Business of Kuwait Public Transportation Company - Literature review Example

 The Kuwait Public transportation Company is the main transport service company in Kuwait penetrating most of the regions in the country. The transport prices are flexible, therefore, there can reach a time there is a 50% discount on the prices (Kuwait Government Online, 2014). There are a total of 400 buses in the company with 1050 bus drivers and numerous other personnel working in the company to ensure successful operation of the company. Any business needs to have a corporate governance and sustainability strategy set in place to guarantee a profitable growing business. Guler & David (2008) stated the relationship between corporate governance and sustainability is fundamental to the lasting of a company. They argued that in the event that a problem arises in a corporation, a new process to solve the problem must be introduced to prevent a repetition of the problem in the future. The role of stakeholders to a corporation is one of the factors raised by Guler & David. It has been argued that a proper stakeholder relationship with a corporation reflects on the success of the corporation, thus, the code has to be put in place to improve the corporation’s governance. As responsibility and accountability in a corporation has increased, corporate governance is important. They say that good governance affects not just the corporation but also the society’s political stand. Even though the corporation has limited resources, good governance will improve the society’s welfare. Sustainability of a corporation has been proved to be important for its growth. To that effect, sustainability is more successful when corporations answer to the public as a whole and not just its shareholders. Ackerman (1975) stated that big businesses needed to consider the society instead of the financial bit of the business as it discriminated against the people thus contributing to an unresponsive society. It was stated by McDonald & Puxty (1979) that corporations had a greater accountability as apart from looking into the interests of shareholders, they had to consider the society as well. An organization needs to analyze and evaluate its environment before making decisions or taking any actions to ensure they do not affect its environs and the people living around it negatively. Positive organizational actions have been stated to be important for the society’s growth and influence. The definition of sustainability has raised many controversial statements but generally, it means taking actions today that will positively affect a corporation creating several options for the corporation in the future (Crowther, 2002). Therefore, it means that resources used today should be able to be used again in the future. Governance and sustainability has successfully been implemented in Kuwait to see to the country’s growth. According to a UNDP article (2014), implementation of programs to promote governance and sustainability were established for problem solving solutions of KPTC. Increased transport demand of people and goods resulting from limited capacity of infrastructure, public transport service inefficiency and lack of railway and road networks is one of the problems. Also, problems like the need for planning of better transport land usage and information systems that are reliable. In addition, increased number of vehicles, people, congestion, vehicle pollution and accidents in the country needed to be addressed. “Kuwait 2035” was launched to promote the country’s financial and commercial status in order to enhance its sustainability. The development of the National Development Plan, a 4 year plan, was established to ensure the implementation of “Kuwait 2035”. The Ministers Council for Implementation adopted the development of the 2010-2012 National Traffic and Transport Strategy to control demand and enhance movement and accessibility in Kuwait. The country’s first priority was to choose a public transport to build their metro networks, railway and modernize their bus transport services. The Ministry of Communications is in the process of developing public transport through the country’s economic centers. The project aims to develop public transport to accommodate the growing economy and population of Kuwait through modern infrastructure and technology. The expected result is to create a better environment, minimize congestion, promote safety and promote productivity. Argyris and Schon (1978) performed research that indicated that individual thinking within an organization can promote positive outcomes in the organization. Organizational learning is based on innovative thinking as well as leadership to promote change and positive, continuous change within the organization. Senge et al (1999) manages to describe leader within the context of organizational learning. Leaders take part in the growth process of the organization through allowing of manifestation of change within the organization. A successful leader is able to recognize their colleague’s dedication and tap into it to lead into a common and changing future. The adaptation of this approach in leadership has been administered in management of knowledge (e.g. Loermans. 2002), corporations (e.g. Amy, 2008) and stakeholder’s emotional understanding of hospital settings (e.g. Moumtzoglou, 2003), higher education sweeping reforms (e.g. Ramaley and Holland, 2005). In all the given examples, the leaders were engaged and involved with both the organization and people surrounding it. Waldman et al. 1998 stated that such kinds of leaders influenced the culture and cultural changes of the organization. Leaders practicing transformational leadership encourage their coworkers and promote values that benefit everyone (Tucker, 2004). Transactional leadership is successful in promoting growth in short periods of time as opposed to transformational leadership that promotes long term growth of the organization. Transformational leadership can only backfire if leaders adapt a unidirectional flow of leadership from leaders to subordinates. Governance has sought to adapt new forms to facilitate sustainability within corporations. Suzanne Benn (2011) stated corporate sustainability as the corporation’s ability to look beyond stakeholders to its employees, customers and supplier’s needs. A collaboration of inter organizational between private and public sectors shows the risks they share and resources as a means of governance leading to beneficial results for both sectors. Collaborations have been found to be more effective in reducing impacts in social and environmental areas at the same time promoting corporate learning (Bergkamp. 2002). They have been commonly used by governments to promote sustainability. However, organizations have emulated the idea by forming partnerships with other organizations. Nongovernmental organizations have also managed to initiate the method (Dunphy et al, 2007; Goldsmith and Eggers, 2004; Stewart and Jones, 2003). Although inter organizational collaborations have their benefits, it is faced with challenges. One of these challenges is the complex organizational systems of each organization. Integrating each organization’s system with the other can be quite difficult (Bertels & Vrendenberg, 2004). In order to overcome this challenge, clear control frameworks should be adapted. In some researches, the collaboration of organizations has proved to be a success where stakeholders are involved (Potapchuk et al, 1999) Organization development is defined as an organization’s ability to achieve a goal with success that is long term. Beckhard, 1969; Cummins and Worley,2004; Seo et al,2004 defined organizational development as a program planned to change and develop an organization through use of knowledge of behavioral science moving towards a certain result in the organization. Team building and research is overcome by focus on individuals and groups (Seo et al, 2004). For the purpose of addressing change, this approach is considered to be unsuccessful (Milne et al, 2006) as the establishment of a relationship that is dynamic between the organization’s human and ecological systems requires a wide intervention of systems. The approach does not have the capability to assimilate innovations and changes for the implementations of ecological values. The earlier approach to change has several restrictions that integrate relationships among the organization, its employees and the natural environment (Dobers and Wolf, 1999; Law, 2004; Sandstorm, 2007). Ecological performance assessments (Kolk and Mauser, 2002.p25) have shown that implementation of change following a predetermined objective through first generation (training, action research and sensitivity) and second generation (future search, transformational change) is very complex. Several factors will have to be considered. Seo et al, 2004 showed that the development of organizations in the third generation has the ability to overcome the above limitations. The approach aims at achieving transformational change within the organization combining organizational learning, inquiry and open space technology. The Kuwait Public Transport Company approaches the third generation form of organizational development with the company providing training programs that add to the employees skill set. The program offered by an organization known as Strategia, offers these programs to several other organization within Kuwait with the aim of encouraging managers to delegate more duties to their subordinates to tap into their innovativeness and allow room for growth. The organizations stand to gain from this transformational kind of leadership (http://www.strategiame.com/aboutus.php) . For a government to successfully implement policies, it first needs to visualize compiled and well thought ideas. A deep understanding of the daily changes in the society and day to day situation, potential requirements and the changes in the agenda of stakeholders involved. Based on building scenarios, they must take into considerations decisions arising from past strategies, build an execution of the scenario and evaluate the results keeping in mind the impact of the government. Deloitte has a team in place to deal with such preparation and evaluation of policies. (https://www.deloitte.com/view/en_be/be/industries/publicsector/challenges-and-solutions-in-the-public-sector/index.htm) The team not only looks into preparation and evaluation of policies in the public sector only but also in other sectors like innovation, healthcare, food and safety. A government requires being effective in order to maintain the safety of its people. Intelligence is mandatory for the government to promote growth in the economy. An intelligent government realizes opportunities for growth and ceases them towards building an effective and peaceful organization while keeping its people safe. Regulations set should be harmonious and lead towards growing the country. Deloitte is able to implement these regulations safely, effectively and efficiently. The government agency tasked is not in a position to take care of all its complex sectors that promote industrial growth, benefit the people and keep them safe without forming partnerships that contribute in reducing government participation. Kuwait has formed a partnership with Deloitte which has helped them tap into growth opportunities of the country (http://www.deloitte.com/view/en_KW/kw/about/deloitte-in-kuwait) The main drive for a successful partnership is a controlled trust and mutual respect between the government, the people and organization. Forming a partnership with loyal organizations helps the government establish a trusting working relationship. Following rules put in place by the European Union, a country, and local authority and political bodies is mandatory not only for the citizens and organizations, but also the government. They should all agree and follow regulations put in place in terms of tax, particular regulations in administrations and financial reports. In this aspect, Deloitte offers guidance towards compliance with the set regulations. They set standard guidelines that the government can follow in all aspects, i.e. tax, financial reports e.t.c. Deloitte advises governments like Kuwait on good governance that the help promote their country’s growth. They have a method of evaluating the governance of the country to identify where the flaws may be in order to advise the government on ways of eliminating these flaws. Their experts evaluate these flaws and create internal with the surrounding of the private sector. Deloitte is also able to identify risk levels within the government and address them early enough before they become a problem later on. The company is able to measure risk levels through its risk management system and build strategic management plan within its government. Partnerships with organizations in Kuwait require some rules and regulations be followed. Article (23) of the Kuwaiti Commercial Code states that in order for non-Kuwaiti citizens to perform businesses in the country, they required to have a partner from the country. The share the partners share should not be below 51%. Further on in Article (24), it states that foreign organizations cannot start business operations in the country unless they had a Kuwaiti agent. Law No (8) was enacted by Kuwait Parliament in April 22, 2001 on the regulation of Foreign Capital Direct Investment in Kuwait trying to attract foreign investors. Although foreign businesses would start operate 100% of their business, there were certain rules in the law governed the operation of businesses in the country. Foreigners with the intention of starting a business in the country will need to carry out four things before starting a business. Firstly, the foreigner will require establishing a business in the country thus creating permanence through investing in specific companies, Limited Liability Company, Closed Joint Stock Company and Joint Stock Company. These companies will guarantee the presence of foreign companies all the while promoting the growth of the country’s economy through the foreign company’s investment. Secondly, the foreigner will require creating a joint venture under the Article (57) of the Kuwaiti’s company law. As the ventures do not have legal personalities, the business cannot carry out business ventures on their name but on the venture’s name. The venture conducts all transactions related to the business upon an agreement they have with the non-Kuwaiti. Personal involvement in the transactions does not matter as the joint venturers are subjected to unlimited joint and several liabilities. Foreigners are prohibited from acting as commercial agents in Kuwaiti under Article (10) where breaking the law leads to 3 months imprisonment or pay a fine. Thirdly, the foreigner needs to appoint a Kuwaiti representative to govern the foreigner’s business interests. Article (297) to (305) of the Kuwaiti Commercial Code states a regulation in the responsibilities of a commercial agent. Both signatures of the Kuwaiti commercial representative and the foreigner must be signed by the agent. Finally, the foreigner should hire a representative to represent him on a commercial level. Communication managers and their subordinates reflect strongly on the organization’s performance and affects quality of consumer products due to the decision making involved when managers and subordinates communicate. The qualities of leadership are highly advised in organizations. A study was made to determine how communication contributes to product quality. One theory stated that subordinates are untrustworthy while the other theory stated that communication between the manager and his subordinates created room for trust and bold decision making leading to organization growth (McGregor, 1967). Instead of the traditional walk around managers used to do, communication is recommended between managers and those below them to form an agreement on job requirements (Chiu et al, 1997). A balance must be created between leadership and management to achieve motivation among employees and ultimately quality in consumer products. The two complement each and cannot work separately. A research study carried on organizations across the United Arab Emirates showed that employees who served the organization longer produced satisfying results in job performance. Factors considered while carrying out this study were based on gender, education level, race, time with the organization and age. Besides the time the employees spent with the organization, the other factors did not seem to matter. Although leadership does not contribute to the performance of the organization, it is a vital factor in the creation of competition (Erkutlu and Chafra, 2006). Leaders and followers should make exchanges at a high level (Basu and Green, 1997) for followers to be fully committed to their leader. Transformational leadership has had more positive outcomes than transactional leadership. In a transformational leadership, the followers are committed to their leader hence feeling the need to achieve the best results in their job performance (Lee, 2005). On the other hand, transactional leadership promises rewards in the event that certain results are achieved. Failure to this leads to leaders portraying harshness towards their followers (Bauer and Green, 1996). The environment continues to evolve forcing organizations to consider important organizational changes. Burnes (2004) argued that the levels of strategy and operations were determined by the inevitable changes occurring in organizations. The future of the organization is reflected by organizational changes. Organizational change and organizational strategy must go hand in hand. Managerial skills require organizational change (Senior, 2002). Change is inevitable and cannot be controlled, therefore, triggered by organizational crisis (Burnes, 2004; De Wit and Meyer, 2005; Luecke, 2003; Nelson. 2003). Issues to be addressed that cause organizational change are the increased pace in changes in today’s business (Balogun and Hope Hailey, 2004; Burnes, 2004; Camall, 2003; Kotter, 1996; Luecke, 2003) and external forces that affect change. ((Balogun and Hope Hailey, 2004; Burnes, 2004; Camall, 2003; Kotter, 1996; Luecke, 2003) Change must be continuous to yield good results. Discontinued change results to complacency, placing behavior defenses and change in focus and routine (Luecke, 2003). Change must be encouraged for organization productivity. Small, continuous changes in an organization lead to fast growth (Burnes, 2004). He further states that an organization’s capacity to deal with one problem at a time brings about incremental change. Grundy (1993) defines change as the constant rate of evolution of change systematically and in a predictable manner. According to Lewin (1946), change required the dropping of old habits making room for new behaviors. Planned approach to change has been argued to result to short term outcomes, therefore, cannot be applied to situations that require transformational change (Burne, 2004; Kanter et al, 1992). Also, planned approach to change assumes that there are zero external factors affecting the organization thus making mobility from one form to another easier (Bamford and Forester, 2003). External factors have caused numerous arguments opposing Lewin’s planned approach to change (Burnes, 1996, 2004; Wilson, 1992). The application of Lewin’s planned approach to change is commonly implemented by senior managers who do not consider the repercussions of their actions (Wilson, 1992). In the event of a crisis, the planned approach to change is not effective as the crisis was unforeseen (Burnes, 1996, 2004; Kanter et al, 1992). The planned approach moves further to assume all stakeholders agree to any decision that arise (Bamford and Forester, 2003). This assumption is wrong as politics and exchange of different ideas will need to be discussed. There, the planned approach for change will give a rough estimate of the changes to occur in a company. Joseph Schumpeter was the first person to understand the processes surrounding innovation summing them up to three stages namely, invention, innovation and diffusion. He stated that invention was the initial idea demonstration, innovation as the initial market invention of a commercial application and diffusion the process of technology spread in the market. He argued that the process of diffusion was best demonstrated by the S curve where slow penetration o technology into the market changes to fast diffusion then later slows down to reach the technology’s saturation levels. Schumpeter assessed innovation drivers to be the men who pushed technology into the market. He encouraged creative destruction which was the introduction of new technology replacing older ones. However, many researchers argued that his work mainly consisted of the consequences of innovation more than their causes. They argue that his work did not contain theories leading to innovation. Besides the claims made by other researchers, his three stages of innovation are still applied. The ‘linear model of innovation’ dwells on the three stages more consistently applied in different modes of innovation from technology development, applied research and diffusion. Solow, 1957 argued that major growth contributor was not the labor increase but change in technology. Chris Freeman was the first to develop the innovation of national systems in the late 80s that led to Japanese successful economy. He described national system of innovations as the integration of the public and private sector in the bid to introduce new technology while importing and advancing them in order to diffuse new technology. He emphasized on the government’s positive influence to support the introduction of new advanced technology. Innovation of national systems was detailed further through two major studies, Lundvall (1992) and Nelson (1993). Innovation of national systems as defined by Lundvall (1988, 1992) states production interaction with elements and their relationships to diffusion and use of new technology and economical use for knowledge are located within the nation’s borders. He made an emphasis on the roles played by innovators and users. He said they both needed to be linked and information flow maintained in order to satisfy consumer needs. Nelson (1993) concluded that different innovation systems influenced different political and economic issues and countries priorities. Decisions surrounding human beings and their immediate surroundings influence the society’s political nature and management as tools for power and privilege and are lodged deep inside management practices and social and economic organizations (Steingard, 2005, p 25). An intelligent government will consider its citizens before making a decision thereby considering them first. People tend to respond more to leaders who share their views and feel put their needs first. Establishment of loyalty is created leading to hard work from the people to ensure that the leader gets the results he requires. As communication is one of the qualities of leadership, a leader who exchanges ideas with his followers is more likely to lead a harmonious nation. Such kinds of leaders keep individuals in mind even as they make decisions without thinking of the shareholders and organization only. He will include all the members of the decision making process, the organization, government, people and shareholders. Good leaders analyze circumstances critically before making a decision. They then reflect on the critical thinking before coming to a conclusion. Assumptions are avoided when performing critical thinking thus eliminating room for errors. Critical thinking distinguishes between ‘truth’ and ‘logic’. Therefore, it leads to say leaders need to put their emotions aside when analyzing something critically. Emotions have been known to cloud one’s judgments during important decision making. Sustainability (Tilbury and Wortman, 2004) and learning as a whole person (Taylor, 2007) combine together to work in a collaborative manner. In environmental sustainability, working and learning is described as a person’s ability to collaborate making decisions with partners and stakeholders alike. One requires being open when addressing ideas, making decisions and listening to others. They also require giving quick responses, giving their attention to others and having a high capacity for managing one. When addressing openness, a good leader should be able embrace new ideas and the ideas of others. Before engaging in an idea, people need to visualize the idea and the changes it will bring. Values, lifestyle and priorities (Tilbury and Wortman, 2004) need to be evaluated when evaluating and reevaluating an idea. As the world is changing, ideas become more innovative in the hopes of promoting growth. Unlike earlier years when the world did not have an open approach of things, people are more open to any kind of ideas, however wild they may be. That being said, creation of new technology has been influenced by the world’s open approach leading to a change in values, lifestyle and priorities. Changes in the organization have been argued in different ways. Evaluation of organizational change has presented major claims into whose approach is the best. Kurt Lewin’s approach to change had been used since the 40s till 20 years ago where a deeper evaluation of his approach was carried out. His approach to change left many assumptions as he operated on the assumption everything was at a constant. He did not consider the external factors that came with change, or the politics that followed discussion of ideas and process of decision making. He assumed shareholders would have a unanimous response. Organizational change is classified in two approaches; prescriptive and emergent approaches. In prescriptive, organizations can change from one form to another. Emergent approaches are more unpredictable and unorganized. Kurt Lewin used the prescriptive approach of organizational change that was well detailed and planned for. His main concept dwelt on his evaluation of continuous change as opposed to Marrow’s (1969) evaluation of approach that brought change by accident. Lewin’s approach has since been reappraised and modifications made. However, one thing remains the same through all these evaluations and modifications into the context of planned approach to change, the adaptation of Edgar Schein’s (1969). Edgar’s approach is implemented in three stages, “freezing existing behavior, changing behavior and unfreezing new behavior.” All analysis revolving around organizational change and their approaches adopt the three stages of Edgar’s approach. Emergent approaches are unpredictable in their nature affected by external factors. Daily circumstances that occur due to surroundings influence emergent approach. Most of the external factors affecting emergent approaches are accidental. Emergent approaches also carry demerits that include more focus put on the collection of approaches than the approach to change, it over emphasizes on political change, it limits the application of types of organizational change and means of applying them and lastly, organizational learning that has already taken place cannot determine a relevant crisis (Lynch, 2005: p772). In 1970, Peter and his associate created the ‘Seven S Framework’ that concentrated on different types of strategy in the corporate level and their relationships (Lynch, 2005: p 792). The framework dissolves into three hard features: system, strategy and structure and four soft properties: super ordinate goals, style, skill and staff. The framework generally tries to create a link among all the features. However, it does not give a clear understanding of the links and how they relate to each other. Issues have been raised about the global warming that is a result of mismanagement of the earth’s natural resources. Consequently, the world experienced the worst financial recession of its kind in 2008 (Talbort, 2009: p227). The recession led to a diversion from global warming leading to major threat to every living organism on the earth’s planet. Urgent issues resulting from global warming include changes in climate patterns, depletion of the earth’s natural resources, corporate dominance, and distribution of wealth, increased poverty and hunger all over the world, obesity, HIV/AIDS. If action is not taken by 2020 to correct the issues surrounding global warming, Global Humanitarian Forum (2009) fears the problem may be irreversible. Global warming is at its critical point. Many organizations including the UN have held discussions on how to correct the problem. But it is sad to say that human beings are the cause of the main problem. Humans have made major contributions mainly through pollution and over use of natural resources. Global warming’s cause for change in weather patterns has leading to food reduction supplies in both urban and rural areas where they are grown. Malnutrition has become rampant in both children and adults due to consuming of unhealthy and unbalanced food products. Also, the lack of sufficient food products has led many to seek after processed foods and genetically engineered foods that are lack the required nutrients. These GMO food products have been found to cause obesity. Corporate organizations are the major players in solving the urgent global issues. They have the power to change economies of countries and provide a healthy standard of living for the people. Organizations are usually set in many countries thus creating an emphasis on the power issue at hand. Corporate leaders are called upon to take part in the effective process of reviving the earth into what it once was. Hormann (1990) argued that businesses have now become a major influence in addressing global warming. Therefore, leaders should be accountable for their decisions as they affect the whole world. The world requires leaders who are fit to lead its people into a better world. Achievement of addressing this issue is through considering four steps. The first step is through changing the vision into a global one. Covey (1999a; p69) stated that leaders needed to implement new ways of thinking and creating ideas. They needed to think outside their current economies and embrace expansion of businesses into the world. There is a need to select leaders who can lead our economies into globalization as it is the norm today. Gone are the days people were kept in a manageable area within their countries. Today, globalization calls for leaders to expand their economic boundaries into other nations and lead harmoniously with other influential persons worldwide. Secondly, create a mission. Leaders ought to change how they think and move further from just organizational growth strategies. Embracing globalization will require them to advance towards a mission that compasses around globalization. Leaders need to apply strategies that result in organization long term sustainability (De Woot, 2005) The third step is to advance into a global setting. Capra (1997, Kriger and Seng, 2005, p. 773) states that major problems cannot be solved individually as they are inter connected. Hence, they need to be approached in a different way where change of thinking and values must be encouraged. However, a new way of thinking will need some time to be adopted and implemented. The final step is adaptation of new problem solving ideas. The Rayment (2001) way of globalization of thinking whereby leaders need to approach a flexible logical approach that creates room for change in thinking. Certain conditions may lead a person to change an idea or decision he had made, therefore, it is best to use Rayment’s (2001) way of thinking. Kuwait Public Transport Service has also been affected by the changes globalization has brought about. Since 1962, the organization has gone through a series of changes leading to its growth in the global sector. The transportation services have embraced the world market with its high quality services provided by its capable and expert personnel. Their transportation business is involved with both the private and public sector. They have been able to exploit technology through providing global positioning system services for their transportation equipment and machinery allowing communication possible from wide ranges of distances. The corporation has formed partnerships with foreign companies enabling to expand its economic growth globally. Partnering with a company like Deloitte has enabled the country to experience an introduction of world class technology, increased economic growth as well as profitable means of increasing sustainability within the corporation leaving room for maximum future growth. Reference Colin Butler (2008). Leadership in multicultural Arab Organization. Effect of Globalization (2012) http://www.economic- geography.org/index.php?option=com_content&view=article&id=98:effects-of- globalization&catid=98:inf&Itemid=85 Grant Jones and Robin Kramer (2011). CSR and the building of leadership capacity. Guler Aras & David Crowther (2008). Governance and Sustainability. An investigation into the relationship between corporate governance and corporate sustainability. Jonathan Smith and John Rayment (2001). Globally fit leadership: Four steps forward. Harvard Guide to Referencing. Victoria University. 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