Knowledge Management

MOTIVES FOR KNOWLEDGE MANAGEMENT OF RETAIL COMPANIES IN CHINA (A CASE STUDY)

A Dissertation

In partial fulfillment of the requirements

For the degree of Doctor of Business Administration

February 27, 2006

Dissertation Committee Approval:

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Chapter 1

Introduction

1.1 Background

In the attempts to discover the motives behind the implementation of knowledge management among Chinese retailers, it is important that the key word knowledge management be deconstructed in order to define adequately the term. Doing so will allow for greater and deeper understanding of the term and the underlying concept. Since the term concept of knowledge management is a combination of two concepts, knowledge and management, it is necessary that the merging point of the two be determined.

The following sections of this chapter will be discussing the definition of knowledge and how it was integrated with management. In the process, it is expected that the underlying concept of knowledge management will be discussed as well. In the latter part of this section, the introduction to the retailing sector of China will be presented. In summary, this chapter of the dissertation will be given a glimpse of the concepts involved as well as the context in which the concepts will be discussed later on. This chapter of the dissertation, the background of the study, will serve as the launching point of all the other discussions that will be presented in the dissertation. The initial claims in this chapter will be furthered by the succeeding chapters until the main objective of discover the motives behind the implementation of the knowledge management in the Chinese retailing sector has been achieved.

1.1.2 Knowledge

Knowledge is associated with learning. Browsing through the history of human development, it is evident that learning has played an important role in ensuring the survival of the species. Practical application of theories led to the confirmation of the validity of the theories and the evaluation of their effectiveness in lives of people. Studies going back to the time of Socrates have dealt with the concept of knowledge and its limits (1981). Furthermore, historians believed that amassing knowledge became the basis of human evolution (2001; 2003)

Until today, the notion of knowledge is closely linked to scientific knowledge. This implies that knowledge stemmed from research facilities that are academic in nature. These facilities include research institutes and universities (2003). Scientific knowledge is developed under scientific standards and methodologies. In addition, they are being tested and evaluated by the scientific community (2003). In order to impart to others the findings of the tests and evaluation, reports are being published in journals and books.

On the other hand, there is another knowledge that is present on the individual level. This kind of knowledge is believed to have been the product of experiences by an individual. Experiences allowed people to practice theories, as stated earlier. In the process, they are able to discern the factors that affect the execution of their theories. This trail and error and trial and error process provides the basis for comparison. Moreover, results gathered during the testing stage will be the same data used by people in attempting to utilize the same activity under different conditions. For example, paper mill workers have commented that they are able to tell that the paper they have produced is of the right quality just by smelling it (1998).

Furthermore, knowledge is defined as the amount of information necessary to function and achieve goals. It is also the capacity to make information from data and to transform it into useful and meaningful information; the capacity with which one thinks creatively, interprets and acts; and an attitude that makes people want to think, interpret and act (2000), which means that knowledge management is simply managing all of those concerns.

The three definitions of knowledge presented above did not pave the way for the term to be easily defined. They are only pieces of the whole puzzle that completes and complicates the definition of the term. According to (1998), there are forty dichotomies of the word knowledge. These dichotomies include the individual versus the collective and implicit versus the explicit. These dichotomies may prove to be obstacle for the standardization of the meaning of the term knowledge.

However, these same obstacles can also be used to further the understanding of the concept of knowledge linked with management. Taking fragments from the definitions presented above will allow for the formulation of various but all-helpful definitions of knowledge management.

1.1.3 Knowledge Management

Knowledge management (KM) is defined as the process of creating, capturing, and using knowledge to enhance organizational performance ( 1997). It is concerned with exploitation and development of the knowledge (both tacit and explicit) assets of an organization with a view to furthering the organization’s objectives, with the need for systems for the creation and maintenance of knowledge repositories and to cultivate and facilitate the sharing of knowledge and organizational learning (2005).

It is also defined as the company’s effort to improve either worker effectiveness or an organization’s structure, or both the exploitation and development of the knowledge assets of an organization with a view to furthering the organization’s objectives (2005; 2005). However, each company has different cultures, different management styles, and different business environments within which they operate. Thus, their motives for implementing knowledge management may be highly intertwined with those realities inherent within them.

The two types of knowledge that concerns knowledge management are: tacit and explicit. Tacit is subjective knowledge; while explicit is documented knowledge (2005). Tacit knowledge deals with or rooted in action and involvement in the particular context and has both cognitive and technical elements ( 1994). For instance, the skills of workers of retail companies in using important equipments, or the skill of the company in dealing with people is tacit knowledge. On the other hand, explicit knowledge deals with written or passed knowledge that can be easily expressed such as company rules, knowledge about the strategy of competitors, etc.

The definitions of knowledge management as presented above prove that there is no agreed definition of the term. Therefore, it can be stated that the term can be used freely to connote the methods and activities being used by business to disseminate, capture and gather expertise that are relevant to their organization. From this point, this will be the definition that will be used in this dissertation. This is the case since other researchers in the field support the definition previously mentioned.

Organizations usually are in need for knowledge, especially in today’s world where development of new technologies seem to be in a fast pace. Nonetheless, knowledge management (KM) is a structure within which the organization sees all of its processes as a business procedure. Knowledge management practitioners assume that knowledge is the most important resource of a modern organization, the only resource not readily replicated by its rivals, and therefore the source of its uniqueness or competitive advantage (1998). Knowledge management practice therefore, emphasizes the creation of new knowledge and the timely application of organizational knowledge to maintain strategic advantage (2000). Here, the organization has to be alert which knowledge is new, in the process, or already obsolete (1993).

With this, it can be stipulated that knowledge management and learning are on the same playing field. Since knowledge management pertains to the dissemination of expertise, it implies that process involves someone sharing the expertise and another party who is receiving the information. Due to this, the notion that the receiving end is more important began to surface. This comment was made because of the perception that the receiving party is the one who has to understand, make sense and apply the shared information.

On the other hand, some would prefer to associate knowledge management as knowledge sharing. It is believed that knowledge sharing has its share of advantages and drawbacks. One advantage is that knowledge sharing is interactive in a certain degree. This means that in the process all parties involve have the opportunity to actively participate in the sharing process. If lower ranking employees are involved in the process, this could mean an upliftment of morale since they will be able to feel that they are not just passive order takers form high-ranking officials of the organization.

However, it is also being perceived that the sharing process is insufficiently interactive giving the impression that the presence of knowledge precedes the process of sharing. In turn this entails that knowledge sharing is a separate activity from research and innovation ( 2000). Another drawback of knowledge sharing is the fact that it can occur both inside and outside the organization. In this case, external knowledge sharing is more risky than internal knowledge sharing. This is the case since external knowledge sharing can raise issues such as confidentiality, copyrights and proprietary asset protection.

Ironically, the risks involved in external knowledge sharing are offset by the benefits that can be reaped from the practice. According to Group (1998), knowledge programs will broaden to include not just employee but suppliers, partners, clients and even customers. This interaction among the various players of the market will allow one another to understand the other parties better. In turn, the result will be a more harmonious and symbiotic relationship leading to the achievement of the goals of all parties involved.

The expected benefits of knowledge management seemed to have outweighed the risks since more businesses are choosing to implement it. Knowledge management is no longer a fad that businesses try to catch up to. Today more than ever, it is a signal that the role of knowledge in managing is being developed in a manner that is more organic and holistic. All of these is being done to ensure that individuals will be equipped with the knowledge to adapt to the ever-changing conditions they operate in.

1.1.3.1 Seven Basics

Now that the rationales for implementing knowledge management has been presented, the next step is to actually outline what to do in order to initiate a knowledge management program. Since knowledge management can affect the whole structure of an organization it is important to take note of the steps based on priorities. Prioritization is important since it will enable knowledge management developers to formulate a program based on what the organization wants to achieve first or on what is needed at that moment. This means that the task of determining where to begin can prove to be difficult.

To aid knowledge management developers, Denning came up with what he called the seven basics of knowledge management. The objective of the seven basics is to guide knowledge management program developers to determine the next step. These seven basics are general in nature. This means that they can be altered depending on the case of the organization. However, Denning believes that these seven basics should be the priority.

1. Knowledge Management Strategy

2. Organization

3. Budget

4. Incentives

5. Community

6. Technology

7. Measurement of Knowledge Management

It has been said that the first is always hard to take, but once it has been done everything else will seem to fall into place. This is also the case in starting a knowledge management program. This task can become easier by answering a few questions like:

-What kind of knowledge will be shared?

- Who will be share and who will receive?

- How will the activity be executed?

- Why will knowledge be shared?

- Will knowledge be ultimately shared in the process?

Answering these questions will allow the organization to evaluate the capacity of their employees to share and receive knowledge. At the same time, it will allow the organization to systematically formulate the program.

1.2 Statement of the Problem

This study shall investigate the motives for knowledge management of retail companies and firms in China. Further, this study shall illustrate possible motives for knowledge management into China retail companies, factors influencing companies’ motives for knowledge management and how motives for knowledge management affect the progress of the Chinese retail market.

1.3 Hypothesis

This paper shall test the following hypotheses:

H1: The quality of retail industry’s performances is likely to influence customer’s perception. Ice: this Hypothesis does not match your dissertation topic.

H2: Knowledge Management significantly affects the performance of retail industries in China.

H3: Knowledge Management is likely to influence customer's satisfaction.

H4: Implementation of knowledge management minimizes the business operation risks involve in retail companies in China.

H5: Knowledge Management is likely to influence employees’ performance.

1.4 Significance of the Study

The findings of this study could help managers of retail companies to develop appropriate strategies in marketing. Furthermore, this study shall serve as an informative guide on the landscapes of retailing in China and the problems that could be encountered in the process of gaining access. Second, the findings could enable business educators and trainers to update their curricula and prepare competent business graduates for the global marketplace. Most importantly, the findings will provide a database for future comparative studies of the negotiating strategies of various countries.

1.5 Scope and Limitation

The findings of the study are limited to what the survey, textbooks, journals and selected top retail MNC management figures in China describe and prescribe. In general, textbooks and educators tend to use representative materials and recommend workable strategies and techniques for students to achieve the desired objectives. In interviews, top management executives from selected retail MNCs in China discuss their views on the motives for knowledge management to the Chinese market. This study is limited to a discussion of the Chinese retail industry focusing on selected top retail MNCs in China. Due to time constraints, a limited number of executives from retail MNCs who have invested in China are interviewed.

Ice: This above part is not clear and please rewrite to simply describe the scope of your survey.

1.6 Definition of Terms

Retail - Firm at the end of the distribution chain, which normally buys a product from a wholesaler in order to sell it to the final consumer.

Market Share- Measure of the relative size of a firm in an industry or market, in terms of the proportion of total output, sales or capacity it accounts for. In addition to profits, one of the frequently cited business objectives of firms is to increase market share.

Joint control - Exists where two or more undertakings or persons have the possibility of exercising decisive influence over another undertaking. Decisive influence in this sense normally means the power to block actions, which determine the strategic commercial behaviour of an undertaking. (1980)

Environmental Factors – The behavioural and cultural factors that need to be considered upon entering markets.

RMB – Renminbi, Chinese national currency.

Chapter 2

Review of Related Literature

This chapter will review the related literature conducted on the area of study. By embarking on such pursuit, the research may be guided accordingly by firstly discovering where the research is coming from, what and how much have been studied regarding the topic and what it is yet to tackle. Besides providing background to the study, this chapter will provide the necessary backbone and support in order for the research to stand credible.

By surveying the past researches related to the study, a historical perspective may take place. The researcher will also gain an idea on how such venture has been explored in the past. In this manner, this study may be able to reflect, compare itself, learn from setbacks and produce a stronger and more efficient study. The Literature Review will also provide the research a rich source of data, both new and old, that will enhance and enrich the study (and the direction it will plan to undertake) even the more.

The previous chapter introduced the topic. What this chapter should do then is to further enrich the reader of the data regarding the research. It will clarify the research for the researcher and the reader, and in a sense concretize the goals, aims and objectives expressed earlier in the study. The chapter will emphasize how it will contribute to the field of study it has chosen and further improve it.

While Chapter 1 offered a glimpse of Knowledge Management, this chapter will seek to delve further into the subject matter among other concepts mentioned in this chapter. It will also elaborate and discuss further the past studies or related literature regarding the motives of foreign retail companies in the implementation of knowledge management especially to risk management in China. Moreover, the discussion regarding the status of retailing in China was also discussed.

Retailing The latest study says that 70% of all decisions and choices to purchase a product come up when the customers are still in the store shopping. So it means that customers go through the so-called impulsive buying. In order to improve sales, the retailer’s marketing efforts is very necessary. In 2003, retailers drive their success on disposable income and impulse purchases (Retail Sales in the Macroeconomic Context, 2004). This alone gives the idea that retailers should seek new ways on how to cope up with the current trends in retail. Lately, the globalization of retailing has made a strong impact on the profitable structure of municipalities in the entire nation. New format retailing has made a significant change in the retail sector (Muncaster, 1998). It changed the consumer behavior as well as caused remarkable changes to the retail structure itself. The study of Muncaster, gives the idea on the effects of the new forms of retailing in Kitchener CMA in Ontario, Canada, the focused of his study. The growing markets absolutely draw the leading edge retailing (as demonstrated mainly by new formats or the “big boxes”, and the power clusters. On the other hand, (1998) cited that performance outcomes are a function of many variables that includes owner behaviors, individual owner characteristics and environmental influences. Small firms as unique entities are the mini-versions of large businesses. Increasingly sophisticated consumers have higher needs and expectations, particularly in retailing. This is an outcome of the new demands of smart shoppers, more so with the, new standards in communication, an invasive advertising, and the extras of just about everything – except the time. The consumers’ common citation now is “I want it better, cheaper, easier, faster, and now” and if his/her demands can’t be meet they won’t stick time to stay to one establishment but rather go to a lot of other alternatives (J. C. Williams Group, 2004, p.1). As for instance, Montgomery Ward, J.C. Penney, and Sears, Roebuck take action on the environmental changes in a lot of ways. Furthermore, they see the need for changes as a guide in their decision-making (Greco & Michman, 1995). Therefore, marketing strategies in operation, strategies for product/ service differentiation from competitors and on how the business compete in the market for price and product supply serves a big factor in determining the success of each retail businesses (Gaskill, Manning, & Auken, 1993). Retailers should constantly meet the demands of consumers to sustain financial growth. The new forms of retailing support the demands of the increasing needs of every consumer. Thus, came out the phenomenon of “e-retailing” (J.C. Williams Group, 2004, p.1), the fastest way to have a link on the stakeholders (customers). This has worsen the competitive situation by recommending the “I want it better....” needs of the consumers, lower prices, easier shopping, and a better product information as compared to the conventional retail channels. However this development is not totally a threat to the traditional retail channels. Observers noted that e-retail range from 5% to 10% or as high as 15% share of industry. Moreover, there are companies that grab the chance for e-retailing to get their share, whether it’s 1% or 15%. In 2003, retailers carry out an intelligent turnaround to profitability (Tedeschi, 2004). It is very essential for the retailers to quickly evaluate their channel strategy to guarantee that they are in a position to sustain and grow their share of total market and stay healthy. Undoubtedly, some arrays of store formats and channels are not new to retailers. Like the case of Canadian Tire that has mixture of store formats, catalogue, e-flyers, and services – all functioning together. Another channel that shakes up the status quo is the arrival of e-retailing because of its enormous competitive advantage and some disadvantages, over the conventional channels. It helps save the time of the shoppers and fills up for the need of instantaneous fulfillment. Again the basic function of e-retailing is a need for retailers to have a model that meets the demands of the “I want it better, etc.” kinds of shopper. The main impact of this new form of retailing is to create an ultimate satisfaction for the customers and gives profitable advantage to retailers. Sophisticated buyers would always want something that they can easily reach out and touch and be touched at any time and place. The advantage of sticking to one-channel is that distribution strategy would be bringing the banner of marketing with just one medium (J. C. Williams Group, 2004). Communication helps facilitate action and determines shopper trial and buying decisions. E-retail is very powerful because it integrates the retail and communications understanding so effectively. Retailers on the other hand, should make sure that they employed all appropriate channel options. The trick will be to have unfailing and unspoiled management of the Total Touch, multi-channel strategy. The Total Touch Model is simple and apparent. Retailers should hold on the reality of the changing channels and their sales usage, shifts, and opportunities. They should make a strategy that gives them competitive advantage, a strategy on how they will get ahead or at least sustain with this wave of change. Total Touch strategy is very transparent and J.C. Williams (2004, p. 3) evaluated it as follows: “retailers should offer a multi-channel choice because people shop across channels and be prepared to deal with customer relationships as they shop and communicate with you across a number of channels; the influenced of e-retailing sets new high standards for pricing, product, assortments, information, ease of shopping, services and speed – ensure that you have similar policies, practices, and standards across all of your channels – or risk that is set against customers; it is a stupid act if you won’t adapt or test a new channel for fear of cannibalization (u should play a market share game because if not, competitors will block you from new channels); and most of all, a powerful brand will be one of the most important keys to success, in creation of channels, stores and Web sites.

China’s Retailing Industry

Marketing is a social process that entails an economic activity and a compilation of physical tasks (1967). It actually engaged in the buying, selling, and trade of goods and services and the additional activities that make these exchanges possible. Marketing is one factor that helps retailing to adjust and adapt to the changing needs of the environment. However, in order to adapt to the changing market, strategies are very important. (1995) mention the strategies in a changing market as follows: foresee the changing market divisions; to position new stores in new shopping centers as well as locate in new markets; improvement of store brands; modernization of the stores; to develop strong store strategies; objectives must be clearly defined; target-precise market segments; and the promoting innovations. On the other hand, they also cited the mistakes that most retailers commit. This is very important in determining the factors that makes a business fail. First is the disappearance from its basic fundamentals; and then by carelessly allowing the image of the store to tarnish; and of course the lack of continued innovation which is very important; “all things to all people”; the incapacity to shift strategies; and by ignoring the forces behind competitions. All in all we can see that innovations are very important in all businesses whether it caters to retailing or that of a bigger organization.

Motives of Knowledge Management

Handling employees, developing company standards, implementing regulations and monitoring business operations are some of the important activities covered by management knowledge (2002). While various crime prevention methods have already been recognized and applied, the value placed on management knowledge appear to be inadequate. Most literatures and actual cases are centered on the benefits of different crime prevention methods, yet the role of management knowledge to the efficient application of these methods is not highlighted. In addition, while people with technological skills are emphasized in the issue, individuals with the knowledge of management are not given value.

For instance, the knowledge of management involves the use of effective communication among clients and employees. By means of this management skill, the employers can effectively relay to the employees the significance of having security management techniques (1989). This is particularly important for controversial methodologies like the active badge and wiretapping. While this may appear to be a violation of ones privacy, management knowledge can allow effective communication, which in turn can make employees realize the purpose or benefit of employing such methods. Through management knowledge, employees will be more open and cooperative towards security measures employed by the organization. The mere application of crime prevention methods will not solve the problem on security if employees will not participate willingly. The involvement of people working within the organization is indeed an important factor to an efficient security system. The knowledge of management will then help ensure that employees are properly trained and informed about these crime prevention techniques.

As noted by (2000), handling people for security management is challenging as internal employees and external members of the organization must be involved. Thus, the presence of management knowledge can facilitate efficient contribution towards organizational security. In particular, the knowledge of management can help in identifying the different capabilities of the employees and maximizing their potentials for better security management systems.

The hiring of employees is an important responsibility of the management. The knowledge of management will then help organizations prevent security problems caused by negligent hiring (1994). People or employers with strong management knowledge have the right skills to screen employees appropriately. Having the right knowledge on hiring can contribute significantly to organizational security as this will reduce the likelihood of hiring employees that are not suited to the company. Specifically, negative employees that could reduce morale and cause unpredictable work-related violence can be prevented by means of management knowledge (2001).

As previously mentioned, the knowledge of management involves the establishment of appropriate processes and regulations. This then implies that a well-established procedure for hiring employees is an important contributor of a more secured work environment. Management knowledge should then be valued as this enables employers to conduct reasonable investigations of their applicants’ backgrounds. In this point, the role of management knowledge in creating a well-defined hiring policy is stressed.

In order to ensure the efficient functioning of the security management system, it is essential that the management employs a monitoring procedure. This continuous step ensures that the no problems are encountered by the system. Should there be minor or major problems identified, the monitoring process can promote immediate action. Configuration changes and upgrades needed by the security system can also be done easily through the monitoring step. In this aspect, the monitoring role covered by management knowledge is emphasized.

Thus, this paper aimed to specify the different motives, interpret them, and link them with the different factors that build a company. Specifically, the purpose of the research is to “specify” motives of companies for knowledge management based on the industries they operate within. This will help confirm the generalized reasons for implementing knowledge management, and may also help in discovering new knowledge management methods. This paper will examine the motives of the retail companies in China for implementing knowledge management.

Despite the fact that there are true reasons why companies in China need knowledge management and that most of those reasons can be logically thought by any businessman, companies may also have their own specific motives for implementing knowledge management. Determining the specific knowledge management motives can be an important research issue because it can reveal many things about how companies, particularly retail chain companies in China, decide to manage their knowledge network.

With this in mind, it is important that this industrial sector of China be introduced before being analyzed. Familiarization with the sector involved will allow for better analysis of the motives behind the implementation of knowledge manage in the retailing sector. This kind of segmentation will ensure that various aspects of the sector will be accounted when analyzing the possible motives. The following discussion will be focusing on the nature of the Chinese retailing industry including the businesses activities that take place within the sector.

Even before the economic reforms started in China, the retailing sector is already present. However, trade was restricted and was only limited to the distribution of basic commodities to the consumers (2001). Retailing back then was considered to be a passive activity. This is because the economy of China at that time is centralized and the shortage of good did not give resulted to the bloom of the retail sector. This also implies that no competition existed.

However, in 1978 the retail sector of China began to undergo a transformation. The reopening of the country to outside merchants brought about this transformation. With the entrance of foreign merchant resulted to certain degree of diversification. This diversification even affected the format of retailing in the country. The passive retailing sector of became was bombarded with retailing formats from the west. Discount retail outlets were established. Supermarkets also mushroomed alongside factory and warehouse outlets, shopping stores and retail outlets ( 2001). In a way, the retail sector of China has undergone revolution of sort that completely altered its façade.

With the changing face of retail store in China, the priority of retailers also shifted. Customer satisfaction became the focus of businesspeople. Chinese retailers have learned to take a note of what the market wants to see on their shelves and what people are most likely to buy. This means that retailers are starting to become aware of the market demands. They began to zoom in on the taste and preferences of the consumers and not just the traditional retail items.

Today, it is being predicted that the retailing sector of China will play a big role in the country’s future. This will be in terms of creating new and more jobs for its people. In addition, it is highly possible that the retail sector of China will become one of the regional leaders. With this possibilities looming ahead, it is important that the Chinese retail sector be able to sustain it edge over other retailing sector in the region. This means that they have to continue their adaptive strategies as described earlier. Doing so will allow them to go head to head with international retailing sectors.

One way of ensuring that Chinas retailing sector continues to develop alongside world retailing leaders is through knowledge management. It is important that they gain access to information regarding the developments on retailing on a global level. Knowledge sharing will allow them to utilize best practices and gauge how they are at par with their rivals. Gathering, processing and disseminating information through out the retailing sector of China will also ensure that majority of the retailers survive despite the continuous influx of foreign merchants and products into their country. It only through continuous education and re-education can the retailers of China sustain their transformation.

Barriers in Retailing

During the last 25 years, China has made great economic progress as it has opened itself up to foreign investment. According to the (IMF) 1999 World Economic Outlook, China maintained an average annual gross domestic product (GDP) growth rate of 9.8% between 1979 and 1998. China’s GDP Growth reached its peak in 1995 by achieving a growth of 12.0%, 4.1% increase from the 7.9 GDP growth achieved in 1990 ( 2002a). However, following the Asian Financial Crisis, China’s GDP fell to 8.3% in 2000 and was predicted by Euromonitor to go down further to 7.0% ( 2002a). This however does not offset the growth implicit in the progress achieved by the Chinese economy.

By June 1999, China had approved more than 332,700 foreign-funded enterprises such as automobile, chemical, computer, electronics, food, beverage, retailing, banking and insurance companies, which have collectively bought in foreign investments of more than $286 billion (1999). And in 2001, China approved well over 22,000 new enterprises backed by foreign direct investment (FDI), an increase of over 16% from 2000. The actual FDI in China rose to US$42 billion according to the Ministry of Foreign Trade and Economic Cooperation. Euromonitor estimates (2002a) that the result is likely to be even more notable as investment in China’s service sector including banking, insurance and telecommunications- will rise rapidly after China grants foreign investors greater access.

The progress achieved by China in retailing can be illustrated by the 38.5% growth achieved in real terms between the years 1996-2001 or translated in monetary terms, it RMB reaches 230.6 billion ( 2002b). In 1997, the retail sales growth reached 9.6% but subsequently, went down. It reached its lowest retail growth in 2000 with 4.8% as a result of the Asian Financial Crisis accompanied by a sluggish market, falling consumer confidence and a continuous deflation in retail prices across the board (2002b).

A survey by E (2002b) shows that the total number of retail outlets increased by 32.6% to register at 20.3 million in 2001. Moreover, the number of food retail outlets increased by 34.1% while the number of non-food retailers increased by 29.8%. The opening up of the retail sector led to tremendous increase in the number of employees in the retail sector; it grew by 22.5% between 1996 and 2001, from 32 million to 39.2 million.

To strengthen the figures noted, the World Trade Organization’s negotiation with China allowed the retail market to be more open to foreigners; it allowed foreign investors to become majority shareholders in January 2001 and in January 2003, all the regional, quantity and foreign equity share restrictions will be lifted, which means a foreign company may wholly own a retail business in China ( 2002b).

Moreover, the growth of the economy and the increasing influence of China's entry into the World Trade Organization (WTO) have propelled China's retail trade to make rapid development through both co-operation and competition with the international retailing giants. In the past five years, China's retail market has maintained an average annual growth of seven percent, higher than the growth of other new markets ( 2002). Statistics from the Chinese Federation of Commerce show that the top 100 retail enterprises realized more than Renminbi (RMB) 230 billion in sales in 2001, rising by 32.5 percent over the previous year. According to forecasts made by the Market Bureau of the State Economic and Trade Commission, total retail sales in China will increase by 10 percent in 2002, promising huge potential growth for China's retail market, supported by the rapid growth of the economy and the increased income of consumers. The total market scale is expected to reach RMB 5, 700 billion by 2010 ( 2002).

The fast growth and huge potential of China's retail market have attracted many famous foreign retail enterprises. By the end of 2001, China had more than 300 foreign-funded retail enterprises in the form of shops, chain stores, retail and wholesale outlets ( 2002). These are expanding inland from the coastal areas, and starting to spread across China. At this point, 70 percent of the top 50 retail enterprises in the world have set foot on the Chinese mainland ( 2002). Especially since China's entry into the WTO at the end of 2001, foreign retail giants have increased their speed in entering China.

However, retail market operations have been scattered during the past 10-15 years, with a very low rate of concentration ( 2002). The top 50 enterprises only snatched less than five percent of the market share, and the total sales of the top 100 accounted for only 10 percent of the total sales of consumer goods in 2001 ( 2002). Their operation is still small scale when compared with those of the international retail giants. Furthermore, with China's entry to the WTO, many Chinese supermarket chains are feeling greater pressure from foreign competitors. The fear comes mainly from their uncertainty over the state of their competitiveness ( 2002b).

Internationalization into China’s Retail Sector

Retail internationalization has attracted much attention in recent years as the scale and nature of the activity has changed (2000). Most analysis of retail internationalization however is based on market entry and mainly successful businesses. (2000) suggested that market exit and failure are important under-researched dimensions of retail internationalization.

There is an impressive body of literature on the internationalization of firms. It can broadly be divided into two currents of research: the economic and the process approaches ( 1992). Internationalization is defined as the process of increasing involvement in international operations ( 1988). Internationalization is not an activity that is divided from other activities in the firm. Internationalization is a part or a consequence of a firm's strategy. Strategy is defined in a broad sense ("a pattern in a stream of action"), as advocated by (1985). Here, however, the focus is on strategic changes and not on standard patterns of behavior ( 1965).

Building on previous research, (2000) contends that conceptual frameworks developed in non-retail environments do not adequately explain the process of retail internationalization. contends that there is a lack of agreement on what constitutes internationalization. Furthermore, (2000) stresses the importance of understanding the two aspects of the internationalization process - the internationalization that takes place whether or not retailers take concepts of skills from one country to another and the internationalization that occurs within the company itself.

In the year of 2000, the public relations industry in China witnessed a 50% output revenue jump to 1.5 billion Yuan (US$ 184 millions) ( 2001), and the actual foreign direct investment rose by 24.2% to 4.58 billion US$ in the first 2 months of 2001 ( 2001). It needs to note here that all these increases happened under the world economic recession background.

Internalization in the Chinese economy can be attributed to several factors. For instance, (2002) argued that China is no longer full of ideological gospels both in political and economical arena. This assertion according to (2002) holds no root even in time. China's administrative system in its very core, has never altered its inherently authoritative elite-governing tradition, which had been well developed through its thousands of years of feudalistic-like history. The core part of this philosophy is self-regulation in ethics and extreme pragmatism in reality.

Knowledge Management – An Overview

The first Chapter gave an overview on the essence of Knowledge Management by defining knowledge and integrating this with management. It had also provided an introduction on the retailing sector of China. It defined knowledge as having a key role in learning as well as human growth and development. It has been related to scientific or learned experiences from an individual’s trial and error processes. It was also alluded to information which determines human functioning. In the context of knowledge management, it was determined that knowledge is created, captured and used in order to improve organizational performance. It also involves the taking advantage and development of an organization’s knowledge to further attain objectives. It involves the database acquisition and arrangement of knowledge. The first chapter has also detailed Tacit and Explicit knowledge. If Tacit would deal with skills and subjective knowledge while explicit would be documented. The chapter also made mention of how knowledge is an essential resource in new technologies and gaining competitive advantage or expertise knowing knowledge’s abilities to provide learning and in turn, enhancement. Knowledge Management is supposed to maximize the sharing of knowledge important for any developing firm in the retail industry especially if the focus had shifted since to Customer Satisfaction. Knowledge Management would assist Chinese retail stores in particular to find out what the market wants to particularly see on the shelves and what the customers will most likely buy. This may be determined by the market demands which Knowledge Management may easily provide. The chapter also asserted how the retail industry will significantly function in China as a means to create more employment opportunities and grow further enough to compete with the International retail sector. Knowledge Management can empower these sectors as it may allow them to determine not only the customers’ needs and wants, but also their competitors.

Knowledge Management thus “maximizes returns” according to It is at the core of global economy and thus, being the center (2001), it’s management and correct manipulation would lead to success for a firm. This suggests as much why there must be a term or a field entirely for the management of knowledge. Secondly, it is the fact that the pervasiveness and ubiquitous nature of knowledge would immediately demand a manner in which it is tracked and properly exhausted of its value. As knowledge is not a tangible or touchable concept, there is a need to capture and bring this in a manner that would allow it to be documented and captured to be further studied and managed. Bendler et al argue that knowledge lead to firm success through toe acquisition of intangible assets such as “knowledge of customers, of products, of technologies, of how to make a company work” thus resulting to enhanced “customer relationships, patents, brands, special skills, superior supply chains” (). Thus the management of these intangible assets should no doubt lead to optimization and “reap the highest rewards”. More aptly, they define knowledge management as (2001):

… the ability to adapt successfully through constant reinvention and optimization, to tap into new market opportunities, to jump on the latest trend earlier and more decisively than others, and to innovate.

Knowledge Management is capable of remarkably improving and positively changing the strategies, views and the many difficulties that a company may face. By optimizing, knowledge may speeden up procedures, produce qualities of high quality in a manner that would be cost and time-efficient. Knowledge Management will actually infuse innovation through “a fresh sense of creativity” in a way that new perspectives and techniques may be used to handle problems, situations and obstacles that may otherwise be old (2001). Bendler et al puts the perspective of a turbulent fast moving economy that will require firms to be flexible in their movement and capable of handling changes. In an age where companies and firms are fast becoming bankrupt even the most popular well known brand names, it is knowledge that will maintain and sustain a company through the understanding of “new markets, the potential impact of globalization, and how to improve processes” (2001,). While knowledge is pervasive and ever-present, it is nonetheless, raw and unrefined. It is Knowledge management that would take these knowledge to be employed, scattered and nurtured. The challenge is that, knowledge’s intangibility allows it to be vague and invisible making it truly a predicament to attempt to capture it. It is also ever elusive as it may take several forms and certainly, a firm with several knowledge would not be able to do much if they cannot translate and understand the importance of some data. Knowledge Management presents the questions that needs to be asked, how to use the information to the company’s advantage and against rivals and above all, what are the implications of such, “Knowledge management is using a company’s understanding of these relationships—whether to improve products, processes, or customer relations—to increase profitability” (). It is rooted to the business missions and objectives as well as strategy to maintain a customer base in order to promise profitability.

(2001) warn that should knowledge Management be ignored by firms, they might as well be ignoring the prospects of “potential improvement…opportunities” as well as “wasting money” because strategies and plans will have no knowledge to rely on or, knowledge has not been managed enough to be maximized and applied. Not only will this lead to stagnation, there is also the possibility of an early demise as customers would opt for companies that know how to satisfy and meet their needs and demands better, Undoubtedly knowledge management would be vitamins or food to an organization. By being able to employ and deploy knowledge in a manner that is quick and effective, the competitors will significantly gain an edge. However, knowledge management does not immediately promise success. It takes the proper “application, coordination and alignment as well as their detailed design” of the knowledge management before success and true knowledge optimization may truly be obtained. A product of poor knowledge management may be a product that would have been researched and spent and unreasonable amount of money that would eventually be “counter productive”, (2001) further point out that knowledge management is not performed by just a particular department, but rather it should be integrated in the entire organization before it may be effective.

Critical Factors for KM Success

In order integrate knowledge management successfully in the organizational setting, key factors would have to be present. One of these key success factors is technology. This key factor enables organization to have access to various useful features, including collaboration, knowledge sharing and document organization (2002). These tools typically provide a secure central space where employees, customers, partners & suppliers can exchange information, share knowledge and guide each other and the organization to better decisions.

The technology factor is essential to KM success as it makes efficient information exchange possible. The technology factor is what actually makes KM different from organizational learning. As it is important in the efficient implementation of knowledge management, the information systems used should be accurate, user-friendly, reliable as well as compatible with the existing platforms of the organization ( 2005).

The people factor is another important key that would help achieve KM success. (2000) noted that people are particularly important in the evaluation of the activities and systems that would be integrated in the KM effort. They are significant in accepting or rejecting KM strategies based on the needs of the organization. The process of how the strategy will operate is also designed by this key KM factor. Effective process design enables KM users to obtain quality maintenance, data entry or deletion as well information updates.

As processes dictate the necessary activities that a knowledge management system must undergo, it is integral that these processes are simple and clearly understood by the entire organization, particularly the employees (2002). Unlike common information systems that are electronic and automatic, KM needs highly-skilled and efficient human support in order to become useful. It is then important for the organization to recognize the individual potentials and skills of each employee in order for them to perform and contribute effectively (2002).

(2001) stated that the application of KM in the organization would also require the people factor for effective leadership. Leadership visibility should be maintained throughout the KM effort mainly to minimize organizational constraints related to the achievement of KM success ( 2005). (2000) noted that the role of important KM actors must be emphasized. Specifically in this case, the objectives of a chief knowledge office (CKO) must be integrated to the activities of a chief information officer (CIO), who plays an important role in organizational knowledge management.

In particular, CIOs should be responsible on developing the appropriate KM strategy for the organization as well as ensuring that this strategy would address its primary needs. Determining KM priorities, securing funding as well as developing relevant policies are also important activities KM leaders or CIOs must perform effectively. Leaders in general serve as the primary facilitators and motivators of projects; in KM, leaders should then serve as chief KM advocates who would maintain order and discipline within the organization for knowledge management implementation.

Leaders and facilitators actually play an important role in generating another important factor in KM success: culture. In order to integrate knowledge management effectively in an organization, management must refrain from forcing the concept and its activities to the members. An organizational culture where openness, coordination, cooperation, participation and teamwork among employees are practiced should then be established and maintained ( 2005).

Leadership is said to be an important element in this factor as the leaders will be the one who would bring the employees together towards a common KM objective. While the cultural factor is an important key to KM success, its establishment is a challenging task. This is mainly because introducing a new concept to an organization, such as knowledge management, would likely encounter resistance from other organizational members (2001). This stresses the role of the leaders in KM success, especially in influencing and convincing other employees.

This role is relevant to yet another key success factor of KM success, which is motivation. In the study done by (2000), the significance of motivation and rewards has been stressed, citing the case of the American Management Systems (AMS) as an example. In order to recognize the contributions of its employees, the company provides special awards to deserving associates. Members who were able to provide outstanding contribution in improving the company’s knowledge base were given due recognition through the Knowledge in Action program. These awards are given every year during the company’s Knowledge Center Associates conference. More tangible rewards such as small cash awards or inexpensive gifts were also given to the employees. The outcome of this key factor has been positive for the company.

Motivating the employees to participate and contribute to the organization’s KM efforts is essential as this builds commitment and determination among employees, another significant factor for KM success. The company management should ensure the committed behaviour among organizational members as this helps reduce organizational change issues and risks. In addition to motivation efforts, the determination and commitment factor can be obtained through other means. For instance, the purpose of knowledge management should be clearly defined to the employees (2002). Through this, employees’ involvement in knowledge collaboration, sharing and reuse will considerably increase. Commitment to KM can also be achieved through effective communication among organizational members. This will help in emphasizing the role and purpose of employing KM in the organization.

Another way of making the employees more committed to knowledge management is through the provision of appropriate education ( 2005). By teaching how the employees can contribute to KM success makes them more committed as education increases their confidence and efficiency in handling KM-related activities. Educating the employees also optimizes the potentials of the employees especially in generating other new ideas that would improve the organization knowledge management status.

In order to successfully implement KM in the organization, the nature of the knowledge itself should be taken into account. In particular, timely, useful and reliable knowledge must be generated to achieve KM success. This can be achieved by means of yet another key success factor called knowledge sharing. By means of sharing knowledge with the customers, suppliers and other work groups, the organization is able to create and acquire useful knowledge ( 2005). With this key factor, it is then essential for the management to design a KM system where the capability to share knowledge is utilized and enhanced.

Finally, assessing the outcome of the KM effort is also another key to success. Also referred to as benchmarking, evaluating the efficacy of the KM effort is essential as this helps the members identify ways on how the existing strategy can be improved further ( 2005). This also helps in ensuring that the objectives of the company are being achieved and that the strategy is in line with the organization’s needs. Assessing the effect of knowledge management to the organization is also one effective way of recognizing the contributions of the members. For this key factor, the company must then develop a benchmarking technique should be developed along with the KM plan.

Several Approaches to Knowledge Management

Before analyzing the different motives that may be behind Knowledge Management, it is first important to emphasize Knowledge Management as having several different approaches fitting to a particular institution. This section will emphasize how Knowledge Management may actually be employed in so many ways. Over the years, the extensive research on knowledge management identified a lot of different approaches to the practice of knowledge management. In fact these researches were able to determine which particular approach is compatible for a specific organization. This proves the fact that the actual way that knowledge management is implemented in an organization varies widely according to the types of organization, its industry and culture. Some of the most common approaches to knowledge management includes; approach through innovation, quality control, knowledge technology, human resource management, intellectual capital, strategic approach, network approach, learning organization approach, and Information and Communication Technology approach.

Knowledge management can be approached from the perspective of innovation. This perspective has an emphasis on research and development and marketing. More specifically the approach manages knowledge related to the acquirement of new products and services. The approach through innovation is particularly applicable to the recently popular software industry. For this industry, it is very important that new innovations are acquired as well as preserved in the organization since there is a very strict competition among companies in this industry. Furthermore, the modern consumers are increasingly demanding for innovative products and services necessary for the modern world.

An approach through quality control is basically aimed at the improvement of the quality of the products of a particular organization by means of quality safeguarding systems. This approach is applicable to organizations involved in the manufacturing industry. The learning organization approach as well as the organizational approach is more general compared to the approach from the perspective of quality control. These two focuses on the whole organization, in other words knowledge management is aimed at organizational development.

Knowledge management approached from the point of view of knowledge technology has an emphasis on the transfer of knowledge. Transfer of knowledge in this scenario is made explicit in knowledge systems. This approach is similar to the network approach. Like the former approach, the network approach is centered on knowledge sharing or the transfer of knowledge within the organization. In the network approach, knowledge is shared through an intensified collaboration agreements and alliances. A more advanced and comprehensive approach in terms of knowledge transfer is the information and communication technology approach. The ICT approach emphasizes on the contribution of information and communication technology to the co-ordination, communication and sharing of knowledge. This approach is also in a larger scale compared to the other two. That is, the ICT approach maximizes the use of the Internet and all the available resources of the advanced technology in knowledge management. This is particularly applicable to organizations operating internationally.

The approach to knowledge management from the perspective of the human resource management can be considered as the universal approach. That is, this can be applied to any industry, organization and company. Knowledge management through the human resources managers deals with self-governing teams, co-operation, motivation and stimulation of (natural) leadership to learn people in organizations to adjust and to change. In this approach, the human resource managers who are the most experienced when it comes to managing people are the major players. Since the people involved in the organization determine knowledge, it is a good practice that knowledge management is practiced together with human resources management.

What makes the strategic approach different from all the other approaches is that it has a concrete basis. Although all the others have their basis too, the strategic approach is more objective and scientific. Its main objective is to develop a method for analyzing key knowledge. The strategic approach holds on the idea that knowledge is key if it distinguishes an organization from competitors. The approach believes that key knowledge should be recognized, sometimes be spread, secured and should always be locked. Several issues play a role in the strategic approach, these include; what’s the right reasoning about knowledge, defining key knowledge in a theoretical perspective, tracing and prescribing key knowledge and taking right decisions on key knowledge.

Organizations may choose to adopt any one of these approaches or combine several approaches that are applicable for their company. Organizations and companies of today are being confronted with a lot of different choices concerning knowledge management. Of all these approaches, however, three general approaches stand out (2002):

Sharing existing knowledge: this was the thrust of many early knowledge initiatives.

Creating and converting new knowledge: this is the innovation thrust.

A growing external focus on the approach: this has led to an upsurge in the interest in customer relationship management systems and interest in knowledge markets.

Why is Knowledge Management Difficult?

There are many problems associated with identifying these knowledge assets and being able to use them and manage them in an efficient and cost-effective manner. Organizations need: to have an organization-wide vocabulary to ensure that the knowledge is correctly understood; to be able to identify, model and explicitly represent their knowledge; to share and re-use their knowledge among differing applications for various types of users; this implies being able to share existing knowledge sources and also future ones; to create a culture that encourages knowledge sharing. ( 2001)

Knowledge management methods and approaches have come a long way towards addressing the use of a company's knowledge assets. They provide disciplined approaches to designing and building knowledge-based applications. There are tools to support the capture, modeling, validation, verification and maintenance of the knowledge in these applications. However these tools do not extend to supporting the processes for managing knowledge at all levels within the organization. ( 2001)

At the strategic level the organization needs to be able to analyze and plan its business in terms of the knowledge it currently has and the knowledge it needs for future business processes. At the tactical level the organization is concerned with identifying and formalizing existing knowledge, acquiring new knowledge for future use, archiving it in organizational memories and creating systems that enable effective and efficient application of the knowledge within the organization. At the operational level knowledge is used in everyday practice by professional personnel who need access to the right knowledge, at the right time, in the right location. China for instance cannot simply employ Knowledge Management without putting this practice into their context and especially their own situation, which, if analyzed, may prove to be difficult. Studying the Chinese retail sector may already suggest why there must be motives towards Knowledge Management. ( 2001)

Knowledge Management as a Communication Tool

As knowledge workers communicate and operate through the social processes of collaborating, sharing knowledge, and building on each others' ideas, knowledge management serves as an effective communication tool within the sector. As knowledge management is also created in order to meet certain productive outputs and to reach out to the consumer group, it can be an effective tool for the improvement of relations between the producers and the consumer group. (2001)

Knowledge Management as a Strategic Tool

The fundamental objective of any corporate Knowledge Management program is to support the achievement of strategic business objectives. In other words, the "starting-point" for KM is to understand what the organization's business objectives are. (2001) Many KM projects fail because they are treated as technology-projects. In order to be successful, KM must not be an end in itself, but must be a strong enabler to achieving real business results.

Moreover, consequent to understanding the basic strategic objectives, the next step is to identify key drivers including Knowledge Capabilities that are vital to achieve these business objectives. (2001) This is followed by a Knowledge Inventory. This is characterized by an identification of what knowledge capabilities currently exist - and where or with whom. At this stage, a Knowledge Map may be prepared. This is described as a graphical representation of the business objectives, critical knowledge capabilities to achieve them and where or with whom they reside in the organization. The Knowledge Inventory and Knowledge Map enable identification of the organization's Knowledge Assets and where & how they can be accessed, Knowledge Gaps and definition of strategies & initiatives to bridge the gaps, which could include the implementation of appropriate IT tools to support knowledge-sharing & collaboration both within the enterprise and in the extended enterprise - including customers, partners and suppliers - to help the organization make better decisions. Another is the formation of communities of practice by experts in each of the critical knowledge-capabilities identified earlier. In addition to that is the sharing of relevant best practices, case studies, lessons-learned, etc. from both internal & external sources.

Effective knowledge management will enable the organization to become nimble and make well-informed business decisions. A key-objective of knowledge management is to ensure that the right knowledge is available with the right person at the right time in a "consistent and systematic" manner to enable timely decision-making. (2001) An organization's Knowledge Map must be a living organism that is updated continuously as Knowledge Gaps are filled, new Subject Matter Experts are identified or new Knowledge Capabilities are defined.

Knowledge Management’s Motives

Knowledge Management remains to be a broad field that will encompass several topics. The study’s particular focus though, is not so much the procedure or manner in which this may be best performed and attained but rather, it will deal with the motives that are working within knowledge management. The motives of Knowledge Management would generally be to improve and be efficient, but there are several specific motivations and reasons why Knowledge Management would be employed. Thus knowing such aims and intentions would allow a better glimpse on the workings of a particular firm, which would be the retail sector in China. This proceeds with the premise that each company has a different culture, different management styles and business environments in which they operate. It is possible for knowledge management’s motive to differ in focus. It will offer a glimpse on how retail industries in China are attempting to make use of this method and how proficient they may be (or what needs to be improved). This review will serve as a case study of a company or an industry employing knowledge management in the context of a Chinese environment and culture. It will be a comparison and contrast to the Western and generally embraced concept of knowledge management as a means towards enhancement and effectiveness. By studying motives, one does not only glimpse upon the operation of Knowledge Management but the whole organization, industry and country as a whole.

Knowledge Management may be so broad that it could be “regarded in fundamentally different ways” (2001). According to (2000) Knowledge Management may greatly differ in motives depending on the individuals and groups employing them. The Government may employ Knowledge Management so they may know the needs and wants of the electorate either to use for the public good or in order to be reelected while the Business leaders are usually motivated to employ Knowledge Management in order to gain more profits (also known as the profit motive). Dr. (2001) would concur and points out that Knowledge management projects may greatly differ in content and importance. “Different types of knowledge management exist, namely business management, policy management, strategic management and administrative management, each of which serves different goals”. He enumerates the following:

· “Business-related motives. Making transparent and optimizing the knowledge-intensive primary process

· Policy Motives. Professionalizing daily policy formation to provide a better service

· Strategic Motives. Creating more intelligent, future-oriented policy processes in order to respond better to confusing ambient developments.

· Administrative Motives. Making forms of bureaucratic organization less bureaucratic in answer to changed relationships with the outside world” (2001)

The most common among these motives is the Business related motive. This is employed in order to build an enhanced organization after taking into account the fact that such firms are, what (2001) says as “knowledge intensive”. Knowledge Management will function as a means to improvement and enhancement of “organizational processes.” The data gathered and its flow are also maximized and more effectively distributed. In order to perform this, the data will need to be “more transparent and accessible by digital means” such that Knowledge Management performs through the use of “digital archives, databases, and information systems” (2001).

(2001) provided five business motives in particular. First, the business in question would like to make efficient use of information or knowledge used in the past in order to avoid Duplication. It is also used to document and maintain information so that knowledge may not be used despite the departure of personnel. Thirdly, knowledge management will do well in centralizing knowledge and data in “territorially decentralized” companies such as the instances of regional or international branches and a separate administrative office. Knowledge Management will do well in “coordinating their activities”. Fourthly, trends monitoring and data collection will be made more effective. Finally, and perhaps most importantly, Knowledge Management ensures transparency of not just the organization but performances all through out and connect, “choices, means and performance” in a manner that will be channeled seamless and clear to all departments (and not merely specific individuals) (2001).

Policy motive in the meantime uses Knowledge Management in order to execute better policies. “This allows a better response to problems and incidents that regularly occur or that can suddenly occur if the policy capacity is insufficient”. If the Business motive is to enhance organizational procedures, Policy motive is used to enhance problem solving and decision making through efficient policy making. Knowledge Management may assist Policy Motive in steering clear from “legal or political” impediments. Government officials are motivated to use knowledge management in order to infuse responsibility, speed, efficiency, availability, accuracy and at the same time, quality on the data distributed and sent especially if this should involve quantitative data. This is seen as a manner to avoid criticisms and complaints of unregulated or inadequate data and data systems which would usually involve the court. Inadequacy is usually coupled with insufficiency and the hesitance to provide information. Thus, employing Knowledge Management would lead to a wider availability and reliability of information obtainable and an open information gateway for public institutions especially if these institutions should maintain integrity, dignity and trust of the masses. (2001).

Strategic motives in the meantime are employed primarily by “experts and managers…to respond better to ambient developments.” Unlike business and policy this is more common and present. Strategic motives would utilize knowledge management in a manner that is centralized and link fragmented information especially if organizations would opt for segregation. In this manner knowledge is taken advantage of, monopolized and hardly developed. There is also a misunderstanding and different interpretations of the information obtained. There is also little control of this information as it is limited and not widely distributed. Knowledge Management would also allow awareness and alertness to ‘signals’ “in order to identify new policy options”. Knowledge Management is also a prerequisite of a “knowledge based society” where knowledge is used as a key resource and “the primary factor of production” with “the ‘network’ is the most appropriate organizational form”. Knowledge Management is also employed so relationships, connection and links may be formed in order to provide a clear idea of what needs to be achieved. (2001)

Finally, there is the Administrative motive which uses Knowledge Management in order to best “facilitate better administration” and basically to reassert authority in a society that has otherwise refused it. Thus Knowledge Management would allow administrations to be flexible and responsive to the environment. This would also mean the construction of be more pervasive, more dynamic and “new relationships with social settings” (2001).

Chapter 3

Methodology and Procedures

Over the years, the extensive research on knowledge management identified a lot of different approaches to the practice of knowledge management. In fact these researches were able to determine which particular approach is compatible for a specific organization. This proves the fact that the actual way that knowledge management is implemented in an organization varies widely according to the types of organization, its industry and culture. Some o the most common approaches to knowledge management includes; approach through innovation, quality control, knowledge technology, human resource management, intellectual capital, strategic approach, network approach, learning organization approach, and Information and Communication Technology approach.

The approach to knowledge management from the perspective of the business management can be considered as the universal approach. That is, this can be applied to any industry, organization and company. Knowledge management through the human resources managers deals with self-governing teams, co-operation, motivation and stimulation of (natural) leadership to learn people in organizations to adjust and to change. In this approach, the human resource managers who are the most experienced when it comes to managing people are the major players. Since the people involved in the organization determine knowledge, it is a good practice that knowledge management is practiced together with human resources management.

Sharing existing knowledge: this was the thrust of many early knowledge initiatives.

Creating and converting new knowledge: this is the innovation thrust.

A growing external focus on the approach: this has led to an upsurge in the interest in customer relationship management systems and interest in knowledge markets.

Basically, this chapter presents the various procedures and strategies in identifying the impact of Knowledge Management in retail industry in China. Actually, the discussion regarding effect of Knowledge Management in accordance to the performance of the surveyed subjects was initiated. Moreover, this chapter also specifies the research design that was followed, the method of research to be used, respondents of the study, data collection, instruments to be used, validation and administration of the instrument, conducting the semi-structured interview, data representative and reliability, description of the used in the study, locating the needed data to be used, statistical treatment of data, and analyzing the gathered data.

3.1 Research Design

In accordance to the previous discussions, this part of the research shall also discuss the research methods available for the study and what is applicable for it to use. Likewise, the chapter shall present how the research will be implemented and how to come up with pertinent findings.

Methodologies are outlooks on research; they set out an image for what research is and how it should be carried out. Basically, axioms and methods are connected to each other. Methods are tools or techniques of gathering of data, techniques of analysis, and techniques of writing. Since it is a tool, then a scrupulous method can often be used by many different methodologies (both qualitative and quantitative). Therefore, methodologies are at a more abstract (or general) level than are methods. Apparently, defined ‘methodology’ as a strategy or plan for achieving some goal. In contrast to this, methods are the tactics that can be used to service the goals of the methodology. In essence, methodologies provide the blueprints that prescribe how the tools should be used. Those prescriptions can be traced to the axioms -- beliefs about how research should be conducted.

According to (2004), all research will possibly involve categorical or numerical data or data that can be use for analysis to help the researcher answer the research questions. In connection to this, (2004; ) defined quantitative as a type of empirical knowledge. Actually, qualitative data are described in expressions of quality. Qualitative is the converse of quantitative, which more precisely describes data in terms of quantity (that is, using 'formal' numerical measurement).

3.1.1 Type of Investigation: Method of Research to be Used

(Ice: Method of Research is what you are going to do your study in this dissertation, NOT to repeat the literature of what is method of research. Please re-write to describe what is YOUR type of investigation for this study.)

The research design chosen both qualitative and quantitative research, which uses explanatory methods in describing the variables wherein the data, situations, or other facts collected will be explained or correlated with other data. It is especially useful when conducting a study wherein the data are immeasurable, such as feelings, beliefs, thoughts, and others ( 2000). Furthermore, the study will be descriptive as it will focus on the conditions set and the nature that surrounds the data and does not focus on the correlation with other collected facts.

The Respondents

The researcher, in choosing subjects or respondents for the topic at hand, is usually thought of to have the power over who the respondents of the study will be. Such a task would have been easier, except a researcher cannot simply choose out of whim; the subjects must be selected carefully with the intention of having subjects who each posses characteristics that, when put together, will represent a community. It is not only themselves whom these subjects will represent, but the bigger whole or the whole population. The characteristics which the researcher has chosen them for will determine which part of the community they belong and what part of the community they are representing. Thus, the choosing of the subjects must be based on their characteristics.

This study basically investigates the manner in which retail companies operating in the China are using Knowledge Management within their marketing strategies, therefore why and how they are doing so. Specifically, the research evaluated the importance of evaluating the impact of Knowledge Management in retail industries in China. Consequently, the level of awareness of travelers and customers was evaluated.

The primary source of data came from a questionnaire and interviews conducted by the researcher in selected retail industries in China. The respondents of the study came from the rank and file staff and the management team of retail companies and customers. The secondary sources of data came from published articles from Business Management, Marketing and Knowledge Management journals, books and related studies.

For this research design, the researcher gathered data, collate published studies from different local and foreign universities and articles from social science journals; and make a content analysis of the collected documentary and verbal material. Afterwards, the researcher summarized all the information, make a conclusion based on the null hypotheses posited and provide insightful recommendations on the impact of Knowledge Management in retail companies in China.

3.1.2 Sampling Design

There are different methods of sample collection such as quota sampling, simple random sampling, stratified sampling, cluster sampling and convenience sampling. The alternative methods are probability and non-probability sampling. Most likely questionnaires were given to different types of people i.e. employees of retail companies, customers and supervisory personnel. The sample plan in this thesis is influenced by several practicalities: time, resources, and the need to minimize inconvenience to the respondent. In this case a non-probability sample was used.

The information required to carry out the research regarding the decisions to be made was attained through the purposive sampling, which is a form of non-probability sampling. This would also be due to the fact that the information gathered from a convenient population sample, which was accessible and close to hand, the guests do not also have a predetermined or known chance of selection. The target group of this research would be about 5-6 retail companies, situated in different parts of China. They would be chosen due to their experience regarding Knowledge Management in China. Judgment sampling was used, in the circumstances where the choices of subjects are in the best position to provide essential information.

3.1.3 Respondents of the Study

Ice: you need to elaborate what is your sample.

The respondents of this study will be (6) retail companies, situated in different parts of China numbering to 60 respondents. Ten (10) staffs and management personnel from each company shall be surveyed. The researcher also provides interviews for managers whose function is directly related to the organisation and implementation of the marketing strategy employed by the company. For the customers of the retail companies, a total of sixty (60) respondents was also be employed, ten (10) in every company.

3.2 Conceptual Framework

After this has been analysed, it is time for the researcher to give conclusion, recommendations and present the findings with the regards to classroom variables and functional behavioural assessments.

1. Doing the library research. One purpose of the library research is to look for some guides in conducting the study. If other studies of the same nature have already been conducted before, the procedures used were used as guides of the researcher in conducting this research.

2. Designing the study. This is the determining the different procedures to be followed which were discussed above. In this, the treatment for the data was decided upon.

3. Developing the instrument. This is for the collection of the data. A tally sheet was prepared which contains all the items or aspects that were studied.

4. Collecting the data. To reiterate, content analysis is quantitative and so tallies have made for the perception of the respondents. And to have an accurate counts and computation, the data were processed through SPSS.

5. Analyzing the data. In this latter part, the analysis of the data was performed based on the computed percentage, and weighted mean revealed in the data collated.

6. Making conclusions. Generally, the conclusions are answers to the questions raised at the beginning of the investigation. Besides, they are based upon the findings of the study.

7. Making recommendations. Recommendations were made to solve the problems discovered in the study. These were also made for further research on the same study finished.

3.3 Data and Statistic Method

3.3.1 Description of the Data Used in the Study

The study also utilized secondary data. Secondary data include raw data and published summaries, as well as both quantitative and qualitative data. (2003) deduced that secondary data fall into three main subgroups—documentary data, survey-based data, and those compiled from different sources.

Documentary secondary data, accordingly, are the ones often used in research projects that also use primary data collection data methods, although such data can also be used on their own or be combined with other secondary data. This type includes: written documents (notices, correspondence, minutes of meetings, reports to shareholders, diaries, transcripts of speeches, administrative and public records, as well as articles from books, journals, magazines and newspapers) that can be important raw data sources on their own right, a storage medium for compiled data, provide qualitative data, and can be used, as well, to generate statistical measures; and, non-written documents (like tape and video recordings, pictures, drawings, films and television programmes, digital versatile disks and CD-ROMs) that can be analyzed both quantitatively and qualitatively, as well be used to help triangulate findings based on other data such as written documents and primary data collected through observations, interviews and questionnaires (2003).

Meanwhile, survey-based secondary data are those data collected by questionnaires that have already been analyzed for their original purpose; usually, such data refer to organizations, people or households and are made available as compiled data tables or as a computer-readable matrix of raw data. These type of data are typically collected through: censuses (usually conducted by governments, where participation is obligatory; since these surveys are done in order to meet the needs of government departments as well as of local government, collected data are usually clearly defined, well documented and of high quality); continuous/regular surveys (surveys that are repeated over time, but these don’t include censuses, such as those which collected data throughout the year and those that are repeated at regular intervals; examples of these are general-purpose market research surveys or regular organization surveys such as employee attitude survey); and ad-hoc surveys (usually one-off surveys and are far more specific in their subject matter, and these include data from questionnaires administered by independent researchers as well as surveys done by governments and organizations) (2003; , 1989; 2002, 1982).

With this particular study, the researcher utilized documentary secondary data (in the form of articles from books, journals, magazines, and newspapers) that are generally about the customer satisfaction, Knowledge Management (KM) and retail companies performance as well as relevant literatures and survey-based data in order to meet the objectives of this study.

3.3.2 Data collection method

There were 2 types of data collection methods involved in these paper; primary and secondary data collection methods. Primary data, as the name implies, is the data collected for the sole purpose of the research topic, by the researcher. While secondary data is data which has been collected by someone else for some other study, which is related in some way to the topic at hand e.g. books, journals, magazines, web site, etc. Secondary data can lead sometimes to wrong conclusions if interpreted wrongly. In this case the methods of collecting the primary data would be to have face to face interviews, telephone calls and also through self-designed questionnaires. In the face to face interviews, the researcher intends to take notes when there is a response by the interviewee.

Also used during the interview process, was a voice recorder in order to remember and facilitated the note taking and also improved the flow and communication of the interview process. Regular visits and phone calls were made to the companies. In the companies that the researcher choose to target, the questionnaires were distributed to the customers by the company staff, and those completed was returned to the reception. This method is chosen in order to have minimum disruption to both staff and customers (the questionnaires could be completed at a time most convenient to the curtomer). A pilot study was first conducted prior to the main study in order to test the questionnaire design.

3.3.3 Data Analysis

The type of testing used in this case was parametric testing. All the data gathered from the interview and questionnaires were tabulated and coded so that parametric testing would be executed. Parametric tests are more powerful than nonparametric tests given the sample size, and assume the variable(s) being measured is/are normally distributed among the population. Criteria other than sample size must, of course, be met before parametric tests can be used.

There were also be low responses from customers, which could be due to (a) their lack of interest in the questionnaire (b) lack of commitment on the company’s part, concerning the collection of the questionnaires and the administration.

Based on the use of the thesis design and method, which utilizes the qualitative and the descriptive methods, this study focuses mostly on the report of the researcher and the interaction of the researcher and the respondents who are the subject of the study. Because the information gathered for the research focuses on the observation of the behaviors of the respondents in accordance to the performance of the Knowledge Management and their view with regards to management risks, one of the best ways that this can be achieved is through analyzing the responses form the given survey questionnaire.

As such, the processing of the data and their analysis will focus mostly on the different methods that the researcher will be able to interpret the answers of the respondents to the questions.

Actually, when all the needed and pertinent data are gathered, the researcher will employ on them the documentary analysis technique, which is more commonly known as content analysis to come up with the findings needed for the fulfillment of the objectives of this research undertaking.

Content analysis is a research tool used to determine the presence of certain words or concepts within texts or sets of texts, wherein researchers measure and analyze the presence meanings and relationships of such words and concepts, afterwards making inferences about the messages within the texts, the writer of the text, the audience as well as the culture and time of the text is a part of. (1997).

Like other research techniques, content analysis must be objective. There should be no bias involved in the selection and classification of content to be analyzed, in its sampling design and in its interpretation of results. To be objective, as much as possible, all items and aspects in the content to be analyzed were placed under appropriate categories. And in this, the perception of the researcher was not influenced by factors other than the true outcomes or the true frequency counts of the variables the inquired.

In line with this, the data were analyzed based on the descriptive statistics performed in data processing. What’s more, the content analysis of documentary materials in this study was quantitative because the interpretations and conclusions from the findings depend almost entirely on the output in processing the frequency counts of the perceptions of the respondents. So, the occurrences of the perception of the respondents were tallied one by one, upon the frequency of the occurrences depends the analysis and interpretation. To further enhance the perception of the respondents, they were also given time for an interview that is subjected to their respective insight to the topics. The interview results were then used to justify their answers.

3.3.4 Statistical Treatment of the Data

When the entire survey questionnaire has been collected, the researcher uses statistics to analyse all the data.

The statistical formulae to be used in the survey questionnaire were the following:

1. Percentage – to determine the magnitude of the responses to the questionnaire.

% = -------- x 100 ; n – number of responses

N N – total number of respondents

2. Weighted Mean

f1x1 + f2x2 + f3x3 + f4x4 + f5x5

x = --------------------------------------------- ;

where: f – weight given to each response

x – number of responses

xt – total number of responses

The researcher was assisted by the SPSS in coming up with the statistical analysis for this study.

In addition, the researcher uses ANOVA to analyze the data collected from the retail industries and from the interviews with experts in Knowledge Management. Using this ANOVA to analyses on retail industry as a framework, the researcher travel and visit a few selected retail companies in China to identify cause and affect phenomenon among service quality, knowledge management, and customer’s satisfaction. Finally, to find out whether the customer's different backgrounds have been a factor that affects service quality, knowledge management, and customer’s satisfaction, the author will direct the research against the interconnected systems of population and customer demographic. The researcher also counts parameters and carries on ANOVA statistics with service quality, knowledge management, and customer’s satisfaction, in order to understand whether the consciousness degree of different customers will have a difference impact. Thus, the researcher conducted a survey via a set of questionnaires on retail industries in China.

3.3.4.1 Analysis for Variance (ANOVA)

To be able to determine if there is a difference between the assessments of the groups of respondents the analysis of variance (ANOVA) was used.

For the ANOVA calculations, the general form is summarized in the table below:

The Generalized ANOVA Table

ANOVA Table

Source of Variation

Sum of Squares

Degrees of Freedom

Mean Square

Treatments

SSTR

t-1

MSTR

Error

SSE

N-t

MSE

Total

SST

N-1

Where:

3.4 Questionnaire Design

3.4.1 Instruments to be Used

To determine the effects of Knowledge Management in the retail companies in China, the researcher prepared a questionnaire and a set of guide questions for the interview that was asked to the intended respondents. The respondents graded each statement in the survey-questionnaire using a Likert scale with a five-response scale wherein respondents were given five response choices. The equivalent weights for the answers will be:

Ice: This is questionable.

Range Interpretation

4.50 – 5.00 Strongly Agree

3.50 – 4.49 Agree

2.50 – 3.49 Uncertain

1.50 – 2.49 Disagree

0.00 – 1.49 Strongly Disagree

The decision was made to use a questionnaire for the data collection for this project due to the sensitivity of the information being obtained. It is important for the respondents to be open and honest in their responses. The use of the questionnaire provides the project owner with the ability to test the views and attitudes of the respondents. The questionnaire was designed to allow the collection of specific information about the participants to conduct statistical analysis, e.g. age, sex, social status and society class.

3.4.2 Validation of the Instrument: Evaluation of Questionnaires

According to 1997, the use of secondary data is advantageous for a researcher since one can already evaluate the suitability of a data as it is already in existence, thus, much time can be saved. Needless to say, an evaluation of potential secondary data is very important before one incorporates it in his/her study.

In this study, the researcher adopted the three-stage process devised by (2003,):

The first stage is assessing the overall suitability of data to research questions and objectives. During this stage, the researcher paid particular attention to measurement validity (measuring / estimating whether the secondary data will result to a valid answer to the research questions and objectives) and coverage (this includes ensuring whether or not the data is wanted and can be included, as well as making sure that sufficient data remain for analyses to be undertaken once unwanted data have been excluded).

The second stage is evaluating precisely the suitability of data for analyses needed to answer and meet the research questions and objectives. In this stage, the researcher made sure of the validity and reliability of the secondary data by assessing how it was previously gathered, who are its sources, and the likes. Also, the researcher was cautious not to commit measurement bias (which can occur due to deliberate distortion of data or changes in the way data are collected) had been paid close attention. Finally, the researcher judged whether to use data based on an assessment of costs and benefits in comparison with alternative sources.

Actually, the researcher initially submitted a sample of the set of survey questionnaires and after approval; the survey conducted to five respondents. After the questions were answered, the researcher was asked the respondents for any suggestions or any necessary corrections to ensure further improvement and validity of the instrument. The researcher was again examined the content of the interview questions to find out the reliability of the instrument. The researchers excluded irrelevant questions and changed words that were deemed difficult by the respondents, too much simpler terms.

3.4.3 Administration of the Instrument

The researcher excluded the five respondents who were initially used for the validation of the instrument. The researcher tally, score and tabulate all the responses in the provided interview questions. Moreover, the interview used a structured interview. It consists of a list of specific questions and the interviewer does not deviate from the list or inject any extra remarks into the interview process. The interviewer may encourage the interviewee to clarify vague statements or to further elaborate on brief comments. Otherwise, the interviewer attempts to be objective and tries not to influence the interviewer's statements. The interviewer does not share his/her own beliefs and opinions. The structured interview is mostly a "question and answer" session.

3.5 Ethical Consideration

The data generated was used solely to understand the development of teaching and learning theories. The researcher is solely responsible for conducting the whole research process and shall abide all the policies regarding the organization as well as the university. The data is not be transferable for any means in person or organization. The research is being done according to the guidelines and rules and regulations of the university. The researcher does not belong to any professional bodies to share the outcome of the research results. The four stages of ethics in doing research are followed by the way of a good design, modes of data collection, analysis of data and for proper dissemination. Both confidentiality and anonymity was maintained of the informants who have participated or shared information in the research. There is no Coercion or force to take advantage from the informants. Full voluntary guarantee was taken from the informants. Due consideration and approval was taken from the organization which is being studied. Prior objectives and motive of the research will be intimated. There is no misrepresentation or misuse of the data collected from the organization. Strict confidentiality should be maintained. Finally, the university for dissemination of academic purposes might take the data collected.

Summary

As stated in this chapter, the researcher will undergo stages. In the research design, the researcher will collect secondary data and will formulate and develop an interview. In this stage, this instrument will be subjected to approval and validation. During the data collection, the researcher will collate and summarize the data obtained from the literatures and survey. The researcher will then analyze these data and from these, findings and recommendations will be presented.

In summary, the researcher will have taken four major phases to complete the study.

Phase 1: Problem Identification for Research

In the first phase, the researcher identifies the specific focus of the problem to be researched. This involves reviewing existing theory, research, and practices from professional literature. This process helps me integrate theoretical perspectives and empirical findings with my own understanding of the problem, and discern the aspect of the problem the researcher want to research and learn more about.

Phase 2: Administration of the Instrument

After reviewing literature, the researcher formulates questions for the survey and makes a set of guide questionnaires for the interview. These are then presented to the advisor for validation purposes.

Phase 3: Data Collection and Analysis

In the third phase, the researcher will collect and analyse data for the purposes of identifying critical variables specific to their setting. These data will enable me to achieve a specific understanding of the problem.

Phase 4: Data Synthesis and Generation of Recommendations

In the fourth phase, the researcher will synthesise findings from the previous phases and relevant previous research. The focus of this stage is to synthesise these data to modify existing hypotheses and account for different factors, as well as generating recommendations based on new understandings. During this phase, research-based and appropriate recommendations for action will be generated.

References:

Knowledge Management

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