Impact of Internationalization on Company Performance

Impact of Internationalization on Company Performance Increased deregulation, cross-border activities of non-financial companies and improved information communications technology led to an increased consolidation of financial institutions across borders. Commercial banking sector in particular, have witnessed tremendous amount of cross-border bank merger and acquisitions (MAs) deals throughout the recent years. While globalization has accelerated cross-border merger activities around the world, another global force recently has been creating a counterweight to cross-border deals. Concerns over nationalism, feelings of national security and protectionism have delayed several cross-border banking deals. Basically, MAs of these institutions results in Consolidation, Internationalization or Conglomeration. In this context, Consolidation: It is a result of more concentrated banking systems, smaller number of larger firms. Ex: Consolidation of Bank of New York and hMellon in 2007 in USA. Internationalization: It is evidenced by increasing number of banking and other financial institutions that operate across national borders. Ex: Citi Bank, HSBC etc., operating worldwide. Conglomeration: Larger number of financial groups whose activities combine those of bank and non-bank financial firms. Ex: State Bank of India combining other State Banks for various activities in its umbrella in India. Objective and Scope of the Project The objective of this project is to understand the concept of internationalization and observe strategic patterns undertaken by various banks and evaluate the way it affected the performance of the organization. In this process, we consider exploring the following areas with a case study of a Canadian or US bank along with our study. Introduction to Internationalization After a relatively quiet period in 2001/2002, international mergers and acquisitions have picked up again. Since the 2003 mergers between Bank of America and FleetBoston, and JP Morgan Chases acquisition of Bank One, speculations were fueled about comparable cross-border deals in the European banking market. JP Morgan Chase announced its purchase of London based Cazenove in October 2004, while Spanish Banco Santander bought British mortgage bank Abbey National for 12.5 billion euro in august 2004, the largest cross border acquisition since HSBC bought French CCF in 2001. On the other hand, restructuring also took place. Credit Suisse announced in December 2004 that it would absorb First Boston, its global investment bank, into the parent organization to revive profits. After barely four years, ING sold the largest part of its German bank BHF to Sal Oppenheim while expanding its Internet banking activities. These examples reflect the increased internationalized nature of banking competitions in three respects (Llewellyn, 1999). Customers that have global financing opportunities are able to arbitrage between domestic, foreign banks and capital markets. Banks are not restricted to business in their own country. Regulatory entry barriers have lowered, making it easier for banks to locate in other countries. In other words, many of the largest banks in the world have been struggling toward a new organizational model where terms as home market seem to become a by-product in a broader strategic vision. Swiss bank UBS, the fifth largest bank in the world measured by assets in 2000, has more than 80% of its assets outside Switzerland. Netherlands based bank ABN Amro owns a retail branch network in Brazil, 9,500 km from Amsterdam which constituted 15% of total profits in 2000. In 2003 the 30 largest banks held more than USD 7,586bn, or 39% of their assets, outside their home country. Successes in international banking are few, failures have been common. One of the more spectacular failures was the acquisition of American Crocker Bank by British Midland Bank in 1981, costing the bank USD 1bn over the next five years and forcing its strategy to retreat on the British retail banking market. Midland was acquired by Hong Kong based bank HSBC in 1992, a bank who subsequently showed that internationalization can be a profitable activity. Degree of Internationalization (DOI): The extent to which a Bank exists and operates in the international markets away from its home market can be measured by a metric called ‘Degree of Internationalization (DOI). Generally, it is measured in terms of the share of assets, revenues, profits, or employment that locates abroad. Literature Review The hypothesized positive relationship between performance and DOI goes back at least to Vernon (1971); many studies have followed. It is generally hypothesized that internationalization is good for firms and leads to better performance, for several reasons (Contractor, Kundu, and Hsu 2003; Dunning 1977, 1981). Going international implies that firms can spread fixed costs, such as operating overhead and research and development (RD) expenditures, through a greater scale and scope (Markusen 1984; Kobrin 1991). Internationalization allows firms to learn about domestic markets from their international market experience, thus improving performance (Kobrin 1991). Operating in foreign jurisdictions allows firms to access factors at lower cost (Helpmann 1984; Porter 1990; Jung 1991). This is particularly true for instances of FDI and other modes of direct involvement in foreign markets. Internationalization allows firms to cross-subsidize their domestic operations and provides greater opportunities for price discrimination and tax and price arbitrage. Although theory implies a positive relationship, the empirical evidence of the effects of DOI on performance is mixed (Hsu and Boggs 2003). For example, Sullivan (1994) lists 17 studies that test the relationship between DOI and financial performance, six of which find a positive relationship and five negative. The remaining six find no relationship. This reflects the consensus in the literature that the empirical results are highly dependent on the sample, the measures of DOI, and the measures of performance used. In addition to testing this link, the literature has moved in two distinct directions. First, to address a measurement issue, Sullivan (1994) attempts to more reliably measure the DOI of a firm by developing a novel index measure of internationalization that captures three of its attributes: Structural, Performance, and Attitudinal. As Ramaswamy, Kroeck, and Renforth (1996) show, there are several limitations to the empirical and theoretical underpinnings of Sullivans work as the DOI is measured in uni-dimensional method. There is also a growing literature focus on the shape of the relationship between DOI and performance. Contractor, Kundu, and Hsu (2003) list 15 studies that find the relationship between performance and DOI is linear: seven of the studies find a positive relationship, four a negative relationship and four no relationship. Two studies listed find a U-shaped relationship, and eight find an inverted U-shaped relationship. Contractor, Kundu, and Hsu (2003) and Lu and Beamish (2004) provide theoretical models for curvilinear relationships between DOI and performance. By analyzing data for 125 multinationals, Kim, Hwang, and Burgers (1993) document the importance of global market diversification in the joint management of risk and return. The measures of global diversification capture the number of foreign markets being operated in, as well as the pattern of a firms industries across those countries. A small literature investigates the performance of Canadian banks. DSouza and Lai (2004) estimate the effects of scope, scale, and concentration on Canadas six largest banks. They find that banks with greater concentration in their business lines are less efficient. Interestingly, for some model specifications, the effect of size on performance (as measured by return on equity) is negative. Using a different methodology, Allen and Liu (2005) estimate cost functions for Canadian banks and find that larger banks are more efficient. Neither study considers the impact of DOI on performance. Walid Hejazi and Eric Santor tried to address this DOI Performance realtionship by verifying the direction. i.e., weather DOI is driving superior performance or it is otherwise around. They also brought the risk factor of the country (in which the bank is venturing) into the equation and found that there is a weak but significant positive relationship between DOI Performance. Measuring the Degree of Internalization There are different approaches to measure a banks degree of internationalization, and estimating the degree of internationalization of a firm or bank is to some extent vague and a random process. An initial approach could be to construct a single item indicator or one-dimensional measurement as indicated above in the literature review; Sullivan (1994) reviewed 17 studies which all applied a single item indicator to measure the degree of internationalization, i.e. the ratio of foreign sales to total sales as degree of internationalization. However as indicated by many researchers and as identified in the literature review above from the work of Ramaswamy, Kroeck, and Renforth in 1996, the use of a single item indicator increases the potential error of measurement, because a single parameter is always more prone to external shocks which may or may not indicate the performance. An alternate approach is to combine several indicators into one index. Depending on the choice of indicators, this might provide a better approximation of the degree of internationalization, but the choice of indicators may be restricted on data availability rather than theoretical induction (Sullivan, 1994). We will follow the method that is most cited and adopted by the researchers in UN conference of Trade and Development. This method applies three single item indicators, which are combined in a composite index to analyze the degree of internationalization of a bank, the Transnationality Index (TNI). The TNI is one of the most cited indicators for internationalization (cf. United Nations Conference on Trade and Development, 1998, van Tulder, van den Berghe, Muller, 2001). The index is expressed as a percentage and calculated as an weighted average of Foreign assets to total assets ratio, Foreign gross income to total gross income ratio and Foreign employment to total employment ratio[1]. The percentage term of the TNI is that the degree of internationalization is presented in one scale, which by definition moves between 0 and 100. Also an internationalization index that incorporates income, staff and assets captures a richer picture of the banks foreign activities than that which would be captured by income, staff and assets separately (cf. Sullivan, 1994). Another attractive characteristic is that the TNI dampens the effect of finance companies or off shore funding constructions if a ratio were only based on foreign assets relative to total assets. A substantial amount of assets can obviously be expected to be located in tax havens or countries with lenient fiscal regimes. Such reported assets would be accompanied by low number of employees. Combining both employees and assets in the TNI would then create a more balanced view. The same argument also applies to investment banking activities that are concentrated in financial centers outside the home country; these ac tivities tend to generate a relatively high degree of income with fewer employees. Demonstration of Measuring DOI through TNI method There is also a flip side for this TNI. It cant take into account the recent technological changes, geographic boundaries, and we cant guarantee every bit of data to be same and uniform in all countries. Technological change: A disadvantage of the TNI might be that the construction of such an index cannot take account of the effects of technological change. Changes in technology can for example raise productivity and increase the assets or income per employee; if these changes are distributed evenly over the total bank organization then its effect on the TNI is probably limited. If the ratio of foreign assets per foreign employee increases in the same amount as the ratio of domestic assets per domestic employee, then technological change has no effect on the TNI. From the mid 1990s however technological advances have had other geographic distribution effects. For example, the development of â€Å"Internet† banks like ING Direct implies that the share of foreign assets and foreign income increases while staff and operations working for the Internet bank basically remain at home. This might potentially depress the true extent of internationalization measured by the TNI. Geographical boundaries: For Banks like Fortis, Belgian/Dutch corporate structure creates a problem to determine what region is home or foreign. This is solved in the database by denoting Benelux as home. Similarly, HSBC is the only bank that is not disclosing information for the home country, instead it is reporting Europe as ‘home region. Data availability: Not all banks have consistently reported detailed information on foreign assets, staff, income or profitability. Banks like SBC, UBS or Deutsche Bank did not report this information although they progressed significantly with their internationalization activities. A general remark is usually found in the financial report stating something like â€Å"due to the integrated nature of our activities worldwide a geographical breakdown does not provide additional information†; the information provided by British and American banks in the 1980s proves otherwise. Data collection from other sources provided valuable information. For example, foreign banks in the United States have to report their balance sheets to the Federal Reserve. Internationalization Patterns Internationalization for banks has progressed at different paces, with different purposes. Here we try to identify these internationalization patterns. As several motives are grounded in history, we start with a brief historic overview of internationalization, after that we shall discuss about various activities that the banks pursued as a part of Internationalization. Historic Overview Internationalization of banks is not a new phenomenon. In 1913 there were approximately 2,600 branches of foreign banks worldwide. The dominating factor at that time was colonization, over 80% of those branches belonged to British banks. The share of foreign banks accounted for one third of banking assets in Latin America and over one half in countries like South Africa, Turkey or China (Goldsmith, 1969). The financial empire of J.P. Morgan started out as a partnership financing American civil war loans from England (Chernow, 1990). International banking has in some respects not changed that much. Over time, innovations in financial instruments, telecommunication, information technology, organization innovation and the growing sophistication of customers have meant a dramatic transformation in the conduct of banking business and client relationships in international banking. The sheer size of international involvement of the present day internationalized banks has increased dramatically (cf. De Nicolà ³, Bartholomew, Zaman, Zephirin, 2004). Foreign assets of the thirty largest banks as a percentage of total assets have changed from 35% in 1980 to over 38% in 2003. However, the absolute size of foreign assets of the thirty largest banks has raised eleven fold from USD 650bn in 1990 to USD 7,571bn in 2000. The increasing importance of foreign activities has affected profitability and stability of internationalizing banks in their home country; it can also have serious effects positive as well as negative on the host economies. The intensity with which banks have pursued internationalization strategies also encouraged us to have a study on them. The dissolution of the British Empire meant that British banks represented the old internationalization of banking. American banks on the other hand have been on the rise since the Second World War. American financial aid, exports of American firms and the export of American ideology such as freeing of competition or creation of uniform markets were feeding ground for internationalization activities of American banks. From the 1960s onwards income in Western economies rose and banks developed more financial products to cater households and businesses as increasing scale of firms raised transaction volumes in corporate finance. American banks formed an apparent threat, seeking out the more profitable activities in investment banking in Europe, being equipped with better staff, more financial resources and more experience. The creation of off shore markets to circumvent (American) regulation and the political potential of seizure of capital belonging to communist states induced the first series of international activities, later propelled by the inflation of capital markets when oil producing countries forced serious wealth transfers. European banks either tried to work together in consortium banks to participate in these activities (Roberts Arnander, 2001) which in the beginning was a cost saving and knowledge rewarding construction or set up foreign activities themselves. Redistribution of the surpluses of oil producing countries found their way to emerging markets, with American banks leading the way. The growing volume of loans masked growing economic imbalances, brought to light from 1981 onwards when Latin American countries defaulted in their loans. Internationalization of banks became a worldwide event (United Nations Centre on Transnational Corporations, 1991). Institutions like the IMF aided governments with restructuring loans, dealing with severed banks and capital markets in distress. Governments of the lender banks, especially the United States, faced potential crisis at home when the losses in emerging markets were transferred by the large banks to their home country. A consequence of this restructuring period was that in the 1980s capital strength and adequate supervision of internationally operating banks were major issues for bank regulators. A major coordination initiative took place in the Basle Accord of 1988, creating more transparency and uniformity among regulatory policies for internationally active banks. Among others, the Basle Accord became one of the drivers for the Japanese banks to retreat from the international arena. Japanese banks increased international activities sharply from the early 1980s fuelled by strong domestic economic growth, a fast pace of deregulation and large flows of foreign direct investment by Japanese industrial firms. The Japanese stock market decline from 1989 showed that (international) banking strategies had not been based on sound banking practices, affecting bank capital and loan quality at the same time (Canals, 1997). Japanese banks found ways to stave off restructuring of their bad loans for almost a decade, contributing substantially to the prolongation of economic recession, and steadily relinquishing their importance in international banking. A general trend fuelling international activities was the ongoing process of disintermediation from mid-1960: large firms found it more profitable to arrange loans directly with institutional investors, thereby bypassing the role of banks as financial intermediaries. Additionally, stricter monetary policies introduced from the late 1970s onwards eventually led to a steady decrease of interest rates consequently lowering income from the core business of banks. These trends forced banks to reconsider their strategic business portfolios. Non-interest income, especially the high margins of fees and commissions in investment banking, became a promising route. The liberalization of British securities markets in 1984 was followed by an unprecedented wave of acquisitions by host banks. By the end of the 1990s British owned investment banks or securities houses in London were few in number; London as an important financial center had become a manifest of internationalization activities of ban ks. Internationalization of banks was also a response to further regional integration and deregulation (cf. Group of Ten, 2001, January). In Europe especially, banks were aware that the competition for larger clients extended over the geographic borders, but the competition for retail clients remained a domestic issue. By the mid-1980s, European integration created momentum in Europe, redefining markets for banking activities on a multinational scale. Mergers and acquisitions became an important strategic tool for banks. They generally took place in two phases: domestic consolidation and then, international expansion; the creation of higher domestic concentration in order to more effectively compete internationally. Opportunity was provided by the capital markets (lower interest rates and higher stock market prices) and the regulators, privatizing banks or not opposing the takeovers. The close of the decade shows the financial might of just a handful of banks: the top 25 banks in 1980 ha d total assets of USD 1,858bn, equal to 30% of GDP. In 2000 this had risen to 64% of GDP, a combined total of USD 12,781bn. Of this amount, 41% are assets outside the home country. In fact, foreign banks practically control the banking sectors in many Eastern European countries; for some observers the â€Å"Single global banking space is almost a reality† (Mullineux Murinde, 2003). The foreign owned assets of the largest banks exhibit uneven geographic patterns, â€Å"Regions and/or countries of the developed world currently represent the most interconnected cluster of national banking systems† (De Nicolà ³, Bartholomew, Zaman, Zephirin, 2004). Internationalization pattern of Banks Starting in the 1970s, bank internationalization originally consisted of setting up banking activities in financial centers and economic centers. Part of this was related to incentives such as â€Å"follow-the-client† or aimed at increasing overall profitability. Additionally, restructuring and expansion in the domestic markets might have been cumbersome for some and impossible for other banks, further stimulating internationalization. Regulatory idiosyncrasies in the home market might be one explanation for this, but also the existence of a home bias ‘inertia: restructuring the domestic retail networks in the early 1980s might have been more difficult with vested interests in the home country such as labor unions. In particular, banks in smaller countries had to expand abroad for fear of anti-trust regulation at home. For most banks during the 1980s, international expansion supported their domestic strategies and was relatively small compared to the home country. So banks did not have to attract additional capital. When banks initiated larger acquisitions in the late 1980s and 1990s, external capital became more important as a source of financing. (Domestic and foreign) shareholders not only provided additional capital to expand. They also followed management more closely, and pressed for changes when expected results were not delivered. An increasing shareholder role and foreign profitability that was below expectations, led bank managers to change objectives in the mid 1990s: profitability should be internally generated, the domestic base strengthened and foreign activities divested if they did not contribute satisfactorily to total profitability. Banks can offer in principle five product categories: credit, securities, asset management, financial services and insurance. Also, five client types can be distinguished that banks can target: Governmental clients (nation states, supra national institutions), Corporate clients, Institutional clients (other banks, asset managers and insurers), Retail clients and Private clients. The case studies show that banks which entered new market activities actively serviced and targeted a wide range of clients and products. Two specific patterns have been identified: Ø Capital market activities, and Ø Foreign retail banking Capital Market Activities For capital market activities banks offer credit, securities, asset management, and financial advice to governmental, institutional and corporate clients. The majority of the banks had set up such operations by 1980: they participated in the Euromarkets, issued bonds to finance their own activities, and took advantage of the financial deregulation in the financial centers. Expanding capital market activities was spurred in the mid-1980s with the financial liberalization in the United Kingdom, and in the mid-1990s with the prospect of restructuring in the European Union. For several banks, the decision to participate in the capital markets heavily influenced their overall strategy. Paribas and J.P. Morgan decreased their commercial banking activities and transformed themselves into investment banks. Both banks however did not have the scale by the end of the 1990s to remain a major market participant in investment banking and sustain the increasing IT investments: J.P. Morgan was subsequently acquired by Chase Manhattan in 2000 and Paribas by BNP in 1998. Most of the acquisitions of UBS, SBC, Credit Suisse and Deutsche Bank in the 1990s were capital market related, steadily increasing their reliance on fee income instead of net interest income. The composition of the fee income changed: more lucrative (but volatile) fee income from financial advice and securities re-distributions on mergers and acquisitions was combined with more stable income from asset management activities. Period 1970s 1980s 1990s Reason Growth Eurocurrency markets (London, Paris, Zurich) Financial liberalization of American stock market Financial liberalization European capital markets (London, Paris, Amsterdam) Financial liberalization of Japanese capital markets Catch up new entrants to profit from current bull market, consolidation existing players Example Chase, Citicorp Deutsche Bank, ABN Amro, Societe Generale Credit suisse, Deutsche Bank, JP Morgan Table 2: Development of Capital Market Activities Retail Banking International retail banking has been the domain of a selected number of banks. Chase and Citicorp set out to expand a retail network in Belgium, The Netherlands, Germany and the United Kingdom in the 1950s and 1960s. European banks in the 1970s and 1980s on the other hand did not expand in retail banking in Europe, but expanded in the United States, especially in California where British and Japanese banks bought retail banks helped by lenient regulation. For most Californian banks, their sale was either instigated by regulation (banks that cannot be bought by domestic competitors due to an increase in market share or banks that need outside capital) or poor performance. By the early 1990s a large number of banks exited from the United States market: they found it difficult to transform these banking operations into profitable ones, and their exit was speeded by the deregulation of interstate banking (cf. Tschoegl, 1987). The general expectation was that this would raise the minimum scale of operations to compete effectively, requiring large amounts of additional investments. Banks that remained were for example HSBC and ABN Amro. Eight foreign banks, including all of the British banks, held retail networks in the United States in the early 1980s; by the late 1980s five had opted out. For European banks, the growth of foreign commercial bank networks took place from the mid-1980s. A limited number of banks (HSBC, ABN and Citicorp) have maintained these foreign networks throughout the period. From the 1990s, the following banks pursued retail banking strategies: Ø Santander in Argentina, Mexico, Chile Ø BBVA in Argentina, Chile, Mexico Ø ABN Amro in Brazil and the United States Ø ING in Belgium Ø HSBC in Mexico, Brazil, the United States/Canada and Hong Kong Ø Citibank in Germany Two groups of banks did not enter foreign retail banking, or only to a limited extent: Swiss banks and Japanese banks. Swiss banks had retail banking activities in their domestic market, but not outside Switzerland. Switzerland was a major financial center and as an economy ran a capital surplus; an explanation might be that setting up foreign capital market activities was a more logical foreign extension of activities then setting up or acquiring foreign retail banks. Japanese banks also entered foreign retail banking to a limited extent. Their activities were mainly concentrated in California, where the banks initially had some links with Japanese immigrants. More important, lenient regulators allowed takeover of Californian banks by foreign competitors. The existence of an opportunity set the ability to buy compared to other more regulated banking markets has probably been the main incentive. Organizational form Banks which decided to enter new markets or to strengthen their market position have had a wide range of options available to them as to how they could proceed in implementing their foreign banking activities. Looking back at activities, there has been a strong rise in the number of each of the approaches used. Three specific developments in organizational form have been identified: Branch Networks Alliances and Joint Ventures Internet Banks Branch Network In general, the objective to build a branch network has been to assist foreign clients, finance activities more cheaply or to evade home country regulation. Activities in financial centers were set up, usually starting with London, New York and Singapore or Hong Kong. This was then expanded to second tier financial centers and economic centers in Europe, the United States, Asia and Latin America. Period 1970s 1980s 1990s Incentive Break down consortium Trade relates service existing clients Increase in trade and exports Liberalization of Capital markets Open up markets (Spain) Growth in Asian Capital Markets Opening of Eastern European markets Increase volume of securities market Example Citicorp, Bank of America, Lloyds, Barclays, ABN Amro, NMB, WestLB Deutsche Bank, Dresdner Bank Table 3: Development of Branch Networks Alliances and Consortium banks Consortium banks were mainly a feature of the late 1960s and 1970s. With these joint ventures, banks tried to create a platform to service foreign clients and undertake corporate finance activities, while sharing the costs of building such an activity independently. In the beginning of the 1980s, there were a number of banks who relied on the consortium banks to provide an alternative for a foreign branch network. These were Amro and Midland. Subsequently, a number of banks built their foreign networks by buying out the other shareholders in the consortium banks. During these alliances banks probably also acquired detailed information of the partner banks. This could be concluded from the observation that ING unsuccessfully acquired former InterAlpha partners from the mid-1990s for its expansion in Europe. From the 1990s, alliances between banks either had to develop specific skills neither bank could achieve alone, or serve as a defensive move in wake of expected restructuring in the European banking market. This usually was accompanied by share exchanges. Alliances to acquire or share specific skills Alliances to ensure future market position Ø Royal Bank of Scotland Santandar (1990) Ø BNP Dresdner (1988-2000) Ø Socià ©tà © Gà ©nà ©rale — BSCH (2000) Ø BBVA UniCredi

Foundations of Management and Organisation

Is rationalization a desirable strategy for managing and organizing Junction Hotel in the current economic climate? Discuss your answer with reference to the topic of organisational change. Rationalization is an organisational concept that aims to increase a firm’s productivity, as it grows in size, through a reorganisation of its current system of operations. Throughout this essay I will be referring to the Junction Hotel case study along with other articles and critiques of the rationalization theory to determine how suitable rationalisation is as a solution for the problems facing Junction Hotel within the current economic climate.Throughout the 19th century Frederick Taylor, a mechanical engineer, was one of the pioneers of the organisational management approach to business. He was renowned for his theory of scientific management, which focused primarily on increasing the physical efficiency of the individual worker. â€Å"The principal object of management should be to s ecure the maximum prosperity for the employer, coupled with the maximum prosperity for each employee† (Fredrick Taylor, 1911, pg. 09).One of Taylor’s most famous studies involved designing shovels that could load the most efficient amount of material (21 1/2lbs) consecutively to save workers time and, in turn, increase productivity. Having a clear and structured command over workers allowed Taylor to experiment with efficiency, which was something he saw as paramount to having a successful workforce of employees. Relating this specifically to the Junction Hotel case study, it is apparent that there are some clear organisational problems that could be resolved using a more rational work design, such as the methods introduced by Taylor.Primarily there is a lack of any concise structure between the task expectations of the employees. The job roles of the General Manager, Deputy Manager, Head Chef and Company Accountant all contradict one another making it further unclear t o the rest of the workforce who they should report to as their boss. A rational organisational solution to this problem would be to introduce a more modern, bureaucratic style of management. â€Å"Though earlier societies had organisational structures, they were not nearly as effective as the bureaucracy† (George Ritzer, 1996, pg.  09).This can be implemented through the use of computer analysis of such things as employee timetables, busy periods, and popular items among customers. Specifically, organisational charts, which provide a clear formation of different job roles that are allocated in a hierarchy of either horizontal or vertical structure, would work effectively in restoring order and control. A hierarchy is most effective in assigning control to different regions of management in order to maintain a more specific level of control over a growing workforce.For Junction Hotel, this would be most appropriate for the separation of the different working areas, which, at the moment, are all under the control of the Deputy Manager. Instead, each area should be operated by group of employees that specialise in that service. From here, each section of workers can then have their own specific manager to report to for daily duties. This way the general manger can take more of an active role within the organisation relieving some of the pressure off of the Deputy Manager and allowing the Head Chef control over his own workforce.This would provide specific segmentation to each individual work force, allowing for a more direct focus from each manager. This would be the most appropriate way of applying a rational, bureaucratic work design to Junction hotel without having to sacrifice any quality of service. However, if Junction Hotel want to remain a competitive company within the hotel industry, some of the personal relationships between the cleaning and reception staff and the general manager may have to be limited in order to increase efficiency during t he working day.Taylor made it clear that he never saw the benefit of a social relationship between workers and managers. Eventually, he became so focused on increasing productivity that he began to see his employees as just another ‘cog in the machine’ of the production process. As time went on, employees would try and use this to their advantage by demonstrating their ‘asymmetric knowledge’. After years of practising their trade the workers would be able to determine the amount of time it would take to complete a specific task before they began it.With Taylor’s approach to his employees being so cold-hearted, it was often the case that the employees would exaggerate the time they needed to complete a task so as to insure they weren’t being over worked. This is an example of some of the social problems that Taylor had to face due to having such a strong rational approach to work. As a result, Taylor quickly began gaining criticism. Max Weber, a German sociologist, was one of Taylor’s biggest critics. Weber summarised Taylor’s scientific management theory as an ‘iron cage’ environment leaving workers trapped in working conditions that left them feeling dehumanized.As a counter belief, Weber explained that promotion by merit with career opportunities for employees was a superior option to the traditional hierarchy of power. However, Weber was aware this would not always be attainable in a realistic world. â€Å"Weber knew the bureaucracy he was designing was an ideal type and that it could not always be perfect† (French & Rayner, 2011, pg315-316). Weber developed the belief that there is no one perfect method of managing an organisation. Organisational change occurs when a business has a need to alter it’s current system of operations.Social, political, technological and economical factors are the four main external aspects that can influence change within an organisation. â€Å"No t only are there different types of change, which manifest themselves in different organisations, change also appears at different levels of an organisation† (Barbara Senior, 2001, pg. 57). Specifically, organisational change relates to the larger changes within a company, rather than just small adjustments to products or branding.â€Å"Organisational change refers to organisation-wide change rather than to small changes such as adding a new role or making minor modifications to a process. † (French & Rayner, 2011, pg. 574). For example, advancements in the technology used by a company would dramatically speed up the production process forcing them to alter the size of both their workforce and production outlets. Henry Ford, of Ford Motor Industries, was one of the most famous examples of an organisation implementing a change within their production process  through the Taylorism ideology.â€Å"Taylor and scientific management allied to Fordism† (Senior & Flemi ng, 2006, pg. 8). Instead of having a specific number of workers collectively working on one motor vehicle, Ford instead realised that he could save time and increase productivity by assigning each individual worker to a particular station on his assembly line. Therefore, Ford could just move the car around the assembly line where it would stop at each station to have a new part added to it.This enabled Ford to expand and increase his workforce whilst still increasing the amount of automobiles he was producing. â€Å"Only by doubling wages to his famous ‘5-dollar-a-day’ was he able to stabilize the work situation and persuade workers to accept the new technology† (Morgan G, 2006, pg. 25). This organisational change would be an example of a naive approach to change, which sees organizational change as a simple solid set of building blocks that are controlled from the top down, with a limited view of only the techno-structural side of the organisation.With one of t he main purposes of a business being to constantly strive to improve output and lower costs in order to increase revenue, the Taylorism and Fordism approaches became popular around the world and production efficiency was now of the utmost importance. However, this high level of efficiency came at a price for the employees. Many of Taylor’s and Ford’s workers found it difficult to maintain any humanistic grasp on their machinelike work due to its repetitive and boring nature.This led to a decrease in efficiency as workers became fatigued and after a while could no longer keep up with the rate of production. Charlie Chaplin outlines this perfectly in his video Modern Times (TheCharlesChaplin, 1936, Modern Times) whereby the worker is dragged along the conveyor belt assembly line because he is incapable of keeping up with the pace. In the Junction Hotel case study a similar situation is outlined with the front of house staff not being able to keep up with the orders given by the kitchen staff, leading to conflict between employees.Ultimately, this will lead to problems in the satisfaction levels of the customers, which can cause huge reputation problems for Junction Hotel, a company who pride themselves on having a high level of traditional customer service. One of the most effective ways of tackling employee confrontation is through the use of team building exercises. Team building exercises are effective as they encourage employees to collaborate with one another to achieve particular goals without having the stress element of actual work.Being new to the team building approach, the waiting and kitchen staff at Junction Hotel would benefit most from a more relaxed outdoor operation, such as raft building. â€Å"For a group that has never done team building before, outdoor experiences can be an exciting way to begin† (French & Rayner, 2011, pg. 410). As a result, when both sets of employees go back to work there will be a greater understandi ng between each member of staff creating a new atmosphere as a group identity. This social aspect of employees during working hours is a factor that was often overlooked by traditional methods of management, such as Taylorism.As a result, this 21st century social method of management is now considered a more popular modern alternative than the traditional Taylorism perspective. In the 1920s, Elton Mayo, an Australian psychologist, stumbled upon the importance of group dynamics whilst conducting a study investigating the levels of productivity in employees. His experiments, on 29,000 workers at the Hawthorne factory, examined the effect light had on productivity. His objectives were to discover the optimum level of lighting needed to gain maximum efficiency from workers.However, Mayo found that the level of lighting had no direct effect on production levels but instead the human cooperative systems that the workers were a part of had a huge effect on increasing worker efficiency. Wor kers being able to establish themselves within an occupational community introduced the concept of ‘group norms’ whereby workers had their own set of regulations to abide by that were considered more socially acceptable. â€Å"Members derived valued identities or self-images, directly from their occupational roles. † (Van Maanan & J & Barley, S, 1984, pg.  298).Expressions and labels such as; ‘rate buster’ and ‘the chisler’ became nicknames that were used to define workers as either an over-worker or under-achiever. The power of an informal organisation, where man is more than just a machine but as a social being was one of Mayo’s greatest findings. This became known as the Hawthorne Effect. Conversely, a bureaucratic style of management is most appropriately suited to those organisations that are willing to sacrifice quality in return for an increase in quantity of revenue.For example, Travelodge, a competing company within the hotel industry, make it clear to their customers that the service they offer is simple but covers all the necessary essentials needed for a comfortable stay. â€Å"If you’ve ever stayed at a Travelodge Hotel, you might have noticed they don’t have shampoo in the bathroom. † (Davis, Evan, 2009) This is known as value engineering and it is a smart way for larger companies to cut production costs whilst still keeping up a respectable level of quality.Higher-end hotels tend to ignore this strategy as it can harshly diminish their unique selling point of providing the best quality goods and services. This would be particularly true for Junction Hotel. Throughout the case study it is clearly outlined that Junction Hotel are a company who pride themselves on having a traditional approach to customer service. This would specifically involve having a very high focus on self-presentation, customer relations, and particularly individual customer requirements.Rationalisati on revolves more around a very routine and strategic attitude whereby all customers are greeted with the same standardised mannerisms and production is aimed at being a quick process, which sacrifices quality for speed. This is the first indication from the case material that suggests that rationalisation might not be the most appropriate method of management for a company that markets itself as ‘an oasis of calm in the city’ as Junction Hotel does. McDonald’s is a perfect example of how quality over quantity has been sacrificed to maximize output.A quick service where customers can walk in and point to a number on the menu as they order means workers can speed up the transaction process of payment for food allowing them to switch to new customers swiftly. â€Å"The manager ensures that all employees are allocated to those jobs in which they perform most efficiently, known as ‘aces in their places†. (Hill, Terry, (2005) McDonald's Corporation). This type of McDonaldization means there is no room for flexibility making it a real problem if customers request to manipulate the menu.This slows down the  process from kitchen staff to front of house staff, if one individual burger is needed to be adapted this will take precious time out of an employee’s schedule, which will have a domino effect on the time taken to serve other customers. Ultimately, the efficiency of the entire operation will have slowed dramatically, especially if this happens on more than one occasion throughout the working day. As Weber explained, dehumanization and lack of motivation are due side effects as a result of having such strict time schedules and regulations to keep to.â€Å"Nevertheless, organisations continue to strive for maximization in the hope that they will at least increase efficiency† (Ritzer, G, 2008, The McDonaldisation of Society). Junction Hotel, on the other hand, has a slightly different demographic to that of the market t hat McDonalds are focusing on. With the emphasis on high-end, premium quality goods and services Junction Hotel are attracting an older age range of those customer who can afford to spend extra on hotel costs. This will most likely be older people enjoying their retirement along with businessmen and women who have their expenses paid for.The reason this is important to identify is because of the current economic position of the UK. Having just emerged out of a recession, consumer spending within in the UK is still continuing at slow pace. This means, that for the more expensive and luxurious organisations it has become just as hard to keep current customers as it has been attracting any new ones. This is the second indication that suggests a complete rationalisation for Junction Hotel would not have much of a positive impact considering it would only increase the similarities they have with already well established rival companies such as Travelodge.In an economy that is still recov ering from a recent recession due to a ‘run on the banks’ consumer confidence is still very low which means less people are going to be willing to experiment with new organisations, especially the more expensive ones. However, some of the most recent economic reports have identified a rise in gross domestic produce, which is a positive sign for Junction Hotel as it means more consumers are starting to get comfortable with spending a little extra money.â€Å"The Office for National Statistics said its first estimate for gross domestic product (GDP) showed the economy grew 0. 3% during the first quarter of 2013. † (Hugh Pym, 2013, UK economy avoids triple dip recession). Although the increase is not a significant one this will benefit Junction Hotel in the long run as it shows signs of a slow but steady growth which is a good climate to begin setting up a new organization in. â€Å"Economists say the news should give a small psychological boost to consumers and bu sinesses†. (Hugh Pym, 2013, UK economy avoids triple dip recession).Keeping with the premium quality approach should provide a competitive edge in the favour of Junction hotel. This type of organizational change is a strategic intervention to provide Junction Hotel with a competitive advantage over their rivals in the hotel industry by aiming their services at a different demographic who will, in the current economic climate, be more likely to afford hotel accommodation. In conclusion to this essay, Junction Hotel will need to introduce a more rational work design to their organisation in order to maximize efficiency and start making a respectable profit.It is vital however that the rational approach is put into action in the most applicable places of the organisation as otherwise it could cause a detrimental effect to production the rates, as was evident with some areas of the McDonaldization. Firstly, a bureaucratic design should be implemented through the use of organisatio nal charts that clearly layout the different tiers of management throughout the entire organisation in a hierarchal fashion.This should enable each section of the work force to have a structured view of where they stand within the organisation and know exactly who to report to. Secondly, team-building exercises must be put into place at least quarterly throughout the year to dispose of any unwanted negative energy and allow workers to voice any concerns they may have with their superiors, especially kitchen and waiting staff. A formal relationship must be of the utmost importance in front of customers between all of the employees.Although, where customer service is not of a high importance, such as in the kitchen, a more relaxed attitude should be taken if it means the social side of individual worker will promote a higher level of efficiency. Overall, it is clear that with the right leadership and a positive attitude towards organisational change from the workers, rationalisation i s strategy that could have significant positive implications for Junction hotel.

Soft Skills Inventory

MSF Soft Skills Inventory 1. Communication Skills: For a previous class, I presented a project on alternative fuels to the class as well as the professor. For this presentation, I communicated to the professor my expertise in this subject by presenting the facts and research I conducted. At the same time, in order to communicate to the students most effectively, I used interactive techniques through questions posed to the class to keep their attention throughout the presentation. During my internship, I would call clients to update beneficiary information.I was able to effectively communicate by having all necessary documents at hand and being prepared to answer any question that they may have. 2. Interpersonal Skills: At my internship, I had the fortune of working with many high ranking professionals in the company. I would sit in meetings with people thirty to forty years older than me. I quickly learned that interacting with them was very different from interacting with friends an d peers. I participated in a group called International Student Connection. I would interact with international students and help acclimate themselves to the campus and American cultural.I would spend time speaking with them to help develop their English, most coming in with only a very basic understanding of the language. 3. Leadership Skills: I had a group project for a class, where we wrote up a proposal about the injustice in Zimbabwe to our state senator. I took the lead in this group by delegating different research responsibilities to each member, where we could at a later time present the research that we found to one another. I also made sure that each person was actively researching by emailing them updates about when we would meet, as well as stay on track with the timeline that we set.During my internship, I had a task to set up a marketing event. I built a team of a couple interns to help in preparing for this event. I took on the main responsibilities of setting up a l ocation and clientele list. I knew however that I needed the other interns’ help in building a full list of potential clients that would attend. Even though this was a event that I was spearheading, working as a team best utilized the different resources that they offered. 4. Teamwork Skills: My pledge class for my business fraternity needed to create a professional, service, and social event for the whole business fraternity.It was clear that we could do this most efficiently by breaking our class up into smaller teams, who in turn would primarily be responsible for one of the event. We would then come together to schedule these dates together. Participating in athletics best exemplifies teamwork, in my opinion. Teamwork was crucial in winning my business fraternity basketball tournament. It also proved to be essential in winning events in the Business Olympics held across campus. 5. Time Management Skills: My part time job during my undergraduate years required working thro ughout the night.I would work from 12 am to 5 am two or three times a week. I would do this while having class at 9 am every morning. Good time management skills were very important in order to keep pace in class while also working these hours. During my last semester for finals, I had four exams over the course of 3 days. The week leading up to finals, I broke down the possible study time that I had and designated time slots in which I would study for a certain subject. Keeping to this schedule as well as being very disciplined was the only way I was able to survive that week. 6. Analytical and Problem Solving Skills:For my project on alternative fuels, I researched all the different technologies that have currently been developed, and those that were still being developed, and then I cross referenced this information with the university’s initiative on going â€Å"green. † I did this in order to find the best ways for the university to become more environmentally fri endly in a cost-effective way. I used my knowledge of the game of basketball in order to run a basketball tournament for a club more efficiently. I used the resources that I had available to run the tournament at a quicker pace, and also saving money, by being charged less time for the gym.

Analysis Of Langston Hughes s The Negro Artist And The...

During the Harlem Renaissance emerging artists sought to redefine the image of African Americans through their works to counter misconceived stigma which included perhaps most importantly, the ill-founded scientific belief that they were incapable of creative expression. Consequently, the space of Harlem invited opportunity for collaboration and publishing while simultaneously establishing the ideal era for artists to fight for the unification and acceptance of black identity. Therefore, in this context, Langston Hughes’s animosity toward Countee Cullen in â€Å"The Negro Artist and the Racial Mountain† seems eloquent and justifiable when Hughes obscurely claims that the black poet who wishes he were a poet is subconsciously saying, â€Å"I wish I were white† by means of supporting black progress. Hughes argues that his desire to be â€Å"a poet† rather than a â€Å"black poet† is stifling black culture which is at the heart of the Harlem Renaissanc e. However, Hughes argument is flawed when he argues that African American writers cannot fully express individuality without attaching a black identity to their work. Additionally, Hughes’s argument is focused on forming unnecessary standards to articulate what he expects a black writer needs to produce to be accepted into this emerging community. Revisiting Zora Neale Hurston’s â€Å"How It Feels To Be Colored Me† she affirms it is only after learning of her black race, by which she precisely means the existing racial disparities between the two worlds,Show MoreRelatedThe Negro Speaks Of Rivers1548 Words   |  7 PagesLangston Hughes was an American poet, novelist, and playwright whose African-American themes names him a primary contributor to the Harlem Renaissance of the 1920s. After moving from several cities, Hughes and his mother finally settled in Cleveland, Ohio. During this time, Hughes began to write poetry. One of his teachers introduced him to the poetry of Carl Sandburg and Walt Whitman, both whom Hughes would later cite as primary influences. By the time Hughes was enrolled at Columbia UniversityRead MoreLangston Hughes And His Harlem Dream1902 Words   |  8 PagesLangston Hughes and His Harlem Dream An explosion of written and artistic creativity, a time of social awareness and enlightenment among the black race. The Harlem Renaissance, originally known as ‘The New Negro Movement’, began after the first world war and lasted until the middle of the 1930’s depression. Harlem became a destination for African Americans throughout the early 1900’s as part of the great migration. As more blacks made Harlem their home, it increasingly became well known as an AfricanRead MorePoem Analysis On I, Too, Sing America 1611 Words   |  7 PagesDai Yueh Cheng Dr. Smedley English 1B 9 March 2015 Poem analysis on â€Å"I, Too, Sing America† In the poem â€Å"I, Too, Sing America† by Langston Hughes, he envisions a greater America, a more inclusive America where all the races can proudly represent themselves as American citizens. Hughes was a leader of Harlem Renaissance, and had tremendous pride of his race as an African American. However, during that time period, African Americans were being considered as second-class race, and they were being segregatedRead MoreBrief Summary of the Harlem Renaissance.1863 Words   |  8 PagesHarlem Renaissance Variously known as the New Negro movement, the New Negro Renaissance, and the Negro Renaissance, the movement emerged toward the end of World War I in 1918, blossomed in the mid- to late 1920s, and then faded in the mid-1930s. The Harlem Renaissance marked the first time that mainstream publishers and critics took African American literature seriously and that African American literature and arts attracted significant attention from the nation at large. Although it was primarilyRead MoreThe Harlem Renaissance By African Americans1955 Words   |  8 Pages Arising in the heart of Harlem, New York throughout the early to mid 1900 s, the Harlem Renaissance was a movement in which African Americans took initiative towards establishing a cultural identity. The Harlem Renaissance marked the first time in which white America began to develop an interest in the African American race and heritage. The movement was declared as the most crucial factors towards the attainment of the American Dr eam by African Americans. Aspects of African American heritage were