Production And Consumption Inseparability

Production And Consumption Inseparability Inseparability of production and consumption refers to the concepts of interaction and service encounter. The process of simultaneous production and consumption involves the presence of customers, the customers role as a co-producer, customer-employee and customer-customer interactions that makes it unique from a product (Shostack 1977). Researchers often refer to the customers as partial employees in a service setting. During co-production, customer involves himself in self-service (self check-in), using technology and machines offered by the service provider (airlines). 2.1 Service encounters During simultaneous production and consumption, it is the service encounters, that are the critical moments of truth in which customer often develops a perception/ attitude about the business (Bitner et al. 2000) and creates a differentiation from other competitors. In the airline industry, these service encounters are on which the organisation, either thrives or dies based on customers evaluation of their service. And the successful organisations take it a step further to enhance their core or essential features with extended or enhanced features. Service encounters can take place across a range from the traditional face-to-face (check-in, cabin crew), telephone (telephonic check in, booking tickets), and lastly through the internet (web check-in, booking tickets) and at every point the airline industry thrives to make it easier and comfortable (less time consuming) for the customer. A successful organisation is which that exceeds the customers expectations (enhancing features) and not just meeting their expectations (core features). But Harris et al. (2003) suggests that if the core features are not met by the airline industry, it is that leads to customer dissatisfaction. He also suggests that only 5% of the unhappy customers complain to the service providers, thus making it difficult for the service providers to address the issue. What intrigues even more is that the 95% of the customers, who do not complain, talk negatively about the service to their acquaintances. . However, when dissatisfied customers do complain and the problem is resolved to their satisfaction, they are very likely to return. The reasons for dissatisfaction may vary across long queues at check-in or booking counter, incompetent personnel, unsafe website and so on and so forth. Bitner et al. (2000) suggests that in the airline industry core factors vary from friendliness of the staff, knowledge about the service, efficiency, and quality service, sanitary and safe environment. But to create differentiation from their competitors these organisations, provide added or enhancing factors and those include concierge service, reservations, seating by host, lounge/ hotel facilities for delayed flights and so on and so forth. Today in the airline industry, companies do offer most of these features but it is noted that the cost increases for a more pleasurable experience. For example, an Air India flight provides cheaper flights just barely meeting the core features, but Emirates for the same route provides expensive flights with a varied extended factors. What companies like Air India could do to provide a better experience would be to remove/ reduce the unsatisfactory experience (upgrading a customer, complimentary meal in case of delayed flights, trained personnel to deal with unhappy customers). 2.2 Shostacks Models Based on Shostacks Continuum, the package tours (Flights+ Hotels) offered by most airlines, form the intangible end, even though there are tangible ends to be considered. Shostack (1977) suggested that there is no element known as a pure service and that there is always a continuum between the tangible dominant goods and intangible dominant services. The airline industry, the tangible elements include the interiors of the flight, food, seat and also the overall graphic continuity from buying tickets to the attendants uniforms (Shostack 1977). Even though the airline industry is intangible dominant, different market segments require different elements to make it an experience for them. Say for example in the case of Virgin airlines they have three tailored traveling experience for three different markets. In the case of students/ backpackers or during bad economic conditions, it is elements such that reaching from one destination to the other or a no frills flight would be of emphasis on the nuclear core (cheap flights+hostels, bed and breakfast) In the case of business travelers, it would be schedule frequency along with comfort would be most important (a comfortable travel+ hotel with internet, office facilities). Lastly for tourists (with families), it would be unison of in-flight and post-flight services (hotels) that would be of paramount importance (Comfortable flight-but not too expensive+hotel near a tourist destination) But in the case of tangible elements the various markets demand differently. For example, for flights like Air Asia, which offers low cost air travel, the travelers are not provided certain tangible elements such as food and drink in-flight. But these airlines just cater to travelers who wish to travel on a limited budget. So the challenge for other firms is to create an experience for each market, so that it would form an experience for each of them as each of their needs differ from another. The challenge is to understand how consumers perceive a certain service and what as a firm they should do to manage and meet the expectations (Lovelock and Gummesson, 2004). Shostack (1977) defined a model that was termed as total market entity where she argues that a change in one element may change the entity on a whole or partial basis. Say for example in an air travel there, it is a unison of both tangible as well as intangible factors. And some tangible factors just act as service elements/evidence. 1. Peripheral evidence: this refers to a tangible factor, which no or little value if it exists on its own. It is part of the service or is required to experience a service. For example a flight ticket, does not mean anything on its own, but is essential for completion of a service. 2. Essential evidence: Consumers do not own these and can exist on its own as its highly dominant in its impact on a service purchase. An example of an essential element provided by Shostack is the DC-10 aircraft, which was involved in a few crashes in the 1970s. But even though all the issues were resolved, US refused to fly in a DC-10 aircraft that eventually led to scrapping them off completely. This model however does not show how a service functions and this is explained using another model by Shostack-Service Blueprinting. It has been developed to deal with processed, acts and flows and in (fig 4), a blueprint for airline travel has been presented under how airlines try to reduce variability 2.3 Service experience Every time a customer is interacting or having a service encounter, a service experience is taking place and because simultaneous production and consumption takes place, the customer mostly experiences the service in the firms physical surroundings (Groove and Risk, 2001). In some cases the level of involvements between the customer and the employees of the organisation is high and in some cases very low and some with no involvement at all. And the nature of physical environment depends on the nature of service as well as service experience. What the firms aim to do is make profit while creating a satisfactory or unique service experience. What determines an experience is also the nature of the physical space. For a high involvement case, (for example, self check-in, lounge services, website) customer satisfaction can be enhanced, by creative use of physical design (Bitner 1992). In the second case, where the employees play a major role, and where customers have less or no contact (cock-pit, cargo personnel) with the service personnel, the physical environment should be to motivate, satisfy the employees, as no or few customers will experience that. In the last case, where there both customers and employees interact in the same environment at the same level (counter check-in), the servicescape is the most complex as it needs to appeal to the customers but at the same time be efficiently motivating the employees (for example, at a check-in the counter needs to look clean and efficient to the customers, but also comfortable for the employee-nice seats, environment). Thus the environment should be neutral to appeal to bot h customers and employees. Other than the physical environment, it is the customer to whom the service is delivered is what is important. Like mentioned earlier, different customer have different needs and it varies based on their gender, age, social status and so on and so forth. For example, a customers needs travelling on business class will vary from that from one travelling in economy class and the service provider needs to meet each of their needs. What normally happens in the airline industry is that the customer travelling on business class is more looked after than the economy class traveller. This would mean that it creates a negative service experience for the traveller. 2.4 Service Quality Service experience is defined by the quality of service provided by the airlines. Based on this service quality, a conceptual model by (Parasuraman et.al 1988), defines the gap between what the customers expect and what is provided. From this model, it can suggested that to create a better service encounter for the customers: Gap1 This represents the void between the perceptions and expectations between the marketer and the consumer. The key is to understand what the customer expects rather than forming a perception of what they might want. Parasuraman et al. (1988) suggests that this void can be filled if sufficient market research is done prior to offering the service. For example, if an airline firm is to find out what a particular target market is looking for, before offering enhanced factors. Gap 2 This refers to the void between what the company perceives and the service quality specifications. For example, low-budget flights like Air Asia advertise that they provide in-flight entertainment, but the quality is limited (all passengers view the same programme on a single television set) Gap 3 This is the void between quality specification and service delivery. For example in the case of few Asian airline companies, the quality of service provided would be accepted by the home nation. But outside the home nation, the quality specification may not be on par with what the customers expect. For example, in India, Kingfisher airlines claims to provide world class travel experience to its customers. Even though the service provided is perceived to be on par with top airlines in India, the quality of service offered is nowhere close to airlines such as Singapore Airlines, Thai Airways etc. Gap 4 This relates to the void between the standard of quality promised and the service delivered. Thai airways has positioned itself has an airline that brings together quality as well as hospitability (Travel with the Thai touch, Smooth as Silk). But what raised issues and led to negative publicity was when their personnel were found to be rude to passengers. This led to a completely contradicting image of what they claim to be to what is delivered. 2.5 Differentiation To create a differentiation from their competitors, airline firms use the Porters Generic Strategy Model (1980): Cost Differentiation Cost Leadership (No Frills) Rynair, EasyJet, AirAsia Differentiation (Premium price for superior quality) Singapore Airlines, Emirates Cost Focus (Differentiation only for a particular target group) Kingfisher Red-low cost Business travel Differentiation Focus (Premium price for superior quality for a small target group) Concorde flights used by BA, Air France A380 flights-Singapore airlines, Qantas, Air France Scope Narrow Broad Fig 1: Porters Generic Model for the airline industry Airlines Pursuing cost leadership strategy Airlines pursuing an integrated strategy (some stuck in between) Airlines unable to achieve either a cost leadership or differentiation strategy Airlines pursuing a differentiation strategy High Fares Low Fares Low Service Level High Service Level Fig 2: Airlines Realized Business strategies (adapted from Dostaler, Flouris 2004) Using Fig 1 and fig 2, Porters Generic strategy can be explained as: Cost Leadership Cost leadership refers to gaining competitive advantage and giving your company an edge over the others. This can be attained in two ways: Firstly increasing profits by reducing costs. Secondly increasing market share by charging low prices. Airlines such as Air Asian, Rynair have chose to cut costs to a minimum, thus enabling to charge the customers low prices. This tactic helped them gain market share, and also have all their flights fully booked, which leads to further reduction in cost. But where they did compromise in on the in-flight and other services. For example, these airlines do not even provide water in the flight; one is expected to buy them, free seating etc helps them price their tickets low. Smaller airlines even provide just few routes at cheaper prices than their international rivals. But the risk if when competitors follow suit and hence firms should look for means to continuously reduce costs. Differentiation Strategy This involves making ones service different and more unique. This could be achieved by airlines in terms of their airplane types, costs, brand image etc. Singapore Airlines, Emirates have portrayed this image of making travel an experience with their superior quality. But as Porter (1980) argues that for a company using differentiation strategy, they would incur additional costs for research, development, innovation as well as advertising, which are normally recovered from the customers. Focus Strategy Airlines using focus strategy focus on a niche market and this could be a unique low cost airline for a target group or high-end price for another target group. For example, the A380 airplanes used by Singapore Airlines and Emirates charge a premium price of  £3600 for Business Class travel on Emirates from Heathrow to Dubai. So this is for the target group who like to travel with a lap of luxury with pool tables, spas, Internet, lounge area etc during their flight of less than 7 hours. There is very less competition in markets where focus strategies are used. But the risk is when the niche will disappear and when the business and customer preferences change over time. 2.6 VARIABILITY OF SERVICES One other feature of services marketing is its heterogynous nature and organisations strive to reduce the variability that would lead to building a strong brand. The aim is to communicate a persistent image and message to its customers at different places and different times. Service Variability can take place in different ways. Variations in external Conditions -weather, crowding and differences in service locations Variations in service delivery- customer interactions with employees Variations in customer perception-customers perception of a service may differ from place to place and with time too The figure below shows the causes and consequences of service variability in any organisation. High Level of perceived risk for buyers Difficulty in presenting an image of consistent quality Difficulty in developing strong brands Services are produced live Often leads to no chance to correct mistakes before consumption Often reliant on imperfect human inputs May be difficult to blueprint the service Variability of Service Fig 3 : Cause and Consequences of Service Variability The issue of variability leads to difficulty in attaining a uniform output especially in services that require a lot of human interaction. Say for example, we still have not developed technology to eliminate the need of humans completely. Airlines do not use robots to replace the human cabin crews as one human interaction is essential and secondly some technologies are too expensive to adopt suggest that behavior varies not only amongst different employees but also amongst the same employee on different days and with different customers (Lovelock 1983). And even though scripting and blueprinting is used to reduce variability, it still has its demerits. To provide a good service as well create an experience for the customer and to ensure reduced service variability, the airlines use the following techniques: 1. Employee Training As employees are part of any service provided, most airline firms have a rigorous selection and training process. For example, Singapore Airlines hires staff who fit in with the Singapore Girl image and portray the same values as the firm does. Firms who invest a lot in selection and training process mostly offer higher quality service than others. Air India does not provide constant training to its staff and hence issues arise when the staffs do not communicate a coherent message. Staff hired should be able to empathise with the customers as well as trained to deal with different types of unsatisfied customers. Also it is taken care to see that the staff matches the cultural differences of the country they are based in. 2. Scripting Most airlines have pre-determined scripts for each type of service encounter, which consists of either verbal responses or series of actions. The usage of verbal scripts is common while booking a ticket or enquiring about a service. Like for example, when a customer calls a call centre for a query, they normally have a script, which goes by: Good morning, Thank you for calling Malaysian Airlines. My name is Ben and how may I help you? Similarly a scripted message is used after a call or as an apology. In the case of scripted actions, it would how all cabin crews, follow the same actions once passengers are in the flight. All messages and actions are scripted so as to ensure a coherent image, message as well to ensure that the information is communicated at all times. But this has its limitations in terms of how at times personnel feel restricted from offering superior service based on their judgement. 3. Blueprinting Shostack (1982) suggested that blueprinting allows quantitative description of critical service elements, such as logical sequences of actions and processes, time that happen at a place of service delivery. It also defines actions for the place of interaction (front-line) as well for events taking place beyond the line of visibility. (Zeithaml, Bitner et al. 2006) define service blueprinting as a tool for simultaneously depicting the service process, the points of customer contact, and the evidence of the service from the customers point of view. With this description, the authors emphasise the different systemic layers overlapping in a service, from the layer of customer interaction and physical evidence to the layer of internal interaction within the service production process. The figure 4 below shows a service blueprinting for an air travel. Fig 4: Blueprinting for Air Travel Airport exterior Parking Baggage claim Seats Gift shops. Toilets Terminal Food/beverage Magazines Airplane Seats Gift shops. Toilets Terminal X-ray machine Metal detector Conveyor belt Computer/ credit card Desk Ticket Terminal Airport exterior Parking Online/ website Mechanic Check plane Metal detector Conveyor belt Conveyor belt Remove bags Pilot Serve customer Greet customer Send off customer Load bags on plane Check Passenger Greet take bags Registration Leave airport Pick up luggage Immigration Exit plane Fly Board plane Check in Wait at gate Security check Arrive at airport Reservation Support Process Contact Person Backstage Onstage Customer Physical Evidence 4. Quality Audits This is done to monitor the consistent quality provided by the airlines. Ground service analysis covers ticketing, check-in, security, lounges, boarding, departures, transfer, arrivals, and corporate branding. Onboard service analysis is a detailed and complex Qualitative evaluation of all product and service delivery elements core product standards, service efficiency and critical factors of staff service delivery. IATA carries out frequent safety audits. 5. Quality Awards Airlines often advertise the awards they have received for their superior quality. These awards are recognized worldwide and ensure that these airlines provide world-class travel experience for their travelers. For example, in 2009, Singapore Airlines was awarded the Airline of the Year award for its superior quality and safety. These information may not be too relevant for the customers, it just adds enough publicity to make consumers realize how one offers superior service than another thus prompting them to try these airlines on their next travel. 6. Service Recovery However thorough an airline is on its quality and service provided, there would still be occasional glitches. And a feature of any service is its heterogeneous nature, where each service encounter is different from another one. Berry (1995) argues that companies do not empower front line employees to solve problems immediately. A service failure does not automatically lead to a lost customer. But once an issue is identified, if it is dealt with promptly and the right actions are taken to ensure that the customer is satisfied, then it mostly would not lead to a lost customer. But in case of a major issue, the customer might seek financial compensation. 7. Customer Retention Parasuraman et al. (1985) suggests that even though there is a positive relationship between service quality and customer loyalty, above a certain level, additional improvements in quality do not have further impact on customer retention as there is no point in increasing quality costs if it cannot be passed down to the customers. The variability of services poses a high threat when it comes to brand building, but since humans are an integral part and cannot be eliminated completely, steps are taken to provide better training, motivate and encourage employees as they all form part of the service encounter. As Lovelock and Gummesson (2004) suggests that performance is less variable when machine-intensive technologies are used. So as to reduce the consequences of service variability, airline industries have adopted the use of technology so as to reduce if not eliminate the factor of human error. These include: Use of computerised system instead of telephone operators. Use of self-check in Kiosks at airports, mobile check-in (SSTs-Self Service Terminals) Using website to book or amend tickets. The other dimension of variability is the extent to which a service can be altered to meet the demand of individual customers. Services that are manufactured for a large number of customers are difficult to be customised like in the case of air travel, but can be customised in particular areas. For Example scheduled airline service is highly standardized in design but offers modules for customizing specific elements, such as alternative schedules; service to or from different airports in the same metropolitan area; different classes and prices; seat location; and a selection of drinks, food, and other amenities. But with the evolution of technology, industries especially the airlines are adopting technology as far as possible as with rising competition there is no room for error. But not using humans at all is impossible. So as Jim Collins said: people are your most important asset is wrong. The right people are your most important asset. REFERNCES Berry, Leonard L. (1983), Relationship Marketing, in L.L. Berry, G.L. Shostack, and G.D. Upah Emerging Perspectives on Services Marketing. Chicago: American Marketing Association, pp. 25-28. Bitner, M. J. (1992), Servicescapes: The impact of Physical Surroundings on Customers and Employees Journal of Marketing. Vol. 56, pp. 57-71. Bitner, M., Brown, S.W., and Meuter, M. L. (2000). Technology Infusion in Service Encounters Journal of the Academy of Marketing Science. Vol. 28, No.1, pp. 138-149. Dostaler, I. and Floris, T. (2004). Business Strategy and Competition for the Future in the Airline Industry. Airline Magazine. No. 28, pp. 1-4. Harris, K.J., Bojanic, D., and Cannon, D. (2003). Service Encounters and Service Bias: A Preliminary Investigation Journal of Hospitality and Tourism Research. Vol. 27, No. 3, pp. 272-290. Groove, S and Risk, R. (2001), Service theatre: An analytical framework for services marketing in Lovelock and Writz (2004) pp. 78-87. Lovelock. C (1983) Classifying Services to Gain Strategic Marketing Insights, Journal of Marketing, Vol.47, pp. 9-20. Lovelock, C. and Wirtz, W. (2004), Services Marketing, People, Technology, Strategy, USA, Pearson Prentice Hall Lovelock, C., and Gummesson, E., (2004). Wither Services Marketing? In Search of a New Paradigm and Fresh Perspectives. Journal of Services Research. Vol. 7, No. 1, pp. 20-44. Parasuraman, A., Valarie A. Z., and Leonard L. B. (1985), A Conceptual Model of Service Quality and Its Implications for Future Research, Journal of Marketing,Vol. 49, pp. 41-50. Parasuraman. A, Zeithaml. V., and Berry. L. (1988), SERVQUAL: A Multiple-Item Scale for Measuring Consumer Perceptions of Service Quality. Journal of Retailing. Vol. 64, No.1, pp. 12-40. Porter, M.E. (1980). Competitive Strategy: Techniques for Analyzing Industries and Competitors, New York, NY: Free Press. Shostack, G.L (1977). Breaking free from Product Marketing Journal of Marketing. Vol. 41, No. 2, pp. 73-80. Zeithaml, V. A., Bitner, M. J. (2006). Services Marketing : Integrating Customer Focus across the Firm. Boston, McGraw-Hill/Irwin.

Promoting Communal Harmony

Promoting Communal Harmony Promoting Communal Harmony In our country people belonging to various religions live in harmony, but there are occasions when the communal fabric gets disturbed, often on trivial issues. It is the responsibility of all sections of society to ensure peace and brotherhood so that all round development of the country takes places rapidly. The police have a great role to play in promotion of communal harmony and national integration. They come in contact with the general public in the process of performing their duties far more frequently then most other bodies of civil servants of the Government.In such a situation, interaction with vision, understanding, tact, compassion and humour by the police will not only raise the public esteem of the police but will also lead to a healthy police-public relationship, and secure the desired measures of public involvement and cooperation in promotion of communal harmony. Keeping this in mind, the National Foundation for Co mmunal Harmony (NFCH) has been organizing seminars with the aim of effective sensitization of the police officers so that they become the torchbearers of communal harmony and national integration in their day to day functioning.The first such seminar was held at Haryana Police Academy, Madhuban, in August 2007 and the second one in Mumbai in October 2007. The Foundation, which is working silently for promotion of communal harmony, has also supplied reading materials on the role of police in promotion of communal harmony and national integration, constitutional and statutory provisions relating to communal harmony. These seminars have been quite successful in spreading the message of communal harmony and national integration amongst the police officers.The Foundation is an autonomous organization registered as a society under the Societies Registration Act, 1860. It functions under the aegis of the Ministry of Home Affairs and the Union Home Minister is the Chairman of the Governing Council. The principal objectives of the Foundation is to foster communal harmony, fraternity and national integration in general, and facilitate physical and psychological rehabilitation of the child victims of caste, communal, ethnic or terrorist violence, in particular.The NFCH undertakes and assists state governments, local administration, non-governmental organizations, universities, colleges and schools, social activists, scholars, researchers and students in undertaking activities and programmes aimed at promoting harmony at local, state and national levels. Though there have been some incidents of communal violence in certain States, there has been no major communal riot in any part of the country in 2007. Proactive role of the Central and State Governments prevented escalation of communal violence at Gorakhpur in Uttar Pradesh and Indore in Madhya Pradesh last year.All states are advised to keep a close watch on the situation with communal overtones and take early steps to prevent any flare up. Over the last five years the incidents of communal violence have gradually come down. The decline is attributed to the Centre closely monitoring the situation and keeping a strict vigil on the activities of individuals and organizations to ensure that the situation remains under control. The activities of all organizations having a bearing on maintenance of communal harmony in the country are under constant watch of the law enforcing agencies.The Communal Violence (Prevention, Control and Rehabilitation of Victims) Bill 2005 has been introduced in the Rajya Sabha. The Bill has been referred to the Department Related Standing Committee of Home Affairs. The report of the Standing Committee, on the basis of suggestions made by several individuals and organizations with regard to the Bill, has been received. The report and various suggestions received are being examined in the Ministry in consultation with the Ministry of Law and Justice and others for further nece ssary action.The Good Samaritan Playing the role of a Good Samaritan, the NFCH provides financial assistance to children who are orphaned or become destitute in caste, communal, ethic and terrorists violence for their care and education. Assistance is provided at the rate of Rs. 9,600 per annum per child in ‘A’ and ‘B’ class cities and Rs. 9,000 per annum per child at other places without any restriction on the number of children in a family. Additional assistance at the rate of Rs. 1,800 per annum per child is extended for undergoing vocational training.Children in the age group of 0-18 years (extended to 21 years in appropriate cases) whose families are below poverty line (Rs. 31,600 in urban areas and Rs. 22,400 in rural areas per family per annum) are eligible under the assistance provided they pursue their study after the age of five. Assistance is sanctioned for 12 months at a time coinciding with the academic session of the child and is renewed on ye ar-to-year basis. The Foundation aims at providing assistance to every single eligible child victim of violence so that such children, after receiving proper education become responsible and productive citizens.The Foundation has stepped up its liaison with State Governments for ensuring assistance to every eligible child, both in the categories of fresh cases and renewal cases. The NFCH has to necessarily depend on States and particularly District administrations for identification of orphaned or destitute children and for submission of their applications along with necessary documents. Every year awards are given by the Foundation to individual and an institution for their outstanding contribution to the cause of communal harmony and national integration.Instituted in 1997, the award has acquired an aura of its own. The Foundation is striving for greater publicity for the awards so as to ensure that cases of as many deserving cases as possible are placed before the jury for select ion. Aimed at creating awareness about communal harmony and national integration, the Foundation extends assistance to state administrations and non-governmental organizations for holding debates, seminars, workshop, painting, poster, slogan or essay writing competition, musical and cultural programmes, kavi sammelans and mushairas.The Foundation is striving to encourage and support as many organizations as possible to take up, on a significant scale activities related to promotion of communal harmony and national integration. The Foundation extends financial assistance to state/union territory administrations for organizing inter-community ‘milans’ (get together) on important festivals like Eid, Deepawali and Christmas subject to certain monetary ceiling. ‘Sadbhavana clubs’ have been established in educational institutions to sensitize students and motivate them to work for promoting communal harmony and national integration.The clubs aim at inculcating so cial values like fraternity, love and peace among the young generation. They strengthen bonds of unity and affinity and promote belief in the principles of non-violence in the society. The Foundation associates itself with important inter-community festivals like â€Å"Phool-Walon-Ki-Sair† in Delhi, and â€Å"Nauchandi† festival in Meerut and â€Å"Deva Mela† in Barabanki, both in Uttar Pradesh, to promote better understanding among various communities. Communal Harmony Campaign Since its inception in 1992, the Foundation has been taking active part in communal harmony campaign and has extended financial assistance of over Rs. 6 crore for rehabilitation of 8,849 children up to December 31, 2006. It also assists non-governmental organizations under the project â€Å"Cooperation† and grants fellowships for undertaking research in field situation in the communally sensitive districts. The Union Home Ministry on its part gives â€Å"Kabir Puraskar† nat ional award to those promoting communal harmony by showing physical and moral courage while saving the lives and property of members of another community during communal riots, caste conflicts or ethnic clashes.While â€Å"Sankalp Divas† is observed on October 31 every year, â€Å"Qaumi Ekta Week† is observed from November 19 to 25. The Home Ministry also encourages voluntary organizations to undertake activities for the cause of national integration and communal harmony through cultural shows, essay and painting competitions, inter-regional camps and exhibitions. It is the cumulative result of all these efforts that a sense of communal harmony prevails in the country by and large as is reflected in the Home Ministry statistics

Business And Environment Interaction Essay

Introduction Dealing with factors in the external environment is a crucial part of corporate survival, stability and growth.   This is especially recognized when a firm is operating internationally where barriers to entry and liability of foreignness serve as aggravation to the challenging task of responding to external forces.   The organization can remain indifferent despite environmental changes and still accumulate revenues. But as soon as its mediocrity and irresponsibility achieved their tolerance limits, the previous competitive position of the organization will likely be unreachable and eventually will drown into demise.   This issue is most alarming to Coca-Cola who is the current leader in carbonated drinks and one of the well-known brands in the soft drink industry.   Even with its current position, external forces are skilled protagonists continuously testing its current strategy and asking, â€Å"Are you capable of retaining your position?† Identification of External Forces The European market is recently observed changes in taste and preference for drinks.   The trend is less consumption of carbonated products and increasing demand for non-carbonated and still drinks.   This is happening since 1998 and a handful of research institutions confirmed this phenomenon including Mintel and Canadean.   Financial results of Coca-Cola also remained flat for its sugary product line while company report is expecting future based on the focusing expansion in its still drink. The market becomes more health-conscious and concern towards tasty but unhealthy drinks is in progress.   In addition to sugar, artificial additives and flavors are blacklisted characteristics of soft drinks for today’s consumers.   The complexity of customers especially in developed countries is a key concern for Coca-Cola as this market is less sensitive to price and are willing to pay more for healthier products.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Environmental factors have a close relation to the shift in social attitudes against carbonated drinks.   With longer hot weather lasting throughout the year as what happening in UK and other neighbouring countries, the shift to still and non-carbonated drinks will be minimal.   This is because physiological issues are stronger than self-expression and more people are willing to risks adverse effect to long-term health in return of enjoying carbonated drinks. Increased awareness of the effects of non-biodegradable products to global warming and pollution also affects the extent of the shift in preference.   Ozone-friendly packaging is an additional feature that drink products must possess to lure the market such as the use of biodegradable plastics.   With regards to bottled water manufacturers, their health advocacy and positive reception of the market is adverse affected by its adjustment to regulation of continuously decreasing of quality water in the UK.   This means that they may not be able to supply the widening market demand for healthy drinks due to scarcity of resources.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   With pressures from social and environmental factors, soft drink manufacturers find new ways to maintain and increase their market share.   This caused motivation within the industry to conduct research and development to create soft drink products that possess hybrid features that addresses health, environmental and taste needs of the market.   Hampered by the fact that the plant and facilities of manufacturers are fixed, the importance of serving the shift in market preference is concretized as they are willing to change the current design despite increase in costs and induce change. In its website, Coca-Cola advertised its products as complete which means that drink aspects such as style, taste, innovation and health are realized.   This can be obtained by introducing new products such as vegetable drinks, drinks that have anti-oxidant properties and exotic drinks.   Innovative packaging is also an important source of product competence such as the use of biodegradable plastics for juices and dairy drinks while tetra-type of packaging has supply chain benefits with longer shelf life and efficient storage compatibility.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   With all the efforts and financial loss shouldered by manufacturers to provide appropriate products in terms of demand, government regulation aggravates the difficulty manufacturers are facing.   Strategic opportunities such as business combinations with local companies are filled with restrictive features while merging with larger companies are confronted with antitrust law.   The contracting sales in carbonated products may force Coca-Cola to merge with competitors to save cost through elimination of repetitive processes and assets.   The need to innovate newer products may also induce others to acquire local companies that have the knowledge of market characteristics. These strategies are not easily available especially when the firm operates internationally.   Stricter quality standards can protect market leaders such as Coca-Cola from the threat of new entrants.   However, this depends on the structure and nature of political system in the host country.   For example, unethical marketing conducted by some companies labelling their cola products as â€Å"less sugar† even if the laboratory tests showed that there is substantial amount of sugar in the product.   With sound legal and political framework, market leaders such as Coca-Cola can survive the reduction in demand for carbonated products. Assessment of Implications Increased sophistication of customers will results in high product differentiation within the industry.   Traditional benefits of economies of scale achieved in the production of carbonated drinks reached its zenith due to the shift in preference.   With the lifestyle of people and technology going forward, it is unlikely that mass production of carbonated drinks will re-emerge as the industry’s business model.   Technological advancement enabled manufacturers to compete based on innovation. In contrast, only few are willing to invest heavily in research because of high risks associated with a new product in both corporate and market response.   This triggers the lucrative strategy of buying companies that offer the facilities and technical know-how.   Government regulation, on the other hand, will apply delays through litigation if not disapproval to business combinations that can impose strategic bottleneck in a company’s first mover aspiration and future profitability.   Even if allowed, merger and acquisition has a historical proof that confirms problems in pre-, during and post-merger/ acquisition phases.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   To further understand the implications of external forces on soft drink companies, it is necessary to study the industry’s strategic space and profit pool.   Since 2006, Europe is receiving the bulk of product introduction to address the sophisticated demands of the region in terms of nutrition and lifestyle.   A number of these products showed innovation by creating exotic and atypical flavours while packaging is made convenient for kids.   The search of value by manufacturers is present in all parts of the value chain, that is, from formulation of the drink up to the distribution of the finished good. Therefore, the usual cost-savings derived from volume-based strategy of carbonated drinks will be ineffective in present scenario.   Marketing campaigns concerning the impact of soft drinks on the heart is the current consideration of manufacturers which concretize that issue of out-of-the-manufacturing activities to derive value from the products.   As much as manufacturers want to excel in all the areas of the value chain, there are financial and structural constraints.   For example, the bottler’s margin is adversely affected whenever a client-manufacturer introduced new drinks that require new bottle design. As observed in Figure 1, innovation in the soft drink industry can maintain and attract market which is the basis of revenues.   However, the manufacturing processes and forward/ backward suppliers are the areas where the bottom-line is dictated.   Without innovation, the current structure of the industry can survive the impact of the change in consumer references.   This is especially true for carbonated drink manufacturers like Coca-Cola. Replacing the manufacturing process to introduce innovation such as non-carbonated or still drinks would require replacing also the machineries and perhaps the entire plant.   Packaging would require less acid resistance, delivery schedule would change depending on package design or expiration date and distribution networks may hesitate to carry the product awaiting positive reception.   As a result, a major source of margin of the company will be undermined due to high costs of manufacturing change.   On the other hand, if Coca-Cola remains to focus on carbonated drink, it will confront a vulnerable future earnings and market share. Differentiation strategy and innovation has a more long-run positive impact to Coca-Cola.   It is also suited for a leader in carbonated drinks and perhaps one of the most reputable beverage brands in the world.   The profit pool reveals that the carbonated products remain the highest margin and revenue contributor in the soft drink industry.   However, forecasts threatens this position with the healthy/ sugar-free products pulling substantial value followed by the same impact from non-carbonated products such as sports-energy, juice, dillutable and bottled drinks. In the long-run, those who will choose to retain a cost leadership strategy and keep large stocks of carbonated drink will face declining sales.   On the contrary, there are also disadvantages in differentiation strategy and innovation that present in regulation, challenge to marketing and transformation of traditional plant.   In an operating environment with ambiguous customer response, intense competition and restricted action, every action counts and one mistake can mean millions of investment lost.   Therefore, consideration of important issues such as creation of sustainable value including financial matters is top priorities. Consideration of Responses Vertical integration is the recent solution of Coca-Cola to address changes of external factors.   This is observed of its development of a bottling subsidiary to remain cost-effective and flexible.   This is a major step for the firm not only as traditional set-up only allows efficient bottling operations by third party suppliers but also it will avoid hindering the innovation feats of Coca-Cola such as demand of new packaging.   The fact-paced environment vulnerable to new innovation from competitors and suppliers, thus, is mitigated by this strategy.   Further, government standards such as carbon dioxide emission can be addressed through a more integrated plan. Formally, Coca-Cola has to put preference to bottling companies that are not only cheap and quality producer but also has an environmental compliance for manufacturing wastes.   With the creation of its own bottling segment, it also solves the problem of increasing government intervention in social and environmental responsibility of manufacturing firms.   Coca-Cola can spend less on environment-related and supplier search costs which impact can extend up to environmental-conscious customers.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Vertical integration is not only noticed in the manufacturing processes of the firm but also in management structure.   Committees for marketing, strategy and innovation are considered one functioning body where the action of one has influence or can be influenced to/ by the results of other committees.   The new structure would allow a cost-efficient and integrated recognition of problem and opportunities in the environment.   Recently, the efforts of the consolidated committee are focused on the project of customer-retention to maintain leadership particularly in carbonated drinks as well as increase market share in non-carbonated drinks.    With their close collaboration, they easily identify that the issues of inactivity and obesity, low level of quality and quantity of water, change in market preference and intense rivalry have adverse effect to financial performance of the firm.   Instead of spending glamorous but baseless advertisements, the valuable budget is invested on market research which rationalized the actions of each department.   The difference in today’s environment for Coca-Cola is that its leadership is threatened and careful strategy is a must to optimize its resources amid innovation, expansion and research costs demanded by the unpredictability in the environment.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   In its global operations, there are regions that exemplified performance growth but only a few to mention such as the Middle East and Latin American countries.   For the European market, however, the reverse is true.   This induced the firm to acquire a bottling company in Germany to provide the same cost-savings of vertical integration from its major manufacturing plants.   The strategy is a smart tactic because the decrease in revenues can be mitigated by efficiency in production and distribution.   Acquisition in foreign countries also indicated the intention of Coca-Cola to expand its product line in an international scale. The German experience, however, incidentally indicated that the cost of doing business will rise because labour and technology in the country is relatively expensive.   The good side is that quality of production and potential innovation necessary to compete in the current industry structure can magnify. As early as 2004, Coca-Cola is in a mission to integrate host country facilities for better coordination, synergy in resources and manufacturing flexibility.   In Japan, it developed a centralized value chain design to restructure the operations based on the business management and relationship traditions of companies.   In this country, where linking for long-term partnership, it is easier to conduct business when the company is implementing a strategy as a whole and based on the request of its partners.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   A decade from now, the soft drink industry will be dictated with high product differentiation and the company who can find valuable competency in its innovation would be the leader.   This is a path that Coca-Cola is undertaking.   Its financial depth and reputation enabled it to acquire important parts of the value chain to protect its carbonated products from significant decline and also to satisfy the innovative demand of non-carbonated and new-age drinks. It used its historical leadership position to protect its market share even tough it partially lagged innovation feats for still drinks.   Its biggest challenge, however, is to acquire a useful innovative product that can compete with new-age drinks.   Its carbonated drink surely found complacency to have at least a constant growth by vertical integration but improving on non-carbonated drink demands more work.   It is expected that in the future it is able to acquire a non-carbonated firm without intervention from government regulation.   Otherwise, it would be force to develop innovation internally which is less clear. Conclusion Coca-Cola is on the right track when it comes in attacking the external forces head-to-head.     It is diversifying its operations, integrating its resources and adopting to local needs in its quest in finding sustainable value.   There are odds such as government regulation apparent in the hardship of acquiring a vendor-made innovation in the non-carbonated product that can pump-up the stagnant financial performance of the carbonated drink. So far, however, the company is doing its share in solving the unpredictability and spontaneity of the external environment.   It is able to decode that the external forces are sometimes like domino in relation to each other.   That is, the change in one (e.g. climate change) can lead to another (e.g. change in consumer preference).   As a result, it is one step away from assuring itself that its leadership position is out of threat. Bibliography   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Baird, S. & Deal, W. (2003). 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