Marketing Strategy and Management - Assignment Example

Marketing Strategy and Management Question 1 Indeed, with “an equity worth NZ$67 million, an annual turnover NZ$39 million, an after-tax surplus of NZ$11 million, and considered as the most profitable trust in New Zealand”, one cannot doubt that the ILT is a success story. Besides the monetary success, the ILT has also managed to achieve most of its social goals that it set as part of its mission. There are several reasons for this success. The most obvious one is the fact that the ILT has been a monopoly. Atleast it was in its initial stages. This means that the ILT has been- for most of the time since it began its operations- the sole proprietor for most of the businesses, especially the major forms of trading on liquor (including off-licenses and pubs) as provided for in the Sale of Liquor Act 1989 Section 216. But the real success of the ILT cannot be measured. This intangible success surrounds the mission and vision that the creators of the trust had in mind about the kind of community that they wanted Invercargill to be. To do this, the ILT did not exactly aim for profits. Any profits made were meant to be invested back into the key objective, i.e. the community. The ILT won the support of the community through sponsoring events and by being a partner in most grassroots businesses and issues. According to Scarpelli (2009), these are some of the ways to win the hearts and support of the community. Part of ILT’s success in this case is due to the fact that the citizens of Invercargill gave it a free reign to prove itself. By entrusting the running of the ILT to the select few means that it set itself free from political interference that can sometimes be an obstacle to the smooth running of organizations. In other words, the ILT has the support of the people. Also, Invercargill was relatively small in size, and with a population of 50,000 it was easy to run. In other words, it was easy to measure success, as well as track the money and how it was used. This means that it was easy to maintain accountability and kill corruption. Question 2 An organization without mission is bound to fail. The mission mentions the organization’s overall purpose and sets out the parameters of its operations. The mission of the ILT is to serve the community (CARI, 2008). Although, like other organizations, it is focused on profits, ILT’s ultimate responsibility is to the community it serves. Thus, unlike other organizations in which money comes first and other stakeholders second, the ILT made the community first and money secondary. At every point, the interests of the people were put into consideration. All the profits made have only been used to uplift the livelihood of the people of Invercargill. Both the original and the second legislations provided for the distribution of the profits to the community for many purposes, including charity and recreation. This is what makes ILT’s responsibility to the community special. For example, it is this emphasis on the people and the community at large that makes the monitoring and regulation of alcohol sales and consumption sensible. This is in line with Handy’s (2002) argument that a business’s purpose is not merely to create profit, but also use the profits to do something better or more. The risk about putting profits first is that everything else that makes ILT special goes away. For example, it is only by ILT’s model that one can care for the social welfare of the community. Also, it would not care how much liquor the community spent as long as it got its profits. Fortunately, since profits is not the primary objective, the ILT has remained focused on its mission. Question 3 One of the criticisms against the ILT is that it is anti-competitive. This is mainly based on the fact that for many years it has been the only body that runs most of the businesses and social events in the Invercargill. Through its licensing trust the ILT has monopolized the liquor trade. Still, it is important to ask if this ‘anti-competitive’ claim is really valid. In considering this question, it is important to first of all assess and evaluate the circumstances that allowed the ILT to create a monopoly. Secondly, one should assess if the operations of the ILT have stopped other businesses from operating in the Invercargill. At the time that the ILT was set, most of the businesses and social amenities, amongst others, were not there. This followed the prohibition, which also saw many businesses pack up and leave. Indeed, not many people or organizations were wiling to take any business risks in Invercargill. The ILT did. In other words, ILT did not become a monopoly because it denied others the space to operate. Instead, it did because, first and foremost, it was willing to take a risk. Infact, it was an ‘experiment’. Taking this risk was made even easier by the fact that it focused on the people more than it did on profits. Nonetheless, despite the ILT running most businesses in Invercargill, many other businesses have still managed to get space for operation and provide competition. For example, there are over 100 other licensees besides the ILT. Ultimately, according to Thepot (2010), anti-competitive organizations find a way to make high profits even as the social welfare declines. But this is not the case here. To say the ILT is anti-competitive is to say that it operations drove other out of business. On the contrary, its successes have drawn other businesses back to Invercargill. True, the market is not as open. But this is understandable considering that ILT’s mission. Based on that mission, its monopoly on the liquor trade is not an act of anti-competitiveness. Instead it is an effort to maintain control over liquor consumption in the community. Question 4 The stakeholder theory, one of the many theories of corporate governance, emphasizes the need for an organization to cater for the needs of all those that it affects one way or another. Social responsibility of organizations towards the communities in which they operate is the realization of this theory (Hatcher, 2002; Wheeler et al. 2003). However, while social responsibility is secondary to profit for most organizations, it is the primary goal for ILT. Still, a number of consistencies can found here. The concept of social responsibility aims at the ‘public good’. This ‘public good’ refers to many factors, e.g. high quality goods and services, fair prices, room for choice, etc (Wheeler 2003). Although the ILT provides high quality goods and services, sponsors events, build recreations facilities, etc for the community, it still enjoys certain privileges at the expense of others. For example, since the ILT is largely a monopoly, the prices of goods and services are relatively high and there is not much competition to provide alternatives for the people. On this basis, therefore, one may question the notion of the ‘public good’. However, one should remember that the ILT does not earn the profits for its own sake. Instead, it invests all its profits back to the community. In other words, the high prices are ploughed back to other good services for the people. The question then becomes: which is the bigger ‘public good’? Is it lower prices or the investments that the ILT makes in the community? While the latter does not justify the former, the ILT offers more good than it takes away. There are inconsistencies yes. But they are minor compared to what the community gains. Question 5 There are several conceptions of the term sustainability. Generally, sustainability is related to the concept of corporate social responsibility. In other words, it emphasizes the ability of an organization to balance its social responsibilities with its long-term goals to ensure that it still has a forward trajectory. In simple terms, sustainability is to ensure both the organization as well as the projects initiated do not fall (Berkout, 2005; Utting 2005; D’Amato et al. 2009). From this explanation, perhaps profit-oriented organizations would seem most sustainable. According to D’Amato et al. (2009), a business model is most sustainable if it maintains the following key elements: Sustainable Development: This principle emphasizes the need to balance economic growth with social responsibility. In other words, an organization must not forget its long-term goals in its social responsibilities. It must set boundaries as to how far it can go; Corporate social responsibility, i.e. his refers to taking into social and/or environmental issues into consideration; Stakeholders; Corporate Accountability, i.e. this refers to keeping track of financial performance and social responsibilities, including providing regular reports on them. Bendell (2005) also emphasizes the need for accountability as a mechanism for sustainability. To answer the question, the issue of business type/model seems irrelevant here. The most important factor is whether an organization maintains these four principles. Although, for instance, ILT does not emphasize profits over the people, it still realizes the need for profits. It is for this that it keeps running businesses and providing many other services to maintains the balance between its responsibilities to the community and its business operations. In this effort, the ILT has adopted certain strategies by which it ensures sustainability of its self as a trust as well as the projects that it runs. The first strategy is operational risk management. Since the ILT focuses on the people, it has reduced both the cost and risk of compliance. In other words, it has fought to comply with most requirements of the people in Invercargill. Secondly, the ILT has a sustainable workforce. The ILT has always provided a dynamic workforce for the projects that it runs, ensuring good management. Thirdly, sustainable consumption ensures that the ILT generates customer loyalty and brand value. The ILT has done this by venturing in various businesses and projects in the area. In all this, the most important tool for the ILT’s sustainability is clearly the community, i.e. the people of Invercargill. By investing in the community, the ILT has the people on its side. Question 6 The question as to whether an organization like ILT or a private profit-oriented organization is the most appropriate is irrelevant. That decision depends on the key objective of the organization, i.e. the long-term goals. In this case the focus was on the Invercargill community. Since the ILT cares about the social welfare of the people other than making profits, its model is the right one. On the other hand, if the key objective for the business was money, then obviously most of the social responsibilities would be done away with. Simply, these two models are applicable in different circumstance based on what is considered the most important. It is therefore important to note that while profit-oriented business would perhaps bring more money, the question is whether that money would serve the people more than the ILT does. The ILT model, despite focusing on the people, has still borne much profit alongside its social responsibility. Simply, as a mayor the question is more on the benefits (both tangible and intangible) made. Monetary profits become secondary. Question 7 The same experiences of the ILT may not be replicated in my locality. The circumstances in my locality are different from the ones that provided room for the ILT to be established and thrive. For example, when the ILT began, there were a few businesses to create competition. In other words, the ILT found a vacuum which it took advantage of and in which it has thrived and reigned. In my locality, there are already many other businesses like the ones the ILT runs. Thus, the relative monopoly that has favored the success of the ILT will not be there. Another factor has to do with population and size of the area. Invercargill has always had a low population. Small populations are relatively easier to manage than big populations, which put more pressure on the available resources. Besides, equitable distribution of resources is not as hard as it is in larger populations. The population in my locality is much bigger. The success of ILT is partly attributed to the involvement of the people. Reaching a larger population in a bigger area is challenging. References Bendell, J. (2005). ‘In Whose Name? The Accountability of Corporate Social Responsibility’, Development in Practice, 15(3-4), p. 362–374 Berkhout, T. (2005). ‘Corporate Gains: Corporate Social Responsibility Can Be the Strategic Engine for Long-Term Corporate Profits and Responsible Social Development’, Alternatives Journal, 31(1), p. 15–18 Center for African Refugees & Immigrants (CARI). (2008). Capacity Development Factsheet. Retrieved 23 July 2012, http://www.ecdc-cari.org/docs/Mission_Vision.pdf D’Amato, A., Henderson, S. & Florence, S. (2009). Corporate Social Responsibility and Sustainable Business: a Guide to Leadership Tasks and Functions. Center for Creative Leadership. Retrieved 22 July 2012, http://www.ccl.org/leadership/pdf/research/CorporateSocialResponsibility.pdf Handy, C. (2002). ‘What’s a Business For?’, Harvard Business Review, 80(12), p. 49–55. Hatcher, M. (2002). ‘New Corporate Agendas’, Journal of Public Affairs, 3(1), p. 32–38. Scarpelli, M. (2009). Three Best Ways to Win Community Support. The Wall Street Journal, 29 October. Retrieved 23 July 2012. http://online.wsj.com/article/SB10001424052748703363704574503573498581220.html Thépot, J. (2010). Private Benefits and Market Competition, 2 Nov. Retrieved 22 July 2012, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1707873 Utting, P. (2005). ‘Corporate Responsibility and the Movement of Business’, Development in Practice, 14(3), p. 375–388 Wheeler, D., Colbert, B. & Freeman, R.E. (2003). ‘Focusing on Value: Reconciling Corporate Social Responsibility, Sustainability and a Stakeholder Approach in a Network World’, Journal of General Management, 28, p. 1-28 Read More