pio rewrite.docx

7/30/2019 PIO REWRITE.docx

1/15

1. What type of power was evident in this case and how was it used?

From the Case study above it is quite evident that Karen Jacobs is the perfect example of a

typical CEO who unleashes coercive power in her management style. In fact as a part of her

management routine, she makes unannounced visits to her stores where she quickly assesses theeffectiveness of the operations and grills the managers about their sales figures and store

expenditures. Since she is extremely possessive for a high need for achievement, she obviously

demands higher expectations from her store managers and their adherence to company

management practices. It appears that she happens to be a very demanding task master. Karen

often came into conflict with many of the new managers over the speed and direction ofher

business.

Coercive power rests in the ability of a manager to force an employee to comply with anorder through the threat of punishment. Though we hardy find any traces ofthreat of

punishment, Coercive power typically leads to short-term compliance, but in the long-run

produces dysfunctional behavior. Karen could have used her Coercive power at times of

economic crisis or threats to the organization.

Karen should have used her Coercive powers carefully; overuse may have lead to unhappy

employee followers. Unhappy followers can be negative or unmotivated; they may resign or

adopt a work to rule attitude. Work to rule is where employees refuse to undertake any

duties or adopt working practices that are not stated in their contract. From the

Case study above, we can also find that she uses a tinge of Expert Power. Karen expects her

employees to believe that has expert knowledge or skills that are relevant to the job or

tasks they have to complete.

What she fails to notice is that often an experienced member of the team or staff in an

organization can have expert power even though they are not a supervisor or manager. We

also come to know that

if shes not satisfied with the way the stores are being run, she simply rolls up her sleeves

and does the job herself. She


2/15

can go into any store and name all the staff, but expects full commitment from all her

workers.

Expert power rests on the belief of employees that an individual has a particularly high

level of knowledge or highly specialized skill set. Apparently Karen has failed to accord her

Managers authority based on the perception of their greater knowledge of the tasks at hand.

Interestingly, while wielding expert power Karen may not rank higher than the other

employees in a formal sense. Karens Expert power has within it a built-in point of

weakness: as a point of power, expertise diminishes as knowledge is shared. If a manager

shares knowledge or skill instruction with his or her employees, in time they will acquire a

similar knowledge base or skill set.

As the employees grow to equal the manager's knowledge or skills, their respect for the

superiority of his expertise diminishes. Maybe this prompted Karen not to delegate authority

to her Employees.

The result is either that Karens authority diminishes or that Karen intentionally chooses

not to shareher knowledge base or skill set with the employees. The former choice

weakened Karens authority over time, while the latter weakened the organization's

effectiveness over time.

Karen failed to create Referent power because her employees failed to believe that the leader

possess qualities that they admire and would like to possess. The followers identify with

their leader and attempt to copy their leader. As referent power is dependant on how the

follower views the personality of their leader, a leader will not have referent power overevery follower they lead. Some leaders will have referent power over just a few, whilsthave

lead millions through their personality and charisma. In

spite of being a is a role model for many young women who aspire to enter the cut-throat world

of business s expertise is portrayed in her acumen for writing management articles for leading


3/15

management journals Karen could not make her employees admire her. In face her talent was

recognized more at well-known business schools across Europe and on many TV programmes.

2. Would you consider Karen to be a leader and if so, what was the prevalent style?

An essential part of leadership or management is to influence the people you manage so

that they do what you want them to do. The influence of a leader will depend on a variety

of factors including their personality and of those around them. Karen was a leader

possessing the authoritarian power style of Leadership. She made all decisions, independent of

her employee's input. The authority figure dictates direction, leaving members in the dark

about future plans. The authority figure selects which members will work collaboratively

and determines solely the work tasks for the teams. Karens leadership type is very personalin her praise and criticisms of each member, but does not actively participate with the

group, unless demonstrating to the group. The authority figure is friendly and/or

impersonal, but not openly hostile. Karens authoritarian leadership style could have been

more effective when a situation calls for expedited action or decision-making. Usually there

is a decline in productivity and creativity when coercive power is employed. Employees are

at an atmosphere of insecurity or fear because Karen makes unannounced visits to her stores

where she quickly assesses the effectiveness of the operations and grills the managers about their

sales figures and store expenditures. Karens multi dimensional Leadership style is evident from

the fact that she inspired many young women business entrepreneurs. In fact Karen carried out

case studies. Karen is a role model for many young women who aspire to enter the cut-throat

world of business. Karens expertise is portrayed in her acumen for writing management articles

for leading management journals. No doubt Karen speaks at well-known business schools across

Europe. Her leadership skills are also presented in a self-help DVD. She has been invited to

share her leadership skills as a guest on many TV programmes. Whereas Leadership is setting a

new direction or vision for a group that they follow, i.e.: a leader is the spearhead for that

new direction, Management controls or directs people/resources in a group according to

principles or values that have already been established.

It surprises us as to how Karen could not see the distinction between the two.


4/15

Leadership is about setting a new direction for a group; management is about directing

and controlling according to established principles

Karen should have adopted a democratic leadership style which allows for multiple

viewpoints, inputs, and participation, while still maintaining control and the leadership

role. A quality democratic leader recognizes each member's strengths and effectively elicits

the best performance from each member, all the while guiding and leading effectively. A

challenge for the democratic leader is to recognize that not all tasks need to be handled by

the group; that the leader should appropriately address some issues alone.

Karen also felt that she needed to exercise her Legitimate Power as a leader expecting the

employees to believe that the leader has a right to instruct them and that they have an

obligation to follow instructions. Sometimes legitimacy power is created by the leaders job

title (in this case CEO), combined with the employees belief that the job title gives the

leader the right to give them orders. In spite ofpossessing a mixture of the leadership powers,

Karen failed to use or combine them strategically so that the she has maximum influence. It is a

well known fact that the leader will therefore need to think carefully about which power to

use.

Only if Karen opted for a democratic leadership style which allows for multiple viewpoints,inputs, and participation, she could have still maintained control and the leadership role. A

quality democratic leader recognizes each member's strengths and effectively elicits the

best performance from each member, all the while guiding and leading effectively. A

challenge for the democratic leader is to recognize that not all tasks need to be handled by

the group; that the leader should appropriately address some issues alone. Karens power

lacked potential of identifying group members who were highly skilled and motivated, with a

proven track record of excellence. She could have given them hands-off approach to allow

these capable members to be productive and effective. The laissez-faire style is interpreted

by the members as a sign of confidence and trust in their abilities and further empowers

them to be successful and motivated.


5/15

Karen Jacobs also didnt embrace the team concept is the effort to improve productivity and

quality. The major impetus for any organization is Team Work which is a key component of

many total quality management programs. For example the QS 9000 program,relies on the

team approach to ensure quality while maintaining a low-cost approach to manufacturing.

In addition to improved productivity and quality, some of an organization's major benefits

from the use of teams are improved quality of work life for employees, reduced

absenteeism and turnover, increased innovation, and improved organizational adaptability

and flexibility. Effective implementation of teams can also improve office politics by

improving the communication and trust between the team members.

Apparently, Karen didnt implement any of these changes.

Effective teams frequently improve the quality of work life for the employees. An effective

team is generally one in which members are empowered to make decisions about how to get

work done. Giving team members authority and control over the work processes reduces

the amount of external control and increases the sense of ownership and accountability for

the work being done. This helps to create a satisfying and rewarding work environment. A

satisfying and rewarding work environment helps to lower absenteeism and turnover.

Teams are particularly effective in this area. Working in a Team gives an employee a senseof belonging, interaction with others on a regular basis, and recognition of achievements.

All of these help to eliminate a sense of isolation within the organization. Team members

identify with and feel pride in the work they are doing and come to rely on one another

being there. At some companies, employees are evaluated based on their contribution to

their team's efforts. Any firm that utilizes the team concept has a strong record of

innovation.

3. Using the ideas in your module, how would you describe Karens use of power?

Karen lacked timing in her decision making. Making the right decision at the right time would

have saved her many problems. Initially Karen disregarded the fact that there was an urgent

need to delegate authority and to begin to employ professional managers to key positions in

the company.


6/15

This early decision could have made a vital impact on the functioning of the organization. She

has now come to a point of realization that she desperately needs to delegate authority but it s

already too late. Another drawback is the fact that she made rapid expansion of stores by

expensive long-term leases which placed a huge burden on profit margins. She began to err in

her use of power. Karen also failed to devise an effective strategy to buffer the onset of the

recession which was slowly beginning to take its toll on the entire business world. Her expert

business skills were not put to innovative use at this crucial juncture. Since Karen had built this

company right from the scratch, she obviously felt hard to let go of the business. Her

obsession for this business initially prevented her from bringing new management into the

business at the request of the bank Realizing that a tough decision has to be taken, she didn t

hesitate to adopt Regulative controls and took the help of a marketing specialist to reposition her

business. Karen learnt that organizations have become more flexible in recent years by

flattening organizational hierarchies, expanding organizational boundaries to include

suppliers in inventory management and customers in new product development, forging

cooperative alliances with competitors, and developing virtual organizations in which

employees are geographically dispersed

She thought it was high time to focus on the high end of the business and to move into the on-

line catering business area which was emerging as a likely growth area. Here we find that she

wanted to adopt an expansion strategy. She was aware that Technology is impacting how teams

meet and function. Collaborative software and conferencing systems have improved the

ability for employees to meet, conduct business, share documents, and make decisions

without ever being in the same location.

Therefore to exploit the growth in on-line premium foods delivered right to the customers door,

Karen decided to go for premium convenience foods. She ultimately took a right decision to

expand the market base for her companys products. To this end, she ventured to sign licensingagreements with well-known hotel chains and food retailers. She began to realize the need for an

online presence for her market. Eventually this resulted in giving her access to other markets in

the premier fast food market. In spite of all these good gestures, we still find that her tendency

to be hands-on was causing problems in many areas. Sadly, due to her ineffective decision

making techniques we find that the bank forced Karen out of her position as CEO and


7/15

president of the company. The bank was clearly concerned that this new venture might

break down if Karen was allowed to carry on as she had done before.

She is devoid of operational control of the business. In fact operational control is apparently one

key area where Karen has failed.

With the rapidly-changing environment and increasing uncertainty that organizations face

in the twenty-first century, Karen should have adopted structures that emphasize flexibility

and quick response to change. Her organization must have made an attempt to place decision-

making authority in the organizational structure with those who can most effectively and

efficiently respond to environmental imperatives. Karen failed to realize that to be effective,

individuals working in her organization must learn to share power, use open confrontation to

resolve issues, and to utilize all directions in the organization to disseminate information

since These more organic structures are not rigidly bound to the chain of command

principle, although it is still an important organizing principle in most organizations.

During the year 2009, managing the recession was difficult, but the downturn offered unique

challenges because it was different to previous recessions in many ways. Karen was burdened

not only with employment plummeting but the sharp decline of consumer spending and to make

matters worse, consumers were in more debt than ever. Karen had to act in spite of not havingany script. She should have made an analysis of various techniques for managing her business in

the recession. Karens use of power should have imbibed the following Qualities:

1) Karen should have reset her priorities to face up to the new reality.

2) Maintained investment in the core.

3) Communicated as much as she could and balance realism and optimism.

4) Offered Customers new solutions to new problems.

5) Thinking twice before cutting prices and costs.

6) Focus on how she was getting capital and where she was using it.


8/15

7) Made a Re-evaluation of her employees and look to steal some good ones.

8) Made a Re-examination ofthe compensation provided and incentives she offered.

9) Think carefully about off shoring because economics have changed drastically.

10) Stay smart about acquisitions and mergers - it was a great time to buy assets cheap if

she was strong enough.

11) Karen needed to find different ways of doing things. Karen should have revisited her

business plan and explored new ways to produce the same product or service faster, better, and at

a lower cost. When the economy is in a recession, instead of painting a picture of gloom, Karen

and her staff should have brainstormed and used this period as an opportunity to reinvent the

business. There are a lot of surprising ideas you can come up with when the economic pressure is

on.

12) Think about what the customer wants and not how you want it. There is a tendency to forget

about what the customer really wants. Karen needed to find out what her customers wanted

through surveys or preferably by just talking to them.

13) Competition gets tough when the economy is slow. Karen was aware that every business she

competed with was trying to grab what little market there is. She ought to have to revisited her

pricing strategies in order to compete but always made sure that she never dropped her costs at

the expense of staying financially sound. She should have also looked at cutting her production

costs so that she could keep her prices the same by giving heed not to cut quality while she was

cutting costs.

14) Enhance the product or service mix. Karen also needed to add value to her product or service

by giving away free items or coupons with each purchase. Or, she should have bundled what is

offered in different ways to make it more appealing to her customers.

Companies, not surprisingly, dont all follow the same strategies during a recession. That

could be because of differences in executives cognitive orientation during a crisis. Karens


9/15

Company is no exception to this. According to Tory Higgins, a Columbia University

psychologist, human beings are hedonisticthey avoid pain and seek pleasurebut they

differ in how they try to achieve those aims. There are two basic modes of self-regulation.

Some people are driven most by goals, such as achievement, advancement, and growth.

These promotion-focused individuals are motivated by ideals and aspirations that provide

pleasure if realized and disappointment if not. Other people are prevention-focused

concerned mainly with safety, security, and responsibility. They strive to avoid bad

outcomes, experiencing relief if they succeed and pain if they fail. Situations have a potent

influence on cognitive orientation: A recession, for example, can trigger a response that

overrides a persons usual orientation. We discover that Karen was not prevention-focused.

She was in fact not concerned mainly with safety, security, and responsibility. Karen was driven

most by goals, such as achievement, advancement, and growth. Karen was promotion-

focused and motivated by ideals and aspirations that provide pleasure if realized and

disappointment if not.

Obviously she was disappointed when the Recession brought in a wave of problems for her

business.

With the rapidly-changing environment and increasing uncertainty that Karens company

faced in the twenty-first century, she must have resorted adopt structures that emphasize

flexibility and quick response to change. These types of organizations attempt to place

decision-making authority in the organizational structure with those who can most

effectively and efficiently respond to environmental imperatives. Thus, these organizations

may have flatter hierarchies and communication and decision-making patterns that do not

fully adhere to the chain of command or unity of command principles.

To be effective, individuals working in these organizations learn to share power, use open

confrontation to resolve issues and to utilize all directions in the organization to

disseminate information. These more organic structures are not rigidly bound to the chain

of command principle, although it is still an important organizing principle in most

organizations.


10/15

Karen must have opted to create a type of influence where she was able to offer a reward to

her followers for completing tasks/behaving in a certain manner. Rewards in the workplace

can take a variety of forms from chocolates, gift vouchers and holidays to promotions,

commission and pay rises. This reward would only be effective if; Firstly - the reward

appealed to the employees. There is no point offering chocolate as a reward to somebody

that likes crisps. This is because they will not view chocolate as a reward, so there is no

incentive to complete the task. Secondly the employees will have to believe that the leader

will give them (or arrange for them to receive) the reward promised once the task is

completed by them. Thirdly the reward should be proportionate to the task the employee

has to complete. For example it would be disproportionate to reward an employee with a

promotion for serving a cup ofice cream. Similarly an employee would feel undervalued, if

rewarded with a $5 gift voucher after they spent six months doing their managers job

without a pay rise. Karen also should have used this type of power carefully to prevent

employees becoming accustomed to rewards and refusing to complete routine tasks without

a reward. Generally rewards should not be offered, to employees to complete duties which

are a normal part of their role. This is because as an employee they are under a contractual

obligation to complete these tasks and they are already rewarded for this through their

salary.

Finally to sum it up,

Leadership is about setting a new direction for a group; management is about directing

and controlling according to established principles. However, someone can be a symbolic

leader if they emerge as the spearhead of a direction the group sets for itself. TIMELINE

OF

KAREN JACOBS


11/15

3c) Critically evaluate the impact of stakeholders interest on strategic

business activities. (4.2)

Stakeholders can be defined as:

Figure 1: Stakeholders

Stakeholders other than the shareholders have their interests looked after, yet both customers and

employees can have a very direct effect on profitability, and are probably the most important groups for

the business. Other groups, such as the local community, are not addressed by the business's strategy,

which is to focus on corporate business, much of it outside the immediate locality. A broader

stakeholder approach might involve offering free initial consultations to employees with grievances, but

as this does not fit with the fee-earning strategy, it would be purely philanthropic.

Ryanair need to make a choice: should profits be compromised in order to keep stakeholder groups'

support? Marcous et al (cited in Rao, 2010) identified the 'stakeholder concept' and the 'shareholder

concept'. The first strategy takes a broader view of the wishes of a range of interested groups, while the

second focuses on profits and maximising benefits for the business's owners.

In practice Ryanair's strategy, is extreme in its unwillingness to address a range of stakeholder concerns.

A disabled customer took legal action after being charged 18 to for wheelchair use, and won the high-

profile case (Mller, 2011). Ryanair responded with a 50p levy on each ticket to cover wheelchair costs

far greater than the actual cost to them of wheelchair use (Mller, 2011). The airline is notorious for


12/15

flying to airports a considerable distance from the advertised destination (Lampel, 2009). The company

has made considerable efforts to maintain non-recognition of unions (Lampel, 2009) and charges staff

for uniforms (against standard airline practice).

Michael O'Leary, Ryanair's Chief Executive, owns 5% of the company's shares (the largest individual

shareholding), and the strategy shows use of the shareholder concept. The Ryanair example show that,

focusing on shareholders rather than the broader range of stakeholders can be a successful strategy if

customers have limited alternative options without considerable increase in cost or inconvenience, and

that if this situation changes, it will impact the business much more.

1) Understanding Social Research

1a) Main types of social enquiry

Define research:

Research can be defined as a process of studying, observing and evaluating facts in order to

arrive at suitable appropriate results (Brown, 2000). Research helps us understands the processes

easily. Burns (1942):2 define research as, a process of systematic investigation for finding the

answers to a problem. Thus, with the help of research we can find answers to questions like

how, when, what and why in a social enquiry.

i) Case study:

Yen 1984, p.23, opines that, a case study research simply investigates a contemporary process in

an actual life condition, at the times when the line between the phenomenon and context are not

clearly defined with the use of various evidence sources. Through case study, we can understand

a complex issue in a systematic manner and it also adds more knowledge that has come out of

experience in similar subject. This method is especially and widely used by social scientists in

order to understand the contemporary actual life conditions and give ideas and methods that are

practically applicable. Case study focuses on a single unit and a single instance only and


13/15

conducts detailed analysis on the subject on selected events and their relationship with each

other.

ii) Cross sectional research

Cross sectional research is normally used in developmental psychology, education and socialsciences. This study uses people with different interests however belonging to same origin,

region, ethnicity, education, social status etc. Descriptive research is also a name of cross

sectional study as it is observational in nature. Researcher records the data from a population

without manipulating the variables. This research brings out the features within a group or

population however it cannot determine the causes and effects that relate between the variables.

This methodology helps in knowing the probable relationships between the variables or it can

help in collecting facts and data that may be useful for future or further research (Beri, 2008).

5c) systematically analyse methods of finance, payment, international investment in trading

situations (5.3)

International business involves different types of financial transaction and financial payments as

well. Firstly, currency plays a crucial role in the transaction and secondly credit check issue

needs to be looked after. Thirdly, agreement between the parent company and subsidiaries,

exporter and importer etc. must take place in the form of payment followed by the terms of

financing (Khartabil, 2011).

International transactions involve major payment methods like advance payment, open account,

documentary collection, credit letters, credit cards and counter trade. Every form of payment has

its own risks and costs (Khartabil, 2011).

Toyota pays and receive multiple currencies U.S. dollar, Euro, Australian dollar, Canadian

dollar, India rupee and British pound etc. from its subsidiaries and then the company transformsit to Japanese yen for presenting its financial statements. Toyota is involved in currency netting

operations to decrease the fund amounts which ought to be converted into foreign exchange to

complete the transactions between the subsidiaries (Khartabil, 2011).


14/15

Company finances customers through instalment sale agreements between 6 and 60 months or

even longer than this which depends on ones personal needs. This agreement type suits owners

of businesses or private people who wish to get assets at the finish of the deal (Toyota EU,

2012).

Toyota must have enough funds in order to go ahead with promising projects. It always tries to

bring down the costs, risk of foreign exchange, political risks, and global taxes etc. by using

either the internal sources or external sources of funds. Companies generate cash through one

source of investment. Legal constraints can allow a firm to use the flow of cash to fund the

project of any other subsidiary from a particular subsidiary fund (Khartabil, 2011).

Toyota if wish to increase its external capital can adopt various alternatives like the debt and

equity alternatives. Banks and NBFCs offer it the required funds on a long or short term basis.


15/15

pio rewrite.docx

Documents