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Organizational Behavior Assignment Autosaved Autosaved
Organizational Behavior Assignment Autosaved Autosaved
Task 1
a) Select two organizations of your choice and compare and contrast the
structure of those two organizations.
1. Hierarchical
2. Flat
3. Tall
4. Functional
5. Product based
6. Geographically based
7. Matrix
8. Centralisation
9. Decentralisation
Virgin group
this comes under the matrix structure.
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“Many assume the Virgin Group to be a multinational, but such is not the
case. Each of the 300 odd companies of the Virgin Group operates separately
and Branson serves as shareholder, chairman, and public relations supremo.
Most of them are operating companies that own assets, employ people, and
offer goods and services. These operating companies are owned and
controlled by about 20 holding companies. The Virgin Group has a very
complex structure. It has been termed both as a brand franchising operation
as well as a keiretsu. (Grant, 2008) However, based on its structure, the
Virgin Group can be safely termed as an organization with a keiretsu
structure. A keiretsu is a group of organizations, each of which owns shares
in the other organizations in the group, and all of which work together to
further the group’s interests. (Jones, Mills, Weatherbee, & Mills, 2006)
Furthermore, such a large organization with a complex structure needs to be
organic in order to be able to adapt to changes in its environment. An
organic structure promotes flexibility, so people initiate change and can
adapt quickly to changing conditions. ( Jones et al., 2006)
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Matrix structure
an organizational structure that overlays two structures in order to influence
the benefit of both.
The companies like virgin use this structure because there are many sub
companies comes under the head company.
Ex:airline services, civilian space shuttles, virgin cola, virgin railway, etc.
The matrix structure usually makes very good use of resources and
expertise, and making it ideal for project – based organizations with variable
workloads.
The CEO of virgin group, Richard Branson uses this structure because this is,
flexible, interdisciplinary, motivates and challenges develop managerial
skills, creativity encouraged and it encourages decentralization.
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According to Deal and Kennedy’s cultural models, there are four main types
of culture.
Work – hard, play – hard culture
Tough – guy macho culture
Process culture
Bet – the – company culture
Risk
Low High
Feedba
ck and Work-
reward Rapi hard, Tough-guy
macho
d play-hard
culture
culture
Slo Bet-the-
w Process company
culture culture
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This culture is the world of sales (among others). Employees themselves take
few risks; however, the feedback on how well they are performing is almost
immediate. Employees in this culture have to maintain high levels of energy
and stay upbeat. Heroes in such cultures are high volume salespeople.
Interestingly, this culture recognizes that one person alone cannot make the
company. They know it is a team effort and everyone is driven to excel.
Contests among employees are common here, as they drive everyone to
reach new heights.
Mind Tools, (n.y.).Deal and Kennedy's Cultural Model Understanding Rites and
Rituals in Corporate Culture.[Online] (n.d.)
Available at: http://www.mindtools.com/pages/article/newSTR_86.htm
[Accessed 23rd January 2013].
Virgin group has lot of companies which serve the consumer in different
decisive factors. We cannot put the whole virgin group to a particular culture
because different companies work out in different way.
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KFC – china
When Kfc arrive to china they had lots of problem with their culture. Chinese
government officials had no idea of what franchising meant, intellectual
property and franchising laws were weak. There were no known foreign
brand names, Kfc did not want to franchisees to buy the brand and then be
able to sell whatever they wanted with no legal recourse. Foreign
multidivisional organizations learned quickly that they couldn’t do business
in china without government involvement. As a result Kfc has 50 registered
companies in china. Another problem is developing a marketing program
that will attract Chinese to Kfc instead of other fast food restaurant. The
management of Chinese kfc knew that kids don’t come alone but bring with
them their friends. To attract kids they added a new menu and provided
entertainment.
E.g. combo meals.
Combo meals not only attacked but also simplify communication and choice.
At Kfc kids have a corner received for them. The corner is staffed with a
professional hostess whose job is to talk with the kids. To ensure that they
are having a good time, the hostess were singing and dancing with them.
The average that Kfc hosts more than 430 birthday parties annually.
To compete in the fast food industry they had to differentiate Kfc from
millions of mom – and – pop restaurants. Therefore they needed to pay
considerable attention to Chinese value. When a restaurant opens, it is
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celebrated with a traditional Lion dance to bring good luck and attend by
local politicians, even though traditional Chinese fast food restaurants have a
lot of choice on their and are cheap, controlling the standard of their cooking
is difficult. Kfc prided themselves on the consistency of their offerings.
Employees are trained to prepare food consistently by following rules and
procedures spelled out in the operating manual. The menu at Kfc provides an
important intangible social freedom. In Chinese restaurants, what you order
has social and implications. The wrong order can cause the person to lose
face with friends. A standard and restricted menu with a limited price range
frees the dinner from the concern. China has a strong desire to catch up with
the rest of the world. Dining at an American restaurant enables Chinese
people to feel connected to the rest of the world. The younger Beijing people
who have higher incomes and wish to be connected more closely to the
outside world, eating at mc Donald’s or Kfc or pizza hut is an integral part of
their new lifestyles.
Virgin group
“At Virgin our people come first because they are the core of our culture and
the force behind our success. Their insatiable curiosity about how to keep our
brand and our customers number one priorities ensure that Virgin always
provides heartfelt service.”
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Virgin, 2012.Our story, your story, her story, history. [Online] ( n.d. )
Available at: http://www.virgin.com/people-and-planet/our-story-your-story-
her-story-history
[Accessed: 23/01/2013]
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Branson says his philosophy of “look for the best and you will get the best”
helped him build an empire recognized young, fun culture. It’s much more
fun looking for the best in people, he says. People don’t need to be told
where they’ve slipped up. He thinks that they can figure that out for
themselves. Branson feels strongly that if an employee is not excelling in one
area of the company, he or she should be given the opportunity to do well in
a different virgin group job. Firing is seldom an option. As Branson puts it in
his autobiography, “I get the best people. I asked questions, and then I say,
let’s have some fun.” It is not possible for employees to enjoy themselves if
their job or career under threat, he believes. “Staff should come first,” he
says.
Branson writes his staff informal letters in his paper notebook to tell
everything that is going on, and he encourages them to write him with any
idea or suggestions. They do. “I really do listen to what people say, even
when we are out in a club at 3 a.m. and someone’s passing on an idea in a
drunken slur. Good ideas come from people everywhere, not in the
boardroom.” Branson also gives them his home address and phone number.
He responds with a letter personally. Branson believes the most important
quality a good leader can have is the ability to care about others. “You can’t
be a good leader unless you generally like people. That is how you bring out
the best in them,” he says.
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Branson also believes in giving people a second chance, as he did with his
best friend, Nick Powell. “Givepeoples a second chance if they screw up.
Even people who have stolen from us have become, when given a second
chance, incredibly loyal and valued employees. I don’t know where I’d be if I
had not been given second chances.”
Branson believes in a “share the wealth” philosophy. When the jury awarded
£ 500,000 and virgin Atlantic £ 110,000 as the result of the libel action
against British airways, it was the highest in the history of uncontested libel
settlement in the United Kingdom. Branson gave it all to his employees. As a
result of his treatment, his staff is incredibly loyal and protective of him.
Drexler, K., 2010. Business Leaders Who changed the World. 1 ST ed. Mumbai:
Jaico publishing house.
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Task 2
a) Describe and evaluate the different management approaches used by the
selected organizations.
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Branson is almost becoming synonymous with Virgin Group. This essay aims
to provide several aspects of Virgin group. These include the critical analysis
of its organizational model, the leadership of Sir Richard Branson and
eventually organization’s communication.
Discussion
Virgin Group is made up of more than 200 companies, which employ nearly
50,000 people all over the world. The business has witnessed continual
growth since it was started. The revenues reached a record mark of 10 billion
sterling pounds in the year 2006. This reveals the magnitude and level of
business in which Virgin Group is operating. The nature of leadership in
existence in Virgin Group draws many features from the personality of Sir
Richard Branson. The business philosophy postulated by Sir Richard Branson
believes that the ultimate results of customer satisfaction and shareholders’
gain is the responsibility of every individual. He believes that if the staffs are
kept happy then the customers are going to be happy meaning that the
shareholders will be happy too. Consequently, the management of Virgin
Group does not fall in to any particular model. It has a unique management
structure whose characteristics do not fit those of the existing models. The
amalgamation of concepts makes it distinctive. A critical review reveals that
the success witnessed by Virgin Group can be attributed to the uniqueness of
its management styles.
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Concisely, it is true to argue that Virgin Group’s success story of many years
is a factor of many things including it optimal management model. The group
has been able to amalgamate the presets of every model to suit its present
needs. What is emerging vividly from this global organization is the fact that
the efficacy of management is determined by its ability to move away from
conventional and rigid requirements. Moving with the trends in the market
has been proven beneficial in optimization of profits.
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From the descriptions given above, it is evident that Virgin Group leadership
is a transformational. In transformational leadership the management looks
beyond the compensation to the employees. The model, which is in use at
Virgin Group, explores the inner factors, which enhance performance of
employees through motivation. On contrary to transactional model, which
look at compensation alone, transformational leadership looks at way of
achieving high-level loyalty and commitment from the followers.
The brand in the name of Virgin was founded in 1968. Since then it has
grown beyond borders and become a worldwide product. Its venture into
many different industries is a true reflection of success. Sir Richard Branson
is the present chairperson of the group. He is well known for his stylish but
competitive leadership skills. Many analysts and scholars attribute the
success of Virgin Group to the creative leadership skills of Branson. In the
process of expansion, he took over several risky ventures in a more to
diversify and improve his business. In most of his business plans, he focused
on minute segment of a specific market and provided quality products or
services. This approach allows for creation of small monopolistic markets
with high profit margins. One major contributor to Branson’s success story is
his ability to lead people in exploring innovative and profitable ventures.
Therefore, the leadership style depicted by Branson is a topic to be
investigated in the following discussions. The kind of leadership philosophy
advocated by Branson has been infiltrate into the entire company.
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The most common feature that has made him achieve great milestones in
business development is the ability to motivate and rally fellow partners in
pursuit of a business opening. If the recent acquisitions are taken as an
illustration, he managed to convince fellow stakeholders in adoption of new
strategy.
In his ventures, he looks for people who are outgoing and willing to start new
businesses. His capacity building nature has made him an admirable leader
of modern business. His focus spans beyond the orthodox perspective of
employees where the management expects the workers to perform to
deserve compensation. The interest of Branson surrounds asking the
question as to whether a partner or employee is optimizing his or her
capacity. He is interested also with people who are willing to take risks and
the best in their tasks. For a long time, he has succeeded in bringing out the
best out of his staff, a core character of transformational leader. There is no
doubt about the fact that Branson’s success since 1970s is directly attribute
to his attitude towards management of a team. In his approach, the barrier
existing between the employees and management is broken.
In fact, many people working with him approaches business issues with a
philosophy of achieving through innovative thinking and not adhering to the
preset rules. Because of the ideologies propagated by Branson, all
participants in the organization share similar values. He formulated his own
style of leadership, priding himself on integrating the employees in to his
style and seeking their thoughts on ways of improving value to customers.
Employees are expected to internalize these values and respond in
accordance to them. Integration of corporate values in leadership strategies
means that there is little interference by external forces. Nevertheless, Sir
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Branson’s approach does not mean that the employees are entirely
dependent on the chairman’s thoughts. They are equally accountable of their
actions like fellow employees under transactional leadership. In order to
motivate his employees, Branson and his management team, especially
human resources management department have systems of enhancing
commitment of employees through bonuses, stock options and profit
sharing, and internal promotion wherever possible.
Apart from Sir Branson’s input in the success of virgin Group, there is a
contribution of organizational culture in the company. Organizational culture
existing in Virgin Group in fairly complex. The Group serves more than 100
companies operating separately in the industries which are not entirely
related. The common feature within ever company in the group is the
glamorous Virgin Brand. The brand remains unchanged in all companies
operating in different businesses. This is a similarity, which puts a heavy
responsibility on each department or division to positively represent the
brand. The image reveals an overall image of quality and innovation inherent
in the group. Through the creation of an exclusive brand, the company has
been able to consolidate and maintain desirable loyalty levels among the
customers.
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whole company will be able to deliver to the market. They can also formulate
ways of improving efficiency in the company. This is an outstanding feature
of Virgin Group. Every individual has a say when it comes to products
development. The management style in application at Virgin Group
encourages members of staff to be competitive. This will eventually build a
desire in the hearts of employees to see the company succeed so that they
can be recognized as contributors to new and innovative business model.
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As the level of hierarchy moves down, the lower levels of management tend
to concentrate more keenly on the management of the company. Although
leadership is always encouraged among the managers, it requires some
levels of strict management to make sure that the task has been
accomplished. Different divisions within the company have different
management function. At Virgin Group, managers have several goals of wide
scope. Because of the fact that different divisions of the company are
specialized in their operations, well-trained and qualified mangers are
required to manage it effectively. In most cases, managers employed by the
company have a firm background in their sector of specialization. They must
also prove that they are capable by showing a successful record of
accomplishment. It is the sole responsibility of managers within Virgin Group
to ensure that day-to-day operations needed to keep the division running are
executed effectively.
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As the hierarchy advances to the junior staffs, goals become more precise
and short lived. The targets set at implementation levels are easily
achievable because they are very specific. These specific goals are
formulated by division managers with close reference to those of the entire
group. This system of information transfer enables the company to remain on
track on the journey to meeting the targets set by executives. Virgin is a
living evidence for the fact that this kind of organization is a major
prerequisite for business success. Breaking down of general goals in to
actionable points is a desirable feature revealed in Virgin’s organization.
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UK Essays, November 2003. Case Study of The Virgin Group and Its
Leadership [Online] Available at:
http://www.ukessays.com/essays/business/case-study-of-the-virgin-group-
and-its-leadership-business-essay.php [Accessed 23rd Jan 2013].
Virgin was founded in 1970 as a mail order record business and developed as
a private company in music publishing and retailing. In 1986 the company
was floated on the stock exchange with a turnover of £250m (A362.5m).
However, Branson became tired of the public listing obligations: he resented
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Branson has said that: ‘The brand is the single most important asset that we
have; our ultimate objective is to establish it as a major global name.’ This
does not mean that Virgin underestimates the importance of understanding
the businesses that it is branding. Referring to his intent to set up a ‘green’
energy company producing ethanol and cellulosic ethanol fuels in
competition with the oil industry, he said, ‘We’re a slightly unusual company
in that we go into industries we know nothing about and immerse ourselves.’
Virgin’s expansion had often been through joint ventures whereby Virgin
provided the brand and its partner provided the majority of capital. For
example, the Virgin Group’s move into clothing and cosmetics required an
initial outlay of only £1,000, whilst its partner, Victory Corporation, invested
£20m. With Virgin Mobile, Virgin built a business by forming partnerships
with existing wireless operators to sell services under the Virgin brand name.
The carriers’ competences lay in network management. Virgin set out to
differentiate itself by offering innovative services. Although it did not operate
its own network Virgin won an award for the best wireless operator in the UK.
Virgin Fuels appears to be somewhat different in that Virgin is putting up the
capital and using the Virgin brand to attract attention to the issues and
possibilities that the technology offers. In 2005 Virgin announced the
establishment of a ‘quadruple play’ media company providing television
broadband, fixed-line and mobile communications through the merger of
Branson’s UK mobile interest with the UK’s two cable companies. This Virgin
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Company would have 9 million direct customers, 1.5 million more than
BSkyB, and so have the financial capacity to compete with BSkyB for
premium content such as sports and movies. Virgin tried to expand this
business further by making an offer for ITV. This was rejected as
undervaluing the company and then undermined further with the purchase of
an 18 per cent share of ITV by BSkyB. This prompted Branson to call on
regulators to force BSkyB to reduce or dispose of its stake citing concerns
that BSkyB would have material influence over the free-to-air broadcaster.
Virgin has been described as a ‘keiretsu’ organisation – a structure of loosely
linked, autonomous units run by self-managed teams that use a common
brand name. Branson argued that, as he expanded, he would rather sacrifice
short-term profits for long-term growth of the various businesses. Some
commentators have argued that Virgin had become an endorsement brand
that could not always offer real expertise to the businesses with which it was
associated. However, Will Whitehorn, Director of Corporate Affairs for Virgin,
stated, ‘At Virgin we know what the brand means and when we put our brand
name on something we are making a promise.’ Branson saw Virgin adding
value in three main ways, aside from the brand. These were their public
relations and marketing skills; its experience with Greenfield start-ups; and
Virgin’s understanding of the opportunities presented by ‘institutionalized’
markets. Virgin saw an ‘institutionalized’ market as one dominated by few
competitors, not giving good value to customers because they had become
either inefficient or preoccupied with each other. Virgin believed it did well
when it identified such complacency and offered more for less. The entry into
fuel and media industries certainly conforms to the model of trying to shake
up ‘institutionalized’ markets.
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five_forces_1.gif
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Threat of substitution
KFC
The Fast Food industry is in a competitive market especially in the UK. KFC
has numerous branches within the UK and the branch located in Southall will
be analyzed. Southall is located in West London and is a vibrant industrial
area. KFC provide a diverse range of products ranging from chicken, to
salads, which increases their scope in the market place.
Competitive Rivalry:
KFC have a wide range of fierce competitors within this industry with the
market share being shared. KFC’s direct rivals in Southall are McDonalds,
Chicken Cottage, Burger King and The Fried and Grill. Innovation and
competitive prices become the focal point for KFC in their strategy. However,
any competition based solely on price can be dangerous in an Oligopoly
market, as responses from competitors are likely to be swift and can trigger a
price war. There is an understanding within the industry to not compete
on price.
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The indirect rivals to KFC are Subway and Pizza hut. These fast food
branches result in the requirement for KFC to innovate and diversify their
product range, in order to negate the effect that their indirect rivals have on
them.
KFC’s innovations such as the bargain bucket have ensured that customers
are provided with diverse products to differentiate them from their main
rivals. Also, the use of information management systems to communicate
secret recipes (old or new) and intellectual property rights to the Southall
branch from headquarters ensures efficiency and profitability.
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offer the best possible deal to retain the fast food restaurant as their
customers. This reduces the bargaining power of customers.
However, the competition in South all is fierce with limited range of suppliers
in the area. KFC is able to cover the delivery costs from other parts of the UK,
which enables it to weaken the bargaining position of its suppliers in the local
area. Plus, the franchise would require quality raw materials to maintain the
standard and reputation of its brand.
KFC have a large market share in South all, which is achieved through
efficient information management of their accounts, products, suppliers and
marketing. This enables them to streamline their operations and to maximize
their profitability.
Also, brand image and marketing enables KFC to increase brand loyalty
amongst customers, which creates difficultly for new companies to enter the
market place. KFC’s logo is protected by intellectual property rights and this
prevents other companies copying or keeping a similar name or slogan.
Already the market for fast food is saturated, which diminishes the
opportunities to enter the market.
All these factors minimize the risk of new entrants entering the market place.
Despite this, there are smaller companies that can enter the market and
offer lower prices.
Threats of Substitutes:
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KFC have diversified their product range, which enables them to control the
transition from one product to another. This is clearly evident from the
transition from fast food to more healthy food i.e. the introduction of salads
and reduction in salt in their food.
Current trends suggest that customers within the UK are becoming more
health conscious and KFC have responded accordingly by expanding their
product range.
Despite this, there remains a risk that customers will change from one
product to another i.e. from chicken to pizza; however the costs for this to
occur remain high. Instead the threat of substituting similar products remains
the biggest danger, due to the high level of competition.
The Value Chain Model was introduced by and is a conceptual tool used to
improve profitability through strategic planning. Porter states that
competition of an organization is not solely dependent on improving sub
functions.
For KFC to successfully develop in the fast food market, they must add value
to their activities. This is achieved through improving products, training staff,
looking after customers and bargaining with suppliers. KFC creates value
through processes, which are divided into interrelated economic activities
and these add value to the organization. Also, KFC conducts other related
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activities like production, marketing and selling, which creates a value chain.
These activities assist in managing the organization, thus creating a chain.
South all is busy industrial area located in West London. This area is
populated by 90% of Asians and majority is Muslim. Recently KFC introduced
new products and services into geographic and demographic areas. The
product introduced by KFC indiscriminately targets all age groups. KFC have
a recognizable brand image and the cost of their products is reasonable.
Primary activities.
Support activities.
Inbound logistics
Outbound logistics
Operations
Service
The Support activities are the internal activities of the company, which
includes:
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Firm Infrastructure
Technology Development
Procurement
Both activities work together and add value that passes on the cost of adding
the product to the customers, hence resulting in a profit.
Primary Activities
Operations: The raw materials used by KFC are combined together to make
the finished product, which increases its value i.e. spicy chicken or
combination meals. This links with differentiation and innovation to provide
KFC with a competitive advantage.
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Marketing and Sales: KFC have a variety of methods for recording customer
preferences. The organization has an internal procedure, where they analyze
their sales figures for each product over a period of time to establish a trend.
Also, there is an external procedure where market research is carried out
each year. This allows KFC to target specific innovative products to specific
consumer segments through Television marketing.
Cost advantage:
KFC aim to decrease costs for their products by implementing the value
chain. This begins with the primary activity of ordering raw materials i.e.
ingredients from headquarters or from local sources at the best price
possible. Since over 40% of customers/consumers are Muslims, it is essential
to obtain supplies from the right source. The secondary activity is procuring
the order in advance from headquarters or for Halal meat supplier ensuring
that it complies with the Halal Food Authority requirements. Also, KFC uses
technological developments to add value i.e. using streamlined
manufacturing processes to increase profit margins.
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Customer
Place Order
Cook
Deliver
Kitchen Staff
Shift in Charge
Counter staff
Assistant Manager
Delivery man
Area Managers are sourced internally, so you will need to earn this position
in the Company through promotion.
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Support Activities
Technological Development:
Many companies use technology all over the world to save cost and for
process management. KFC use information system to their advantage and
they have incorporated two types of systems. One is an electronic cash
register system, which they use for sales operations and to maintain daily
sales report. The other is an “Inventory Control System,” which is very
beneficial and helps the franchise to formulate their strategy. The Inventory
Control System is directly integrated with KFC headquarters. KFC
headquarters received sales reports on a daily basis via the system .The
system is called “ARMS System”. Also, the system has important features
installed, such as storing information in relation to recipes, cost of products,
purchasing management est. KFC have a website, where information in
relation to all products and their nutrition value is provided in line with a
health conscious society.
Procurement:
KFC headquarters have a uniform policy for all their franchises. The branch
located in South all is required to purchase all its raw material, cooking
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ingredients and equipment from KFC approved suppliers. KFC buy products in
bulk to control purchasing costs and supply line from suppliers. KFC regularly
review delivery, quality and cost from their suppliers to increase efficiency
and streamline the process of procurement. KFC is directly linked with their
franchise and receives orders for supply of raw material. The franchise in
South all can place orders through Information system or by phone.
KFC have over recent years adopted and changed their information system
structure through streamlining their processes and implementing
amendments in line with evolving requirements. KFC, as an organization
have utilized their information system for different operational processes.
This assists in reducing the cost of raw material and recruiting less working
staff. All the necessary information, such as supply chain management,
franchises or new promotion stores is part of the system. Also, KFC have a
comprehensive online website, which assists in increasing business
advantage. On the website there is information in relation to updating prices,
latest activities, promotions, advertisements and customer feedback.
Recently, the South all franchise has upgraded their information system
software to include credit card payment facilities. This increases payment
method for customers and enables the organization to collect customers’
information. This innovation that KFC has adopted to remain competitive in
the market.
5. Competitive Advantage
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Differentiation:
Innovation:
KFC new products innovation is “Popcorn Variety Bucket Chicken, ITWIST with
two flavors and All Stars Box Meal,” which creates an identity that can be
differentiated from their main rivals.
Growth:
KFC is the largest worldwide fast food organization and runs a globally
successful business. The international growth of KFC is recognized through
the location of restaurants across 100 countries. KFC have 700 restaurants in
UK alone.
Cost:
KFC restaurants are well renowned for offering products at affordable prices,
which links in with efficiency and streamlining information management.
Particularly, KFC are able to offer special deals, which provide value for
money and enable the organization to compete with its rivals.
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7. Conclusion
Overall it is clear that the five forces model, value chain and strategic thrust
have been used by KFC to attain a competitive advantage over its rivals. The
theories assist in establishing the information management requirements for
the organization to operate efficiently and effectively i.e. the use of the ARMs
system. The five forces model enables KFC to analyze its competitive
position within the fast food market and to formulate a competitive strategy
to increase its influence in the market. It can be seen that for example KFC
has strengthened its bargaining position with suppliers by integrating with
some aspects of its supply chain. The value chain enables KFC to add value
to its activities to justify the prices it charges customers and the perceived
benefits. The primary and secondary activities link with each other to provide
insight into how to increase efficiency within the value chain. The strategic
thrust provides an insight into how KFC is able to differentiate itself and its
processes from its rivals to gain a competitive advantage. Reducing costs
and providing unique products are the focal point for distinguishing KFC in
the fast food market by utilizing its brand reputation. Information
management systems such as effective communication between
headquarters and the franchise in South all enable analysis of marketing
strategy. Also the use of new technology, such as chip and pin systems have
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benefited the branch in the area of South all, as more payment methods are
covered. However, it is evident that there is still room for improvement
through using coupons and/or souvenirs to attract customers.
c) Compare the effectiveness of the different leadership styles that are used
in the selected organizations.
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Task 3
a) Discuss the impact leadership theories have had on the motivation of
the selected organizations in periods of change.
Richard Branson, the CEO of the virgin group is known as a very good
example for a leader that proves the qualities of a good leader.
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they will do a better job. If they do a better job, the customers will be happy,
and thus business will be good and the shareholders will be rewarded.
Branson regularly takes entire flight crews out to dinner and practice when
he arrives on a virgin Atlantic flight. He even says that at the crew’s hotel
rather than in expensive hotels downtown away from the crew. He gives
every virgin employee a virgin card, which provides big discounts on the
airline as well as at virgin megastores and other virgin businesses.
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b) Explain the different motivational theories that are used in the selected
organizations in different circumstances.
KFC
The fast food industry has not, historically, been seen as the most attractive
place to build a career, particularly for those starting at the bottom of the
ladder. But the sector is working hard to overcome this perception, with one
of its major players, Kentucky Fried Chicken (KFC), at the forefront of the
battle.
When it comes to remunerating staff, however, the company does not have a
vast pot of money to play with. Misty Reich, vice-president HR at KFC UK and
Ireland, says: “It is very difficult to compete on cash-based compensation,
particularly for our hourly employees because of the cost basis. We have
nearly 24,000 employees in our UK business. Small moves in base rates of
pay have significant multiplier impacts from a cost standpoint, so we are
looking at being creative about where can [we] differentiate and where
should [we] differentiate that will make a difference.”
For all the talk of fast-service restaurants being a transient career option, the
average length of service for a typical employee, such as a restaurant staff
member, is two years.
Reich believes the company’s culture of recognition sets it apart from its
competitors. “It is not something you can really fabricate,” says Reich. “It
comes off as being very inauthentic if it is not in the DNA of a business and it
is very much in our DNA.”
This has a direct, positive effect on staff retention, she says. “People really
become attached to the culture and they find it quite difficult to replicate
outside of our company, so employees tend to stay.”
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KFC also puts a significant focus on making employees feel valued. This is
manifested in the way employees treat each another, and is also achieved
through the company’s reward package.
For example, all employees are eligible for a bonus through a range of
schemes. The company’s quarterly plans give all staff the chance to earn a
bonus on top of their income, whether they are paid on an hourly rate or
receive an annual salary.
The bonuses are paid in the form of retail vouchers up to the value of £200
per employee each quarter. Reich explains using vouchers rather than cash
is intended to create a sense of fun for staff.
“There is a lot of complexity that comes with cash, but there is also fun that
comes with the retail vouchers,” she says. “This is not necessarily intended
to be an income supplement. It is meant to create energy, engagement with
the goals of the restaurant and, for a team member, it is fun.”
Meanwhile, managers and senior staff can earn cash bonuses depending on
how they fare on a balanced scorecard, which takes into account various
metrics, including sales and customer satisfaction.
Reich says the aim is to use the bonuses to create an ownership mentality
among KFC employees. Career progression is also considered to depend on
this. The company tracks the promotability of its restaurant staff by carrying
out an in-depth review of their performance twice a year, with the aim of
deciding which of them has the ability to move forward in the organisation.
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KFC’s efforts to change the outside perception of its restaurant staff, allied to
the effects of the recession, which has attracted both staff and customers,
means the brand is enjoying a boom time. In February last year, it
announced plans to create 9,000 new jobs across the UK in the following
three to five years.
The company has also been working to improve its benefits offering. Last
year, for example, it worked with Jelf Employee Benefits to select a new
healthcare provider and look into the possibility of introducing total reward
statements.
But there is still a way to go before Reich will be completely happy with the
package. KFC currently offers a voluntary benefits scheme for all employees,
which it introduced with provider Perkz in 2009, but up to now it has not
offered a flexible benefits scheme. This is something Reich is looking into and
she expects to spend the next 12 months investigating all the options around
flex, potentially rolling it out in about two years, if it suits the business.
Although Reich is proud of the company she works for, she believes one area
it could improve is communication. Using the language of KFC’s main
business of frying chicken, she describes its present standard of
communication as “unsizzly”, but pledges that it will improve.
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A further challenge for KFC is that a number of its restaurants are franchises,
which it has to be taken into consideration when putting benefits in place.
Although each individual franchisee decides who administers core benefits
such as pensions, KFC looks to its franchisees for feedback on other benefits.
So Reich and her team have a number of challenges to face over the next
few years, not least the 2012 pensions reforms, which she describes as
“daunting”.
But there are strong signs that the fast food industry’s image as an employer
is changing for the better, and an evolving benefits package at one of the
industry’s leading players looks set to make that change go from strength to
strength.
KFC at a glance
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After a motorway was built that bypassed his town, Colonel Sanders was
forced to go on the road to sell his chicken. This led to the first Kentucky
Fried Chicken outlet being opened in South Salt Lake, Utah, in 1952.
By the 1960s, Kentucky Fried Chicken was sold in more than 600 franchised
outlets in the US and Canada, and the first UK restaurant opened in Preston,
Lancashire in 1965. Today, there are more than 700 outlets in Britain, both
franchised and company-owned.
In 1986, KFC was bought by PepsiCo, having been bought three times before
by different companies. In 1997, it was spun off into an independent
company, Yum! Brands.
Yum! Brands have its global headquarters in Louisville, Kentucky and its UK
base in Woking, Surrey. The company also owns Mexican food chain Taco
Bell, fish-and-chips business Long John Silver’s, A&W Restaurants, Pizza Hut
and Wing Street.
Texan Misty Reich says she fell into HR by accident after taking an internship
with US telecoms company AT&T in 1994.
She stayed with the firm for more than 10 years, rising to become vice-
president of HR for two divisions, before joining Yum! Brands in 2005 as
chief people officer of its A&W Restaurants and Long John Silver’s
businesses.
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Reich was not daunted by her career path involving a move overseas. “I
joined Yum! Brands, our parent company, explicitly because I wanted to
move abroad,” she says. “I wanted opportunity, I wanted to stretch myself
and this opportunity came up and they offered it to me and I was extremely
fortunate to be able to come over here.”
Reich is proud of the fact that people seek her out for advice. “There are
individuals I have hired or individuals I have had the opportunity to develop
and as I look back, that is what I am most proud of,” she says. “Particularly
the people who still stay in touch and especially people that still seek me for
out for coaching and advice and they are progressing and still driving their
careers. I get a real buzz out of that.”
Petra Bool, restaurant general manager at KFC’s Bra knell restaurant, has
worked for the company for 20 years.
Bool has private medical insurance for her family and is a member of the
company’s pension scheme, but she most values KFC’s quarterly bonus plan.
“There are very set guidelines on what we have to achieve to get a certain
amount of money value as a bonus, so, four weeks before you get paid, you
can work it out - how much you are going to get, what you can afford and
what you are going to do with all your money,” she says.
“It is enjoyable because you are getting rewarded for the hard work you
are putting in and for the achievements you make.”
But financial rewards are not the only reason Bool has stayed with KFC for
20 years. “It is probably the people I work with,” she says. “I get great joy
out of taking some people on, training them, and making them into team
leaders, assistant managers, in building the next manager and giving
them some
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learning on their way. I think that is very enjoyable to do, to see people
grow.”
Pension
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Available athttp://www.employeebenefits.co.uk/resource-centre/analysis/kfc-
keeps-staff-recognition-and-bonuses-on-the-menu/10692.article
(Accessed 28th January 2013)
VIRGIN GROUP
Employee motivation can be divided into two groups: intrinsic and extrinsic.
Intrinsic motivation is “the work motivation in the absence of such external
factors as pay, promotion, and co-workers” (Aamodt, 2012, p.326). Extrinsic
motivation, on the other hand, arises from a range of compensational factors
such as financial rewards, career opportunities, co-workers etc.
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Abraham Maslow’s Hierarchy of Needs is the most basic and the most
popular theoretical frameworks related to need-based perspective on
motivation. According to the theory human needs can be classified into
several layers and an individuals’ most immediate needs have to be satisfied
in order to upper layer needs to be used as motivational factors (Maslow,
1943).
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For instance, Virgin Atlantic has contracted with Capital Capture consultancy
firm to reduce data processing time by eighty per cent, and as a result Virgin
Atlantic has achieved the capacity of offering personal training and
development to employees based on their performance levels (Resource
Centre, 2010, online).
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Task 4
Teamwork is very important to KFC staff because for a quick and reliable
service they need to communicate, help and get support from each other in
working at registry, preparing and serving food and in drive through.
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Growing up in the south of England, we didn’t see a lot of snow, but after a
big storm my father would always say, “There’s nothing like a good snowfall
to get the neighbors talking to each other.”
When Mwangi first took the reins as finance director in 1993, Equity was a
small, insolvent building society about to close. Determined to save it,
Mwangi asked the staff to join forces with him to turn things around. He
asked them to use their personal networks to encourage people to join the
society.
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Mwangi told the magazine Kenya Yetu that soon afterward, he was able to
issue a raise to employees. He also persuaded them to use 25 per cent of
their salaries to buy shares in the company.
“Now they were involved. It was as much their company as anybody else’s,”
he said. “They knew that if they succeeded, they had a lot to gain.”
Mwangi’s strategy worked: The bank began to expand. In 2006, it was listed
on the Nairobi stock exchange, and shareholder value rose rapidly. These
days, Ernst & Young says, Equity Bank is the biggest bank in the region by
customer base, with more than 7 million customers in Kenya alone. Mwangi
has been CEO since 2004.
If your company is faced with a financial crisis, make your team part of the
solution. Don’t shut yourself in your office – get out and tell staff what’s
going on. As you consider strategy, remember indiscriminate lay-offs, pay
cuts and benefit reductions will probably make a bad situation worse.
Instead, enlist your employees’ support; reward them for commitment. Your
ability to foster a sense of teamwork can mean the difference between
success and failure. When management fails to listen and respond to staff
concerns, they may turn to unions. While unions are set up to give
employees more clout with management, they frequently become an even
greater roadblock between the two groups as relationships grow distant. If
you are leading a company where unions are established, it’s important to
set up great communications with union leaders, especially in tough times.
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Of course, crises come in all sizes, and your employees have to be ready to
work with each other on defusing small emergencies as well. A few years
ago, when I was waiting at Heathrow for a Virgin flight to Los Angeles to
take off, a small crisis emerged in the form of a long weather delay. There
is nothing an airline can do about such events, but not every passenger
sees it that way. I watched as one of our agents tried to placate an
agitated male customer.
When she was done, I commented, “Tough day, eh?’’ She said, “Not really. I
enjoy days like this because we all really pull together as a team in keeping
the passengers informed and comfortable, so you go home feeling you’ve
put in a good day’s work. Days when everything works like clockwork aren’t
nearly as rewarding – for us, at least!’’ (I was glad she added the last few
words.)
Such connections between your people are built over time. This agent
learned to rely on her team through her everyday work with friendly
colleagues, by her manager’s listening to her suggestions and following up
on them, and by management’s encouraging her supervisors to hold events
that allow the agent and her colleagues to get to know each other outside
the office. These small touches can add up to a team.
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the same mistake at the office: Once the crisis is averted, don’t slip back into
old ways. Keep that wartime spirit of working together alive and well.”
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b) Discuss the factors that had promoted and inhibited the development of
effective teamwork within the selected organizations.
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