Strategic Management in Computers and Internet - Essay Example

Introduction: BA.com introduces a fully operational service, whilst still using the efficiency of Web based booking. BA also focuses highly on customer service over no frills air travel. The following report will consider the approach of BA in the current market of UK based air travel and consider whether it will be successful. Also it will consider its streamlining of staff whilst also ensuring that the staff is well treated and part of the decision making processes, which lend its self to consider good customer service. This may be an important factor that will make BA a more powerful competitor than the budget counterparts in the market. This will be one of the main factors when considering the buyer's (consumer's) segment of Porter's Five Forces Analysis. Then it will consider the new substitutes in the market, i.e. the no frills budget airlines, such as EASYJET and RYAN AIR as opposed to traditional competitors, such as British Midland. Porter's Five Forces Analysis: Figure 1:1 The above diagram succinctly explains the five forces that effect the position of a company within a competitive liberal market. These forces are the competitive rivalry within the industry, i.e. whether it is a monopoly or oligarchy, i.e. how easy it is for new individuals to enter the industry. In respect to airlines the ease to enter the market is limited because there are large setup costs; as well as the strict regulations since the events surrounding September 11th 2001. However, in recent years there have been budget airlines that have been entering the market, with the financial backing of large companies or tycoons. A prime example is Easy Jet. The bargaining power of customers is increasing with the entrance of budget airlines, whereby pricing is very competitive; especially with the rising fear of terrorist attacks. In fact, in many cases the pricing is dictated by the general consumer's expectations; however this causes problems to locations which are not the destination of the mass public. In respect to substitutes to airlines, this is limited in respect to long haul trips but much more diverse in respect to national and continental travels. Therefore not only does BA have to compete with budget airlines on short haul trips, but also with road, rail and sea travel. In order to compete with these obstacles BA.COM has initiated a very old, but winning approach which is customer service; however the main difference is that one can also have the efficiency and hassle free approach of online booking. The following report will focus on how introducing the first class customer service approach will create a stronger company internally and therefore making the choice of UK air travellers. In dealing with these issues of reputation, customer, staff and shareholder retention and satisfaction some serious queries have to be considered in respect to the regulatory regime of the Terrorism and Security requirements in each of its trading countries. As a company that engages in international travel, especially air travel, it is governed by strict requirements, guidelines and laws that need to be followed. This report will investigate the problems that may occur if BA.COM did not have an effective set of organizational behaviors in respect to the treatment and protection of staff, customers and shareholders; as well as the reputation of the company. The most important factor to remember is a happy staff means improved customer service and therefore the choice of customers.2 This falls in line with new EU Regulations concerning the position of the consumer. There are three key areas where problems are easily identifiable for the organization which are; the lack of proper organization with respect to operations; customer satisfaction; and staff morale. The first question that has to be dealt with is whether the bad market name is a direct result of the new policy or lack of organization in the customer service side. It would seem that the lack of any viable customer service will have a major negative impact on the organization because if one considers the basics of company law a director holds special duties of care to the company and subsequently the shareholders. Also in the light of new EU regulations the customer is considered the king. The latest EU regulation is ensuring the protection of the consumer under the Sale and the Supply of Goods to Consumer Regulations 2002 (SSGR). The focus of the SSGR is to make the consumer the King of the transaction and properly protected by the law. Therefore under any contract the consumer has extra protection in order to balance the playing field. A consumer under the SSGR is defined as: "Consumer" means any natural person who, in the contracts covered by these Regulations, is acting for purposes which are outside his trade, business or profession.3 Reputation is the key to the troubled markets, such as air travel, because without proper adherence to the needs of customers; as well as their protections under the legal system it can cause damage to its reputation. The key factor that BA.COM has focused is ensuring that its reputation is protected. This is through exceptional customer service and high standards of security, which reduces the financial and security risks to the organization; hence promoting BA.COM as the choice of consumers. The policy that has been recently introduced should be of positive effect. The new policy has to be efficiently implemented without causing loss for existing customers, i.e. the administration of the company has to be efficiently monitored and goals for customer service need to be implemented. Also the staff need to educated on the policy and reassured; as well as schemes to raise morale. At the same time the qualifications of the staff need to be monitored to ensure that all Air Security standards are met, especially in an atmosphere of high turnover. Also staff retention has to be closely monitored because staff changing hands all the time will slow down the efficiency of organization's efficiency. There will be conflicts from implementing these measures, first of all in the organizational hierarchy because the lower management has been able to create their own rules, which a new Operations Director will challenge. In addition there will be a conflict in respect to any staff that does not have adequate qualifications; whereby they will have to be let go or put in to a position where they can legally work which inevitably will be paid lower. In keeping the new accounts policy may lead to two sets of conflicts - the existing customers and staff; however without proper evaluation, i.e. in a properly run organization it is difficult to determine whether the policy is the problem or the lack of proper organization in respect to customer operations. Finally, if the new policy does not meet the standards of the Airline Security Standards in giving a wide choice to air travelers then this will be in breach of compliance. As long as security standards are kept then the new policy will make BA.COM a market leader by accepting that there are a variety of customers with more product choice and competition was the aim4, therefore this is highly unlikely. Therefore any breach will have to be on the grounds of customer service/complaints standards, staff qualifications and/or reputation grounds. There is an added problem in respect to staff turnover in where the staff has to be adequately trained, if the staff does not have the required qualifications as set out by their job role then the company and the staff member is open for prosecution and fines/sanctions by the regulatory regimes, as well as civil suits from consumers and shareholders. These are very important rules especially in respect to the company crime, but also in respect to customer satisfaction and dealing with customer complaints. BA.COM's approach can be successful, because such approaches have been taken by market leaders in other sectors. For example, HP takes training and motivation seriously, which is supported by its training mission and mandate because it is central to customer service, reputation and becoming and maintaining itself as a market leader: An agile and changing business can only succeed if its workforce is equally dynamic, flexible and knowledgeable. It calls for employees who are open to continuous learning - a workforce that is given every opportunity to learn, grow and develop skills to drive the company toward achieving its business goals. A key aspect of HP's employee development philosophy is our commitment to the support of life-long learning.5 HP understands that if their staff is not adequately trained then this will leave rise to customer dissatisfaction, as well as low staff retention and lack of motivation. Therefore the promotion of self-development is highly important in the organizational structure of HP, because the possibility of advancement and learning is a primary motivator of staff. Although a large amount is invested in training and development the benefits outweigh the costs because a satisfied and highly trained staff creates a better customer experience, less complaints increases staff retention and therefore improves the reputation of the company. HP has an excellent global reputation, which is primarily the result of customer experience due to excellent customer service which based upon training and development strategies. The main benefit of this reputation is that it increases the investment and therefore income and capital within the company. The theory of Weber6 provides some important insights into management who stresses the importance of hierarchy and accountability within the organizational structure for employees. Weber's theory is more than a lineal interaction between the management and employees. Weber's theory argues that management is made up of wertrational - value orientated rationality and zweckrational - goal orientated rationality. Therefore there needs to be additional aspects to the workplace rather than a dictatorial approach, there needs to be a support of promoting positive values, goals and motivation. HP understands this through both it training program, benefits and bonus incentives.7 HP understands that the lack of transparency and accountability also opens the company to liability, especially in the highly regulated sector of listed companies, because corners will be cut by employees due to the lack of control and accountability.8 HP was listed as No. 8 of top accountable companies in the world's top 100 companies, illustrating their commitment to accountability and transparency to the environment, society, shareholders and consumers: HP today announced that it was ranked No. 8 overall in the Accountability Rating, the first global index that evaluates how well the world's 100 largest companies account for their impacts on society and the environment. HP was the only U.S. company ranked in the top ten.9 HP understands that main problem with non-compliance of duties of a line-manager, high-level management, director or vice president is that it results in lack of organization and without the effective control by an accountable and efficient manager then the legal liabilities of the company are increased.10 This is because without a sufficiently responsible and liable individual corners will be cut. In other words this individual's behavior is putting the department of the company to a detriment, especially of privacy and data protection is breached. This would put HP a company as a whole, in a difficult position if laws are breached because the company owes a duty of care to its clients and consumers to privacy. HP being a large technology companies includes defense and government contracts, where breaches of privacy rules can have drastic consequences.11 HP understands is there is a lack of accountability and transparency in the management structure then a single employee's actions can open up the company, relevant managers and himself to civil and criminal actions; therefore an appropriate management structure needs to be adopted to ensuring accountability and efficiency into the organization.12 Therefore accountable and efficient actions from an efficient management structure needs to be present from the basic everyday actions to the special occasions, because how can a manager discipline an employee without accountable and transparent behavior This is promoted in various policies of HP but an excellent illustration is HP's approach to its approach to privacy and confidential data: In addition we argue that accountability is a fundamental aspect in dealing with privacy management and needs to be explicitly managed to mitigate risks and increase trust in the system. Despite the efforts being made by organisations in dealing with privacy, it is very unlikely that "tamper proof" solutions will ever be provided, considering that solutions are the result of a compromise between business needs, costs and requirements. In this respect, we believe in the importance of active tracing of disclosures of confidential data and auditing by trusted third parties to collect tamper-resistance evidence about enterprise activities when dealing with confidential data.13 Summary: Therefore if BA.COM succeeds and has a system of organizational behavior that promotes the best for the employee, shareholder, consumer, company, society and even the environment. This seems to be a hard paradox to solve but its promotion of global citizenship, diversity, transparency, accountability and the rights of the employee has created a successful balance between these competing interests. This can be seen in the approach of HP. The most important aspect that HP focuses on is that the company, its management structure and employees have to be responsible; otherwise this successful balance in organizational would not be achieved: A company cannot be a good global citizen without running its daily business responsibly. This involves a commitment to corporate governance and business ethics, and putting that commitment into practice.14 Bibliography: Beres et al, 2003, Accountability and Enforceability of Enterprise Privacy Policies, HP www.ba.com www.hp.com Kraakman, 1999, Vicarious and Corporate Civil Liability Harvard Law School can be found at: http://encyclo.findlaw.com/3400book.pdf McGrath, Berdahl & Arrow, 1995, in Jackson & Ruderman, 1995, Workteam and Diversity: Paradigms and Perspectives, APA Nahavandi, A. (2003). The art and science of leadership, Prentice-Hall Nkomo, 1995, Identity and the Complexity of Diversity in Jackson & Ruderman, 1995, Workteam and Diversity: Paradigms and Perspectives, APA Stewart & Associates, Leadership Models and Theories, can be found at: www.stewart-associates.co.uk Tinsley, 1994, Special Issue on Racial Identity and Vocational Behavior, Journal of Vocational Behavior 44 Weber, 1976 edn., The Protestant Ethic and the Spirit of Capitalism, London, Unwin Read More