Value Creation In E-business in Xtra Company - Case Study Example

Value Creation In E-business in Xtra Company 1. PROJECT PLAN The company has already been there for a time, however, Xtra Company is now undergoing a dramatic evolution. Though the product that will be offering is still the same, yet the manner with which they reach their clients, the customers will be totally new – via the Web. However, things are not as bright as they have wanted it to be. Due to global recessions, the company has seen a significant drop in the sales. They have an external eBusiness consultant look at their condition and major recommendations are given to them. And to top it all, the company only has 4 months left or else they face bankruptcy. This is the project plan. The motivation for adopting IS Development is improvement of efficiency, protecting market share, assisting in innovative activities, and increasing, productivity and profitability. (Wang et al, 2004; Pateli & Giagles, 2004). What the company is selling is a novelty items that catches the attention of Hollywood fans and movie goers. What they only have to do is to be able to reach a wider market based and the moment that they can establish a wide market, they have to come up new means of reaching it. And the way to reach it is via eBusiness. The transition to eBusiness requires two important aspects the internal aspect and the external aspect.In the internal aspect what is necessary are the following: effective individual, effective team and an effective organization. In the external aspect what are needed include basic website, interactive website and ecommerce. These two aspects should converge for the plan to work (Arunatelika & Ginegi,nd). Furthermore, of primary importance is the satisfaction of the customers.ECostumers have greatly appreciated the personalize services that they have been receiving in virtual market (Dubosson-Torbay et al, 2001). And Xtra Company cannot deviate from this trend, this current value creation in ebusiness (Ahmet & Zott, 2001). With all important points laid down, the plan is simply, they are going to use the internet to sell their products. As such,they have to create the IT structure, the creation of an interactive website and an ecommerce should be undertaken. But it is not only that, they should have a good collaboration links with the suppliers, links with the distributor and definitely a good interactive website that can be accessed 24/7. Aside from that they should have a strong IT infrastructure, Business systems, IT policies, IT security measures and IT maintenance. Likewise, they also have to establish a strong and effective organization who are made up of people who are highly motivated, of a team that shares the vision, goals and values of the company. Furthermore, there is a need for the proper market system to be inplace. They also have to hire IT experts so that they can start This means that they have done feasibility studies to know what really is that their customers want. But, there are problems. The problems can be divided into two groups. The technical problem and the non-technical problem. In the technical problem, the company really has to start from scratch. As already mentioned they have to establish a strong IT infrastructure, Business systems, IT policies, IT security measures and IT maintenance. They have to have a good interactive website and an ecommerce. Aside from the technical materials, they have to hire the IT people to operate the machines. Their current employees lack the necessary IT skills to start with it right away. Another technical problem that is lurking its head is the structural reorganization. They have to consult an external expert that will help them come up with an effective organization. As stated, for the plan to work an effective organization should be in place. However, there are two major constraints; time –four months away from bankruptcy- and financial constraints –slump economy and decline sales. As such, the whole situation of the company is critical and aggravated. On the other hand, there are non-technical problems which are as important as the technical concerns. The first concern that should be addressed right away is the question of job security of the employees. As the nature of the company will expand and it enters into ebusiness, there is also the needed for structural reorganization, and with all these changes the employees are left wondering what will be their lot. The fear of the workers is further compounded by the fact that the staffs lack the IT skills that the new nature of the company requires. Thus, they are apprehensive that changes will be dramatically affecting their jobs which they have held for a number of years already. Another, concern is the financial resources. Although there was increase in sales during the 80’s and 90’s the global recession has affected them so much that the company if it is not going to undertake a radical change, will go bankrupt in a matter of four months. So the situation is really critical. The following are perceived solutions to the problems 1. Strong leadership that will stir the company out from the impending bankruptcy. 2. The manager and the employees should work as a team that shares a common goals, visions, and values. 3. Train the employees. Enter into a 50 -50 scheme of payment for their training. The employees need to see that they are supported by company. And the employees have to sacrifice something for the good of the organization. 4. Start with IS development ASAP. 5. Start the feasibility study for the business right away. 6. Communicative action should be undertaken in the company. 7. mastering implementation strategies :teaching, training, motivating, coaching (Loebbeck &Wareham, 2003) 8. synergetically integrating technical network management and the management of non-technical networks 2. RESOURCE ALLOCATION AND TIME ALLOCATION Resource allocation is an important aspect of strategic management and project planning in an organization. It involves certain parameters that enable the leader of the organization in making the right decision. Normally, when we think of resource allocation what comes to mind are the economic parameters that limits or guides the decision making in the distribution of the limited resources of the company. Having this in mind, the economic parameters which have a strong bearing in the decision making includes the following: First is the limitedness of currency or money. Second, are the price resources and the consumer surplus. And third, includes market mechanism (Stoenescu & Teneketsis, nd). Aside from the economic factors, consideration is also being given to the environment, the agent and the information which the agent may fully possess or not. These factors act as guide on how the limited resources of the organization will be allocated and distributed in such way that minimal waste will be attained and poor allocation which is manifested in providing many resources to unimportant jobs at critical time is avoided; while attaining the goals and visions of the company. As such, resource allocation is important in strategic management and project planning. For the project not to fail there is a strong need for the following: human resources, financial resources and knowledge resources. There is a need for the training of the current employees of the company. And to hire at least one or two persons who are IT savvy in order for the IS development that is recommended to push through. The current workers will be offered the chance to enroll in certificate courses in IT so that they too may become oriented with the new structure of the business. Although what I have in mind is 50 -50 scheme for the payment of their study. The company’s support on this is necessary. Financial resource is definitely needed in order to purchase programs, ORMS, additional computers, switch board , Interactive webpage and ecommerce and all the other necessary technological materials needed to implement the IS development. Also what is needed is knowledge resource. This goes two ways. The first is the knowledge management and transfer intrafirm. The manager or leader may start mentoring younger employees who has the potential. And the other knowledge which is very necessary is the data collection from their buyers, business feasibility so that the company may be able to keep abreast with the current trends and developments in the market and at the same time now the preferences of the customers. B. TIME SCALES The importance of timescale and allocation of time in the business sector specially in project planning lies on its advantages. First, it keeps you focus on what you are going to do. It keeps the person on track and allows him to utilize his time in such a way that the most important things are done and address. And time for administrative works and other concerns are properly attended as well. The second importance of time scales is that it pushes manager to really plan the time. Time is gold. Once it is lost it cannot be return. Being such, it is basically important that proper planning be done so as not to miss anything important. The third significance of timescale is that keeps the owner or the manager right on track. This is important as there many things to do in the running of business. Keeping track of time helps the owner or the manager prioritized. The allocation of time in business is a wise investment for the growth not only of the company but of the individual as well (Becker, 1965). For the project plan, since Xtra Company is given only a four month window to implement all the suggestion given by the external eBusiness consultant, the allocation of time for the major changes necessary for saving the company should be done within the 16 week span. While continuing development will push through even after the 16 week plan. The 16 week plan Week 1 – 2. Start plotting the restructure of the organization. Talk with banks for possible refinancing. Talk with the employees regarding the finding and what needs to be done. There should be anon going consultation regarding this matter with the employees. Offer the employees the study scheme. Week 1 – 4 Start with the IS Development. This is necessary as this is the only way for the company to grow Start with data collection for the framing of the new business Week – 4 -8 Start with the ebusiness. Continuous training in IT for the employees Continuous discussions with banks. Meeting with the employees. Week 9 -10 Data analysis should start coming in. Training of employees. Week 10 -16 Review all the things that happened in the 10 weeks. Discussion with the employees. Feedback. Listen to the employees. Other possibilities should be open by week 14. 3. DIFFERENT KINDS OF LEADERSHIP Leadership in an organization is perceived as a dynamic and interactive phenomenon which helps stir the organization in fulfilling its goals and visions (Westley & Minztberg, 1989). Although, there is a perception that the concept of leadership is loosely use, its role in facilitating organizational performance enhancement is accepted (Jing & Avery, 2008). Recognizing the different cultures concerns and needs of the organization, there are different kinds of leadership that best suit the organization. The different kinds of leadership are the classical leadership and under it is the authoritarian leadership and paternalistic leadership. The second kind of leadership is the transactional leadership and samples of it are participative leadership and laissez-faire leadership. The third kind of leadership is visionary leadership which is transformational and charismatic kind of leadership and the last kind of leadership is the organic leadership which is “relatively new” (Jing & Avery, 2008). In the classical leadership which is typified by authoritarian leadership and paternalistic leadership, this is characterized by pre-dominance of the ‘elite’ group in the organization. What happens is that the leadership is autocratic and the members are not included in the decision making. Normally, the leaders stir the members to the goal without really explaining to them the reasons and the dynamics why such actions are being undertaken. Under this kind of leadership, the members are just expected to follow, they are not expected to think. The drawback of this kind of leadership is that it tends to present the idea that only a few people in the company are capable and “great persons” (Jing & Avery, 2008) and that the leader is the sole accountable for the outcomes or consequences of the projects. The second kind of leadership is the transactional kind of leadership which is exemplified in laissez-faire and participative leadership. In transactional leadership, the subordinates are recognized and their needs, desires, opinion and views are taken into consideration. In this kind of leadership, since the leaders know the sentiments and opinion of the member of the group, he/she can easily motivate them in reaching expected levels of performance. However, according to Avery (2004), under this kind of leadership which is basically consultative in its decision making, the last say or the final decision still rest with the leader. The third kind of leadership is known as visionary leadership. This kind of leadership is transformational and charismatic. It presents to the subordinates the image that the leader possesses high competence and has the ability to achieve success. So, the subordinates are rallied behind. This kind of leadership shows much passion and emotional involvement to the employees within the organization. In this kind of leadership, the leader uses collaborative decision making, seeks consensus before making the final decision, thus giving the subordinates more power. The fourth kind of leadership is the organic kind of leadership. Organic leadership is relatively new (Jing & Avery, 2008). Under this kind of leadership the power distinction between the leaders and the members are blurred. They work as a team and they function as a team. In this kind of leadership, there is a shared values, visions and goals within the team and that there is a strong support from the organizational culture. This kind of leadership recognizes the autonomy, freedom and relies on the self control and discretion of all the members of the group. `In the execution of the project plan in Xtra Company, an effective leader will be able to address some of the problems that may arise in the implementation. Primarily, the first thing that should be addressed is the increasing fear of the employees regarding their job security. This is important since if this is not given enough concern then the employees will not be highly motivated in achieving the performance level that is necessary in turning the company. An effective leadership can assuage the fear of the employees and at the same time inspire them with the vision of success. But the vision should not only be coming from the leader , it should be a shared vision among everybody. The second important problem that needs to be assessed right away is the lack of technical skills. An effective leader should convince the employees that they should take the necessary training in order to be equipped with the new challenges. In this scenario, the effective leader creates a vision for the group which everybody can embrace as their vision, their goals and their values. The company in turn should provide the support mechanism for the sustenance of the shared goal and vision. The threat of bankruptcy should be seen a challenge to everyone and it should not be used as a tool to threaten anyone. In this dire time, the leader should be the visionary and the servant leader. 4. EFFECTIVE COMMUNICATION Communication is the process of transmitting meaning from a sender to a receiver (Hodgetts, 2002). Considering the situation that Xtra Company is in, there should be a conscious implementation of effective communication. First and foremost, the structure of the communication that should be transpiring should not be from top – down flow of communication only. What is necessary is the employment of all the communication flows. These are the downward communication – from the manager to the employees, lateral communication from the managers side and the diagonal flow from the worker to the manager and finally the upward flow from the management to the owner. Moreover, there is a need for communicative action where in the employees will be given the public sphere wherein they can air out their opinions and sentiments without fear of repercussions and discrimination. In the same way, communicative action deters deception whether consciously or unconsciously. It is avoided. Therefore, in an arena of respect, trust is encouraged and fostered among the employees and between the employees and the management (Jacobsen & Storey, 2004). These points are being raised since it is important that the structure and type of communication that will be employed in the company is laid down already before raising the possible problems of communications. Since this will serve as the framework with which the problems of the company arising from IS development will be tackled. The first problem that can occur in the implementation of the IS development is misunderstanding regarding the job security of the employees. This situation will really pose a big problem since the development requires specialized skill of which the current employees who have been with the company for years do not possess. If this situation is not properly clarified and communications regarding this issue are not encouraged and are side stepped, then there is a high probability that the employees will be kept hanging in fear regarding their job. And this feeling of not knowing what may happen may build resentment and distrust on the side of the employees. On the other hand, the management should not be making an assumption that they have communicate their messages clearly. There has been a study which shows that managers often think that they have communicated clearly t heir ideas to the employees only for the employees to ask in the end ‘What did the boss mean by that?’ (Hodget, 2002) Another problem that may arise is the use of language. IT uses technical language which a person who is not familiar with may not be able to understand, and this situation is a huge language barrier between the employees and the IT people. If this language barrier is not address, it can create animosity among the employees, heightened insecurities of the employees who lack technical knowledge or IT skills. And this is from the employees side. When we look into the customer service side, then you have a bigger problem. For, how can employees who lack IT skills or knowledge manage e-customers who maybe using the lingua franca of IT? In this way the company, clearly, will be at the losing end since the employees instead of working their way together to save the company will not be motivated to perform well. The third foreseeable problem in the implementation of the IS development is the restructuring of the organization. If the restructuring will be done with the employees not properly informed and involved, then the morale of the employees will go down. Working with a company for number of years and then suddenly no clear information is given on how the restructuring will be done is really disconcerting and frightening. However, these problems can be addressed by an effective communication. Xtra company is only small. What the manager can do is to call a meeting tell the group the findings of the external expert and inform them about the condition of the company – it is facing bankruptcy in the next four months if changes are not made. Being true and honest to the employees will be more beneficial. Rather than being secretive and deceptive, this will only breed anger and distrust and it is not good if the company intends to stir itself from bankruptcy. After group meeting, the manager also should conduct individual meetings so that he/she can personally inform them and also listen to them, gain some feedbacks from them. This solution also holds for the problem regarding the restructuring. In terms of the technical language that maybe employed as IS developments are implemented. As a support for the employees what can be done is that they should be given a crash course on IT. It is like giving them IT for Dummies. This may not be enough in the long run, but in the initial phase of the implementation of the IS development this will be a lot of help for everyone. 5. MENTORING: A VIABLE OPTION Considering the job stress that everybody is experiencing in Xtra Company, there is a need to utilize all the means in order to overcome the job related stress that everybody is undergoing. As there are definitive ways where IT skills and technical knowledge can be addressed, and this can be done via appropriation of IT knowledge and knowledge management, the transition from non- IT to eBUsiness can be facilitated. Another aspect that needs to be dealt with is the non-technical concerns which is as integral as the IS development. As stated earlier, the non-technical concerns zero-in on the human resource of the company. This is something that cannot be relegated in the periphery since the human asset of the company is the very life blood of the organization. As such, the non-technical problems of company which includes job insecurities, fear or doubts regarding the organizational restructuring, implementation of the new marketing technique. (This is considered as a non-technical problem since this is perceived as a combination of technical skill and human relations. As such, this is the bridge between the technical problem and the non-technical problem) are big concerns. There is also the concern regarding the redundancy of job functions. Although it can be fixed by the coming restructuring of the organization, still until the restructuring is done there is fear and insecurities regarding their jobs among the employees. As the non-technical problem is as important as the technical problem, one effective approach that can be used to address these concerns is through mentoring. How can mentoring and coaching address the non-technical problems? Mentoring is “an evolving dynamic relationship between two individuals: a mentor and a protégé or mentoree. Mentoring can be mutually beneficial to both mentor and protégé, as well as to an organization”(Appelbaum, 1994; 3). Moreover, it has been recognized as “Mentoring is a form of social support which may allay job-related stress of organizational members. ...Mentoring is defined as 'a deliberate pairing of a more skilled or experienced person with a lesser skilled or experienced one, with the agreed-upon goal of having the lesser skilled person grow and develop specific competencies” (Sosik & Godshalk, 2000; 366). As the company is now undergoing a stringent period, it is but necessary that mentoring be undertaken. Mentoring can help ease the fear and doubts regarding job insecurity and organizational restructuring. If other employees see that a senior member of the company is coaching or training a junior member it can ease out the stress of many as the act of mentoring can be seen as an affirmative action taken by the company, an affirmation of its organizational culture - support system. Mentoring benefits specific aspects of the human resources, as such it influences the attitudes of some individuals and groups in the organization. (Appelbaum et al, 1994). Adapting mentoring in the company entails the idea that the company is embracing a particular kind of leadership that gives enough room and voice for the employees of the company (Sosik & Godshalk, 2000). Furthermore, mentoring can inspire other to pursue human development. It can open for them the chance to pursue endeavors that will benefit them and the company at the same time. As the company is facing uncertainty, and definitely, the job security of the employees are hanging on a balance, to be inspired and be motivated by the actions coming from the leader of the organizations create a vestige of hope. The leader through mentoring “utilizes positive reinforcement of behaviors, a strong conviction toward the organizational vision, and a definitive purpose in his actions; all within the context of the development of positive reinforcement to the follower”(Hall, 2008;5) The leader’s charisma creates room for hope and inspiration highlighting motivations which are geared towards achieving performance expectancy , even exceeding it. This undertaking is a form of response coming from the employees; to embark on a personal development and fulfill functions and tasks that coordinates with the shared goals and organizational objectives of the company. The role of the leader is significant as he/she provides the beacon with which the team will be guided and inspired. English (2007) has listed the benefits of mentoring. He claims that mentoring can reduces misunderstandings creates an environment that is conducive to creativity provides insight into the innovation process presents an opportunity to correct errors stimulates consideration of strategies for further development These are the behaviors or attitudes that Xtra Company needs now. Everybody has to stepped up in order avert the bankruptcy of the company. REFERENCE: Arunatileka, S. & Ginegim A. (nd) The Seven E’s in eTransformation- a strategic etransformation model. Amit, R., & Zott, C. (2001). Value creation in ebusiness, Strategic Management Journal, Vol. 22, No 6/7, 493 – 520. Appelbaum, S. H., Ritchie, S., & Shapiro, B.T. (1994). Mentoring revisited: An organizational Behavior construct, The International Journal of Career Management, Vol. 6 No. 3, 3-10. Avery, G.C. 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