Management - Internal and External Environments

I owned a business for over 10 years and with owning the business I noticed that I could create (or better yet, control) the internal environment but also that the external environment influenced my company greatly – much more so than I could control.  Everything I controlled within my business was a response in one way or another to the dynamic external environment.  As an example, I could choose to carry specific product lines, where to ship, what relationship to create, build, or discard, and whether or not I wanted to be more customer-centric.  There were many variables that I could experiment with to create more profits; however, I could not control many things.  Consumer demand, new government policies or recalls on baby items, government fees, prices offered by my competitors, new entrants into the industry, and customer issues with product shortages (supply) were all uncontrollable aspects of the external environment and all of these aspects affected the way I did business, internally.

Expanding on the issue of an organization creating its environment is relatively complex because it largely depends on the type of organization.  For instance, Weick mentioned in his article that Polaroid was able to create a situation where the stock was “less attractive to hold” and ultimately satisfied a “self-fulfilling prophecy” (Weick, 2001).   Weick stated through examples that banks, actors, and physicians can also create their environments through investor size and contribution, improvisation in theater, and type 2 errors when diagnosing patients.  Essentially when a company is creating its environment, it is creating a situation where the environment is conducive to growth and their structure is not necessarily attached to the demands of the external environment.  My argument is this:  How can a company truly believe they are creating their own environment when they are creating/controlling the environment in response to ultimate consumer or other demand?  I mean, the entire existence of the organization is for the purpose of helping others, creating profit, other otherwise dealing with other people in general.  I can understand how creation of the environment can be seen in the examples that Weick provided, but people bailing out on stock? Doctors diagnosing patients incorrectly get more business; and improvisational actors having fun?  I agree that these organizations are being more proactive than reactive to their specific environments; however the situations in these examples are not necessarily contributing to the growth of business (monetarily or otherwise).  My main concern here is do companies create the environment because they want to or because they need to (response mechanism to externalities)?  I feel that Weick’s article is very interesting and is a good read; however I feel that the examples have narrow scope and are not exactly indicative of the majority of organizations.  That is to say for instance that I hope doctors are not creating type 2 errors with the majority of their patients.  I feel that organizations evolve and adapt to changes in the external environment, but also try to control as much as possible, even if most of that creation or control is sometimes impossible and/or solely internal.  As stated in the text on page 274, “It is important to realize that while organizations can learn and adapt to their environment, they also, to varying degrees, attempt to change and control their environment” (Bowditch, Buono, & Stewart, 2007).     

Expanding on the issue of external environments influencing organizations is also complex, because, again, it largely depends on the type of organization to what degree the external environment has on the organization.  All organizations are affected by the general external environment which is discussed by Dr. Olga Chapa from the University of Houston-Victoria as “the economic, technological, sociocultural, and political trends that affect all organizations” (Uhv.edu, 2010).  In my company, I constantly had to change, or evolve, to the ever pressing demands from consumers.  I had to pay very close attention to recalls from the government, watch for new entrants into the industry, and constantly benchmarked competitor’s pricing and programs.  I could control the environment of the organization when it came to internal policies, which products to carry, and overall organizational climate. However, I could not control the external environment; instead I had to respond to it in order to survive in the industry.  For instance when customers were complaining about certain aspects of customer service, I had to change some of the corporate culture to respond to the demands.  As stated in the text, “organizations are open systems that are influenced by a multitude of environmental forces” (Bowditch, Buono, & Stewart, 2007).   I completely agree with this statement, furthermore I believe that even though organizations try to create or control their environment they also are influenced by the environment and that an open system is a better choice for most organizations today due to the dynamic nature of the environment itself.   I feel this way because of consumer demands, economic issues, political conditions, rapid change in technology, and various other dynamic external conditions need to be responded to by an organization. It is this response that ultimately shapes the strategy the business uses.   The organization needs to be sensitive to the changes and respond appropriately and quickly to those external changes in order to succeed.  According to the Encyclopedia of Business Reference for Business online, “research during the 1960s showed that traditional bureaucratic organizations generally failed to succeed in environments where technologies or markets were rapidly changing. They also failed to realize the importance of regional cultural influences in motivating workers” (Referenceforbusiness.com, 2011).  I feel that organizations simply cannot afford not to be open systems due to the current market and consumer interests / demands.  But organizations still need to implement control of their organizational environment in response to the needs and pressures of the external environment. 

Weick takes the position that organizations mainly create their environments.  “Organizations are more active in constructing the environments that impinge on them than is commonly recognized” (Weick, 2001).  Weick believes that organizations create their environments and also have varying degrees of control over these environments once they are built.  Weick also states that “as an organization increases in size it becomes more and more its own selection system and finally quite literally does impose the environment that imposes on it”.   So, essentially Weick is stating that organizations build their own environments, and then eventually have to control the other aspects of environment once it is imposed onto the organization.  “Organizations have to build their environment before they can even have the luxury of controlling them” (Weick, 2001).  This statement says it all – Weick’s view is that an organization does not automatically know the environment because it has yet to be built and once it is built then the organization can worry about controlling it.  And that the only thing that is truly known is what a person has already done or what they are thinking.  Weick is concerned with the definitions of boundaries that are defined by other people.  He sees the definitions of these boundaries as non-existent and problematic.   Weick stated that “an organization can never know what it thinks or wants until it sees what it does” (Weick, 2001).   I understood this as an organization can offer a good or service to consumers and based on the consumers, then the organization can see what it wants and what it thinks about a situation.  Organizations will have to respond, evolve, and/or adapt to the external environment, especially in the case of a bad product or service being offered.  I wonder how Weick would reconcile advocacy groups, economic recessions, and new laws that are passed which affect business as usual.  Would Weick state that these were all conditions because the organizations made them so?   I can see Weick’s point, but I do not agree with it.  For instance, if I started a company again selling any type of product retail, I would have to exam the external environment first.  The external environment has a huge impact on what I can sell in this economy.  Then as new laws are passed, I would have to adhere to those laws; I would have to constantly adjust business due to the changing external environment.  I mean, bell-bottom pants and polyester white leisure suits were cool back in the day, but would they sell now?  Making adjustments due to the external environment is the evolution of an organization.

Personal thoughts:

Weick used three examples, which were described above in answer number 1, and states that the banks, physicians, and actors influence their environment instead of the environment influencing them.  At what point does an organization cross ethical lines when attempting to influence their environment?   Also, Weick dives deep into his article discussing environments as a psychological thing (he does have a Ph.D. in organizational psychology after all).  So, I have another question:  Are many organizations really solipsistic in nature?

Cognition & Sensemaking

Karl Weick’s article provided a link between cognition and the environment.  I took away a lot from this because I absolutely adore psychology and enjoy reading theories and various articles on the subject, especially regarding cognition and reality.  I felt that the entire take away from this article was to understand how a person (or organization) can justify their thoughts, rationalize their ideas and enact these emotions through sensemaking thus creating their environment.  According to Dr. Weick, “sensemaking fills important gaps in organizational theory.” And “The seemingly transient nature of sensemaking belies its central role in the determination of human behavior, whether people are acting in formal organizations or elsewhere” (Weick, Sutcliffe, & Obstfeld, 2005).  Even though I have an opposing view on the some of Weick’s views (but I plan to read a lot more of his articles), I can understand what Dr. Weick and his colleagues were conveying –that people or organizations gather thoughts and ideas, put them in order (organize them) and enact these thoughts back to the environment in order to make their environments more logical overall.  And this is why I took this part out of the reading and enjoyed it the most – order out of chaos.  It seems it is a human need to create, control, project their feelings, and try to make sense of their environment, always, even if there really is no connection. When people are faced with ambiguity and uncertainty “people search for meaning” and “settle for plausibility then move on” (Weick, Sutcliffe, & Obstfeld, 2005). Connecting abstract thoughts to concrete actions, creating an environment, and looking back in retrospect is the cornerstone of sensemaking.  For instance, when I ran my business I would often think, plan, do, and look back at the decisions I made and altered what I needed to in order to control my environment.  However, I learned very fast that in my industry if my decisions did not work out as planned that it was mainly due to outside influences such as demand and supply; conversely, if my internal plans did work, it was because they were in harmony with the external environment.  If the demand did not run high or low and remained stable, then my actions would have been to do nothing; it was because of the flux in demand and supply that started a reaction in my business to alter prices and to order more or less goods in a period.  The decisions I did make created the environment that produced more profit. So perhaps Weick is correct, perhaps I made the decisions, thereby creating the environment and found myself inside my own creation.

References:

Bowditch, J. L., Buono, A. F., & Stewart, M. M. (2008). Organization-Environment Relations.A primer on organizational behavior (7th ed., pp. 252, 274). Hoboken, NJ: Wiley.

Weick, K.E. (2001). In Weick, K.E. (ed.), Making Sense of the Organization:179-206, Malden, MA: Blackwell Publishers.

Referenceforbusiness.com. (2012). Organization Theory - Open-systems theory, Basic organizational characteristics, Organizational theory in the 1980s and 1990s. Reference For Business - Encyclopedia of Small Business, Business Biographies, Business Plans, and Encyclopedia of American Industries. Retrieved August 28, 2012, from http://www.referenceforbusiness.com/small/Op-Qu/Organization-Theory.html.

Uhv.com. (2010). Chapter 3 Summary. University of Houston - Victoria: Academic Web. Retrieved August 29, 2012, from http://www2.uhv.edu/chapao/MGT3311/outlines/chp3.htm 

Weick, K., Sutcliffe, K., & Obstfeld, D. (2005). Organizing and the process of sensemaking. (4 ed., Vol. 16, pp. 409-421). Organization Science

Management vs Leadership

I feel that  both management and leadership are different in a literal sense and by definition although they can both exist simultaneously.  As an example, a manager is appointed or hired to a position but could also be a leader (that is to say that leadership is just one facet of management) and, conversely, a leader may be a leader with or without holding the title of manager.  Also, I feel that both terms are in the title of this class because leading is becoming more and more popular in management.  According to David K. Williams, a contributing writer for Forbes magazine online, "What if a company simply dispensed with traditional managers? What if every employee had the opportunity and potential to lead? What if everyone was given the freedom to consider “Am I doing the right things?” instead of just “Am I doing things ‘right’?”".  This is important because companies of the future may consider dispensing formal management and focus more on direct leadership due to the distinction leadership holds for employees (Williams, 2012).  Perhaps this idea from David K. Williams has a lot of merit and is directly linked to the Hypercaninophobia complex (aka top-dog fear) which is “fear caused in superiors when an inferior demonstrates strong leadership potential” (Peter & Hull, 1969).   It does make logical sense that if a manager is also a leader, then the subordinates will follow the manager instead of a leader born from a group. 

There is a fundamental difference between the two terms; however many people use the terms interchangeably both correctly and well as incorrectly.  The definitions are not confusing but the practical applications can be and this is why the terms are used interchangeably - sometimes justified, and sometimes not so much.  The term management is defined by Merriam-Webster's Collegiate Dictionary as "the conducting or supervising of something (such as a business)", and the term leadership is defined by the same source as the "capacity to lead".  So does this mean that anyone who is a manager is automatically also a leader or has the capacity to lead?  The answer is no, and this is because not every manager has this capacity, and not every leader has the title of manager.  Furthermore not every manager wants the distinction of being a leader.  The only time a person is justified in using the terms interchangeably is when the definition of the term(s) fit(s) the situation correctly.  As an example I would like to point out that a leader such as Dr. Martin Luther King, Jr. did not hold a management position; and I have personally had managers in fast food environments that just controlled situations, but they never gave any type of advice or other direction to employees other than what was mandated by the franchise.  Managers are also not always required by an organization to be a leader due to the structure of the organization, so leadership can also be considered an asset that a manager holds instead of a necessity.  Therefore, the terms can only be used interchangeably when a person holds the title of manager and also has the capacity as well as the objective to lead.   Management and (or) leadership is often contingent upon the structure and overall purpose of the organization.   

My Philosophy on Management and Leadership: 

In management, managers do things according to policy, company rules, and generally by the book.  Managers form teams, control situations, organize meetings, staff employees, and plan various activities that are all aimed at reaching the overall goal of the company.   Managers are viewed by employees as being authoritative - a person that the employees must directly obey and carefully listen to whether or not they actually want to.   A manager is hired to a specific position and therefore a manager is more of a title rather than a label.   I feel that managers think critically about situations and try to stay within the parameters of company guidelines.   To me, managing a situation means getting into chaos and straightening up a mess in order to meet a goal or set of goals and a manager is a ruling authority whereas a leader is someone to follow willingly due to their views, characteristics, enthusiasm, and passion.

In leadership, leaders think more radically than managers; they challenge norms, unite people to follow, use emotions to excite followers, and set examples through their leadership.   Leaders are normally not bound entirely by organizational rules or structure and understand when, as well as how, to challenge the status quo.   Leaders may not have the expertise of a company or organization like that of managers, but are able to gain more employee loyalty.  Loyalty, I feel, is a key difference between a leader and a manager.  People in general tend to feel more loyal to a leader than to a manager and I feel this is because they are not ordered to follow a leader; people actually want to follow a leader due to the leader’s message, fervor, and direction.  

Leaders are able to establish loyalty through trust building and by creating enthusiasm in their followers.    My favorite example of a great leader is Queen Elizabeth I – she was not called the “manager of England”, and I believe this is a good way to show the difference between the two terms (perspective).    To me, leading is setting an example by actions, through emotions, and creating trust and loyalty among followers.  If I want to teach my children about science, I show them how fun science can be and tell them stories of how science has changed my life and how it is beneficial to them; if I want to lead a group in class, I show the members that I have the capacity to contribute to the group and that their ideas and opinions are extremely important to the success of the group; if I want to lead my employees I take action, treat them with respect, get to know them on a personal level, trust them as I want to be trusted, and lead by example.  As a note, in all of these situations, proper and well-timed feedback is always very important as a leader and a manager. 

There certainly is a distinction between the terms management and leadership; both terms can apply to a person if the standards mentioned above for both terms are present.

Younger Years - Noticing the Differences:

As a teenager I worked at McDonalds for 2 years.  During this time I was strictly managed and not led.  I knew what I had to do, my goals for the day, and how to carry out these goals.  My managers rarely spoke to me unless they had to give e some type of directions or orders for work.  Later, I decided to open my own business and through much trial and error I learned that managing people in this same fashion under a completely different business structure was simply not going to work.   I was only doing what I knew at the time, and was managing people, not leading a group.  I learned promptly that different people respond to different incentives in very different ways.  Being managed before at McDonalds taught me that things needed to be done in order to be profitable but it did not teach me that leading people motivates them to work harder and to be loyal to the company.  This is probably why McDonalds has an incredibly high turnover rate – as there is not much loyalty there due to the management style.   For my business I needed people who had general and specific knowledge, who enjoyed coming into work, and who were loyal to my company.  It was because of the uneager response of my 15 employees that I knew I would have to be both a manager as well as a leader.  I decided I needed lessons on leadership and did not have time to go back to college to learn these lessons, yet.   So I purchased books upon books just to learn leadership ability.  Books are great, but nothing teaches leadership like that of a true leader.   I looked in various places, sought out mentors, and the evolution of my thoughts on leadership became more and more of what not to do as a leader than what to do.  But that is also good, for knowing ‘what not to do’ relinquishes the possibility of errors when leading in the future. 

My thoughts of leadership at this point were focused on motivating other people.  I needed my employees to want to come to work and I wanted to see smiles.   My thoughts of leadership were quiet antiquated too; for instance during this time I truly believed that people were either born leaders or born followers and that they could never change their status.  After more trial and error and going at this leadership all wrong, I found out one day that leadership truly comes not through words but through actions.  I could talk all day to my employees but it was about as well received as a preacher spilling out words on Sunday to kids who simply thought they were going to church for fun due to parental lies.   It was the day when my company received a huge order from a very high-class institution.  The order was 200 crib sets packaged and delivered within 24 hours.  We were short handed because seven employees decided to leave when we got the huge order in.  I told my other employees thank you for staying, and I immediately began to work.  Without much instruction from me, my other employees also immediately began to work.  But then a very interesting thing happened – they were laughing, having fun, and one of them said “we can get this done in no time” and the other employees agreed.  It was then that I realized only when there was a challenging goal and I rolled up my sleeves to join them, that they were the most eager.   I was no longer just a manager preaching orders from my soapbox, but rather I was leading them by my actions.  When I took action with a positive attitude, there was a clear domino effect in the employees.  We got the order finished with 4 hours to spare, and we all went out to celebrate on my dime.  After that day, things went very well in the office; my employees started asking my advice with everything from work to personal life situations.  The seven employees who showed no loyalty were fired, and the other employees were given a raise due to the new availability of funds from the firings.   My employees trusted me and were loyal to me based on my actions.  This was a very important milestone for me.

More lessons came throughout the years, but my business closed in 2009 due to economic hardship.  I decided then to go back to school and I have learned so very much from Southeast Missouri State University regarding leadership and management – and surprisingly it has been mostly from the way the classes are taught, what the professor(s) expect from students, how well professors communicate, and then the actual material of the classes in this order.   In one class, for instance, the professor laid out the syllabus and wrote an email which said “you can do the assignments as you wish.  The due dates are posted.”  I emailed the professor 4 times during the 16-week course, only once was I responded to with “that information is in the syllabus.”   This professor certainly managed the course well through a very organized syllabus, but there was no leadership, and quite frankly I did not even want to take the course anymore because of the lack of enthusiasm I felt for it.  If the professor wasn’t excited about teaching it, why should I be excited to learn it?  Conversely, the class I took on leadership through SEMO by Dr. Erin Fluegge was amazing.  She was such an active part in that class, she made the class a lot of fun, and I got the feeling that she was very happy to teach her students.  She managed and led her class very well – all emails were immediately responded to and in such a positive way.  These differences between classes show only a small picture of management and leadership, or the lack thereof.  Outside of the classroom these principles are the same and I have learned that some people prefer to just manage and show no passion, but others are full of passion and have the capacity to lead.   My perspective on both leadership and management has evolved greatly throughout the years.  This evolution has taken place mainly due to trial and error, through formal studies, and through not-so-formal studies in what not to do as a leader.  I am excited and happy to say that my perspective still has room to grow, and continually does so through more education on leadership and management. 

References:

Merriam-Webster's collegiate dictionary (10. ed.). (1999). Springfield, Mass.: Merriam-Webster.

Peter, L. J., & Hull, R. (1969). Followers & Leaders. The Peter Principle, (p. 171). New York: W. Morrow.

Williams, D. K. (2012, July 5). No More Managers. Everyone Leads - Forbes. Information for the World's Business Leaders - Forbes.com. Retrieved August 22, 2012, from http://www.forbes.com/sites/davidkwilliams/2012/07/05/no-more-managers-everyone-leads/

The Consumer Buying Process - Understanding the Consumer

The Consumer Buying Process

            Consumers today are switching from the old economy (standardization, replication, hierarchy, scale, and efficiency) to the new economy (differentiation, personalization, speed, customization, and networks) and an overall shift away from quantity of transactions to quality of relationships.  Companies are switching to meet consumer demands and, if the companies wish to stay successful, are catering to the new consumer of today.  Due to the vast amount of information that is readily available today, consumers are empowered which means that the buyer/seller information connection is much more symmetrical instead of asymmetrical like in the past.  Consumers have more information and therefore have more buying power. A consumer can spend a second thinking about a purchase or can spend days, months, or even years weighing cost and benefits. The amount of consumer involvement largely depends on the amount of money that is to be spent on a purchase (i.e. larger purchases require a consumer to contemplate more).  The consumer buying process includes five distinct stages that a buyer goes through when purchasing services or goods.  These stages are (in order of the buying process, 1 being the first stage): need recognition, the information search, the evaluation of alternatives, the purchase decision, and the post purchase evaluation.

Need Recognition

            In the first stage, need recognition, the buyer realizes that they have an unmet internal (thirst, hunger) need or an unmet external (talking long distance with family) need.  Time utility with need recognition is of extreme importance because today people want what they want as soon as they can get it. Marketers can create this need in customers by offering to consumers, through advertisements, an idea that they absolutely need a particular product.  A good example of this first stage of need recognition would be to advertise restaurant commercials around dinner time and point out that customers need to eat and the product is already hot and ready. Another good example is the constant late-night commercials regarding AndroGel, commenting on how men may be lacking in various (especially sexual) areas in their lives without the product.  And yet another good example through marketing is how AT&T makes it abundantly clear in commercial advertising that people really need to communicate with others, to get information as fast as possible (need for speed in this nanosecond culture), and that people need to tell other people what they are doing as it happens such as seen with iPhone applications for Facebook.  A commercial from AT&T here: http://www.youtube.com/watch?v=8s9_pi9vQbs shows how the need for speed with information is a necessity for single women.  This commercial directly caters to a specific segmented market and to the new economy’s need for speed and information (ShareATT, 2012).  Convincing a consumer that they need a product because they have unmet needs is easier when they are needs regarding thirst or hunger; however marketing truly shines when marketers are able to convince consumers that they need something they never knew they needed.  Such is the case with luxury cars, for example.  A Geo Metro will get a person from point A to point B, but people want the luxury of an Audi.  This is because the Audi also gets a person from point A to point B though it does so in style and creates a need from a want due to the add-ons (such as prestige) that the Audi has to offer.  In the buying process a need may be a want in disguise or an internal/physical need, regardless of the type of need, it is the marketer’s job to close the gap between current situation and ideal situation for consumers, and this is done by first understanding consumer interests. 

            Some marketing implications come in with this first stage because consumer interests are fickle, meaning they change from day to day.  Technology advances, new products hit the shelf every day, and consumers become more aware as well as more demanding.  Due to globalization, hyper-competition, and the nanosecond culture, marketers must constantly keep updated with consumer wants and needs.  And it is imperative that marketers today get consumers involved and to “convince the buyer that the purchase is significant” (Cherry, 2013).  

Information Search

            The second stage is the information search stage wherein a consumer has some interest in a product and wants more information.  The consumer can passively seek information which means paying more attention to advertisements they may see or hear in passing, or they may use information resources to gather said information in an active search.  Place utility is very important here because the information (as well as the product itself) needs to be right in front of the seeking consumer for easy access.  Not many consumers want to wear themselves out trying to find out information on a product but they do want as much information as possible about a product (especially a large purchase) in today’s fast-paced society. Information can come from many sources including family, co-workers, word of mouth as internal sources or from websites, magazines, and television commercials as external sources.  According to Ferrell and Hartline (2011), consumers tend to trust external sources more than internal sources (p. 157). However, I agree with Dr. John Cherry in his Minilecture 06 when he states that “advertising is dead last in credibility, and it's no surprise to anyone” (2013). Consumers want good, credible information; they do not want information overload of useless statistics or a forum filled with thousands of consumer opinions.  Microsoft is a good example of a company who cleverly capitalizes on the information search in the consumer buying process.  Microsoft’s Bing search engine commercials direct consumers to the engine because it advertises that it provides good, relevant information during searches and has the slogan, “What has search overload done to us?  Find the cure at Bing.com” with a side slogan of “Bing & Decide” (ViadTv, 2009).  The information search can be quite lengthy for some purchases, or can take a very short time for smaller purchases. This stage is a pivotal point for marketers because if consumers cannot find information on a product they want or cannot find the right information for which they are searching then they will simply walk away. Therefore the more relevant information companies have available to a consumer about their product is critical in the consumer buying process. 

            The main marketing issue for this stage would be that a lot of information takes time, and many consumers today do not take the time to thoroughly search or read for every single purchase (even for some of the larger purchases).  Simply stated, today people are in a hurry so marketers have to put as much information as possible out there to consumers in just the right market segment in order to inform consumers enough to purchase a product.

Evaluation of Alternatives

            Once the consumer recognizes the need, has all the information they wish about wanting a specific item, then they have to evaluate the alternatives.  This stage is actually another type of information stage because the consumer gathers information regarding alternatives and weighs the decision mainly based on cost/benefit ratios.  For instance, a new car purchase may start with the old car breaking down, hence the need.  Then an information search regarding cars, what is considered the best for the price, and other options the consumer may want to know about their purchase.  Then once information is gathered, the consumer has other choices on where to purchase and which brand exactly, since there are many car companies today with various offerings from which a consumer can choose to purchase.  Eventually the consumer picks and chooses elements they prefer over the other available alternatives and the few items left in the consumer’s decision pool is called an evoked set.  Sellers really want to be in this evoked set and have tried (and are still trying) everything to understand why consumers have an evoked set, using techniques that span from demographic studies to psychological analysis of consumer behavior.  If sellers wish to get into or stay into buyer’s evoked sets, they must maintain product quality, defend against competition, keep items in stock, use reminder advertising, use specials and couponing, and use customer loyalty programs.  If sellers are not in an evoked set they must use product sampling techniques, introduce new products into the market, use comparison to competitor advertising, have a lot of publicity regarding their products, and use promotional advertising aggressively (Cherry, 2013).   

            The main marketing implication in this stage of the consumer buying process is a lack of differentiation and many options since that is what consumers are wanting in today’s economy.  For instance, if a company has a unique product, there are not many substitutes (if any) for that product and therefore the choices of the consumer are limited.  With limited choices in substitutions, the product the customer needs will be purchased from the company that sells it, but today marketing is a different story.  Years ago, say in the 1930’s, there were not too many brands of toothpaste as an example.  A consumer in the 1930’s purchased this need commodity because they basically had no other choice.  As the years have passed, more and more companies offer homogenous product lines, thereby increasing consumer choices.  And today, with information being readily available for consumers as well as many more merchants in the marketplace, they have many more options than they did in the past.  A good way to work around many options consumers have and for a company’s products to stay in the consumer’s evoked set today is to differentiate, personalize and customize the products as much as possible, also to make certain that information about the product’s offerings is readily available.

Purchase Decision

            The purchase decision is the next stage in the consumer buying process and a purchase decision is not the same thing as making an actual purchase (Ferrell & Hartline, 2011).  It is critical that during this time the consumer feels that the purchase is needed, significant, and has an easy way to purchase the goods or services (i.e. one-click purchase option online and sellers accepting a spectrum of payment methods).  Product availability and possession utility is important during this stage of the consumer buying process because a buyer wants convenience such as not having to travel 100 miles to get a specific good and a buyer wants an easy way to pay for the item such as lay-away or financing so they can possess the product.  A good example here is that I do not have a pool table simply because there is no easy way for me to get one in this area.  I can purchase one online but the shipping is outrageous and I am scared that the slate table may be broken during shipment.  The closest store that offers the type of pool table I desire is 112 miles away near St Louis Missouri and I have no vehicle that can transport the item safely to my home.  Marketers and sellers a like need to ensure that the products are available to consumers and that there is also a convenient way to purchase services or goods.

Postpurchase Evaluation

            This stage is where consumers have purchased an item and they are thinking about whether or not the purchase was a good one or if they should have thought harder about their options.  Marketers want the buyers to feel that the purchase was a good one; after all if the consumer begins to feel bad about the purchase or think they should have chosen another alternative, this loses customers for sellers and marketers.   This Postpurchase stage is a link between the consumer buying process and creating, building, and maintaining customer relationships (Ferrell & Hartline, 2011, p. 159).   Also according to Ferrell and Hartline, during this process the consumer will either feel delighted, satisfied, dissatisfied, or have Postpurchase doubt (cognitive dissonance).  Naturally, marketers want customers to feel delighted where they feel that the product or service exceeds their expectations or they are at least satisfied with their purchase (the purchase met their expectations). Dissatisfaction happens when the products fail to meet buyer expectations and cognitive dissonance happens when the consumer is unsure about the overall performance of the product in relationship to his/her needs.  In order to avoid dissatisfaction or cognitive dissonance, the marketer / seller should find information and give information to the consumer which supports their choice on the purchase.  For instance, the car company here in town where I purchased my Hummer (H3) calls me every time the anniversary of the purchase was made (since 2009) and sends my husband and me birthday cards on our birthdays.   Each card says “thank you” and with each call our car salesman also tells us “thank you for your past business and if you need anything else, you know who your friends are!” Essentially, marketers need to reinforce to the customer that their purchase was really needed, significant, and wise to make.  If the marketer / seller fail to do this, then the customer will more than likely be lost to other competitors. 

           

References

Cherry, J. (2013, January 14). Chapter 01 Minilecture - Marketing in Today's Economy. BA 651   - Strategic Marketing. 

Cherry, J. (2013, January 28). Chapter 02 Minilecture – Strategic Marketing Planning. BA 651 -    Strategic Marketing. 

Cherry, J. (2013, February 25).  Chapter 06 Minilecture – Customers, Segmentation, and Target    Marketing. BA 651 -Strategic Marketing. 

Ferrell, O. C., & Hartline, M. D. (2011). Buyer Behavior in Consumer Markets. Marketing            strategy (5th ed., pp. 153-189). Mason, OH: South-Western Cengage Learning.

ShareATT. (2012, March 13). AT&T TV Commercial - "Speed Dating" iPhone 4S 3x Faster - YouTube. YouTube. Retrieved March 16, 2013, from http://www.youtube.com/watch?v=8s9_pi9vQbs

ViadTv. (2009, June 5). Microsoft Bing #2 Commerical – (Cure for Search Overload Syndrome). Youtube. Retrieved March 16, 2013 from http://www.youtube.com/watch?v=i1AwFY6MuwE

Understanding Globalization for Managers

What is Globalization?

            Globalization refers to the alliance of the global economic order amalgamating through the reduction of international trade barriers such as import and export fees, trade embargoes, quotas and other tariffs.  The overall goal of globalization is to simply increase the wealth of nations on a global scale.  The means in which this can be accomplished is through policies, specialization, competition, and international relations.  Globalization is often described as the way regions, nations, people, societies, cultures, and economies have been connected through trade, communications, direct investments, migration, military presence, technology, and transportation.  Globalization can also mean the integration of popular culture (i.e. movies, art, and literature), sociocultural events, languages, and even ideas.  Once one culture, which is considered “advanced”, shares knowledge with another less advanced culture, the less advanced culture is then said to be globalized.  

            The term globalization is generally used to explain a flow of goods, ideas, and culture between nations; it does have a series of advantages as well as disadvantages which must be considered when sharing goods, services, and even information with other nations.  There are many aspects of globalization that must be taken into account, such as: industrial, political, financial, language, economic, informational, ecological, technical, ecological (regarding a nation’s resources), and religious.  Globalization is an extremely important topic to understand in today’s society and this paper is a breakdown of the most important economic aspects and effects regarding the issues and how they affect the United States.

The Globalization Effect

            In the United States of America, globalization is not a new issue.  We, as Americans, are constantly changing the face of our culture.  It is certain that we hold many traditions, morals, and values as a people; however, Americans naturally love change, shopping, communications, as well as technology.  Many businesses, as well as the employees within a business, have had to alter their ways of doing business because of globalization.  But how does globalization affect our nation in other economic ways, on a grand scale?  How do businesses, as well as managers, have to change due to globalization in the United States in order to stay in business?  Are all businesses affected by globalization?  Which facets of business have to change due to globalization? And, what has happened to a manager’s responsibility within a business since globalization? What are the effects of globalization on competition within and outside of the United States?

            Globalization has been a part of the United States since the birth of our nation. (Boudousquie & Leavell, 2007)  The United States traded tea, cotton, tobacco, and silver with England, traded fur with France, and traded various other commodities such as rum, slaves, sugar, and spices with the Dutch, Spanish, and Portuguese just to name a few.  Since colonial times, globalization in the United States has grown expansively throughout the nation and has affected the United States economy in many ways – which includes the way big and small businesses operate.  Globalization started rather small with businesses trading in colonial times, then later on when banks and investors began exchanging money across borders.  (Boudousquie & Leavell, 2007).  Today, American citizens are able to purchase knickknacks and even Japanese stock online from the comfort of their American home.  So, on a grand scale, globalization affects the entire economy, namely in the areas of technology, competition, political policy, culture, and even various other social issues such as immigration and online trade.  

            Competition is a very important aspect of globalization – it is competition which is the precursor to demanding that businesses and managers within businesses adapt their behavior to survive in the face of globalization.  Because globalization enables outsourcing and lower prices on domestic goods through importing, businesses in the United States are facing more financial issues.  For instance, some companies have closed factories in the United States because they have moved to foreign countries where they are able to cut labor costs. It is hard for United States’ businesses to compete with Chinese household commodities pricing when importing.  The main idea here is that importing is cheaper than making the goods in the United States.  When companies outsource for cheap labor, well, this exacerbates the current United States unemployment issues as well as the recession. So what must managers do in the face of globalization?  Should they compete with lower prices thus enhancing a recession? Or should they simply maintain their prices and risk losing their investment in their business?  Or should they move operations overseas (outsource) in order to keep costs low and still stay in business?  This is a true dilemma with companies and there is no real answer to this question.  However, as a business person, I would more than likely move operations overseas until things got better at home unless I could get by with lower prices for an indefinite period of time.  But then again, how will things get better at home with businesses doing this?  It truly is a dilemma and one that is an important question in the United States’ current state of affairs.

            Not all businesses are affected by globalization – yet.  I say yet because as time marches on, businesses who want to stay in business will have to compete with those businesses that are adapting and embracing technology as well as international relations.  As more and more businesses become integrated into the realm of globalization, managers and businesses will have to adapt to this change.  They can either adapt or go out of business; these are the rules of a competitive marketplace.  If companies are not able to compete with other companies, then they will eventually go out of business.  For instance, nowadays business are able to compete globally with the internet.  Many small businesses and some large businesses still do not have a website for their business.  As emerging nations gain broadband access, the market is growing, and fast.  These nations who are experiencing new policies (such as allowing internet sales globally and the use of at-home broadband access) are jumping at entrepreneurial opportunities and thus expanding the global market of trade.  (Renski, 2009).      

         Looking at new nations joining the global market, competitiveness cutting into profits, and overall changes around every corner, how has a manager’s responsibility changed due to globalization? I feel that looking through just the last 50 years, it is very clear to note that a manager’s responsibilities are becoming more diverse and decisions are becoming more and more difficult to make with any amount of certainty.  Managers need to keep one thing in mind, and this is that the global market is a very dynamic place.  For instance, one day steel may be worth $500.00 per pound and the next day it could be worth as little as $50.00 per pound.  Because demand and supply varies greatly just within one nation, it would be wise of the manager to keep in mind that globally this principle will be larger.  It is important to realize that as time goes on, this change will only be greater as more and more nations / people / businesses enter the market.  These “patterns of evolution are dynamic; terrains often undergo significant changes as globalization proceeds.” (Collis & Carr, 2011). 

Advantages and Disadvantages of Globalization

            There is a great debate currently on the advantages and disadvantages of globalization.  This debate is largely political and economic in nature and both sides have very good arguments and points to be made.  However, this paper is not designed to take sides on the issue, but rather to portray an objective point of view which highlights the important points of both the advantages and disadvantages of globalization.

            According to G. L. Breedon, of darkseptemberrain.com, some of the advantages of globalization are:  increased trade between nations, increased liquidity of capital which allows investors to invest in developing nations, businesses / firms / corporations have greater flexibility to operate or trade across borders, globalized mass media integrates world events, the sharing of information is increased, there is a great ease and speed of transporting goods, with globalization there is the chance of democratic ideals that can be spread to developing as well as other non-democratic developed nations, reduction of the likelihood of war breaking out between developed nations (because if they are trading partners, they will have more incentive to remain allies), and increase in policies that can help with environmental protection.

            Some of the disadvantages are: outsourcing – when developed nations send skilled workers to undeveloped countries due to the cut in labor costs and when companies hire other people in different countries who will work for much less than their home country; increased likelihood that if there is a problem with one nation that many nations could be affected (i.e. war, or natural disasters); threat of cultural limitations posed by the media favoring corporation interests; a chance that a nation may create a threat of violence when reacting to the transition of globalization in an attempt to preserve their heritage (culture clash); greater risks of disease being transported across borders;  transfer of capitalism or seeing prosperity in only materialistic terms; international organizations such as the World Trade Organization could infringe on national sovereignty; and decreases in the integrity of the environment of the developing nations as corporations move in and take advantage of lax environmental regulations.

Neutralizing the Disadvantages of Globalization

            As the previous section shows, there are just as many disadvantages to globalization as there are advantages.  How could we, as a global entity, neutralize some of the disadvantages in order to make globalization more of a smooth process for developing as well as developed nations?  For globalization to work well in the future, it will eventually be mandatory to make adjustments in order to fix some of the issues that are already inhibiting the advancement of people. Neutralizing the disadvantages of globalization would help the overall cause and effect of globalization in many ways; it would even perhaps help new nations embrace globalization in the future.  I agree with the statement by Mike Gordon, “"Made in China" is not necessarily a bad thing”. (Gordon, 2007).  I do feel that it is important to embrace developing nations in order for trade, technology, and information sharing to advance in every society simply because the advantages listed above create jobs and can help both developed as well as developing nations if the disadvantages were taken care of properly.  But the overall feel of globalization in America is generally bad.  This is that the people feel anxious, nervous, discontent, and anger regarding globalization due to the disadvantages.  A Professor in the Practice of International Trade says this of the overall American attitude: “globalization is highlighting two alternative visions for America: one vision is of a state with a cohesive set of purposes and interests and a commitment to the economic security of the middle class. A second (newer) vision sees the state as neither promising nor providing a larger sense of purpose.” (Janow, 2003).  This section contains some suggestions to negate a few of the aforementioned disadvantages of globalization. 

            First, outsourcing – anytime I hear about globalization critics have claimed that it is removing United States jobs to foreign countries.  This actually translates into developed nations hiring cheaper labor in other countries to cut costs.  Outsourcing sometimes also includes sending skilled workers to undeveloped nations to train these new, lower paid employees.  So what could we, as a nation, do in order to keep jobs here in the United States?  I feel that perhaps a good idea for this would simply be to not cut the costs and offer prices here that reflect United States wage demand.  I understand this is a hard concept, especially for companies who save millions per year in profit, not to mention that outsourcing creates jobs in other countries.  Therefore, why not simply expand without closing businesses in the United States?  Job loss due to outsourcing is a serious problem of globalization; according to Robert Morley of thetrumpet.com, “In reality, outsourcing makes Americans poorer over time, because America’s wealth and technology slowly migrate to other nations.” (Morley, 2011).   Obviously outsourcing is one of the major disadvantages of globalization that needs attention before it spirals out of control for developed nations.   I do not feel, however, that this is necessarily the case.  I feel that American wealth is simply branching out and the United States should be able to compete in international markets without the nation crumbling to the ground.

            Other disadvantages such as environmental control (air, soil, and water pollution) issues that corporations bring with them to the undeveloped nations, the spread of communicable diseases via the trade of goods, and threats upon national sovereignty can all be very easily neutralized by the addition of new policies and laws to create new margins of trade.  My suggestion would be to eventually create global standards for health and environment procedures in order to create a common understanding of the rules of trade.  For instance, if all countries were no longer allowed to use lead paint, if all countries had to make sure their food processing equipment was cleaned properly, or if all countries had to abide by cape and trade laws, then perhaps there would be much less disease and environmental issues on a global scale.  The culture clash between corporations and the people of the underdeveloped country could easily be averted by simply learning the culture and becoming less ethnocentric and more open minded to new customs, languages, traditions, mores, values, and norms of the particular country.  I understand this could create more costs for the companies who are outsourcing to teach/train their managers on the different cultures, and if policies are in place to protect people and the environment then possibly it could even out the trade playing field a little in terms of cost.  I have learned something new when doing research for this paper and that is globalization is occurring on very uneven terrain.  For instance, developed nations choose to outsource mainly to cut costs by hiring cheap labor, and in some cases the corporations are able to surpass strict laws in the United States by going to another nation with lax health / environmental policies.  And simply because the laws are different in each nation, the playing field is uneven.  There are many trade laws in effect for certain nations, some nations simply do not comply, some nations are not required to comply  I truly believe that if laws were as globalized as trade, that the negative effects of globalization would not be nearly as bad.      

Conclusion

            Globalization is the integration of knowledge, goods, and services with an overall goal to promote wealth and prosperity to every nation it touches.  Globalization encompasses every facet of an economy that is currently, or will be, partaking in trade with a different nation.  Globalization is not a new concept to the United States as we traded in early colonial times with England, Portugal and various other nations for goods; therefore the overall principle is the same, but many details have changed throughout the years since that time.  Because of globalization, managers, corporations, employees, and corporations themselves have had to evolve in numerous ways just to keep up with domestic as well as international competition.  Today, the average consumer is able to purchase spices and herbs from India via the internet instead of going to a local store.  Globalization has created much new work for managers and corporations as well as creating much ease for the average consumer. There are many advantages and disadvantages to globalization; within the past few decades especially, there has been a very heated debate regarding globalization.  This debate is largely due to technological advances and globalization spreading faster than are the policies which are able to control trade.  The major advantage is that globalization can help emerging economies / nations but the downside is that it could also hurt an already developed country if proper precautions are not taken.  I feel that with the correct balance of policy and knowledge that most, if not all, of the disadvantages of globalization could be neutralized in the future.

References

Boudousquie, R., Maniam, B., & Leavell, H.. (2007). Globalization: Its Impact on the United       States             Economy. The Business Review, Cambridge, 9(1), 94-100.  Retrieved October      30, 2011, from ABI/INFORM Global. (Document ID: 1416813331).

Breedon, G. L. (n.d.). Advantages and Disadvantages of Globalization. Home. Retrieved             November 1, 2011, from http://www.darkseptemberrain.com/ideas/advantages.htm

Collis, D., & Carr, C.. (2011). Should You Have a Global Strategy? MIT Sloan Management        Review, 53(1), 21-24.  Retrieved November 2, 2011, from ABI/INFORM Global.       (Document ID: 2478300251).

Gordon, Mike.  (2007, July). The world is flattening at an ever-hastening pace. Aftermarket             Business, 117(7), 62.  Retrieved November 4, 2011, from ABI/INFORM Trade &             Industry. (Document ID: 1310806121).

Janow, Merit E..  (2003). The Rules of the Global Game: A New Look at U.S. International         Policymaking / The Politics of Globalization in the United States. Journal of Policy       Analysis and Management, 22(2), 322-324.  Retrieved November 4, 2011, from       ABI/INFORM Global. (Document ID: 310004431).

Morley, R. (2011, January 18). TheTrumpet.com by the Philadelphia Church of God. The Death   of American Manufacturing. Retrieved November 4, 2011, from http://www.thetrumpet.com/?page=article&id=1955

Renski, H.. (2009). New Firm Entry, Survival, and Growth in the United States: A Comparison   of Urban, Suburban, and Rural Areas. American Planning Association. Journal of the             American Planning Association, 75(1), 60-77.  Retrieved November 2, 2011, from        ABI/INFORM Global. (Document ID: 1843935431).