Business-it alignment - Free Essay Example

Sample details Pages: 29 Words: 8723 Downloads: 8 Date added: 2017/06/26 Category Business Essay Type Research paper Did you like this example? BUSINESS-IT ALIGNMENT (BITA) The relationship between Business strategy and IT strategy and the influence of organisation culture on this strategic alignment in Saudi firms will form the basis of the research in this research. As such, the literature reviewed here will survey major research and practice in the business-IT strategic alignment domain for the purpose of deriving a research framework, or model, of business-IT strategic alignment that will unite the key principles contained within the literature. The intention is to develop a model simple enough for application that will provide a practical tool both for management and IT practitioners. Don’t waste time! Our writers will create an original "Business-it alignment" essay for you Create order 2.1 BITA A CHRONLOGICAL HISTORY Study on the strategic alignment concept will soon be reaching a quarter of a decades worth of knowledge. Henderson Sifonis (1988) began studying this notion during the late 80s when alignment emerged from a focus on strategic business planning and long-range IT planning where IT plans were created in support of corporate strategies Chan Reich (2007, p. 298). Nevertheless, strategic alignment has retained its interest and value in the business and IT communities and is still a popular topic today for organisations; perhaps even more so as technological advancement continues to dominate the exchange of information. Not surprisingly, its evolution has followed closely the developmental progress of IT itself which began with the operational era continuing through the re-engineering viewpoint and the new economy as figure 2.1 illustrates: The initial phase, the operational era, was concerned primarily with the operations that an organisation performed and focused on setting up mai nframes, managing networks of PCs, and backing up organisational data. IT provided the nuts and bolts to facilitate automation of back-office functions through the development of software and had only a supportive role. Strategic alignment was thus viewed merely as a supporting act for every-day operations with its software applications. The second phase, re-engineering, arose from the increasing trend toward dependency on the automation of business processes by IT which not only offered back-office functions support but the promise of total automation within an organization as a whole through IT software applications. At this stage, IT was still viewed only as a supportive tool with no representation in the business end of an organisation. For example, business managers expressed their system needs which the IT department embraced and went on to develop and deploy a new software application in isolation. These early strategic alignment projects were not always successful. It wa s discovered that the development of software (with embedded processes) for automation of a business function was no guarantee of improvement over its earlier manual operation, indeed it could end up being more time-consuming and therefore less efficient as operators were not necessarily au fait with the application. There was not a full understanding of what IT could do and how it could enhance a companys position beyond speeding up communications and thereby creating more ‘time for production or interfacing. A ‘Them and Us atmosphere prevailed with the ‘techies in a separate world to the mangers or drivers of the business, neither fully understanding the others needs [elements that are also considered further in the organisation culture aspect of this research and dealt with in the next chapter]. In the 1990s, Baets study of European banks (Baets, 1996) supported the findings of Vitale and colleagues ten years earlier (Vitale et al., 1986) that knowledge of IT ha d to be on a par with expert business knowledge for the two to create any comprehension and thereby effective application of strategic alignment in organisations. The third phase, new economy, saw IT commanding greater importance and status as organisations began to emerge that were embracing e-commerce. The demands of the new e-business projects required involvement of IT representatives in their management and strategic planning. The implementation of Internet technologies to augment business processes for productivity or profitability improvements brought the role of IT into the spotlight, according it recognition and strategic responsibility. Along with the newly elevated status of the old IT department there was a greater familiarity with technology and its capabilities and the prejudice that had previously scorned the ‘nerds dissipated somewhat as managers and personnel became more knowledgeable and the IT personnel more essential beyond a lab coat and a screwdriver [ cf: artifacts causing division, Schein (1992) and Trompenaars (1997) in chapter 3]. Despite the current global economic crisis and the demise of the new economy IT continues to assume new responsibilities and organisations have even more need for strategic alignment projects. An IT department in 2010 must manage relations with partners and bear business responsibilities concerned with the development and customisation of software that will improve how a business functions; practice effective project management to control costs and maximise efficiency and ensure that the introduction of any new hardware or software support operations and infrastructure, â€Å" maintaining the crucial corporate data that helps managers throughout the enterprise to make intelligent and informed decisions Hoque (2002, p. 31). Kearns Lederer, (2003) and Seggie et al. (2006) agree that strategic alignment is a means to gain competitive advantage and Sabherwal Chan (2001), Wagner et al. (2005) and Zhou et al. (2008) further add that it improves organisational performance. 2.2 DEFINING BITA Determining a conclusive definition for alignment is as challenging as its function and application. There are many perspectives and multiple definitions including in chronological order: strategic alignment (Henderson and Venkatraman, 1993); harmony (Luftman, 1996); fit (Porter, 1996); bridge (Ciborra, 1997); integration (Weill and Broadbend, 1988); fusion (Smaczny, 2001); IS alignment (Chan et al., 2006; Benbya and McKelvey, 2006) business-IT alignment (Luftman, 2007); and IT alignment (Chan, 2007). It is understandable that there is such diversity as definitions depend on our understanding of language. The semantics involved are precarious because the new technologies are often described in technical terms and applying simplistic synonyms to explain the intention of alignment in the context of business IT in terminology that is understood without associated jargon is very difficult. Overall, the definitions offered, though they have nuances of difference between them, do relate to the improvement of organisational capability through technology. Broadbent and Weills (1993) early definition, purports that it is the degree to which information strategies support, stimulate and/or enable any business strategies. A later definition offered by Reich and Benbasat (1996) asserts much the same but frames it in terms of the missions of the IT and business objectives and plans on both sides. Luftman (2000) was the first to introduce the element of evolution into the definition and argued that it required strength [as the key element] from leadership, senior management and working relationships, combined with a complete understanding of the business and technical environments, fitting prioritisation, mutual trust, and of course, effective communication. Hirschheim and Sabherwals (2001) definition included the idea of a reciprocal arrangement as fundamental to its meaning and stated that alignment was the achieved between strategy and supporting structures that allo wed both IS (information systems) and business to function and communicate responsively each way to one another. Most accepted definitions do highlight the alignment dichotomy described by Kearns and Lederer, (2000), where the argument is that the IS plan ought to align with the business plan (ISP-BP) and vice versa (BP-ISP) the business plan ought to align with the IS plan. Each perspective serves to increase the understanding of IT at organisational level and assist the prioritisation of IT projects. Reich and Benbasat (1996) were protagonists of the ISP-BP model, which they declared signified, IS managements comprehension of the business strategy. Whereas Bensaou and Earl (1998) contrarily preferred the BP-ISP alignment model as they believed it assumed a greater understanding on the part of the business comprehension of the IT aspects and thus the plan and the resources would ally more effectively together as a result of this knowledge, understanding and commitment. These ele ments are believed to be enablers of alignment (Luftman et al., 1999). In the definitions offered some view alignment as a specific happening or event and others regard it is an ongoing process. Duffy (2001) saw BITA as a process of achieving competitive advantage through a developed and sustained business and IT symbiosis. Maes et al. (2000) claimed BITA to be a continuous and continual process that involved management and design sub-processes with conscious and coherent interrelation of all elements and mechanisms within the business/IT relationship offering contribution to the ongoing performance of the organisation. Moodys (2003) definition saw BITA as a form of comprehensive resources management (people/ technology/ outside resources) that provides a set of IT services and capabilities that are in line with the business needs and priorities. And Senn (2003) was assured that each action executed by IT individuals was to focus on the creation and delivery of shareholder/stakeh older value through supporting business operations and/or achieving business goals. 2.3 BITA PERSPECTIVES AND DIMENSIONS With the diversity of definitions offered to explain the meaning of the strategic alignment concept, as outlined in the previous section, there is a need to further explore the differences to discover why there is such variety. Part of the explanation may be that as the concept has evolved it has been closely linked to the evolution of technological capabilities. Attitudes have changed as organisations have adopted new technologies and personnel have become more familiar with their potential and their operation. These dynamics and the evolution of strategic alignment are reflected in the number of conceptualisations and their definitions will be analysed in the context of the differing perspectives afforded to them. BITA with regard to its perception as a strategy, an event, a continuous process, a performance indicator, an assessment tool, a social influence and as an operation will be briefly outlined below to expand on the definitions in the literature from their different dimen sions. 2.3.1 BITA AS A STRATEGY It has been a tradition for literature to refer to Business-IT alignment as ‘strategic alignment. Considering it in these terms frames it as an intellectual notion rather than something more concrete or practical and as such it can be high-jacked to represent whatever strategy suits the organisation that is considering alignment. There is no harm in referencing alignment in this manner for it allows debate and therefore change, essential for evolution and adopting a ‘strategy suitable to the structure, culture and level of alignment required. By referring to it in this way however, the literature suggests that strategic alignment is dependent on the fit between IT strategy and business strategy, and on how the IS plans are established to support such a fit (Teo and King, 1997). Many authors in the strategic alignment field approach alignment purely at the strategic level, e.g. Baets (1992), Broadbent and Weill (1993), Chan et al. (1997), and Luftman (2003). At the core of their conceptualisations is the notion that business strategy itself must first be analysed and only thereafter be used to determine a complementary IT strategy. In this scenario the business strategy is paramount and the IT strategy contribution secondary, it is a means to an end rather than a means in its own right. However, despite the alignment between business strategy and IT strategy where emphasis is laid on defining IS strategy plans (Benbya and Mckelvey, 2006) strategic alignment continues to be problematical in many organisations. Thus, reaching an agreed definition that details IS strategic plans is important for strategic alignment; however, is it not enough on its own for the achievement of such alignment (van der Zee and de Jong, 1999). 2.3.2 STRUCTURAL TOPOLOGY AFFECTING BITA The literature often takes for granted the strategic element of the concept and delves further into its implications for organisations, concentrating on the behaviour and nature of BITA what it does when you introduce it [and also is a strong feature of the organisational culture types discussed in the following chapter]. This depends largely on what type of a structure into which it is introduced. A formal structure, an informal structure or a hybrid structure, each having its own merits and each being capable of effective function when the circumstances and environment are conducive to the choice made (Brown and Magill, 1994). Against their three identified structures, Earl (1989) identified five potentially suitable structures: centralized, business unit, business venture, decentralised, and federal. Tavakolian (1989) found a direct correlation between competitive and conservative strategies within an environment and the corresponding decentralised or centralised IT structures evident in an organisation and this finding is supported to some extent by Bergeron et al. (2001) with the caveat that it is not solely the complexity of structure that impacts performance but that other factors are influential too. Chans (2001) view is that informal structure, â€Å"†¦relationship-based structures that transcend the formal division of labour and coordination of tasks†¦Ã¢â‚¬  (Chan, 2001, p67) can be just as effective as formal structure with the human element rather than intellectualised models and processes driving alignment, often with more impact and success than a formal arrangement. Structure, therefore can add a new dimension to the perspective of alignment as it places it in a setting that will impose its own constraints on the practice and execution of alignment exercises and ideals. 2.3.3 BITA AS AN END IN ITSELF For some authors it alignment doesnt seem to ‘do anything rather it is a business unit that lacks the dynamics others see in it. The implication is that it is something that is ‘brought in like an object concrete and physical and recognised by its static end state where some sort of equilibrium is achieved between the IT and business sides in an organisation. In the previous section, some of the definitions only present strategic alignment as an outcome achieved through the employment and adoption of different models, techniques and processes (Ortiz, 2003). Broadbent and Weill (1993), Chan et al. (1997), Luftman (2003) and Reich and Benbasat (1996), also see strategic alignment as something to be arrived at, a destination that is terminated when an optimal situation has been achieved. This may be a misunderstanding of the full meaning as the attitude that having strategic alignment the business married with the technology required for effective fulfillment of objective s cannot stand alone and it would be naà ¯ve to believe that BITA was a panacea for all business problems so perhaps the authors see it as an optimal achievement when all the other factors, or perspectives, also come into play to make BITA a worthwhile ‘thing in itself. 2.3.4 BITA AS A CONTINUING PROCESS If a business is static it will stagnate and if a business wishes to grow, like IT, it must always continue to evolve through a naturally occurring dynamics that are integral to the implementation of policies such as strategic alignment. Baets (1996), Luftman et al. (1999), and Rondinelli (2001) agree that these dynamics require constant monitoring and appropriate adjustment. Therefore, strategic alignment is not something attainable but something constantly in development, as it is variously described by Henderson and Venkatraman (1993), Baets 1996, Maes et al. (2000), Duffy (2001), Moody (2003), and Senn (2004). â€Å"An issue that has remained relatively unchallenged and unquestioned is how to align IT that is relatively fixed once implemented in an organization, with a business strategy and associated information requirements that are constantly in need of adjustment Galliers (2007, p. 228). Even within this perspective there are two schools of thought; the classical school of thought with emphasis on contingency adaptations and the ‘processual approach (Whittington, 1993) that emphasises the importance of addressing internal and power issues, particularly how cultural elements influence the formal elements of rationality and the decision process in strategic alignment and rejects IT as merely an adaptation but gives it greater weight as a resource. Furthermore, practitioners are being advised to adopt a view of strategic alignment as a continual process. In Pearlmans (2004) article advice to CIOs, in summary, is that they should communicate, demonstrate, lead, collaborate, govern and build if they wish to achieve alignment. 2.3.5 BITA FOR PERFORMANCE INDICATION It is the consideration of several authors that strategic alignment is not only a process but also a tool whereby they can reflect on the business value that organisations might possess, or not. In studies analysed the relationship between strategic alignment and competitive advantage or organisational performance were tracked, (Venkatraman, 1989; Sabherwal and Chan, 2001; Kearns and Lederer, 2003; Wagner, 2005; Seggie et al., 2006; Zhou, 2008). Tallon and Kraemer (2003) were responsible for the additional concept of business value being included as an element to the performance indication point of view of strategic alignment and analyse business value by relating it to organisational IT goals and measuring the IT return of investment from a strategic alignment viewpoint. 2.3.6 ASSESSMENT USING BITA In response to the question: `how do organisations know how good their strategic alignment is? different authors have developed Maturity Models (MMs) (de Koning and der Mark, 2002; Duffy, 2001; Luftman, 2003; van der Raadt et al., 2005). MMs describe the development of a specific domain over time. This perspective is in itself a more mature outlook than other perspectives as it has to consider many of the dynamics before being able to construct an effective strategic alignment. Because of the in-built review and evaluation required for this perspective it has to look at all aspects that the alignment may affect. Researchwork and systems are subject to assessment and revision through these maturity models and their monitoring. On the basis of the assessments of those MMs, organisations can fine tune and calibrate their strategic alignment: Identify any alignment-related aspects/processes improvements required to obtain a higher level of strategic alignment maturity. Initiate any change processes to ensure that the identified improvements eventuate. In much the same way, acceptance of the cyclical nature of strategic alignment as posited by Burns (1996) ‘lead-lag model implies assessment in response to intermittent predictable and unpredictable changes as does the ‘punctuated equilibrium model of Sabherwal et al. (2001) where interruptions to stability demand a fresh look at the long term plan and goals of strategic alignment. 2.3.7 BITA AS A SOCIAL INFLUENCE If an organisation intends to work toward achieving strategic alignment it will necessitate communication that will involve negotiation, collaboration and mutual understanding elements not always present a specific organisational structure or culture. This communication can blur the boundaries of traditional or conventional approaches and therefore becomes a driving force behind social attitudes and perceptions. Chan (2002) and Huang and Hu (2007) uphold this view that maintaining effective communication in an organisation will impact on corporate strategic alignment culture. Concord must be developed for effective channels of communication, transparency in the exchange of knowledge and sharing of learning (Hoque, 2002; Daneva and Hu, 2007), and the use of informal communication is just as important a factor for adjustment and control (Mintzberg, 1993; Chan, 2002; vander Raadt et al., 2005), to generate an atmosphere of trust and an effective response to business needs from an IT perspective. Reich and Benbasats (2000) study further confirms that strategic alignment is more likely to succeed when business and IT executives have an [importantly] expressed and [understood] shared common vision of ITs contribution. 2.3.8 BITA AND OPERATIONS Strategic alignment [when it is all-encompassing and embraced by all as part of an organisational culture] necessarily involves organisational issues of communication, structure and, particularly, coordination processes that are operational to the business in specifically performed actions (Wieringa, 2008). Operational strategic alignment consists of aligning the operational activities of IT and business people with each other so that optimal IT support for business requirements is achieved. In this context, Peak and Guynes (2003) put the onus of success on the IT side of the equation, though it does imply some reciprocity in the initial communication of ‘quality requirements and they state that strategic alignment will only be attained when an organisations IT staff can deliver quality information and quality IT products and services to the business side. 2.4 BITA MODELS 2.4.1 MIT90S FRAMEWORK (1991) During the 1980s, research conducted at the world renowned MIT (Massachusetts Institute of Technology) initiated interest in the academic community to the potential of the strategic power of IT. In the attempt to exploit the possibilities revealed in the model from the research it was suggested that radical innovation involving IT investment could carry substantial reward if key elements of strategy, structure, technology, management processes and individuals and their roles were kept in alignment (Morton, 1991). Organisation can be visualised as a set of five forces in dynamic equilibrium subject to external influences from the technological environment and the socio-economic environment. In this view, a core task of general management is to ensure that all five ‘forces (represented by the boxes), can flow without restriction or impediment in order to achieve the organisations goals and objectives. With management at the centre of the model its role is central too. Tho ugh some areas might not necessarily be in direct contact with each other they are connected via the management process which plays the principal role and ensures organisational response to shifts in demands from the external variables. 2.4.2 THE HENDERSON AND VENKATRAMAN STRATEGIC ALIGNMENT MODEL (1993) Henderson Venkatramans (1993) strategic model (Figure 2.3) is a widely used four-part illustration favoured by many researchers and organisations for the assessment of the level of alignment in a company. Each of the four parts [quarters] contain three distinct and individuals elements which, when collectively analysed, can be used to define each quarter operationally. These twelve elements- further expanded in Table 1 are used to establish the level and type of alignment within a corporation (Henderson Venkatraman, 1993; Papp, 1995). Table 1 Components of the Strategic Alignment Model Within the model it can be seen how external influences may affect change on either processes [lower sectors] or strategies [upper sectors]. A vertical link couples the upper and lowers sectors and shows the relationship between strategic fit to accommodate strategy with infrastructure. A horizontal link for functional integration shows how IT strategies must adapt as business strategies c hange, and displays the dependence and required response of each sector upon anothers adaptations particularly in relation to skills and operation. Giving focus to three of the four quarters of the model at a given time can permit a simultaneous address to both strategic fit and functional integration (Papp, 1995; Luftman et al., 1999). The SAM (Strategic Alignment Model) model has proven empirical authenticity and has provided valid conceptual and practical value (Goedvolk et al,. 1997; Avison et al., 2004). Nevertheless, it is subject to confines, eg, the applicability of the SAM model may vary depending on the IT-intensity of an industry and the assumptions expounded might not be relevant to the circumstances (Burn and Szeto, 2000). As mentioned, the model does have recognition and a number of scholars have further elaborated on it (e.g., Luftman et al., 1993). Goedvolk et al.s (1997) extension of the SAM model gave greater focus to technical and architectural attributes. A vison et al.s (2004) addition to the SAM model was able to provide practitioners and academics with further practical ways to attain alignment in their advocacy of examining projects retrospectively to determine alignment. This form of alignment monitoring, can allow pre-emption in a change in strategy and implementation of a new alignment perspective by re-allocation of project resources. The SAM model inspired Maes et al. (2000) to produce a framework that incorporates even more layers pertinent to function and strategy where information providers are separated from the systems providing information in a new information domain representing knowledge, [and exchange of information through] communication and coordination. Their third dimension addresses specific sub-architecture areas. 2.4.3 IS CAPABILITY AND ORGANISATIONAL PERFORMANCE MODEL (2004) Peppard and Wards model (2004) shows IS capability at the core of everything, inherently affecting competencies and emanating an influence on all areas that interrelate [business strategy/business operations/IT operations and services/IS/IT strategy] and impact upon the organisational performance. Such focus on the importance of this core element demonstrates the value IS capabilities can create and is therefore an organisation-wide responsibility that cannot be delegated to the IS function alone (Peppard et al., 2000). Peppard and Ward (2004) later asserted that though an organisation might envisage an IT based innovative strategy, it will be their IS capabilities that permit such a vision to come to fruition. 2.4.4 CO-EVOLUTIONARY IS ALIGNMENT (2006) By 2006 the model suggested by Benbya and McKelvey (2006) through its graphic presentation appears a more fluid representation suggesting, even visually, that there is more of a flow between relationships in alignment. It still addresses the need to analyse relationships between business and IT (horizontal IS alignment) but introduces a need to merge the views at different levels [strategic/operational/individual] of analysis (vertical IS alignment) through shared understanding and communication. The co-evolutionary IS alignment perspective conveys the necessity for mutual adaptation within a dynamic interplay of co-evolving elements. Co-evolution does not necessarily seek harmony between the elements but a respect for their position and the innovation that may result from the circumstances and environments in which they function. 2.5 ASSESSMENT APPROACHES OF BITA In this section MMs (maturity models) are referred to that have been developed for the assessment of BITA. 2.5.1 DUFFYS MM (2001) Duffys (2001) MM is founded on the principle that a dependable, mutually compatible partnership between IT and business executives is elementary in order to achieve a worthwhile BITA. Without this premise there cannot be a successful desired outcome. Accepting that there is a level of interdependence between IT and business objectives, any schism or division between IT and non-IT areas would sabotage any efforts to establish alignment. This model is arranged about a series of key success drivers (the domains: human resources organisation and management/innovation and renewal strategy/IT/business architecture/IT/business partnership/operational excellence/ROI strategy management) which are operationalised in KPIs (key performance indicators) that each contain five contributory factors aspects designed to address explicit and significant questions within the KPI where it is included. The six domains are briefly explained below: Human resources organisation and management. In this domain reference is made to an organisations personnel and emphasis is given to the importance of workforce recruitment, retention and management by an organisation. Innovation and renewal strategy. The focus here is how innovative an organisation is with an emphasis on currency and validity having a bearing upon understanding when renewal is required to processes and capabilities in an organisation. IT/business architecture. This domain is concerned with the relationship and interaction of entities involved in the information and applications in the business environment of an organisation. IT/business partnership. This domain reflects how the recent upgrading of the role of the IT function affects an organisation â€Å"Technology is critical to business success and this co-dependency drives the need for the IT and non-IT executives to pursue a win/win relationship Duffy (2003, p. 4). Operational excellence. This domain deals with the performance outcomes of the organisation. Duffy recognises that operational excellence can only be achieved if an organisation can recognise the value of ideals embedded in learning and partnerships, and can respond to market demands promptly. ROI strategy and management. This domain investigates the importance of the metrics and processes required for efficient and effective financial management within organisations and accepting IT costs and benefits as having parity with business ones. Duffys six domains address the â€Å"IT and non-IT assertion as well as certain strategic elements within an organisation but there are no explicitly stated maturity levels for them. Instead, Duffy merges the six domains of the model into four BITA scenarios where organisations fall into the following categories: â€Å"uneasy alliance†, â€Å"supplier/consumer relationship†, â€Å"co-dependence/grudging respect†, and â€Å"united we succeed, divided we fail†. These laymans terms are loose at best and though intended to be descriptive only serve to confuse in their interpretation. Such scenarios are the maturity levels in the model. 2.5.2 LUFTMANS MM (2003) Luftmans model (2003) was constructed on the basis of practical experience and research into enablers and inhibitors of alignment (Luftman et al, 1999), incorporating reference to various other models [here listed chronologically and not in order of importance or influence]: Nolans stages of growth model (Nolan, 1979), SAM (Henderson and Venkatraman, 1993) and CMMs (Capability Maturity Model) reach and range concept of (Keen, 1996). Luftmans MM is an endeavour based in six domains (skills/technology scope/partnership/governance/competency measurements/communications) to discover a specific organisations BITA profile. A brief description of each domain follows: Skills: addresses practical human resources issues such as cross-training in IT and business issues regarding the cultural environment and its impact on innovation and organisational change. Technology scope: refers to how much provision of comprehensible and flexible infrastructure comes from IT, the implementation of emergent technologies and IT standards. Partnership: centres on how the perceptions in the relationship and contributions between IT and business sides affect the conduct of effective and efficient management of an organisation. Governance: pertains to the authority accorded to the role of IT and its execution and delivery of activity-supporting resources in the organisation. Competency and value measurement: refers to the accountable value given to the contribution of the IT side to the business side of an organisation. Communication: addresses transparency and comprehension in knowledge sharing and understanding to ensure achievability of stated business and IT strategies and goals. Each domain is then assigned these next five levels of alignment: Initial/ad hoc: is the lowest ranked process of alignment where IT and business are non-aligned and processes for improvement are only ad hoc and random in nature. Committed process level reveals a level of intention how far an organisation has committed itself to the promotion of a global BITA vision. Established focused process level reveals an existing, established BITA process that has a focus on business goals. Improved/managed process level reveals usage of a well-founded BITA process that endorses the acceptance of technology as a value creator for the organisation. Optimised is the highest ranked process of alignment and reveals a fully integrated and co-adaptive strategic BITA process between both IT and business sides in an organisation. [This model will be used by the author in this research to assess the influence of organisational culture in BITA.] 2.5.3 SANCHEZ ORTIZS BITA INSTRUMENT (2003) Sanchez Ortiz (2003) developed a twenty questions based instrument to measure the level of alignment between strategic objectives declared [and shared] by business and IT. The questions are founded on analytical study of the areas in literature offering domains that addressed BITA and the concept of total quality management (Henderson and Venkatraman, 1993; Chan et al., 1997; Bruce, 1998; Luftman et al., 1999; Burn and Szeto, 2000; Creteau and Bergeron, 2001; and Chan, 2001; Kearns and Lederer, 2003). The instrument attempts to definitively measure BITA with due consideration to the areas uncovered by Henderson and Venkatraman (1993), the quality perspective of the MBNQA framework Prybutok et al. (2001) and Chan (2002). The questions in the instrument were designed specifically to parallel some dimensions of the MBNQA: Leadership Strategic Planning Customer and Market Focus Information and Analysis Human Resources â€Å"†¦but reflecting the fit between the priorities and activities of IT with those of the business Sanchez Ortiz (2003, p. 52). Thus the questions would illicit a qualitative attitudinal response and offer levels of agreement with statements of intention. For example, some questions/statement posed direct the respondent to assess suggested purposes of the use of IT ‘to achieve high quality performance, ‘to communicate values and expectations, ‘to support organisational and employee learning, ‘to increase customer/citizen satisfaction, ‘to determine current product/service requirements and ‘to promote cooperation, innovation, and flexibility. To answer the questions, those responding gave ratings on a seven point likert-scale with 1 = ‘strongly disagree to 7 = ‘strongly agree and Not Applicable (N/A) option also included. Sanchez Ortizs BITA instrument has been subsequently amended with input from IT researchers, management , and psychology providing refinements resulting in validation through a pilot assessment conducted in the Denton City Government. However, as it is oriented to single organisations and is only a list of albeit, pertinent and relevant revealing questions, it fails to identify process areas and consequently restricts that particular organisations improvement plan to limited BITA activities and denies it any answers to process and function issues. 2.5.4 COBIT (Control Objectives for Information and Related Technology) COBIT first came to notice with its initial version in 1996 but it appears here according to the chronology with reference to the current (May 2007) version. It was issued by the IT Governance Institute and is a toolset based on business-oriented standards and best practice that organisations can employ for successful delivery of IT against business requirements and measurement of IT processes. â€Å"The business orientation of COBIT consists of linking business goals to IT goals, providing metrics and MMs to measure their achievement, and identifying the associated responsibilities of business and IT process owners Information Systems Audit and Control Association [ISACA] (2006, p.5). Version 4.1 succeeds the earlier version 4.0 with changes to the ‘Goals description making it simpler and including now a cascade of processes and (bidirectional) relations between the ‘IT Processes, the ‘IT Goals and the ‘Business. This comprehensive framework provides e xplicit support in clearly stated points identified by their association with 34 specific naturally grouped areas: Plan and Organise [10 processes] (PO), Acquire and Implement (AI) [7 processes], Deliver and Support (DS) [13 processes] and Monitor and Evaluation (ME) [4 processes] making up the domains. Between them they control applications, information, infrastructure and people with most of the IT resources controlled by process in AI and DS. The table below lists the specific elements of each area. Processes [not illustrated here] are further sub-divided into detailed control objectives [210 contained in COBIT 4.1] Table 2 List of COBIT Framework Areas IT PROCESSES Plan and Organize PO1 Define a Strategic IT Plan and direction PO2 Define the Information Architecture PO3 Determine Technological Direction PO4 Define the IT Processes, Organization and Relationships PO5 Manage the IT Investment PO6 Communicate Management Aims and Direction PO7 Manage IT Human Resources PO8 Manage Quality PO9 Assess and Manage IT Risks PO10 Manage Projects IT PROCESSES Acquire and Implement AI1 Identify Automated Solutions AI2 Acquire and Maintain Application Software AI3 Acquire and Maintain Technology Infrastructure AI4 Enable Operation and Use AI5 Procure IT Resources AI6 Manage Changes AI7 Install and Accredit Solutions and Changes IT PROCESSES Deliver and Support DS1 Define and Manage Service Levels DS2 Manage Third-party Services DS3 Manage Performance and Capacity DS4 Ensure Continuous Service DS5 Ensure Systems Security DS6 Identify and Allocate Costs DS7 Educate and Train Users DS8 Manage Service Desk and Incidents DS9 Manage the Configuration DS10 Manage Problems DS11 Manage Data DS12 Manage the Physical Environment DS13 Manage Operations IT PROCESSES Monitor and Evaluate ME1 Monitor and Evaluate IT Processes ME2 Monitor and Evaluate Internal Control ME3 Ensure Regulatory Compliance ME4 Provide IT Governance COBIT has been successful for many businesses wishing to identify its requirements for the achievement of BITA; key goal indicators, key performance indicators, maturity levels [measurable] and audit guidelines are among the processes employed. COBIT aims to support both management and process owners through IT governance whereby a determination of the level of adherence to the control objectives by either self-assessment or in conjunction with an independent review to establish reference can be easily conducted. The assessment can be placed in context by comparison to the industry and the environment in which they reside, or by comparison to where international standards and regulations are evolving. The detail of COBIT can be overwhelming and counterproductive to its intentions but it is still useful and independent groups however realise the need for navigation information and pointers to where FAQs are answered appropriately and applicably such as the forums led by Debra M allette [CISA Certified Information Systems Auditor] a speaker in joint session with ISACA (ISACA, 2008). 2.6 BARRIERS TO BITA Despite the many variables referred to in the literature cultural barriers are probably among the most difficult to identify, analyse and overcome when introducing new Information Technologies. Organisations can find solutions to most of the technical barriers through different means of support and skill development, but organisational cultural barriers are often invisible, impossible for many to separate from national culture and harder to deal with. Religion is often the foundation for the development of a culture. The kingdom of Saudi Arabia (KSA) epitomises the Arabic Islamic culture because it witnessed the birth of the dominant religion of the region, Islam. It provides a symbol of Islam to the world. KSA also holds the Islamic sacred places for all Muslims across the globe and is viewed by many as the most religious country of Islam. Islam has a strong influence on the people in KSA through Islamic teachings, and this has impacted their way of life and the way things are done (Abdul-Gader, 1999). In addition, KSA has never been occupied or conquered by Western countries, as have many other countries in this region. An important barrier or reluctance may in some measure be due to a lack of available sources for introducing IT systems. There are insufficient IT assets in organisations in different parts of KSA, which limits their ability to implement and introduce new technologies. IT systems are ill-reputed, being widely known for their expensive cost, time-consuming demands, and high rate of failure. Decision makers worldwide are keen to implement new systems, but the lack of certainty and vagueness of successful implementation reduces their enthusiasm (Reinig Mejias, 2003). Another barrier is a lack of BITA awareness possibly because of cultural issues. Without promotion of the benefits and organisations selling the quick wins and showing the consequences of such a strategic alignment between both business and IT strategies, organisations ar e left in a vacuum where progress in line with technological evolution will face arrested development. Part of the lack of awareness might also be tied up in structure and management style coupled with cultural aspects of communications but business and IT objectives and goals should be known and explained to managers and staff through all levels of organisations and any notification of changes in those goals should be exchanged and explained. Lack of skilled personnel is another barrier to BITA that the literature suggests. A workforce containing personnel with IT skill-specific attributes supporting excellent product knowledge in their field in order to manage and implement IT systems successfully is a relevant factor in helping organisations understand the relative ease and potential value of embracing technology (Kelegai Middleton, 2004). Countries with a shortage of skilled IT personnel suffer the business and economic consequences and they very much on foreign expertise, a double-edged sword which brings with it an international cultural dimension that may provide innovative solutions but may also cause conflict within organisations if managed ineffectively. In addition, the absence of reliable quality infrastructure (organisational, and IT) is considered a barrier to BITA. Organisations operating without decent IT infrastructure could face insurmountable financial difficulties [something that can have its reluctance steeped in cultural perception] to introduce and implement completely new systems such as telecommunications systems, Internet, and other hardware as well as the associated costs of the personnel or training required to bring skill levels up to standard. Additionally, organisations without basic organisational infrastructure would have difficulty in achieving its goals. The literature in this field identifies many other barriers that to a greater or lesser extent block progress toward developing or effectively deploying BITA and ha ve been referred to earlier; middle and upper management outlook toward IT; concerns regarding the benefits realised by IT; conflict of politics; tangible benefits/ROI; guaranteeing the meeting of users needs; and trust issues. The literature also specifically points to cultural factors and issues as particularly pertinent elements that may provide barriers to the introduction and implementation of IT (Gefen et al., 2005; Hwang, 2005; Jain Kanungo, 2005; Karahanna et al., 2005; Mann, 2005; Shanks et al., 2000). 2.7 SUMMARY This chapter reviewed a selection of related literature on BITA relevant to this research study sourced from academic publications, industry journals and information on the web. A chronology of BITA history was delivered, BITA definitions presented, and BITA perspectives were given. In addition, BITA models were discussed. Brief explanations of BITA assessment instruments were given. Finally the chapter addressed Barriers to BITA from organisational cultures. Luftmans MM will be used in the current study to assess the indirect influence of organisational culture in KSA; it will assist in evaluating maturity levels of alignment in organisations. Luftmans MM has strong empirical support, which is valid, reliable, and widely cited. This will be used to detect statistically significant effects on BITA with regard to the independent variable of organisational culture. Chapter three explores the literature review for the independent variable considered in this research, namely the organisational culture. References Bergeron, F., Raymond, L. and Rivard, S. (2001). Fit in Strategic Information Technology Management Research: An empirical comparison of perspectives, The International Journal of Management Science 29(2) Burn, J.M. (1996). 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Information Systems Strategy, Structure and Alignment, in R. Papp (ed.) Strategic Information Technology: Opportunities for competitive advantage, 1st edn, Hershey, PA: Idea Group Publishing, pp. 56-81. Luftman, J. N. (2003). Assessing IT-business alignment. Information Systems Management, 20(4):9-15. van der Zee, J. T. M., de Jong, B. (1999). Alignment is not enough: integrating business and information technology management with the balanced business scorecard. Journal of Management Information Systems, 16(2):137-156. Teo, T. S. H., King, E.R. (1997). Integration between business planning and information systems planning: An evolutionary-contingency perspective. Journal of Mana gement Information Systems, 14(1):185-214. Benbya, H., McKelvey, B. (2006). Using coevolutionary and complexity theories to improve IS alignment: A multi-level approach. Journal of Information Technology, 21(4):284-298. Sanchez Ortiz, A. (2003). 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Essay about Know Thyself - 1335 Words

â€Å"Know thyself† – Socrates. Self-awareness is the act of being fully perceptive about one’s innermost self; an essential part to one’s life. However, this self-inquiry is not easily obtained. â€Å"Self-awareness and its accompanying egoism profoundly affect peoples lives, interfering with their success, damaging their relationships with other people, and undermining their happiness.† (Leary) One’s self can become distorted through the influence of society and their beliefs. â€Å"Knowing others is wisdom, knowing yourself is Enlightenment† – Tao Tzu. This introspection surpasses the ordinary understanding of life and grasps the aspect of one’s innermost self. The insightfulness brought to one through self-awareness leads to the utmost happiness†¦show more content†¦This pervasive â€Å"commentary† adds new meaning and interpretation to what is occurring in actuality. 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What Came Before Free Essays

Looking back on history is a great way to learn how to improve the future. America is built on The Declaration of Independence which is a solid foundation for establishing how we should look forward. As we progress, we can use the values and principles of the past in addition to the mistakes they may have occurred and create a better future. We will write a custom essay sample on What Came Before or any similar topic only for you Order Now Lesson 2: The Best of Intentions When looking back over our historical roots, we need to consider both the good and the bad. This is how we learn. We can look at how some groups of people were mistreated. We can see how we can be a better human race. We can see the consequences of past choices. We can evaluate successes and find ways to make them even better in the future. History is a great model for us on how to prepare for the future. Lesson 3: The Devil’s in the Details All historical events are significantly impacted by emotions and attitudes at that time. The same is true today. People’s perceptions, biases, opinions, reactions, emotions, and attitudes influence the entire culture. These details shape the entire environment of America. Lesson 4: Pivot Points Pivot Points occur in everyone’s lives. It is a time when we are faced with a critical decision and we are required to use a great deal of courage or effort to move in a new direction. This year I am attending a new high school for my senior year. I am very nervous about this since I really don’t know anyone at the new high school and i feel like I will be completely lost. But I also feel like it is the best option for me and that I need to try my best to be successful in doing this. Lesson 5: Illusion vs. Reality I think Hollywood has distorted people’s reality. We see in movies and on TV that every story has a happy ending. We learn from video games that is something is in our way we can just fire bomb it. This is not how reality works. Sometimes we have bad days. Maybe even bad years. There isn’t always a perfect solution. Not everyone can win every time. We just have to learn to not give up and to keep trying. Even if today is bad, we can try for a better day tomorrow. Lesson 6: Integrity of the Mind Part of life is learning how to trust yourself and the decisions that you make. As we start life we are told how to do most new things by our parents or a teacher. But they are not always there to give us step by step instructions. So at some point we need to start trusting our instincts and intuition to determine how to best solve problems and complete tasks. Our mind is constantly learning and growing. Through experience, we can trust the decisions we make as we become more mature. Lesson 7: Modern American Transcendentalism I actually watched the movie So I Married An Axe Murdered with my dad. He loves this movie and thinks it is very funny. I thought it was pretty weird but I laughed in it as well. The poetry was reallyn strange to me. It didn’t seem to have a point. And the coffee bar where they did the poetry reading was very strange as well. I liked part of the movie. But I dont’ really see how that style of poem writing is very influential on the literary world. Lesson 8: The Origins of Fear in Literature Half my family really likes scary stuff. Me, my dad, and my sister love scary movies. My mom and two brothers absolutley hate scary movies. Its funny to watch scary movies with all of us and see how scared half my family gets. I think it’s really funny actually. Lesson 9: Fear of the Unknown I asked my parents if they remember September 11, 2001 and what they were doing. They both knew exactly where they were and what they were doing. They then talked about other significant historical events in their lives, like when President Reagan was shot and when the Space Shuttle crashed. I think these are defining moments for the country and people truly unite in times of tragedy. I’m not sure what events during my lifetime are like this. Maybe when Trump surprisingly won. Lesson 10: The Great American Novel I have an uncle that always says he’s going to retire and write the next great American novel. I never really knew what he meant by this. I think he is just bored with his life. It does seem like all the great, award winning novels were written a long time ago. I wonder if someone I know or go to school with will end up being the author of the next great American novel. Lesson 11: Examples of Courage At church someone said that the trials and challenges we face today as teenagers are more difficult than the challenges the pioneers faced when crossing the plains. This really made me think because I always thought I would totally hate to be a pioneer with no home and wondering where we would get food each day. But then I thought about the challenges I face each day with school, friends, temptations to do bad things, etc. I think it is very challenging to be a teenager right now. Lesson 12: No Run-of-the-Mill Man I remember reading To Kill A Mocking Bird and how Aticus FInch never waivered on how he stood for what he believed in. I’ve had friends like this. They are not tempted to do bad things. They always do what is right. I think these kinds of people are very admirable. I hope I can be more like that in my lifetime. Lesson 13: Most People Are Nice I think my generation is much better about seeing the good in all people and being less judgemental about others. My grandparents generation and even my parents generation seem to have many more biases and prejudices against different races, sexual orientation, opposing political beliefs, etc. I think my generation is much more accepting of differences in people. I think this is a very positive thing and I hope that it makes the world a better place as my generation gets older. English – 2nd Semester Lesson 1: Small Towns – Big Dreams I have never lived in a small town. But my grandparents came from small towns. I have visited where they grew up and I don’t think I could survive. My grandpa was born in a log cabin in Elmo, Utah. He didn’t even have running water. I like all of the luxuries of growing up near a Walmart and McDonalds. I feel like it makes it easier to focus on â€Å"big dreams† if I don’t have to worry about where I’m going to get water to survive. Living in a civilized community allows me to dream bigger. Lesson 2: The Harlem Renaissance and Beyond Black writers have had a great influence on literature and arts. I think it is very valuable to learn from their challenges and struggles. I am happy that even though they have had a lot of adversity, they are now becoming very successful. SOme of the greatest musicians, athletes, politicians and business leaders are blacks. They have overcome many obstacles. Lesson 3: Wars and Wars and Wars Great lessons can be learned from wars. Wars have lead to us being able to enjoy most of our freedoms. Wars have created more equlality. Some wars stem from selfishness. Some wars are fought to overthrow evil dictators. Some wars have good and bad people on both sides. People fight wars because they are passionate about their belief so much so that they are willing to risk their lives. Lesson 4: Personal Challenges and Choices I have had many challenges in my life. When I was four years old I nearly died from Kawasaki’s Desease. I lived at Primary Children’s Hospital for several weeks until they were able to diagnose my illness. I have had family challenges like my parents getting divorced. I think these things have made me stronger but they were very difficult at the time. Lesson 5: Who Are We†¦And Who Should We Be? These are some of life’s biggest questions. I often wonder what my purpose in life is supposed to be. I think all I can do today is try to be the best person I can with values that can shape the person I want to be. Things like honesty and loyalty are attributes that can benefit me today and for the rest of my life. No matter what I become, these values will make me a better person. Lesson 6: And Where Are We Going? Life is a journey and there are many times that I may vere off course. I think each time I get off course, my goal is to try and learn from the experience. Where did I go wrong? What could I have done better? This will help me to navigate better in the future. I can grow from each experience and learn how to be a better person. How to cite What Came Before, Papers

Insomnia (1492 words) Essay Example For Students

Insomnia (1492 words) Essay InsomniaLying among tousled sheets, eluded by sleep with thoughts racing, many people wrestle with the nightly demon named insomnia. Insomnia is defined as, the perception or complaint of inadequate or poor-quality sleep because of one or more of the following: difficulty falling asleep, waking up frequently during the night with difficulty returning to sleep, waking up too early in the morning, or unrefreshing sleep (Rajput 1431). Because the definition of â€Å"poor-quality sleep† is not the same for every person, it is not easy to determine the frequency and severity of it’s occurrence (Holbrook 216). To add to the complexity of this problem, there is not even one universal treatment that can be used effectively in all cases. Many effective treatments have been discovered, but there is no â€Å"cure-all.† The two most popularly used treatment methods are pharmocological treatment and behavioral-cognitive treatment . Each of these treatments has its pros and co ns and is recommended for different types of patients. Although taking a pill every day would appear to be the simplest way of overcoming insomnia, it is, â€Å"at best a temporary solution,† and in recent years, use of drugs as a treatment has declined rapidly. Medical records show that the yearly number of prescriptions for sleeping pills peaked in 1972 and were cut in half by 1982. The reason for this decline is that a large amount of cases, insomnia has been proven to be a â€Å"symptom of an underlying . . . problem (Sweeney 231).† Drugs can be a good solution for a short period of time, but their long term use is discouraged, because a tolerance can develop after four weeks of regular use (Espie (?) 115-116). There are three main types of drugs used for treatmentbenzodiapine hypnotics, sedating antidepressants, and antihistamines. Benzodiapine hypnotics are the most prescribed drugs for treating insomnia. They are most useful when treating short term problems and have relatively few side effects when used correctly. They reduce the time for sleep onset and increase sleep efficiency. Long-term use can lead to physical and psychological dependence and abruptly discontinuing their use may cause symptoms of withdraw. (Zammit 132-135). Gradually tapering off the drug is recommended to prevent rebound insomnia. The possible side-effects of benzodiapines include inducing anterograde amnesia, excitability, agression, and symptoms of depression. (Longo 2121). Benzodiapines can be especially harmful for the elderly. They can heighten the symptoms of demensia related disorders. Pregnant women are also discouraged from taking benzodiapines because they are considered teratogens (substances that can reach a fetus and cause harm) (Myers 118). A secondary option to benzodiapines is sedating antidepressants. These drugs can â€Å"promote sleep onset and maintain sleep (Zammit 136),† but they have not been scientifically proven to treat insomnia. The re is no risk of dependence on antidepressants but it is possible for them to become ineffective after a very short time. The third drug option is antihistamines, which besides helping with allergies, are said to decrease sleep onset and reduce time in REM sleep. Many antihistamines are available without a prescription. They are not recommended for treating insomnia because they are not sedatives and very few studies have been done to show their effectiveness. There are also side effects such as dry mouth and urinary retention associated with antihistamines (Walbroehl 1911). In addition to drugs, there are other sleeping pills available. These natural remedies are not regulated by the FDA and it is difficult to accurately jusdge their effectiveness and safety. One of these remedies, which has gained a lot of attention recently, is melatonin. This hormone, naturally secreted by the pineal gland, helps control the sleep-wake cycle. It is now sold as a dietery supplement which aids in sleep. It is still in the process of being tested as an accepted treatment for insomnia. Many results of these tests are coming back favorably, but there are still many questions about it’s safety to be answered. (Cupp ?)An alternative to sleeping pills, cognitive-behavior therapy can sometimes be used effectively as a treatment. This therapy focuses on encouraging the patient to â€Å"eliminate behavior incompatible with sleep (Rajput 1431).† This treatment has many components, which include stimulus control, sleep restriction, relaxation techniques, and cogniti ve therapy (GN 103). According to _____, â€Å"all of these therapies are known to be effective in the treatment of insomnia. (103). Unlike pahrmacotherapy, these techniques do not have side effects. They do however have drawbacks. Results from using behavioral therapy techniques may not be substantially noticed for four to six weeks, and in today’s â€Å"now† society it is difficult for many patients to stick with the program that their doctor suggests. People trying this treatment are encouraged to keep a sleep log in order to better monitor their progress. The first aspect of behavioral treatment is stimulus control. According to Macintosh (?):If a change in a particular stimulus is always followed by the probability, amplitude, latency, or rater of a particular response, we may say that this stimulus exercised some control over tat response. The term stimulus control has come to be used as the convenient shorthand expression for describing such an observed relatio nship between changes in external stimuli and changes in recorded behavior. When applying this to insomnia, these are probably stimuli that are detrimental the ideal sleep environment. For a good sleeper, laying in bed is associated with falling asleep, but for an insomniac, the bed represents a place of frustration. (Espie 158). Stimulus control therapy aims to differentiate the habits that reinforce sleep from the habits that discourage sleep. According to Espie (?), there are six rules to follow. The first rule is that the insomniac should only lie down when they feel tired. This presents difficulty for some, because past failure to sleep has made them unsure of their ability to determine when they are tired. They may need guidance to let them know which cues for sleep they should pay attention to. Rule number two is to only use the bed and bedroom for sleeping. Such normal bedroom habits such as reading, watching television, talking, eating, smoking and drinking should be discon tinued, because they are cues for being awake. Rule number three is go to another room if you do not fall asleep quickly. Quickly is defined by about ten to twenty minutes of wakefulness. However, that does not mean that the patient should watch the clock for an exact period of time. That can cause additional stress. It is recommended that the patient do something relaxing after getting out of bed. Rule number four is that rule three should be repeated. Early on in the treatment the insomniac should expect to get out of bed many times during the night. Persistence with this technique is the key. Step five suggests setting the alarm for the same time each morning. The object of this is to set a biological sleep rhythm. The final rule, rule six, discourages the insomniac from taking naps. Afternoon and evening naps are especially discouraged since sleep onset times are related to how much time has passed since a person last slept. (Espie 158-166)Like stimulus control, sleep restrictio n therapy places limits on time spent in bed, but the idea behind it is different. Sleep restriction aims to make deeper sleep possible by diminishing the time spent lying in bed without sleeping. The first step is to keep a sleep log to track how many hours are spent trying to fall asleep and how many hours are spent actually sleeping per night. The next step is to calculate the average sleep time. Then it needs to be determined how much extra time is spent in bed while not sleeping. After this is calculated, use this time to determine what time you should go to bed and what time you should get up in the morning. It is important that this schedule is strictly adhered to reset your biological clock. A very broad form of behavioral-treatment is relaxation techniques. These techniques include progressive relaxation, autogenic training, and meditation. Progressive relaxation is a sequential tensing and relaxing of the main muscle groups (Espie 107). This causes a decrease in muscle act ivity, blood pressure, and heart rate. Another form of relaxation is autogegnic training, where the patient rehearses simple phrases referring to warmth or heaviness of the legs and arms. In this technique the person is instructing their body to respond as if they are in a low state of physiological arousal. (Espie 110). .u150f99fb1c23ef9cb98b95b239ba25a1 , .u150f99fb1c23ef9cb98b95b239ba25a1 .postImageUrl , .u150f99fb1c23ef9cb98b95b239ba25a1 .centered-text-area { min-height: 80px; position: relative; } .u150f99fb1c23ef9cb98b95b239ba25a1 , .u150f99fb1c23ef9cb98b95b239ba25a1:hover , .u150f99fb1c23ef9cb98b95b239ba25a1:visited , .u150f99fb1c23ef9cb98b95b239ba25a1:active { border:0!important; } .u150f99fb1c23ef9cb98b95b239ba25a1 .clearfix:after { content: ""; display: table; clear: both; } .u150f99fb1c23ef9cb98b95b239ba25a1 { display: block; transition: background-color 250ms; webkit-transition: background-color 250ms; width: 100%; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #95A5A6; } .u150f99fb1c23ef9cb98b95b239ba25a1:active , .u150f99fb1c23ef9cb98b95b239ba25a1:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #2C3E50; } .u150f99fb1c23ef9cb98b95b239ba25a1 .centered-text-area { width: 100%; position: relative ; } .u150f99fb1c23ef9cb98b95b239ba25a1 .ctaText { border-bottom: 0 solid #fff; color: #2980B9; font-size: 16px; font-weight: bold; margin: 0; padding: 0; text-decoration: underline; } .u150f99fb1c23ef9cb98b95b239ba25a1 .postTitle { color: #FFFFFF; font-size: 16px; font-weight: 600; margin: 0; padding: 0; width: 100%; } .u150f99fb1c23ef9cb98b95b239ba25a1 .ctaButton { background-color: #7F8C8D!important; color: #2980B9; border: none; border-radius: 3px; box-shadow: none; font-size: 14px; font-weight: bold; line-height: 26px; moz-border-radius: 3px; text-align: center; text-decoration: none; text-shadow: none; width: 80px; min-height: 80px; background: url(https://artscolumbia.org/wp-content/plugins/intelly-related-posts/assets/images/simple-arrow.png)no-repeat; position: absolute; right: 0; top: 0; } .u150f99fb1c23ef9cb98b95b239ba25a1:hover .ctaButton { background-color: #34495E!important; } .u150f99fb1c23ef9cb98b95b239ba25a1 .centered-text { display: table; height: 80px; padding-left : 18px; top: 0; } .u150f99fb1c23ef9cb98b95b239ba25a1 .u150f99fb1c23ef9cb98b95b239ba25a1-content { display: table-cell; margin: 0; padding: 0; padding-right: 108px; position: relative; vertical-align: middle; width: 100%; } .u150f99fb1c23ef9cb98b95b239ba25a1:after { content: ""; display: block; clear: both; } READ: Case summary of benefits of team work EssayInsomnia in itself is a very frustration and complex condition, and sorting through the possible treatments can be an additional frustration. Since there are so few specially trained sleep specialists, many doctors will go initially with drug treatments as an â€Å"easy way out,† but as I found out, the easy way is not necessarily the best way for every patient. Medicine Essays

Doing Business with Multinational Organizations Essay Example

Doing Business with Multinational Organizations Essay INTRODUCTION Owing to the fast evolution of information and technology organization are operating in an environment where the geographical boundaries are none existent and a company with a subsidiary in another continent operates as if they are in the same city. This paper seeks to identify how this has affected way of doing business by multinational organization by looking and four aspects, which are cultural differences, ethical issues, strategy and industrial or business. 1. CULTURAL DIFFERENCES Culture plays a very important aspect in various aspects of business especially for multinational corporations (MNC) operation on a global level. Cultural variations affect the way a firm conducts its business in different geographical regions and around different cultural settings so that they widen their market base, increase revenue and reduce conflicts resulting from cultural differences(Deresky,2008). Managers of MNCs have to understand what implications cultures have on various business transactions. The main areas where cultural factors affect multinational corporations are: 1. 1. Influence on Strategy that will be used A multinational company must research on the cultural aspects of a new market they would like to venture in. They have to understand the likes and dislikes, preferences, what is considered right or wrong, what is valued, what is the common belief in the area they are going to operate in. An example is in Saudi Arabia where religion dictates what happens in normal business transactions and daily activities for instance for Muslims who pray five times a day, departmental stores and other businesses created room to allow the Muslim customers and employees to pray moreover during the month of Ramadan, most businesses are closed during the day as the Muslims are fasting and are less active during the day and opt to open in the evenings when people are more active. 1. 2. Communication Language and non-verbal communication are cultural cues that affect passing of messages from one party to another. We will write a custom essay sample on Doing Business with Multinational Organizations specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Doing Business with Multinational Organizations specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Doing Business with Multinational Organizations specifically for you FOR ONLY $16.38 $13.9/page Hire Writer Communication between parties that come 2 from different cultures becomes more challenging because of the differences elements of culture and what they value in communication. Different cultures have different communication styles (Gallois and Callan ,1997). These communications styles are: 1. 2. 1. Explicit Vs Implicit Communication Explicit communications is where someone when someone talks it is straight to the point and unambiguous for example Americans. Implicit communication is usually indirect and inexact for example Indonesian communication. For instance a mother telling a man that he is not compatible with her daughter serves him with tea and bananas instead of telling him directly (Gallois and Callan ,1997). 1. 2. 2. Direct Vs Indirect Communication Direct communication states direct action for example ‘has this report done before you go home’. When someone hears direct speech they know what is to be done. Greek employees prefer this kind of communication as they prefer orders as compared to their contribution in management decisions. Indirect communication is not authoritative and encourages input from the listener. American managers prefer this kind of communication as it goes with their managerial style of participatory management. 1. 2. 3. Silence Vs Verbal exaggeration Silence is also seen as a way of communication but different cultures perceive silence in different contexts. The Japanese use silence during negotiations as a strategy to control the negotiation process however if their counterparts are 3 Americans, they would see this silence as lack of knowledge or an indication to move to the next point. On the other hand some cultures dramatization and over emphasize to express the gravity of the matter. This has been observed in the Arab states where common words are used at the end of sentences and pronouns will be repeated for emphasis also used are graphical similes and metaphors. Managers in multinational corporations should therefore study very carefully which communication style takes prevalence in what area and use what is preferred (Gallois and Callan ,1997). 1. 3. Non-verbal communication Non-verbal is another way of communicating messages and portrays messages with more emphasis than words as they say actions speak louder than words. Non-verbal communication includes body movements, posture and gestures, facial expressions. In intercultural communication, it is possible that people rely on non-verbal communication especially when verbal messages are unclear or ambiguous. This is because non-verbal communication is used to add meaning to our verbal communication. How non-verbal communication is used also varies for example low context cultures like the Americans tend to concentrate less with non-verbal communication. This means that it is not there but it is given little importance compared to the words. Examples of non-verbal communication cues are proxemics (space), tone of voice, body gestures, facial expressions and eye contact (Gallois and Callan ,1997). . 4. Negotiations This is a process where business people engage in discussions with the objective of 4 reaching an agreement that will result in the parties involved benefiting. Negotiations for multinational corporations are usually with the suppliers of capital (investors), suppliers, service providers, the Governments involved (either domestic o r foreign), customers and the society. Managers should be aware of the sensitivity and complexities of negotiations especially that are caused by cultural differences as these are usually the key to success (Horst,1972). The multicultural negotiation process is as outlined below 1. 4. 1. Preparation: Understand the counterpart’s culture as compared to ours and identifying the differences. Meant to make us understand the counterparts culture 1. 4. 2. Relationship building: This stage is used to build trust, some cultures find this step irrelevant while others emphasize on relationship building and spend more time here. 1. 4. 3. Exchange task related information: Presentation of details by each the parties and they state their stands. Culture dictates how much information is revealed. . 4. 4. Persuasion: Each party tries to convince the counterparts to take their option by explaining the benefits each would get from their stand. 1. 4. 5. Concession and agreements: This is where agreements are reached and using culture, negotiators know how they will get to this point. 1. 5 Motivation This is what gives human beings or groups the desire or willingness to do something 5 in terms of work and person al life and such a context is greatly influenced by cultural variables that affect attitudes and behavior. Using Hofstede’s ultural dimensions we can evaluate how different motivation methods by multinational corporations would affect employees from different cultures especially if they use the same methods across several countries. 1. 4. 6. Individualism/Collectiveness People who are members to a culture that promote individualism such as the American culture would be motivated by opportunities for individual advancement and autonomy plus they would prefer individual rewarding systems than people of a collectivist nature who would prefer rewards of the entire group and would be motivated with what will advance the entire group. . 4. 7. Uncertainty/Avoidance People who are members of cultures who prefer to avoid opportunity would prefer job security while the opposite would be motivated with risky opportunities for variety and fast track development. 1. 4. 8. Power distance A low power distance culture will be motivated by team work, contribution coming from all members while in a high power distance, motivations comes from the relation ship of the managers and the subordinates. 1. 4. 9. Masculinity/Femininity A masculine culture would prefer the traditional division of work and roles by gender and each gender to stay in their positions for example the traditional African culture 6 while in a feminine culture is open and will motivate people through flexible roles and equal opportunity . (Harris and Moran ,2000) 2. ETHICAL AND LEGAL ISSUES Globalization has led to the development of worldwide and regional governing bodies such as the World Trade Organization (WTO), European Union (EU) and the Common Market for Eastern and Southern Africa (COMESA). They are tasked with regulating interactions between economies and preventing conflicts as well as ensuring business ethics and legal measures are taken care of (Farrell et al, 2008) 2. 1Examples of Regional and world governing bodies 2. 1. 1. World Trade Organization The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goals of the WTO include among others the administration of trade agreements, facilitation of trade negotiations, settlement of trade disputes, provision of legally binding ground rules for international commerce and trade policy. Basically WTO attempts to reduce barriers to trade between and within nations and settle trade disputes ( Ferrell, Fraedrich Ferrell, 2008). The WTO can be said to favour the powerful multi-national corporations, which daily strengthen their grip on the world economy. This has led to smaller nations being forced to open up their trade areas e. China being forced by US to open up its trade 7 to allow U. S imports. Globalization of multinationals has many adverse effects on millions of people throughout the world. The overriding aim of the WTO, in short, is to create a world eminently fit for the multi-national corporations to live in. 2. 1. 2. European Union The European Union is the economic association of over two dozen European countries, which seek to create a unified, barrier-free market for products and services throughout the continent, as well as a common currency with a unified authority over that currency. The EU relies on member states to protect collective labor rights. The EU expects member states to have thriving trade unions and employees associations to participate in the legislative process at EU level that can help to implement directives at the national level. The EU also places considerable importance on upholding human rights standards in its dealings with 3rd world countries (Alston, 2005). 2. 1. 3. COMESA The Common Market for Eastern and Southern Africa, is a preferential trading area with nineteen member states stretching from Libya to Zimbabwe. COMESA formed in December 1994, replacing a Preferential Trade Area which had existed since 1981. The main objective of COMESA is to facilitate the removal of all structural and institutional weaknesses of member States, and the promotion of peace; security and stability so as to enable them attain sustained development individually and collectively as a regional bloc. Among other things, COMESA member States have agreed on the need to create and maintain: 8 ? a full free trade area guaranteeing the free movement of goods and services produced within COMESA and the removal of all tariffs and non-tariff barriers; a Customs Union under which goods and services imported from nonCOMESA countries will attract an agreed single tariff in all COMESA states; ? free movement of capita and investment supported by the adoption of common investment practices and policies so as to create a more favorable investment climate for the COMESA region; ? a gradual establishment of a payments union based on the COMESA Clearing House and the eventual establishment of a common monetary union with a common currency; and ? The adoption of common visa arrangements, including the right of establishment leading eventually to the free movement of bona fide persons. 2. 2. Effects of World Governing Bodies on globalization and business World governing bodies have opened up trade between member countries and as a result increased globalization namely through: 1. Reducing barriers to international trade through international agreements such as WTO agreements 2. Elimination of tariffs; creation of free trade zones with small or no tariffs 3. Reduced transportation costs, especially resulting from development of containerization for ocean shipping. 4. Reduction or elimination of capital controls 5. Reduction, elimination, or harmonization of subsidies for local businesses 9 6. Creation of subsidies for global corporations 7. Harmonization of intellectual property laws across the majority of states, with more restrictions 8. Supranational recognition of intellectual property restrictions (e. g. patents granted by China would be recognized in the United States) 9. Globalization has brought about the formation of alliances between countries such as the G8, NAFTA, EU, such alliances want to improve trade and business amongst themselves and companies operating outside these alliances have quite some disadvantage e. g. flower companies in Kenya selling flowers to the EU 10. World governing bodies and trade alliances such as EU, WTO stipulates the basic ethical rules that should be used in their member states. If companies do not comply they would have campaigns against them creating boycotts for their products. 10 3. STRATEGIES During the last half of the twentieth century, many barriers to international trade fell and a wave of firms began pursuing international strategies to gain a competitive advantage. Business strategies may include geographic expansion, diversification, acquisition, product development, market penetration, retrenchment, divestiture, liquidation, and joint venture. Strategic management enables organizations to recognize and a dopt to change more readily; successfully adapting to change is the key to survival and prosperity. 2. 3. Two types of international strategy 2. 3. 1. Global strategy Treat the world as a single market. It is applied where forces for global integration are strong and force for national responsiveness is weak. For example this is true of consumer electronics market. Global Strategy is suitable for: ? ? ? Product is the same in all countries. Centralized control little decision-making authority on the local level Effective when differences between countries are small 2. 3. 2. Multinational Strategy It treats the world as a portfolio of national opportunities. It is applied where forces for global integration are weak and force for national responsiveness is strong. For example this is true of branded packaged goods business for 11 example strategy pursued by Unilever. Multi domestic strategy is suitable for ? ? ? Products customized for each market Decentralized control – local decision making Effective when there are wide differences between the countries 2. 4. Strategies of investing abroad 2. 4. 1. Joint venture Marula (2006) defines joint venture as a venture that is jointly owned and operated by two or more firms. He further explains that many firms penetrate foreign market by engaging in a joint venture with firms that reside in those markets. Advantages of a Joint venture First these organizations are able to apply their respective comparative advantages in a given project and Marula (2006) gives an example of General Mills Inc which joined in a venture with Nestle SA so as that cereals produced by General Mill could be sold through the overseas sales distribution network by Nestle also Xerox Corp and Fuji Co. of Japan engaged in a joint venture that allowed Xerox Corp to penetrate the Japanese market and allowed Fuji to enter the photocopying business. Secondly a joint ventures enables organization especially in the automobile to offer its technological advantages for example General Motors has ongoing joint ventures with automobile manufactures in several different countries. 12 Disadvantages of Joint Ventures Association of Certified Charted Accountants (2004) asserts that disagreements may arise over profit shares, amount invested, the management of the joint venture , making the strategy and finally one partner may wish to withdraw from the arrangement. 2. 4. 2. Contract Manufacturing or Licensing Pearce and Robison (2004) define licensing as the transfer of some industrial property right from the licensor to a motivated licensee. They further explain that most tend to be patterns, trademarks, or technical know how that are granted to the licensee for a specified time in return for a royalty and for avoiding tariffs or import quotas. Advantages of Licensing Pearce and Robison (2003) argue that firms that use licensing will benefit from lowering the risk of entry into the foreign markets and used best in companies large enough to have a ombination of international strategic activities and for firms with standardized products in narrow margin industries. Disadvantages of Licensing According to Pearce and Robison (2004) is the possibility that the foreign partner will gain the experience and evolve into a major competitor after the contract expires as this was a case between U. S electronics firms with Japanese companies. Secondly they argue th at another potential problem stems from the control that the licensor forfeits on production, marketing and 13 general distribution of its products. And this loss of control minimizes a company’s degrees of freedom as it reevaluates its future options. 2. 4. 3. Franchising Pearce and Robison (2004) define Franchising as form of licensing which allows the franchise to sell a highly publicized product or service, using the parent’s brand name or trademark, carefully developed procedures, and marketing strategies. In exchange the franchisee pays a fee to the parent company, typically based on the volume of sales of the franchisor in its defined market area. The local investor who must adhere to the strict policies of the parent operates the franchise. Examples are Avis, Burger King, CocaCola, Hilton, Kentucky fried chicken, Manpower and Pepsi. ACCA (2004) asserts that the franchiser provides the name, any good will associated with it, systems, business methods, support services such as advertising, training and site decoration while the franchisee provides the capital, personal involvement, local market knowledge, payment to the franchiser for the rights, support services and responsibility for day to day running and the ultimate profitability of the franchise. Disadvantages of franchising According to ACCA (2004) search for competent candidates is both costly and time consuming where the franchiser requires many outlets for example McDonalds in UK. Also the control over franchisees is demanding as they are spread over many locations. 14 2. 4. 4. Transnational Alliances Levi (1996) defines transnational alliances as associations of firms in different countries working together to overcome the limitation of working alone. One of the motivations to form a ransnational alliance is cooperation over research where cost and risks may be too high for any one firm or where different firms may possess different abilities. He gives an example IBM and Siemens of Germany in Memory chip development or marketing of Geo produced in Korea by GM. He further asserts that transnational alliances are compromise between a firm doing everything itself and dealing with a stranger. Advantages Of transnational alliances As Levi (1996) argues organizations form tran snational alliances to gain access to foreign markets, to exploit complementary technologies and to reduce time taken for innovation. . 4. 5. Wholly owned foreign subsidiaries Based on a study done by Richard Vernon of Harvard Business School where 187 United States manufacturing with six or more foreign subsidiaries outside of Canada the researcher concluded that these multinational corporations tend to be larger, more profitable more advertising and research oriented and more diversified than firms which have not invested abroad. (Horst, 1972) 4. 0 INDUSTRIAL AND BUSINESS Economic reforms/environment affects the business and industry directly. Business plans and programmers are directly influenced by economic factors, 15 such as, interest rates, money supply, price level, consumers’ credit etc. Economic conditions leading to inflation or deflation affect the business activities. Inflation leads to rise in general price-level, whereas deflation leads to fall in price level. Higher petrol prices in the country resulted to a trend in favor of small like Maruti and starlet cars. State of industrial trade and business booms and slumps constitute the economics of market environment, (Lewis, 2006). Recently government initiated various economic policies. As such the impact of these reforms changes on business and industry in the following manner: 2. 5. Buyers’ market In the liberalized policy regime shortages of goods are no more, but there are surplus of goods. These arise due to competition, reduction in cost, up-gradation of technology, improvement in quality and customer convenience. Removal of government restrictions on capacity creation and capacity utilization has also helped increase in the supply of goods. Industry has been given total freedom to expand and diversify. Price control has been removed. Investment now takes place in the areas of demand. All these changes have made the buyer, the sovereign of the market. 2. 6. Export is required for survival Implementation of new trade policy has linked imports to exports. The enterprises should earn foreign exchange by exports and use the same foreign exchange for importing raw material spares and equipments. For example: Reliance Group, Essar World Trade, Ceat, Videocon, Eicher, MRF etc, are being benefited by the 16 new policy. 2. 7. Threat from multinational companies Due to the present policy of liberalization of our government, massive entry of multinationals in the country has started. The vast resources and the modern technology of the present multi-national companies have enabled their subsidiary companies to boost sales and enjoy strategic advantage over their competitors. The presence of multinational companies has been rendering valuable services to our economy. It is supplying superior quality of goods, generating more employment opportunities, promoting modern technology and awakening our business community. Presence of multinational companies has also boosted growth of small industries in the country. 2. 8. Overall competition The new competitive environment has thrown the economy open. There is tough competition between multinationals and there is also competition between local enterprises and foreign enterprises. Competition has now become global. It is not confined to national boundaries. For instance, Weston Electronics Company, which held about 18% of the television market, has been virtually thrown out of the market due to cutthroat competition and technological backwardness. . 9. World class technology Changes in government policy regarding business and industry have provided us with world-class technology. Most companies have also started making investment in research and development. Pharmaceutical industries in countries such as India made 2% investment in R D. In developed countries investment in 17 research and development is approximately 12%. Multinationals are also bring ing world-class technology in the country. This has enabled faster growth of industries. 2. 10. Future not guided by past failures It is rightly said that future starts afresh for companies. Future now needs new strategies, high technologies, determined efforts, enthusiasm, organization and leadership. New approaches, systems structures and new leadership must emerge to compete with the multinationals. We must forget the past, bury its failures and start working with new endeavor, approaches and leadership. 2. 11. Wider and diverse markets Due to globalization markets have been opened up and can now be widely accessed by companies from various countries. Countries have lift barriers improving flow of goods between them. This has boosted import and export trade among various countries. Regional trading blocks have been formed to improve trade and allow free flow of goods and services among member countries. In the agricultural sector, crop imports are traded at cheaper prices and exchanged for another commodity because of the free trade as entailed among the provisions of bodies such as COMESA or WTO. A country such as Philippines could purchase or import crops from another country at cheaper tariff rates, in case of a shortage. However, on the downside, countries that are more progressive agriculturally could just dump their third-rate or low-class products to their third-world trading counterparts. 18 2. 12. Foreign direct investment inflows Local industries which have invested abroad such as Bidco oil refinery is reaping huge profits from its foreign direct investments such as from its investment in Uganda palm plantation. Creation of common markets has given countries incentives to invest in those countries thus leading to investment inflows. Lowering of tariffs: countries such as India have been reaping from enormous opportunities emerging from globalization such as consequent lowering of tariff barriers. Information Technology has given Indian industries formidable brand equity in the global markets. Indian companies have a unique distinction of providing efficient business solutions with cost and quality as an advantage by using state of art technology. Outsourcing is the act of giving a third-party the responsibility of running hat would otherwise be an internal system or service. Due to globalization, most companies and businesses have sought to contract most of its services or processes to outsiders. Most industries now use outsourcing such as call centers and can outsource its functions such as marketing, financial, training, transport and distribution and so forth. Capitalize on global trade: most domestic industries now capitalize on global trade by concentrating on the domestic market and then leverage their eco nomies of scale overseas. 2. 13. Devaluation Some countries have had to cope up with the trend of globalization by devaluing their currency such as India. The first step towards globalization was taken with the announcement of the devaluation of Indian currency by 18-19 percent against 19 major currencies in the international foreign exchange market. This was a measure taken in order to resolve the balance of payment crisis. 5. 0 ANALYSIS AND CONCLUSION In conclusion my own critique on globalization is that the whole process has increased power that multinational corporations seems to enjoy . This is seen as a particularly worrying phenomenon because it affects the issues that are raised and witnessed everywhere we have a multinational company. An overriding concern is that globalization increases the gap between the haves and the have-not of the world. Unfair labor practices such as child labour, poor working conditions and low remuneration packages are some of issues that have been witnessed in the recent past. Although it’s not clear whether the forces of globalization may produce a general deterioration of working conditions around the world or increase the inequality of working conditions among countries . espite the above ,in rich countries the picture is totally different thus self-interested opposition to globalization with fears that cheap imports or immigrants from other countries will lower the relative wages of low-skilled workers, more rapid economic change and shifting patterns of comparative advantage will increase economic insecurity and internation al competition. Despite all this countering the claims of globalization skeptics is a century-old economy theory that predicts free trade will reduce a convergence of labour conditions around the world. 20 6. References: ACCA (2004) Strategic business planning and development (paper 3. 5). London: BPP Professional Education Alston, P. (2005). Labour rights as human rights. New York: Oxford University Press Inc. Deresky, H. (2008). International Management : Managing Across Borders and Culture (6th ed. ). Upper Saddle River, Pearson Education. Gallois, C. , Callan, V. (1997). Communication and culture: A guide for practice. Chichester, UK, Wiley. Ferrell, O. , Fraedrich, J. , Ferrell, L. (2008). Business Ethics: Ethical decision making and cases. New York: Houghton Mifflin Company. Horst T. 1972) Firm and Industry Determinants of the Decision to Invest Abroad: An Empirical Study The Review of Economics and Statistics, Vol. 54, No. 3 (Aug. , 1972), pp. 258-266 Kotler, Philip: Market ing Management: nineth edition, Prentice Hall India Lewis D. 3rd ed. (2006): When cultures collide. Leading across cultures. London. Nicholas Brealey International. Levi, Maurice D (1996) International Finance; The markets and financial management multinational business (3rd ed) Singapore: McGraw- 21 McFarlin, D. B. , Sweeney, P. D. (2006). International Management: Strategic Opportunities and Cultural Challenges (3rd ed. . Boston, Houghton Mifflin Company. O’Carroll, G. (n. d. ). Intercultural Communication Module: [Intercultural communication]. Retrieved from ECO European Career Orientation website: http://eco. ittralee. ie// Pearce, J. and Robinson, R. (2004). Strategic Management: Formulation, Implementation and Control. New York: The McGraw-Hill Companies Schermehorn, J. R. (2005). Organizational Behavior (9th ed. ). Hoboken, NJ Thomas, D. C. (2002). Essentials of International Management: A cross culture Perspective. 2455 Teller Road, Sage Publications Inc. 22 Doing Business with Multinational Organizations Essay Example Doing Business with Multinational Organizations Essay INTRODUCTION Owing to the fast evolution of information and technology organization are operating in an environment where the geographical boundaries are none existent and a company with a subsidiary in another continent operates as if they are in the same city. This paper seeks to identify how this has affected way of doing business by multinational organization by looking and four aspects, which are cultural differences, ethical issues, strategy and industrial or business. 1. CULTURAL DIFFERENCES Culture plays a very important aspect in various aspects of business especially for multinational corporations (MNC) operation on a global level. Cultural variations affect the way a firm conducts its business in different geographical regions and around different cultural settings so that they widen their market base, increase revenue and reduce conflicts resulting from cultural differences(Deresky,2008). Managers of MNCs have to understand what implications cultures have on various business transactions. The main areas where cultural factors affect multinational corporations are: 1. 1. Influence on Strategy that will be used A multinational company must research on the cultural aspects of a new market they would like to venture in. They have to understand the likes and dislikes, preferences, what is considered right or wrong, what is valued, what is the common belief in the area they are going to operate in. An example is in Saudi Arabia where religion dictates what happens in normal business transactions and daily activities for instance for Muslims who pray five times a day, departmental stores and other businesses created room to allow the Muslim customers and employees to pray moreover during the month of Ramadan, most businesses are closed during the day as the Muslims are fasting and are less active during the day and opt to open in the evenings when people are more active. 1. 2. Communication Language and non-verbal communication are cultural cues that affect passing of messages from one party to another. We will write a custom essay sample on Doing Business with Multinational Organizations specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Doing Business with Multinational Organizations specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Doing Business with Multinational Organizations specifically for you FOR ONLY $16.38 $13.9/page Hire Writer Communication between parties that come 2 from different cultures becomes more challenging because of the differences elements of culture and what they value in communication. Different cultures have different communication styles (Gallois and Callan ,1997). These communications styles are: 1. 2. 1. Explicit Vs Implicit Communication Explicit communications is where someone when someone talks it is straight to the point and unambiguous for example Americans. Implicit communication is usually indirect and inexact for example Indonesian communication. For instance a mother telling a man that he is not compatible with her daughter serves him with tea and bananas instead of telling him directly (Gallois and Callan ,1997). 1. 2. 2. Direct Vs Indirect Communication Direct communication states direct action for example ‘has this report done before you go home’. When someone hears direct speech they know what is to be done. Greek employees prefer this kind of communication as they prefer orders as compared to their contribution in management decisions. Indirect communication is not authoritative and encourages input from the listener. American managers prefer this kind of communication as it goes with their managerial style of participatory management. 1. 2. 3. Silence Vs Verbal exaggeration Silence is also seen as a way of communication but different cultures perceive silence in different contexts. The Japanese use silence during negotiations as a strategy to control the negotiation process however if their counterparts are 3 Americans, they would see this silence as lack of knowledge or an indication to move to the next point. On the other hand some cultures dramatization and over emphasize to express the gravity of the matter. This has been observed in the Arab states where common words are used at the end of sentences and pronouns will be repeated for emphasis also used are graphical similes and metaphors. Managers in multinational corporations should therefore study very carefully which communication style takes prevalence in what area and use what is preferred (Gallois and Callan ,1997). 1. 3. Non-verbal communication Non-verbal is another way of communicating messages and portrays messages with more emphasis than words as they say actions speak louder than words. Non-verbal communication includes body movements, posture and gestures, facial expressions. In intercultural communication, it is possible that people rely on non-verbal communication especially when verbal messages are unclear or ambiguous. This is because non-verbal communication is used to add meaning to our verbal communication. How non-verbal communication is used also varies for example low context cultures like the Americans tend to concentrate less with non-verbal communication. This means that it is not there but it is given little importance compared to the words. Examples of non-verbal communication cues are proxemics (space), tone of voice, body gestures, facial expressions and eye contact (Gallois and Callan ,1997). . 4. Negotiations This is a process where business people engage in discussions with the objective of 4 reaching an agreement that will result in the parties involved benefiting. Negotiations for multinational corporations are usually with the suppliers of capital (investors), suppliers, service providers, the Governments involved (either domestic o r foreign), customers and the society. Managers should be aware of the sensitivity and complexities of negotiations especially that are caused by cultural differences as these are usually the key to success (Horst,1972). The multicultural negotiation process is as outlined below 1. 4. 1. Preparation: Understand the counterpart’s culture as compared to ours and identifying the differences. Meant to make us understand the counterparts culture 1. 4. 2. Relationship building: This stage is used to build trust, some cultures find this step irrelevant while others emphasize on relationship building and spend more time here. 1. 4. 3. Exchange task related information: Presentation of details by each the parties and they state their stands. Culture dictates how much information is revealed. . 4. 4. Persuasion: Each party tries to convince the counterparts to take their option by explaining the benefits each would get from their stand. 1. 4. 5. Concession and agreements: This is where agreements are reached and using culture, negotiators know how they will get to this point. 1. 5 Motivation This is what gives human beings or groups the desire or willingness to do something 5 in terms of work and person al life and such a context is greatly influenced by cultural variables that affect attitudes and behavior. Using Hofstede’s ultural dimensions we can evaluate how different motivation methods by multinational corporations would affect employees from different cultures especially if they use the same methods across several countries. 1. 4. 6. Individualism/Collectiveness People who are members to a culture that promote individualism such as the American culture would be motivated by opportunities for individual advancement and autonomy plus they would prefer individual rewarding systems than people of a collectivist nature who would prefer rewards of the entire group and would be motivated with what will advance the entire group. . 4. 7. Uncertainty/Avoidance People who are members of cultures who prefer to avoid opportunity would prefer job security while the opposite would be motivated with risky opportunities for variety and fast track development. 1. 4. 8. Power distance A low power distance culture will be motivated by team work, contribution coming from all members while in a high power distance, motivations comes from the relation ship of the managers and the subordinates. 1. 4. 9. Masculinity/Femininity A masculine culture would prefer the traditional division of work and roles by gender and each gender to stay in their positions for example the traditional African culture 6 while in a feminine culture is open and will motivate people through flexible roles and equal opportunity . (Harris and Moran ,2000) 2. ETHICAL AND LEGAL ISSUES Globalization has led to the development of worldwide and regional governing bodies such as the World Trade Organization (WTO), European Union (EU) and the Common Market for Eastern and Southern Africa (COMESA). They are tasked with regulating interactions between economies and preventing conflicts as well as ensuring business ethics and legal measures are taken care of (Farrell et al, 2008) 2. 1Examples of Regional and world governing bodies 2. 1. 1. World Trade Organization The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goals of the WTO include among others the administration of trade agreements, facilitation of trade negotiations, settlement of trade disputes, provision of legally binding ground rules for international commerce and trade policy. Basically WTO attempts to reduce barriers to trade between and within nations and settle trade disputes ( Ferrell, Fraedrich Ferrell, 2008). The WTO can be said to favour the powerful multi-national corporations, which daily strengthen their grip on the world economy. This has led to smaller nations being forced to open up their trade areas e. China being forced by US to open up its trade 7 to allow U. S imports. Globalization of multinationals has many adverse effects on millions of people throughout the world. The overriding aim of the WTO, in short, is to create a world eminently fit for the multi-national corporations to live in. 2. 1. 2. European Union The European Union is the economic association of over two dozen European countries, which seek to create a unified, barrier-free market for products and services throughout the continent, as well as a common currency with a unified authority over that currency. The EU relies on member states to protect collective labor rights. The EU expects member states to have thriving trade unions and employees associations to participate in the legislative process at EU level that can help to implement directives at the national level. The EU also places considerable importance on upholding human rights standards in its dealings with 3rd world countries (Alston, 2005). 2. 1. 3. COMESA The Common Market for Eastern and Southern Africa, is a preferential trading area with nineteen member states stretching from Libya to Zimbabwe. COMESA formed in December 1994, replacing a Preferential Trade Area which had existed since 1981. The main objective of COMESA is to facilitate the removal of all structural and institutional weaknesses of member States, and the promotion of peace; security and stability so as to enable them attain sustained development individually and collectively as a regional bloc. Among other things, COMESA member States have agreed on the need to create and maintain: 8 ? a full free trade area guaranteeing the free movement of goods and services produced within COMESA and the removal of all tariffs and non-tariff barriers; a Customs Union under which goods and services imported from nonCOMESA countries will attract an agreed single tariff in all COMESA states; ? free movement of capita and investment supported by the adoption of common investment practices and policies so as to create a more favorable investment climate for the COMESA region; ? a gradual establishment of a payments union based on the COMESA Clearing House and the eventual establishment of a common monetary union with a common currency; and ? The adoption of common visa arrangements, including the right of establishment leading eventually to the free movement of bona fide persons. 2. 2. Effects of World Governing Bodies on globalization and business World governing bodies have opened up trade between member countries and as a result increased globalization namely through: 1. Reducing barriers to international trade through international agreements such as WTO agreements 2. Elimination of tariffs; creation of free trade zones with small or no tariffs 3. Reduced transportation costs, especially resulting from development of containerization for ocean shipping. 4. Reduction or elimination of capital controls 5. Reduction, elimination, or harmonization of subsidies for local businesses 9 6. Creation of subsidies for global corporations 7. Harmonization of intellectual property laws across the majority of states, with more restrictions 8. Supranational recognition of intellectual property restrictions (e. g. patents granted by China would be recognized in the United States) 9. Globalization has brought about the formation of alliances between countries such as the G8, NAFTA, EU, such alliances want to improve trade and business amongst themselves and companies operating outside these alliances have quite some disadvantage e. g. flower companies in Kenya selling flowers to the EU 10. World governing bodies and trade alliances such as EU, WTO stipulates the basic ethical rules that should be used in their member states. If companies do not comply they would have campaigns against them creating boycotts for their products. 10 3. STRATEGIES During the last half of the twentieth century, many barriers to international trade fell and a wave of firms began pursuing international strategies to gain a competitive advantage. Business strategies may include geographic expansion, diversification, acquisition, product development, market penetration, retrenchment, divestiture, liquidation, and joint venture. Strategic management enables organizations to recognize and a dopt to change more readily; successfully adapting to change is the key to survival and prosperity. 2. 3. Two types of international strategy 2. 3. 1. Global strategy Treat the world as a single market. It is applied where forces for global integration are strong and force for national responsiveness is weak. For example this is true of consumer electronics market. Global Strategy is suitable for: ? ? ? Product is the same in all countries. Centralized control little decision-making authority on the local level Effective when differences between countries are small 2. 3. 2. Multinational Strategy It treats the world as a portfolio of national opportunities. It is applied where forces for global integration are weak and force for national responsiveness is strong. For example this is true of branded packaged goods business for 11 example strategy pursued by Unilever. Multi domestic strategy is suitable for ? ? ? Products customized for each market Decentralized control – local decision making Effective when there are wide differences between the countries 2. 4. Strategies of investing abroad 2. 4. 1. Joint venture Marula (2006) defines joint venture as a venture that is jointly owned and operated by two or more firms. He further explains that many firms penetrate foreign market by engaging in a joint venture with firms that reside in those markets. Advantages of a Joint venture First these organizations are able to apply their respective comparative advantages in a given project and Marula (2006) gives an example of General Mills Inc which joined in a venture with Nestle SA so as that cereals produced by General Mill could be sold through the overseas sales distribution network by Nestle also Xerox Corp and Fuji Co. of Japan engaged in a joint venture that allowed Xerox Corp to penetrate the Japanese market and allowed Fuji to enter the photocopying business. Secondly a joint ventures enables organization especially in the automobile to offer its technological advantages for example General Motors has ongoing joint ventures with automobile manufactures in several different countries. 12 Disadvantages of Joint Ventures Association of Certified Charted Accountants (2004) asserts that disagreements may arise over profit shares, amount invested, the management of the joint venture , making the strategy and finally one partner may wish to withdraw from the arrangement. 2. 4. 2. Contract Manufacturing or Licensing Pearce and Robison (2004) define licensing as the transfer of some industrial property right from the licensor to a motivated licensee. They further explain that most tend to be patterns, trademarks, or technical know how that are granted to the licensee for a specified time in return for a royalty and for avoiding tariffs or import quotas. Advantages of Licensing Pearce and Robison (2003) argue that firms that use licensing will benefit from lowering the risk of entry into the foreign markets and used best in companies large enough to have a ombination of international strategic activities and for firms with standardized products in narrow margin industries. Disadvantages of Licensing According to Pearce and Robison (2004) is the possibility that the foreign partner will gain the experience and evolve into a major competitor after the contract expires as this was a case between U. S electronics firms with Japanese companies. Secondly they argue th at another potential problem stems from the control that the licensor forfeits on production, marketing and 13 general distribution of its products. And this loss of control minimizes a company’s degrees of freedom as it reevaluates its future options. 2. 4. 3. Franchising Pearce and Robison (2004) define Franchising as form of licensing which allows the franchise to sell a highly publicized product or service, using the parent’s brand name or trademark, carefully developed procedures, and marketing strategies. In exchange the franchisee pays a fee to the parent company, typically based on the volume of sales of the franchisor in its defined market area. The local investor who must adhere to the strict policies of the parent operates the franchise. Examples are Avis, Burger King, CocaCola, Hilton, Kentucky fried chicken, Manpower and Pepsi. ACCA (2004) asserts that the franchiser provides the name, any good will associated with it, systems, business methods, support services such as advertising, training and site decoration while the franchisee provides the capital, personal involvement, local market knowledge, payment to the franchiser for the rights, support services and responsibility for day to day running and the ultimate profitability of the franchise. Disadvantages of franchising According to ACCA (2004) search for competent candidates is both costly and time consuming where the franchiser requires many outlets for example McDonalds in UK. Also the control over franchisees is demanding as they are spread over many locations. 14 2. 4. 4. Transnational Alliances Levi (1996) defines transnational alliances as associations of firms in different countries working together to overcome the limitation of working alone. One of the motivations to form a ransnational alliance is cooperation over research where cost and risks may be too high for any one firm or where different firms may possess different abilities. He gives an example IBM and Siemens of Germany in Memory chip development or marketing of Geo produced in Korea by GM. He further asserts that transnational alliances are compromise between a firm doing everything itself and dealing with a stranger. Advantages Of transnational alliances As Levi (1996) argues organizations form tran snational alliances to gain access to foreign markets, to exploit complementary technologies and to reduce time taken for innovation. . 4. 5. Wholly owned foreign subsidiaries Based on a study done by Richard Vernon of Harvard Business School where 187 United States manufacturing with six or more foreign subsidiaries outside of Canada the researcher concluded that these multinational corporations tend to be larger, more profitable more advertising and research oriented and more diversified than firms which have not invested abroad. (Horst, 1972) 4. 0 INDUSTRIAL AND BUSINESS Economic reforms/environment affects the business and industry directly. Business plans and programmers are directly influenced by economic factors, 15 such as, interest rates, money supply, price level, consumers’ credit etc. Economic conditions leading to inflation or deflation affect the business activities. Inflation leads to rise in general price-level, whereas deflation leads to fall in price level. Higher petrol prices in the country resulted to a trend in favor of small like Maruti and starlet cars. State of industrial trade and business booms and slumps constitute the economics of market environment, (Lewis, 2006). Recently government initiated various economic policies. As such the impact of these reforms changes on business and industry in the following manner: 2. 5. Buyers’ market In the liberalized policy regime shortages of goods are no more, but there are surplus of goods. These arise due to competition, reduction in cost, up-gradation of technology, improvement in quality and customer convenience. Removal of government restrictions on capacity creation and capacity utilization has also helped increase in the supply of goods. Industry has been given total freedom to expand and diversify. Price control has been removed. Investment now takes place in the areas of demand. All these changes have made the buyer, the sovereign of the market. 2. 6. Export is required for survival Implementation of new trade policy has linked imports to exports. The enterprises should earn foreign exchange by exports and use the same foreign exchange for importing raw material spares and equipments. For example: Reliance Group, Essar World Trade, Ceat, Videocon, Eicher, MRF etc, are being benefited by the 16 new policy. 2. 7. Threat from multinational companies Due to the present policy of liberalization of our government, massive entry of multinationals in the country has started. The vast resources and the modern technology of the present multi-national companies have enabled their subsidiary companies to boost sales and enjoy strategic advantage over their competitors. The presence of multinational companies has been rendering valuable services to our economy. It is supplying superior quality of goods, generating more employment opportunities, promoting modern technology and awakening our business community. Presence of multinational companies has also boosted growth of small industries in the country. 2. 8. Overall competition The new competitive environment has thrown the economy open. There is tough competition between multinationals and there is also competition between local enterprises and foreign enterprises. Competition has now become global. It is not confined to national boundaries. For instance, Weston Electronics Company, which held about 18% of the television market, has been virtually thrown out of the market due to cutthroat competition and technological backwardness. . 9. World class technology Changes in government policy regarding business and industry have provided us with world-class technology. Most companies have also started making investment in research and development. Pharmaceutical industries in countries such as India made 2% investment in R D. In developed countries investment in 17 research and development is approximately 12%. Multinationals are also bring ing world-class technology in the country. This has enabled faster growth of industries. 2. 10. Future not guided by past failures It is rightly said that future starts afresh for companies. Future now needs new strategies, high technologies, determined efforts, enthusiasm, organization and leadership. New approaches, systems structures and new leadership must emerge to compete with the multinationals. We must forget the past, bury its failures and start working with new endeavor, approaches and leadership. 2. 11. Wider and diverse markets Due to globalization markets have been opened up and can now be widely accessed by companies from various countries. Countries have lift barriers improving flow of goods between them. This has boosted import and export trade among various countries. Regional trading blocks have been formed to improve trade and allow free flow of goods and services among member countries. In the agricultural sector, crop imports are traded at cheaper prices and exchanged for another commodity because of the free trade as entailed among the provisions of bodies such as COMESA or WTO. A country such as Philippines could purchase or import crops from another country at cheaper tariff rates, in case of a shortage. However, on the downside, countries that are more progressive agriculturally could just dump their third-rate or low-class products to their third-world trading counterparts. 18 2. 12. Foreign direct investment inflows Local industries which have invested abroad such as Bidco oil refinery is reaping huge profits from its foreign direct investments such as from its investment in Uganda palm plantation. Creation of common markets has given countries incentives to invest in those countries thus leading to investment inflows. Lowering of tariffs: countries such as India have been reaping from enormous opportunities emerging from globalization such as consequent lowering of tariff barriers. Information Technology has given Indian industries formidable brand equity in the global markets. Indian companies have a unique distinction of providing efficient business solutions with cost and quality as an advantage by using state of art technology. Outsourcing is the act of giving a third-party the responsibility of running hat would otherwise be an internal system or service. Due to globalization, most companies and businesses have sought to contract most of its services or processes to outsiders. Most industries now use outsourcing such as call centers and can outsource its functions such as marketing, financial, training, transport and distribution and so forth. Capitalize on global trade: most domestic industries now capitalize on global trade by concentrating on the domestic market and then leverage their eco nomies of scale overseas. 2. 13. Devaluation Some countries have had to cope up with the trend of globalization by devaluing their currency such as India. The first step towards globalization was taken with the announcement of the devaluation of Indian currency by 18-19 percent against 19 major currencies in the international foreign exchange market. This was a measure taken in order to resolve the balance of payment crisis. 5. 0 ANALYSIS AND CONCLUSION In conclusion my own critique on globalization is that the whole process has increased power that multinational corporations seems to enjoy . This is seen as a particularly worrying phenomenon because it affects the issues that are raised and witnessed everywhere we have a multinational company. An overriding concern is that globalization increases the gap between the haves and the have-not of the world. Unfair labor practices such as child labour, poor working conditions and low remuneration packages are some of issues that have been witnessed in the recent past. Although it’s not clear whether the forces of globalization may produce a general deterioration of working conditions around the world or increase the inequality of working conditions among countries . espite the above ,in rich countries the picture is totally different thus self-interested opposition to globalization with fears that cheap imports or immigrants from other countries will lower the relative wages of low-skilled workers, more rapid economic change and shifting patterns of comparative advantage will increase economic insecurity and internation al competition. Despite all this countering the claims of globalization skeptics is a century-old economy theory that predicts free trade will reduce a convergence of labour conditions around the world. 20 6. References: ACCA (2004) Strategic business planning and development (paper 3. 5). London: BPP Professional Education Alston, P. (2005). Labour rights as human rights. New York: Oxford University Press Inc. Deresky, H. (2008). International Management : Managing Across Borders and Culture (6th ed. ). Upper Saddle River, Pearson Education. Gallois, C. , Callan, V. (1997). Communication and culture: A guide for practice. Chichester, UK, Wiley. Ferrell, O. , Fraedrich, J. , Ferrell, L. (2008). Business Ethics: Ethical decision making and cases. New York: Houghton Mifflin Company. 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