A New Initiative of E Commerce - Case Study Example

Table of Contents Executive Summary 3 Introduction 4 Description of the issues/events 5 Introduction on UPS 7 Brief introduction of e-commerce 8 Strategic challenges in blending with local cultures 8 Alan Gershenhorn’s role in UPS’s e-commerce 10 Corporate Responsibility 11 Influencing that competitive advantage by CSR policy 11 Consolidating and protecting benefits incurred due to CSR 12 Conclusion 13 Reference 15 Executive Summary Even with automation and computerization happening in every segments of organization, all the important processes of the organization including the issues related to the external environment mainly rests with the humans’ ‘filled’ management team. The management team and particularly its manager will only decide on all the major aspects of its functioning including launch of new initiatives and products. So, this paper will analyze how UPS, the American parcel service major, was able to launch its new initiative of e-commerce, blending into new markets, due to the initiatives of its management team, particularly its Vice-President, Alan Gershenhorn. Then, as part of its Corporate Social Responsibility, UPS also organized its employees to contribute their part in social services. These two aspects of planning e-commerce and organizing social responsibility activities are some of the important management functions, and in this paper these functions are analyzed using another real issue found in an online newspaper. Management Report on an issue related to external environment Introduction Any organized human activity, which is done in-group, will be most times constituted into structure called organisation. So, Organisation is a structure with a ‘collage’ of humans doing their allocated work under the supervision of a leader or manager, for the benefit of the organisation as well as them. These workers will normally be apportioned into different departments for better arrangement or streamlining of work. These workers or employees will be apportioned into different departments or roles according to their educational qualifications, experience, skill, knowledge etc. Then after the recruitment and apportionment is over, it is the duty of the organisation to provide the employees a best working environment, so that they will work effectively in that interior environment as well as handle the issues that happen in the external environment of the specific organisation. So, the duty of the organisation and its leader is to provide an optimal working environment for its workers. From time immemorial, the success or failure of an organisation or any other human activity depends on the role, the leader or manager plays. The manager is the one who can lead humans under him/her to ‘heaven’ or ‘hell’. And, if the manager follows a set of traits he/ she can ‘sprinkle’ success on many lives, including the workers in his/her organisation. The managerial skills or the leadership traits should be visible and should be put to effective use when the manager, as a ‘builder’ builds a group and as a ‘founder’ launches an organisation. The leader can build a group, by associating individuals who came from the same ‘stable’ like friends, work mates, family members etc and by recruiting individuals with talent, knowledge and attitude. That is, as Schein (2004, p.261) said, “... best way to build an organisation was to hire very smart, articulate, tough, independent people and then give them lots of responsibility and autonomy”. With this ‘living’ group, and the material things like capital, machines, infrastructure etc the founder cum manager embark on an organisation. But, in most cases, a manager will normally take over or preside over or manage an existing organisation. That is, the building or recruiting of the ‘group’ of workers as well as the installation of infrastructure, set up etc, would have already taken place, with the manager only leading and managing the internal as well as the external part of the organisation . This job of taking an existing set up and managing it, brings in set of challenges, which can be taken care by formulating certain strategies or solutions. That is, challenges can be overcome and new initiatives can be tried by following certain management functions and also management concepts. Description of the issues/events ITC, short for Imperial Tobacco Company, is the major Indian company which won the prestigious “Golden Peacock Global Award for Corporate Social Responsibility (CSR) in Emerging Economies for 2005.” (Hindu Business line). The award was presented by Dr Ola Ullsten, former Prime Minister of Sweden, in London for the company’s e-commerce initiative, e-choupal, which is transforming lives and landscapes in rural India (Hindu Business line). ITC to shed its image of being a tobacco company, is focussing on the agriculture sector in a big way. ITC’s International Business Division (IBD) is only responsible for the procurement, processing, and export of various agricultural commodities, which include soybean, coffee and wheat. Among these various agricultural commodities, IBD understood that soybean has a lot of potential, as it could be sold as oil in India and as an animal feed for export. To tap this opportunity, ITC-IBD has created an IT-enabled rural ‘channel’ or e-commerce called eChoupal to procure and process the soybeans in a productive way. So, using eChoupal, ITC-IBD wanted to streamline the input and output sides of the soybean supply chain, throughout its distribution network particularly in the Indian state of Madhya Pradesh. Through this process, they set an objective of giving the farmers, access to quality inputs such as accurate weather report, correct information about sowing seeds, herbicides etc. “Vernacular Web sites relating to each agricultural crop that the company deals in provide ready and real time information to even marginal farmers on the prevailing Indian and international prices and price trends for their crop, expert knowledge on best farming practices, and micro level weather forecast” (Hindu Business line). Then in the output side, ITC’s objective through e-Choupal is to remove the dominance and clogging of the middlemen, by using Information Technology. So this issue of incorporating social responsibility with e-commerce has turned to be quite successful in the case of ITC, and its business model has become the case study of many prestigious institutions. Both these external environment related issues is not unique to ITC only, as many real organisations have integrated both theses issues in their management functioning. For example, U.S.’s major parcel service firm, UPS have also tried to integrate both these external environment issues successfully. UPS, having a worldwide presence, is trying this incorporation or integration by following the management function of planning in the case of e-commerce implementation and organizing in the case of management concept of corporate social responsibility. Introduction on UPS United Parcel Service Inc (UPS for short), America’s major parcel service, is the world's largest package delivery company. It was the brainchild of Jim Casey, an American teenager, who founded the American Messenger Company in Seattle, Washington in 1907, with the sum of $100 borrowed from a friend. After achieving success with this venture, Jim Casey merged with Evert McCabe’s Motorcycle Messengers. Then as a step towards creating a unique brand, in 1919, the company expanded beyond Seattle and changed their name to United Parcel Service, and then onwards it has been an upward progress. “From its humble beginnings, UPS has grown into a global giant” (Deresky, 2006, 342). According to the Insiders as well as the industrial circles, UPS’s corporate culture is always on the fast edge with the effective planning and hard working culture to compliment it. Even though, the job at UPS involves routine tasks, out of the ordinary things tend to happen and the corporate culture of UPS has inbuilt mechanisms to plan out things, encourage decision-making and feedbacks to solve those things. And UPS’ e-commerce initiative came out from that process. UPS's e-commerce initiative has developed into a full pledged one with specific a web site (ups.com) for operations. It features a fully functional online store with UPS’s e-business tools to guide potential customers. The other initiatives of UPS in e-commerce sector are USPnet, eVentures etc. When the UPS planned to introduce its e-commerce site, its main goal is to address some of the major sources of frustration for the online shoppers', by unveiling fully functional e-commerce sites, with a streamlined back office. But, while setting up the back office only, the other external issue of culture orientation came into the picture. That is, as internet is a borderless world with people from any part of the accessing it, UPS’s e-commerce site also had visitors from different parts of the world. UPS handled this external issue of culture assimilation by planning out and blending with the local culture. Brief introduction of e-commerce Electronic Commerce or e-commerce is the term given to denote the virtual marketplace where buying, selling and transactions involving goods, services etc takes place with Internet as the base. Most major corporations have got themselves involved in this sector as the potential of e-commerce is growing every day with the ever-expanding Internet and information technology. The advantages are, it provides an easy and secured way for customers to effect transactions. It shrinks the physical distances and gives a wider choice to make about products and services. It also gives the feature of fast transactions, where every business can be done in seconds. Strategic challenges in blending with local cultures when integrating e-commerce UPS like the other majors joined the bandwagon of e-commerce, patronizing it fully. That is, with the spread of Internet in the decade of 90’s, UPS saw the prospects and created a separate department for it in 1996. “In 1996, UPS created its e-commerce team to develop ways to use the internet to conduct business. The company realized that any way companies buy, sell, and do business would affect UPS” (Deresky, 2006, 346). Also, with the financial condition of UPS in optimum condition, they planned to expand their business further. That is, UPS had gone for an Initial public offering (IPO) in 1999, which raised $5.47 billion, leaving the company cash-rich and paved the way to pursue strategic acquisitions and mergers. Since then, the company has put the focus on expansion around the world, consistent with its new mission to become an enabler of global e-commerce. UPS's broad vision of e-commerce did not have a smooth sailing with some inbuilt challenges, which have been addressed. The challenge, UPS faced when integrating e-commerce with world countries is the difficulty in blending with local cultures. The first of the challenge faced by UPS is the positioning of its service in the new market, where there were existing players offering the same service. So, UPS built a strategy to position its services, which are within the reach of customer, based on the concept of competitive price. Along with this challenge of positioning in an existing market, UPS was also tagged as an outsider. This challenge was an important one to surmount; otherwise, they can’t root themselves in the new culture and the market. Even with the spread of English and its usage in Internet, UPS approached and enticed the local people with messages in all mediums in a local flavour, in the aspect of language and culture. “E-commerce companies have to think ahead of how they manage these different customers' needs and how they easily target the "local" customer with a "local" message.” (Amling cited in Wan, 2002, 452). That is, as the ‘communication’ is in the ‘foreign’ language of English, websites will not be accessed by the local customers. That is, the challenge will be to design Websites on a bilingual basis or vernacular basis, so that the websites became the main vehicles behind e-commerce. The same was the case with catalogues, but both options caused excess expenditure for UPS. The other challenge of UPS at that time was to study the market, to find, which service of UPS is perfectly feasible to the local market. Alan Gershenhorn’s role in UPS’s e-commerce Alan Gershenhorn is one of the leaders inside UPS, who played a key role when the e-commerce was at the planning stage and also during the implementation stage. And he continues to formulate all the plans regarding UPS’s e-commerce wing. “As senior vice president of worldwide sales and marketing for UPS, Alan Gershenhorn directs electronic commerce… Under his direction, UPS is focused on deepening customer relationships through an expanded offering of technology-based services and solutions.” (ups.com). And the steps taken by Alan to boost the performance of UPS’s e-commerce mainly focused on catering to all the aspects of local market and local culture. About the positioning for the UPS’s e-commerce, Alan decided to promote the e-commerce concept in the markets, which are Internet literate and ready for a new entrant. In addition, Alan and UPS promoted their e-commerce service mainly with its motto of "Best Service, Lowest Rates”. This tactic, which worked successfully in USA, also succeeded in its global operations. Alan also planned out well to handle the important challenge of reaching out to the customers of the local market in their own language, taste, culture etc. Alan was able to do that by taking the UPS in the bilingual route. In its e-commerce websites, the local language was given major importance when marketing about its e-commerce’s features. This tactic, which is already followed, by UPS in some of the North American and European market, was developed further, particularly in the Asian Market. “We continue to roll out additional local language sites and have seen an increase in usage. In the latest Asian sites, we have seen preliminary numbers indicating an increase of 22-143%.Visitors chose the local language version 84-96% of the time.” (Amling cited in Wan, 453-454) Corporate Responsibility Any organisation including UPS could not exist like there are in an isolated island without any one around. They have to be in the midst of many things, organizing and changing the lives of many people in the positive direction. But, the sentence ‘changing the lives of people’, when viewed from the management function could be restricted to organization’s role in changing the lives of their employees. But some companies like UPS apart from changing the lives of its employees, also organises its employees “to do something for the community”. This should be the motto for all the corporate because with corpus of capital, exceeding in the high ranges in their ‘treasury’ or in bank accounts, it would be feasible and importantly nice to do nice things for the community. UPS looks at this community or social responsibility in the positive way and is organizing and contributing a lot in that direction through their employees. Influencing that competitive advantage by CSR policy Public normally believe in what they see and hear, and if an organisation want to make the people believe in them, they have to reach the minds of the people, by organising genuine activities. This is where the activity of public relations with the social responsibility as the main vehicle comes into the picture. That is, any organisation including UPS cannot allow people’s visit or outsider’s visit into their work place with the purpose making a good impression about themselves. So, to make a good impression UPS, apart from showing their growth in terms of profits should also organize its employees to participate in socially responsible activities. Through this way, the organisation can make the people believe in them positively. Also, it will create a good, satisfying image in the mind of the common people, without spending large amounts of money on advertisement. This registration of positive, good and satisfying image will surely help UPS to attract many businesses including ones from governments of countries, which always trust socially responsible organisations. Also, the awarding of prestigious honors for UPS’s social responsibility have heightened the image of UPS in the mind of the people particularly their customers, including the newly arriving ones. “FORTUNE Magazine’s, America’s Most Admired and World's Most Admired Company survey named UPS the most socially responsible company in America. UPS has been ranked #1 in its industry, both for social responsibility for the last four years.” (ups.com). So, this honor and image because of social responsibility will surely give UPS the competitive edge and a good platform to elicit further good response. Consolidating and protecting benefits incurred due to CSR Once this process of Corporate Social Responsibility is organised and started by UPS, it should not be stopped at whatever costs. Because, it will derail, the developed positive image from the minds of the people including the customers. So, it should be a continuing process, and extra efforts should be put to consolidate and protect the benefits that have been incurred. For that process, the roles of UPS’s employees are very crucial and they have been doing activities, which will compliment this process. That is, the same activities, which they are undertaking now, should be optimized to further consolidate and protect the benefits. So, the optimization of the options will be key. As the first step of optimization, The UPS Foundation, the charitable arm of the United Parcel Service should function with vigor. Through that foundation, the employees as a first step, toward foolproof Corporate Social Responsibility, should live and work in the communities they serve. This is because they can learn and understand, where help is needed, in first hand. The other steps should be in the form of organizing voluntary work, community grants etc. UPS management on their part could provide the maximum backing to the employee’s efforts, and this expectation of UPS can be easily and willingly fulfilled by them. This is because; they have a vision and mission to do so. “UPS is involved in communities where our employees live and work. We have made a personal commitment to make a difference through hands-on community service.” (ups.com). As part of the UPS Foundation, UPS has contributed more than $20 million in support of hunger minimization among world population. They were able to do it, by distributing the surplus food donated by food producers and food servers such as restaurants, to nonprofit organisations feeding the hungry. Along with the hunger initiative, The UPS Foundation is also putting lot of efforts to promote literacy in USA and throughout the world. UPS Foundation focused mainly on adult literacy but subsequently concentrated on workplace literacy and children’s literacy. "If you are not a socially responsible company, you are not truly a customer-focused company...let alone a shareholder-focused company." (Eskew). These words from the UPS Chairman, Mike Eskew sums up the Corporate Social Responsibility of United Parcel Service. Conclusion Finally, the recommendation the organization and its manager should try to follow, is not to stagnate and saturate. Schein (2004, p.418) pushes forward this idea by stating “that the leader of the future must be a perpetual learner”. Perpetual learner in the sense, the leader or the manager should learn new levels of perception and acquire lot of insights for running an organization. Then, secondly, they should start by playing an important role in the development of a common and feasible work culture. Thirdly, by getting involved in all the process of the organization, the manager should motivate oneself to learn new things and importantly motivate the employees working under him/her, to provide better financial performance and formulate better strategies. Fourthly, the manager should show a consistent behavior, without exhibiting any weakness or anxiousness. Finally, the manager should provide a perfect working environment for its work , so that the employees can work on any new projects like UPS’s e-commerce and also contribute to social responsibilities. So, Unison of humans with an urge to usher an organization into a leading ‘utopia’ will be a successful endeavor, if the manager of the organization show undaunted, unabated and effective conduct. Reference: Deresky, H. (2006) International Management: Managing Across Borders and Cultures. Pearson Prentice Hall, Upper Saddle River, New Jersey. Eskew, Mike. Social Responsibility. Accessed on February 11, 2008 http://pressroom.ups.com/mediakits/socialresponsibility/0,2512,,00.html Hindu Business Line. TC wins `Golden Peacock' award. Accessed on February 12, 2008 http://www.thehindubusinessline.com/2005/05/17/stories/2005051700760700.ht m Schein, E. H, (2004). Organizational Culture and Leadership, 3rd. ed. Jossey-Bass. Ups.com. 2007. UPS foundation. Accessed on February 10, 2008. http://pressroom.ups.com/mediakits/landing/0,2307,50,00.html?mkit_name socialresponsibility Wan W.P. (2002) Interview: United Parcel Services's Director of Electronic Commerce. Thunderbird International Business Review, 44(4) pp445-454. Read More