Research Korner: Industries

The Rise and Fall of Baan Company: A Case Study

Q1. What are the main strategic issues in this case study? In this case study, among the main strategic issues are:       Failure of Strategic Management/Planning and Corporate Governance             Planning is commonly known as the process of formulating in advance as organized behaviour action. While it is true that people do not always plan their actions, it is inherent for any organizations to plan. However, whether dealing with the context by which planning is occurring, whether on the individual or organizational level, the process takes shape according to the prevailing attitudes, beliefs and goals that are involved. The term strategic management is also used synonymously with strategic planning (David 2001).             In Baan Company, the management’s ambitious strategy neglected some important aspects of the company’s operation. The aggressive action to abruptly expand and grow contributed to fall of the productive and increasing market share. Strategic management as well as corporate governance is guiding an organization relative to challenges and opportunities appearing in the contingent environment. This environment is composed of those external elements that most directly affect organizational goal achievement and new goal development. Thus, organization system design and management should complement strategic actions taken for productive subsystems, as well as those providing output delivery and other support functions for the organization. To the extent possible, the organization bases its actions on strategic planning that, rather than a one-time effort, is an ongoing process of adaptation of original conceptions of mission, goals, structure, roles, and so forth relative to environmental dynamics (Siegel 1992). The failure in corporate governance is a real threat to the future of every corporation. To make matters worse, standards of corporate governance are changing rapidly in response to random events which capture public imagination. These are the simplest prime reasons why the company failed.       Change Management Change management is basically defined as the formulation and assimilation of change in a methodical process. The major objective of change management is the introduction of innovative means and systems in the work organization. Businesses, like Baan Company must normally undergo change in order to evolve to a higher level of for instance, stability, management or production. Appointing a new head officer, for example, can greatly enhance his subordinates based on his management principles and personality.  Due to the proposed ambitious strategy, organizational change is part of and a result of struggles between contradictory forces. Also, change management practice is related with endeavoring to manage their competing demands. To understand why and how to change organizations, it is first necessary to understand their structures, management and behaviour.These systems of ideas, or organizational theories are crucial to change management in two respects. First, they provide models of how organization should be structured and managed. Second, they provide guidelines for judging and prescribing the behaviour and effectiveness of individuals and groups in an organization. It is clear that in many organizations there is no clear understanding if the theories. Change cannot hope to be fully successful under circumstances (Burnes 1996). Again, this simple principle with the ideas embodied on it were overlooked by the Baan Company management.       Weakened Leadership Leadership comprises the aptitude and ability to inspire and influence the thinking, attitudes, and behavior of other people (Adler, 1991; Bass, 1985; Bass and Stogdill, 1989; Bennis and Nanus, 1985; Kotter, 1988). Leadership is a process of social influence in which one person is able to enlist the aid and support of other individuals in the achievement of a common task (Chemers, 1997). With the Baan Company case, the sudden resignation of Jan Baan can be attributed to the decline of the company’s performance. He is an effective leader as shown in the rapid growth of revenues of the company. However, the fall of the organization is not dependent on his resignation.       Technology and Competition The technological upheaval and intense international competition tender significant challenges to an organization’s capability to keep up their competitiveness (Bettis & Hitt 1995; Hitt, Keats, & DeMarie 1998). In a micro economic sense, competitiveness is defined as sustainable development in productivity motivated by the quality of business strategy and operations, the quality of business and environment and the prevalent macro economic environment (Yener 2001). In a macro economic point of view, competitiveness is the degree to which a country can under free and fair market conditions, produce goods and services which meet the test of international market, while simultaneously maintaining and expending the real incomes of its people over a long term (Garelli 2002). This is evidently projected in the case of Baan Company. The challenges of global competition and technological advancement triggered or contributed to its eventual economic tragedy. Q2. What should the Baan Company's leadership do? At the business level strategy, knowing what the market demands and the latest trends could help Baan Company to fully exploit its research and development capabilities and come out with new practical and applicable strategies or plans which are cost-effective but high in quality and performance. The strategic option can even be used as marketing tool where the focus is on staying close to your customers and listening to their feedbacks. On the flip side of the coin, there will be huge mobilization of resources involved, and the associated risks bestowed on the corporation. At the corporate level strategy, understanding the strategic importance of its subsidiaries is something Baan Company has to be familiar with. This allows information dissemination to be retained at the corporate headquarters of the whole company (Tweedale 2002). At the network level strategy, there are various strategic options available for Baan Company. These are enumerated as follows: •           Tie up with more related companies •           Collaboration with its major competitors •           Alliances with leading suppliers in software technologies A tie-up or merger with various related companies offers tremendous benefits in terms of access to Baan Company subscribers, infrastructure and even its resources. However, the firm must not lose sight of its core competencies while pursuing these tie-ups. Otherwise, its image might be put in jeopardy. Meanwhile, the collaboration with its major competitors can be seen as a ridiculous move at first.  However, upon close examination, this move could pave the way to increase even more its market shares and revenues. The bottom line is both sides would be able significantly gain financially in such an alliance. One possible setback, however, is the differences in the cultures of the companies involved. Another possible setback could be whether any of competitors has the need to form alliances. The third option also focuses on alliances, but this time with either one of the suppliers specializing in manufacturing of software technologies. The benefits of these alliances should outweigh the costs in the long run. In terms of appropriateness, all three options are able to directly address the current issues mentioned. However, the question remains whether Baan Company could be able to implement any of these options, and whether these options can be acceptable to the key stakeholders. Any merger or alliances may also involve the sharing of expertise. Baan Company has traditionally relied on the inside-out approach. It is important to note that any merger transactions would have many implications on the firm’s values and culture as well as the resources. The key stakeholders definitely would be concerned with such options and need to be convinced of the positive aspects. Somehow, it will be able to overcome this barrier in managing strategic changes in the process of implementing any of the above mentioned strategic options. Q3. What does the case say about the 'Corporate Governance' and 'Corporate Social Responsibilities? Discuss what you believe Baan's corporate social responsibilities might have been in the circumstances of the case?             According to Stapledon (1996), corporate governance can be defined as a system that is used in order to direct and control companies. Corporate governance on this case can be judged as profit-oriented. The managers are greedy at some instances. Due to the aggressive desire to expand and grow in its line of operation, the management forgot to take a closer look and give a significant amount of attention to the various sectors of the organization. Planning and making up practical and applicable plans were taken for granted. The authorities are concentrated in profit making thus neglecting its financial capability, human resources, and management strategy.             The Baan Company corporate social responsibility on this case was also not fully implemented. The company served as a venue for economic growth for the management, state, and work force. With its failure, the corporate social responsibility to provide economic growth opportunity to every party concerned vanished. However, there are also areas of social responsibility that the company excels. Among these are focused on the product like responses to customer complaints, product warranties, and processes for exchanging purchases. The corporate social responsibility to its workers was not fully manifested. Data included on this case study says that the company tends to ignore the substantial contribution of the human resources in the continuous growth and development of the company and its operations. Instead, the company technically laid-off some of the useful employee during its momentous decline.

The Rise and Fall of Baan Company: A Case Study

Q1. What are the main strategic issues in this case study? In this case study, among the main strategic issues are: ...

Influence of an Individual’s Perceptions and Interpretation In Decision-Making and Judgments

Every single day, people are faced with decisions whether be it as simple as what to do or what to wear for the day. Every single minute is characterized by choices, choices that people make, rationally or irrationally.  decision making is as essential process in the human nature. Much has been learned about the psychology of human decision making as well as decision making within organizations. This paper will examine and assess the extent by which people’s judgments and decisions are influenced by one’s perception and interpretation of the world.             There are many factors affecting our choices in life. The field of judgment and decision making is concerned on how people combine desires and beliefs to choose a course of action. There are three components in the conceptual design for a decision. It includes courses of action or choice options and alternatives; beliefs about objective states, processes and events in the world including outcome states and means to achieve them; and desires, values or utilities that describe the consequences associated with the outcomes of each action-event combination. Decision making is central to every human activity; thus, everybody is a decision-maker. It must be noted though that good decision making begins with a consecutive, purposeful, strategic-thinking process. In addition, good decisions are those that efficiently choose or select means that are available in a given circumstance or situation to attain the goals of the decision maker.             Defines a decision as “the act or process of deciding; a conclusion or resolution reached especially as to future action, after consideration; the settlement of a question; a formal judgment; tendency to decide firmly; resoluteness”. Many theories of decision making exist in disciplines for both scientific and social science paradigms. In statistics, decisional theory is a strategy of measuring the decision-making process, or making it into mathematical form to make the most efficient and effective choice. In early economic theories, there is also a decision-making model of economic utility wherein people choose the best option that provides the maximum positive utility. The aforementioned early theories are also referred to as classical decision-making which basically shows how decisions are made in ideal situations. In psychology, the highlight of the process of decision-making has been a primary area of focus and study. In Janis and Mann’s Conflict Model of Decision-making, the process of decision=making is viewed as a stressful process which involves an assessment of risk and an assessment of success and time availability to make a decision. This model hypothesize that people make a decision through a decision balance sheet wherein individuals evaluate the gains and losses of a decision on the basis of tangible gains or losses for oneself and for significant others and approval or disapproval from the self and from significant others as well.             Usually though, our decisions and judgments are primarily affected and influenced by how we perceive and interpret the world. In psychology, perception is a “neurological process of observation and interpretation; any neurological process of acquiring and mentally interpreting information from the senses”. It is the process by which individuals organize and interpret their sensory impressions in order to give meaning to what happens in their environment perceptions are essential because individuals act upon their interpretation of events and at other times fail to act because of perceptions. People are sometimes faces with the same events; however, there are different perceptions and views on such same events. Comments that perception is like beauty. It is in the eye of the beholder.             It must be noted that an individual’s behavior is based upon their perception of what reality, not on reality itself actually. The world as it is perceived or viewed is the world that is behaviorally important. Each one of use the five senses to experience our surroundings. They are the senses of sight, touch, smell, hearing and taste. Organizing all these information that we receive from these senses is called perception states that perception is a cognitive process. Perception actually helps individuals select, organize, store and interpret stimuli into a meaningful and rational picture of the world. As each person gives one meaning to stimuli, different individuals “see” the same things in different ways.  Obstacles in Making Accurate Perceptions             Sims has outlined some obstacles that hinder individuals from making accurate perceptions. They are stereotyping, first impression error, halo effect, contrast effect, selective perception and implicit personality theories. Each of these obstacles will be examined and discussed in the proceeding part of this paper. Stereotyping. Stereotypes are considered to be a group concept, actually held by one social group about another. They are often used in a negative or prejudicial sense and are usually used to justify certain discriminatory behavior . The basis for commonly held stereotypes may be associated to one’s sex, race, ethnic group and age. An example of stereotyping may be: the belief or perception that older workers are not capable of being trained for new tasks or younger workers cannot handle responsibility. Even though stereotyping may seem inaccurate and worthless, in some cases, there be “kernel of truth” in the basis of stereotyping; Stereotypes are sometimes based on actual group characteristics. It must be noted though that as stereotypes are some typical beliefs based on the element of truth wherein the beliefs are derived from observations that hold true for the entire group but do not hold much truth and accuracy for given individuals in the group. First Impression Error. As the saying goes, “first impressions last”. First impression errors mean that a person may observe a very brief bit about another person’s behavior in their first encounter and conclude that this behavior mirrors what the person is really like. Such impressions may be dangerous in interviews for work as these first impressions become the lasting impressions in the basis for their long-term employment relationships.    The Halo Effect. The halo effect is described as when a person good at something is assumed to be good at something else. This positive assumption creates a halo.  Gives two instances for this type of obstacle in making accurate perceptions. Example one: Let us say that you are a supervisor in a machine shop. An employee, let us call him John, has been one of the best drill operators in your section for the last ten years. A lathe operator is in need in another section. So, you recommend John, assuming that he will do superb at the lathe as he does in drill pressing. However, John fails; he may be very good in the other task but it doesn’t mean that he will definitely be great with the other task as well. He lacked the necessary skill and the training for the other task. Figuratively speaking, you have somehow placed a halo over John’s head. Another example may be when two people have a violent fistfight on the job. One is rather a personal friend of yours with whom you socialize off the job. There may be a tendency for you to place a halo over your friend’s head by assuming that the other person must have been the cause of the fight and conflict . Projection. Projection happens when an individual credit our own feelings and attributes to others. People engaging in projection have the tendency to perceive others according to what they themselves are like instead of according to what the person observed is really like. It must be noted that the observations may be accurate as they make observations of people who are actually like them; however, accuracy don’t always happen as they might have observations on people who are not like them. So, when engaging in projection, one must respond to individual differences. Contrast Effects.  Contrast effect can distort perceptions. A very common example is when illustrated in an old saying among entertainers that states never to follow an act which has kids or animals in it. There is a common belief that majority of the audience just love and adore kids and animals that the entertainer will look bad in comparison. This specific example portrays how contrast effects can affect and distort perceptions. States that people don’t assess a person in isolation. A person’s reaction to one person is influenced by other people we have just encountered. Selective Perception. Selective perception happens when perceptions arise from influences by one’s own interests. When individuals can longer take in all stimuli received, one has the tendency to select out certain elements. For instance, as one purchase a car, for some unknown reason you just begin to notice the same type of car every now and then on the streets compared to before purchasing the car . Implicit Personality Theories. As people have individual mini-theories on how people look and behave, this will result to inaccurate perceptions. These theories, helps each one of us to organize our perceptions and take shortcuts rather than incorporating new information all the time. Adds that people are cognitive misers. As the world becomes more complex and confusing and as people have only a limited mental capacity, people try to make sense of the world by grouping traits and appearances into clusters that may seem to go together. The discussion on what hinders making accurate perceptions have enlightened us on the issue of how much one’s perceptions and interpretation of the world can affect and influence decision-making as well as making judgments. We have seen how perceptions are distorted by stereotyping, first impression error, halo effect, contrast effect, selective perception and implicit personality theories. Researches on judgment and decision making have recognized important limitations in cognitive and emotional processing. It must be noted that errors in decisions occurring due to biases have widespread effects. Many scientists, economists and psychologists are driven to make behavioral assumptions in the market place as a result of real-world violations of the rational choice theory. In psychology, many examinations are made in the concept of rationality. Psychologists are further examining different and alternative frameworks and theories to explain ways of how people make decisions and what influences them upon making their decisions. The future of judgment and decision-making research within psychology lies in its capability and capacity to develop other theories and frameworks that make associations with research on emotions and cognition, in addition to social and institutional factors. Such associations will definitely influence and affect our views in decision making and adjustability and provide good foundations for research in many years ahead.

Influence of an Individual’s Perceptions and Interpretation In Decision-Making and Judgments

Every single day, people are faced with decisions whether be it as simple as what to do or what to wear for the day. Ev...

Flight Attendant in Cathay Pacific Airlines

This paper discusses the career opportunities for aspiring flight attendants in Cathay Pacific Airlines. Insights about the plane industry and the duties of flight attendants are provided for to give a clear view of the nature of this job. Moreover, a brief background on Cathay Pacific Airlines is included in this paper to establish the basic reasons why it was selected. Lastly, this paper is aimed to present the opportunities for the said industry and the personal attributes that makes one qualified for the job.  Introduction: Setting a career path for oneself entails a great deal of assessment. As such, one must be able to distinguish the industry where he is interested in and is most likely to succeed. The choice of the company is also a key factor for it determines the career progression for its employees. With this in mind, a career in the plane industry specifically as a flight attendant was selected. This career was the primary choice because of the personal interest in air travel. Also, a career in the plane industry specifically in Cathay Pacific Airlines can provide more opportunities for promotion. Additionally, the acquired education is suitable for this job. The course and trainings undergone meets the qualification of the job. Equipped with this qualifications and perseverance, greater opportunities can be awaited specially in a fast and dynamic industry such as the Cathay Pacific Airlines Career Path as a Flight Attendant The adventure of travel is associated with the career of flight attendants. The most interesting about this career is the opportunity to travel while being paid at the same time.  As one, you are bale to visit some interesting places abroad that are learned in the school. Aside from this, you are able to experience the culture of other countries and eat different kinds of food. Flight attendants get to meet so many people with different backgrounds and circumstance every flight they make (’Flight Attendant: Onna Williams’, 1997). Typically, the work day of flight attendants start in a city and ends in another city or may be another country. The working time in this industry is not standardized. Due to the nature of the industry, the arrangements for work hours may involve the combination of shifting, weekend and night work as well as irregular hours (Shalla, 2004). As an attendant, one needs to ensure the safety and comfort of the passengers during and after the flight. By the end of each flight, they are tasked to do reports that involve recording unusual incidents, sales, and customs documentation (‘Flight Attendant’, 2006).The industry is indeed demanding but opportunities for career progression are obtainable in this industry. Greater opportunities for flight attendants can be acquired by working in prominent airlines. Cathay Pacific Airlines, being the flag bearer of Hong Kong and one of Asia’s highly regarded airlines is an excellent venue for this. It is partnered with other international airlines such as the American Airlines, British Airways, Iberia and Qantas. Another attribute of this airline is it bilateral relationships with Asian countries such as Air China, Japan Airlines, Philippine Airlines among others. In 2006, it also acquired 100 percent holding of th4e biggest airline serving mainland China (‘Cathay Pacific’, 2007). With the vision of being the world’s most admired airline, Cathay Pacific offers a diverse range of career paths both in the air and on the ground. The quality of service catered to the passengers is prided by the airline. With this, they are continuously seeking for qualified flight attendants that are willing to work in a dynamic and demanding industry. Flight attendants of Cathay Pacific are regarded as special individuals. They are trained individuals, caring team players and ambassadors of Hong Kong. The responsiveness to the needs of the passengers and genuine care for their comfort and safety is the basic principle for this position. Furthermore, the adventures of traveling in different countries are part of the job at Cathay Pacific Airlines. Each flight is an International route and that includes exciting destination for flight attendants each month. Three year contract are given to new flight attendants that allows them to reinforce their career paths. Promotions are given and are based on the individual performance. The career path starts from being a flight attendant to flight purser. Next to this is senior flight purser and lastly the in flight service manger.  A wide range of benefits is given to flight attendants which include a competitive pay, medical coverage, insurances and retirement benefits (‘Cathay Pacific’, 2007). Undeniably, being part of Cathay Pacific Airlines fulfills one’s dreams of exploring the world and being part of a competitive industry.   Conclusion  Indeed, there is a great responsibility associated with this job. Aside from ensuring the safety and comfort of the passengers, flight attendants also reflect the hospitability of their country. As in the Cathay Pacific Airlines, they serve as ambassadors of Hong Kong to foreign passengers. Thus, aspiring attendants must possess all the qualifications required of this job.  Fundamentally, the adequate education I’ve acquired in airplane service serves this qualification. With the linguistic training undergone for difficult situations, I am certain to handle very well any untoward incident or emergency that may transpire during the flights. The linguistic training I have acquired will be of great help in terms of communicating with passengers in any modern language. Customer relation skills are also vital in this job. Thus my ability to interact in a courteous and polite manner can be very essential in the performance of such work.   Additionally, my interest and enthusiasm in air travel makes the job interesting and exciting. This gives a degree of motivation to overcome the stress and strenuous activities associated with this kind of work. The promising career path for flight attendants specifically in the Cathay Pacific Airlines serves as a great venue to apply my education and the trainings undergone. Equipped with these basic requirements and the positive outlook towards air travel work, the capacity to succeed as flight attendants is never far from reach.

Flight Attendant in Cathay Pacific Airlines

This paper discusses the career opportunities for aspiring flight attendants in Cathay Pacific Airlines. Insights about the plane industry...

Fashion Photography

It is by the nature of people to be fascinated with the beauty they see around – may it be natural or inanimate. Though many people believe in the cliché “beauty is in the eye of the beholder”, the universality of expression when it comes to beauty as a whole is uncontested. People will always rely on their personal judgment when it comes to defining and appreciating real beauty on its sense. This paper aims to discuss the extent of attractive presentation used in fashion photography to stimulate desire among individuals who see it. It will justify desire stimulation as an aim of fashion photography by presenting examples. Further, several examples are presented to support the claim.             Fashion photography is a specialty aspect of photography that caters to the artistic exposition of clothing and other fashion pieces. It is believed that fashion photography mastered its individual aesthetic characteristics in which the clothes and other fashions are taken into considerable angle and out of the extraordinary locations. According to Rosetta Brookes, “Fashion photography is traditionally regarded as the lightweight end of photographic practice. Its close relationship to the economic imperatives of turnover makes the fashion photograph the transitory image par excellence.” As a primarily recognized fact, fashion photography is directed not only to artistic representation of clothes and fashion materials but also to the aim of persuading people and spectators to try, buy or purchase such products being endorsed and even the personality present as a subject in the photo itself. Further, Eamonn Mc picture editor of The Guardian, affirmed in such related description that “fashion photography is like its models, nobody wants it for very long.” Cabe believes that fashion photography is dynamic. The feeling of likeness the photograph brings in the eyes pf people who sees it changes. Thus, the relativity and duration of its effect is temporary. However, this belief was challenged by the fact that there are significant differences between how actual garments and representations of them are both produced and consumed. Since people originally wear clothing or fashion on our bodies, the description provided by Cabe is said to be “reductive” or oversimplifying. The aspect of personal differences and individual characteristics in terms of physical traits and the appropriateness of such fashion items to people are overlooked. Fashion photography is always a dynamic area of camera work since it caters to a specified and more business-oriented side. The art presented by most ordinary photographers and visual artists is a bit diverse when compared to such kind of photography. However, the main aim in capturing the subject in the best and most artistic manner is the common denominator of every photographer who held their camera and focused their lenses. But the question is, why is desire stimulated by using attractive representations in fashion photography? The Aim of Fashion Photography     Photographers, in general, aim to project the “art” out of the subject. Pierre Bourdieu suggests that the invention of photography, far from setting its own standards for realism, merely fell into line with the dominant ideology laid down by painting. He added that photographs themselves try to depict an ape in a painterly style. In fashion photography, the look of the subject as well as the fashion being endorsed is the main concern of the artist. In the process up to the publication of the material, the main goal is to attract people by using the taken photos. The most often media where the art of fashion photography is showcased is advertising and print (such as magazines and newspapers). Today, it is too evident in the daily encounters of people in various publications to see photographs adorn with strong color presentation, extraordinary themes, effects and bizarre images. Almost all glossy magazines distributed to the market are full of images that bear a specific message. On this case, fashion photography as presented in fashion oriented magazines and other publications will serve its own purpose: to persuade, stimulate and elicit desire among the readers and lookers. Indeed, fashion photography persuades people by the visual beauty being presented but at the same time separate them to the reality of the ordinary purpose of clothing. With such representations, people no longer stick to the idea of clothes as a basic need for practical considerations such as protection, modesty, and adornment. Instead, it gives them the opportunity to ponder on the symbolism of fashion. Thus, the magazine as the principal outlet for photographic exposition as well as a prime motivator in helping individuals to assess the meaning of clothing, determining what is “in” and what is “out”, must serve its real objective. But more often than not, with the superficiality of images, use of strong visual elements, and surreal characters, people are subjected into fashion dilemma. For example, photographer Ruth Harriet Louise takes her lenses to Hollywood glamour.  Louise understood the critical importance of fashion and its display, and worked with designers and subjects to the best advantage of both.  Most of her works were focused in the glamour portraits of Hollywood celebrities especially to the movies they starred in. However, there are significant examples applicable in the stimulation of desire in relation to fashion photography. A certain instance was when some stars seemed almost entirely identified with their wardrobes. “Carmel Myers was in Italy filming Ben-Hur, so far as the newspapers and fan magazines were concerned, she spent most of her time looking at the latest European fashions. The blonde wig Myers wears in her first scenes in the movie, for example, was said to be the result of a shopping expedition to Vienna. Upon her return to the United States, press photographers captured her in Paris gowns designed by leading couturiers such as Callot” (Dance & Robertson 2002, p.108). After the publication of such photo, wigs became more popular. Thus, the presentation and the model herself persuaded people to imitate what she wore.          Carmel Myers in a gown and in a wig accentuated with artificial berries     In reality, models for fashion photography are stars and celebrities. Because they are considered as such, the tendency is that their fans will be greatly influenced by the acts, ways, and looks they portray. Evidence that will support this observation is the fact that fans do not only collect and display the photos but were encouraged to imaginatively reinterpret and manipulate the images published in the magazines. It is deemed that the process of looking at stars' photographs, for the most devoted followers, was highly interactive and creative.   Further, today’s fashion industry is multifaceted. If before, fashion industry is largely concentrated to women, today, men are also engage to the trend. Because the studios sold primarily to women, the products that came to be associated with the female were largely domestic ranging from intimate cosmetics or lingerie, for example, to functional household objects, to more subtle aspects of style and taste. For men, perfume, sports items and designer’s clothes like jeans is the inclination. Some of the most popular brands endorsed by men and women are Calvin Klein, Tommy Hilfiger, Versace and the likes. The presentations of photos for such instances are depicted to be highly attractive that it will serve its persuasive function. Traditionally, women models are photographed wearing their particular dress in a specified setting. For example, ball gowns (like wedding gown) are depicted in an environment of elegance, nobility and high taste of quality like fabulous party scenes. Men endorsing clothes, aside from being handsome, the overall appearance of the suit and tie they wear correspond to the superficiality of the venue. With these instances, it could be said that the main aim of fashion photography in stimulating desire by using attractive presentation is valid and true.     A woman in lingerie and a man on pants – a typical ad located in today’s magazines         A lady in a wedding gown photographed in peculiar location and two gents in their suit and bow/tie   Moreover, it is a common notion by many historians and critics that the fashion magazine and the fashion photograph is an ephemeral and exiguous form of cultural production. It is a potential medium of transferring cultural characteristics of people with diverse origins. For example, in the anthology Beyond Desire, several portraits in fashion were showcased including the works of Christian Dior and John Galliano, fashion photos, African studio photography, art, and documentary stills that holds the relativity of people when it comes to fashion sense. The collection of essay about the “idea” of Africa and Europe fashion is used as a useful medium to establish social relationships, local institutions, and transnational connection”. In here, “fashion creates fantasy onto which qualities such as seduction, eroticism, exuberance – and desire – are projected”. The book provides a comparative analysis of “the random mixing of ethnic and contemporary elements” that makes the fundamental result both “strange and beautiful”. Fashion photography is not as simple as having a catalogue in which people can see what is new in the fashion industry. It is not also necessary that it should be a way for people such as the fashion shoppers in big commercial trading, to know what and how clothes may or really look like. In reality, the photographic presentation of fashion has something to do with the process or the act of capturing the moment and the subject. For fashion, there are several considerations to be taken into account. Aside from the items and the models to be used, among these considerations are “the catwalk, designer's studio and changing room perform this function, affording the opportunity for scrutinising garments on bodies in movement, or for trying them on, while simultaneously enhancing their appeal with atmospheric music and lighting”. Certainly, photos about fashion create an image of blissful and “beautiful” in the ordinary eyes of the viewer. It increases or even enhances the actual look of the item. Fashion photography offers an illustration of clothing that does not offer exactly the equivalent point of identification as it was demonstrated on the stage, or displayed on a mannequin or model in the studio. Relatively, almost all images in fashion photography designate people into a world of unconcealed illusions and fantasies. It places fashion and the body in any number of rational contexts. More often, the sessions in fashion photography is far from the reality of imagery. It has either little or nothing to do with clothing. Or even clothing itself seems to become an alibi for the representation of other contemporaneous issues and ideas.   The Issue of Digital Photography: Visual Truth in Fashion               With the advent of high technology in all segments of living, the process of fashion photography nowadays is also sophisticated. The presence of digital photography is another consideration to be taken into its revolutionary course of change. Researches find that digital photography has become immensely popular among recreational photographers and professionals alike while the benefits are multitudinous. The most pronounced benefits are the ease of reproduction and the effortless manipulation digital photography allows for exact replicas of images that can be made instantly and sent out where they have the potential to reach and affect millions of individuals. Furthermore, photo editing software allows for the manipulation of images, where any element can be altered, added or extracted but in doing so, the computer has followed the law of unintended consequences: the box that came to be seen as the conclusive media machine has made conclusions themselves more difficult to reach. The status of photos as visual truth has been severely shaken by this digitization of photography. The debate over the level of visual truth in photography has only been heightened with the arrival of digital imaging. Visual truth is the notion that a photograph has the power to project images of the truth and can be seen as an unmediated copy of reality. While this view is extreme, traditional photographs do indeed all have a referent in the real world something of which they mimic and are reflections of. While simply digitizing a photo does not change that, when photographs are altered through the use of a digital technology, they lose this referent and can present a distorted view of reality. This thought is unsettling for some, as determining the authenticity of a photograph is nearly impossible. This can allow for people to create completely fictitious events and execute elaborate hoaxes.          Clearly,  believes that the expression of an attitude such as this in fashion photography bears witness to the fact that it can both make a profound impact on the social and cultural scene, and have the potential to make a lasting rather than fleeting impression on the consciousness of any individual. The deceiving tactics in order to persuade or stimulate the desire of viewers and more importantly buyers in the subject presented is evident in every images shown and products endorsed. Often, photographs are not meant to be strictly a depiction of reality, but instead to be art and evoke an emotion from its viewer. Thus, digital manipulation simply becomes another tool for the artist which allows them to convey meanings that would be otherwise impossible. One must not forget that the interpretation of a picture takes place in one’s heads. The meaning of what people see is never what they see but what it means to them. Pictures are not to concretize reality, but to interpret. Although the digitization of photography is an unavoidable evolution, it is important to understand that digitization does not necessarily include alteration. Digitization is an astounding advancement that will allow for endless and rapid distribution of photography worldwide especially to the fashion and even advertising industries. As tempting as digital manipulation may be, it is crucial that fashion photography maintains its integrity and continues to display unaltered photographs. Even in an unaltered state, however, photography will always be a subjective art, void of any absolute visual truth. It is digitization though, that allows for a new level of image that can be made to fulfill any desire. According to sources, it is said that the world becomes more controllable and we become more capable of projecting and confirming ourselves and our own world and in our own image as well provided that these digitally altered images are not labeled as authentic, one should be able to appreciate and accept this reconstructed version of photography. There has been a general argument that the diverse and complex array of images people encounter in their everyday lives, from paintings to news images to digital representations, are subject to the dynamics of social power and ideology, and that images acquire meaning and value according to context and use. Fashion photography aims not the excessively and overly visual presentation of images but to the artistic and realistic way that will induce the desire of people who loves fashion and the art of photography as a whole. As Jennifer Craik in The face of Fashion deemed, “fashion photography provokes viewers and consumers into confirming their own identity through structures of desire … constituting a nexus between fashion and selfhood”. In my own opinion, fashion photography must not be overly interpreted. The images should be attributed from the standpoint of a lens' creative and technical capabilities such as angle view, zooming, depth of field, perspective, aperture control, contrast or tonal and color reproductions. The element of visual truth is the most important aim that fashion photographers must meet. Thus, the presentation of images and subjects is not beyond the limits of real characteristics of fashion items, clothes, and models in the picture. The extent of fashion photography is limited to the execution and presentation of what is true and artistic in the eyes of every individual. Balancing artistry and honesty when it comes to stimulating desires of people is another vital denominator. Thus, people can observe fashion photography play with their own desires and fears and appreciate how the rational images appears without the main influences of “attractive presentation using colours, exotic themes, lighting effects and phantasmagoria of abundance” but with the idea that fashion is relative and that everyone is exceptional in the eyes of one another.

Fashion Photography

It is by the nature of people to be fascinated with the beauty they see around – may it be natural or inanimate. Thou...

The Case of China Kelon Group

Problem Statement             The issue in the case of China Kelon Group is whether they should push through their attempts to diversify their economy.    Situation Analysis             According to the case, the fundamental target of the company is the households in China. The case also indicated that there is a growth of the middle class in the country thus creating the demand for their products. The company is faced by competition from other appliance firms such as Matsushita, Sharp, Hitachi, Toshiba, Sanyo, Mitsubishi, Electrolux, Siemens, and Whirlpool. Despite the number of prospective competitors, the case has indicated that local brands still dominate the industry. In addition to this, the company is deeply ingrained in as the foremost refrigerator making brand in China. After acquiring several awards from state, provincial, and international organizations, there is no doubt on the capacity of the company to provide high quality of products and services. Similarly, to maintain this standard of high quality, the company is constantly in coordination with foreign corporations.       Alternatives             There were two other alternatives with regards to the recommendation of the proper course of action for Kelon. These include vertical integration of the firm, and geographical diversification. In the first one, it wasn’t chosen because this entails maintaining the status quo for the company. The other alternative, geographical diversification would not be probably practical for the company since China has already possesses a large market and the company has yet to realize its full potential. Recommendation             The recommendation is to engage in a horizontal diversification plan. The company has long been in the refrigerator industry and has established a name for its brand. It is high time that they move into a new industry. Although there is a great risk in entering into unfamiliar territory, the company still has a wide base from its refrigerator customers which is basically the same target market as that of the air conditioning industry. What they have to carry out is the manner in  this target market to purchase their products, given that they are a new entrant in the air-conditioning scene.    Implementation Plan As a new entrant on the air-conditioning industry, the company must be able to discern how much power it possesses. This is where the company should look into the possibility of existing national competitors of cutting down their price if they are to defend their market position. Moreover, the company should also look into national regulations regarding new entrants in the national market, particularly those which directly affects the products of the company. The company must conquer an assortment of competitive barriers such as economies of scale, capital requirements, access to distribution channels, product differentiation, switching costs, cost disadvantages independent of scale, and government policy. These obstructions lengthens the period during which active companies may be able to make use of competitive advantage devoid of laying bare the competitive rivalry or imitation from others.

The Case of China Kelon Group

Problem Statement The issue in the case of China Kelon Group is whether they should push through their attempts to diversif...

INFLIGHT SERVICES INDUSTRY

INFLIGHT SERVICES INDUSTRY   Overview of the Inflight Services Industry Because of the fact that airline was now perceived to be a primary mean of transportation both regionally and globally, the commercial aviation industry is very keen in providing passengers with the superior, holistic service. Inflight services are one of those wherein the objective is to ensure that passengers are provided with quality services aligned with their needs during travels especially lengthy ones. Inflight services are provided by both on-ground suppliers and airline staff and crew, providing for both cabin and onboard services. Inflight services, nevertheless, depend on the nature of the flight and the class of travel. Although inflight services appear as more routinal, it holds the reputation of a high profile element of airline service. Today, the essential services now includes basically for comfort and amenities pack as well as crew catering with associated ancillary items and serving utensils provision. Entertainment has also become an inevitable service component as well as the duty free sales.   The inflight services industry is no longer at its infancy while increasingly becoming a globally recognized industry as well. Such a globalize industry, inflight services are now provided for 9, 000 daily flights in 1, 000 airports. From the period of 1920s to 1940s, inflight services were initially restricted considering the small number of passengers. Foods and beverages are specifically limited to sandwiches and thermos coffee or tea due to lack of heating systems and passengers are only able to access full hot meals during stopovers. It was in the 1950s that the inflight servicing became developed in conjunction with the dramatic changes in passenger volume. It was also this decade that airport restaurants and independent purpose kitchens became fully involved with onboard servicing. As such, large scale meal preparation and distribution were established leading to development of standardized food and beverage products specifically for the aviation industry.   Basically, this can be viewed as the ongoing globalization of inflight caterers. The globalization of commercial aviation industry was realized because of the continuous demands of passengers for facilities and therefore services. Inflight catering facilities, for instance, had grown complementary with these demands. The globalization requires airline companies to commit to customer satisfaction, employee engagement and core profitability. Organic growth was also a part of this globalization wherein airline companies resort to major mergers and acquisitions. Although organic growth is incremental and processual and involves volume and mix with emphasis on own resources (Kennedy, 2007, p. 111), it could be best realized through the combining the energies of organic and venturing strategies (Sadler, Ryall and Craig, 2003, p. 123) which lead to the optimization of the economies of scale and scope and therefore maximizing the return on investment (ROI).      Inflight Food Service as the Basic Service Importantly, provisions for food and beverages are the most apparent inflight service. As demand for quality onboard dining grows, passenger services with emphasis on victuals services being provided by the airline caterers became the competitive reference of airlines. Airline caterers are given the responsibility of inflight food management hence supervision of critical logistics activities. Airline catering refers to the servicing of food to passengers onboard on a commercial airliner. Airline catering has increased and developed considerably over the past twenty-five years. The trend now includes full and varied service which could be either terminal catering or in-transit. Furthermore, the in-flight catering varies depending with the class of travel, type and duration of flight, making airline catering strategically positioned within the aviation industry (Davis, Lockwood and Stone, 1998, p. 8).    Stressing on the complexity of the nature of inflight food service, it is both much customized and highly individualistic. Inflight caterers produce meals of varying volume and variety taking into considerations the precise weights and quantities and specifications for passengers and aircrew. Even so, food preparation must be in accordance with both space and time due to hygiene controls and food safety. Significantly, there are many consequences along the flights which can devalue the food like inclement weather and delays. What made inflight service industry a significant industry is the crucial investment on value chain leveraging to deliver high levels of customer satisfaction in real-time as well as the investment on the human capital. Customer satisfaction is generally related with the fact that passengers dictate the profitability of airlines and it is also the passengers that consume the inflight service products thereby the products and services must be attractive for passengers.   “Customer has become a crucial measure of competitiveness” (Harding, 1998). The service quality increasing became the determinant of customer satisfaction.  It can be effectively managed through customer-centered and priority-driven techniques. There are two principles of customer service according to Deviney and Engelke (2000). The first principle is the internal customer. Airline caterers and onboard crew are considered as internal customers to the airline whereas the passengers technically fall under the second principle which is the perceived value. Passengers of any airline make decisions according to higher perceived value with quality, customer service and price are the variables. Passenger’s perception of inflight food has implications for availing the services of a specific airline.       Competition in Inflight Services Industry Competition in inflight services increasingly becoming intense because of the continuous waves of globalization, making a more quality passenger management at the center of concern. Development, planning and logistics of inflight services especially food which is seen as a diversion befell to be even more critical. Air travelers preferred variations in their meals and food choices. The Inflight Service Division takes full responsibility of this aspect and all the associated tasks that comes with it such as the liaison and interfacing with the inflight caterers. Wensveen (2007, p. 215) relates that airlines are particular with departmentalization or the practice of subdividing both people and functions into group in order to gain advantages of specialization. It is this very reason that the airline and the airline caterers maintain a very close business relationship regardless of whether the latter is a part or not of the airline, independent or part of the competitor of the airline. There are responsibilities on both sides which must be taken seriously and can not be sacrificed. What the inflight service industry can do is to leverage its supply chain trough four basic commitments including maximization of return on investment (ROI), high levels of customer satisfaction; real-time service delivery and human capital.       In pursuit of acquiring the competitive advantage within the inflight service industry, the use of product and service diversification could be the key. A reason to account for this is that long-term industry attractiveness was based on market profitability, competitive intensity, entry barriers, opportunity to differentiate products and services, demand variability, segmentation and technology development. Irwin (1995) states that the more attractive the industries that a company has diversified into, the better the performance prospects are likely to be. True enough, the inflight service industry could benefit from the competition through consistent food products and service innovations including activities of co-branding, quality of the foodservice brands, strength of competencies and relative brand strength all aligned with the passengers requirements and expectations.   In order that airlines and airline caterers to keep pace with the competition, moreover, training and development will be an important endeavor then. Both and airline and inflight services industries must learn how to manage a new generation of employees whom are outspoken, expectation-driven and motivated so that they can add value to the airline company (Wensveen, 2007, p. 215). Training and development is also needed because of the inherent constraints of inflight catering for both airline and carriers. Such constraints include but are not limited to time and length of flight, point of embarkation and disembarkation, class of people with reference to their nationality or ethnicity, budget allowed, price of food, seasonality of food, cost of labor, time required to serve the food, number of flight attendants available in serving food, time needed to consumer food, ability of meal to be consumed in limited space, time and effort needed to clear an item, odors which may penetrate the cabin, ability of meal to rethermalised and ability of meal to withstand low humidity and pressures.   Airlines and Inflight Services Providers             There are three among the activities that require tight working liaison between airlines and airline caterers which are planning and budgeting, production and provisioning and outsourcing of activities. Activity planning could be as short as three months and be as lengthy as a year depending on the activities involved and the budget. Production and provisioning follow but are subjected to consistent changes thus communication between the two parties are fundamental. Activities which might not be in the capacity of the airline or the caterer and/or too costly for both are outsourced. Cost therefore is an important element in the business relation of the two. These activities necessitates that the airlines of the 21st century are expected to focus their energies on specialization of functions.   Jones (2004) argues that each of the stages of flight catering, there are specific features that are unique depending on how the caterer and the airlines will respond to. One simple fact, however, encompasses such uniqueness that “while the food is prepared on the ground it will be consumed in the air” (p. 12). Such condition impacts first on customers and their needs where the prime motivation for travel is not eating but a mere add-on. Second is on menus that some foods and drinks are not suitable for consumption in pressurized spaces above the ground. Production method is the third with emphasis on the volume of large scale meal production. Service style which is predominated by trays, shelf life or the gap between production and consumption and transportation of majority are modular trolleys are other considerations.   Further, Jones (2004, p. 17) points out that in responding to various constrictions, caterers act as preparers of the food products but essentially require competencies on part of the caterers which must reply with and respond to the airline’s wishes if not for the passengers per se. Because of this, caterers must also build distinctive relationship with suppliers and together must comply with the specifications of the airlines in behalf of the passengers. Anything that is within the caterer’s production facilities that concerns the airline and its passengers are of concern to the airline. Airlines, on the other hand, have the responsibility to establish the passengers requirements with the caterers and through the caterer interpret and respond to the expectations of the passengers. The airline management also decides on the number and content of the menus (p. 18).   As such, the complex relationship between the airline and caterers must be legally binded. This relationship between the two parties is based on service delivery with the following requirement variables: consistency of food product, accuracy of uplift, on time delivery, value for money, service relationships, health, hygiene and safety, innovation and overall operational performance. All of these are perform under a contact which tends to be very long and detailed but one which conform to fair standard structures. Service level agreement, price list and standards of performance criteria are also other documents to be considered under the contract (Jones, 2004, p. 21).   Summary Inflight services are now perceived to be an imperative and high profile component of airline services as airlines purport to ensure convenient, comfortable, safe and healthy travel of their passengers. Although inflight services depends heavily on the nature and class of travel, its affects virtually all stakeholders (i.e. passengers, aircrew and external customers like the airline caterers. An industry which moves along with competitive pressures, standardization of inflight services materialized. This was seen as the globalization of the inflight services industry; airline companies strive for providing superior service through customer satisfaction, employee engagement and core profitability. Inflight food service is the most basic service and had been the basis of competition since it was established. Nevertheless, the undertaking was complex and painstaking at the same time, stressing the need for airlines and caterers to work closely together.       References   Davis, B, Lockwood, A and Stone, S 1998, Food and Beverage Management, Butterworth-Heinemann.   Deviney, D E  and Engelke, D 2000. ‘Customer Service as Viewed by Cooperative Employees’, Management Quarterly, Vol. 41   Harding, F E 1998, ‘Logistics service provider quality private measurement, evaluation and improvement’, Journal of Business Logistics.   Irwin, R D 1995, Module 8 – Strategic Analysis of Diversified Companies, in Principles of Strategic Management.   Jones, P 2004, Flight Catering, Butterworth-Heinemann.   Kennedy, G 2007, Strategic Negotiation, Gower Publishing Ltd.    Sadler, P, Ryall, M J and Craig, J C 2003, Strategic Management, Kogan Page Publishers.   Wensveen, J G 2007, Air Transportation: A Management Perspective, Ashgate Publishing, Ltd.

INFLIGHT SERVICES INDUSTRY

INFLIGHT SERVICES INDUSTRY Overview of the Inflight Services Industry Because of the fact that airline was now perceived to be a...

Sample Case Study

Recommendation for the Course of Action             If I choose option 1 (factoring), I will have a total benefit of $24,147.94.  This amount is almost three times the benefit of option 2 (discounting) equivalent to $15,340.93 difference.  If this would be the firm’s annual savings and the only issue that will affect my decision, there is no second thought of choosing option 1.  However, strict imposition of 30-day period would discourage potential and current customers that would affect my long-term profitability.  This is on top of my firm’s inflexibility in streamlining strategic actions/ responses to the detriment of long-term opportunities because we will loose control of our customer credit leveraging.  On the other hand, shareholders and other creditors basically want short-term profitability recurring in the form of cash and not merely graphical projections of increasing customer base in the fate of apparently aggravating cash conversion period.  Therefore, there is a need for further considerations of other factors.             Freezing the financial aspect (as the computed benefits delimit the variables to my decision-making), opportunities for option 1 are higher conversion period, predictability of inventory level, and less risk on overdraft repayment.  As a result, planning for the financial and operational aspect of the business would be more efficient.  This will have positive effects in reducing lost opportunity for an investment endeavor, cost of warehousing and its consequent use to finance other investment, and security in financing permanent current assets.  In effect, investors and creditors will increase their trust to the future operations of the company since its survival and business opportunities are easily observable including their increased confidence in its performance since only customers with relatively higher liquidity stayed transitions with the firm.                             On the other hand, the three main opportunities suggested risk-aversion of the firm to the detriment of future possibilities of bigger returns.  We may be dropping considerable amount of customers who relatively lack liquidity but are also bulk, repeat and strategic buyers.  They could be seasonal customers who purchase in bulk and so payment is of minimal consideration.  In addition, they could also be small but frequent buyers whose return in reselling/ consuming our products is intermittent and so requires contingent financial structuring.  Lastly, they can be really bad debtors but have large access to end-users through their ocular presence in malls, billboards, etc.  It could also be a situation of large customer with large bargaining power who wanted our policy to be customized as to give way to their own financial restructuring.  These customers are causing us financial headache but also provide or marginally/ discretely providing strategic support in the value chain particularly in marketing.             Further, the factoring firm may not accept or undermine strategic and tactical plans in favor of operational ones.  In this view, our firm, particularly the contingent actions of our sales and marketing teams to key customers, would lose its flexibility considering the fact that factor firm who will handle our key customer financial leveraging is seemingly “cash-based” rather customer-based.  We can be a one-time news maker in this industry who is unforgiving and craving for an aspect that is usually referred by customers as really “the root of all evils”.  What is more important to us, tangible (cash) or intangible (reputation) resources?  As a result, our future is blurred as to gain above average returns to the detriment not only of shareholders and creditors’ incentive to invest in our firm but also the managerial incentive for more challenging and high paying job.  And most importantly, our conservative customer base would limit our incentive intensifying value-added activities like product modifications and additional service to justify our harsh credit contract.  However, with the stance of eliminating those who cannot pay within 50-day period, it is questionable that our firm would still permit pro-customer pursuits rather than strict asset management.             In comparison, opportunities in option 2 are the mitigated problem against low conversion period particularly the 40% of the debtors and maintained (have prospect to increase due to incentive) level of inventory.  However, planning for financial and operational aspects would be more complex and the need for contingencies including its subsequent costs is necessary due to relatively ambiguous policy.  The existence of 60% of bad debtors would injure the capability of the firm to invest in other profitable ventures including increase in the cost of warehousing and there is the necessity to allocate contingent financing for permanent current assets (due to the unreliability of overdrafts).  In effect, shareholders and creditors would require me to explain further more intricate computations of risks.  Their trust is not instantly given for the new strategy since it has trade-offs between predictability (lower risk) and profitability (higher risk) of the firm.             The relative ambiguity of option 2, on the other hand, has its long-term advantages.  Old customers including the bad but strategic debtors will be retained, therefore, increasing the opportunity for bigger projects and larger profits.  The fact that there is an incentive in the 30-day bracket would minimize ambiguity of future returns (from raw data to 40:60 ratios).  As a result, the problem of financing permanent current assets can have relative ease in anticipation and leveraging.  This would necessitate the firm’s managers and employees to continuously react and foresee the trends in order to maneuver possible adjustments like increasing the incentive from the 30-day bracket or coming up with disciplinary policy to hold deliveries when bad debts exceed the tolerable level.  In this respect, the organization must perform beyond the expectations of shareholders and creditors in order to obtain their trust in our capability to collect in a determined period (although customer would translate this as approximate) including our dexterity to finance crucial permanent current assets.  In effect, this will necessitate the resources and capabilities of a factoring firm but with the culture and mind-set of our company.                 One of the most important issues of option 2 is that it increases our capacity to be flexible.  Due to the challenging situation, we can test our professional extents without being too timid to financial drawbacks.  Our movement towards risks and higher profitability would not be possible without our flexibility concretized by our culture, experience and intra-/ inter-departmental relationship among managers and employees.  There is a treasured history of negotiation culminated between sales and marketing department and manufacturing, purchasing/ warehouse division and supplier/ customer markets, and sales and marketing and finance particularly accounts receivable unit.  Are we willing to loose this relationship and adapt to new environment with outside parties?  If this will be the case, then we would turn to formality and strictly business type started not by department managers rather from the small unit of account receivables.  This would likely loose motivation of our collections department and undermines their informal communication and bargaining to customers.                      According to the abovementioned scenarios, my selected strategy would be option 2.  I would rather explain the shareholders and creditors how we can have a profitable tomorrow with our heads up rather than disclose the details of how we can improve our finances by hiding in the middle of our secured zones.  The fact that we have a net benefit of 8,807.01 from the venture, although sub-optimal compared to option 1, the reduced number of bad debtors to only 60% and a more challenging environment for the organization particularly the sales and marketing and finance departments would be enough to express the improved situation from the previous performance.  Strategic leadership is crucial and it depends on my ability and credibility including provisions of benefits for employees to convert this ambiguous and difficult situation into everybody’s legacy.  This option is not at all aggressive stance as to lead to increased risk, overtrading and liquidity problems due to higher profitability because there is a reduction (less ambiguity) of bad debtors due to a minimal incentive of 1% (which could be encouraging in the coming periods), contingency plans for disciplinary actions, investors’ trust, and forecasted on-time payments.  These can be our justification to our refused position against short-term, static and inflexible money-based decision in option 1.    The Balanced Strategy: Hybrid of Option 1 and Option 2             The subjective solution to option 2’s relatively risky stance of having a strategic leader and the firm being endowed with motivated employees can be set aside for a more objective (financial-based) approach to credit facility problem by integrating and polishing the flaws of the two options.  The first phase is to identify the main problem which is the rising of collection period for sales to 50 days from the policy of 30 days.  The symptom of such problem is the 1.5% increase in annual bad debts.  In addition, there is a need to minimize the use of bank overdrafts by customers to limit the risk of loosing financing for permanent current assets.             Due to this, the factor service is limited to implement the following: the advance payment of 60% of debtors and interest rate at 15% level (as to offset impact of revision to the original offer).  On the other hand, my strategy will be limited to only one: incentive of 1% or higher depending on the circumstances for 30-day bracket.  As observed, the provision of the factor service to lead our collection platform is removed to support our flexible and collaborative incentive system.  Also, its absorption of the 60% represents the bad debtors that is estimated in option 2 while the 15% annual interest represents its consultancy services and lost control of our internal operations.  The additional burden in interest is justified by the absence of 2% sales commission that would then offset the administrative savings of $18,000.  And even though we did not opt from the assurance of all customers to pay within 30 days, we are basically endowed with flexibility to allow us to apply the history of customer relationship and learning experience.  On the other hand, overdraft payments and maintenance of workable bad debts would still remain a challenge involving company effort and negotiation with the factoring firm, creditors, shareholders, and customers.             This model is not a perfect and risk-free alternative.  However, it embodies the possible advantages of factoring service and internal capabilities towards the attainment of short-term financial and long-term profitable health.  If strategic leadership and motivated workforce would emerge in the picture, the minimized operational difficulties have their corresponding resolution.  In effect, the need of liquidity does not eclipse the need for organizational challenges and prospects of the future of the firm.  Liquidity is important to the firm as well as future opportunities that they are reinforcing factors for the firm to consider.  Optimizing a Firm’s Working Capital Position             Although a firm uses formal capital budgeting process wherein a minimum requirement of $2M should be approved by the Chief Operating Officer (CFO) and should show 12% rate of return, few proposals have received careful attention.  Of course, nothing is lost from the firm while its capital structure remained untarnished.  And so being, the numerical evaluation continues to be enjoyed by few engineers, accountants and technical people.  There is also a departmental chronic habit to spend less in the first three quarters of the year and accelerate spending 25%-50% for the last quarter.  This is referred as capital budgeting being out of control (Copeland & Ostrowski, 1993).  Although analytical tools like net present value (NPV) are helpful, the greatest obstacle to minimize the need for working/ physical capital to be able to enhance free cash flows is not guaranteed.  This is when capital efficiency comes into the picture.  The strategy requires managers to understand the demand of capital and its implementation of particular projects which in effect entails involvement from specific units.  The teamwork would identify and manage resources and capabilities that provide value to the firm.  In this process, inefficiencies will be eradicated so that operational expenditures can be an optimal reflection of capital spending.  As a result, capital requirements are reduced between 10% and 25% without change in revenues or quality of products/ services provided to customers.  A specific example of this activity is the measurement of capacity utilization of cable wires of telecommunications company and the size of transformers of an electric firm.  By locating inefficiencies and value-adding activities, deferral or elimination of projects that can be a deceptive action (due to savings) can be re-analyzed to locate possible opportunities that are kept untapped (Copeland & Ostrowski, 1993).     Second, the optimization of working capital can also be attained when a firm uses appropriate accounting procedures to guide decision-making.  An innovative measurement of corporate performance, economic value added (EVA) is defined as the difference between a company’s net operating income after taxes and its cost of capital of both equity and debt.  It challenges the conventional accounting earnings for both security analysis and performance evaluation for the firm.  EVA has the capability to show the wealth created by the firm during a period as accounting earnings can do but differs with the latter as it also measures the opportunity cost accrued by shareholders in investing to a specific firm activity (equity capital).  Providing a clear grasp of equity capital, accounting distortions can be prevented.  For example, the management proposes to establish a research and development facility.  The current GAAP would impede this engagement as it will not include the wealth that can arise (reflected in the equity side).  This could transform the opportunity to a risky strategy and would not receive approval (Chen & Dodd, 2001).             EVA is also applauded by its ability to reflect a more appropriate stock price and even result to higher stock returns (as in the case of Coca Cola’s 200% stock gain between 1987 and 1993 using EVA as performance measure and decision benchmark).  In this foregoing, it is a clear indication that accounting practice has an impact to optimize the working capital, that without an efficient and relatively accurate performance measure, decision-making both in short- and long-term basis can be crippled.  As a result, the firm would tend to be in risky position and would rather prefer to set aside/ ignore a value-adding venture just because of numerical impediments and distortions of accounting for earnings.  Using a more accurate measurement of economic reality, EVA concretizes decision-making for the firm to be able to take relatively farther steps towards higher returns with enough liquidity left at home (Chen & Dodd, 2001). The company’s working capital should not always be a source of risk.  There is a need to balance this cognition to the reverse side of the venture which is opportunity.  Our attack to the problem of optimization is two-edged that focus on activities to minimize the requirement of capital outlay (financial relaxation) and clearer understanding of firm standing for a particular venture (financial opportunity).  With this in mind, the firm can optimize its working capital in the sense that it does not impede the prospects for the firm to think big and think in a futuristic manner.  It also equips the company with efficiency and relative accounting accuracy bringing confidence to shareholders, creditors and employees including secured continuous improvement in supplier and customer relationships.  Thus, the two-edged blade harvests a lot from the working capital indeed.

Sample Case Study

Recommendation for the Course of Action If I choose option 1 (factoring), I will have a total benefit of $...