Importance in Learners Leadership Plan - Term Paper Example

Introduction Learners will submit an addendum to the ongoing Leadership Plan, Incorporating this course’s content into an action plan for managing/leading a functional area of an organization and improve performance. This addendum continues the exploration undertaken throughout this DBA program of one’s own development as potential leader within their own organizational environment. This assignment has been used and expanded upon in several courses throughout this whole DBA program, and throughout this process each doctoral learner has been challenged to address managerial, leadership, global, organizational leadership stature. Leaders have to go through different stages of learning which will help to avoid the errors that one may encounter in the initial stages when one takes up leadership position. This paper will develop a greater understanding of risk issues that will have an impact on Simcenter, Inc. and their leadership styles. Background of Organization SimCenter, Inc. is one the nation’s leading pilot training facilities in the United States and is privately owned by the George Family from its headquarters in Miami, Florida. SimCenter has been providing flight training instructions for over ten years and has built is reputation on providing the airline industry well trained and highly experienced pilots. Air carriers seek pilots trained by SimCenter both nationally and internationally because of their professionalism. Although SimCenter has primarily been a training center for commercial carriers that have large aircraft such as Airbus300 series, Boeing 737s, and Boeing 757s; it is uniquely positioned to profit from both current pilot shortages and hiring requirements of National and International carriers by leasing pilots and creating a charter airline to the Bahamas. This new venture is based on Porter’s Value Chain Theory, which explains the need of producers to provide products and services at the same level of customer demands (Value Chain, 2005). Value chain of any organization reflects its history, the strategy and the approach to implementing the strategy, and the economics of the activities. The purpose of a value chain is to create a process or product that would generate profits. According to Porter, adding value is a strategic means to achieve profit and competitive advantage. Traditionally different business functions perceived and created value differently. Under Porter’s model profitability and market control can be maintained if an organization controls all aspects of the buying experience including supplies, inventory and production. For the Airline Industry, personnel are the most expensive component of their product. Current airline hiring requirements require that First Officers or Captains have a minimum of 1500 hours of total time and additional 1000 hours on aircraft type. These requirements are very difficult for student pilots to achieve because being hired by a carrier or renting very expensive aircraft can only satisfy requirements. SimCenter would provide foreign and domestic students that have completed a commercial pilot certification and can attain full time employment the opportunity to earn needed hours through an internship program, which would be constructed as a pilot leasing program that would allow SimCenter students to fly for regional passenger airlines and cargo companies at an extremely lower rate than that of full time company dedicated employees. However, the airline industry is not consistent with its goals and when it becomes difficult to survive in the competitive environment, they manipulate three variables – costs, yield and load factor. While calculating the total operating costs, the number of pilots engaged and the turnaround of flights per pilot is the prime consideration. Hence, the requirement of pilots globally could change at any point of time. This requires that heavy investments should not be made for entering foreign markets. Risk Management in the Global Environment This section will discuss different leadership models with Simcenter, Inc. Through this section learner will evaluate risk issues that arise in both domestic and global markets; and the risks associated with unethical business practices within foreign venues. Risk is the level of exposure to uncertainties that an organization and its leaders must be aware of, and understand how to effectively manage risks while executing its strategies to achieve the business objectives (Norrman & Jansson, 2004). The leader should be conscious of the probability of the events that might occur and the consequences thereof. Leaders would require excellent critical-thinking skills in operating within foreign venues (Yocum, 2010). In international business environments, leaders face uncertain situations and tend to fall back on their values to make decisions (Wong & Chung, 2003). Being ethical is the responsibility of the leader within foreign venues. As a leader, these values have to be communicated because the employees act on what they believe. If these values are not communicated in the right way, the employees will assume that values are less benevolent (Navran, 2002). A leader has to lead by example and the values should reflect in his conduct. Consumers are the biggest stakeholders and in this case the pilot students. Consumers today demand ethical goods and services. This enhances the role of the leader to ensure that the pilot training covers all that is required by the airlines industry. Profits may slip and may not remain constant throughout the year. This should not encourage unethical means to attain profits. Ethical conflicts arise when the values of the organization, the values of the employees and the perceived criteria for success are misaligned (Navran, 2002). Employees then tend to protect themselves from the organization or even justify their attacks against the organization. Aircrafts experience different fuel burn rates in various flight profiles – taxi, takeoff, climb, cruise, landing approach, and landing (Carbonoffsetguide, n.d.). The fuel burn emissions are released in the atmosphere. Many countries have their own laws about greenhouse gas emissions and since the student pilots would require practical in-flight training, the leader must follow the laws pertaining to carbon emissions at foreign venues. Risk Factors of Culture In this assignment we introduce the idea that the organizational culture is the personality of an organization, which can be defined, measured, sustained and changed and have an important impact on an organization’s effectiveness. Organizational culture is an important situational variable that influence all members of an organization to various degrees, so it is important to have a sound understanding of this construct to manage and work effectively in an organization. The risk factors of culture include male dominated leadership, collaboration and retaining diversified workforce (Yocum, 2010). Effective leadership precedes effective management cites Yocum which implies that leadership is essential to handle the risk factors of culture. At the same time, it is not essential to be in a formal leadership position to exert leadership behavior and to retain diverse workforce. Leadership is the “natural and learned ability, skill and personal characteristics to conduct interpersonal relations, which influence people to take desired actions (Eric, n.d.). Leadership varies across cultures and hence leaders must be able to create and deal with change. Leadership requires vision, direction, strategies, motivation and inspiring. Cultural differences give rise to differences in goals, expectations, values and the proposed course of action (Friday & Friday, 2003). Diversity is an attribute specific to an individual which makes him feel different from others. Managing diversity determines whether an organization can deliver the goods/services as per specifications and on schedule. Cultural differences cannot be ignored because it impacts the outcome, the decisions and the overall organizational effectiveness. This emphasizes the role of a transformational leader in appreciating and understanding the concerns of the subordinates from other cultures. Transformational leaders are consistent with their beliefs and values and they assist others to convert their vision into reality (Working Futures, 2005). They have the ability to influence others to embrace change; they have the qualities to boost the morale of the employees to work towards organizational effectiveness. Global Audiences and the Risk Impact of Global Communications This section will analyze the risk associated in converting a domestic strategy into international policy and procedure. Problems or challenges are an inevitable part of any business environment. In fact, many business organizations have to make critical decisions on a routine or daily basis. These decisions are essential to their operation and may have a huge impact on their company's financial health. These problems can be handled effectively by businesses adopting problem-solving models to assist them in identifying the problems, the available alternatives, assist in the implementation or execution of solutions, and generally serve as a guideline in problem solving. With global audiences, debate ensues whether to have a globalized approach or a localized approach in business strategy. Adopting a standardized approach for all global markets may not work because of the differences in culture and mindset. Standardized approach can work in homogenous markets in which case the organizations can cross national borders with ease. However, a study conducted by Souiden (2002) revealed that even in culturally bound nations such as the Arab World, a standardized approach cannot be adopted. Standardization implies a product orientation and is not customer-centric. Such a strategy leads to failure. With the focus on the product, the organization may turn blind to consumer demands and needs. For global audiences, the communication strategy too would have to be devised accordingly. Communication takes place with the intention of influencing or motivating (Athanasios, 2005). Successful communication has taken place when the receiver is able to decode the transmitted message. To keep the group cohesive and work towards a common goal, this is a key factor. The basic functions of communication are to inform, to persuade or to collaborate, to acknowledge and to empathize. Distortion in sending and receiving messages are likely in international operations because of the difference in perception, nuances and understanding. In fact, even the body language differs across culture and nations and this too could send the wrong signals. Effective communication requires a shared understanding. The leader must be able to stimulate others to take action and encourage them to think in new and innovative ways. Global Market Entries This section will discuss the risk associated with expanding internationally; specifically, the global market environment such as culture, politics, legal aspects, commercial practices and economic climate and its effects on an organization’s decision to go global. To enter a foreign market requires an understanding of the macro (political and economic factors, host country rules and regulations) and the micro (the service factors, the corporate goals and objectives, the corporate strengths and weaknesses) environment (Ekelado & Sivakumar. 1998). The foreign market entry strategy would hence depend upon the firm size, the market size, the cultural distance, the international experience of the firm, country risk and uncertainty, industrial barriers, firm advantages (Zhao & Decker, 2004). In addition, the foreign exchange rates, the host country currency and the characteristics of the operations in terms of firm size would help determine the mode of entry. Again, depending upon the level of control and commitment required, Simcenter, Inc would need to evaluate whether to enter through joint venture (JV) with a local partner firm, or as a wholly owned subsidiary (WOS). WOS is essential when a firm wants maximum control and is prepared for maximum risk and commitment. Since the objective of SImcenter, Inc is to train student pilots, the ideal mode of entry would be to enter into a contractual agreement with the leading pilot training institute in the host country. This can be in the form of franchising which is a vertical contractual relationship between the franchisor and the franchisee (Grunhagen & Dorsch, 2003). Under the terms of the contract, technical know-how has to be disseminated so that the pilots have the standards required by the aviation sector. This may give rise to infringement of intellectual property rights but the franchisor-franchisee relationship is based on mutual support and trust. Simcenter, Inc. would provide support, technology and advice against an entry fee and continued royalty on sales and advertising fees. The standards of training can be assured because the franchise has his investment at stake. The franchisee has to operate the training as per the terms and the format supplied by Simcenter, Inc. This is absolutely essential because the organization cannot compromise on professionalism. Financial Risk Issues’ and Impact on Global Organizations A corporation that operates in foreign countries must understand globalization and foreign financial risk. When a corporation operates on a global level, there are many financial risk factors that need to be taken into consideration. These risk factors include foreign exchange rates, differing interest rates from country to country, complex accounting methods for foreign operations, and foreign tax rates. To be successful at globalization, corporations must not only understand and recognize these risks but find ways to successfully manage them. In addition, the banking arrangements would need to be evaluated in the foreign venues including the credibility of the bank and the authority to operate the bank account (Bank of America, 2001). The arrangement for initiating payments and managing receipts has to be considered in advance including who would have control over disbursements. The financial stability of the overseas partner has to be established. The payment risks are also associated with the commercial contracts. The changing political and economic conditions in the host country can impact the terms of the contract. Currency conversion can lead to losses. Sudden changes in the regulations in the host country can impact the repatriation of funds. In countries where the risk of currency devaluation continues, it would be advisable to set up accounts in a more stable currency, but within the parameters of the laws prevalent in the host country. The leader needs to have a good understanding of the political, economical and regulatory environments within the host country. For this reason having a local partner or appointing a franchisee is a practical approach as they would have knowledge and understanding of the local policies. Local labor laws and employment practices also need attention. The tax structure of the host country must be determined in advance and use this as one of the factors to evaluate the location decision. Overall, the various types of financial risks that could arise, and need to be managed, should be defined. These are the transaction exposure – caused by changes in the foreign currency cash flows, the translation exposure caused due to translation of financial statements from one currency to another and the economic exposure which is due to changes in the value of the firm as a result of exchange rate moves. Global Imperatives and Leaner Development As the world economy continues to globalize and integrate, the imperatives for management to act in a globalize manner become more crucial. Companies must therefore rethink and reengineer their entire business processes - their organizational structures, staffing, and especially their information systems and technology infrastructures on an international level. Furthermore this section will discuss the impact of globalization on the learner’s future prospects. Globalization is a continuous process and is a force of economic expansion. It offers several challenges and opportunities. This requires restructuring aimed at achieving a higher level of technological sophistication within a short time span. This requires change in the education level, the HR policies, the roles and functions of the government and businesses (PECC, n.d.). The MNCs also have a role to provide quality vocational and training programs in collaboration with the local governments. Globalization is opposed by many as it undermines cultural diversity but it actually promotes cultural diversity as people are able to interact across borders (Lechner, 2001). Virtual teams having members across the globe work on projects together through advanced communication techniques. Ideas and images are being shared and the social networking sites foster closer interpersonal relations. Globalization has also enabled accepting certain forms universally but with local adaptation, also known as glocalization. As a leader, one has to identify the resources necessary in the country of expansion. Globalization lays emphasis on the cultural dynamics at play and hence the leader face challenges but the leader must have a long-term perspective in planning overseas expansion. The leader must have the qualities to retain talent, and have a sense of ethics and responsibility towards the society. Conclusion This section will conclude/summarize the paper and its overall importance in learner’s leadership plan. SimCenter, Inc. is one the nation’s leading pilot training facilities in the United States providing flight training instructions for over ten years. They now seek to expand their operations overseas. The leader would require undergoing different stages of learning to successfully operate at foreign locations. The leader should recognize the risk factors in venturing overseas. The risk could range from changes in the airlines sector and could also be due to changes in the macro-economic policies of the host country government. However, the leader must be aware of all the labor laws and other regulations necessary to operate without compromising on ethics. By appointing a franchisee, the regional issues can be overcome. To meet with uncertainties, critical thinking skills are essential and to motivate people from different backgrounds, transformational leadership is necessary. Effective communication is critical in overseas expansion because of the differences in nuances and understanding. The leader must also be prepared for the financial risks which could range from fluctuation in the currency rates and changes in the economic and political stability of the host country. References Athanasios, L. (2005). Communication problems in professional sports: the case of Greece, Corporate Communications, 10 (3), 252 Bank of America. (2001). Expanding into Global Markets. Retrieved from: http://www.phoenixhecht.com/treasuryresources/PDF/Global_Mkts.pdf (accessed 15 August 2010). Carbonoffsetguide. (n.d.). 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