EasyJet emarketing strategies and its implementation

EasyJet emarketing strategies and its implementation Management Summary This report undertakes a study of EasyJet e-marketing strategies and its implementation outlining its impact on EasyJet operations as a whole. EasyJet is an airline company operating in Europe with its base in UK. It was founded by Stelios Haji-Ioannou in mid 1995. EasyJets operations are paperless, with all business transactions done through the internet. EasyJet has experienced a successful online business due to its e-market strategy that aims to provide low cost no frills air transportation. Under the strong and charismatic leadership of Stellios, it has accomplished its goal by creating brand awareness, adoption of an efficiency-driven operating model and maintenance of a high level customer satisfaction. EasyJet conducted its business using telephone in order to achieve the goal of undercutting traditional carriers and increase savings by direct selling. Business was later on conducted over the internet aiming to cut down cost on it call centers, to make flying affordable and to compete even with busses by attracting people who would have otherwise not travelled by air. EasyJet is doing this by using a website which is designed with high usability and has an intuitive navigation allowing user to do booking and purchase ticket online. EasyJet also does promotion on newspaper by running internet only promotion, giving discounts to consumers who purchase online only. This mix has helped in EasyJet promotion giving impressive results by achieving tremendous sales results. The design, structure, usability and usefulness of its website have enabled EasyJet to secure leverage over its competitors. The most important fact is that EasyJet has incorporated flexibility in its e-marketing strategy enabling it to anticipate changes and further develop its strategies to counter-act accordingly. The impact of EasyJet e-market strategy is evident on the growth that EasyJet has enjoyed through the years In general the e-marketing strategy followed by EasyJet works for it. EasyJet is obviously aware of its surrounding environment, and appreciates the magnitude of closely monitoring and control of its strategy, so as to stay ahead in an environment that constantly evolves by keeping a close eye on any happening changes. Its evident that EasyJet takes few risks and applies firm business principles while carefully exploring the market. Introduction Company Background, Financial Performance and Key Services EasyJet is an airline company based in Britain with its headquarters at London Luton Airport. It operates 500 domestic and international routes between 118 countries within Europe, West Asia and North Africa carrying more passengers than any other UK based airline. Its parent company EasyJet plc is listed in London Stock Exchange. (Wikipedia, n.d). EasyJet Airline was founded in Britain by Stellios Haji-Ioannou, holder of masters degree in business and son of a Greek Cypriot shipping tycoon. He started the company with  £5 million loaned by his father after he was approached by Virgin Atlantics Greek franchisee to invest in a London-Athens route and decided to start his own airline instead. The company started with two leased airplanes operating in two routes; London Luton to Edinburgh and Glasgow respectively and later Aberdeen. Stellios was inspired by principle of price elasticity applied by Southwest Airlines based in the United States. Southwest air fares were so low that the airline attracted people who would not have otherwise traveled by air. It aimed to compete with busses as much as it did with other airline companies. In the beginning, EasyJet operated a paper airline contracting British World Airlines to fly and maintain its two 148 seats leased planes. Its base in London was at Low-rent Luton airport. After acquiring its first plane, EasyJet started competing against British Airways and KLM on the route to Amsterdam focusing on short-haul routes aiming to offer half of its competitors fare. Stellios later on capitalized on the Swiss connection buying 40% stake in a failing charter airline; TEA Switzerland. It is believed that, in the beginning EasyJet spent all its revenue on advertising, offering cheap air fares. A specific example of billboards declaring a fare of  £29 for London-Scotland route which was one-tenth the price charged by British Airways. Advertisements on TV directed customers to bypass travel agents and directly call the company reservation number which was also painted on all EasyJet planes. Direct selling was the strategy from start and later the Internet became EasyJets preferred booking media. Dress code for its employees was jeans and orange sweatshirts which reflected a casual yet fast-paced attitude. Only pilots were allowed to wear neck ties. Organization culture of EasyJet was described as brutally transparent, allowing employees in all paperless offices to share all types of information except payroll, by scanning all its documents into a computer system accessible to all employees. The company is lean on services having no in-flight catering, charging for snacks and soft drinks and having no cancellations or refunds option. The three keys to EasyJet strategy were Simplification, Frugality and Friendliness with a motto of Easy come, easy go. Some passengers were apprehensive of low-rate airlines compromising safety, EasyJet had to change tactic in advertising by explaining why it was possible to reduce fares without compromising safety. EasyJet stimulated traffic in all the markets it entered by introducing price competition to a market that was previously driven by free offers such as frequent flier miles. This enabled EasyJet to turn a profit of  £2 million in the year 1997. In 2000 fiscal year, EasyJet declared a profit of $33 million and floated a quarter of the companys stock on the London Stock Exchange with shares offered exclusively to institutional investors, raising  £190 million which was used to purchase 32 new Boeing 737 airplanes. After it merged with Go Fly in August 2002, it became one of Europes biggest and leading low cost airlines. (Business Essays, n.d) Since its establishment in mid 1990s, EasyJet has enjoyed a rapid expansion growing through a combination of mergers, acquisitions and base openings brought about by demand of low-cost air travel by consumers. It now boasts a fleet of over 180 aircrafts with 20 bases across Europe and is ranked as the second largest low-cost carrier in Europe having carried 45.2 million passengers in 2009. (Wikipedia, n.d). EasyJet has had its fare share of legal battles, the most popular one being with British Airways. It has also faced criticism in Germany for not observing the European Union law on compensation and on environmental issues due to its advertisement that EasyJet aircrafts made 22% less emission compared to its competitors. Services offered by EasyJet include real time on-line booking, telephone booking for 3 months before flight bookings, in-flight magazines containing destination guides, holiday and accommodation products, car rentals, airport parking, travel insurance and on-board sales of fragrances, cosmetics etc. Situation Analysis A business does not operate in isolation. Business reactions and decisions depend on what happens on its environment. The factors happening outside an organization are known as external factors or influences. The external factors affect main internal operations and the objectives and strategies of the organization. It is therefore important to identify factors that might in turn affect a number of vital variables that are likely to influence the organizations supply and demand levels and operation costs (Kotter Schlesinger, 1991; Johnson Scholes, 1993). The strategy of EasyJet is to offer low cost, no-frills air transportation. This strategy has enabled EasyJet to prosper. It is however, important to continually strive to satisfy customer needs and stay in a competitive position by evaluating market trends and situation. This calls up the need to do situational analysis which involves the studying of important business elements such as competitors, customers, costs, climate (external environment), collaborators and the company itself. Conducting a situational analysis for a company provides the knowledge and context for planning by describing the companys competitive position, financial and operating conditions and the general state of the companys internal and external affairs. To accomplish this methods such as SWOT and PEST are used. PEST Analysis PEST stands for Political, Economical, Social and Technological. PEST analysis is a framework used to categorize environmental issues that influences an organization Politically, Economically, Socially and Technologically. Papers4you.com (n.d) quoting Kotler (1998) and Porter (1985) states that: Kotler (1998) claims that PEST analysis is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations. The headings of PEST are a framework of reviewing a situation, and can in addition to SWOT and Porters Five Forces models, be applied by companies to review a strategic directions, including marketing proposition. The use of PEST analysis can be seen effective for business and strategic planning, market planning, business and product development and research reports. PEST also ensures that companys performance is aligned positively with the powerful forces of change that are affecting business environment (Porter, 1985). PEST is useful when a company decides to enter its business operations into new markets and new countries. The use of PEST, in this case, helps to break free of unconscious assumptions, and help to effectively adapt to the realities of the new environment. (papers4you.com, n.d) PEST analysis is therefore useful tool for understanding and determining the market growth or decline of an organization, the position as well as the potential and direction of a business. PEST analysis for EasyJet shows the following: Political The change of government or policy may influence the company profile as new regulations are introduced. EasyJet has been involved in various legal disputes a good example is when Germany criticized EasyJet for not observing the European Union law on compensation. Political changes in the countries where EasyJet has routes. EasyJet operates in different countries across Europe; changes in these countries may affect its operations. Local government councils object to noise and prohibit building of new runways. Governments wanting to promote tourism in their countries may welcome and act in the favor of EasyJet. Different taxes that are charged in different countries for fuel, landing, airport tax etc. Changes in employment laws, trade restrictions and tariffs has impacts on EasyJet business operations for example in April 2000, EasyJet had to launch a campaign to stop Barclays from increasing landing fees by 300%. Economic Economic recession where some countries economy might grow and some might collapse. Uncertainty due to the cost fluctuation of energy and fuel. Business involves having loans; change of interest rates and foreign exchange rates may affect EasyJet long term loans. There has been unrest in consumers attitude due to the September 11th attacks which caused a significant decrease in the confidence of airline travelers. Social Flying with EasyJet may attract companies with employees doing frequent business trip since EasyJet do not offer in-flight luxuries thus less cost to companies. Stability in economy and expansion of tourism means many people want to fly away for holidays. Low cost, no frills attracts wider demographic of consumers including people who would have otherwise not think of travelling by air. Outbreak of contagious diseases such as the bird flu, SARS may cause decrease of travelers. Safety measure applied while on air and on the ground conveys a positive image of the company thus many people feel safe to travel with EasyJet planes. The friendliness and efficiency of EasyJet employees make customers to always want to travel by EasyJet. The growth of population means more travelers and people in a certain life stage have more disposable income to spend. EasyJet runs an environmental friendly business; depending entirely on the internet running paperless operations which means less waste. This gives it a positive outlook from a world that is so environmental conscious. Technological The rate at which technology changes has favored EasyJet by making it possible to conduct paperless operations therefore reducing operation costs. IT technology is available in competitive price thus enabling EasyJet to design a system that can be remotely accessed by all its employees. The growth in technology also ensures the availability of spares and maintenance services to its fleet of airplanes. Technology has become cheaper; it is cost effective in the running of the company but at the same time the entries to barrier are lower for competitors to join in. SWOT Analysis SWOT is an important part of strategic planning that involves a scan of internal and external organization environment. SWOT analysis provides helpful information for fitting organizations capabilities and resources to the competitive environment it operates in. SWOT analysis is used to determine the Strengths, Weaknesses, Opportunities and Threats of an organization. Strengths EasyJet is under the strong and charismatic leadership of Stellios who possesses great entrepreneurial vision, is adaptable to change and is able to identify business opportunities EasyJet is original and has very effective promotional strategies. EasyJet is serving many of the leading city destinations across Europe and is leading as provider of low budget and no added costs air travel. It is a well known, respected and recognized as the leading brand name in travel industry in UK. Has a low running cost due to the use of internet giving its customers the benefit of paying for local calls. EasyJet is easily recognizable and distinguishable from their competitors due to the high distinctive corporate colors on all of its aircraft. EasyJet has diversified into other market such as car rental and internet cafes making life easy for their customers by being served by same company when requiring these services. Has an excellent customer service for example EasyJet offers refunds for flights that have been delayed for 4 hours or more. It operates an efficient and fast service with an average turnaround time of 30 minutes or below thus is able to maintain a hassle free and reliable service to its passengers. It has a very user friendly website showing fully the price breakdown structure for passenger planned trips. Divulging the full breakdown price plan prevents any hidden charges to customers when confirming their booking. It has a sophisticated system that offers online promotion alerts by e-mail to existing customers. Weaknesses EasyJet relies so much on computers for booking and information storage which could be risky. EasyJet flies exclusively within Europe. EasyJet does not offer free in-flight food services. The extreme competitiveness of the domestic air travel industry can restrict and shape pricing policies on some of EasyJets less profitable routes. EasyJet has to charge low rates even on these routes to compete with their competitors which are Jet, BMI Baby, Ryan Air and other smaller independent companies. Opportunities Possible opening of other routes to major cities in Europe such as from Dublin to UK and new links into business flyers to and from UK. Restructured versions of the fly on the wall documentaries would provide the EasyJet brand with more coverage and publicity. Offering free in-flight refreshments would be a bonus and would increase comfort to EasyJet customers. Threats Threat of substitution where travelers travelling as a group might choose other means to save on travelling expenses. Other airlines flying the same routes compete fiercely on price forcing pressure on margin on popular flights and time slots. External market forces such as the rise of price of oil can have major impact on running costs posing significant pressure on the profit of less popular routes and time slots. Day to day operations of EasyJet can be significantly affected by pressure from unions and employee relations committees, strikes have proved to be costly to the company and its image. Economic recession may decrease the number of casual and business travelers. E-Marketing Strategy To fully understand what e-marketing involves, it is worthwhile to revisit the original definition of marketing before it was prefixed by e. Nowsell.com, (n.d) quotes cim.co.uk definition of marketing as follows: Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably (nowsell.com, n.d) The definition accentuates the focus of marketing on the customer, while implying the need to link other business operations to achieve the required profitability. E-marketing is therefore defined as achieving marketing objectives through the use of electronic communication technology which includes internet, eBooks, e-mail, databases, wireless mobile phones and digital television.(nowsell.com, n.d). The internet, as noted by Smith and Chaffey (2001) can be used to support the aims mentioned in the definition i.e. identifying, anticipating and satisfying as follows: Identifying use the internet for market research to find out customer needs. Anticipating the internet provides an additional channel for customers to access information and makes purchases. Understanding this demand is basis to governing resource distribution to e-marketing. Satisfying an important success factor in e-marketing is accomplishing customer satisfaction through electronic channel by making sure that the site performs adequately and is easy to use. Planning is essential in order to succeed in e-marketing. A successful e-marketing plan relies on traditional disciplines and planning techniques that is adapted for the digital media environment and mixed with digital marketing communication techniques. SOSTAC is a generic framework used for e-marketing planning. SOSTAC stands for: S Situational analysis (where are we now) O Objectives (where do we want to go) S Strategy (how do we get there) T Tactics (the details of strategy) A Action (or implementation) C Control (evaluation, measurement) The Situational analysis above has identified the current position of EasyJet using SWOT and PEST methods. The analysis shows EasyJet holds a strong position and has gained a competitive advantage due to the use of technology internet in particular in conducting its business operations. The objective of EasyJet is to increase online revenue, minimize cost and retain their customers. EasyJet has accomplished this by creation of brand awareness, adoption of an efficiency-driven operating model and maintenance of a high level customer satisfaction. Strategy is the process of developing options to achieve a desired outcome. E-marketing strategy therefore consists of steps taken and procedure followed for marketing a brand through the website. (buzzle.com, n.d). The important aspect in any e-marketing strategy is the company website which needs to be properly formatted and designed, so as to give a good impression and attract users and thus increase sales. EasyJet uses internet to meet its objectives. EasyJet has a comprehensive website with good usability and structure that presents EasyJet services without the use of redundant graphics and advertisement which usually distracts website visitors. EasyJet went online because of the need to reduce cost. EasyJet aimed at making flying affordable and urged travelers to deal direct and cut out travel agents. An overview of EasyJet lists the following strategies: Reduction and distribution of costs by online booking. No tickets during travel, just an e-mail with the booking reference is adequate to board the plane. This reduces tasks and costs associated with issuing, distributing, processing and reconciling tickets. Paperless operations making the internet useful in other aspects of the business such as administration and management. EasyJet URL is printed alongside all its planes. The company aimed to scale down its call centers operations by selling most of the tickets online. By putting the company URL everywhere, it increased the use of the website and this helped EasyJet get more customers thus making EasyJet flights prices cheaper. EasyJet also uses the website as an aggressive tool. A good example is the competition to predict BA losses on Go enticing visitors with prizes. EasyJet also had earlier on used a TV series to promote itself in every household in the UK. The value proposition and differential advantage of this strategy can be seen on the benefits offered to customers as well as cost cutting experience by EasyJet. EasyJet operates cheaply making it possible to give its customers reliable, convenient and great value for money service. The EasyJet market mix (i.e. the 4ps: product, price, placement and promotion) can easily be evaluated at the structure of its website. EasyJet has identified its website audience as those on-line visitors living in Europe requiring cheap, comfortable and comprehensive real time travel without needing to go through travel agents. For this, EasyJet offers low cost, no frills flights and other services such as car rentals and accommodation (product) at reduced online price with no hidden-added cost (transparency) showing fully the price breakdown structure (price), that can be purchased direct (disintermediation) online without the need to go through third party travel agents (placement), letting travelers know where to buy ticket by advertising on TV, newspapers, EasyJet planes and through e-mails (promotion). The website has all the required information readily available in all dominant languages of the continent and is sectioned under different tabs of accommodation, travel insurance, car rentals, flight bookings and airport related transport to enable users to go directly to the service they require. Moderate use of text eradicates wastage of time yet communicates accurate message to website visitors to guide them through various links based on logical visitors usage. It also has enough information on each page to support the need of visitors without abstract marketing banners to distract real buyers. EasyJet website gives attention on usability and reliability of information rather than visibility and colorful display alone; it however does not lack color. Orange color has consistently been used throughout the website helping clients to easily associate the website with the airline. EasyJet maintains a website that can be considered an ideal re-intermediation where service provider is in direct contact with the consumers via an electronic medium (Internet). This reduces cost to both consumer and service provider and creates business value. (businessteacher.com, n.d) Implementation The implementation of EasyJet e-marketing strategy has been achieved on the companys website. The EasyJet website has been designed to offer high usability to visitor and is simpler to use compared to some of its competitors. It is simply designed, with an intuitive navigation allowing users to move from page to page without the need to go via home page. It has high functionality and is without excess baggage. It was created with the intention not to tire the visitor with redundant graphics and advertisements which would distract its visitors and make them walk away from the website. It employs moderate use of text eliminating time wastage while conveying accurate message to guide users through various links. Each page on the website consist enough required information without abstract marketing banners to sidetrack real buyers. For example if a user wants to book a flight, he would enter the date of travel, destination and check flight availability then move on to make booking or p urchase. How the managements creates new core and extended value for customers The purpose of setting up an on-line business is to ensure growth, efficiency, competitive advantage and leverage over competitors.(businessteacher.com, n.d). Using the internet, EasyJet has been able to reduce running cost and to cut down its supply chain by removing intermediaries and dealing direct with customers enabling it to sell almost 90% of its flight over the internet. EasyJet website targets business and leisure travelers who are keen on saving time and money and do not want to deal with third party intermediaries, providing them with easy access to booking, flight scheduling, transportation and accommodation. Facilities such as choice of airport lounges or parking are important in completing the process of travel booking, and having this on the website EasyJet extends value for customer. They also analyze consumer e-mail queries and use these to formulate services according to customer needs. Operating in this way reduces cost and helps the company, by use of technology mediation, to sell its product and services and create business value. There are exclusive promotions for on line booking customers and all customers who book online receive discount for each leg of the journey example EasyJet was able to reduce  £1 for people who booked online. Online customers also get the benefit of paying the price of local call. EasyJet make it a point to put all cheap flights online and customers can search flights by fair and view flights that are available over two weeks. Customers can make flight transfers, change names, reschedule flight bookings, and request duplicate confirmation by e-mail and check in on-line. There is also an option of speed boarding which enables the passenger to board the flight before other passengers. They also have flight promotions which intend to avoid customers who would fly with EasyJet. These promotions are advertised few minutes before the flight time aiming to get rid of empty seats. Balancing online and offline promotion methods The management balances online and offline promotion by using newspapers to advertise about new online promotions and offers by calling or e-mailing journalists and referring them to the website. EasyJet does this by putting internet-only promotions in newspaper encouraging travelers to purchase their ticket online. The guess BA Go Losses and the section entitled Battle with Swissair were advertised on newspaper to lure more people to the website. Impact of the implementation of the strategy on business performance The implementation of the strategy has an impact on the business performance because the site is well integrated into EasyJets existing systems and business process. A good example is the ability to feed press release into the site through electronic and new destination appearing automatically once fed into the companys information system. Also the effectiveness of the website was proved when the dedicated phone number on the site hit six months target within six weeks. The log file recorded 8 minutes average time spent on the website per person and almost each caller made a purchase. The website proved that EasyJet phone operators were busy selling tickets rather than answering questions over the phone. Legal and Ethical issues The use of Internet in e-commerce has brought up invasive legal and ethical issues. This is partly due to its underlying features and the way it has been exploited by businesses disrupting existing social and business relationships and understanding. EasyJet like many other businesses has benefited from commercial development of the internet but this commercial development demand a price from individuals. EasyJet gathers and processes customer information and uses this information for marketing by sending e-mails. This is regarded as intrusion of solitude because once a customer registers in the EasyJet website, then they will be receiving constant emails which can be really annoying. This has resulted to consumer use of spam guard (junk mail filters) to stop receiving unsolicited emails. Sherrington (2009, p 19) emphasizes that the status of a business is not respected; it is earned (Sherrington, 2009, p 19). It is not good for a business to burst into peoples inboxes or profiles on social networks such as Facebook, advertising their brands just because it has spotted a potential customer. Consumers regard this as abuse and violation of their privacy and some can punish the business by never purchasing their product or service. It is important in e-marketing to demonstrate integrity, honesty, respect and a willingness to share and apply the golden rule of treating consumers as you would like to be treated. This can be accomplished by letting consumers know before their information is gathered, give consumer the opportunity to agree or deny secondary usage of their information, give consumer access and the right to review personal data, store accurate consumer information and have in place a clear means by which consumer can address the situation if any of their right is violated. The use of cookies, spyware and other techniques enables tracking of consumers online behaviors, recording searches and sites visited by individuals. This helps business such as EasyJet in profiling customers and targeting them for specific marketing campaigns. The law and consumers regards this as intrusion of privacy (like stalking in the physical world). As a result there are a number of privacy advocacy groups on the web that monitor developments in privacy.(Laudon Traver, 2008, pg 500). The use of internet excludes a certain group of people who do not make use of internet. A good example is older people who do not seem to grasp the use of computers. EasyJet are likely not to have customers from this group of people. The use of internet sometimes violates copyright laws where intellectual properties such as trademarks of others are used without consent. EasyJet went through a legal battle with British airways for using a slogan that resembles that of BA. EasyJet called itself The webs favorite airline mimicking the BA slogan The worlds favorite airline. Conclusion This report mirrors EasyJet strategy for its online business model. In wide-ranging EasyJet strategy works well for the company. EasyJet is aware of its business environment and realize the importance of monitoring it. Through the use of internet, EasyJet succeeded to be among the top low cost, no frills airline companies in the UK. The design, structure, usability and usefulness of its website have enabled EasyJet to secure leverage over its competitors. The most important fact is that EasyJet has incorporated flexibility in its e-marketing strategy enabling it to anticipate changes and further develop its strategies to counter-act according

Microeconomics and the Laws of Supply and Demand Essay

Macroeconomics focuses on the entire economy while micro economics studies the individual characteristics and peoples within the economy. Both the fourth and seventh scenarios in the simulation were examples of macroeconomics. They illustrated examples that display the economy as a whole. For example, the affected changes were caused by an increase in the population and a change in consumer demand. The first and second scenarios were examples of microeconomics as they illustrated actions and decisions of individuals and businesses. Whenever the managers created lower or higher price points for rentals they affected the supply and demand curves. As the summary at the end of the simulation states, â€Å"the supply and demand curve is not static; various factors cause them to increase or decrease.† For instance, in the simulation there was a shift in the demand curve with changes in the rental rates for the apartments. The supply curve shifted downward as the demand shifted upward with the changes in lower rental rates. More specifically, when the rental rates lowered to $1050 consumers began demanding more apartments at that rate. The increase in demand led to lower vacancies and, thus, less supply The equilibrium price is the price that allows the supply to meet the exact quantity of what is demanded. When there is shortage in the market it put pressure on the price and increases the price. When there is a surplus in the market it exerts a downward pressure on the price and decreases and decreases the price. Surplus and shortage determines the rate of equilibrium. Applying what we learned Working for a tea supplier for the Los Angeles County and Orange County, the lessons in the simulation really resonated with me. I started to think about the effects of pricing on our products and its effect on the supply and demand for our specific products. I began thinking about what factors are necessary to meet the demands of our clientele without compromising positive revenues. By analyzing our current conditions and creating accurate supply and demand curves for our products I realized that our company can set prices at equilibrium. In the context of microeconomics, individual and business decisions are what create shifts in supply and demand on the equilibrium price and quantity. For example, when the managers for the apartments made decisions to have lower vacancies they had to lower the price on there month to month rentals. This increased the demand while lowering the supply thereby creating a price that is closer to equilibrium. In the context of macroeconomics, population changes or things like unemployment rates would change the supply and demand. For example, when the unemployment rate is high there would be less demand for higher priced rental rates. This would, therefore, increase the supply. In other words, there would be a surplus in vacant apartments. With a higher population rate there would be an increase in demand. There is a direct relationship between the prices of a product set by a firm to how much it will be demanded by the consumers. The price elasticity refers to these changes in demand as the price is lowered or raised. Therefore, the most essential question firms must ask first when determining a price points is, â€Å"How many people will demand a certain product at what specific price?† This does not take into consideration the supply held by a firm since it makes no difference to what is demanded based on the price. References Colander, D. C. (2010). Economics (8th ed.). New York, NY: McGraw-Hill. University of Phoenix. (2013). Economics for Business 1: Applying Supply and Demand Concepts. Retrieved on October 27, 2013. https://ecampus.phoenix.edu/secure/aapd/vendors/tata/UBAMsims/economics1/economic s1_supply_demand_simulation.html

Implications of Information Technology in Developing Countries Essay

The survival and growth of organizations in an increasingly turbulent environment would depend upon effective utilization of information technology for aligning the organizational structure with environmental preferences and for creating symbiotic interorganizational structures. How can IT help the organizations in responding to the challenges of an increasingly complex and uncertain environment? How can IT help the organizations achieve the flexible organization structure? These are the topics that remains to be a matter of question for many developing countries. Although Information technology is still a .black box . technology for developing countries, it is largely applied in industrialised countries to the disadvantage of the majority of developing countries. This paper will try to illuminate the aspects and the impact of Information Technology in managing organizational change and its implications for developing countries. 1. Introduction The rate and magnitude of change are rapidly outpacing the complex of theories. economic, social, and philosophical on which public and private decisions are based. To the extent that we continue to view the world from the perspective of an earlier, vanishing age, we will continue to misunderstand the developments surrounding the transition to an information society, be unable to realize the full economic and social potential of this revolutionary technology, and risk making some very serious mistakes as reality and the theories we use to interpret it continue to diverge..-Arthur Cordell(1987). We have modified our environment so radically that we must modify ourselves in order to exist in this new environment..Norbert Wiener(1957) The survival and growth of organizations in an increasingly turbulent environment would depend upon effective utilization of information technology for aligning the organizational structure with environmental preferences and for creating symbiotic interorganizational structures. How can IT help the organizations in responding to the challenges of an increasingly complex and uncertain environment? How can IT help the organizations achieve the .flexible. organization structure? These are the topics that remains to be a matter of question for many developing countries. This study will try to illuminate the aspects and the impact of Information Technology in managing organizational change and its implications for developing countries. 2. Aspects of Information Technology Information technology (IT) may be defined as the convergence of electronics, computing, and telecommunications. It has unleashed a tidal wave of technological innovation in the collecting, storing, processing, transmission, and presentation of information that has not only transformed the information technology sector itself into a highly dynamic and expanding field of activity – creating new markets and generating new investment, income, and jobs- but also provided other sectors with more rapid and efficient mechanisms for responding to shifts in demand patterns and changes in international comparative advantages, through more efficient production processes and new and improved products and services (e.g. replacing mechanical and electromechanical components, upgrading traditional products by creating new product functions, incorporating skills and functions into equipment, automating routine work, making technical, professional, or finan cial services more transportable). The development of IT is intimately associated with the overwhelming advances recently accomplished in microelectronics. Based on scientific and technological breakthroughs in transistors, semiconductors, and integrated circuits (â€Å"chips†), micro-electronics is affecting every other branch of the economy, in terms of both its present and future employment and skill requirements and its future market prospects. Its introduction has resulted in a drastic fall in costs as well as dramatically improved technical performance both within the electronics industry and outside it (Malone and Rockart, 1993). The continuous rise in the number of features on a single micro-electronic chip has permitted lower assembly costs for electronic equipment (each chip replacing many discrete components), faster switching speeds (thus faster and more powerful computers), and more reliable, smaller, and lighter equipment (fewer interconnections, less power and material). Similar dramatic falls in costs occurred in the transport and steel industries in the nineteenth century and in energy in the twentieth, associated with the emergence of the third and fourth Kondratiev cycles, respectively. The potential effects of microelectronics are thus very far-reaching, for its use in production saves on virtually all inputs, ranging from skilled and unskilled labor to energy, materials, andcapital. All sectors of the economy have been influenced by the development of IT applications: information technology opens up greater opportunities for the exploitation of economies of scale and scope, allows the more flexible production and use of labor and equipment, promotes the internationalization of production and markets, offers greater mobility and flexibility in capital and financial flows and services, and is frequently the precondition for the creation of innovative financial instruments. Information system developments are constantly being applied to increase the productivity, quality, and efficiency of finance, banking, business management, and public administration. In manufacturing, and to some extent in agriculture, many processes have been automated, some requiring highly flexible, self-regulating machines, or robots. The engineering industry has been transformed by computer-aided design and three-dimensional computerized screen displays. The pace of technological change in IT will most likely accelerate the already observable growth in the interdependence of international relations not just economic or financial, but also political and cultural. National economies have become more susceptible to the effects of policy decisions taken at the international level, and domestic economic measures are having increased impacts on economic policies of other countries. World markets for the consumption of similar goods are growing, and so are common lifestyles across national borders. The advance of telecommunications and computerization has recently enabled large companies to use information systems to transmit technical and economic information among numerous computer systems at different geographical locations, subjecting widely dispersed industrial plants to direct managerial control from a central location; this affects the international division of labor and production and international trade, changing the patterns of industrial ownership and control, altering the competitive standing of individual countries, and creating new trading partners. It is the integration of functions that confers on information technology its real economic and social significance. More than just a gradual and incremental technological evolution leading to improved ways of carrying out traditional manufacturing processes (i.e. simply the substitution of new technologies for existing systems and the rationalization of standard activities), IT offers the opportunity for completely new ways of working through systems integration. Rather than applying one item of new technology to each of the production functions now performed at distinct stages of the production process, i.e. design, production, marketing, and distribution (in what could be called â€Å"stand-alone† improvements or â€Å"island automation†), having evolved in to new technologies, i.e. Enterprise Resource Planning systems, IT offers the possibility of linking design to production (e.g. through programmable manufacturing, measuring, and testing equipment responding to the codification of design), planning and design to marketing and distribution (e.g. through a variety of computer aids and databases that sense and collect changing market trends), production to distribution (e.g. by automatically incorporating orders and commissions by customers and suppliers into the production process), etc. The complete integration of all these production subsystems in a synergistic ensemble is still more a long-term trend than a reality, but use of automated equipment to link together individual items of equipment belonging to hitherto discrete manufacturing operations has already made IT a strategic issue for industry. More technical advances are expected soon in the automation of telecommunications and the linkage of computers by data transmission that will enhance the possibilities of systems integration. Such â€Å"programmable automation,† or computer-integrated manufacturing (CIM), has the capability of integrating information processing with physical tasks performed by programmable machine tools or robots. CIM offers radical improvements in traditional problem areas confronting manufacturers, such as: – reduced lead time for existing and new products; – reduced inventories; – more accurate control over production and better quality production management information; – increased utilization of expensive equipment; – reduced overhead costs; – improved and consistent quality; – more accurate forecasting; – improved delivery performance (Miles et al., 1988). These features characterize information technology as a new technological system, in which far-reaching changes in the trajectories of electronic, computer, and telecommunication technologies converge and offer a range of new technological options to virtually all branches of the economy. Moreover, IT forms the basis for a reorganization of industrial society and the core of the emerging techno-economic paradigm. The reason for the pre-eminence of the new technological system clustered around information technology over the equally new technological systems clustered around new materials and biotechnology is the fact that information activities of one kind or another are a part of every activity within an industrial or commercial sector, as well as in our working and domestic lives. Almost all productive activities have high information intensity (some involve little else, such as banking or education). Further more, along with the premier of internet technology and e-business architectures; powerful concepts like inventory control, supply chain management, customer relationship/service management, and management resource planning through the internet under the name of Enterprise Resource Planning have enabled IT to be capable of offering â€Å"strategic† improvements in the productivity and competitiveness of virtually any socio-economic activity. Other than industrial or commercial sectors, information technology is also applicable in education sector and in public institutions. Thus, Information Technology is universally applicable. Probably only a fraction of the benefits derived from information technology-based innovations have so far been reaped and the rest remain to be acquired in the next decades. The shift towards systems integration to capitalize the full potential benefits of IT requires considerable adaptations, learning processes, and structural changes in exis ting socioeconomic institutions and organizational systems. The tradition in most current organizations is still to operate in a largely â€Å"disintegrated† fashion, reminiscent of the Ford-Taylorist management approaches that dominated the fourth Kondratiev cycle: high division of labor, increasing functional specialization/differentiation and de-skilling of many tasks, rigid manufacturing procedures and controls, long management hierarchies with bureaucratic decision-making procedures and a â€Å"mechanistic† approach to performance. Under these conditions, use of IT is restricted to piecemeal technology improvements. By contrast, information technology-based systems offer organizations the opportunity of functional integration, multi-skilled staff, rapid and flexible decision-making structures with greater delegation of responsibilities and greater autonomy of operating units, a more flexible and â€Å"organic† approach enabling a quick adjustment to changing environmental conditions. (Piore and Sabel, 1984.) But this means that information management skills require the ability to make choices about the optimal arrangements for particular situations: unlike earlier generations of technology, IT offers not a single â€Å"best† way of organization but a set of more or less appropriate alternative organizing, staffing, and managing options that may be adopted in different organizational contexts. There is no â€Å"determinism† in the way information technology influences the socioinstitutional framework. Therefore, organizational innovation is a crucial part of the requirement for firms to adapt to survive (Miles, 1988). Unfortunately, this is true for all the institutions as well. Further, it is even more dramatic for the organizations in developing countries because of not being able to properly adapt to this so-called .black-box. technology. No matter how frustrating it is interpreted for these countries, IT still has significant impact on their development. Although socio-economic structure of these countries resists organizational or institutional changes, the complex interrelations between these changes and information technologies have significant implications for the way IT does and will affect the societies and economies of developing countries. As a matter of fact, the negative and positive potential impacts of IT on these countries are a matter of great controversy among economists and politicians. The main short term issues usually discussed are the potential erosion of the comparative advantages of low labor costs, particularly in relation to assembly facilities, and the effects of automation, particularly on internal markets and international competitiveness. Implications of information technology for those countries hold great importance. 3. Implications for Developing Countries The first direct effect of the â€Å"micro-electronics revolution† was the location of production for export in third world countries. While production of mainframe computers continued to be located largely in industrialized countries, production of smaller computers and of microelectronic devices, more subject to price competition, was shifted to low-wage locations, mainly in East Asia, where countries presented low wage costs as well as political stability, a docile labor force, and government incentives. Location of production for local and regional consumption followed, but the countries concerned were mainly middle income: three quarters of US investment in third world micro-electronic industries was concentrated in 11 countries, namely the four Asian â€Å"dragons,† India, Thailand, Malaysia, the Philippines, Brazil, Mexico, and Colombia (Steward, 1991). Export-oriented investments in these countries were associated more with direct foreign investment from larger firms in industrialized countries than with firms producing for the local market; on the other hand, licensing was more associated with smaller firms (Tigre, 1995). The automation of production decreases the relative importance of labor-intensive manufacturing and cost of labor, thereby eroding the competitiveness of low labor costs. For instance, automation led to a sharp decrease in the difference between manufacturing costs of electronic devices between the United States and Hong Kong: in manual processes, manufacturing costs were three times higher in the United States, and the introduction of semi-automatic processes made the difference practically disappear (Sagasti, 1994). Equally, the expansion of automation in Japan has contributed to a reduction of Japanese investments in the Asia/Pacific region involving firms in electronics, assembly parts, and textiles (Sagasti, 1994). The trend to increasing systems optimization and integration is most likely to induce large producers in industrialized countries to bring back a significant share of their production located in developing countries (offshore production). This movement has been called â€Å"comparative advantage reversal.† As integration increases, with functions previously obtained by assembling pieces being incorporated in the electronic components, value-added is pushed out of assembly processes into the components themselves and upwards towards servicing. In addition, the growing technological complexity of electronic devices increases the value of the parts manufactured by firms located in industrialized countries The amount of value-added obtained in offshore assembly has thus been constantly decreasing (Sagasti,1994). Global factories constructed in locations of least cost, often at a considerable distance from final markets, were economically worthwhile because labor was one of the major determinants of costs. Technology and rapid responsiveness to volatile local markets are becoming more important components of competitiveness. The reduction of product cycles due to the growing resistance to obsolescence of programmable machines and equipment has led to a concentration of manufacturing investment in capital-intensive flexible manufacturing, further adding to the erosion of the comparative advantages of developing countries. The assembly of systems will probably continue in some developing countries that have adopted protective legislation for local production targeted at particular market segments (e.g. Brazil), although this is changing very rapidly (Steward, 1991). The types of equipment produced under these circumstances are used largely in internal markets and are hardly competitive on the international level; they tend to be far more expensive than comparable equipment available abroad, and often their installation and use are also more costly because of expensive auxiliary installations, under-use, and lack of management skills. Nevertheless, they may at least provide the country with the capacity to follow the development of information technologies more closely. In other countries, assembly of equipment is taking place from components bought practically off the shelf, but as the level of hardware integration and the amount of software incorporated into the chips (firmware) grow, valueadded will be taken away from the assembly process, reducing or eliminating its economic advantages. The introduction of microelectronics requires certain new skills of design, maintenance, and management, as well as complementary infrastructural facilities such as reliable telephone systems and power supplies. Deficiencies in these factors prevent the widespread adoption of information technology in developing countries (Munasinghe et al., 1985). The more advanced developing countries, with a wider basis of skills and infrastructure and a more flexible labor force, may be in a better position to adopt IT and to increase their productivity and their international competitiveness. But the less developed countries, with inadequate skills and infrastructure, low labor productivity, and lack of capital resources, will find it difficult to adopt the new technologies; they are likely to suffer a deterioration in international competitiveness vis-à  -vis both industrialized and the more advanced developing countries (Stewart et al., 1991). Quality, too, requires an adequate level of skills, infrastructure, and managerial know-how that is generally lacking in developing countries. This greatly reduces the synergies, number of options, faster responses, and more informed decisions that can be implemented in the firm by the optimization of the systems performance. In turn, the composition of the labor force existing within firms located in industrialized countries will further improve their systems performance and further reinforce the advantages derived from automation. The proportion of the labor force employed in production is constantly decreasing in the industrialized countries, implying that performances at the systems level and innovation, not manufacturing, are becoming the key to profit, growth, and survival (Sagasti, 1994). Like biotechnology, information technology is a proprietary technology, vital technical information regarding design engineering specification, process know-how, testing procedures, etc., being covered by patents or copyrights or closely held as trade secrets within various electronic firms from industrialized countries. Many companies in the software area do not patent or copyright their products because it entails disclosing valuable information, and firms are generally reluctant to license the more recent and advanced technologies. Therefore, technology transfer takes place mainly among established or important producers, hindering the access to developing countries. Moreover, the main issue facing developing countries is not so much the access to a particular technology but to the process of technological change, because of the dynamism of this process. Sagasti implies this issue in the book The Uncertain Guest: science, technology and development (1994) that recent trends in int er-firm relationships seem to indicate that this access takes place essentially through the participation in the equity of the company holding the technology.

Human Rights And Women s Rights - 955 Words

Over the past few centuries, human rights have evolved all around the world. The main purpose of human rights are to protect people and promote happiness. At one point in history women did not work outside of the home or even have the right to vote. This day in age, women have more rights, but society still finds ways to discriminate against them and limit their rights. In third world countries women are also treated as inferior because of their appearance, race, and religion. Everyday in third world countries women are abused and belittled. For example, women in some countries in Asia have to follow certain dress codes because of their religion. These women have to be completely clothed and cannot show their faces. They have to wear long dresses that go down to their ankles and veils and cloaks to cover their faces. Women in these countries are also abused and are treated like objects; many are beaten and raped. In addition, women are downgraded when it comes to the work force. 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