Organizational Behaviour

Course Code: 2HS401

Institute of Technology

Department of Humanities & Social Sciences

Nirma University
Ahmedabad, Gujarat, India

Course Coordinator: Dr Parulkumari Bhati

[Link]@[Link] ,B block Room no 201 C

Student’s Details:

Name : Jaydeep Solanki

Roll No. : 22BEC059

Branch: EC
Div : A
Batch : A3

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Rubric for Assessment of Class Tutorials (Each Case 10 Marks)
MARKS – RUBRICS
[Link]. Case Class Quality Practical Case Timely Total Faculty
Title Participation Application SWOT Submission Sign
(02 marks) of Answer (Writing) (02 marks) (10marks)
(Writing) (02 marks) analysis
(02 (02
marks) marks)
1

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10

Rubrics for Regular Evaluation Rubrics for Final Examination

Weightage Weightage (0.5)

Class Participation (2 marks): CP will Understanding and implementation of what
be marked on the basis of the level of have learned throughout the case analysis
active engagement and participation of process.
student in the class during case study
analysis in tutorial.

Quality of Answer (Writing) (02 Written case quality and rigor.

marks): The quality of answer given by
student in solving the case and the
valid justification for each answer.

Practical Application (Writing) Correlation of theoretical concepts with real-life

applications.
(02 marks): Tutorials are built around
the subjects that instructors teach in
the classroom. Additionally, what
students learn in OB is applicable to
problem-solving techniques in the real
world. Therefore, the teacher wants the
students to provide examples from real
life that they have either encountered
or learned from other platforms or
during the class.
SWOT Analysis of case study. (02 The ability of demonstrating the case strength,
marks) weakness, opportunity and threat. And by
findings a way to turn a threat into an
opportunity and a weakness into a strength.

Timely Submission (02 marks): Timely submissions will be valuable to both

Students who are quick to solve teachers and students. On time submissions
problems in class or engage in active will help teachers, and students’ confidence
learning foster a positive learning will grow as well.
environment and inspire the class as a
whole to work hard and finish tasks
before the due date.

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The following diagram will serve as the basis for the SWOT
analysis

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Case 1 Uber Technologies Inc.: Managing
Opportunities and Challenges
INTRODUCTION
Uber Technologies Inc. (Uber) is a tech startup that provides ride sharing
services by facilitating a connection between independent contractors
(drivers) and riders with the use of an app. Uber has expanded its
operations to 58 countries around the world and is valued at around $41
billion. Because its services costs less than taking a traditional taxi, in the
few years it has been in business Uber and similar ride sharing services
have upended the taxi industry. The company has experienced resounding
success and is looking toward expansion both internationally and within the
United States. However, Uber’s rapid success is creating challenges in the
form of legal and regulatory, social, and technical obstacles. The taxi
industry, for instance, is arguing that Uber has an unfair advantage because
it does not face the same licensing requirements as they do. Others accuse
Uber of not vetting their drivers, creating potentially unsafe situations. An
accusation of rape in India has brought this issue of safety to the forefront.
Some major cities are banning ride sharing services like Uber because of
these various concerns. Additionally, Uber has faced various lawsuits,
including a lawsuit filed against them by its independent contractors. Its
presence in the market has influenced lawmakers to draft new regulations
to govern this “app-driven” ride sharing system. Legislation can often hinder
a company’s expansion opportunities because of the resources it must
expend to comply with regulatory requirements. Uber has been highly
praised for giving independent contractors an opportunity to earn money as
long as they have a car while also offering convenient ways for consumers to
get around at lower costs. Its “Surge Pricing” technique has been criticized
for charging higher fares during popular times, but it is also becoming a
model for other companies such as Zappos in how they compensate their
call center employees. The biggest issues Uber faces include legal action
because drivers are not licensed, rider and driver safety, protection and
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security of customer and driver information, and a lack of adequate
insurance coverage. To be successful driver-for hire supplies his or her own
personal automobile, gas, insurance, and maintain Uber must to address
these issues in its marketing strategy so it can reduce resistance as it
expands into other cities.

BACKGROUND
In 2009 Travis Kalanick and Garrett Camp developed a smartphone
application to connect drivers for-hire with people needing rides to a
destination in their city. This innovative service
was originally founded as Uber Cab Inc., a privately held company. It was
renamed Uber Technologies, Inc. in 2010. Co-founders Kalanick and Camp
designed the mobile-app for iPhone and Android smartphones, enabling
customers to get an estimated time of arrival from the driver on their
smartphone with the use of an integrated GPS system. Consumers liked the
Uber app because of its convenience and ease-of-use. After the mobile-app is
downloaded to their smartphones, passengers can pay for the rides-for-hire
service through a third party, known as a Transportation Network Company
(TNC), using the UberX platform that scans or takes a picture of their credit
card with the smartphone’s camera. Uber does not maintain automobile
inventory for drivers, such as a fleet of taxicabs or limousines. Instead, each
ce of his or her own car. Drivers can drive their own cars where they want
when they want, providing them with significant freedom to run their own
small businesses. A surge pricing model is used during times of peak
demand. While Uber initially charged about a 20 percent commission, it
later introduced a new tiered structure in some cities that charged different
commission rates depending upon the number of hours worked. For
instance, in San Francisco a driver pays Uber a 30 percent commission on
the first 20 rides in the week, 25 percent on the next 20 rides, and 20
percent on rides after that. Due to the increased demand in the rides-for-
hire industry, Uber predicts $10 billion in revenue, with an estimated total
valuation of $40 billion. Uber recently relocated to new headquarters in San

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Francisco, providing office space for nearly 700 employees. In the near
future, it plans to expand to two 10-story buildings, increasing their total
square feet of office space utilization to more than 700,000 square feet. Uber
Technologies, Inc. provides rides-for-hire services to 57 countries and more
than 250 cities worldwide. Uber maintains a presence in major U.S. cities
including Los Angeles, San Francisco, New York City, Chicago, Washington
DC, and Boston. These cities have the most driver–partners, although many
other cities also have driver–partners. Uber technology-based products are
available under these various brands: Uber, UberX, UberXL, UberPOP,
UberBLACK, UberSUV, UberTAXI, UberLUX, and the logistics-request
brands referred to as UberRUSH, UberFRESH, and UberEATS. Uber has
also upgraded its current navigation service (Google and Apple) with deCarta
Mapping Company. This new mapping system will continue to improve
Uber’s navigation and location technologies.
UBER’S MARKETING STRATEGY
Like all companies, Uber must understand its target market and maintain a
strong marketing mix to be successful. Due to its technology, Uber does not
have as many constraints as taxi cabs, although it has encountered
regulatory obstacles and some public resistance. The Uber business model
takes advantage of the smartphone technology of consumers and links them
with independent drivers as their cabs. This provides a more potentially
efficient and less expensive way to purchase transportation.

PRODUCTS

Uber’s products are all digital. Consumers download Uber’s app onto their
smartphones.
When they want to request a ride, they can use the app to contact a driver in
the near vicinity. The Uber app allows consumers to track the location of the
car and alerts them to when the car arrives. Uber offers a few different
services to customers based upon their preferences. Its most used service is
UberX, the low-budget option. Drivers use their own vehicles to transport
passengers. UberTAXI is an app that connects licensed taxi drivers to

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passengers. UberBLACK is for consumers who desire to have their own
private driver in a high-end sedan. UberSUV connects users with SUVs,
while UberLUX is the most expensive service with luxury vehicles. UberXL is
similar to UberSUV but is 50 percent less. Other low-cost options include
UberPool, which allows passengers to share rides and split the costs, and
UberPOP, a service costing less than UberX because it utilizes non-
professional drivers and smaller cars. Despite the opportunities UberPOP
provides, its use of non-professional drivers have led to regulatory issues in
different countries. Uber is also attempting to expand into other services. Its
UberRUSH app launched in New York is used for package deliveries.
UberFRESH and UberEATS are meal delivery apps that partner with local
restaurants to offer meals to consumers within 10 minutes. These new
services are allowing Uber to branch out and expand its services into
different businesses.

DISTRIBUTION
Uber operates in more than 250 cities in more than 57 countries. One major
reason Uber is so popular is because its app allows users to contact any
drivers in the near vicinity. Drivers use the Uber app to provide them with
directions. It is estimated that Uber has more than 162,000 “active” drivers
in the United States that make at least four trips. The number of drivers has
doubled every six months for the past two years. Los Angeles, San
Francisco, New York,
Chicago, Washington D.C., and Boston have the most drivers in the United
States. Most Uber drivers offer their ride sharing services on a part-time
basis. To be successful, Uber engages in strategic partnerships with other
companies. In the United States it has partnered with American Express.
Card members enrolled in American Express’s Membership Rewards
program can earn points with Uber for rides. Strategic partnerships with
local firms are especially important as Uber expands internationally because
it allows the company to utilize the resources and knowledge of domestic
firms familiar with the country’s culture. Uber has partnered with Times

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Internet in India, Baidu in China, and AmericaMovil in Latin America.
PRICING Uber uses its app to determine pricing. Once the passenger
completes his or her ride with an Uber partner–driver, the person’s credit
card is charged automatically. Fees charged for speeds over 11 miles per
hour are charged by the distance travelled. Uber operates on a cost
leadership basis, claiming that it offers lower rates than taxis. However, the
app OpenStreetCab suggests that Uber might be more cost-efficient only
when the fare is more than $35. 4
Uber uses an algorithm to estimate fees charged when demand is high.
Called surge pricing, Uber has even applied for a patent for this type of
system. This “peak pricing” strategy is not too different than when utilities
or flights charge higher prices when demand is high. Passengers are alerted
during times where the price is higher. However, the extent of the pricing
increase has been questioned as some consumers believe Uber uses this
high demand to “price gouge” passengers. In some situations, Uber’s surge
pricing has led to considerable criticism. During one New Year’s Eve, pricing
surged up to seven times the normal price. During a hostage crisis in
Sydney, Australia, Uber charged as much as four times the normal price as
an influx of people struggled to evacuate. During ice and snow storms surge
pricing may be applied. Uber responded by claiming its price hikes
encouraged more drivers to pick up passengers in the area, but consumers
were outraged. Within an hour Uber agreed to refund users in the area who
paid the higher prices. In extreme shortages, prices are sometimes hiked to
as high as 6-8 percent. On the one hand, it can be argued that surge pricing
increases the number of drivers during times of high demand. It is estimated
that the number of drivers increases by 70 to 80 percent due to surge
pricing. On the other hand, consumers believe this is a form of price gouging
and that Uber capitalizes on emergency situations such as the Sydney
hostage crisis. Uber has to reconcile these different situations in order to
create a pricing strategy considered fair by its users. PROMOTION Uber has
engaged in a number of

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promotional activities to make its brand known. Often it adopts buzz
marketing strategies to draw attention to its services. For instance, to
celebrate National Ice Cream Month one year Uber launched on-demand ice
cream trucks in seven major cities. In one promotion Uber partnered with
General Electric to offer free DeLorean rides to San Francisco users
reminiscent of the movie Back to the Future. Uber also uses promotion to
portray its benefits compared to its rivals. For instance, Uber assumed a
combative advertising approach to its major rival Lyft through a Facebook
ad campaign. Uber advertising often stresses the convenience and low cost
of its ride sharing services. However, like all companies Uber must take care
to ensure that its advertising could not be construed as misleading. A
lawsuit was filed in U.S. District Court in San Francisco stating that Uber
violated the 1946 Lanham Act that prohibits false advertising. Taxi
companies claimed, for instance, that Uber’s drivers do not have to undergo
fingerprinting in California as part of background checks, and yet it uses
advertising such as “the safest ride on the road” and sets “the strictest
safety standards possible,” as well as Uber’s $1 “Safe Rides Fee.” According
to the taxi drivers, these deceptive advertising practices take customers
away from their services and are therefore leading to economic harm.

UBER FACES CHALLENGES

Uber faces a number of challenges including internal struggles, legal and
regulatory challenges, and global issues. In the United States, major cities
are considering regulating Uber. However, it faces 5 even more challenges as
it expands internationally as some countries are opting to ban Uber or
certain services that it offers. Uber will have to adapt its marketing strategy
to address both domestic challenges within the United States as well as to
the various laws enforced in different countries.

INTERNAL CHALLENGES—DRIVER SATISFACTION

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Uber operates in an industry where trust between strangers is vital. This
trust ensures a safe and comfortable ride for both passenger and driver.
Uber has developed a rating system to help assure this trust and reliability
between passengers and drivers, called a rideshare ratings system.
Rideshare rating systems pose a unique challenge for Uber because of the
way they are set up and the level of rider objectivity. Uber's insistent policy
of maintaining a five-star fleet can put drivers at a disadvantage. Uber rivals
have similar policies; for instance, Lyft tells customers that anything less
than 5 stars indicate unhappiness with the ride. Low driver scores can mean
drivers are forced to take remedial classes where they learn about safe
driving techniques and driver etiquette. Those who fail to increase their
scores risk suspension or permanent deactivation. Because consumers have
different views of what constitutes quality, it can be argued that Uber drivers
are placed at the mercy of the consumer’s mood. Drivers have also
expressed unhappiness with Uber’s pay. Uber will often lower fare rates in
order to gain a competitive advantage in different markets, which cuts into
driver earnings. Additionally, drivers are driving their own cars and
spending their personal funds on upkeep and insurance. In 2014 drivers
working with Teamsters Local 986 launched the California Appbased Drivers
Association (CADA), an Uber drivers’ Union. More cities have started their
own unions. Uber has begun to guarantee hourly earnings of $10 to $26 per
hour for its drivers, but to qualify drivers have to comply with Uber’s rules
including accepting 90 percent of ride requests, doing one ride per hour, and
being online 50 out of 60 minutes. Critics say these restrictions effectively
keep drivers from working for other ride sharing services. Uber drivers are
independent contractors and not employees of the company, so they have
the option to work for competitors. However, these new criteria may be a
way to keep drivers working for Uber and no one else. This independent
contractor status has also created controversy for drivers. Drivers claim that
Uber’s requirements make them more employees than independent
contractors. For instance, Uber has certain rules about types of cars and

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soliciting business. Disgruntled drivers have staged protests and filed
lawsuits against the firm. In 2015 Uber faced a setback when a California
labour commissioner ruled that an Uber driver qualified as an employee.
The commissioner argued that because Uber was “involved in every aspect of
the operation,” including setting fares and non-negotiable fees, it had
enough control over the driver for her to qualify as an employee. Uber was
ordered to pay the driver $4,100 to cover mileage and tolls. Uber continues
to maintain that its drivers are independent contractors and is still fighting
against other lawsuits in California. While this does not necessarily mean all
Uber 6 drivers will qualify as employees under the court system, it does set
a precedent for drivers in other states to file lawsuits. If Uber encounters
more issues in this area, it might have to alter its relationship with drivers
and give up some control so its drivers will fall beneath the employee
threshold.

LEGAL CHALLENGES

Regulation is a constant challenge for Uber. As it becomes more popular,

Uber will become subject to more legal and regulatory requirements common
to other big businesses. For instance, the Americans with Disabilities Act is
becoming a challenge for Uber. Since the Uber service is usually operated
within a driver’s personal vehicle, many of the vehicles are not wheelchair
friendly. Taxi lobbies are also pressuring local governments to block Uber in
many cities. They claim that Uber hurts their businesses and has an unfair
advantage as Uber drivers are not subject to the same restrictions as
licensed taxi drivers. Cities have taken action against Uber by blocking
ordinances that provide a path to legalization for mobile ride-booking apps
and issuing cease-and-desist orders. These types of legal challenges will be
discussed in more detail in the global section. Some U.S. airports such as
Salt Lake City have restrictions on Uber. In addition to having an unfair
competitive advantage, another accusation levied against Uber is that it does

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not adhere to proper safety standards. Allegedly, Uber drivers were involved
in three rapes in Delhi, India; Chicago; and Boston. These rapes have
harmed Uber’s reputation and cast its safety into serious question. A lawsuit
was filed against Uber in San Francisco for the wrongful death of a 6-year-
old girl. The lawsuit alleged that a driver was distracted using the UberX app
when he struck and killed the girl. Uber responded by claiming that the
driver was not an agent for Uber and was not en route or transporting a
passenger at the time of the accident. Once again, this brings up the issue of
how much Uber should be responsible for its drivers as independent
contractors. To reestablish its reputation for safety, Uber has added a “safe
ride checklist” to its app which is a pre-pickup notification that encourages
riders to confirm the license plate number and verify their driver’s name and
appearance before entering a vehicle. They have also added a team of safety
and fraud experts to authenticate drivers and a dedicated incident-response
team to address rider issues in India. Insurance is another criticism.
Although Uber’s website claims that it offers $1 million in liability insurance
plans for its drivers, some states are issuing warnings stating that rideshare
insurance may not cover them should there be an accident. This is because
personal cars for commercial purposes. Many states in the United States are
reconsidering insurance requirements in light of this issue, and
insurance firms such as Geico and MetLife have begun offering insurance

packages for ridesharing services.

GLOBAL EXPANSION
Uber has adopted the motto "Available locally, expanding globally" to
describe the opportunities it sees in global expansion. International
expansion is a major part of Uber’s marketing strategy, and it has thus far
established the ride sharing service in 58 countries. Uber is correct in
assuming that consumers from other countries would also appreciate the
low cost, convenience, and freedom that its app services offer. Even though
it is successful in some countries, many countries have regulatory hurdles

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that have caused trouble for Uber to successfully operate in these areas.
Perhaps the biggest is failure to obtain licenses even though they offer many
of the same services as a taxi.

Many, if not all, of the instances involve banning Uber or Uber services due
to the lack of professional licenses for derivers. For instance, in Taiwan
authorities claim that Uber services violate highway laws by not having
transport-licenses to operate legally. The ministry of
Economic Affairs has looked into the possibility of revoking Uber’s business
registration. In Spain, Uber shut 8 down its ride-sharing service after a
judge ruled that Uber drivers are not legally authorized to transport
passengers by unfairly competing against licensed taxi drivers.

In Australia, Victoria and New South Wales ruled Uber’s app to be illegal due
to safety concerns. Police in Cape Town, South Africa impounded 33 cars
operating with the Uber app because the drivers did not have a taxi license.
Police in Indonesia have been prompted by taxi and transportation operators
to investigate whether Uber’s start-up practices are illegal. Bans have also
been instituted in France, India, and Germany. FRANCE In 2011 Paris
became the first city outside of the United States where Uber set up
operations. However, an attempt was made to ban UberPOP because drivers
do not need to be licensed. French police even raided Uber’s Paris office. A
French law was passed mandating that operating a service that connects
passengers to non-licensed drivers is punishable with fines over $300,000
and up to two years in prison. Hundreds of Uber drivers in France were
issued fines for operating illegally. Uber challenged that law, claiming that it
is unconstitutional because it hinders free enterprise. A French court
decided against banning UberPOP and sent the case to a higher court. This
has generated strong criticism from taxicab officials in France as they claim
that they have to license drivers while Uber is currently free from this
restriction. INDIA is Uber’s second largest market after the United States.
India rejected Uber’s application for a taxi license. In New Delhi a woman’s

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rape allegation led to a ban against app-based services without radio taxi
permits in the capital. In response to the alleged rape, Uber began installing
‘panic button’ and tracking features to its app. Uber also began offering its
service in New Delhi without charging booking or service fees. Despite these
changes, Uber continued to run afoul of Indian authorities. India asked
Internet service providers to block Uber’s websites because it continued to
operate in the city despite being banned. However, it did not ban the apps
themselves because doing so would require it to institute the ban across the
entire country. Uber must tread carefully to seize upon opportunities in
India without violating regulatory requirements. This is more difficult as
Uber drivers are independent contractors that set their own schedules and
make their own decisions about whether to work.
GERMANY Uber provides its ride-sharing service in Germany's five biggest
cities, namely Frankfurt, Berlin, Hamburg, Munich and Düsseldorf. In 2014
Frankfurt's court filed an injunction against Uber. A nationwide ban was
instituted against Uber’s UberPOP services after taxicab operators asked for
an emergency injunction, but it was overturned because the judge
determined they waited too long to file the injunction. However, in 2015 a
German court banned Uber services if they used unlicensed drivers. Uber
argued in court that the company itself is only an agent to connect driver
and rider. Rules that apply to taxi services supposedly do not apply, and all
services are deemed to be legal, according to Uber. The court ruled that
Uber's business model clearly infringes the Personal Transportation Law,
because drivers transport riders without a personal transportation license.
The injunction includes 9 a fine of more than $260,000 per ride for non-
compliance. If the injunction is breached, drivers could go to jail for up to
half a year, in addition to an imposition of fines. The German Taxi
Association (Taxi Deutschland) was pleased with the outcome, claiming that
taxi services will remain in the hands of qualified people and keep everyone
safer. Despite the ruling, an Uber spokesperson said that the company will
not give up on Germany because UberBLACK and UberTAXI services will

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remain unaffected by the District Court's verdict. Both, UberBLACK and
UberTAXI are using licensed taxis and limousine drivers. UBER
ADDRESSES RISKS Long term sustainability of Uber depends on managing
future risks in four key areas: Drivers: The number of disgruntled drivers
could get out of control if Uber increases its profit share deductions. With
recent laws mandating healthcare insurance, drivers may require healthcare
coverage. Training programs to improve driving skills could reduce risk from
negligent drivers, and decrease liability insurance costs. Competitors: Uber’s
business model can be found in similar rides-for-hire services, such as Lyft,
Sidecar, and Curb. More rides-for-hires could emerge, in addition to the
everyday competition from taxi-cabs, limos, rental car businesses, air travel,
trains, city and chartered buses. Customer Base: Increasing the demand for
rides-for services is a continuous or future challenge that requires attention
primarily to safety improvements and rates that have a cost/benefit to both
passengers and drivers. Unpredictable demand is a future risk that could be
met with product diversification. Currently, Uber offers technology-oriented
products, and it must continue to be competitive in an industry where there
is intense competition for rates. Technology: Customers are wary of
downloading apps, and some online businesses have been hacked for credit
card information. Uber could upgrade its data-base security system to
reduce financial or personal account information risks. Customer
satisfaction: Some customers experience long waits, inexperienced drivers,
and even sexual harassment has been reported. Better Business Bureau
complaints mainly involve pricing and problems with service. Uber might
use the Internet to check consumer complaints and address them to
improve customer satisfaction. CONCLUSION The emergence of Uber has
influenced many services to follow the Uber business model. There are
similar firms that offer ride sharing services, and there are firms that want
to be an Uber-type business in the way they deliver goods and services. For
example, Cargomatic has developed an app to help fill space on trucks.
Cargomatic, which now operates in California and New York, has been called

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the Uber for truckers because it connect shippers with drivers who are
looking for extra 10 shipments to haul. This is signaling a shift in the
industry in which people are the infrastructure rather than buildings or
fleets of vehicles. Uber faces a number of marketing challenges including
regulatory and legal issues both inside and outside of the United States.
Laws that protect consumers specifically target taxi services, whereas Uber
defines its services as “ride sharing” and Uber as an “agent” of their
“individual contractors.” However, many courts do not view its services in
the same way and are forcing Uber to comply with licensing laws or stop
business in certain areas. Despite Uber’s challenges, the company has
become widely popular among consumers and independent contractors.
Supporters claim that Uber is revolutionizing the transportation service
industry. Investors clearly believe Uber is going to be strong in the market in
the long run. Uber has a bright future and expansion opportunities are
great. It is therefore important for Uber to ensure the safety of their riders
and the drivers. They should also adopt controls to ensure that independent
contractors using their app obeys relevant country laws. Uber has to
address these issues to uphold the trust of their customers and achieve
long-term market success.

QUESTIONS

1. What are the ethical challenges that Uber faces in using app-based

peer-to-peer sharing technology?

2. Since Uber is using a disruptive business model and marketing

strategy, what are the risks that the company will have to overcome to be

successful?

3. Because Uber is so popular and the business model is being expanded

to other industries, should there be regulation to develop compliance with
standards to protect competitors and consumers?

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Case 2 Employee Motivation - Apex Computers (Apex)

Rohit Narang joined Apex Computers (Apex) in November after a successful

stint at Zen Computers (Zen), where he had worked as an assistant
programmer. Rohit felt that Apex offered better career prospects, as it was
growing much faster than Zen, which was a relatively small company.
Although Rohit had enjoyed working there, he realized that to grow further
in his field, he would have to join a bigger company, and preferable one that
handled international projects. He was sure he would excel in his position at
Apex, just as he had done in his old job at Zen. Rohit joined as a Senior
Programmer at Apex, with a handsome pay hike. Apex had international
operations and there was more than a slim chance that he would be sent to
USA or the UK on a project. Knowing that this would give him a lot of
exposure, besides looking good on his resume, Rohit was quite excited about
his new job. Rohit joined Aparna Mehta’s five-member team at Apex. He had
met Aparna during the orientation sessions, and was looking forward to
working under her. His team members seemed warm and friendly, and
comfortable with their work. He introduced himself to the team members
and got to know more about each of them. Wanting to know more about his
boss, he casually asked Dipti, one of the team members, about Aparna.
Dipti said, “Aparna does not interfere with our work. In fact, you could even
say that she tries to ignore us as much as she can.” Rohit was surprised by
the comment but decided that Aparna was probably leaving them alone to
do their work without any guidance, in order to allow them to realize their
full potential. At Zen, Rohit had worked under Suresh Reddy and had looked
up to him as a guide and mentor – always guiding, but never interfering.
Suresh had let Rohit make his own mistakes and learn from them. He had
always encouraged individual ideas, and let the team discover the flaws, if
any, through discussion and experience. He rarely held an individual
member of his team responsible if the team as a whole failed to deliver – for
him the responsibility for any failure was collective. Rohit remembered
telling his colleagues at Zen that the ideal boss would be someone who did
not interfere with his/her subordinate’s work. Rohit wanted to believe that
Aparna too was the non-interfering type. It that was the case, surely her
non-interference would only help him to grow. In his first week at work,
Rohit found the atmosphere at the office a bit dull. However, he was quite
excited. His team had been assigned a new project and was facing a few
glitches with the new software. He had thought about the problem till late in
the night and had come up with several possible solutions. He could not
wait to discuss them with his team and Aparna. He smiled to himself when
he thought of how Aparna would react when he told her that he had come
up with several possible solutions to the problem. He was sure she would be
happy with his having put in so much effort into the project, right from day
one. He was daydreaming about all the praise that he was going to get when

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Aparna walked into the office. Rohit waited for her to go into her cabin, and
after five minutes, called her up, asking to see her. She asked him to come
in after ten minutes. When he went in, she looked at him blankly and asked,
“Yes?” Not sure whether she had recognized him, Rohit introduced himself.
She said, “Ok, but why did you want to meet me?” Rohit started to tell her
about the problems they were having with the software. But before he could
even finish, she told him that she was busy with other things, and that she
would send an email with the solution to all the members of the team by the
end of the day, and that they could then implement it immediately. Rohit
was somewhat taken aback. However, ever the optimist, he thought that she
had perhaps already discussed the matter with the team. Rohit came out of
Aparna’s cabin and went straight to where his team members sat. he
thought it would still be nice to bounce ideas off them and also to see what
solutions others might come up with. He told them of all the solutions he
had in mind.
He waited for the others to come up with their suggestions but not one of
them spoke up. He was surprised, and asked them point-blank why they
were so disinterested. Sanjay, one of the team members, said, “What is the
point in our discussing these things? Aparna is not going to have time to
listen to us on discuss anything. She will just give us the solution she
thinks is best, and we will just do what she tells us to do; why waste
everyone’s time?” Rohit felt his heart sink. Was this the way things worked
over here? However, he refused to lose heart and thought that maybe, he
could change things a little. But as the days went by, Rohit realized that
Aparna was the complete opposite of his old boss. While she was efficient at
what she did and extremely intelligent, she had neither the time nor the
inclination to groom her subordinates. Her solutions to problem were always
correct, but she was not willing to discuss or debate the merits of any other
ideas that her team might have. She did not hold the team down to their
deadlines not did she ever interfere. In fact, she rarely said anything at all!
If work did not get finished on time, she would just blame her team, and
totally disassociate herself from them. Time and again, Rohit found himself
thinking of Sureshm his old boss, and of how he had been such a positive
influence. Aparan, on the other hand, even without actively doing anything,
had managed to significantly lower his motivation levels. Rohit gradually
began to lose interest in his work – it had become too mechanical for his
taste. He didn’t really need to think; his boss had all the answers. He was
learning nothing new, and he felt his career was going nowhere. As he
became more and more discouraged, his performance suffered. From being
someone with immense promise and potential Rohit was now in danger of
becoming just another mediocre techie.

Questions for Discussion

1. What, according to you, were the reasons for Rohit’s disillusionment?
Answer the question using Maslow’s Hierarchy of Needs.
2. What should Rohit do to resolve his situation? What can a team leader
do to ensure high levels of motivation among his/her team members?

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Case 3 Starbucks Corporation: Case Study in Motivation
Because of rapid globalization over recent years, competition around the
world becomes more intense, especially for the service industry with similar
products. The most critical point for business to achieve success is not only
the quality of products they supply, but the atmosphere of cooperating and
the amount yielded from teamwork in retail sales. Therefore, it turns out to
be essential for companies to motivate, reward and train their employees to
be the best quality personnel. Starbucks Corporation, the most famous
chain of retail coffee shops in the world, mainly benefits from roasting and
selling special coffee beans, and other various kinds of coffee or tea drinks.
It owns about 4000 branches in the whole world. Moreover, it has been one
of the most rapid growing corporations in America as well. The reasons why
Starbucks is popular worldwide are not only the quality of coffee, but also
its customer service and cosy environment. Starbucks establishes
comfortable surroundings for people to socialize with a fair price, which
attracts all ages of consumers to come into the stores. Besides, it is also
noted for its employee satisfaction. The turnover rate of employees at
Starbucks was 65% and the rate of managers was 25% a year However, the
rates of other national chain retailers are 150% to 400% and 50%
respectively. Compared with them, the turnover rate of Starbucks is much
lower than other industries on average. As a result, Starbucks is one of the
optimal business models for strategies of employee motivation, customer
satisfaction and cooperation of teamwork.
The history of Starbucks:
Starbucks began by three friends, Jerry Baldwin, Zev Siegl, and Gordon
Bowker, who knew each other at the University of Seattle, in 1971. A sales
representative, Howard Schultz, decided to be a part of Starbucks, as
director of marketing and retail sales, after he realized the atmosphere and
environment of the company. In 1985 Howard Schultz chose to establish a
new coffee shop, named II Giornale, in Seattle. After the next two years, due
to the successful strategy of Schultz, the original three owners of Starbucks
decided to sell their corporation to Schultz. Then Schultz gathered other
investors and changed the name of II Giornale to Starbucks. He sought to
pursue his dream to make everyone taste his coffee, so he focused on the
rate of expanding. At that time, he though that the most efficient way to
grow the amount of branches was to set up new stores in other places. In
I987, Starbucks had the first overseas store in Japan. Until the end of 2002,
Starbucks has developed from 17 stores to 5,688 spreading over 30; it has
grown over 300 times in these ten years! In Fortune magazine, Starbucks
was ranked the 11th best company to work for in 2005 in the USA and then

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rose up in 2006 to 29th. In 2007, it was ranked as the 16th best. In the
same year, Starbucks was also voted as one of the top ten UK workplaces by
the Financial Times.
Motivation: Motivation is a vital factor for business in the production
process. Labourers are not machines, and can not always do the same task
with equal passion. The chief executive officer of Starbucks corporation,
Howard Schultz, considers that the reason for success in Starbucks is not
coffee but employees. He firmly believes that the spirit of Starbucks is
employees and feels honoured about the value of Starbucks employees.
Starbucks offers an interactive structure that makes personnel throw
themselves into their job.
1. Equal treatment: The managers in Starbucks treat each employee
equally and all of the staff are called ‘partners’, even the supervisors of
each branch. In order to narrow the gap between managers and
employees, they also cowork with the basic level staff in the front line.
Due to this, they can maintain a good management system and create
a much closer and more familiar atmosphere than other places. Not
only do employees enjoy their job but customers are also affected by
their enthusiasm.
2. Listen to employees: Starbucks has a well organized communication
channel for employees. It places great importance on labour. For
example, managers plan the working hours per workers and arrange
the schedule of time off, according to the workers’ wants in order to
meet their requirements. There are interviews weekly to see what
employees’ needs are. The partners have the right to figure out what is
the best policy for them, and the directors show a respect for each
suggestion. Starbucks even wants every employee to join in making
and developing plans, then work together in achieving their goals. As
a result, the policies and principles are communicated between all
staff, and there is no limitation in employees’ personal opinions.
3. Good welfare measures: All employees, including informal personnel,
are offered a great deal of welfare policies, for instance, commodities
discounts for employees, medical insurance (including health, vision
and dental) and vacations. Moreover, the partners who work over 20
hours a week are entitled to benefits.

Starbucks also thinks that debt financing is not the best choice, thus it
chooses to allocate stock dividends to all employees with a free script issue.
By this policy, the employees can get benefits from the dividends of the
company. Because of this, they have the same goal; in other words, they are
motivated to increase the sales to earn more profits. To Starbucks, the
employees are the most important asset.
Teamwork:
1. The strategies to keep good relationships: Starbucks establishes a
well-developed system to keep good relationships between managers
and employees. As mentioned, they use the title “partner” regardless
of the level of the worker, which narrows the gap of bureaucracy.

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 Furthermore, they cowork in the first line to eliminate the distance
between different statuses. Thirdly, the numbers of employees are
usually from three to six. Such a small size helps staff get to know
each other easily and deeply. Suggestions and complaints made by
employees are treated of equal importance. In the same way, they
have a right to participate in the process of revising company policies.
In that case, each staff member thinks that they also play an
important role in company operating, and they jointly work out the
direction of Starbucks. All this gives employees respect and a sense of
participation.
2. A goal of public welfare: Starbucks contributes part of its profits to
public service. As a consequence, staff have an idea that what they do
for Starbucks is for society as well. With regard to goals, Starbucks
set a challenging and specific goal, and it allows all partners to decide
the direction.
Questions:
1. How does Starbucks manage to keep good relationships between their
managers and employees?
2. Name the five issues that teams should take note of and address, if
necessary, before these issues become a crisis.
3. The staff at Starbucks are empowered and motivated employees.
Briefly explain, in your
own words, the three principles that Starbucks implement in
motivating their employees.
4. Management needs to commit to certain aspects in order to empower
employees. List four of these aspects.

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Case 4 : Aldi

Introduction
Aldi is a leading retailer with over 8,000 stores worldwide. It continues to
expand in Europe, North America and Australia. The Aldi brand is
associated with value for money. Its stores provide customers with a wide
range of products. There is an emphasis on high quality products and
providing excellent value for customers.

Aldi’s slogan is ‘spend a little, live a lot’. It works hard to keep prices low for
its customers. The company buys large quantities of products from carefully
selected suppliers. Its buyers are experts who choose the best quality
products at the most competitive prices. The savings achieved by sourcing
products in this way can be passed on to customers. Aldi keeps costs down
in other ways. It ensures its operations are as efficient as possible, for
example, store layouts are kept simple and opening hours focus on the
busiest times of the day.

Aldi places great importance on how it trains and develops its employees.
Training is the process of providing employees with the necessary knowledge
and skills to perform their tasks and roles competently. Training not only
helps to increase business efficiency but it can also make staff more
motivated by increasing their job satisfaction. While training is narrowly
focused on helping a company become efficient and effective in the short
term, development is more about building the long-term capabilities of the
workforce.

It is about helping individuals to gain knowledge, learn new skills and

develop a wide range of attributes. Development makes employees more
adaptable and more able to take on a wider range of roles.

This case study will demonstrate how Aldi’s training and development
programmes help ensure its employees have the skills and competencies
that the business requires both now and in the future.

Identifying training needs

Workforce planning is the process of finding out how a business will meet its
labour requirements both now and in the future. Aldi, like other businesses,
needs to predict its future staffing needs accurately. It needs to plan for both
the number of workers it will require and the specific skills that the
business will need in the future. The company can then recruit new staff if

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necessary. It can also ensure that it has training and development
programmes in place to meet these needs.

Aldi identifies future training needs through an ongoing analysis of company

performance in key areas at all levels. For example, the company monitors
the availability of its products to the customer within its stores. If the level of
availability drops below the targeted level then a programme of training on
order accuracy would be undertaken. It also considers future developments
within the business and within the grocery retail sector in order to predict
both the total numbers of staff it will need and, more crucially, the skills
and competencies that will be required.

Aldi’s rapid expansion means that its current workforce cannot meet its
future staffing requirements. The company will need to recruit more than
4,000 new members of staff within the next
12 months to meet the requirements of current exceptional sales growth and
new store openings. To attract the best candidates, it offers industry-leading
salaries at all levels.
To ensure it gets people with the right set of skills, the company produces
clear and detailed job descriptions for each post. These show the tasks and
responsibilities for that position and in turn, the skills and competencies
needed by an individual to succeed in that role.

Through a process of interview and assessment, managers identify if

candidates have the precise skills and competencies that the job requires. If
the selection process shows that they are suitable, then they will be
recruited and Aldi can be confident that they will fulfil the challenges of
their role.

Although Aldi expects new recruits to make an immediate contribution to

the business, it also provides training so that they can develop their careers
within the company. Aldi has entry levels for apprentices, store assistants,
deputy managers, assistant store managers, trainee store managers and
graduate trainee area managers. Aldi organises high-level training for
recruits to all levels. For example, in their first year, graduate recruits
receive training in all areas of the business. This ranges from training in-
store to understand how the retail operation works, to regional office tasks
such as logistics, trading and financial planning.

All new recruits go through a comprehensive structured training plan. New

employees learn about the philosophy of Aldi and its expectations of them.
This is important in making new employees quickly feel part of the Aldi
family. This training will be appropriate to the role, so could be in a store or
at an Aldi regional office.
On-the-job training
On-the-job training is training that takes place while employees are actually
working. It means that skills can be gained while trainees are carrying out

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their jobs. This benefits both employees and the business. Employees learn
in the real work environment and gain experience dealing with the tasks and
challenges that they will meet during a normal working day. The business
benefits by ensuring that the training is specific to the job. It also does not
have to meet the additional costs of providing off-the-job training or losing
working time.

There are several methods of providing on-the-job training. Four frequently

used methods are briefly described here:
• Coaching – an experienced member of staff will help trainees
learn skills and processes through providing instructions or
demonstrations (or both).
• Mentoring – each trainee is allocated to an established member of
staff who acts as a guide and helper. A mentor usually offers
more personal support than a coach, although the terms ‘mentor’
and ‘coach’ are often used interchangeably.
• Job rotation – this is where members of staff rotate roles or tasks
so that they gain experience of a full range of jobs.
• ‘Sitting next to Nellie’ – this describes the process of working
alongside a colleague to observe and learn the skills needed for a
particular process. This can be a faster and more useful way of
learning a job role than studying a written manual. The colleague
is always on hand to answer any questions or deal with any
unexpected problems. For most on-the-job training at Aldi stores,
the store manager acts as the trainer. A typical format is for the
manager to explain a process to the trainee, then to demonstrate
it. The trainee then carries out the process, while the manager
observes. Once the manager is happy that trainees are
competent, they can then carry out the process unaided. This
process is used, for example, to teach a store assistant how to
operate the till and to instruct a trainee manager how to order
stock accurately.

All positions from apprentices through to trainee area managers follow

this type of structured ‘tell, show, do’ training. Trainee area managers
also undergo job rotation. They have the opportunity to experience all
aspects of the business to give them a complete overview of how Aldi
operates. They can then see how each department and business
operation relates to and links with other parts of the company and
other processes. Off-the-job training
As the name suggests, off-the-job training is provided away from the
immediate workplace. This might be at a specialist training centre or
at a college or at a company’s own premises. This type of training can
be particularly useful for developing transferable skills that can be
used in many different parts of the business. It may be used, for
example, to train employees in the use of new equipment and new
methods or to bring them up to date with changes in the law. Typical

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 off-the-job training courses offered to employees by Aldi include: •
recruitment, interviewing and selection
• employment law
• influencing skills
• performance reviews (appraisals)
• Aldi Management System (how to develop and performance
manage people).

For each aspect of training Aldi decides whether on-the-job or off-the-

job training is the better option. Off-the-job training may involve extra
costs, such as payments to training organisations. It also means that
staff taking training courses are not at work, so their jobs have to be
covered by others. This can lead to an increase in payroll costs.
However, balanced against these costs are the gains that Aldi makes
from off-the-job training. These include the benefits of having more
motivated staff, greater staff productivity and employees with better
skills and the ability to provide improved customer service.
Aldi provides training opportunities for young people. The Aldi
apprentice scheme combines on-the-job and off-the-job training.
Apprenticeships are open to 16-18 year olds. Apprentices training as
store assistants also study for an NVQ in Retail Apprenticeship. They
complete store assistant training and gain an NVQ Level 2 in their
first year. They then take a store management training programme
over two years and work for a Level 3 advanced qualification.

The variety seems to suit apprentices. As Sam, an Aldi apprentice

says: ‘The fast pace of the role is really exciting, with lots of chances to
learn new and useful skills. As well as the on-the-job training, there is
also studying towards a recognised qualification that
I can fit around work.’
Emily, another apprentice, recognises that the programme is a good
opportunity: ‘After attending college I was looking for an opportunity
that would allow me to use my customer service skills and the Aldi
apprenticeship has given me just that. There is a lot of competition for
places, so you really need to want to succeed. I really feel part of the
store team. It can be challenging but it is well worth it.’
At the end of their apprenticeships, Sam and Emily will have the
knowledge and skills to take on deputy manager or assistant store
manager positions. From there each can rise to become a Store
Manager in the business. Aldi’s current growth means that there are
many opportunities for promotion, so Sam and Emily could soon join
the many others who have been promoted within the business.
Development
Development is not the same as training. Development focuses as
much on personal growth as skills that are directly related to the job.
A development programme is designed to make individuals more
skilled, more flexible in their approach and better qualified for their

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 chosen careers Through a development programme, employees can
obtain transferable qualifications that benefit the individuals
concerned as well as the business. This can have disadvantages for
the business, as it gives workers greater value in the job market.
However, Aldi is willing to take this risk as it believes in providing
what is best for its staff. Development options for apprentices include
working for various qualifications. Aldi has a fast-track approach for
graduates. Opportunities for graduate recruits at Aldi include
secondments to different international countries to develop all-round
expertise.

The Aldi retail placement scheme takes university students on a one-

year placement. This allows the chosen individuals to show what they
can offer the business and to find out what the business can offer
them. Aldi offers an excellent reward package for students on a
placement, but in return expects trainees to have enthusiasm, drive
and ambition. Successful students get the opportunity to apply for a
place on Aldi’s Area Management training programme.

To support their development, managers help employees to set

personal goals. These are identified during an appraisal process. This
is when a member of staff sits down with their line manager to
evaluate past and current performance, to consider what skills are
needed going forward and to set targets for the future. This could
involve identifying further training or development opportunities.
Conclusion
Aldi seeks to provide its customers with quality products at prices that
provide value for money. It wants efficient operations, with its stores staffed
by people who are keen and competent. Aldi’s success is shown by the fact
that it is expanding rapidly. It is opening new stores and experiencing sales
growth that requires it to take on more staff. This means that it needs to
combine good recruitment policies with robust selection processes. Staff are
recruited from school or college into Aldi’s apprenticeship scheme or directly
into stores for positions from store assistant up to trainee Store Manager.
Those from university with a 2.1 degree or better are able to apply for the
Graduate Area Manager programme. All recruits are assured of appropriate
on-the-job and offthe-job training, as well as career development
opportunities. Promotion is open to all staff, regardless of the route they
choose to join Aldi. Aldi puts great emphasis on developing its people. Over
85% of Aldi directors have been recruited from within the company. This
commitment to training and development makes Aldi a business of choice
for both ambitious teenagers and top graduates. Questions

1. Describe what is meant by training.

2. Explain the difference between on-the-job and off-the-job training. Explain
why you think both training approaches are used by Aldi.

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3. Analyse the similarities and differences between training and development.
Which do you think is most important to Aldi and why?
4. Evaluate the different ways that Aldi attracts and trains new staff. Which
of these do you think is the most important route for Aldi? Give reasons
for your answer.

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Case 5 Entrepreneurship in engineering
Introduction
In an increasingly service-orientated world of work, it is easy to miss the
vital role engineers play in transforming our lives.
Engineering is the crucible in which scientific, mathematic and design skills
come together. The Engineering industry makes up nearly one-fifth of the
UK economy and employs over 4.5 million people. The UK is still the world’s
seventh biggest manufacturer. Engineering is a key part of a range of
industries including music, TV and film, construction, transport, cosmetics,
medicine, food and fashion.

Britain has been a leader in engineering for over 300 years. British engineers
transformed modern transport by designing and building some of the first
railway engines (Thomas Stevenson), ships (Isambard Kingdom Brunel),
aeroplanes (Geoffrey de Havilland) and motor cars (Rolls-Royce). They also
developed new road building techniques, bridges and viaducts More recently
engineers have embraced new technologies and materials to create
alternative energy sources, such as wave power (from the sea) and credit
card sized computers that plug straight into your TV (Raspberry Pi). They
have designed high tech, energy-efficient buildings such as the new Olympic
Park for the London 2012 Games. It was a British engineer and
entrepreneur, Tim-Berners Lee, who first developed the internet. For more
information and insight into the impacts of engineering on our lives visit
[Link]

To be at the leading edge of engineering development, it is important for

engineers to share their ideas. This is where the Institution of Engineering
and Technology (IET) plays a vital role. The IET is a world leading
professional organisation with the vision to share and advance knowledge,
promoting science, engineering and technology across the world. Through
professional development, partnerships and networking the IET offers a
professional home for life. It is a trusted source of essential engineering
intelligence to over 150,000 members across 127 countries. Anyone with an
interest in engineering can join the IET ([Link]) to network with
people with similar interests.
The IET has developed close partnerships with businesses and is licensed to
award a range of engineering qualifications such as CEng, IEng, Eng Tech
and ICT Tech. Businesses have a massive demand for more engineers and
technicians. The IET is heavily involved with running activities for students
and developing resources for science, maths and technology teachers to
enable students to see the relevance of their learning to the engineering
sector.
Engineering skills are particularly effective when combined with enterprise.
This case study examines the relationship between engineering and
enterprise and the role that the IET has played in developing engineer
entrepreneurs.

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Why people become entrepreneurs
An entrepreneur is someone who is prepared to sacrifice their own time,
effort and money to turn a good idea into a marketable product. For
example, Charles Rolls and Frederick Royce were motor engineers. They
showed enterprise by setting up the
Rolls-Royce car manufacturing company. James Dyson is an example of a
modern engineer entrepreneur. He invented the ball wheelbarrow and the
Dyson Dual Cyclone Vacuum cleaner. His Dual Cyclone idea involves
filtering dust in a funnel of air that spins at up to one thousand miles per
hour with 100% efficiency. Dyson’s enterprise has created a global brand,
employing workers in many countries and selling across the world.
Entrepreneurism is not for everyone because it requires hard work, long
hours and the ability to keep going in difficult times. It is not sufficient just
to have a good idea. The entrepreneur needs to conduct market research to
find out if it is a product that consumers will be willing to buy at a price that
yields an acceptable profit.

When Dyson built the Dual Cyclone it took thousands of hours of

experimentation with over 5,000 prototypes (trial models) to iron out
weaknesses. The process of testing and market research cost money.
Entrepreneurs are not guaranteed a pay-off at the end of their hard work
more new enterprises fail than succeed. However, the rewards for successful
enterprise are considerable.
Characteristics of an entrepreneur
There is no such thing as a typical entrepreneur. Some entrepreneurs are
quiet and hardworking, while others are more outgoing and flamboyant. The
key to being a successful entrepreneur lies in the ability to take an idea and
then, through the process of innovation, develop it in such a way that it
becomes a marketable product or service. Research indicates that there are
a number of characteristics that are quite likely to be present in high-
achieving entrepreneurs:
• The ability to learn from others – entrepreneurs tend to be good at
networking. They benefit from being members of organisations like the
IET where they can learn best practice ideas from others.
• Self confidence – a belief in their own abilities and ideas.
• Being innovative/inventive – being able to generate ideas, either for new
products/services or new ways of applying them.
• Self motivation and determination – the drive to keep going and see
things through.
• Showing initiative – it is necessary to have not only the ideas for the
business, but also the detailed plans to achieve objectives (both
thinking and doing).
• Analytical abilities – capable of researching and evaluating each aspect
of the business, from development, through finance, production, to
marketing and sales.
• The ability to make decisions and to take (considered) risks.
• A focus on results that ensures products are sold for a profit.
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The combination of many of these skills and qualities, with the right
support, ensures ideas do not just remain as dreams but become real, viable
businesses.
Starting up a business
There are a number of legal requirements that must be met to form a
business. A new business will adopt one of a number of possible structures.
Many very small start-up businesses are in the form of a sole trader (one
owner) or partnership (two or more owners). These forms of business give
the owner/s more freedom to make decisions themselves and to keep the
profits their hard work has earned. A business can also take the form of a
limited company. A limited company is owned by shareholders who share
the profits the business makes. The company is run by directors. However,
limited companies tend to be more expensive to run and administer than
sole traders or partnerships. They need to be registered with the Registrar of
Companies and have to produce complicated paperwork. Starting up a
business involves a number of steps:
Step 1: Generating good business ideas. These might be, for example, based
on the skills of the owners, or by spotting a gap in the market or extending
an existing idea
Step 2: Market research in order to find out information such as whether
potential customers like the product or service, how they would use it, how
often they would use it and how much they would be willing to pay. For
example, in creating the hybrid car, the developers needed to check that
customers would be prepared to pay for the extra engineering that went into
the new designs.

Step 3: Identifying the target audience and the characteristics of the typical
customer for the new product. This allows the business to create the right
sort of advertising and promotion to reach them. For example, competitive
long distance runners make up a distinct segment of customers for SatNav
directed watches as they show distance travelled.

Step 4: Identifying suitable sources of finance. These may come from

personal funds, bank loans or special grants from trust funds for new
enterprises such as the Prince’s Trust and Shell Livewire.

Finally, all start-up businesses need a well worked business plan. The plan
should set out the objectives of the business, sales targets, marketing
details, the main costs and the resources needed, including equipment,
accommodation and people. The plan can be used to demonstrate to a
potential lender or investor that the business idea is well thought out and
likely to generate a return on investment. A young entrepreneur’s story
Matt Wilson is an engineer, an entrepreneur and regards himself as a
pioneer in cloud-based communications. His tale is one of rags to riches. At
sixteen years old he had no job and £100 in his pocket. Today at 34, he is a
chartered engineer, an IET Fellow and Chief Executive of his own highly

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successful business: Crosby Communications PLC. Matt started a disco
agency at the age of twelve. He funded it by washing cars in his
neighbourhood. It was a real success and at fifteen he was interviewed on
local BBC radio as a ‘budding entrepreneur that would go places’.
He had a keen interest in electronics and the entrepreneur in him enjoyed
hunting out and fixing old TVs and radios which he sold through his local
newspaper. After finishing school Matt became unemployed. His dad
convinced him to use his interest in electronics to take an apprenticeship in
electrical engineering. At the same time Matt set up the small company that
was to become Crosby Communications PLC. The toughest challenge Matt
faced was getting the finance he needed to get the business off the ground.
He continued with his DJ work to save money to fund the new company.
Once he had raised the cash he needed, Matt was able to concentrate on the
voice, data and video business of Crosby Communication. He continued to
grow the business, branching into other areas to spread the risks. Once
established, Matt turned his attention towards self-development, seeking to
get himself and the company recognised for the technical abilities that he
and it possessed. To gain this recognition he joined the IET and in the
summer of 2010 Matt achieved IET Fellow status.
Conclusion
Engineers have been at the heart of the British economy and industry for a
long time. Matt
Wilson is part of a long line of British engineers going back to Brunel and
more recently James Dyson. There are many different types of engineers
ranging from mechanical and electrical engineers to software designers, bio-
technology engineers and those working with nanotechnology (on a minute
scale). These engineers form communities through professional
organisations such as the IET in order to share good ideas. The IET also
gives professional accreditation and status to the work of engineers.
Engineers like Brunel, Dyson and Matt Wilson are not just ideas people -
they are entrepreneurs, having set up their own companies to put their
ideas into the market. This involved taking risks but the rewards are high.
These rewards are not just financial, but perhaps more importantly, are
concerned with the freedom to take pride in one’s own work and shape the
future.
Questions
What are the benefits that people like James Dyson and Matt Wilson have
gained from becoming entrepreneurial engineers?
2. Describe the main characteristics of a successful entrepreneur.
3. Using the case study, analyse the problems entrepreneurs have to
overcome to bring a product to market.
4. To what extent does success as an entrepreneur depend solely upon the
characteristics and qualities of that person?

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Case 6 Harrods: Developing a career path in retail
Introduction
‘Harrods of London’ is a British institution. It is probably the most well-
known and respected retail store in the world. For 162 years, Harrods has
built its unique reputation supported by its key brand values – British;
Luxury; Innovation; Sensation; Service. Harrods employs approximately
5,000 people from 86 different nationalities who deal with up to 100,000
customers a day at peak times. Harrods needs employees who can face the
challenges that its reputation and standards bring. It needs people who are
looking for an exciting and rewarding long-term career with responsibility
and prospects. Its challenge is to find (and retain) employees with the right
mix of skills and abilities, who can be developed to become the managers of
the future.
To achieve this, Harrods has to counter some of the negative perceptions
about working in retail. Working in a shop has traditionally been seen as
low-skilled – with long hours, poor pay and little chance of promotion.
However, because quality is key at Harrods, employees are well-paid,
respected and have clear career paths open to them. Senior managers at
Harrods have come from all walks of life and started out with various levels
of qualifications. All have benefited from development opportunities provided
by the company.
The importance of training and development Training and development is
vital to any business. Its purpose at Harrods is to better the performance of
employees to enable Harrods to meet its business goals. For example, at
Harrods the Sales Academy develops employees’ sales skills, leading to
increased sales when they return to the shop floor. Allowing employees to
acquire new skills, expertise and qualifications supports employee
progression which leads to increased motivation. This supports Harrods’
retention strategies.
Training is about gaining the skills needed for a job. These may be learned
at the place of work (on-the-job) or away from work (off-the-job). On-the-job
training tends to be more costeffective and relevant. However, off-the-job
training is usually carried out by professional trainers. It also occurs away
from the distractions of work. Training tends to have very specific and
measurable goals, such as operating an IT system or till, understanding a
process, or performing certain procedures (for example, cashing up).
Development is more about the individual – making him or her more
efficient at a job or capable of facing different responsibilities and
challenges. Development concentrates on the broader skills that are
applicable to a wider variety of situations, such as thinking creatively,
decision-making and managing people. In short, training is typically linked
to a particular subject matter and is applicable to that subject only, while
development is based on growing broader skills which can be used in many
situations.
Harrods employees come from diverse backgrounds and different
nationalities. They have differing levels of competency, education and
experience. Harrods offers comprehensive Learning and Development

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opportunities. These opportunities are offered at a variety of levels to suit
the needs of all Harrods employees. These range from workshops for Sales
Associates and Warehouse Operatives to developmental programmes for
senior managers.
Amber is a Harrods Retail Manager who started as a Sales Associate at
Harrods through an online application. Harrods has created a web site
[Link] to enable candidates to apply for roles easily
However, Harrods Learning and Development ensured Amber acquired the
skills she needed to carry out her role. Development at Harrods is linked to
the company’s Business Competencies which fall under four headings:
Working at Harrods, Your Impact on Others, Making Things Happen, Focus
on Improvements. Each Business Competency is supported by workshops so
that every skill can be improved. Learning is offered off-the-job in ‘bite-size’
sessions. These sessions give employees the chance to learn more effectively
over a much shorter period, reducing time away from work and bringing a
tightly focused approach to skills development. They have been described as
concise and punchy and a workshop typically lasts 90 minutes. All the
Business Competencies are supported by self-help guides which are run
either on-or off-the-job and include activities such as observation and
review, reading, and ‘one minute guides’ offering top tips and tactics
Identifying key competencies also helps Harrods to design its recruitment
process to ensure that it attracts the best candidates.
They must have the right approach to sales, customer service and decision-
making and support the ‘theatre of retail’ that underpins Harrods’
reputation. This is about flair, showmanship and expertise. Harrods
Learning and Development department must be proactive in responding to
changing customer needs. For example, Harrods has introduced cultural
awareness training for employees better to serve the increasing number of
customers from the Middle East, China, Brazil and Russia. Developing a
career path Harrods stands out from its competitors by providing a wide
variety of development opportunities for all employees. This means the
business can recruit and retain good managers and maintain improvements
in sales and business performance. Individuals’ self-esteem and motivation
is raised. Once a year, managers talk to employees about their progress and
ambitions during appraisals. Employees then identify their personal
development targets.
The sales and service programmes include the ‘Harrods Welcome’. This
induction provides essential training for new employees, such as Harrods’
brand values and The Theatre of Selling. Other courses ensure the
effectiveness of Harrods sales associates:
• ‘Your Theatre’ is a two-day programme to improve sales skills and
provide the highest level of customer service. It introduces the idea of
selling as a ‘theatre’ requiring specific skills and expertise. ‘The
Theatre of Selling’ element covers personal presentation, effective
questioning, product selection and closing the sale. ‘The Science of
Selling’ develops employee awareness of customer types and needs.

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 • The Harrods Fashion Programme is run in partnership with the
London College of Fashion. It enables sales associates to understand
the entire ‘product journey’ from design to sale. The School of
Communication offers voice, body language and presentation skills
workshops.
• For suitable candidates, the Harrods Sales Degree provides the high
level sales skills the company needs. This is the first and only degree
of its kind in Sales. It is recognised globally and can be completed in
two years.
High Potential programmes are concerned with succession planning. They
are aimed at ensuring there is a strong pipeline of potential senior
managers. The Harrods Management Programme develops ambitious and
career-focused employees into a management role. Jessica joined the
company after graduating with a degree in Art History. After just three years
she is now a Harrods Retail Manager. She runs the Designer Collection sales
floor, managing 26 employees and controlling a substantial budget Harrods
offers other programmes:
• The Business Academy which supports managers as they progress
into more senior positions.
• The Oxford Summer School which is a challenging academic learning
opportunity held at Keble College, Oxford. This is designed to highlight
some of the problems, decisions and challenges of running a retail
business. 10 prized places are awarded to high potential managers.
• The Buying Academy which develops Assistant Buyers into Buyers of
the future
Retaining talent
Employee retention is important for businesses. A low employee turnover
can keep recruitment costs down. It also ensures a skilled and experienced
workforce. Employee development is beneficial for both the employee and
the business. However, sometimes employees think that their new-found
skills will enable them to gain a better job elsewhere. Harrods, therefore, has
put in place strategies to keep its talented Retail Managers. It has found that
employees who develop within the company tend to stay. Those brought in
from outside are more likely to leave. Another vital part of retention for
Harrods involves identifying the ‘DNA’ (key factors) of great sales people. It
then matches applicants to these factors. To reduce employee turnover
Harrods has developed a better management structure, improved benefits
and created initiatives which make Harrods a ‘great place to work’. Harrods
has put in place a system of rewards and incentives:
• An excellent package of employee benefits including good pay,
employee discounts and a good working environment.
• Commission and sales bonuses for individuals and teams.
• Improved work schedules which help to give a better work-life
balance.
Harrods also has systems to improve employee communications so that it
can listen to feedback and address any issues. There is an Internal

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Communications department, regular performance assessment meetings
and SMART targets for employees to reach.
These initiatives have seen employee turnover fall from 51.4% in 2006 to
25% in November 2011.
Careers at Harrods
Harrods ensures there is a clear career path for any employee, from any
background. Three key levels in Harrods are the sales employee, department
managers and senior managers. At each level, employees can benefit from
Harrods development programmes in order to build a career. James is a
Sales Associate and one of Harrods first Sales Degree students. When an
injury prevented him from following his previously chosen career in
contemporary dance, he applied to Harrods. He has never looked back.
Harrods training has given him transferable skills. He has been able to work
within more than one department, providing the same high levels of
customer experience. James will complete his BA Honours in 2012. He
believes that the qualification will provide the additional skills he needs
before he steps up to the next level at Harrods. James now expects his
future to be with Harrods.
Amber’s application was successful because of the customer skills she was
able to bring from previous experiences. She is now the Retail Manager of
Childrenswear. Her responsibilities range from overseeing budgets to
managing both stock and people, as well as upholding the Harrods
standards of service. By taking advantage of the Harrods Management
Programme, Amber has risen to a better paid and more responsible job.

Conclusion
People may have negative ideas about retail work based on their own
experiences of part-time or vacation work. Harrods is different as it is
possible to start building a career from any level. Harrods is about the
‘theatre’ of retail. As with a theatre production, however, excellence is built
on hard work and basic skills. The flair must be underpinned with discipline
and attending to day-to-day issues, such as unpacking and displaying stock
and managing employees.
Providing development opportunities is a key factor in how Harrods
maintains its high levels of employee retention. The business looks after its
employees and helps them along their career path. As a result employees are
loyal to the company and continue to offer exceptional levels of commitment
and service Sabrina joined Harrods 10 years ago as a part-time Sales
Associate whilst studying for her degree. After graduating she worked in
Human Resources (HR) and, with Harrods support, gained further
qualifications. This led to a series of promotions and experience in other
roles including Business Manager. Her current role is Head of Personal
Shopping, managing a team of 50 people. Personal shopping is about
creativity and exceptional service. Her role requires strong organisational
skills, commercial understanding and practical and strategic thinking.
Sabrina’s experiences at Harrods shows how diverse a career in the retail
environment can be.

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Questions
1. Describe the difference between training and development.
2. Explain the importance of developing employees.
3. Analyse the methods by which Harrods ensures it recruits and retains its
employees. 4. Evaluate how training and development leads to career
progression at Harrods.

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Case 7 Kellogg’s - Devising a communication plan
Introduction
Research shows that children benefit from eating a healthy breakfast prior
to the start of the school day. However, too often children have no breakfast
at all or eat chocolate or crisps and a fizzy drink on their way to school.

This case study examines how Kellogg’s devised a plan to communicate the
importance of breakfast to selected target audiences through a multi-
platform campaign. This was in support of its ‘Help give a child a breakfast’
campaign launched in October 2011.

Kellogg’s is the world’s leading producer of cereals. Its products are

manufactured in 18 countries and sold in more than 180 countries.
Kellogg’s produces some of the world’s most easily recognizable brands such
as Kellogg’s Corn Flakes, Coco Pops and Rice Krispies. For more than 100
years, Kellogg’s has been a leader in health and nutrition through providing
consumers with a wide variety of food products.
Kellogg’s has been active in supporting breakfast clubs in schools for many
years, working with the education charity ContinYou, the experts on
breakfast clubs. Breakfast clubs provide a healthy meal at the start of the
day in a safe and friendly environment. They also provide a great
opportunity for kids to play, learn and socialise with classmates.

Since 1998, this partnership has set up 500 breakfast clubs in schools
across the UK. Interested schools have been supported with training on how
to start a club and have received a start-up grant from Kellogg’s.

According to research by Kellogg’s, many schools have run into trouble with
the funding of their breakfast club due to recent budget cuts by the UK
government. Kellogg’s responded by putting a team together to create a
communications plan which highlighted the importance of breakfast clubs to
parents, schools, the UK government and the public.

Writing a communication plan

The communication process involves transmitting information from a sender
to a receiver. However, effective communication needs to ensure that the
message has been not only received but also clearly understood. This is
relevant whether the communication is internal or external. The message
needs to be sent in a way that will appeal to and be understood easily by the
target receiver or audience. This involves selecting an appropriate format or
channel to deliver the message. Examples of media that may be used
include a leaflet, a television advert and a personal letter. The feedback part
of the process is vital as this is how the sender knows if the message has
been received correctly.

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For the message to be effective, barriers to communication (known as ‘noise’)
need to be eliminated or reduced. Noise is anything that might distort the
message or prevent the receiver getting or understanding the message. For
example, noise might include using language or jargon that the receiver will
not understand or using a channel such as email or the internet when the
receiver does not have a computer.

A communications plan uses the same principles of tailoring the message

and the delivery channel for a target audience.
A communications plan also sets out the overall objectives to be achieved
and the means by which these will be measured.

Research with teachers showed that the majority believe that the lack of
breakfast opportunities would lead to poorer academic results and
worsening behaviour in schools.
The purpose of the Kellogg’s campaign was to show its commitment to
breakfast clubs in schools in the UK. The important messages that the
campaign was aiming to get across were that:
• breakfast is important for people of all ages especially young people
• breakfast clubs positively impact on children’s behaviour, attendance
and ability to concentrate in morning lessons
• Kellogg’s has supported breakfast clubs since 1998
• by buying Kellogg’s Corn Flakes you are helping to feed children at
breakfast clubs.

Kellogg’s faced potential noise for its messages from different sources. At the
time, the government spending review was high profile in the press which
could have resulted in the Kellogg’s story being overlooked. In addition,
other food companies also support breakfast clubs which could have led to
confusion or dilution of its messages. It also needed to make clear that this
was not a marketing effort to promote Kellogg’s brands but a part of the
company’s long- standing Corporate Responsibility programme. Corporate
Responsibility involves understanding the impact the business has on the
wider community and working to make that impact positive. Kellogg’s has
been supporting breakfast clubs in schools and local communities for 14
years and has invested over £1.5 million to date.

Fitting the message to the audience

The Kellogg’s breakfast club campaign had a number of key objectives which
depended on promoting the right messages to different audiences. Key
aspects of the campaign were not only to get messages across about the
benefits of breakfast and However, the campaign was primarily designed for
the needs of external audiences. These included:
• Schools – to alert them to the Kellogg’s grants available, inviting them
to apply for funding.

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 • The media – to generate excitement and press interest about the
campaign and to increase public awareness of the issues involved.
• Parents – to demonstrate Kellogg’s socially responsible stance and
inform them how breakfast clubs could support their children.
• Members of Parliament (MPs) – asking them to encourage schools in
their constituencies (i.e. the area that they had been voted to represent)
to apply for funding.
• The public – to attract consumers to buy Kellogg’s products in order to
generate additional funding for the breakfast club initiative
Using the right medium
In order to convey any message effectively to a targeted audience, the most
suitable medium and channel needs to be used. For example, if a company
wants to promote products with a mass market appeal to a wide audience, it
might use well-scripted television advertising. To advertise a job opportunity
for a finance director of a company, a business might place an
advertisement in the Financial Times (or other financial and business-
related publications).

Take, for example, the message that ‘Kellogg’s supports breakfast clubs’.
How should Kellogg’s communicate this message to children and parents?
Kellogg’s approach was to use a multi- platform campaign. This is an
approach which communicates over a range of media, rather than using just
one, in order to reach many different audiences. The various campaign
communications involved a mixture of formal and informal communications.
Formal communications are through approved channels and so might
include, for example, a company policy document or a press release.
Kellogg’s formal communications included the letters sent to MPs.
In contrast, informal communication is more spontaneous and less
structured, for example, a chat with colleagues over coffee. Informal
communication can be very effective in a business as it has the advantage of
being quicker and more direct. Kellogg’s face-to-face interactions at
breakfast clubs and the briefing to mummy bloggers demonstrated a more
informal approach to communication. The problem with informal
communication is that it could result in rumours that can cause messages
to be mistrusted or even convey inaccurate information.

Conclusion
Breakfast clubs provide a healthy meal at the start of the day in a safe and
friendly environment. They also provide a great opportunity for kids to play,
learn and socialise with classmates.

Kellogg’s has long supported breakfast clubs and so planned a multi-

platform approach to communicate key messages about the importance of
breakfast and breakfast clubs to various audiences.

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The feedback to any communication is important to evaluate whether
messages are reaching the target audience effectively. Kellogg’s therefore
carried out an evaluation of its campaign. Highlights include:
• The first six weeks of the campaign generated 73 press articles across a
variety of media – including news coverage on ITV’s Daybreak and news
articles in The Observer and The Independent. All carried positive
reaction to the messages and reached a potential audience of nine
million people.
• Over 700 schools applied for funding and around 500 of these received
a grant of up to £450 for their breakfast club.
• Kellogg’s employees have attended 15 of those breakfast clubs with the
local MP to see what difference the funding has made to the children.
• The money raised from the campaign will provide a million breakfasts
by the end of 2012.
These results clearly indicate that Kellogg’s has communicated its messages
effectively. The time taken in planning the communications through a multi-
platform approach worked in relation to each of the targeted audiences. As a
food company that takes its responsibility for nutrition seriously, Kellogg’s
has maintained its commitment to write to and talk to key government
officials to get the message over about the importance of breakfast for
children. This highlights how effective communication is not just a one-off
event but an ongoing cycle requiring evaluation and a response to feedback
received.

Questions
1. What are the key steps in the communication process?
2. Explain two benefits of Kellogg’s using its multi- platform campaign
to communicate its messages.
3. Choose two audiences of Kellogg’s campaign shown in the case study
and identify which media you think would be particularly effective for
getting the messages across to them, explaining why.
4. How far do you think the Kellogg’s campaign will go in changing the
press and public opinion about breakfast clubs? Justify your
opinions.

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Case 8 Using market research to support decision making

Introduction Organisations that operate in the business-to-consumer (B2C)

market are increasingly turning to market research to support their decision
making processes. A retail business, for example, might be considering
opening new stores, expanding internationally, proposing to diversify its
product range or thinking about acquiring another company. Before
proceeding, the business will require specific information to understand the
implications of making such changes. The process of collecting this
information and developing this understanding is known as market
research. This case study focuses on how JD (part of JD Sports Fashion
PLC), the UK’s leading retailer of fashionable sports and leisure wear, uses
market research to support and develop its business. As a B2C retailer, JD’s
performance depends on providing the most desirable brands and products
at the right price and in the right locations to meet with the demands of the
consumer. Founded in 1981 in Mossley, near Manchester, JD today is a
nationally recognised UK high street fascia. For 20 years, the business
expanded through organic growth, meaning that growth was generated by
building sales revenue through increasing its network of stores. JD has
expanded more rapidly in recent years through acquisitions (inorganic
growth), significantly increasing its JD store base through the purchase of
First Sport (2002) and All:sports (2005). Through the purchase of Scotts
(2004), Bank (2007) and, most recently, Blacks (2012), it has diversified the
business into the young branded fashion and outdoor markets. The Group
has also made international acquisitions including Chausport (France),
Champion Sports (Ireland) and Sprinter (Spain) as it has expanded its
business overseas The group has also secured brands such as The Duffer of
St George, Sergio Tacchini (under UK licence) and the fashion brands Chilli
Pepper, Nanny State and Sonneti. The JD Sports Fashion Group now has
over 900 stores across the UK and Europe and a reputation for stocking
exclusive and stylish ranges. What is market research? The exchange
between sellers (supply) and buyers (demand) for particular goods or
services is called a market. A market does not necessarily exist in a single
location, nor need it be a real location – products can be bought and sold
online. Markets change constantly and businesses need to have a clear
understanding of both the supply and demand. The principal role of market
research, therefore, is to provide a business with a comprehensive view of
consumers in order to develop products and services that satisfy their needs
better than the competition. Also, given the increased complexity of the
business environment, it is no longer enough to make key decisions using a
‘gut-feel’ approach alone. Decisions need to be informed and market
research helps to support this process, significantly reducing the level of
financial risk attached with investment decisions.

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 Market research involves the capture and analysis of consumer,
competitor and market trend data. This enables JD to assess more
accurately the level of demand for its products. It also influences
decisions to target capital investment on projects that will offer the best
return on that investment, such as opening a new store or entering a
new market. Market research provides consumer feedback. It is essential
for JD to have this dialogue with the consumer to gain insight into what
they think about its range of products, brands and services. This enables
the business to meet its demands and outperform the competition. It
helps the business develop a clear and informed strategic business plan
which all business colleagues can work towards fulfilling. For example,
this information can create a winning marketing mix to target promotions
to reach different customer groups or influence decisions on range
planning in new stores. Research can also provide information about the
size and performance of markets. It can inform a business about who the
key competitors are, what they are doing, and their market share.
Potential areas of opportunity within an international, national and local
context can also be identified. By using tools such as an Ansoff’s matrix
to assess the levels of risk, JD can then decide which marketing
strategies to focus on These are: o market penetration – winning greater
market share in its existing markets o market development – entering
new countries or new retail sectors o product development – acquiring or
developing new products or brands o diversification – taking the
business in a completely new direction
Primary market research There are principally two types of market research
– primary and secondary. Primary research is sometimes known as field
research. This is because it involves gathering data through new research.
This data can be collected in either a quantitative or qualitative format.
Quantitative research is numerically-based and obtains the hard numbers
from which decisions can be made with confidence. Examples of quantitative
market research at JD include: • Exit surveys – carried out face-to-face with
consumers as they leave the store. This is a simple survey covering a cross-
section of stores to gather the views of consumers in different locations and
regions. At JD the purpose of the survey is primarily to understand the
reasons for visit, frequency of visit/purchase and reasons for and against
purchase. • The ‘shopping bag’ survey – the JD research team monitors
what carrier bags customers entering JD stores are carrying. This helps
identify what other stores JD customers use and are spending money in. It
provides competitor insight and an idea of which retailers attract a similar
customer profile to JD, a variable that can influence the location of new JD
store openings. • On-site fieldwork – JD’s dedicated Site Research team
invests significant time researching new locations. This involves defining the
extent of a location’s catchment area, reviewing the presence and quality of
the competition and assessing the pitch and visibility (i.e. how busy the area
is) of a unit. This helps build a detailed SWOT analysis of each new site.

Qualitative information is a primary form of market research which focuses

on consumer feelings and opinions on a product or service. This type of
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research illuminates the facts and figures collected through quantitative
research. Examples of qualitative research at JD include: • Focus groups –
by speaking at length with small groups of 8-10 people, more insightful
questions can be asked regarding brands and new product developments. At
JD these are typically run in schools and colleges, where it can get direct
feedback from its core consumers. • Depth interviews – this involves a
researcher accompanying the consumer on a shopping trip in store. This
drills deeper into shopper behaviour and their reactions to stores. When
undertaking market research, it is important to reflect the views of all
consumers within the business’ target market. However, this would be a
huge exercise. One way of managing this is to use sampling methods.
Sampling involves taking the responses of a representative group of
consumers that are likely to reflect the opinions of the customer base.
Secondary market research Secondary research is sometimes known as
‘desk research’. This research draws on material that has been collected by
another organisation to provide market information. Secondary research
data provides a fact-based overview of the market. Examples of secondary
research include: • Government census data – the census is conducted every
10 years across the UK and brings together data on factors such as the
number of people, their ages and occupations in a location. • Geo-
demographic data – collected by specialist agencies, this segmentation tool
profiles consumers based on their lifestage (e.g. marital status, number of
children) and their lifestyle (e.g. newspapers read, leisure activities, TV
programmes watched). • Commercial market research reports – prepared by
research experts, these provide estimates of the size (volume of sales) in
each product or market category and market share by operators within
these sectors. At JD this information is invaluable when assessing new
product markets (e.g. outdoors) or international opportunities (e.g. France
and Spain). However, there are drawbacks with any form of market
research. It costs money to collect and analyse large amounts of information
and the results are not always definitive. Numerical data might be biased,
particularly if the sample size is too small. Focus groups may be skewed if
one member of a focus group is too dominant and stops others from voicing
their opinions. Market research at JD
The location of stores is a critical element of the success of a retailer in any
market. Sound competitive locations can provide a source of competitive
advantage. To achieve this it is essential to build a clear understanding of
the consumer and how they interact with a retailer and its sales channels
(i.e. stores, internet or kiosks). So, how does JD build up information about
its consumers and develop a clear location strategy? One method employed
by the company is its check-out survey. This is a simple but highly effective
survey that is carried out with customers at the till. By collecting the
customer’s home postcode, gender and age and matching this data to the
products purchased, JD can build up detailed consumer profiles. JD also
asks purchasers a further question: has the item been purchased for
yourself or for another person? This helps JD to understand the difference
between customers (the purchaser) and its consumers (the end user). For
example, some purchases are made by parents buying clothes or shoes for
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their children. This additional question helps prevent the survey results
from being misinterpreted. The survey is carried out annually over a two-
week period and involves over 350,000 customers. This provides a robust
sample from which to extract invaluable insights into consumer buying
behaviour. In-depth analysis of the survey results helps the company: •
understand how far customers travel to stores – this enables JD to define
real catchment areas for each store and understand the overlap with other
existing stores • build consumer profiles by gender, age, brand and lifestyle
• identify and quantify new store location opportunities • influence product
ranges to meet the buying habits of customers in different locations • assist
with marketing strategies to target the consumer more effectively. This type
of information is collected regularly by large retailers such as supermarkets
through the data collected on their store loyalty cards. However, loyalty card
schemes can be very expensive to run. Till surveys, although only providing
a snapshot of the consumer, offer a cost effective means of gathering data.
JD is relatively unique on the high street in using this type of survey to
capture additional customer information. More recently this survey has been
replicated across JD stores in France and Spain. It is important that
research is properly managed to ensure that the data collected is valid and
reliable. It is also useful, where practical, to use a variety of methods to
validate research findings. At JD the findings from the exit surveys (smaller
sample sizes) are validated by the check-out survey (larger sample size). Put
together, this information helps JD to anticipate the level of demand
customers may have for its products. Sales expectations can be accurately
forecast to ensure profitable stores are opened. JD has also embraced the
internet as a means to support business strategies. The data collected
through the online ordering process is ‘live’ information and it provides a
valuable insight into consumer demand. It can influence store ranges and
support decisions about its stores network by highlighting ‘hotspots’ with
high levels of demand but no physical presence. In an increasingly multi-
channel world, capturing, analysing and acting on this information offers a
business a key competitive advantage. Again, this information can provide
useful insight into potential international opportunities.
Conclusion
In recent years, the UK retail industry has faced challenging conditions.
However, against this tough economic backdrop, JD has managed to
maintain growth through a thorough understanding of market
opportunities. Market research is not a one-off process. Markets change and
a business like JD needs to evaluate customer trends and monitor
competitors on a regular basis in order to remain competitive. JD has
therefore established research mechanisms to provide ongoing feedback.
These provide a mix of qualitative and quantitative market data obtained
directly from consumers and from published research. By understanding its
consumer base, JD has established itself as the market leading retailer of
fashionable sports and leisure wear
1. Describe the difference between primary and secondary market
research.

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 2. Use an example from the case study to explain the purpose of market
research.
3. Analyse why market research should be viewed as an ongoing process.
4. Evaluate how market research, if undertaken properly, adds value to
the decisions made by a large company. Why does it help to reduce
risk?

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Case 9 : Logica Using skills to respond to the external
environment

Introduction Businesses do not operate in isolation. They are constantly

faced with internal and external factors that impact on the dynamics of their
operations. Monitoring the external environment is vital to identify changes
that could affect the business operations. Being able to address and adapt
to these changes ensures the longer term survival of the business. Logica is
an innovative IT services organisation that brings people, business and
technologies together. Logica employs more than 41,000 people and has
clients around the world in a variety of industries including automotive, oil
and gas and manufacturing. Logica’s services aim to add value for clients
through, for example, improving efficiency and productivity or reducing
waste. This case study illustrates how Logica monitors its external
environment using PEST analysis. This is a structured business tool that
looks at the political, economic, social and technological influences affecting
a business. By auditing and monitoring these influences, Logica can be
proactive in ensuring it remains competitive by adapting its own business
and by generating innovative and unique solutions for its clients. For
businesses to stay ahead of their competitors, they have to deliver innovative
products and services. Logica works with customers to aid business
development.
For example, Logica has provided: • the automated ticketing system for
London Underground • the outsourcing of IT and technical applications for
Taylor Wimpey, the UK house building business • business applications for
the Ministry of Justice’s Courts, Tribunals and offices • the design of
electronic security services for the UK’s Department of Defence • the system
for generating Premium Bonds (ERNIE). Logica therefore requires highly
skilled employees who are able to adapt and deal with a range of challenges.
The work of Logica is not just about developing technology. It is about
getting business benefits from the technology available. It is also about
enabling clients to reduce environmental impacts. Logica’s experts
increasingly provide sustainable and long-term solutions for its customers.
For example, it works with governments and automotive companies to
develop and promote sustainable methods of transport.
Political factors Business decisions may be influenced by political factors.
For example, recent public sector budget cuts by the UK government and
increased university fees are affecting the education sector. For students
this has meant making key decisions about how they intend to pursue their
careers. This in turn has meant that academic providers need to review how
they will meet the challenges of generating income. Logica identified that
these changes in the educational landscape could have an impact on the
number of potential employees with the skills and competencies that it
requires. For example, it had to consider the affordability of higher
education for students and how this could influence long-term development
opportunities within the company. The increasing cost of becoming a
student may restrict the social mobility of talented individuals and they may

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then need to consider alternative routes to gaining qualifications and
experience. Logica has therefore reviewed its workforce planning. It has now
engaged in strategies to ensure it has enough workers with the right skills
both now and in the future. To address the changes in the educational
landscape, Logica has introduced apprenticeships and enhanced its
graduate scheme. Logica has embraced the strategy of direct training as it
provides the company with a new pool of talent, with the focus on
individuals who have decided to specialise in IT or Computer Science. This is
why Logica has embarked on creating Level 3 Apprenticeships in 2012. This
widens the range of talented young people that Logica needs and supports
the organisation’s long-term commitment to career development of its
employees. Also, in 2007 Logica launched a three-year sponsored degree
programme with the University of Winchester. The degree programmes BA
(Hons) Business Management and BA (Hons) Business Management with IT
attract applications from students throughout the UK. These degrees allow
students to combine academic study with on-the-job learning. Students
spend one day a week studying on campus and four days a week working at
Logica. Logica pays the course fees as well as offering students an attractive
salary from day one. Upon graduation they can further develop their
professional career within Logica. As part of its sustainable focus, Logica
has also responded quickly to government initiatives on climate change and
reducing emissions. For example, it has been involved in the government’s
new Cycle Hire Scheme in London. It secured the contract for the major IT
components with Serco, the contractor responsible for designing, building
and operating the system. Logica’s role is central and focuses on the design
and build of the simple-to-use payment system. This is supported by a back
office function. Economic factors Economic factors change rapidly and are
sometimes difficult to predict. The global economic recession has affected
how most firms conduct business, perhaps by looking for cost-savings or
reducing waste. As businesses focus on areas where efficiencies can be
made, some might choose to outsource functions to reduce costs, rather
than employing people with specialist skills. This has created increased
demand for outsourced services such as those Logica offers. Logica’s
employees have the specialist IT skills required to offer businesses of all
types efficient and effective ways to manage systems and processes.
Logica was selected by BAE Systems, the global defence and security
company, to provide a Human Resources outsourcing service for its
employees within the UK. Logica works with BAE to increase the
effectiveness of its systems and to enhance the efficiency of its operations.
This improves how BAE engages with its employees to maximise their
potential. This also helps BAE to reduce its costs and focus on growth. The
recession in the UK has also heightened the need for the government to cut
spending. One example of this is the government’s commitment to achieving
savings through the better use of its technologies. As a result Logica has
been awarded a 10-year outsourcing contract with the Serious Organised
Crime Agency. During this contract Logica will manage the Agency’s
information and communication technologies and related services. This
creates efficiencies by bringing together data centres and networks, whilst
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helping the Agency to exploit intelligence and case management more
effectively through an integrated system. Similarly, Logica’s services have
helped Transport Scotland to put together the largest ticketing scheme in
the world. This has involved the installation of new electronic ticket
machines on 7,000 buses and 200 bus operator sites. The system processes
over 12 million journeys every month and delivers cost-savings in terms of
employee time. Social factors Social factors reflect the constant change in
society’s interests, beliefs and actions. There are now different working
patterns available which allow men and women to balance work and life
commitments better. New technology is driving faster and more integrated
forms of communication - 25 years ago the mobile phone was just an
evolving concept; the personal computer and internet were just starting to
make an impact. The makeup of society is also changing. The UK has an
older and more diverse society with people from many different backgrounds
and cultures. A diverse workforce brings together people with different skills
and competencies. Diversity is therefore a focus of Logica’s HR strategy.
Logica competes with many other firms for a limited pool of highly talented
individuals with good IT and numerical skills. To increase this pool of talent,
Logica aims to increase the number of females in its workforce. Within the IT
industry, females only account for an average of 16% of the graduates in
Computer Science/IT. Logica understands that increasing the number of
females in its workforce will bring different strengths. Logica has been
heavily involved in driving equality within the workplace. It has supported
the Women’s Empowerment Principles (WEPs). This is a partnership
initiative of the United Nations. It has joined 267 nations across the world in
order to improve gender equality. This has helped to empower women within
the workplace and the community. To do this they have created a Women’s
Mentoring Programme aimed at supporting women in their career
development. This will ensure that more women rise through the ranks into
positions of senior management.
Another way that Logica is addressing this issue is by supporting IT clubs in
local schools near Logica’s offices across the UK. These clubs promote the
importance of IT and demonstrate the variety of exciting career opportunities
available within the industry, particularly for young women. By offering a
range of different routes into the business and making education more
affordable, Logica is able to provide an exciting and desirable option for
career development. Technological factors The speed of technological
advances means that existing electronic equipment, IT processes and
systems will quickly become dated. To remain competitive a business must
ensure that its processes and systems support innovation and creativity for
itself and its customers. Logica has embraced recent advances in technology
to offer its clients the most advanced and sustainable services possible. An
example of this is the use of ‘cloud’ technology. Cloud technology allows
companies to access and buy into data storage or software ‘on demand’
through the internet. It enables companies to access a shared
infrastructure. This eliminates the need for firms to buy software for every
staff member or support a server to store company data and pay for staff to
maintain it. This in turn reduces waste in terms of both time and money
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and can help a business to become more competitive by unlocking capital.
This capital can then be invested in other areas. Logica has also worked
with the UK police force to develop the Police National Database. This is the
most secure national police system developed to date and only authorised
and vetted users will have access to the system. It will make a big difference
to policing in the UK as all police forces will now have easy access to key
information from forces around the country. The system will make a real
difference in protecting people in society.
Technology can also help businesses to meet the issues of sustainability.
Sustainability is now a high priority and businesses are keen to reduce
waste and be more energy-efficient. Using more efficient IT systems can help
reduce waste, recycle more or cut carbon emissions. For example Logica has
created innovative software for Ford which monitors vehicle emissions. If
drivers behave in an environmentally efficient way, they may benefit from
fuel discounts. Systems like this help businesses save money through
reduced fuel consumption whilst also reducing emissions. Logica’s
technology supports its clients in many ways but to do this it needs to be
able to offer a dynamic and innovative working environment for its highly
skilled employees from diverse backgrounds. Logica’s people are key to the
technologies that it provides, as employees need to have both the IT skills
and an innovative mindset. As an example, graduates within the business
may be involved in any part of the organisation, from business consultancy,
systems design and development and implementation, to testing the support
of new technologies, training or applications management. Conclusion
The external environment in which businesses operate changes very
quickly. Political, economic, social and technological changes all put
pressure on organisations. Logica is a global business that provides
innovative solutions in data and systems management for its clients, helping
their organisations to respond to external factors. The nature of the work
that Logica can offer an employee is both challenging and stimulating. By
monitoring and auditing its own external environment, Logica has also been
able to adapt its business to maximise efficiency and exploit opportunities.
This has been done through adjusting its service offering to utilise
advancements in technology and drive improvements to IT services for
clients. In addition, Logica has been proactive in dealing with the political
and social influences that have affected the educational landscape. It now
offers a variety of entry routes into the business, such as apprenticeships,
sponsored degrees and graduate programmes. The business has created
longterm career development opportunities for young people. Logica is also
actively addressing the shortage of females within IT. 28% of its recent
intake of graduates were female. This is a significant improvement on the
industry average of just 16%. Logica hopes to increase this further through
its IT clubs in schools, which further promote the exciting and varied career
opportunities available within the industry.

Questions
1. Describe the four elements of a PEST analysis.

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 2. Give four examples of other external factors not featured in the
case study.
3. Analyse how social influences have changed the attitudes and
approaches of employers towards employees.
4. Evaluate how the external environment influences the decisions
that businesses make.

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 Case 10 NetworkRail : Managing change through
training and development

Introduction Britain relies on rail. The railway is a vital part of Britain’s

economy and infrastructure. More people travel by rail now than since the
1920s, even though there are 50% fewer rail routes now than in the 1960s.
Every day Network Rail gets three million people to their destinations. It also
moves thousands of tonnes of goods around Britain. Rail is a greener and
safer mode of transport than car so it is no surprise that passenger numbers
have increased by more than 40% in the past ten years. These numbers are
expected to double by 2034. Network Rail is the business responsible for the
tracks, bridges and tunnels that make up the British rail network. These,
along with signalling and level crossings, form the railway’s infrastructure.
Its responsibility extends to 20,000 miles of track and 40,000 bridges and
tunnels. It also runs 18 of Britain’s major rail stations, from Edinburgh
Waverley to London King’s Cross. Network Rail’s job is to keep all of these
services running both efficiently and above all safely. Its mission is ‘to
provide a safe, reliable and efficient railway fit for the 21st century.’ Network
Rail faced huge challenges when it took on these responsibilities ten years
ago.
At the time, the rail network faced a number of problems. Trains were late,
costs were high and there had been a lack of investment in both people and
equipment. These issues meant that there was low public confidence in the
rail network. Since then, Network Rail has focused on a sustained
programme to bring down costs. New ways of working have reduced costs by
28%, largely due to economies of scale. Track and equipment has been
renewed and punctuality has risen to over 90%. Major projects have been
delivered on time and to budget, leading to more public confidence in the
service. Network Rail has changed its focus to ‘predict and prevent’ rather
than the previous ‘find and fix’. This is both more cost-effective and efficient
and helps to avoid delay or disruption to journeys for passengers. Between
2009 and 2014, Network Rail will have invested around £12 billion in the
rail network. Britain now has the fastest growing network in Europe.
This case study examines the role of people in improving the rail network
and the British economy. HR strategy Network Rail invests in people and, in
so doing, invests in its future. It is one of Britain’s biggest employers, with
35,000 employees. It offers a broad range of roles, from maintenance and
signalling engineers to project managers.
There are opportunities in all functional areas. These include specialists in
human resources (HR), information technology (IT), finance and customer
service. To achieve its work programme Network Rail needs to recruit and
retain talented engineers. Its engineers are currently working on some of the
most exciting projects in Europe. These include HS2, the new high-speed
rail link between the north and south of Britain, and the London Crossrail
project. There are also major upgrades to some of the country’s biggest and
busiest stations, like London King’s Cross and Birmingham New Street.
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Network Rail’s vision is to improve the rail network by providing faster and
more reliable journeys. Network Rail’s HR strategy focus is on recruiting a
diverse workforce. This not only gives depth to the culture of the business
but also ensures that it can access the widest pool of talent. To make sure it
has a continuous stream of the right talent to keep its long-term projects on-
track, it offers training to suit all applicants, whether school leavers or
graduates, male or female. The company also offers a range of opportunities
for employees to acquire recognised qualifications, including a unique
postgraduate programme, sponsoring a Master’s degree in project
management, and apprenticeships. In addition, it provides development
opportunities for employees to make sure that their knowledge and skills
meet its world-class standards. Many of Network Rail’s current senior
engineers and managers started their careers through these programmes.
Training
To maintain the quality of staff, Network Rail has put major investment into
improving the knowledge and skills of its workforce. It operates a ‘learning
for life’ policy and staff are expected to continue learning throughout their
careers.
Training is usually defined as being job-related. It provides staff with new or
improved skills so that they can carry out a role or task better. Training staff
brings a number of benefits to a business. It makes staff more efficient and
therefore they produce more output. At the same time it improves safety and
reduces the risk of accidents. Workers become more flexible, allowing the
business to use them in whatever areas they are needed.
This can also help to improve motivation. The provision of good training has
led both to higher quality applicants and to better customer satisfaction.
The UK is currently facing a shortage of young people with skills in
technology and engineering. This is partly due to fewer young people taking
qualifications in science and maths in further and higher education.
Network Rail has recognised that it needs to fill this gap. It has therefore put
in place high quality training to make sure that it has people with the right
skills it requires in the future. There are two main types of training – ‘on-
the-job’, which is training based in the workplace, and ‘off-the-job’ which is
based at a college or other learning centre. Network Rail has developed
many such centres to fulfil its specific needs.
It currently has 26 modern training centres across Britain. It has invested
£23 million in four new state-of-the-art workforce development centres
(WDCs) in Scotland, Kent, Bristol and Walsall. These allow it to train up to
100 frontline engineering and maintenance people at once. Examples of off-
the-job training at the Walsall centre include practical training on a
purposebuilt 60 metre stretch of internal track with signalling and 150
metres of outdoor track. Trainees learn how to practise procedures in
controlled environments that they can then use when they return to the
British Rail network. On-the-job training includes trainees accompanying
mentors, for instance, when fixing signalling issues, and learning hands-on
how to maintain the network effectively.
The Advanced Apprenticeship Scheme is a three-year programme, designed
for young people aged over 17 with at least 4 GCSEs. Both boys and girls are
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encouraged to apply. This is the largest scheme of its type in Britain and
allows young people to earn while they learn. Apprentices spend a year
training with the Royal Navy at Europe’s largest engineering training facility
at HMS Sultan in Hampshire. Here they learn both technical and leadership
skills. A further two years are spent in on-the-job training around Britain,
returning to HMS Sultan for additional courses and learning. At Network
Rail’s own training centres a mixture of classroom learning and job-related
experience is given. Network Rail uses its own expert engineers as trainers.
This means that apprentices gain knowledge from people with direct
experience of rail issues and projects. By the end of the apprenticeship,
young people have the knowledge, qualifications and experience to become
engineers in a number of rail-related areas. These include track, signals,
electrification and overhead lines. In addition to being paid, apprentices are
given accommodation whilst training, subsidised rail travel and generous
annual leave. The Graduate Programme helps Network Rail to build the
leaders of the future. Graduates control the pace and content of their work
so that they can progress at their own rate. They gain key experience on a
range of placements and receive regular reviews of their progress and
performance. There are opportunities in all engineering disciplines (civil,
mechanical and electrical). Trainees work on some of the biggest engineering
projects in Europe and get involved in management and decision-making
roles in all functional areas. Development
Once trained, Network Rail makes sure that its employees have access to
development opportunities. Development is about enhancing relevant skills,
qualities and knowledge to give a person greater competency. People who
take development opportunities can move into more challenging, higher level
roles. However, there is the risk that a person who has better skills can
more easily find another job elsewhere.
Network Rail recognises this risk, but knows that it is balanced by the
excellent opportunities and conditions that it offers. The development
programmes that it runs lead to further nationally recognised qualifications
ranging from NVQs and HNCs through to degrees and diplomas. These are
all backed by a university, college or professional body as appropriate.
Network Rail also offers employees the chance to take part in its own
leadership programme. This is designed to develop employees so that they
can take on managerial roles.
It is held at the Westwood Leadership Development Centre in Coventry, in
partnership with the University of Warwick and is available to employees at
all levels of the business. Every year thousands of Network Rail staff benefit
from this course. They develop the skills and strategic knowledge to help the
company deliver its challenging goals and targets Careers at Network Rail
There are career opportunities at all levels within Network Rail, within all
the main functional areas. This means not just opportunities in engineering,
but also in many other disciplines. All of the jobs benefit from Network Rail’s
commitment to excellence through its training and development
programmes. Bill is a track maintenance operative. This job is vital to
ensure the safety of the public. Bill works to stringent safety guidelines and
is committed to carrying out reliable, faultless work. Network Rail has its
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own in-house maintenance team and provides them with protective clothing
and, of course, training. Track maintenance operatives work carefully to
maintain safely all the signal, track, power and telecoms equipment across
20,000 miles of track in Britain.
Cho is a signaller. She operates the signals and points that help make sure
trains run safely and on time. Cho needs to be able to make decisions
quickly and calmly. Signallers are responsible for maintaining Network Rail’s
high standards with calm and methodical decision-making. Skills required
for this job include being able to take the lead, being assertive and being in
command of many different situations. Good communication skills are
therefore vital. Katie is a project management assistant. She provides
support to the whole team for the dayto-day management of a wide variety of
projects. These must run to time and within cost budgets. To maintain
quality across projects requires a highly organised and flexible person.
Katie’s duties include working with both paper and people. She: • monitors
progress and produces programme reports • develops effective ways to
manage change • deals with internal and external customers and
stakeholders.
Conclusion
From a position where public confidence was low, Network Rail has
improved rail efficiency and customer satisfaction. Whilst keeping safety as
its central focus, it has also invested in the future. Network Rail has
dramatically increased the punctuality of its services and aims to continue
to improve on this success. Part of this is due to Network Rail’s vision and
values, which have been used to underpin its training programme. High
quality training, from apprenticeships to Master’s level, makes sure that the
business has the best engineers and the best leaders. Its investment in the
future is tied up in its investment in people. It recruits and retains the best
people for a wide range of jobs and roles. It is able to go forward with some
of the most challenging, but also the most exciting engineering projects in
Europe.
Questions
1. Describe how Network Rail influences Britain’s economy.
2. Explain the similarities and differences between training and
development.
3. Analyse the benefits of Network Rail’s Advanced Apprenticeship
scheme as a means of developing new recruits.
4. Evaluate the various methods that Network Rail uses to train and
develop its employees. Which do you think are most effective? Explain
your answer.

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