  What is a global business cultural analysis? From looking and several examples and finding information on this country, I have come to the conclusion that it is a description of the country and how its culture contributes to or restricts the business environment. As many of us may already know, culture plays a major part in a lot within a country. For one, culture dictates communication. Culture also the mannerisms of the people that are within the country. So, just to clear up any confusion, culture is a major part of a country and how it conducts itself, especially how it conducts business. It would be only right that if one was trying to conduct business in a country, they would need to understand the culture of the country in order to successfully interact with the people of the country in hopes of promoting and maintaining a highly active and flourishing business. With that being the case, I will focus my attention on the major elements and dimensions of culture in France. I will also describe how these elements and dimensions are integrated by the people of France when conducting business within this nation. Lastly, I will compare and contrast the culture and business of France with the culture and business of the United States and explain what a United States company would have to do in order to conduct business in France successfully. Communication One of the most important elements of culture in any and every country is communication. Communication comes in two different forms, verbal and nonverbal. Of course verbal is talking and actually saying what you mean and non verbal would be things such as hand gestures and body movements. In France, the official language is of course French. According to A Practical Guide to French Business by Alston, Hawthorne, and Saillet, â€Å"The French consider their language a central part of their cultural heritage, their â€Å"patrimoine,† and fluency in French is a major part of how French and non-French are evaluated. It is almost impossible to be fully accepted, or respected, when one does not speak French well† (2003 p. 43). The French appreciate when people not of the nation attempt to speak French but get irritated when it is spoken incorrectly according to Alston et al (2003). I can personally vouch for this because I had a French teacher that became visibly bothered when learned words or phrases were butchered and not used in the correct context. The French language is so important to the people of France, the government does not allow advertisements to be a mixture of languages. For example, if a store decided to display a sign that said, â€Å"Como is life? † it would be illegal and subject to a fine by the French government. The United States differ greatly in this aspect. There are a lot of examples of mixed languages, especially in entertainment such as movies and sitcoms. The French are very unique when it comes to conversation. They have a great appreciation for it, however, they tend to enjoy arguments and disagreements. They look at these things as interesting. They value someone that can argue with great skill. This is a complete contrast of the United States. We tend to try to avoid arguments and look down upon it. We try to be liked and attempt to agree with people that we are trying to build a relationship with or hold a conversation with. The French would rather voice their opinions and appear non-hypocritical than to agree or compromise how they feel. When it comes to interacting with people, France and the United States differ greatly. The people of France tend not to smile or have an expression when meeting new people. In the United States, we tend to smile and greet people as we have known them for a very long time. Edward MacNeal talks about growing up in a bicultural environment and noticing the differences between French and American interactions. He states in his journal French-American Misunderstandings, â€Å"†¦the French don’t smile at people they don’t know. They think it’s hypocritical† (2003). This nature is why many Americans view French people to be rude or snobbish. MacNeal also says that the American assumption is that we are all friends and the French assumption is that we are all strangers. This very assumption could hinder interaction between people of the two nations. So with that being said, when doing business with the French, be sure to address them by Sir or Madame rather than by their names. One should always approach them with no expression because a sign of expression, such as a smile, could be viewed as phony or fake. When communicating with the French, you should be mindful of the volume of your voice and be sure to make eye contact. Americans are known to be a little bit louder than the French would like. We tend to offend them by our loud talking and blaring laughter. The French are seen as very intimidating to Americans because of the intensity and vast amount of eye contact they make. Like I stated earlier, communication can also be non-verbal. Many actions and behaviors are observed by the French as well. Matt Priest (2012) notes that the French are very casual when it comes to punctuality. If you were to show up late to a meeting, you would probably be easily forgiven by many French professionals. Americans value punctuality a lot more than the French. You would mostly likely be the topic of discussion after the meeting. Speaking of conducting business, Mr. Priest also gives us insight by telling us that the French prefer to do business over lunch as opposed to any other meal. The French value privacy. They do not tend to like unannounced visits, so it is very important to let them know if you are planning to visit. Americans and the French have a little in common when it comes to communication. We both greet with a brief handshake, followed by a bit of eye contact. However, according to Matt Priest’s France Business Etiquette, Culture & Manners, French handshakes are not as firm as American handshakes. When conducting business, most people speak English, as English has become the common language within international business. According to Organization Communication in France: An Overview of Current Research, â€Å"†¦English has progressively and irremediably become the de facto Lingua Franca since the end of World War II†¦Ã¢â‚¬  (Cooren & Grosjean, 2010). Americans are similar to the French when it comes to business attire. We both recommend dress to be conservative. Bright colors are usually avoided by both counterparts and flashy, overpowering, and glitzy accessories are not encouraged according to the International Business Center (Priest, 2012). Conservative clothing is usually preferred when conducting any kind of business internationally. Religion The dominant religion in France is Roman Catholic. According to the World Factbook of France, about 83-88% of the population of the country is Roman Catholic (2012). Religion plays a major role in the operations and actions of the people of France. The International Business Center tells us that for the countries that have over 50% of the population that practice the Catholic religion, there is a dimension of the Geert Hofstede analysis called the Uncertainty Avoidance that correlates positively with this statistic (2012). The Geert Hofstede analysis will be discussed later on throughout this paper. According to Edward J. Woell, â€Å"Catholic belief and practice continued to shape French national identity throughout the modern era† (2009). The national identity of France was also molded by the Declaration of the Rights of Man and of the Citizen. This document is very similar to the United States Constitution and even though both societies say there is a separation of church and state, they were both created and influenced by religious beliefs. This very idea is the justification of many laws implemented in France and the United States together. Back in the nineteenth century, France had a belief of spreading its culture around the world on civilizations that were considered wrong or backwards. They believed their culture was the hands down best and most appropriate way to live and conduct oneself. Since France was rooted in the Catholic religion, that would imply that they were spreading their religious beliefs on other civilizations and people of other areas. As you you will see a little further through this article, France has continued to spread its beliefs on people, especially the people that are occupants of the country. There are several examples that show the influence religion has had on the actions and even laws of the people of France. One of the most recent events that was influenced by religion was the banning of the burqa. A burqa is a full body veil that is worn by Muslim women. The banning of the burqa started with not allowing the burqa to be worn in the schools in France. According to Ellen Wiles’s article Headscarves, Human Rights, and Harmonious Multicultural Society: Implications of the French Ban for Interpretations of Equality, headscarves and any signs or clothing that demonstrate ones religious affiliation (2007). This article also pulls a passage directly from the rule that was passed by legislation on the issue of the schools ban on religious clothing, â€Å"Article L. 41-51 of the French Education Code provides: â€Å"In state primary and secondary schools, the wearing of signs or dress by which pupils overtly manifest a religious affiliation is prohibited. † (Legislation passed on March 15, 2004)† (2007). The French government was not happy there. They passed a law on September 14, 2010, that would ban the wearing of the burqa in public. Right Vision News tells us, â€Å"A woman who repeatedly insists on appearing veiled in public can be fined 150 euros and ordered to attend re-education classes. There are much ore severe penalties for anyone found guilty of forcing someone else to hide his or her face â€Å"through threats, violence, constraint, abuse of authority or power for reason of their gender. â€Å"Clearly aimed at fathers, husbands or religious leaders who force women to wear face-veils, and applicable to offences committed in public or in private, the law imposes a fine of 30,000 euros and a year in jail† (2011). 150 euros equals out to about 200 United States dollars and 30,000 euros is about 40,000 United States dollars. This is a very harsh punishment for something that is considered a part of some people’s custom. People argued that this would infringe on the religious freedom of the individuals in the society; however, since the majority religion is Roman Catholic, this ban fits perfectly into the identity of the people that actively practice the Catholic religion. The government of France, like I stated earlier, was shaped by religious beliefs. The argument of the government of France for banning the burqa was that it hindered inequality and promoted submissive behavior. However, many people question this argument. As we all know, France is very conscientious of their appearance. The burqa does not display the Roman Catholic religion but actually has a negative connotation to other people that still view Muslim as terrorist because of the extremist group called the Taliban. The United States has taken a very different approach. Just recently, a mosque was built near ground zero of the bombing that took place on September 11, 2001. In the United States, the majority religion is Christianity. The idea of the construction of the mosque received lots of opposition but it was ultimately approved for construction by the members of the United States federal government. This was one of the most extreme signs of the support of religious freedom in the country, or better yet, a more absolute signal of separation of church and state. As we all know, the United States pushed their beliefs on people as well, which is very similar to France. We came overseas from Britain and persuaded the Native American people to adapt our ways. We taught them our ways of hunting and even our way of survival. Most importantly, we taught the Natives our religious ways. The same goes for modern day America as well. Though slightly more subtle, we influence people today with our religious beliefs. Christianity is embedded into our culture and is forced upon people through the many rules and amendments. I guess you can say that about just about any country, however, not all countries are backed or rooted in religious beliefs. For instance, the national religion of China is atheist. That is strictly enforced by the government of the country and displays of other religions are subject to punishment. Ethics and Etiquette This section will not just focus on ethics, but more so business ethics. First off, ethics, according to Google’s dictionary, is â€Å"Moral principles that govern a person’s or group’s behavior† (2012). This is the perfect definition for the ethics of a culture because it is the principles that govern the people and it influences the decisions and actions of certain groups of people as well. Business ethics is defined by Chris MacDonald as, â€Å"critical, structured examination of how people & institutions should behave in the world of commerce. In particular, it involves examining appropriate constraints on the pursuit of self-interest, or (for firms) profits, when the actions of individuals or firms affects others† (2012). Business ethics influence how certain companies and businesses interact with one another to conduct business activities. Some of France’s ethics and values were discussed earlier in the article, but let us talk about these set of governing principles in detail to see how they affect interaction between the people of the country. French people value their language as I stated earlier and the history of the country. The French language and its importance was fore mentioned in the communication section, so let us discuss the importance of history on the people of this country. According to The ins and outs of doing business in Europe: Germany, France, Russia, and the emerging markets of Eastern Europe, â€Å"Ignorance of French history, culture, literature, and so on is demonstratively looked down upon† (Gray 2005). The French pride themselves on the long history of their country and the influence they have had on the world throughout the years. They also place importance on inheritance. This value of inheritance goes hand in hand with the importance of social classes in France. Social classes and structures will be discussed later in this article. The French place strong value on friendship. Friendships to the French are very similar to being family related to Americans. We Americans tend to make many friends with moderate devotion or dedication whereas, the French do not make as many friends but build very strong relationships. Mr. Edward MacNeal states on the topic of friendship in both the United States and France, â€Å"Friendship in America may imply nothing beyond a momentary conjunction of place or interest, and even those you consider as your friends probably don’t know your other friends. Friendship in France usually implies a lifelong commitment. One takes on a more active burden of concern for friends in France than most Americans would knowingly accept. Your obligations to a friend in France might be likened to those you would have to a family member that you personally selected. In France, then, one shies from making friends casually and most of one’s friends probably do know each other† (2003). With this in mind, it is beneficial for one to make friends with their employers. True, you do want to become an ally of your boss, but be sure not to try to hard because like I stated before, the French despise phony demeanors and are very critical of hypocritical behavior. The best way to meet someone new in France is to be introduced by a mutual third party. This is true because of the great emphasis that is placed on friendship. Remember, in France, all of your friends will likely know one another. Like MacNeal said, friendships are lifelong commitments; so, once you become friends with your boss, you can expect them to help you in any way they can and the actions should remain mutual. I will now discuss the business etiquette of the French people because this is going to be very important for people of different nations that intend to conduct business with the French. Firstly, when greeting anyone, be sure to address them by Monsieur or Madame, no matter the circumstance. This is considered formal and is regarded as more polite. It is always important to remember to never confuse business with personal in France. France rarely uses humor in the workplace. It is seen as unprofessional. The French value intellect over all. Like I mentioned earlier, the best meal to discuss business is lunch.

SAS Institute Case Study Answers

The SAS institute was founded in 1976 by Dr. James Goodnight and Dr. John Sall, both professors at North Carolina State University, SAS Institute, Inc. provides business intelligence (BI) software and services at more than 40,000 customer sites worldwide, including 90 percent of the Fortune 500 companies. SAS, which stands for â€Å"statistical analysis software,† is headquartered in Cary, North Carolina. It is the world’s largest privately held software company, having over 100 offices worldwide with approximately 10,000 employees. With an unbroken record of growth and profitability, SAS had revenue of $1. 18 billion in 2002 and invested about 25 percent of revenues into research and development. SAS has been widely recognized for its work-life programs and emphasis on employee satisfaction. The company’s various honors include being recognized by Working Mothers magazine as one of â€Å"100 Best Companies for Working Mothers† and by Fortune magazine as one of the â€Å"100 Best Companies to Work for in America. † The Working Mothers recognition has been received 13 times and the Fortune recognition has occurred for six consecutive years. . Critically analyse the basic management philosophy that governs employee relation management at SAS. The management culture is a very important factor in the imprinting of a company: it shapes the relationship between working environment and employee satisfaction. SAS’s particular strategy of running the business in which the employees are unbelievably loyal, as a software developer himself, SAS CEO Jim Goodnight knows well that designing software is a creative process, and that SAS’ continued success is built on â€Å"products of the mind. The creativity and puzzle-solving behind great software and the caring professionalism behind great customer service are the most essential resources in an intellectual property enterprise. SAS management believes that workplace culture, company values and employment practices can transform the work experience in ways that are not only good relations but good business. Focusing on people and relationships making employees a top priority leads to more productive, satisfied and dedicated employees. They take care of the company that takes care of them. To achieve that ideal, employees must be stimulated, engaged, appreciated and supported. They need to be trusted and valued, to feel that they make a difference. To support the creative process and balance work and family, they must be offered a flexible work environment that allows them to be the most productive. And they should be freed from many of the distractions and difficulties of day-to-day life, so they can focus on doing their best work. They want good results so they pay their employees competitively, targeted at the average for the software industry. SAS does not provide stock options like other companies in the industry. Instead of relying on high salaries and stock options to attract and retain workers like many software companies do, SAS takes a very different approach. SAS focuses on providing meaningful and challenging work, and it encourages teamwork. SAS also provides a host of benefits that appeal to the employees and help keep them satisfied. As one employee who took a 10 percent pay cut to join SAS said: â€Å"It’s better to be happy than to have a little more money. Employees are given the freedom, flexibility, responsibility, and resources to do their jobs, and they are also held accountable for results. Managers know what employees are doing and they work alongside them, writing computer code. The company employs very few external contractors and very few part-time staff, so there is a strong sense of teamwork throughout the organization. SAS employees are clearly involved in their work. One employee, Kathy Passarella, notes that: â€Å"When you walk down the halls here, it’s rare that you hear people talking about anything but work. Clearly, human resource management at SAS is a two-way street. SAS has an HR strategy and related policies and practices that attract, motivate, and retain highly capable workers who make significant contributions to the ongoing success of the company. Goodnight and the other SAS leaders expect nothing less than superior performance from the employees, and they continue to get it. The employees are loyal a nd committed to the company, and they are productive; so loyal, committed, and productive, in fact, that only a small percentage of the employees ever leave once they have been hired at SAS. They have the employees who don’t want to leave the work even if they get little more money somewhere else as they want the peace they get in SAS. (Drucker 1974, Chaffee 1985) 3. Critically evaluate how SAS’s have ethically played its role in providing for the needs of its employees and how its human resource strategy policies, and practices affect the company’s ability to attract, develop, and maintain a quality workforce. This Corporate Social Responsibility Report reflects the core values and achievements of how SAS does business as an employer, a software provider and a corporate citizen. The guiding principles that launched the company in 1976 are still the foundation of the enterprise. The company strives to be approachable, so customers recognize SAS as a reliable partner and not just a vendor. It is about being customer-driven, engaging with customers to find out what they want and helping to solve their problems. It requires swiftness and agility, to adapt to changing technology and global conditions. It relies on the kind of innovation that grows in a workplace culture where employees feel valued, vested and inspired to excellence. And it demands that SAS be trustworthy, an ethical business partner that customers can count on for their critical decision-making processes. Overarching these guiding principles is the commitment to sustainability to drive operational efficiency, spawn innovation, and satisfy the expectations of customers, employees and society. This commitment and understanding are driven from the top. Through the SAS Executive Sustainability Council, top executives ensure that sustainability goals and priorities permeate every aspect of the company’s operations. Externally, SAS senior management is represented on the boards of leading conservation organizations, such as The Nature Conservancy, and provides influence on the global stage through such organizations as the World Economic Forum, World Resources Institute and the Environmental Defense Fund. Responding to the growing need for companies to measure their performance, SAS introduced SAS for Sustainability Management software in 2008 to enable organizations of any size or industry to measure, manage and report on sustainability indicators. This groundbreaking solution led to Jim Goodnight, SAS CEO, being named among the â€Å"100 Most Influential People in Business Ethics† in 2008. This 2009 Corporate Social Responsibility Report, the third published by the company, highlights SAS’ commitment to, and leadership on, sustainability across all business units – in terms of governance and management, employees, community engagement and the environment. Employees are given the freedom, flexibility, responsibility, and resources to do their jobs, and they are also held accountable for results. Managers know what employees are doing and they work alongside them, writing computer code. The company employs very few external contractors and very few part-time staff, so there is a strong sense of teamwork throughout the organization. SAS employees are clearly involved in their work. One employee, Kathy Passarella, notes that: When you walk down the halls here, it’s rare that you hear people talking about anything but work. (Cooper 1991) Included among the various employee benefits that SAS provides are: an employee fitness and recreational center, an employee laundry service, a heavily subsidized employee cafeteria, live piano music in the employee cafeteria, subsidized on-site childcare, and a free health center. All of these benefits are geared toward employees having a better work experience and/or a better balance between their work lives and their personal lives. The company’s commitment to work-life balance is evident in SAS’s 35-hour workweek, which clearly recognizes the importance of employee’s personal lives. That strategy is intended â€Å"to make it impossible for people not to do their work. † The owners of SAS want employees to be satisfied because they believe satisfied employees will be excellent performers and will provide exceptional service to the company’s customers. If you treat employees as if they make a difference to the company, they will make a difference to the company. Satisfied employees create satisfied customers. † This viewpoint might be described as a form of enlightened realism and enlightened self-interest on the part of the company. Satisfied employees make for satisfied customers, and satisfied customers make for an ongoing stream of revenue and profits for SAS. . In commenting on the company’s performance expectations for employees, Goodnight says: â€Å"I like to be around happy people, but if they don’t get that next release out, they’re not going to be very happy. Pondering the likelihood that SAS employees would take advantage of the company’s relaxed atmosphere, John Sall, co-owner of SAS, observes: â€Å"I can’t imagine that playing Ping-Pong would be more interesting than work. † David Russo adds some additional perspective. He says: â€Å"If you’re out sick for six months, you’ll get cards and flowers, and people will come to cook dinner for you. If you’re out sick for six Mondays in a row, you’ll get fired. We expect adult behavior. † David Russo, SAS’s head of human resources says: â€Å"To some people, this looks l ike the Good Ship Lollipop, floating down the stream. It’s not. It’s part of a soundly designed strategy. † That strategy is intended â€Å"to make it impossible for people not to do their work. † (Buzzell 1987) 4. Critically evaluate SAS employees’ moral duty to the organization towards the achievement of its goal. As the company is doing its best to keep the employees happy it also expects the employees to give their best to the company. The owners of SAS want employees to be satisfied because they believe satisfied employees will be excellent performers and will provide exceptional service to the company’s customers. So by treating the employees well they know that they will get ga good return as the employees will treat the customers well. They follow the strategy that satisfied employees create satisfied customers. † This viewpoint might be described as a form of enlightened realism and enlightened self-interest on the part of the company. Satisfied employees make for satisfied customers, and satisfied customers make for an ongoing stream of revenue and profits for SAS. SAS’s leaders recognize both the benefits and costs associated with keeping employees satisfied. One of the most significant benefits for SAS is a very low annual turnover rate. The company’s turnover rate is less than four percent, as compared to approximately 25 percent for the industry as a whole. This low turnover saves the company about $70 million annually in employee replacement costs. On the cost side, of course, is the company’s monetary outlay for the various programs. David Russo, the human resources director, argues that the employee replacement cost savings more than pays for the company’s generous benefits. Perhaps of more concern on the â€Å"cost side† is the potential for employees failing to perform. In commenting on the company’s performance expectations for employees, Goodnight says: â€Å"I like to be around happy people, but if they don’t get that next release out, they’re not going to be very happy. † Pondering the likelihood that SAS employees would take advantage of the company’s relaxed atmosphere, John Sall, co-owner of SAS, observes: â€Å"I can’t imagine that playing Ping-Pong would be more interesting than work. † David Russo adds some additional perspective. He says: â€Å"If you’re out sick for six months, you’ll get cards and flowers, and people will come to cook dinner for you. If you’re out sick for six Mondays in a row, you’ll get fired. We expect adult behavior. † The system of SAS is a two-way street. SAS has an HR strategy and related policies and practices that attract, motivate, and retain highly capable workers who make significant contributions to the ongoing success of the company. Goodnight and the other SAS leaders expect nothing less than superior performance from the employees, and they continue to get it. The employees are loyal and committed to the company, and they are productive; so loyal, committed, and productive, in fact, that they are giving the best to the company. Borgerson 2008). 5. Conclusion: SAS has proved to give the best quality of working atmosphere to its employees. They motivate their employees and help them to give their best to the company. They don’t interfere in the family life of the employees instead they tray to make their lives better in every way by creating things around them that make th em feel comfortable. Clearly, human resource management at SAS is a two-way street. SAS has an HR strategy and related policies and practices that attract, motivate, and retain highly capable workers who make significant contributions to the ongoing success of the company. Goodnight and the other SAS leaders expect nothing less than superior performance from the employees, and they continue to get it. The employees are loyal and committed to the company, and they are productive; so loyal, committed, and productive, in fact, that only a small percentage of the employees ever leave once they have been hired at SAS, as they feel so comfortable that even if they are offered a little more money in some other company they don’t prefer more money.

Attrition in Bpo

Abstract The broad objective of this research is to identify the root causes of attrition and retention in BPOs, analyzing the level of employee motivation, satisfaction and involvement, generate a model for maximizing sustenance of employees in the organization and come up with concrete recommendations, which will eventually be valuable to the organizations to retain their employees for a long term. 1. Objective It is clear from the review of BPO research that solutions are required to some specific problems of practical importance in the field of escalating attrition and retention in BPOs. The broad objective f this paper is to identify the root causes of attrition and retention in BPOs, analyzing the level of employee motivation, satisfaction and involvement, generate a model for maximizing sustenance of employees in the organization and come up with concrete recommendations, which will eventually be valuable to the organizations to retain their employees for a long term. The spec ific objectives of this paper are:  · To identify and rank the factors of attrition in BPOs based on accumulative literature review and secondary data.  · To develop a regression model for escalating the stay of employees in BPOs nd give recommendations for the same.  · To assess the existing level of employee motivation and validate the model by studying the impact of recommendations on a small patch. 2. Introduction The last decade saw an upheaval in the growth and development of the Indian economy, which was accompanied by the revolution in the technological front and a radical change in the way businesses were done. Instead of being the jack-ofall- trades, the smart organizations have now redefined the way of working and now aim at being the master of their core business. Outsourcing the non-core processes in order to concentrate on the ore ones is how the companies prefer to work now. BPO has become the obvious strategic choice of the phenomenal lifestyles seem to flash t he mind in a jiffy. That’s just the start. One reads it again, contemplates over it, dives into the unveiled afflictions, and gives it a second thought and companies looking at the visible profits of cost reduction while improving the quality of service, increasing shareholder value etc. With the whirlpool of opportunities the Indian Business Process Outsourcing sector seems to be on a happy ride. It has emerged rapidly, and its exports have grown from $565 million in 2000 to about $7. 3 illion in 2005. With the boat steaming ahead in the global markets, India has already become the most privileged destination. Hence such an eternal inventory of opportunities simply showcases a phenomenon, which is no less than the renaissance for our Indian markets. Attrition in BPOs has terrible effects on the organization. The high attrition costs increases the costs to the organization considerably. They have to combat the amount of disruption due to unplanned exits. The more the people l eave an organization, the more it is a drain on the company’s resources like recruitment expenses, training and orientation resources and the time.The high attrition rate also affects the productivity of the organization. Therefore, it is extremely important to curb attrition not only for an individual firm but also for the industry as a whole. Many researchers have worked enormously on the IT & BPO sector, citing its challenges, issues, and ATTRITION AND RETENTION OF EMPLOYEES IN BPO SECTOR Ankita Srivastava [email  protected] com SKS Group of Institution,Mathura Yogesh Tiwari [email  protected] com SKS Group of Institution,Mathura Hradesh Kumar hradesh. [email  protected] com SKS Group of Institution,Mathura Ankita Srivastava et al,Int. J. Comp. Tech.Appl,Vol 2 (6), 3056-3065 IJCTA | NOV-DEC 2011 Available [email  protected] ijcta. com 3056 ISSN:2229-6093 opportunities in and around employee performance, employee satisfaction, employee turnover etc. 3. Literature Re view Grossman and Helpman’s (2005: 135) statement, â€Å"We live in an age of outsourcing,† clearly designates that outsourcing has now become an acknowledged, accepted and established business strategy. One of the most familiar forms of outsourcing is business process outsourcing BPO, i. e. , transferring the operational ownership of one or more of the firm’s business processes to an external supplier that, in turn, administers the rocesses according to some predefined metrics (Ghosh and Scott, 2005; Stone, 2004). BPO or Business Process Outsourcing thus refers to the rearrangement of entire business functions to some other service providers, primarily in low cost locations. The service provider may be either selfowned or a third party. This relocation or transferring of business processes to an external provider is essentially to accomplish increased shareholder value. Some of the general services provided by the BPOs are Receivables and Payables, Inventory Ma nagement, Order Processing, Cash flow Analysis, Reconciliation, Data Entry, PayrollProcessing, QuickBooks Accounting, Financial Statement Preparation and Accounting Services. Some of the web based services include live online sales and order entry, E-commerce transaction support, Live online enquiry handling, Web Design/Development. Reduced international trade barriers and improved telecommunication and IT capability over the past decade has led to a situation where organizations across the world are increasingly interlinked with each other. This has resulted in intense global competition, challenging business managers across the world to find ways to reduce the cost of conducting business and accessing lobal resources in meeting the need of global markets. In such a context, the reorganization of business models to leverage benefits of outsourcing and focus on core competencies has become a key strategy pursued by large corporations across the world. BPO service-providers are expec ted to provide a wide spectrum of benefits to their customers, ranging from having greater expertise in the outsourced processes, lower costs achieved through economies of scale, scalability and the ability to absorb cyclicality of loads.  · Demand-Supply Equations According to market analysis firm Gartner, the global outsourcing market in 2000 was pproximately $119 bn and will touch $234 bn by the end of 2005. The market is expected to grow to about $310 bn by the end of 2008. Contribution from the North American continent stands at about 59% of the total market, with Europe contributing about 27% and Asia-Pac region (including Japan) contributing the remaining portion of the market. In terms of vertical contribution, the financial services industry contributes approximately 17% of the total market size, followed by the Telecom sector (16%), Consumer Goods and Services (15%), Manufacturing (9%) and the rest by the Information Technology sector. Global BPO Market by IndustryFigure : 1 The BPO market can be broadly broken down into three areas of functional operations: i. Business administration (falling under G&A expense costs) ii. Supply chain management (COGS), and iii. Sales, marketing and customer care (Selling and marketing costs) India has emerged as one of the bright stars in the global Business Process Outsourcing market and has maintained its global competitiveness by offering the best combination of cost, quality and scalability. The growth rates of the Indian BPO-ITES industry have been 59%, 45. 3% and 44. 4% in years 2002-03, 03-04 and 04- 05 with revenues of over $3. billion in FY 2003- 04 and expected to touch $5. 7 bn in FY 2004-05. Ankita Srivastava et al,Int. J. Comp. Tech. Appl,Vol 2 (6), 3056-3065 IJCTA | NOV-DEC 2011 Available [email  protected] ijcta. com 3057 ISSN:2229-6093  · BPO in India Currently the sector employs approximately 2,45,100 people and another 94,500 jobs are expected to be added in the current financial year. There a re over 400 ITES-BPO companies operating in the Indian market, including captive units (of both MNCs and Indian companies) and third-party services providers. In terms of markets, the US continues to be the main consumer of India’s ITES-BPO ervices (with a 66% share of the market), followed by Western Europe (including the UK), which accounted for 20% of export revenues. In terms of functional service offerings, Customer Care and Support services contributed approximately 34% of the industry’s revenues with the other leading service lines including Finance (with a contribution of 22%), Administration (13%) and Content Development (19%). The global financial services vertical remained the largest user of Indian ITESBPO services, followed by telecom, healthcare and airline segments. Captive units continued to dominate the ITESBPO industry, accounting for ver 65 percent of the value of the work off shored to India. 4. Research Methodology The methodology deployed for this survey consisted of primary research, with insights being captured through questionnaires and face -to- face discussions with senior management of participant organizations. Inputs from potential customers to this industry have also been collated, with respect to their key concerns while considering outsourcing to India. The analysis was further supplemented by PwC knowledge-bases and published data to validate trends and best practices, emerging from primary sources. Our analysis and findings are ased on consensus findings from the survey and are supported by quantitative and qualitative inputs from the respondents. The data presented in this report is based on information received from the respondents and has been collated to represent an industry trend. The general intent of this descriptive study was threefold. Therefore a systematic and organized methodology was obtained for the research study. A survey design was used to obtain the required information. The population for thi s study comprised of employees working in various BPOs in the National Capital Region. A sample size of 250 was chosen for this study. Simple andom sampling technique was used to gather data from the respondents, because of which respondents diverged from every age group, gender, organization, marital status etc. but were restricted only to low and middle level employees, where the attrition is highest. The questionnaire was intricately designed to tap the demographic variables including age, education, gender, marital status, and tenure of the respondents. It also gathered information about the factors responsible for attrition, the factors that can be employed to retain the employees in a BPO, their overall level of satisfaction, motivation, involvement and life nterest and work compatibility. Main data collection began in the month of July 2011. Statistical Package for the Social Sciences (SPSS) version 17. 0 was religiously used for the statistical analyses.  · Primary Data An alysis A questionnaire was intricately designed to tap the factors responsible for attrition, the factors that are expected to be present in a specific job for retention. The instrument was divided into 4 parts. The first part gathered information about the personal profile of the respondents which included their age, gender, education, marital status, and tenure. Part II consisted of questions about their easons for change or probable change in their jobs. Part III aimed at knowing what according to the respondents is important for their sustenance in an organization. And last of all, Part IV was about their overall perception of the work which included their level of satisfaction, level of motivation, level of involvement and level of life interest and work compatibility.  · Secondary Data Analysis In order to gain a deeper understanding about the phenomenon of high attrition, and identification of the factors behind it, a lot of literature on BPO, particularly what got publishe d during 2004 and 2005 was studied in detail.Major causal factors for high attrition in Indian BPO industry identified in this study were based on qualitative research using secondary data. These were compared with causal factors for attrition identified through personal interview with a number of BPO employees in the Ankita Srivastava et al,Int. J. Comp. Tech. Appl,Vol 2 (6), 3056-3065 IJCTA | NOV-DEC 2011 Available [email  protected] ijcta. com 3058 ISSN:2229-6093 NCR. There was a close similarity between the two results, authenticating the qualitative research on causal agents for attrition identified in this study. The study ranked low perceived value and onotonous work as number one factor attrition. Rank two was shared by high salary expectation and unusual working hours. Next factor was disillusioned employees; rank four was shared by stress and burnout, pressure to perform on metrics, and lack of motivation. Finally rank five was jointly shared by lack of security and soci al interaction. Causal Agents / Factors Score (on 1) (Rank) Higher Salary Expectation 0. 7 (Rank-II) Lack of Security 0. 3 (Rank-V) Lack of Social Interaction 0. 3 (Rank-V) Monotonous Work 0. 8 (Rank-I) Unusual Working Hours 0. 7 (Rank-II) Pressure to perform on Metrics 0. 5 (Rank-IV) Low Perceived Value 0. (Rank-I) Disillusioned Employees 0. 6 (Rank-III) Stress and Burnout 0. 5 (Rank-IV) Lack of Motivation 0. 5 (Rank-IV) Table 1: Summary of ranks from secondary study 5. Growth of BPO industry  · Company Owned Units Pioneered BPO in India Company owned units such as American Express, General Electric (GE), Citibank, and AOL etc. triggered the trend of outsourcing back office operations and call centre services to India. Since then several banks, insurance companies, airlines and manufacturing companies have set up back office service centers in India.  · Venture Funded New Companies Over the last few years, a number of xperienced professionals have set up start-up operations in India. Generally such start-ups have been funded by venture capital funds.  · Leading IT Services Companies enter BPO Given the magnitude of such opportunity, natural synergies with the software services business and the ability to leverage their high-end physical infrastructure and management bandwidth, most large IT services companies have ventured into ITES. Consolidation of the market with the smaller players merging with each other/ larger companies for economies of scale  · Domain / Industry Specialized BPO’s Niche players in industry verticals or specific usiness processes have setup BPO businesses. Many of these players have had vast experience in the domestic market and are now offering offshore BPO services Generalized large BPO players are now focusing on â€Å"verticalizing† their competencies and structures Industry Structure MNC subsidiar ies Internatio nal BPO Companie s Diversifi ed IT Compan ies GE Convergys Daksh Infosys (Progeon) British Airways Sitel Brigade Wipro (Spectrami nd) eServe, HSBC, Scope, AmEx eFunds Talisma Tech Mahindra Hewlett Packard —- Hero HCL Table: 2 Ankita Srivastava et al,Int. J. Comp. Tech. Appl,Vol 2 (6), 3056-3065 IJCTA | NOV-DEC 2011Available [email  protected] ijcta. com 3059 ISSN:2229-6093  · Size and Growth of BPO in India Figure: 2 The growth in the BPO sector of India in 2004 was mainly due to the demands from the two segments – BFSI and telecommunications. There were low telecom costs for the leased lines and 400 companies were part of the BPO sector of India. The companies that were involved included third parties, Indian companies and MNC. Growth of BPO sector in India has been truly impressive in recent years, but things can get even better, according to market analysts. India stands out already as a market leader as far as BPOs are oncerned and so India also attracts huge foreign investments which are extremely essential since the Indian economy is expected to have an un precedented growth in the years to come. Growth of BPO Sector in India during the first half of 2007 was showing a moderate trend of growth which is registered at 14%. Five years ago, the growth in this sector was quite low due to less contracts but the situation is worse now. However, the growth of the BPO sector is expected to improve. The BPO and KPO sectors in India have been showing some positive signs with demands from western countries increasing manifold due to the vailability of cost-effective labour in India, which is highly skilled and also fluent in English. The BPOs in India are focused on increasing the growth through change in pricing techniques. Pricing in a BPO is supposed to be based on the value added to the business. So a remarkable change is in store as the BPOs in India work towards their full potential. Of course, the big boom in the BPO industry in 2003 had generated a lot of employment opportunities and continues even today. Nevertheless, Indian BPO sector i s facing competition from countries like Philippines, Mexico, Malaysia, China, and Canada. The xpected growth of this sector in 2003 was 25%. Nations like the United States and Europe are showing great interest in increasing their investments in the Indian BPO sector. India has an edge over other countries as we consider the following:  · Tech savvy professionals  · Cost effectiveness  · Superior competency  · Business risk mitigation  · 24 hour service  · Economy of scale The trends in growth of the BPO sector in India are as follows:  · 2003 – USD 2. 8 billion  · 2004 – USD 3. 9 billion  · 2005 – USD 5. 7 billion According to studies conducted by NASSCOM and leading business Intelligence Company, McKinsey & Co. he Indian IT/BPO segment is expected to employ over 1. 1 million Indians by the year 2008. Market research shows that in terms of job creation, the ITES-BPO industry is growing at over 50 percent. In the financial year 2003-2004, ITESB PO companies were the largest recruiters in the IT/ITES sector, adding a total of about 70,000 jobs. An estimated 70,000 new Jobs expected in 2005 in the field pf ITES. Plus there will be additional hiring to replace industry attrition that is around 25%. On the other hand BPO and outsourcing services would generate around 1, 25,000 new Jobs in 2005. McKinsey & Co. predicts global market or IT-enabled services to be over $140 billion by 2008. In that the opportunity for India will be around $ 17 Billion. Ankita Srivastava et al,Int. J. Comp. Tech. Appl,Vol 2 (6), 3056-3065 IJCTA | NOV-DEC 2011 Available [email  protected] ijcta. com 3060 ISSN:2229-6093 Figure: 3 Supplier-Side Assessment  · Domestic Indian BPO Industry has seen a spurt in the recent years growing at a 33 %CAGR.  · The Domestic Indian BPO industry grew from a USD 660 Million to a USD 1. 18 Billion industry.  · EBITA margins for domestic BPO stood at a double digit Percent figure  · Billing rates are less com pared to offshore segment – Most Indian BPOs (especially all centers) are engaged throughout the night hours (for offshore clients), leaving the facility empty for the day. 1. This enabled them to be leveraged during the day for domestic markets in India Demand Side Assessment  · Financial, banking, and telecom companies are leading the domestic BPO wave: 1. BFSI sector companies – UK’s largest banking firm 2. Telecom majors- almost all major mobile & landline telephony provider 6. Factors responsible for attrition and retention of employees in BPO Hackman & Oldham (1976) proposed the Job Characteristics Model, which is widely used as a framework to study how particular ob characteristics impact on job outcomes, including job satisfaction. The model states that there are five core job characteristics (skill variety, task identity, task significance, autonomy, and feedback) which impact three critical psychological states (experienced meaningfulness, experience d responsibility for outcomes, and knowledge of the actual results), in turn influencing work outcomes (job satisfaction, absenteeism, work motivation, etc). The basic hypothesis of this research that employee motivation, employee satisfaction, employee involvement, and life interest and work compatibility lead to rolonged sustenance is an extension of this model with minor modifications in it. It is proposed that the Job Characteristics model is modified by redefining job dimensions as growth prospects, accountability, sense of accomplishment, self-esteem, job security, interpersonal relationships, working conditions, by extending organizational outcomes as satisfied, motivated, involved and retained employees. Figure 1 is the modified Hackman and Oldham’s Job Characteristics model which has been taken as the base to study the research questions pertaining to this research. The new model is also designed to be of use as a management tool and must herefore be simple and flexi ble enough to be of use to the management of an organization. Typical management questions would involve the likely motivational impact of job redesign, such as increasing employees’ level of control and responsibility over their work behaviour or introducing a scheme whereby employees participate in certain management decisions. The model should therefore allow managers to manipulate a host of job characteristics and investigate the likely effects upon the motivation, performance and sustenance of the workforce. This study aimed at exploring the dimensions of attrition and retention.Based on our ground work; initial survey and personal interviews held with the BPO employees, it was found that factors that contribute to attrition are quite different from the factors that contribute to retention. Ankita Srivastava et al,Int. J. Comp. Tech. Appl,Vol 2 (6), 3056-3065 IJCTA | NOV-DEC 2011 Available [email  protected] ijcta. com 3061 ISSN:2229-6093 Figure:4 Modified version of H ackman and Oldham’s Job Characteristics Model Based on the Hackman and Oldham’s Job Characteristics Model and the modifications made to it, a clearer and more lucid pictorial framework of the model is given in Figure 5 and 6. Figure 5 learly illustrates the basic constructs of the attrition model: personal characteristics, negative job characteristics (job dimensions), and the final resultant as attrition. Figure 6 illustrates constructs of retention model i. e. personal characteristics, intrinsic job dimensions and the resulting level of satisfaction, motivation and involvement (work outcomes) and the final result i. e. retained employees (organizational outcomes). Figure: 5 Basic models for attrition Figure 5 clearly suggests the personal characteristics as age, education, gender, marital status and tenure along with the negative characteristics of a BPO job i. . monotonous nature of job, lack of motivation, poor mentoring, power and politics, dissatisfaction with co lleagues, low career growth, lack of skill variety, irregular working hours, achievement not recognized etc. These two collectively result in the attrition of employees. The question is how much do these factors actually contribute to attrition. Similarly figure 6 describes the personal characteristics and core job dimensions which are intrinsic in nature and how do they contribute to retention of employees. Figure: 6 Basic model for retention of employee 7. Result and Analysis  · Regression Model for retentionThe dependent variable was sustenance in an organization, and the independent variables were personal characteristics viz. age, gender, education, marital status, and retention factors viz. motivation factors, extrinsic factors, involvement factors, and life interest and job compatibility factors. All these eight factors were put in the model as independent variables and willingness to continue in the organization was put as the dependent variable. Intrinsic motivation facto rs, employee involvement factors, age and education are the main determinants of retention. The value of multiple R is 0. 60 and the value of r square is 0. 6 in the equation. It states that 36% of the retention in a BPO is explained by these factors. An employee’s sustenance in an organization can be rightfully explained by these factors. Ankita Srivastava et al,Int. J. Comp. Tech. Appl,Vol 2 (6), 3056-3065 IJCTA | NOV-DEC 2011 Available [email  protected] ijcta. com 3062 ISSN:2229-6093 Equation: 1 Y= 1. 78 + 0. 47X 1 + 0. 15X 2 – 0. 13X 3 – 0. 11X 4 Where, Y = Stay in the organization X1 = Intrinsic Motivation Factors X2 = Involvement Factors X3 = Age X4 = Education After forming the regression model, value for each respondent’s willingness to stay in the organization was calculated.These predicted values were then compared to the actual values as given by the respondents. There was a strong correlation between the actual and predicted values. The cor relation came out to be 0. 659** which was significant at 0. 01 level. Thus, on the basis of the regression model it can be concluded that intrinsic motivation factors; and involvement factors are quite instrumental in retaining the employees in an organization and at the same time, age and education negatively contribute to the sustenance of the employees in the organization. Employee involvement is a proven tool to motivate and retain mployees and according to the result here, it can be constructive in the Indian BPOs too. In the West, there has been ongoing interest in getting workers more involved in various processes, such as decision-making and information sharing. Employee participation adds to employees’ growth needs and sense of achievement through a healthier deployment of their dexterity and potential. Employee participation in planning and decision making and in articulating new policies also acts an important tool to improve employee motivation. Finding ways to i ntrinsically motivate employees to improve effectiveness and performance can have ong lasting impact on their sustenance too. Based on the two dimensions i. e. motivation and involvement which, according to the regression model, significantly contribute to the sustenance of an employee in the organization, employees can be broadly classified into four broad categories. There are people who are woefully inadequate in both dimensions i. e. neither are they involved in the work, nor are they motivated to perform. We may call such people as ‘detached’ who leave the organization for no rhyme or reason, hence extremely difficult to be retained. Next comes the ‘disgruntled’ who get involved in the iven assignment but lack aspiring motivation. Such people are moderately to highly difficult to be retained as they lack in the basic intrinsic motivation. The other two segments comprise of ‘strugglers’ and ‘stars’ who are at the higher end of the motivation continuum. The former may be relatively lower in their involvement as compared with the latter. ‘Strugglers’ lack involvements but have a high degree of intrinsic motivation, because of which they struggle hard to work. It is moderately difficult to retain them. The ease and art lies in fulfilling their involvement needs by expanding their responsibilities, empowering them, aking them involved in decision making etc. ‘Stars’ are highly motivated and highly involved in the work, and thus they are the easiest to be retained. ‘Disgruntled’ and ‘strugglers’ are the focus segments, which a company would not want to lose. They need to be enhanced, protected, valued and retained by pulling away all the nonretentive forces and kicking the retentive forces into high gear. DISGRUNTLED Highly involved but demotivated employees Moderately to highly difficult to retain STARS Highly involved and highly motivated employees Easy to retain DETACHED Uninvolved and demotivated employees Highly Difficult to retainSTRUGGLERS Uninvolved but highly motivated employees Moderately difficult to retain LOW HIGH Table: 3 Intrinsic Motivations Involvement vis-a-vis Intrinsic Motivation: Effect on employee retention  · Model Validation For the final validation of the regression model, a small patch test was done on a sample of 50 employees in Intelnet Private Ltd. Few concrete recommendations were made to the process manager of this BPO and he was asked to stringently apply these recommendations. The employees chosen for this study were the ones who had said they would leave the organization if they were offered work with the same pay elsewhere.Data which was collected, after three months of implementation, was analyzed statistically. The response scores were put in the regression equation as derived from the fourth objective and the resultant willingness to stay in the organization was calculated. The comparison with the ir original scores clearly revealed that there was an escalation HIGH LOW Ankita Srivastava et al,Int. J. Comp. Tech. Appl,Vol 2 (6), 3056-3065 IJCTA | NOV-DEC 2011 Available [email  protected] ijcta. com 3063 ISSN:2229-6093 in the scores. Also, the predicted scores and the actual scores of the willingness to continue in the organization was put under correlation.Finally, employees were classified under four broad categories based on their level of involvement and motivation viz. detached, disgruntled, strugglers and stars. 8. Conclusion The regression model for the retention of employees in a BPO explains two important factors i. e. intrinsic motivation factors and involvement factors. This result is robustly analogous with all the prevalent and established theories of motivation viz. Herzberg’s theory, Maslow’s theory, Alderfer’s Theory, McClellend’s Theory. According to all these theories, the higher order needs revolve around self esteem, or selfact ualization in one way or the other.According to Maslow’s theory, the higher-level needs are selfesteem and self-actualization. Only when one need is satisfied, another higher-level need emerges and motivates the person to do something to satisfy it. A satisfied need is no longer a motivator. Only the next level of needs in the hierarchy will act as motivators. Once a level of needs has been satisfied they no longer act as motivators and the individual then directs attention towards the next level of needs in the hierarchy. Herzberg draws a parallel with Maslow’s theory but with a subtle difference. According to his theory, motivator factors are actors that are intrinsic to the job, such as the content of the work itself and the availability of opportunities for responsibility, advancement and recognition for achievement. The motivator factors, which Herzberg described as â€Å"complex factors leading to this sense of personal growth and selfactualization†, would then be able to act on that employee and increase job satisfaction and productivity. Thus, according to this theory, in order to motivate workers towards higher productivity, it is important to ensure that the motivators are utilized to arouse the instinct of the employees. Herzberg’s motivator and hygiene actors can be mapped onto Maslow’s hierarchy of needs with the motivator factors corresponding to the higher order needs of ego and self-actualization. Next, according to Alderfer’s ERG theory, growth needs involve the intrinsic desire for personal development and include the intrinsic element of Maslow’s esteem category as well as self-actualization needs. Finally according to McClellend’s theory, people with a high achievement need have a compelling drive to succeed. They strive for personal achievement rather than rewards and have a desire to do something better or more efficiently than it has een done before. They seek situations where they can attain personal responsibility for finding solutions to problems, where they can receive rapid feedback on their performance so they can tell easily whether they are improving or not, and where they can set moderately challenging goals. 9. Recommendations Organizations should have a proactive retention strategy which helps in reducing employee turnover. Retention plan strategies should be different for different level of employees, because their roles are different; their needs are different; what motivates them are different and what makes hem leave are also different. Based on the study it has been seen that dimensions of satisfaction and motivate are significantly different for employees on the basis of age, gender, marital status and education. Then, the regression model revealed that intrinsic motivation and involvement factors, as well as age and education level contribute to the sustenance of employees in the organization. Thus based on the findings, it can be said if the employees are motivated and involved in the work they can be retained. The ease of retention would depend on their degree of motivation and involvement. It is desirable to lan employee retention strategy by an organization, which should cover following aspects:  · Reciprocity is the key. Employees are investors in the company and expect a return on investment. The return can be in the form of recognition, empowerment and authority.  · Retention must be part of the organization’s DNA. Successful organizations have woven retention and engagement deeply into their structure.  · Loyalty is never given. Loyalty must be earned; even satisfied employees sometimes leave. Therefore, develop sense of loyalty among the employees.  · Organizations must be seen as employers of choice. One has to compete on ompensation and benefits, but win on culture, learning and development.  · Stars include more than just the top 10% – – or 1%! Stars are people at any level who sustain in the organization and bring value to it. Ankita Srivastava et al,Int. J. Comp. Tech. Appl,Vol 2 (6), 3056-3065 IJCTA | NOV-DEC 2011 Available [email  protected] ijcta. com 3064 ISSN:2229-6093  · Each generation of employees has different reasons for staying. For the first time in modern history, there are varied generations working side-by-side in most companies of this industry. Generational differences continue to pose new challenges to today’s employers.Thus, retaining them needs a generation-centric approach.  · Mentor widely and in both directions. Build learning relationships in all directions and hold all partners responsible for the success.  · Train intelligently. Provide on-going retention training in manageable bites – make it a continuous effort and find ways to size the retention plan to the specific demographics of the organization.  · Create a development culture. â€Å"Career development is the right thing for the organization (ide ntifying and developing future leaders), the right thing for the employee (creating a development environment), and a key retention omponent. †  · Recognize managers who keep employees. Meaningful recognition remains a potent energizer for employees and managers alike. 10. References 1. Vohra, Kushal, Systems Approach to Retention of Critical Employees. Available at SSRN: http://ssrn. com/abstract=662442 2. Tapper, David. â€Å"Worldwide and U. S. IT Outsourcing Services 2004–2008 Forecast: A Potential Perfect Storm. † Market Analysis (April 2004): IDC, Document 31089 . 3. Witt, L. A. , Martha C. Andrews, and Dawn S. Carlson. â€Å"When Conscientiousness Isn’t Enough: Emotional Exhaustion and Performance among Call Center Customer Service Representatives. †Journal of Management 30 (February 2004): 149–60. 4. Walletwatch. â€Å"Call Centre Attrition Puts HR Managers to Test. † (April 2003). www. samachar. com/biz/fullstory. ht ml; (Ac cessed on May 8, 2010). 5. Rediff. com â€Å"What Indian BPO Industry Needs. †(2005a). us. rediff. com/money/200 5/apr/23bpo. htm; (Accessed on May 1, 2010). ———. â€Å"1000 Jobs Offshored . 6. Ravichandaran, Ram. â€Å"BPO, ITES Sectors to Hot Up in 2005, Says NASSCOM Report. † Financial Express (March 9, 2005): 2 7. Ramchandran, Kumar and Sudhir Voleti. â€Å"Business Process Outsourcing (BPO): Emerging Scenario and Strategic Options for IT-enabled Services. Vikalpa 29 (January–March 2004): 49–62. 8. Prakash, S. and Chowdhury, R. (2004). â€Å"Managing attrition in BPO†, In search of Excellence, Cool Avenues, http://www. coolavenues. com/know/hr/s_1 .php. Last accessed on: February 06, 2010. 9. Pande, Bhanu â€Å"Sun, Survey Can’t Deter the Call of Duty. † Economic Times Online (July 29, 2005). (Accessed on May 8, 2010). 10. Neale, Helen. â€Å"Offshore BPO Delivery. † NelsonHall BPO and Outsourcing Sub scription Service: Nelson-Hall, 2004 . Ankita Srivastava et al,Int. J. Comp. Tech. Appl,Vol 2 (6), 3056-3065 IJCTA | NOV-DEC 2011 Available [email  protected] ijcta. com 3065 ISSN:2229-6093

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Different Aspects of Reflective Learning and How it Relates with Hinna Azeem Jewelry - Essay Example This report also reflects how our group worked both individually and collectively in order to complete the task. Reflective learning helps us improve our future by learning from the past. A good entrepreneur is one who not only posseses reflection skills but also enhances theses skills as time goes on. Hinna Azeem has proven herself as a entrepreneur who possesses good reflection skills. She has proved this phenomenon with the actions during the course of business. Introduction Hina Azeem, a jewelry brand named under the name of its very designer has become one famous brand. The brand started its life cycle in 2000. Like every business H Azeem grew slowly but steadily and within two years of the business achieved a stable growth. Hinna Azeem, the designer, was in the view of introducing jewelry at afforable price to the community. She not only wanted the jewlery to be affordable but also wanted it to be luxurious and stylish too. She believed that wearing nice and stylish jewelry gav e a lot of psychological advantages to woman in which confidence was one major aspect. After introducing luxurious and stylish watches and jewelry for woman Hina Azeem has now planned to introduced products for men is well. She has planned to start off with gemstone cufflinks and custom made cufflinks and also offers after service products which no competitor offers at the moment. This shall give her an added advantage in the market. Her idea of pricing jewelry at affordable rates has ensured a large turnover which has led to profit making. Her business strategies and skills are impressive. She has outsourced her manufacturing to turkey, china and far off to ensure cheap labour. This tactics in return has ensured her to provide cheap and affordable prices. Instead of choosing a business strategy like that of APPLE and pricing her products highly and make it a fashion symbol, she has prefered to go about it in her own way. Even though now that has business has flourished and her bran d named developed she has shown commitment to her initial strategy and has kept her price low. She has shown her sharpness when it comes to business at many occasions. Entering the men jewelry segment which is hardly saturated and offering extra value added services has kept her spot her. She has also started sales online, which shows her sharpness with regard to use of technology. Her skills and actions make her stand out to the rest of her competitors. She has been mentioned in many journal, which is a great achievement. She is a young but at the same time a prolific entrepreneur. REPORT Below is the report sections which reflect how each of us went about in fulfilling this task. What kinds of problems we went through and how each and every one of us played our part in completing the requirements of this module. The report has been laid down in such format so each individuals work and achievement can be analysed and understood. The conclusion is right at the end, and has been achi eved not individually but as a team. Individual 1 Every entrepreneur has its own way and strategies to success. Some use their own beliefs while others may go from learning from experience of others. Some may go making new opportunities out of threats; some may simply wait and capitalize on them. We may even come across people who believe that entrepreneur are born rather than made. I personally think that people have their own view and we are to respect that fact. No one is an entrepreneur until and unless he actually enters the field of business. On his ladder to success he shall face many

ECT170 Essay Example | Topics and Well Written Essays - 500 words

ECT170 - Essay Example The internet is the central source of data among the external sources. The inputs of an MIS include scheduled reports produced periodically such as weekly or monthly, demand reports, produced, to provide certain information upon request. There are several characteristics of an MIS. One characteristic is that it provides reports with fixed and standard form as well as producing both soft and hard copies of the reports. It also uses internal data stored in a computer system allow users to develop customs report. The MIS requires user requests for reports developed by systems personnel (Stair and Reynolds 303). MIS can be divided along functional lines. Financial management information systems provide financial information to executives. Some financial MIS subsystems and outputs include profit/loss and costs systems, auditing and management of funds. Manufacturing MIS subsystems and outputs include monitoring and controlling the flow of materials, design and engineering, inventory control, process control and quality control. Marketing MIS supports product development, pricing and its distribution. Marketing functions are increasingly being performed on the internet. The subsystems involved include marketing research, product development, product pricing, sales analysis and advertising. The human resource MIS are concerned with issues related to previous, current and potential employees. Its subsystems include human resource planning, personnel selection, training and skills inventory, scheduling and job placement as well as salary administration (Stair and Reynolds 305). Decision support systems (DCCs) are used when the problem is unstructured. These systems’ performance is a function of decision quality and problem complexity. The problem complexity depends on how hard the problem is to solve. The DCC provides rapid access to information and can handle

Organizational Behavior and the Individual Essay - 3

Organizational Behavior and the Individual - Essay Example As stated above, studies of organizational behavior have gained immense prominence in the last few decades owing to globalization, cross cultural business settings and greater focus on increased employee productivity. Organizational behavior studies determine the context, environment and other factors which lead to successful desired behavior of employees that aligns with the strategies goals (McShane & Glinow, 2010). In anchoring a better understanding of the organizational behavior concept, MARS model is of special recommendation which points at four major determinants of individual performance- motivation, ability, role perceptions and situational factors (David Bourassa 2010). These four determinants take into account both personal and external factors that help determine the voluntary behavior and performance of employees. Weakening of any single factor result in a decline in the overall desired performance. Motivation is the drive which compels an employee to achieve the coveted goal. Various motivational theories have been propounded by eminent researchers stating the needs which work as facilitators for work encouragement. Maslow’s need hierarchy theory levels those needs on physiological, safety and self actualization criteria (David Bourassa 2010). It states that employees first look for fulfillment of general food, clothing and shelter needs and then climb up the need ladder to security and finally self actualization. This theory asserts that with successive levels of job and work, how needs change and alter the motivational perceptions of employees. Ability refers to the inherent talents and the acquired skills needed to accomplish the tasks given (David Bourassa 2010). Employees are found to demonstrate superior performance in areas where their competencies- values, skills and talents match. Also, with training and making them develop the required skill

Gold has long been a popular investment choice in emerging and Essay

Gold has long been a popular investment choice in emerging and developed economies. While portfolios become more diversified, allocations to gold remain significant - Essay Example It will also consider its place in credit driven economies, and its significance in compensating flaws of the banking system. Using survey, first hand observation and expert research; this paper will show that gold retains its popularity as an investment tool, which compares favorably with bank savings products. As a credit controller at the National Commercial Bank of the Kingdom of Saudi Arabia, I observed many misinformed invertors putting money in inappropriate investment products. These observations prompted my consideration of allocation to commodities such as gold. In order to diversify my portfolio I invested in gold at 1286 USD/Oz on April 28, 2014, and I have observed a 26 dollar per ounce increase in price following news of the escalation of the Ukraine crisis, the US job report, the devaluation of the Yuan and an increase in gold imports from China. However on June 2, 2014 gold dropped to around 1234USD per ounce after a sever hedge fund selling. Gold was sold, to cover losses on bonds as result of the rising yields. Simultaneously people were selling gold to buy stocks as good economic data boosted the US stock market. By June 10, 2014 the price of gold rose again to around 1260 USD/Oz, following a decrease in the US stock market. From this we can clearly see that gold prices are influenced by contrasting economic and political forces. From the behaviors of investors under negative world economic events, it is very clear that gold has an effective hedge against these assets and, therefore, it can provide diversification benefits to inves tors. As investors start questioning equity under these negative economic events gold will still remain a popular option. The survey was conducted to further investigate; the different attitudes to investments in gold, type of preferred investments, expectations of the market, and allocation to investments. In the survey, the main target was on professional and retail investors. The

Impacts of Fuel Price Increase on Logistics and End User Assignment - 2

Impacts of Fuel Price Increase on Logistics and End User - Assignment Example The researcher states that over the past decades, logistics executives tried to cut down inventory costs by moving the goods as fast as possible through the supply chain. However, growing fuel costs changed the whole scenario, and hence today companies tend to keep more inventories on hand. In addition, organizations consider shipping larger loads and increasing buffer stocks as two potential ways to fight mounting fuel prices. Reports indicate that companies are relying on more fuel-efficient modes of goods movement such as rail and water in response to rise in fuel costs because those transportation facilities are beneficial to ship larger loads and to reduce congestion. In addition, the logistics industry focuses more on short sea shipping and moving freight along inland waterways to mitigate the adverse effects of growing fuel prices. The drastic increase in inventory costs is a direct impact of rising fuel costs. Increased product density is another major consequence of hiking f uel prices in the logistics industry. Logistics sector would be compelled to establish central warehouses when fuel prices increase constantly. Companies may be forced to depend more on in-sourcing in order to trim down logistics costs, and the situation, in turn, would drive changes in warehousing and distribution. In the worst case, firms may consider relocating their production at customer plant sites to reduce transportation costs or near-shoring to achieve optimized inventory levels. In the context of increasing fuel prices, logistics departments of competing firms may operate collaboratively to cut down unnecessary transportation costs. Gross, Hayden, and Butz point out that adverse increase in fuel costs over the past few years have resulted in the optimal degree of centralization of logistics networks. The authors add that the optimal configuration of logistics network is greatly influenced by varying fuel prices.

Performance Management Framework Essay Example for Free

Performance Management Framework Essay Mr. Stonefield is starting his own business in Austin, Texas, called Landslide Limousine Service. One of the fundamental elements to building this new business venture is creating a framework for performance management. The framework must include necessary employee job skills, the methods used for measuring these skills, the process for addressing skill gaps, and the approach for delivering effective performance feedback. It is important to understand how the performance management framework (PMF) aligns to the organizational business strategy. Mr. Stonefield previously stated he wants to provide first-class transportation to his customers. His goals are realistic for the first year with an anticipated -$50,000 in revenue, and 10% turnover. The success of the business’s performance management will ensure there will not be any additional lost revenue, and turnover stays at, or under target. The goals set in place lay the foundation for the future of this company, and a clearly defined PMF will foster highly engaged employees and lead to continual revenue growth. It is imperative Mr. Stonefield’s employees have the necessary job skills to allow Landslide Limousine to achieve its goals and gain a positive reputation. A job analysis is â€Å"The process of obtaining information about jobs, including the tasks to be done on the jobs as well as the personal characteristics necessary to do the tasks† (Cascio, 2013, p.690). Mr. Stonefield has elected Atwood and Allen Consulting to conduct the job analysis process to identify the skills his employees will need. The job analysis process, or in this case, processes, have been identified, but additional time is required to act out these processes. The first process is observation. â€Å"The analyst simply observes a worker or group of workers doing a job. Without interfering, the analyst records Team Reflection: Performance Management In week 4 Team â€Å"D† reviewed and discussed the following information and how it applies to Landslide Limousine. Alignment of the performance management framework to the organizational business strategy, organizational performance philosophy, the job analysis process completed identifying the  skills needed by employees, methods used for measuring an employees skills, process for addressing skill gaps, approach for delivering effective performance feedback. Alignment of the performance management Aligning the structure of the performance management plan with the business strategy is a key element for its success. For Landslide Limousine Services, it was previously communicated that this strategy entailed providing first class transportation to its customers. Its prospective goals indicate a $50,000.00 first year net revenue, a 5% net revenue increase over the first few years, and a turnover rate of approximately 10%. In order to achieve the realistic goals set and for the business strategy to be met, you must consider what it would take to reach them. Understanding that employee loyalty will be an asset to the business is a good start. This means developing a flexible framework that expresses the companys culture and shows managements commitment to developing a strong team of employees. Providing the right training opportunities is essential for meeting business objectives. Many companies just go through the motions of a performance management plan without fully evaluating the needs of the employees to develop their morale and commitment in return. In order to provide first class transportation to its customers, opportunity for development in this area with the proper guidance and encouragement will engage employees in the direction of the companys strategy. Organizational performance philosophy Every business and its culture differ from one Introduction Creating a performance management framework ensures that Clapton Commercial Construction will achieve its business venture goals. A critical tool for a company is its performance management. It gives the employees an opportunity to succeed and for the organization to prosper. Outlined are recommendations that we here at Atwood and Allen consulting feel should be utilized to maximize the potential this company has. Performance Management For any business to be successful it is imperative that they implement a  performance management framework. This structure must be effective for the company to meet its goals and ensure that internal decisions are made based on the work performance of its employees. The performance management framework aligns with the business strategy because the structure is created based on the goals and vision of the business. Recommendations Clapton Commercial Constructions desire is to deliver quality top notch construction and customer service. A clear vision and realistic goals are needed to target areas of improvement. An effective performance management framework ensures consistency in reviews and brings the business success they are anticipating. It is recommended that Clapton Commercial promote growth by making sure that all employees are properly trained and feedback be analyzed from the employees and customers. The job analysis is an in-depth study of the position. It provides information for job descriptions (Job Analysis-Human Resources Management for Employers, 2011). We recommend that the employees be involved by completing a job analysis form, this is a way of collecting information about the work. Interview the employees by asking them specific questions about their job duties and make a list of the specific task performed. Also, identify the experience, education, and training levels PERFORMANCE MANAGEMENT SYSTEM ABOUT PERFORMANCE MANAGEMENT SYSTEM Performance Management involves the entire gamut of processes in identifying critical dimensions of performance setting work plans against laid down objectives, reviewing the work done against indicators of performance and developing and enhancing competencies for improved performance. THEORGANIZA TIONAL GOAL PROVIDES THE PERSPECTIVE TO DETERMINE THE DEPARTMENTA L (REGION/ THEME/UNIT) GOAL WHICH IN TURN PROVIDES THE CONTEXT FOR AN PROCEDURE FOR EFFECTIVE PERFORMANCE MANAGEMENT SYSTEM An effective Performance Management System should be based on :a) Setting up Key Result Area (KRAs) for the Region/Theme/Unit/ Department b) Clarity of Individual Roles and Responsibilities c) Laying down Plans and Performance  Indicators for each position d) Periodic assessment of performance of the individual against such Plans/ Performance Indicators e) Identifying factors facilitating and hindering achievement of Plans development of action plans for overcoming hindering factors and strengthening facilitating factors f) Periodic review of role incumbents behavior, which contributes to effective functioning and working out action plans for developing such behavior. g) Identification of role incumbents developmental needs and preparing plans for staff development through training and related activities. h) Implementation and review. HUMAN RESOURCE MANAGEMENT: PERFORMANCE MANAGEMENT SYSTEM PAGE STAGES OF MANAGING PERFORMANCE SYSTEM : 1. Identification of KRAs (Key Result Areas)  KRA(s) for the Organisation need to be identified and collectively agreed upon. The KRA(s) for the organization will be drawn out from the Country Strategy paper (2005-2010) which has evolved through a bottom-up approach, from consultations held with over a 1000 persons, with participation from the partners and communities AAI-India works with. KRA(s) for the organization will hold good for the Performance Management Plan Performance Management Plan HRM-531 March 17, 2014 Patrice Cloutier Mr. Stonefield, I am very happy to hear that you are considering a Performance Management Plan for your business expansion in Austin, Texas. As you may know there are sound organizational payoffs for implementing a strong performance management system. Study indicates that companies with a strong management plan is likely to outperform competitors by 51% on financial measure and by 41% on nonfinancial metrics. The performance management plan for the limousine operation with 25 employees, with a net $-50k revenue, with a growth of rate 5% for the first two years and expected rate of turnover of 10% should be straight forward. Here below I am presenting to you our recommendations for a very comprehensive performance management plan. (Cascio, 2013, P.332) The first step a business must consider is alignment of performance management to the business strategy. Once you have the vision for the Limo operation in Austin, identify the drivers or Key Performance Indicators to achieve the vision. The KPIs then can cascaded down to the functional areas then to individual level. The next step in the process should be of defining goals. The process of goal setting should be a collaborative process between a manger and the employee. Once the company wide strategy is established the strategy and the goals should be shared with each employee. This is a critical step in the process. One thing to keep in mind in goal development is that the goals should be specific, measurable, achievable and timely. Specific: Well-defined to inform employees exactly what is expected, when, and how much. Measurable: Provide milestones to track progress and motivate employees toward achievement. Achievable: Success needs to be attainable with effort by an average employee, with a bit of a stretch. Relevant: The goals should focus on the greatest impact to the overall

Internal and external factors affecting Starbucks

Internal and external factors affecting Starbucks Introduction This report will provide a critical review of Starbucks and its place in the coffee house market in the UK using three well tested approaches to strategic market analysis: SWOT, Porter’s Five forces and PESTLE analysis. A brief history of the coffee house market is provided in addition to some background to the company in question, Starbucks. Then the company is analysed using the three frameworks. Finally a few conclusions are drawn. History of the coffee shop The coffee house is not a new idea – they were established in Britain in the 17th century, the first opening in London in 1651 (Wilkes Group, 2012.). Some elements of the Coffee House clientele worried the establishment of the day, causing King Charles to speak of them as resort of ‘idle and disaffected persons’ producing ‘very evil and dangerous affects’ due to the fact people met there to discuss the politics of the day (Ibid, no page no.) 300 hundred years later coffee shops are just as popular, with an estimated 5,700 in the United Kingdom in 2013 (Ibid.); the market is fiercely fought, with Costa Coffee being number one brand in the market (in terms of the number of stores), followed by Starbucks (Figure 1). Third is Cafe Nero and there are a number of smaller companies joining the market, including Cafe Ritazza and a joint venture between Tesco and an Australian coffee company called Harris Hoole (Ibid.) Figure 1 – Coffee House UK market share (number of stores) Source: The Wilkes Group, 2012. Starbucks Company background The company was founded in Seattle, Washington State in 1971; the name was inspired by the mermaid in the novel Moby Dick, and the mermaid also inspired the company logo. It is now a very successful coffee house using ethically sourced Arabica coffee beans (Starbucks n.d.) Howard Schultz, now the company CEO, first visited a Starbucks store in 1981; he subsequently travelled to Italy where the coffee bars inspired him to bring the concept back to the United States (Starbucks website, n.d.) In 1987 Schultz purchased Starbucks with investment from local businesses. The ethos of the firm is to create a welcoming place for conversation: a third place between work and home. Today there are 15,000 Starbucks stores in 50 different countries (Starbucks website, n.d.) SWOT Analysis – Strengths, Weaknesses, Opportunities and Threats (SWOT) This section presents a SWOT analysis for Starbucks; SWOT is a method of market analysis; this familiar acronym stands for Strengths, Weaknesses, Opportunities and Threats. These four words represent the major constructs firms need to consider to make the most of their internal set up and the external marketplace characteristics. Its major value is in the identification of those business critical factors which provide opportunity for the firm, but also any threats from competitors and the changing business environment. These need to be weighed up against the internal factors (strengths and weaknesses) of the business to develop the best business solutions and strategies, both short term and long term (Meek Meek, 2003). (i) Strengths ~ One of the major strengths of the company is the strong Starbucks brand and it’s stylish image; this has made it very popular with young people, particularly students. According to Alderman (2012, no page number) â€Å"laptop-wielding young people embrace the coffee chain as an avatar of American popular culture† ~ Starbucks has a very modern website which is attractive to users and easy to navigate. This is so important in this digital age when the majority of people rely on the Internet to gather information about goods and services. ~The loyalty scheme introduced by Starbucks is another major advantage, a strategy adopted early on in the firm’s development. Encouraging consumers to increase their frequency of purchase through the use of loyalty cards is now a marketing tactic successfully adopted by many companies in different sectors. ~ The fact that Starbucks beans are ethically produced is a strong advantage to the company as consumers are increasingly concerned about sustainable production and corporate responsibility. A recent large-scale survey on social responsibility (Nielsen, 2014) shows that around 50% of consumers will choose to buy socially responsible brands. This includes going so far as to check packaging for claims about sustainability. (ii) Weaknesses ~ Starbucks has been experiencing financial difficulties in recent years, even recording a loss (Wilkes Group, 2012.) putting it at a disadvantage in terms of having the capacity to invest in developing new products or expanding its network of stores. ~ Perhaps as a result of poor performance Starbucks has experienced some decline in its stock values which also can result in reduced investment. ~ As students and the youth market is one of the main market segments for Starbucks, this is one age group in the UK demographics which is declining and projected to continue to do so over the next few years (ONS, 2011). ~ The tax avoidance scandal of recent years, when Starbucks avoided paying corporation tax in the UK (Bergin, 2012), temporarily dented the company reputation. However, in the long term it does not appear to have affected the popularity of the firm with consumers still patronising the stores. (iii) Opportunities ~ The taste for coffee houses and coffee consumption, particularly as part of the working day routine is continuing (Wilkes Group, n.d.) and showing little sign of slowing down. ~ This is supported by a recovering economy and signs that consumers are finding they have more discretionary income to spend (CEBR, 2014). ~ The relaxation of the licensing laws has provided an opportunity for firms like Starbucks to broaden their offering in coffee houses to include alcohol. This will attract new market segments. ~ There are further potential niche markets or segments to target, for example developing a caffeine free alternative for those consumers concerned about the health risks of too much caffeine. ~ Increased interest in corporate responsibility, ethical trading and sustainable coffee growing techniques for reducing the carbon footprint provide Starbucks with a competitive advantage as it has always adopted ethical business strategies. ~ The enduring trend for ‘drive thru’ premises and kiosks on railway and bus stations as a valid and popular way of delivering products in the food and drink sector provides good, relatively low cost, ways for Starbucks to increase sales and raise brand awareness and loyalty further. ~ An extension of this might be ‘pop-up shops’; temporary occupation of premises as part of for example, music and cultural events. This would also be an ideal vehicle for reaching the target market segments particularly young adults and students. ~ The increasing globalisation of markets provides wider opportunities for Starbucks to expand into new markets; some authors maintain that young people in different countries have more in common than people of different age groups in the same country (Usunier and Lee, 2013). This presents â€Å"an opportunity to target consumers sharing a common set of values, needs, habits and preferences† (Usunier and Lee, 2013 p. 131). (iv) Threats ~ The increasing emphasis on healthy lifestyles and reducing caffeine intake for people with certain health conditions is a potential threat to coffee house companies (Lopez-Garcia et al, 2008). The secret will be finding suitable alternatives for those consumers who cannot or choose not to drink caffeinated coffee. A quality decaffeinated alternative will provide access to this sub-segment of the market. ~ Climate change may well represent a threat to coffee production and hence make the raw materials more expensive. ~ There is very strong competition in the coffee house market with Costa Coffee firmly in the number one spot (Wilkes Group, n.d.) It is important for Starbucks to maintain relationships with its customers; the loyalty card is a good way of doing this as is two way communication with consumers via social networking sites (SNS). However, Starbucks must be careful to ensure not all messages it sends out to consumers are sales promotions; according to (Cohen, 2011) nine out of ten communications should be sharing information not sales pitches. Porter’s five forces This represents an equally important activity for any firm competitor analysis; in a rapidly changing world and such a fiercely contested marketplace a scientific view of the competition is key to success. This particular approach being described was designed by Michael Porter and is a systematic approach to identifying and assessing the relative strength of the ‘five forces’ influencing the nature of competition in the coffee industry. Figure 2 below illustrates the five forces which include competitors, new products, new entrants to the marketplace and the bargaining power of consumers (Porter, 2008). Figure 2 – Porter’s five forces Source: Porter, 2008 1. The potential threat of a new competitor and/or a new product in the already crowded coffee house marketplace is high, with strong contenders such as Cafe Ritazza on the fringes. The barriers to entry to the market are quite high as any company wanting to compete with Starbuck or Costa would need to open a large chain of shops. However, the example of the coffee house joining forces with Tesco (Poulter, 2013) is a case in point and could have disastrous consequences for Starbucks. 2. Secondly, the bargaining power of suppliers and the costs of raw materials is another strong force for any firm. In the case of Starbucks and its commitment to only using ethically sourced coffee beans, prices are at a premium anyway for fair trade goods. This will squeeze profit margins if the company is not able to pass the increased costs on to the customer. Other coffee houses may get their raw materials, particularly the high cost coffee beans, elsewhere and non-fair-trade meaning the price is most likely lower. 3. The third of Porter’s forces is the increasing bargaining power of customers; most decisions are influenced to a considerable extent by on-line peer reviews and recommendations. This can influence which product consumers will buy, with a bandwagon effect applying i.e. consumers buying the brand which is most popular (Kastanakis Balabanis, 2012). The power of the consumer is not to be underestimated and smart firms invest in nurturing relationships and communication with consumers. This can ultimately result in co-production e.g. of new products. There is clear appreciation of the value of social media to communicate with consumers who want to feel engaged with their favourite brands. Such engagement cancels out the ‘us and them’ culture of corporation-consumer relationships; now customers feel closer to brands (Engeseth, 2005). Yan (2011, p.695) describes this phenomenon as â€Å"consumers want to know they have some influence over the brands that they connect with†. 4. Fourthly is the force resulting from substitute products entering the marketplace; this might be in the form of an innovative new product for an established competitor e.g. a new flavour coffee from Costa; or a coffee house offering from a non-coffee house company. This might be considered the case when McDonalds introduced the concept of ‘McCafe’ providing a coffee house concept within the traditional burger house (Petersen, 2014). 5. Finally, Porter’s fifth force is the way any combination of the four other forces may influence the strength of competition provided by rival firms and products. There is strong competition from rival companies in the coffee house market, particularly Costa Coffee which dominates the number one spot in the market (Wilkes Group, 2012). PESTLE Analysis This represents the marketing audit angle and those companies which are most thorough in their analysis of the internal and external marketplace are the best placed to exploit any opportunities and protect against any threats. The analysis is based on clarity around the following questions: 1. Where is the company now? 2. How did the company get where it is today? 3. Where is the company heading and what are the corporate objectives? Jobber (2010) defines a marketing audit as the process of examining marketing in a business in a systematic way, including the environment, corporate objectives, strategies and any activities to assist in identifying any factors that may impact on the company and its products. The Chartered Institute of Marketing (CIM 2013) explains that the business environment is in a constant state of flux, hence a regular audit is necessary to provide any intelligence needed to inform sound decision-making. Such decisions have to take many aspects of current and future influences in the external environment into account in a process widely termed a ‘PESTLE’ analysis. The acronym stands for: 1. Political 2. Economic 3. Social 4. Technological 5. Legal 6. Environmental This method assesses the impact on the firm of macro-environmental factors (Kotler and Armstrong 2010) and may well include those PESTLE elements listed in Table 1 below. Some factors will be more relevant to the coffee house market than others and these will be drawn out in the analysis. Table 1 – examples of PESTLE analysis components Political Economic Social Technological Pressure to strengthen environmental regulation. Hangover from recession still limits discretionary spending. Income distribution: coffee houses tend to sell premium priced products which people on lower incomes cannot afford. New inventions, including advanced roasting techniques can provide advantage. Employment law –pressure to increase the minimum wage Interest rates will increase soon. Coffee drinking is enduring as a popular ‘fashion’ New product development, including flavoured coffees and improved decaffeinated coffee for those concerned about the caffeine content. Political stability – general election in May 2015. Uncertainty and unemployment is commonplace. Lifestyle changes, including longer working hours are making a coffee ‘pick-me-up’ a regular part of the working day. Energy use and costs are key with ethically sourced coffee beans adding to raw material costs. Inflation rates are on the up. Health consciousness with coffee having advantages and disadvantages: Consumer confidence is improving slowly. High caffeine intake raises pulse rate and hence is not recommended for certain groups e.g. those with hypertension (van Dam, n.d.), but doesn’t increase risk of death (Lopez-Garcia et al, 2008) -But coffee does contain high levels of anti-oxidants which are beneficial and may protect against diabetes, Parkinson’s and liver disease (Ibid.) Legislation Environment New/extra legislation around sustainable coffee production will impact. Consumers in the UK are conscious of the ethical implications, with increasing consumption of Fairtrade coffee (Blacksell, 2011). Biodegradable packaging is key to reducing waste. Tax evasion scandal – this has legal implications for the company and damages the corporate reputation. Organic production of coffee is also on the rise due to consumer demand for naturally produced goods (Blacksell, 2011) Source: After Kotler and Armstrong, 2010 Market segmentation â€Å"The purpose of business is to create customers† is a definition by the business guru Peter Drucker (Swaim, 2010, p.14) who recommends that the best way to do so is to look at the company from the customer’s viewpoint. There are also a number of questions which need to be asked about segmentation of the market; specifically â€Å"what products does the customer buy† and â€Å"what does the customer value†? Research provides an indication of the market segments which are of importance to companies such as Starbucks. (i) Students represent a clear and well defined segment which can assist in promoting and recommending the brand through social networking. (ii) Young professionals and white collar workers: picking up a coffee on the way to work is a growing trend in the UK; the provision of Wi-Fi and newspapers in the stores assists the professionals to use Starbucks as a second office. Crookes (2014) observes that this has been so for a lot longer than many people realise, citing a London coffee shop opened in 1688 where ship-owners, insurance brokers and merchants would drop in to drink coffee but also to trade. There has been a long history of connecting coffee with work in terms of the introduction of the concept of the coffee break, first introduced in 1902 by Barcalounger, an American furniture manufacturer (Crookes, 2014). And the fondness for coffee amongst workers was the cause of a strike at Chrysler in 1964 when the management tried to stop company coffee breaks in an effort to increase production (ibid.) (iii) Young adults may well be an increasing segment attracted by the availability of alcohol at Starbucks coffee shops (Crookes, 2014), hence providing an alternative to pubs and clubs for socialising. Marketing mix The marketing mix incorporates the traditional concept of the four Ps (product, price, promotion and place) and is integral to marketing strategy development. Some authors have expanded the mix to seven Ps (Kotler et al. 2012) encompassing three more criteria of ‘people’, ‘physical evidence’ or ‘environment’, and ‘process’; these might be considered to better describe any influences on the marketplace. Kotler (2012, p.31) explains that it â€Å"recognizes and reconciles the scope and complexities of marketing activities†. However, this report will focus on the four Ps and how they might apply to Starbucks. (i) Product: Lower caffeine content options may attract more health conscious consumers; plus emphasis on ethically produced coffee beans. (ii) Price: In a high price, premium market Starbucks might consider offering a value option to broaden the market, particularly for the student segment. (iii) Promotion: Maximizing the social media promotion of Starbucks and its good works in ethical and responsible coffee production will improve the firm’s reputation (Berry, 2000). A constant and interactive presence on social networking sites will build relationships with consumers and can encourage co-production of new products and services, through electronic word of mouth (Chu Kim, 2011). (iv) Place: Starbucks has introduced around 200 ‘drive-thru’ coffee shops in the UK over the past couple of years enabling consumers to access coffee 24 hours a day (Smith, 2014). There may also be scope for pop-up shops at events or kiosks at railway and bus stations (e.g. the new mini-shop at Birmingham New Street station). Conclusion Starbucks is a well established part of the coffee house culture in the UK, well regarded for its ethical approach to sourcing and buying coffee beans. There are global opportunities for the firm as well as niche markets within the UK to exploit. Although not the number one firm in the coffee house market (a position held by Costa Coffee) Starbucks has developed a strong following amongst the youth and student segments; whilst continuing to provide the requisite products for the working population in their busy working day. Having weathered the temporary storm of bad publicity over the income tax evasion scandal, Starbucks has worked hard to improve its position in the eye of the consumer by emphasising the ethical and sustainable principles the firm has always maintained. Such communication and relationship marketing is key to long term brand loyalty. Despite fears that coffee may be bad for health there is also evidence to support drinking coffee in moderation to have preventive value against certain diseases. Starbucks is well placed to continue to trade competitively in the UK market, particularly as it continues to find and exploit new and innovative ways to get their product out to the consumer in the form of drive-thru’s and kiosks in high footfall areas. There seems little sign of the trend and fashion for coffee houses to diminish any time soon and it continues to be part of the UK culture just as it was over 300 years ago. Word count: 3191 References Alderman, L. 2012. In Europe, Starbucks adjusts to a Cafà © Culture. [On-line]. Available @ [Accessed 23/10/14]. Bergin, T. 2012. Special Report: How Starbucks avoids UK taxes. [On-line] Available @ http://uk.reuters.com/article/2012/10/15/us-britain-starbucks-tax-idUSBRE89E0EX20121015 [Accessed 23/10/14]. Berry, L. 2000. ‘Cultivating Service Brand Equity’. 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