Global Challenges for Business , Management and Leadership

Introduction

The organization is defined as a union of people in which their functions are coordinated for the achievement of organizational goals through applying division of labour. The organization makes use of the individual strengths and capabilities in an optimum manner through forming part of groups.

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Open System Management theory

The open system management model is based on the concept that organizations have dynamic and continuous interaction with the environment in which it functioning. Organizations acquire the resources; utilize the labor for carrying out the processing and rendering the output to the environment. Thus external environmental factors influence organizational operations. Thus organizations have to consider these factors while formulating strategies and policies. Management is required to interact with the environmental forces. (Montana & Charnov 2008, p.64)

The open system theory is a widely accepted organization management model. This theory states that organizations need to integrate the environmental factors related to the business in their business operations. In reaction to the environmental changes organizations have to make changes in their business policies and strategies.

Traditional theories on organization management are based on closed systems. But it failed to include the environmental influence on organizational efficiency. Open system theory integrates the influence of environmental factors on organizational efficiency and success. Organizations have unique operational environments and thus the opportunities and threats arising from such environments influence the efficiency of the business. These factors may be specific or general.

In the specific environment, suppliers, distributors, government, and competitors of the business are involved. In the general environment, there are four factors such as cultural values, economic conditions, legal and political environment, and education quality. Thus, business organizations have to consider these factors while formulating their business strategies. The open systems theory also assumed that large organizations consist of multiple subsystems. (Organization theory 2007).

Corporate social responsibility can be defined as “a voluntary approach that a business enterprise takes to meet or exceed stakeholder expectations by integrating social, ethical, and environmental concerns with the usual measures of revenue, profit and legal obligations.” (Business definition for: corporate social responsibility 2009).

Corporations are institutional members of society. Being citizens, corporations have civic duties and responsibilities. Like individuals, corporations should also try to improve the welfare of co-inhabitants and leave behind a better world for the generations to come. A business firm has corporate responsibility towards the stockholders, customers, employees, suppliers, creditors and the community.

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A company should put ethics and social responsibility ahead of profit-making objectives. Without meeting the social obligations properly a business firm cannot operate successfully in society.

Climate change: In the business context climate change is the changes in the external environment of the business. The potential and actual changes in the environment as a result of the economic factors and actions of competitors should influence the business organizations. “The presence of both direct and indirect signals of climate change is required for the emergence and building up of belief in climate change in a business organization.” (Bleda & Shackley 2005).

The term management can be interpreted in many ways. It is better to analyze various definitions to attain a better insight into management. The management theory of Boddy is a well-known theory in the world of management. It explains all the aspects of management very clearly. Harold Koontz and Heinz Weihrich define management as the process of creating and sustaining a better environment supportive for individuals and groups to work together for the achievement of selected organizational objectives.

Dalton E McFarland defines management as a process in which the managers develop, direct, motivate and control the human resource in the organization in a systematic approach. According to Mary Parker Follet, management is focused on the achievement of organizational goals through the coordination of human resources. Through these definitions, we can understand that good management helps to accomplish a goal by getting others to do the necessary tasks.

The Competing Values Framework is developed by Robert Quinn and Rohrbaugh through analysis of foremost indicators of successful organizations. Quinn and Rohrbaugh identified that there exist two major dimensions from the ample pool of effective indicators. These two dimensions involve organizational focus i.e. internal focus and external focus. In internal focus, the employees well being and defective functioning are considered whereas, in external focusing, the better functioning of the entire organization together with its improvements in organizational preference are considered.

The competing values framework is referred to as a criterion considering the four models such as human relations model, open systems model, rational goal model, and internal process model. Through this model, it revealed that organizations are able to adopt changes in the external as well as an internal environment whereas at the same time they should be more stable and better controlled.

The human relations model gives importance to flexibility and internal focus. It is based on the concept of human resources development focusing on their cohesion and morale. In the open systems model, the flexibility of the organization is focused and giving importance to the capability of the organization in terms of growth potential, resources acquisition, and provision of external support. The rational goal model is focusing on the entire control of the organization. Thus in this model importance is given to the productivity, and efficiency of the organization to being competitive.

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In the internal process model, internal organizational control is focused and thus importance is given to the role of information management, communication, stability, and control within the organization. The competing values framework is used as a tool for analyzing the organization’s effectiveness and examines possible strategies for the future.

Quinn uses Competing Values Framework for explaining leadership role in organizational effectiveness. We can see eight categories of leader behavior, or roles are explained in the Competitive Values Framework. In Quinn’s opinion, effective managers can play different roles according to the situation which demands. Competing Values Framework by Quinn Rohrbaugh is an effective tool to ensure organizational effectiveness. The Competitive Values Framework is explained in both the view of organizational effectiveness and leadership roles.

It can be used as a teaching tool for practicing managers. (Competitive values framework 2009).

Critical report on challenges facing the organisations:

Club Med and Climate change

Club med, Inc., is American part of Club Méditerranée, a French resort company that was formed by a group of friends in 1950 as a non-profit sports foundation. The company is famous for its resorts in exotic locations. Its activities lie in countries like Europe, Asia, North America, South America, Pacific Oceana, Africa, Middle East, etc. It conducts air fairs and ground transfers, all meals (including unlimited drinks), most sports equipment and lessons, entertainment and dancing. Club med owners define a perfect vacation as one that is free of everyday cares and preoccupations.

It was the ninth-largest company in 1986. Club Med initially concentrated on singles with low-budget packages now they are dealing with families with children by giving onsite childcare. They are providing all-in-one packages included meals activities and lodgings for guests. Club Med’s annual sales is exceeding F2 billion. (Search results on “club med swot analysis” 2009). (Club med n.d.).

The political uncertainty in the external environment badly affects the operational performance of Club Med. “Chavalin Rodsawaddi, the company’s country marketing, and the sales manager said the occupancy rate of Club Med Phuket has been around 50% since the Songkran riots, down from 80-90% in normal times. But this is still higher than the 20-30% rates of nearby hotels on Karon beach.” (Chinmaneevong 2009).

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The political issues in the region reduce the return of the Club Med. It reduces their market share in the industry. As a result of the economic recession, the traveller rate is reduced and thus the occupancy rates of hotel rooms are also reduced largely.

SWOT Analysis

The ‘SWOT analysis’ is used for analyzing the external and internal environment. The internal environment including Strength and Weakness and the external environment consist of Opportunities and Threats.

Strength

Club Med is known for its complete vacation packages provided to the customers. The cost of the villages is priced at the time of booking. They provide three types of villages – hut villages, bungalow villages, and hotel villages to choose from according to customer’s wishes. This makes the Club Med a unique tourist attraction.

Weakness

Even though it has the capacity of accommodating 50000 people it didn’t utilize the market very well. Club med wants to increase its capacity and amenities to serve the increasing demand.

Opportunities

It did not exploit the market fully and the concept of Club med is getting popularized now. So, the Club med should acquire new facilities. This will ensure to accomplish the objectives of the Club med concept.

Threats

The entertainment/tourism industry is very much dependent on the climate and political pattern in the country. The threats from the competitors affect like any other industry. The service-oriented resort industry is gaining success. Seasonal fluctuations have a great impact on the industry. Climate change is a major threat to the tourism industry. As mentioned earlier, seasonal variations will be a threat for Club med. In a good season, it can reap benefits, but the offseason will affect the business badly.

Recommendation

Analysis shows that the current dominant model of management of Club Med is the rational goal model to take the advantage of the opportunities offered by globalization. It is recommended that the organization examines the benefits of both the collaborative and creative models. Do not forget the value of the internal control model in the current circumstances

British Aerospace and Corporate Social Responsibility

British Aerospace (BA) is a manufacturer of aircraft, munitions, and defence systems, formed in 1977. It started as a statutory body. It later changed to a public limited company. In previous years BA occupied a leadership position in the exporting sector of the country UK and it records an approximate value of £45 billion in the export business within the past ten years. Its defence sales were approximately 80% of the total export business. Its products are Aircraft, Missiles, Unmanned Air Vehicles, and Space Hardware, etc. After New British Aerospace purchased the Marconi Electronic Systems, the defence electronics and naval shipbuilding subsidiary of GE Company Plc its name changed to BAE systems in 1999. This merger helped the company to penetrate the defence market.

SWOT Analysis

SWOT analysis is an effective method for the analysis of the external and internal business environment. The internal environmental analysis of a business involves the internal environment consists of its Strength and Weakness and the external environmental analysis consists of Opportunities and Threats.

Strength

The company is known for its products like Aircraft, Missiles, Unmanned Air Vehicles and Space Hardware, etc. It is producing the full range of products and services for Air, Land, and Naval forces as well as advanced electronics, information technology solutions, and customer support services. The company is having an 80% market in the sales of defence instruments. The company made its name in electronic warfare capabilities.

Weakness

Because it is being operated in the area of technology, the company needs to upgrade the technology time to time otherwise it will create a bad impact. It had issues in Saudi Arabia. This problem will create a bad image in the minds of customers.

Opportunities

It has major operations across five continents, with customers and partners in more than 100 countries it distributes its products indiscriminately. It has strong positions in each of the six home markets. This strong customer base is making the organization’s opportunities wider. The company is dependent on the feeling of insecurity. The UK government is giving support financially and politically to BAE systems this made the opportunities wider.

Threats

Barriers in the market lead to the entry of other companies. Changing technology is a threat for this organization because it is involved in technology-related activities. Competitors are a major threat to the organization. The company is always seen being corrupted with the deals. These allegations make threats to the company’s future. Being innovative and remaining in the market consistently is a difficult task for any company. Corporate social responsibility is the practice carried by the organization in self-regulating them to ensure adherence to the law, ethical standards, and international norms. Their focus is total performance in every aspect they do in the business, not only financial and program performance, but also business conduct and CR. So, this will impact BA going forward successfully.

Recommendation

Analysis shows that the current dominant model of management British Aerospace is using is the internal process model to take advantage of the opportunities offered by globalization. It is recommended that the organization have to consider internal control and internal focus as a core factor in the management process and thus it has to focus on the role of information management, communication, stability, and control for assuring the better functioning of the entire organization. The internal control model in the current circumstances will help them to improve the organization.

Conclusion

The Club Med is facing challenges with organizational climate change in the business environment. The economic recession in the economic environment affected the business growth of the company. Political uncertainty is also a constraining factor in the business growth of the company. For enhancing the business growth the company is planning to expand in the Asian region as it offers greater opportunities for luxury hotels as a result of increasing global tourism trends in that region. In the case of BA, the restriction on the part of the British people affects the business badly. It is related to the corporate social responsibility issue.

The Corporate Social Responsibility issue has to be carefully dealt with by the BA to assure profitable business operations. When combining the operational issues of Club Med and BA with the open system management theory concepts it revealed that the external factors have influential power over the organizational performance of the organizations. To solve the operational issues they can adopt the organizational model developed by Quinn Rohrbaugh i.e. Competing Values Framework as it is an effective tool to ensure the organizational effectiveness and achieving operational performance improvement.

References

Bleda, M & Shackley ,S 2005, The formation of belief in climate change in business organizations: a dynamic simulation model. Web.

Business definition for: corporate social responsibility 2009, BNET Business Dictionary. Web.

Chinmaneevong, C 2009, Political Hurts Club, Bnagkok Post Business. Web.

Competitive values framework 2009, Value Based Management. Web.

Club med: Where happiness means the world n.d. Web.

Search results on “club med swot analysis “ 2009, Term papers-2000: College research papers and essays. Web.

Montana, P J & Charnov, B K 2008, Management and the environments of business, Barron’s Education Series. Web.

Organization theory 2007, Business Reference. Web.

Appendix

Competing Values Framework.
Competing Values Framework.
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