Script
Sodmann - Business English - Winter 2013 - Semester 3
1.
Multi-brand strategy
1
2.
Aldi - marketing mix
3
3.
Primark case
8
4.
Managing the corporate brand - Primark
11
5.
Online retailing - Amazon and Zalando
12
6.
Globalization
16
7.
International HRM
19
8.
B2B
22
9.
Employee motivation in retail
24
10.
Apple from a marketing perspective
26
11.
Attitude and Manners at a job interview
29
12.
Strategic analysis of Zara Fashion (Porter)
31
Multi-brand strategy
Brand awareness
5
10
Brand awareness refers to customers' ability
to recall and recognize the brand under different conditions and link to the brand name,
logo, jingles and so on to certain associations in memory. It consists of both brand
recognition and brand recall. It helps the customers to understand to which product or
service category the particular brand belongs and what products and services are sold under
the brand name. It also ensures that customers know which of their needs are satisfied by
the brand through its products. Brand awareness is of critical importance since customers
will not consider your brand if they are not aware of it.
Brand elements
Brands typically are made up of various elements, such as
15
20
C
Name: The word or words used to identify a company, product, service, or concept.
C
Logo: The visual trademark that identifies the brand.
C
Tag line or catch phrase: "The Quicker Picker Upper" is associated with Bounty paper
towels. "Can you hear me now" is an important part of the Verizon brand.
C
Graphics: The dynamic ribbon is a trademarked part of Coca-Cola's brand.
C
Shapes: The distinctive shapes of the Coca-Cola bottle and of the Volkswagen Beetle
are trademarked elements of those brands.
C
Colors: Owens-Corning is the only brand of fiberglass insulation that can be pink.
C
Sounds: A unique tune or set of notes can denote a brand. NBC's chimes are a
famous example.
[...]
What is MULTI-BRAND STRATEGY?
25
30
35
Under different and unrelated brands two or more similar and competing products are
marketed by the same firm. Multi-brand strategy has some advantages as a means of (1)
holding more shelf space, leaving less for competitors’ products, (2) filling all price and
quality gaps, saturating a market, (3) catering to brand-switchers users who like to
experiment with different brands, and (4) generating internal competition, keeping the
firm’s managers on their toes. Meanwhile these brands eat into each others’ sales.
Once again, Procter & Gamble is a leading exponent of this philosophy, running as many as
ten detergent brands in the US market. This also increases the total number of "facings" it
receives on supermarket shelves. Sara Lee, on the other hand, uses it to keep the very
different parts of the business separate — from Sara Lee cakes through Kiwi polishes to
L'Eggs pantyhose. In the hotel business, Marriott uses the name Fairfield Inns for its budget
chain (and Ramada uses Rodeway for its own cheaper hotels).
Cannibalization is a particular problem of a Multi Brand Strategy approach, in which the new
brand takes business away from an established one which the organization also owns. This
1
40
may be acceptable (indeed to be expected) if there is a net gain overall. Alternatively, it may
be the price the organization is willing to pay for shifting its position in the market; the new
product being one stage in this process.
The onliness statement – for
positioning statement
What: The only (category)
45
How: that (differentiation
characteristic)
Who: for (consumer)
Where: in (market geography)
Why: who (state need)
50
When: during (underlying
trend)
Example SEB Group
Our multi-brand strategy enables us to :
55
60
C
better respond to the many expectations of our consumers throughout the world
C
ensure a vast international presence by combining global and local strategies
C
implement an offensive sales policy vis-à-vis retailers – organising in-store events,
optimising shelf presentation and generating growth for themselves and the Group.
Each brand has a well-defined identity with specific values that are reflected in the product
offering, features and design, as well as in a radical and consistent language. With this in
mind, Groupe SEB applies coherent brand systems that are both differentiated and
complementary and that fit long-term and transnational consumer behavioural trends.
Groupe SEB manages 6 separate and complementary brand systems, corresponding to its
international brands (Moulinex, Tefal, Rowenta, Krups, Lagostina, All-Clad).
65
These 6 brands guide the Group’s policy for innovation and product development – each
brand is allocated product innovations that embody its own particular, differentiating values.
In this way, brands can address different consumer behaviour.
Questions:
C
Which companies have a multi-brand strategy?
C
Are there sectors/industries that do not know this strategy?
2
MARKETING
Creating value through the marketing mix
Introduction
Aldi’s immediate challenge for the ‘Like Brands’ campaign was to
increase market share from 2.3% to 2.5%. Although this sounds
In increasingly competitive markets, consumers have a greater
very little, the retail grocery market is very large. A single 0.1% is
choice over where they buy their goods and services. For an
worth an extra £65 million revenue.
organisation to meet its business objectives, it has to find out
what consumers require and then identify the best way in which it
This case study focuses on the marketing strategies used by Aldi
can satisfy these needs and wants. Creating a competitive
to increase its market share and encourage loyal customers.
advantage can be difficult. A unique marketing strategy with clear
objectives is vital to ensure effective promotional activity.
Since opening its first store in 1913, Aldi has established itself as
one of the most reputable retailers in the global business market by
providing great value and quality. Aldi’s goal is simple; ‘To provide
our customers with the products they buy regularly and ensure that
those products are of the highest possible quality at guaranteed
low prices.’ Aldi’s products are sourced from hand-picked suppliers
The marketing mix
The Chartered Institute of Marketing describes the term marketing
as the process ‘The process responsible for identifying,
anticipating and satisfying consumer requirements profitably.’ This
places consumers at the heart of every organisation. The
marketing mix is often referred to as the four Ps. It involves
creating a unique blend of the right product, sold at the right price,
in the right place, using the most suitable methods of promotion.
whose products are sold under Aldi’s own brand labels.
A marketing mix is a complex set of variables. The marketing mix
Aldi’s main marketing objective is to grow its market share within
of every business will be different. Aldi’s mix focuses on providing
the UK grocery market. With the economic crisis came an
high quality products that are cheaper alternatives to famous
increased demand for value for money. Market research identified
brands. Aldi’s marketing mix therefore focuses on:
that 80% of Aldi’s customer base also shopped at other
• Product – high quality ‘Like Brands’.
supermarkets. These customers spent around £20 billion per year
• Price – Aldi offers lower prices than its competitors without
in the other stores. Aldi’s marketing strategies therefore focus on
compromising on quality.
generating customer loyalty. Aldi focuses its marketing efforts on
• Place – Aldi outlets are expanding globally.
encouraging customers that are already familiar with the brand to
• Promotions – Aldi uses a combination of above-the-line and
below-the-line promotions with a focus on its ‘Like Brands’ and
shop at Aldi more often.
‘Swap & Save’ campaigns.
Another key focus of Aldi’s marketing strategy is on demonstrating
that Aldi brands are of equal quality to well known brands such as
Heinz and Fairy Liquid. To do this Aldi ran blind taste tests
amongst a cross section of shoppers. These confirmed that the
majority of consumers that liked the famous brands also liked
Aldi’s brands. These findings formed the basis to Aldi’s ‘Like
Brands’ marketing campaign. This provided Aldi with a platform to
communicate its quality and value messages effectively.
Curriculum topics covered: • Marketing mix • AIDA model
• Above-the-line promotion • Below-the-line promotion
3
The AIDA model can be used to demonstrate the aim of any
promotional activity:
• Initiate awareness amongst customers.
• Generate interest for and desire to have the product(s).
• Leading to customers taking action to purchase.
a
awareness
i
interest
d
desire
a
action
The place element of the marketing mix involves identifying where
the product or service will be sold. Aldi keeps its store layouts
simple to limit waste and keep costs down. This means Aldi can
focus on offering its customers the lowest possible prices for its
products. When considering new store locations, Aldi takes
into account:
Aldi uses a variety of communication methods and channels to
increase the impact of its promotional activity and meet the aims
of AIDA.
• the number of people visiting an area as well as the
demographic of the area – for example, the population of the
area should be more than 30,000 people
• the position of store – Aldi focuses on edge of the town centre
Balancing the mix
locations with good visibility from a main road and not too
much competition
Organisations need a balanced marketing mix to meet the needs
• the accessibility of the store and its public transport links
of its customers. Aldi’s focus is on offering the best possible
• the number of parking spaces available.
quality products at the lowest possible prices. Every buyer for Aldi,
from fresh fruit and vegetables to meats and electronics, is an
Above-the-line promotion
expert in their field. They look for products from around the world.
This enables them to get the finest quality products that Aldi then
For Aldi to achieve its objective of increasing its market share, it
sells under its own brand labels.
had to ensure its promotional activity demonstrated the balance of
its marketing mix. For example, to increase customer loyalty it had
Selecting the prices is one of the most difficult considerations
to communicate its key quality and value messages. Promotion
when developing a marketing mix. Different pricing strategies that
helps to:
are commonly used include:
• increase awareness and improve brand recognition
• Market penetration – charging lower prices for new products to
• increase demand for products
help them enter the market and gain market share quickly.
• Competitive pricing – pricing at a slightly lower prices than
• improve brand image
• highlight the superiority of products and services.
competitors.
• Strategic pricing – emphasising the quality or brand positioning
of a product to allow a higher price to be charged.
Competitive pricing is a key strategy for Aldi. Aldi is able to offer
quality products at low prices as it buys in great volume. The fact
that Aldi buys such large quantities of these products allows great
leverage for negotiating the best possible prices with its suppliers.
This is called economies of scale. Buying large quantities of each
product allows Aldi to pass these savings to its customers.
www.businesscasestudies.co.uk
4
• Newspaper adverts extend the ‘Like Brands’ campaign and
help to showcase a variety of product categories. They also
communicate Aldi’s ‘Swap and Save’ message. This campaign
demonstrates the amount that shoppers could save if they
swapped their weekly shop to Aldi. They compared Aldi
products to famous brands to demonstrate Aldi’s value for
money message.
• In store posters are also used to highlight the ‘Swap and Save’
message.
Below-the-line promotion
Below-the-line promotion uses different ways to engage with
customers. These methods can be more easily targeted to
Above-the-line promotions are paid-for advertising aimed at a mass
specific audiences than above-the-line methods. They offer
audience. These include the media such as television, radio,
organisations a greater level of control over their communications.
magazines and newspapers that reach a large number of people.
Aldi uses a range of below-the-line methods. These include:
This form of promotion can be costly. It can also be difficult to target
• social media
specific audiences. Aldi uses a range of above-the-line methods to
• targeted e-mails to customers
reach its customers and potential customers. These include:
• 3rd party endorsement and awards
• Advertising on TV. The ‘Like Brands’ campaign features 20
• public relations and media relations.
second TV adverts which focus on a particular product. The
adverts show a famous brand as a benchmark for quality
Aldi’s Facebook and Twitter pages encourage two-way
side-by-side with an Aldi brand product. They use the slogan
communication with customers. These social media channels
‘Like Brands. Only Cheaper’. This reinforces the message that
provide a platform through which Aldi can interact with customers. It
Aldi products are cheaper than leading brands but equal in
can then assess their opinions about the brand. One objective of
terms of quality. The adverts provide personality to the Aldi
this form of promotion is to create ‘Aldi Advocates’. These are
brand. They use humour which helps to build trust and an
consumers who recommend Aldi to others, through stimulating
emotional connection with target audiences.
interactions about the high quality and low prices of Aldi products.
• Printed leaflets are distributed within stores (1 million copies
For example, the ‘I Love Aldi’ campaign asked fans to send a virtual
printed per week) and also to customers living in areas
Aldi Valentines card to a Facebook friend. This was encouraged by
surrounding stores. These leaflets help to reinforce the ‘Like
providing rewards. The campaign gave consumers the chance to
Brands’ campaign. They also showcase products with limited
win a £10 voucher. They could also win a box of Aldi chocolates for
availability and seasonal offers available in stores.
their Valentine. The campaign also encouraged consumers to
complete the sentence ‘I love Aldi because...’ directly onto Aldi’s
Facebook page to encourage positive brand feedback.
3rd party
endorsements
Facebook
Below-the-line
promotion
Public and
media
relations
Twitter
www.businesscasestudies.co.uk
5
www.aldi.co.uk
Aldi also uses direct e-mails. These e-mails allow Aldi to
communicate a variety of messages to target customers. For
example, they can convey the ‘Swap and Save’ message as well
as promote seasonal messages such as products associated with
Pancake Day.
Aldi’s website is an integral part of its below-the-line promotion. It
features all of Aldi’s key promotional messages as well as
additional content to engage consumers. Examples include recipe
ideas and weekly offers. Aldi developed the www.likealdi.co.uk
micro-website to further encourage brand engagement with the
Further coverage was gained through targeting key media at
‘Like Brands’ TV campaign. The site provides consumers with the
specific times with seasonal promotional messages. The ‘Swap &
opportunity to upload their ideas for the next Aldi TV campaign.
Save’ campaign highlighted the savings available through
Aldi also uses a dedicated recruitment website to promote its
shopping at Aldi at times when value for money is high on the
employer brand messages and career opportunities.
agenda. This was particularly relevant with its ‘Back to School’
and Christmas products.
Conclusion
Aldi has a distinct approach to retailing that has given it a
competitive advantage in a crowded marketplace. Aldi’s unique
balance of the marketing mix enables it to provide high quality,
own branded products at the lowest possible price. Aldi’s
innovative ‘Like Brands’ and ‘Swap & Save’ marketing campaigns
are improving brand perceptions. They are aiding the achievement
of Aldi’s marketing objectives. The campaigns have increased
Aldi’s sales per store by +100% over 3 years through creating
more loyal customers. Its multi-channel promotional activity is
engaging consumers and creating positive feedback.
A further below-the-line method used to highlight the quality of
Aldi’s products is positive 3rd party endorsements. Aldi has entered
over 1,000 of its products into awards such as Grocer Golds, Pizza
and Pasta Awards (PAPA) and the British Frozen Food Federation
Awards. In 2012 Aldi was awarded ‘Best Supermarket’ by
consumer Watchdog Which? It beat competition from Marks &
Spencer and Waitrose. Further positive endorsements for products
on TV and in the press reaffirm the message that Aldi products are
of the highest quality as well as being great value for money. For
example, Aldi’s Christmas pudding was awarded runner-up and
Housekeeping magazine.
1. Describe what is meant by the term marketing.
(2 marks)
2. Explain why it is important to balance the marketing
Effective public and media relations help to create positive press
exposure. Aldi has secured record coverage through hard working
and innovative media relations. Journalists from newspapers such
as The Grocer, The Financial Times and The Times were invited
for exclusive interviews with Aldi’s Group Managing Directors. They
mix. (4 marks)
3. Analyse the factors that might affect the location of a
new Aldi store. (6 marks)
4. Evaluate how Aldi has identified a unique position
Exam-style questions
acknowledged as a ‘bargain’ in a taste test comparison in Good
within a competitive marketplace. (8 marks)
discussed record breaking sales results.
Aldi | Creating value through the marketing mix
6
www.thetimes100.co.uk
Providing consumers with ethically sourced garments
Curriculum Topics
• Business ethics
• Corporate Social
Responsibility
• Ethics in practice
• Costs of ethical behaviour
This case study shows how Primark sources the clothes it sells in
Introduction
its shops in an ethical and fair way, often at added cost to itself.
Rapid changes in media, transport and communications
What are business ethics?
technology have made the world economy more interconnected
now than in any previous period of history. Nowhere is this more
evident than in the world of textile manufacture and clothing
Business has a responsibility to society. Business ethics are rules
distribution. Consumers want fashionable clothes at affordable
of conduct and principles and patterns of behaviour in business
prices. Much of high street fashion is produced in various
dealings that involve ‘doing the right thing’. Part of this
countries across the world. Businesses source clothes from
responsibility is to look after the wider community involved in the
countries like India, China, Bangladesh and Turkey because of
business process, including employees, across the globe.
lower material and labour costs in these countries. In order to
meet consumer demand, Primark works with manufacturers
Primark works with many third party suppliers and has a key
around the world.
concern to source ethically. Primark is very clear about where it
stands on business ethics. ‘As an international brand with a global
Primark is part of Associated British Foods (ABF), a diversified
supply chain we have a responsibility to act ethically. We embrace
international food, ingredients and retail group. Primark has almost
this responsibility as an opportunity to be a great force for good.
200 stores across Ireland, the UK, Spain, Netherlands, Germany,
Primark is committed to providing the best possible value for our
Belgium and Portugal. Primark’s annual turnover accounts for a
customers, but not at the expense of the people who make
significant proportion of ABF’s revenues and profit.
our products.’
Primark’s target customer is fashion-conscious and wants value
for money. Primark can offer value for money by:
• sourcing products efficiently
• making clothes with simpler designs
• using local fabrics and trims
• focusing on the most popular sizes
• buying in volume
• not spending heavily on advertising.
Primark’s business growth comes from meeting these customer
needs whilst continuing to expand stores and move into
new markets.
EDITION
15
www.thetimes100.co.uk
Primark | Providing consumers with ethically sourced garments
7
www.thetimes100.co.uk
In other words, this means making sure that, throughout the
Primark is able to offer value and low prices because its business
supply chain, Primark’s goods are manufactured under good
model is based on high sales volumes and lower retail margins
conditions and the employees in those factories are treated well.
with minimal advertising. The company keeps costs down by
buying large quantities of items and enjoying the economies of
Primark shares its values with its parent ABF. These values shape
scale resulting from buying in bulk. In addition, retail prices are kept
Primark’s relationships with its stakeholders. Stakeholders are
low through lean production and efficient operational practices.
individuals and groups who have an interest in or are affected by a
For example, using off-season factory time for production means
business. They may be internal, such as shareholders or
that the costs are lower than at peak time. This is good for Primark,
employees, or external, such as government or the community.
but it also means factory employees get work and pay when they
might not otherwise have been needed. Therefore, its practices are
both efficient and ethical at the same time.
Taking care of our people
(Employees)
Being good
neighbours
(Community)
Primark
Values
Using fabrics
produced locally
to the manufacturer
Fostering ethical
business
relationships
(Partners)
Reducing packaging
and extensive use of
multi-pack product
Producing
on a large
scale
Efficient
operating
process at
Primark
Important business principles for Primark include respecting
human rights and setting guidelines for appropriate conditions of
Focus on key
garment sizes
Minimal
advertising
employment in its suppliers’ factories. Primark has over 600 major
suppliers in 16 countries. These companies provide employment
for over 700,000 workers in three continents. Primark is
Using off-season
factory time for
production
committed to making sure that its partners, both factories and
suppliers, also act responsibly towards their employees.
Typically, textiles are manufactured in low-wage/high manual skill
economies such as are found mostly in the developing world.
Ethics in practice
Factories in countries such as India or China may supply a range
of retailers and brands, producing goods according to each
A company needs to be constantly alert to the challenges of
individual retailer’s specifications. In these circumstances, the
operating ethically. It needs to develop ethical practices and
factory sets the same wage rate to employees, regardless of
principles that are supported and adopted throughout the
which retailer the goods are for. At least 95% of the factories
business and to work in partnership with the many industry and
supplying Primark also produce for other high street retailers.
international bodies seeking to secure ethical practices and
protect the rights of employees. Primark bases its Code of
Primark works to ensure ethical sourcing in a number of ways. It has
Conduct on the International Labour Organization’s (ILO) Code.
an Ethical Trade Director, whose role is to make sure Primark goods
The ILO is an agency of the United Nations. It brings together
are sourced ethically and who leads a team of ethical managers and
representatives of governments, employers and workers to shape
executives based in the key sourcing countries. Primark is a member
policies and programmes. This unique arrangement enables the
of the Ethical Trading Initiative (ETI -www.ethicaltrade.org). The ETI is
ILO to incorporate 'real world' knowledge about employment and
an international alliance of companies, trade unions and non-
work. The ILO code describes a set of standards for international
governmental organisations (NGOs) working in partnership to
labour. These promote opportunities for women and men to work
improve the lives of workers across the globe.
in freedom, equity, security and dignity.
GLOSSARY
Supply chain: Sequence of linked
transactions that carries a product from
its origins as raw materials or
components through its manufacture to
its receipt by the final consumer.
Values: Set of ethical or operating
principles that guide decision-making.
Non-governmental organisations
(NGOs): Non-profit making
organisations that aim to influence
opinion, e.g. Oxfam.
Retail margin: The proportion of a
selling price that is profit. Measured as
profit/retail selling price X 100.
Economies of scale: Reductions in
long-term average costs that arise from
operating on an increasing scale.
Lean production: Organising any
production process to minimise waste
and inefficiency.
EDITION
Primark | Providing consumers with ethically sourced garments
www.thetimes100.co.uk
15
8
www.thetimes100.co.uk
Primark’s Code of Conduct is translated into 26 languages, all
Primark seeks to work collaboratively with its suppliers when
published on its website, to ensure clear communication on
auditors identify issues of non-compliance against the code of
standards. The Code of Conduct sets out the company’s policy
conduct. Often factories need support and training to implement
and is part of its legal terms and conditions. See the full Code
changes to their factories that are permanent and effective.
and additional detailed information on the 11 points of the code at
www.primark.co.uk/Ethical/Values/Code_of_Conduct
Why take an ethical approach?
As with most businesses, Primark’s main objective is to be a
The code states that within its supply chain:
profitable and sustainable business. Consequently, it is always
1. Employment is freely chosen
seeking opportunities for profitable growth to ensure these primary
2. Freedom of association and the right to collective bargaining
objectives are achieved year-on-year. At the same time, Primark is
are respected
committed to acting as a responsible corporate citizen. The term
3. Working conditions are safe and hygienic
Corporate Social Responsibility (CSR) describes this approach.
4. Environmental requirements - Primark shares its commitment
with suppliers
When a company operates in a responsible way, for example,
5. Child labour shall not be used
through conducting ethical audits and working in collaboration
6. Living wages are paid
with its suppliers to address issues, it helps to:
7. Working hours are not excessive
• build confidence in the brand. The reputation of the business
8. No discrimination is practised
grows; stakeholders are pleased to be associated with it.
9. Regular employment is provided
• reduce risk to the business, for example, from poor publicity
about ethical issues.
10. No harsh or inhumane treatment is allowed
11 Legal requirements - Primark is commited to compliance of all
Good business practice involves being sustainable over the long
countries’ laws.
term. A business is sustainable when it is able to make profits for
Primark works closely with the suppliers and factories that produce
shareholders, offer good employment opportunities for its staff, pay
its goods. It provides training for suppliers, factories and its own
taxes to the governments of countries in which it operates, and at
buyers so that they understand ethical issues. For example, it offers
the same time give consumers what they want (e.g. products that
guidance on issues such as child labour and home working in Asia,
represent good value for money at affordable prices). A business
that makes a profit is able to make an important contribution to
as well as immigration and right to work issues in the UK. The role
of Primark buyers is important in helping to support ethical business
society and to look after all of its stakeholders.
practices. When selecting new suppliers and factories, Primark
requires them to go through a selection process. This enables
Primark to establish if working conditions are appropriate or if
improvements are necessary before the supplier can be approved.
All Primark suppliers are also subject to thorough independent
audits and follow-up visits to make sure that the supplier is
maintaining ethical practices. This involves an audit of labour
standards. An auditor is someone that checks factories to ensure
that Primark’s code of conduct is being implemented within the
factory. This includes, for example, checking that the factory has
the appropriate fire safety equipment and that staff have been
trained how to use it, to ensuring that all employees receive the
Audits: A systematic check and
evaluation relating to any variable typically finance, skills or environmental
performance, usually based on
conformance against criteria laid out in a
code of conduct.
Corporate Social Responsibility:
Responsibility of a company to be a fair
and positive force for good in the local
community and wider society.
GLOSSARY
wages and benefits they are entitled to.
EDITION
15
www.thetimes100.co.uk
Primark | Providing consumers with ethically sourced garments
9
www.thetimes100.co.uk
www.primark.co.uk
The costs of ethical behaviour
Operating in an ethical way may incur additional costs to a
business when compared with other retailers and companies who
may not do business in the same way. For example, Primark
bears the cost of carrying out all audits. Then there are its costs
associated with working with ethical partners. An example of this
is Primark’s partnership with Nari Uddug Kendra (NUK). This is an
organisation supporting women’s rights and health in Bangladesh.
See more information and read an interview with NUK at
Conclusion
www.primark.co.uk/Ethical/External_Partnerships
NUK has more than 20 years experience in addressing
supply chain, bringing together manufacturing units in China,
women’s rights and labour issues in the ready-made
India, Turkey, Bangladesh and other countries, with retail outlets in
garment sector in Bangladesh. Through this partnership,
Ireland, the UK and other parts of Europe.
Primark seeks to identify and address key issues around
equal rights, opportunities for growth and career
enhancement, as well as training needs within some of its
key suppliers in Bangladesh. NUK's expertise in this area
helps Primark provide employees and middle management
at factories with more intensive support and training on
ethical issues.
A key principle of Primark’s business practice is to make sure that
it provides its consumers with value-for-money garments, whilst
maintaining ethical manufacturing standards. This involves paying
for independent audits of all its factories and working with
suppliers to address issues in a sustainable manner.
By working with external agencies such as the International
Labour Organization, the ETI and independent auditors, Primark
Costs to Primark of working in an ethical way include:
• the employment of the global Ethical Trade team
• training its buyers on all ethical trade issues
• managing and paying for external audits
helps to set and maintain standards. Its auditors work with
suppliers over a period of time to help them meet the exacting
standards set out by the Ethical Trading Initiative. This enables the
supplier to become approved. Primark sees this as a programme
of continuous improvement.
• helping suppliers put right issues raised by audits, through
training and support from the Primark Ethical Trade team.
By making its Ethical Trade processes transparent, Primark aims
to demonstrate its commitment to responsible manufacturing. This
However, rather than seeing these activities as costs, Primark
helps to assure its customers that the goods they are purchasing
believes that they enable the business to operate in a sustainable
are not only fashionable and good value-for-money, but also that
and well-managed way. Through its remediation programme,
they are ethically produced by workers who are fairly treated.
Primark’s team of ethical managers work with factories to help
them find ways of putting issues right and developing sustainable
practices. This provides a benefit to the supplier but also in the
1. What are business ethics?
long term to Primark, who gains from having suppliers all working
2. Give two examples of ways in which Primark is
to its standards.
operating in an ethical way. Provide two additional
examples of ethical practices or behaviours in a
business not associated with retailing or clothing.
means the business is open to people seeing how it manages its
3. Why is it so important for businesses to operate in an
relationships with suppliers. In turn, suppliers’ practices also need
ethical way? Explain your answer by referring to the
to be transparent. The alternative would be for an organisation to
fashion industry.
ignore ethical behaviour. However, this would rapidly lead to a
decline in brand reputation and consumers could move to
QUESTIONS
Transparency is an important part of this process. Transparency
4. In what ways could ethical business practices incur
costs to the business? Evaluate the extent to which
purchasing from competing retailers behaving more ethically.
the benefits to a business of operating in an ethical are
Operating in the ‘right way’ is therefore not just appropriate for
likely to outweigh the costs.
ethical reasons, but is also good business practice.
The Times Newspaper Limited and ©MBA Publishing Ltd 2010. Whilst every effort has been made to ensure accuracy of information, neither the publisher nor the client can be held responsible for errors of omission or commission.
Primark is an exciting, growing brand that provides consumers
with value-for-money fashion items. The company has an effective
EDITION
Primark | Providing consumers with ethically sourced garments
www.thetimes100.co.uk
15
10
Managing the Corporate Brand: The Reputation of Primark Retailer (extracts)
5
10
15
20
In 2008, many articles in UK newspapers revealed what had been discovered about
Primark’s supply chain. A documentary by the BBC found out that the brand had three
suppliers that used child labour in India’s sweatshops, aged 11+ and paid about 60p/day,
even working at night in candle light. An undercover investigation called “Fab and Fabric”
made about one of Primark’s Indian suppliers found that at least one supplier was
subcontracting to other manufacturers employing children.
Therefore, customers protested in front of the Oxford Street branch in London as a reaction
to the shameful news. So an order worth millions of pounds was cancelled by Primark.
Withdrawing clothes produced by the three suppliers from stores was the next step to
restore CSR.
Primark, like all the other retailers and brands is now focusing on CSR and ethics but
unfortunately it took a broken reputation and a loss in sales in order not to be left behind
and keep up with the changes in the market. There are differences in the markets in terms
of income distribution and culture but the ratailer learnt lately how to adapt to them
without being unethical or losing their differentiation point, i.e. pricing. All the necessary
measures were taken in order to repair what had been done wrong in terms of regular
social and environmental audits made by their new Ethical Trade Director, internal
communications, transparency, staff responsibility and incentive systems. The retailer is
regaining its reputation and has made steps ahead but with the corporate objective to
expand in Europe, the supervision of all the suppliers and buyers will be impossible and the
brand should do its best to keep its current ethical and CSR approach.
11
Online Shopping and the Germans:
Amazon and Zalando
Internet companies are other great
examples where the character traits
5
determine strategy. Many of these
companies are willing to take massive
risks. Start-ups like German online shoe
store Zalando seized opportunities that
its competitors saw as too risky. It
10
entered the online sporting goods
segment that traditional, more
risk-averse sports outfitters had left untapped for
years. It is a strategy that has proved successful as
this particular online channel is now growing
15
rapidly. [from: Roland Berger]
Amazon and eBay are online giants not just in the
US, but also around the world. So it’s not
surprising that our survey respondents in several
countries ranked them high on their list of online
20
pure players.
For example, in Germany, 89% of online shoppers
made purchases on their PC with Amazon and
75% with eBay over the past 12 months. Domestic
online retailer Zalando was a distant third with
25
only 22%. That might suggest that domestic
players are at a serious disadvantage—but
appearances can be deceiving. After Zalando
there are a whole host of German players where
5-17% of shoppers are making purchases. Both
30
Amazon and eBay actually entered the German
market by acquiring a local player. And after 15
years, Amazon still has only a 13.8% share of total
internet sales in Germany.33 While an eventual
shakeout is probably likely, eliminating some of these smaller retailers, the fact remains
35
that domestic online players do possess a path to success.
12
Indeed, we’ve found that in many cases domestic online pure players are able to withstand
entry by foreign competitors. They’ve already built up brand recognition and customer
loyalty, making it harder for new entrants to compete, especially in competitive, mature
markets.
40
Global delivery is well established in the fashion sector. Online fashion shops have a very
good ability to detect the customer’s location, sending him or her to a country---specific
webshop and offering local content; major players such as Mr.Porter and Tres Bien Shop
have platforms detecting the customer’s location and gives him information such as the
currency, language or shipping price. But the reward comes to Zalando in 2012; the brand
45
receives the price of the “Best Cross---Border Webshop” at the European e---commerce
Awards in Barcelona. The summit underlined the brand ability to make “the customers […]
feel they are shopping with a local brand.”
•
Today Zalando is the biggest online fashion retailer in Europe
•
Zalando has reached a strong brand awareness in all the countries he is currently
targeting (i.e. in Germany same brand awareness as Volkswagen)
50
•
Zalando is active in 14 European countries
Main drivers for Zalando success
1.
Extremely figure-driven company (Business Intelligence, Marketing Intelligence
teams, etc.)
13
55
2.
Strong online marketing competencies
3.
Quick and efficient logistic system
4.
Strong focus on customers’ behavoiurs (User Experience team): give the users what
he is looking for
60
5.
Efficient and reliable Customer Service
6.
Be local: adapt products and services to the specificity of each markets:
i. Having a wide and country specific offer (products, etc.)
ii. Country specific management teams
iii. Country specific webpage
Amazon in Germany (and another one at the end - sorry)
14
65
The Italian market entry and its current status
Issues
Observations
Conversion Rate
Low level compared to other Zalando countries. Perfect pricing and
improved assortment represent crucial levers
Trust project
Return Rate
Italy has the lowest Zalando return rate. Italians buy when they are
extremely convinced therefore return is physiologically less likely
70
Brand Awareness
TV had great impact. Offline measure under testing (Magazine,
(aided)
educational booklet
Preferred Payment
Cash on Delivery represents more than half of the Italian payment
methods
method. Strong focus in the current advertising in order to get
“offliners” online
Call-Center Contact
Italy has the highest contact ratio with half of the contacts
Ratio
pre-sale” and CS represent a powerful marketing tool (telephone
orders)
75
Customer
Satisfaction
“Fashionability“
Italy has one of the highest customer satisfaction level.
Huge efforts in order to achieve First Class Operations
New home page
News&Style section
15
Globalisation
The word globalisation was not recognised as academically significant until the early-to-mid
1980s. Since then its use has increased dramatically. Some see the concept of globalisation as
the key idea by which we understand the transition of human society into the third
5
millennium. There have been numerous definitions of the term with the common theme
being the increasing interconnectedness of the world economically, culturally and politically.
What is ‘globalisation’?
It is the coincidence of especially the following forces that can be associated with the concept
of economic globalisation:
10
1.
deeper and wider international economic integration as the combined effect of the
increasing international mobility of goods and services, technological and
organizational knowledge, and corporate as well as portfolio investments;
2.
accumulation of breakthroughs in communication and computer technologies,
together often coming under the information and communication technology (ICT)
label, and their world-wide commercialisation;
15
3.
the global interlocking of financial markets, enabling much of the above.
Tom Friedman on Outsourcing, in the NYT
How can it be good for America to have all these Indians doing our white-collar jobs?" I
asked 24/7's founder, S. Nagarajan.
20
Well, he answered patiently, "look around this office." All the computers are from HP.
The basic software is from Microsoft. The phones are from Lucent. The air-conditioning is
by Carrier, and even the bottled water is by Coke, because when it comes to drinking
water in India, people want a trusted brand. On top of all this, says Mr. Nagarajan, 90
percent of the shares in 24/7 are owned by U.S. investors. This explains why, although
25
the U.S. has lost some service jobs to India, total exports from U.S. companies to India
have grown from $2.5 billion in 1990 to $4.1 billion in 2002. What goes around comes
around, and also benefits Americans.
Globalization does not exist - criticising the hyperglobalist attitude
Seductive as such ideas might seem, a moment’s thought will show just how misleading they
30
are. The world is both a ‘space of places’ and a ‘place of flows’. Production networks don’t just
16
float freely in a spaceless/placeless world. Although transportation and communications
technologies have, indeed, been revolutionized both geographical distance and, especially,
place remain fundamental. Every component in the production network – every firm, every
economic function – is, quite literally, ‘grounded’ in specific locations. Such grounding is both
35
physical, in the form of sunk costs, and less tangible in the form of localized social
relationships and in distinctive institutions and cultural practices. Hence, the precise nature
and articulation of firm-centred production networks are deeply influenced by the concrete
socio-political, institutional and cultural contexts within which they are embedded, produced
and reproduced. An especially important bounded territorial form in which production
40
networks are embedded is that of the state. All the elements in the production network are
regulated within some kind of political structure whose basic unit is the national state but
which also includes such supranational institutions as the International Monetary Fund and
the World Trade Organization, regional economic groupings such as the European Union or
the North American Free Trade Agreement, and ‘local’ states at the subnational scale. All
45
markets are socially constructed. Even supposedly ‘deregulated’ markets are still subject to
some kind of political regulation. [extract from: Dicken, Peter (2003), Global Shift: Mapping
the Changing Contours of the World Economy, Fourth Edition, London: Sage.]
17
18
International human resource management
1
Selection and recruitment
5
10
15
20
25
An assumption is often made that an effective manager at home will also be an effective
manager abroad. Moreover, many companies continue to focus primarily on the technical
competence criterion for expatriate assignments. There are two reasons for this: (1) task
requirements are usually more easily identifiable; and (2) since technical competence
almost always prevents immediate failure on the job, particularly in high pressure
situations, the selectors play safe by placing a heavy emphasis on technical qualifications
and little on the individual’s ability to adapt to a foreign environment. Both these
assumptions are suspect, however, when one examines the rate of expatriate failure and
the reasons for such failure.
Some US multinationals experienced expatriate failure rates as high as 30-40 per cent; in
contrast, European, Japanese, and Australian multinationals experienced significantly lower
rates of expatriate failure. Nevertheless, these casualties of selection not only represent
substantial lost investment, they also constitute a human resource waste since most of
those who fail seem to have a noteworthy home track record. Failures often constitute a
heavy personal blow to the expatriates’ self-esteem. Hence, even if they are accepted back
by corporate headquarters, it may take some time before they regain confidence in their
own abilities. The unsettling experience for the person’s family, both emotionally and
physically, represents yet another consequence.
What are the causes of expatriate failure? In the US sample the most important reasons for
expatriate failure, in descending order of importance, were:
1.
inability of the manager’s spouse to adjust to a different physical or cultural
environment;
2.
the manager’s inability to adapt to a different physical or cultural environment;
3.
other family-related problems;
4.
the manager’s personality or emotional immaturity;
5.
the manager’s inability to cope with the responsibilities posed by overseas work;
6.
the manager’s lack of technical competence;
7.
the manager’s lack of motivation to work overseas.
30
Selection criteria
35
Overseas managerial assignments can be classified into four major categories: (1) the chief
executive officer (CEO), whose responsibility is to oversee and direct the entire foreign
operation; (2) the functional head, whose job is to establish functional departments in a
foreign subsidiary; (3) the troubleshooter, whose function is to analyse and solve specific
operational problems; and (4) the operative, or rank and file. [...]
Selection of parent-, host- and third-country nationals
Multinationals have three sources of human power supply available to them: (1) parent-
19
International human resource management
40
2
country nationals (PCNs), or those who are citizens of the home country of the
multinational corporation; (2) host-country nationals (HCNs), or citizens of the country of
foreign operation; and (3) third-country nationals (TCNs), or nationals who are neither
citizens of the home country of the multinational nor of the country in which the foreign
operation is located.
Analysis thus far has focussed on the use of PCNs. The reasons for using PCNs, HCNs and
TCNs are multiple and varied, and the selection criteria may be summarized as in Figure 1.
45
50
55
60
65
70
75
It is noteworthy that west European multinationals seem to use expatriate assignments as a
mechanism for developing an international orientation among their management
personnel. Tn the 1990s, US multinationals are also following this trend (Tung and Arthur
Andersen 1997). In order to compete effectively in a world characterized by the
globalization of industries, European multinationals recognize the need to develop this
orientation among its management personnel.
The extent to which PCNs, HCNs and TCNs are used at various levels of management in
different geographic regions of the world varies. For the US and west European samples,
HCNs are used to a much greater extent at all levels of management in developed regions
of the world compared to less developed countries. This is logical as one would expect the
more developed nations to have a larger pool of personnel that would possess the
necessary human power and technical skills to staff management-level positions.
Unfortunately, the countries staffed by a smaller percentage of HCNs at management levels
of US and European subsidiaries tend to be ones whose culture, values and business
practices differ substantially from those at home. Consequently, the issue of selecting a
candidate who would be able to live and work in a very dissimilar cultural environment still
constitutes a pressing problem.
Japanese multinationals, on the other hand, employ considerably more PCNs in their
overseas operations at the senior and middle management levels. This phenomenon may
be attributed, in part at least, to the significant differences that exist between Japanese and
non-Japanese styles of management which can create problems of integration, particularly
at the senior management level. One problem pertains to language differences. Virtually all
communication between corporate headquarters in Japan and the foreign subsidiary is in
Japanese. There are very few non-Japanese who are thoroughly proficient in the Japanese
language. The more extensive use of PCNs at the senior and middle management levels in
Japanese multinationals may also be a function of the stage of internationalization of
Japanese firms. Compared with their US and European counterparts, Japanese companies
are more recent entrants into the multinational scene. Aside from the large general trading
companies, the majority of Japanese firms only began overseas expansion in the 1960s. In
start-up phases there is a greater tendency for multinationals to use PCNs.
Another characteristic of international human resource management practices in Japanese
multinationals is the limited use of TCNs. Except for Africa, the Japanese multinationals
studied did not use TCNs at all. When asked why, the Japanese multinationals indicated
20
International human resource management
80
85
3
that since they already experience difficulties in trying to integrate a local workforce with
their expatriate staff, they do not wish to confound the situation by adding a third
dimension, namely TCNs.
The trend towards the increased use of HCNs at various levels of management in overseas
operations has continued for US multinationals. While acknowledging the obvious
advantages associated with the use of HCNs, such as reduced costs and greater familiarity
with the local environment, there can be limitations associated with relying exclusively on
HCNs. Because of geographic distance and cultural differences, corporate control becomes
more tenuous. [...]
Retention of personnel
90
Two factors which can affect a firm’s ability to retain competent corporate personnel to
meet their international human resource management needs are: (1) compensation - is
there adequate compensation for service abroad? and (2) repatriation - does the overseas
assignment have a positive impact upon the expatriate’s subsequent career advancement
within the organization on repatriation?[...]
21
The business market consists of all organisations that purchase goods and services. All
organisations operate in the business market in some way. We refer to the business
market, but in fact we are actually referring to the organisational buying market. This is
because it is not only businesses that are the target of business to business marketers.
5
Other organisations such as hospitals, schools, charities and agricultural enterprises also
form part of the business market. The business market is often referred to as the B2B
(business-to-business) market.
B2B (business-to-business) marketing is marketing of products to businesses or other
organizations for use in production of goods, for use in general business operations (such as
10
office supplies), or for resale to other consumers, such as a wholesaler selling to a retailer.
Differences from Consumer Market
Fewer customers.
There were about 316,000,000 potential individual consumers in the
U.S. alone. The number of businesses in comparison is almost
laughable. In 2007, it's estimated that there were about 7,705,000
businesses operating in the U.S. and about 86% had fewer than 20
15
employees.
Derivative demand.
A significant amount of business demand is derivative of consumer
demand. For example, a big box retailer's demand for books from its
wholesalers may decline as its customers continue to transition to
22
electronic books. This may not effect the retailer much, but it sure
20
hurts the traditional publishing industry.
Complex
transactions.
The products and buying process is often more complicated. The
products purchased are often very complex and expensive, like
manufacturing equipment, and are sometimes even custom made.
25
Moreover, negotiation between buyers and sellers is much more
prevalent because of the increased bargaining power of individual
buyers.
Types of Business Consumers
1. Manufacturers are businesses that produce products. The bulk of their purchases will be
30
inputs for their production, such as raw materials, components, and outsourcing of
labor. They will also buy some products to support general operations, including office
supplies, furniture, and computers.
2. Trade are consumers that generally purchase finished products to sell to consumers for
a profit. Retailers and wholesalers are examples. A wholesaler may make a high-volume
35
purchase of a product at a reduced price and then sell the product to retailers at a
lower volume but at a higher price. Of course, trade businesses will also buy products to
support general operations.
3. Government is certainly the largest
consumer in the U.S. market bar none. It
40
spends trillions of dollars for goods and
services ranging from pencils to
billion-dollar aircraft carriers.
4. Institutions are organizations that engage
in charitable, educational, and community
45
activities. They can be public or private
organizations. Common examples include
universities and hospitals. These
consumers generally buy products that
support their service activities, like general
50
office supplies, and equipment and
specialized equipment needed for a
service, such as an MRI machine.
23
Employee Motivation, by B. Nelson
The vast majority of today’s workers report they are overworked and underappreciated.
The most validated principle of employee management is the simple notion that “you get
what you reward.” If you systematically provide positive consequences to your employees
5
for desired behaviors and results, you will get more of those behaviors and results. Studies
prove that employee recognition also has an immediate positive impact on stress,
employee morale, job satisfaction and increased performance. That translates into more
sales and better customer service.
There’s also strong evidence that employee recognition has a direct impact on employee
10
retention. Robert Half International, the staffing firm, found the number-one reason why
people left their jobs was “limited recognition” for the work they were doing. Similarly, the
Gallup Organization found that the number-one predictor of tenure on the part of any
employee is the relationship that person has with his or her immediate supervisor. In
relationships that were characterized as “positive,” employees tended to stay in their jobs
15
longer. In other words, for most of us if we have a good boss and a good job, we think twice
about leaving it!
Fortunately, the most effective forms of recognition cost little if anything and are within the
grasp of any motivated manager. Here’s what workers say they want in study after study:
20
Support and
involvement
How well do you provide the information to employees that they need
to do their jobs? How well you involve employees when making
decisions? How well do you support your employees when they make
mistakes? These are all aspects of support and involvement.
Employees want to know how they are doing in their jobs and how the
company is doing in its business. Involving employees is both
respectful and practical: you increase their commitment, make it
easier for them to complete their work, and encourage them to
implement changes and adopt new ideas.
Personal and
public praise
It only takes a few seconds to thank someone for going above and
beyond by helping a co-worker or staying late until a project is
completed. If your thank-you is immediate, sincere and specific, it will
be on the mark in making your workers feel valued and
appreciated—and will increase the chance that they will repeat the
behaviors you noticed.
Autonomy and
authority
Most employees value being given a chance to do their work as they
see fit. Do you allow employees to decide how to get a job done, give
them increased job autonomy and authority once earned, and allow
them to pursue their ideas or give them a choice of assignments, when
possible?
24
25
30
Flexible
working hours
Time is the new currency for today’s employees. They expect work to
be an integrated part of their lives, but not their entire lives. Given
that 83 percent of employees report wanting more time with their
families, allowing greater work flexibility, where possible, can be a
great motivator. Using time off as a form of reward—whether it’s an
hour, an afternoon, or a full-day—is another way this need can be met.
Learning and
development
Most development and learning occurs on the job from new
opportunities, new challenges and chances to gain new skills and
experience. Do you support and encourage employees to learn new
skills? Do you allow them to take on new tasks, discuss what they’ve
learned after the projects are completed and explore continuing career
options within the company? If not, now is the time to start!
Manager
availability and
time
Are you available to address employees’ questions and concerns? Do
you take time to get to know your employees and listen to their
non-job issues? Being accessible to employees is critical for building
lasting relationships with your workers. Remember, you can’t be open
and receptive with a closed mind!
This is why “employee of the month” programs are so ineffective.
Here are a few examples of effective and low-cost recognition methods:
•
Crate & Barrel store managers in Houston, TX, started a program for their associates
involving a “surprise hour off.” Once a week, each store manager would pick a sales
associate, and take his or her shift on the floor for an hour, saying, “You’ve been
35
working hard, and I appreciate it—take an hour off and come back refreshed and
ready to sell some more.”
•
As a result of its commitment to a more balanced work life, employees at clothing
outfitter Eddie Bauer can “call in well.” The company’s Redmond, WA, store has
even created Balance Day, an additional day off for all employees.
40
•
At Claire’s Boutique in
Wooddale, IL, district
managers reward store
managers for the highest sales
45
by filling in for the store
managers on a Saturday so
the manager can have a day
off. The regional managers
also present simple trophies
50
to district managers in
recognition of their
achievements.
25




     
     
    
    

  



    



    
     





   


    





      










        

















   















 

26























 

 


 
 

 




27

 

































   
   


   

28
Attitude & Manners at a Job Interview
Pre-reading
Questions:
• What does it mean to have a good attitude?
• What are some good manners?
• Why should you show both a good attitude and good manners
at a job interview?
Definitions:
• Attitude – a way of thinking, acting, or feeling
• Manners – a way of behaving that is polite or proper
• Alert – interested, quick to notice or act
• Motivated – to want to do something
• Enthusiastic – having or showing great interest and excitement
Reading
Having a good attitude and good manners are important both at an interview and on the job.
17 Managers agree that a person’s attitude can be more important than their work experience. Your
32 attitude makes a big difference.
37
If you are excited about being at the interview and are eager to be hired for the job, the
56 employer will probably consider you for the job. If you speak softly and look at your feet during
74 the interview, the employer may not consider you for the job. Managers are looking for someone
90 who is alert, motivated and enthusiastic.
96
Using good manners at an interview and at your work is very important. The way you act
113 tells a great deal to an employer. If you’re polite and kind, it says that you get along with people
133 and you have a respect for seniority, company managers and supervisors.
144
One of the first manners an employer will look for is punctuality, being on time for the
161 interview. This indicates whether you’re reliable and will be to work on time. Being late for an
178 interview could hurt your chances of being hired.
186
When you meet the manager, smile. Then, offer a friendly greeting of “Hello” or “Hi”.
201 Give the manager a firm handshake. Address the manager as Mr. or Ms. unless he or she asks you
220 to call him or her by a first name. This shows that you have respect for the manager’s position.
239 Also, look at the manager directly in the eyes, not down at your feet.
253
During the interview, sit up straight in the chair. It shows that you’re alert and interested.
269 Keep your hands and feet still during the interview. And, never chew gum.
282
Level 6.5
29
Understanding
1. What does the word punctual mean in this story?_______________________________________
______________________________________________________________________________
2. Why is punctuality important? _____________________________________________________
______________________________________________________________________________
3. What does the word eager mean in this story? _________________________________________
______________________________________________________________________________
4. What is the difference between a good attitude and poor (or bad) attitude? ___________________
______________________________________________________________________________
5. What are some good manners to show at an interview? __________________________________
______________________________________________________________________________
6. What should you never do at an interview? ___________________________________________
______________________________________________________________________________
7. What shows that you have respect for the person giving the interview? _____________________
______________________________________________________________________________
Writing
Option A:
Think about a past job interview you’ve had. In what ways have your attitude and manners
been the same as those you read about? In what ways have your attitudes and manners been
different?
Option B:
In your own words, write about why having a good attitude and using good manners are
important at a job interview. What would you do at an interview to show the employer you
had a good attitude and good manners?
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
30
31