The non-market environment (government, NGOs, media)
1. UK debt ‘will push retirement age to 70’
The United Kingdoms has an ageing population that is becoming a political, economic and social burden. As medical science has enabled people to live much longer the number of people reaching retirement age increasing (Office of National Statistics, 2011). A demographic time-bomb created as a result of the post war ‘baby boom’ followed by low fertility rates in the 1970s means that as more people leave the labour market they are not being replaced by younger workers (Coupland et al., 2008).
Elliot (2010: 1) reporting in The Guardian Newspaper of the government plans to deal with the pension shortfall quotes John Hawksworth, chief economist at Pricewaterhousecoopers:
"The sweet spot enjoyed by the economy during the past 30 years as the post-war baby boomers moved through the workforce has the potential to turn sour as longer periods of retirement leave a lasting and expensive burden on future generations of workers."
The women ‘baby boomers’ began their retirement in 2006 and were eligible for state pension the men start their retirement in 2011. This year alone will see an increase of more than 10% of people claiming state pension (Office of National Statistics, 2011). Over the next 20 years the number of people claiming State Pension will have increased by 78% unless the government takes action the state pension fund will have to be spread further in years to come. At present weekly state pension is approximately £82 in 20 years time unless the fund is increased to cope with the additional claimants the pension pot will have to reach more people meaning that people will collect just £42 per week pension(Warwick, 2006).
To reduce the number of people claiming state pension the government will increase the age of qualifying for state pension for women to 65 by 2018 and by 2020 for men and women there will be an increase to 66 years by 2020 (Warwick, 2006). The trend in previous decades of early retirement has mean that there are many people who have not reached state pension age that are economically inactive. The government aims to get these people back into the workforce and has launched a number of initiatives to encourage people back into work (Vickerstaffe and Coxx, 2005).
Roberts (2006) suggests that this will be no easy task as research has shown that to return to the labour market older workers are looking for the type of work that will engage not only their bodies but also their minds. The type of jobs that are available are low paid and the work is menial and this is not attracting people back into the workforce. Researchers have successfully demonstrated that job types could be directly linked with age and although an employer may not doubt the experiences and ability of an older worker they may make their decision based on how that individual may fit with younger people in the workplace (Shore and Goldberg, 2004). Empirical research has confirmed that as workers get older they are more productive, supervisors believe the opposite to be true based on a stereotypical viewpoint (Taylor, 2001).
McGuire and Robertson (2007) found that those talent managers who showed a greater interest in older workers where aware of the changing demographics and may have had concerns about future skills shortages or shortages in the workforce later down the line. Some organisations had adopted Human Resource strategies which included flexible working, recruitment and training, succession planning with compensation and benefits programs. Taylor (2001) found some employers saw considerable commercial benefits in recruiting and retaining older workers pointing to the high costs of early retirement and skills retention as important reasons for maximising the working lives of older workers. Some organisations have adopted Human Resource strategies which included flexible working, recruitment and training, succession planning with compensation and benefits programs. Others had been looking to become recognised as a preferred employer due to how it viewed older workers. As the workforce continues to age it is likely more people will continue working through their retirement.
Coupland, C., Tempest, S. and Barnatt, C., (2008) What are the Implications of the New, UK Age Discrimination Legislation for Research and Practice? Human Resource Management Journal, 18(4), pp.423-431.
Elliot, L. (2010) UK debt ‘will push retirement age to 70”, The Guardian, 25 February 2010, P.28 -http://www.guardian.co.uk/business/2010/feb/25/national-debt-raising-retirement-age
McGuire, S. and Robertson, M. (2007) Assessing The Potential Impact Of The Introduction Of Age Discrimination In UK Firms From An HRM and KM perspective, Faculty of Business, Environment & Society Coventry University.
ONS (2011) Office of National Statistics, http://www.statistics.gov.uk/default.asp
Roberts, I. (2006) Taking age out of the workplace: putting older workers back in?, Work, Employment and Society, vol.20, no.1, pp.67-86
Shore, L. M., Cleveland, J. N., & Goldberg, C. (2003) Work Attitudes and Decisions as a Function of Manager Age and Employee Age, Journal of Applied Psychology, 88: 529–537.
Vickerstaff, S. and Cox, J. (2005) Retirement and Risk: The individualisation of Retirement Experiences, Sociological Review, Vol.53 No.1, pp.77-95
Warwick Report (2006) Ageing and employment: Identification of good practices to increase job opportunities and maintain older workers in employment, Study for the European Commission by the Warwick Institute for Employment Research, University of Warwick.
Information technology and it’s impact
2. The great online travel revolution: The noughties heralded the rise of self-service travel websites, bringing with them a boom in cheap flights and last-minute budget breaks
Technology has had a significant impact on E-tourism (Sheldon, 1997). Informations Communication Technologies (ICTs) have transformed global tourism and has changed both business strategies and practices ( Porter, 2001). The Internet has had a significant impact on the travel industry over the past decade as consumers look online to save money on their annual holidays. The last 10 years has witnessed significant t investment in the latest technology that have given holiday makers all the resources required to book their holidays from start to finish. Search engines like Google have enabled visitors to get all the information that they require on all the leading holiday companies (Johnson, 2009).
The latest research shows that 55% of internet users now book their holidays online and over 60% of internet users book more than one holiday a year. The people who appear to benefit from the internet the most are the so called ‘silver surfers’ who are regularly booking trips inline and are in the best position to take advantage of the late deals because they have total flexibility of the late deals (Harvest Digital, 2007).
The figures show that only 7% of holiday makers use the high street travel agents, 17% of people research and book directly on the internet, 9% use teletext for research and then book via the telephone and 50% of people research over the internet to find the best deal and then contact the operator and book the over the telephone. Mike Teasdale Planning Director at Harvest Digital comments on the research and the latest trends,
‘As the first truly global medium, the Internet has always had a special affinity with the travel industry and powerful new entrants are rumoured to be entering the market, most notably Google with their long-rumoured Google Travel portal. Obviously offline media still has a vital role to play in the marketing mix, but once an online consumer is interested in a specific destination or holiday, they use the Internet to research and buy.’
The growth in price comparison sites (Clemons, 2002) such as the Travel Supermarket compare the price of the same holiday with numerous holiday companies to get the consumer the best deal on the market. Tourist information sites such as Trip Advisor and the latest Simonseeks.com have holiday experts that no the destinations well enough to advise people who may be traveling to a destination for the first time. There have been a number of successful online travel agents such as Expedia and Lastminute.com where customers can take advantage of late deals and a fully interactive (Klein, 2002).
Travel to a whole host of european countries has been made possible by the growth of the low cost airlines based on the success of the low cost airlines based on the model by the american operator Southwest Airlines. Ryan Air was founded by Christopher Ryan in 1985 and 10 years later in 1995 Easyjet was founded by Stelios Haji-Ioannou both airlines aimed to have all booking made directly online which they have almost achieved (Buhalis, 2003). Theses low cost airlines allowed their customers to travel throughout europe with some famous 1p airfares or traveling for no airfare just paying the taxes (Oorni and Klein, 2003). Recently Ryan Air has been criticised for its extortionate credit and debit card fees which are much higher than the fees charged by the banks (Poulter, 2011)
Traditionally consumers would have visited a travel agent who would have completed relevant training and would be able to talk the consumer and be able to recommend destinations and resorts, even down the most suitable hotel and the local bars and restuarants (Morrison et al.,2001). All this information is now available on the world wide web (Mills and Law, (2004). Websites like Tripadvisor (Brynjolfsson and Smith, 2000) allow normal customer to leave comments about the hotels where they have stayed and can also about the area in general, the local restaurants, the food and service at the hotel can all be ranked so that fellow travelers can make an informed decision on that holiday.
Brynjolfsson, E., & Smith, M. D. (2000) Frictionless commerce? A comparison of Internet and conventional retailers, Management Science, 46(4), 563–586.
Buhalis, D. (2003). eTourism: Information technology for strategic tourism
management, London, Pearson
Clemons, E. K., Hann, I.-H., & Hitt, L. M. (2002) Price dispersion and differentiation in online travel: An empirical investigation. Management Science, 48(4), 534–549.
Harvet Digital (2007) Booking Holidays and Flights Online: What is the opportunity for travel companies selling online?, London, Nielson / Netratings
Johnson, B. (2009) The great online travel revolution, The Guardian , This article was published on guardian.co.uk at 14.07 GMT on Tuesday 15 December 2009. It was last modified at 14.47 GMT on Tuesday 15 December 2009 http://www.guardian.co.uk/travel/2009/dec/15/travel-websites-noughties-decade
Klein, S. (2002) Web impact on the distribution structure for flight tickets. In K. W. Wo¨ ber, A. J. Frew, &M. Hitz (Eds.), Information and communication technologies in tourism 2002 (pp. 219–228). New York: Springer Wien.
Mills, J., & Law, R. (2004). Handbook of consumer behaviour, tourism an the Internet. New York: Harworth Hospitality Press.
Morrison, A. M., Jing, S., O’Leary, J. T., & Lipping, A. C. (2001). Predicting usage of the Internet for travel bookings: An exploratory study. Information Technology & Tourism, 4(1), 15–30.
Oorni, A., & Klein, S. (2003) Electronic travel markets: Elusive effects on consumer behavior. In A. J. Frew, M. Hitz, & P. O’Connor (Eds.), Information and communication technologies in tourism , pp. 29–38, New York: Springer Wien.
Porter, M. (2001) Strategy and the Internet. Harvard Business Review, Vol. 79 No.3, pp.63–78.
Poulter, S. (2011) Holiday and airline giants accused of ripping off customers over credit card charges, MailOnline, 11th February, 2011 - Read more: http://www.dailymail.co.uk/travel/article-1355878/Credit-card-charges-Thomas-Cook-Ryanair-easyJet-accused-ripping-customers.html#ixzz1DjsAFcRP
Sheldon, P. (1997) Tourism information technologies. Oxford: CAB.
3. Sustainability and social responsibility
Blood, sweat and tears: the truth about how your sportswear is made: Factories used by biggest brands abuse staff, employ children and pay pitiful wages – while stars earn a fortune
Hickman (2010) reported just days before the commonwealth games that factory inspections by some of the worlds top brands showed that where 281 factories fell below acceptable standards. Low paid workers being forced to work longer and having their basic human right ignored always under the threat for low performance with the sack from their employment. One of the main arguments appears to be down to pay and the difference between a living wage and the lowest legal age that companies and get away with paying the workforce. Hickman (2010) quotes Anna McMullen, of Labour Behind the Label, who said: "They haven't acknowledged there is something called a living wage, never mind working towards it." Nike have argued that pay is something should be decided locally with negotiations between local management and workers.
Nike Inc, is a major world wide brand based in Oregon , United States of America and has more than 28,000 employees in over 160 countries. Phil Knight founder of Nike and person responsible for Nikes business strategy had the vision to move production to developing countries with lower costs. Nike started production in countries like Korea and Taiwan but as the production costs in those counties started to increase Nike switched production to lower cost countries such as Indonesia, Thailand, China and Vietnam . In the 1980’s and 1990’s the brand Nike was becoming synonymous with slave labour and was getting so much bad publicity its executives realised that it was time to change (Youseffi, 2007). Nike set about accepting Corporate Social Responsibility (CSR) which was a function added to the many functions that the organisation was required to perform whilst remaining viable a profitable in a competitive global market place. This of course brings in the question of sustainability, in an ideal world the rights of the workforce could be protected and the organisation still makes a profit. The question of sustainability has become a popular subject a of business and management research (Halme et al, 2009). Corporate Social Responsibility has increasing part of corporate strategy and a management function (Carroll, 2008). There are a several concepts and theories associated with Corporate Social Responsibility such as corporate conduct (Sethi, 2002), Stakeholder Theory (Phillips et al, 2003), Shareholder Value(Halme et al, 2002), and Corporate Social Performance (Callan, et al, 2009). As the concept of Corporate Social Responsibility (CSR) begins to get recognition in the business world there are some who are sceptical about sustainability must be questioned (Hopwood et al, 2005; Moon, 2007).
The bad publicity Nike received from consumers and the fact that consumers were willing to go far enough to boycott the Nike Brand was enough for Nike to transform it’s business to include a Corporate Social Responsibility function within the business. This question of sustainability has too be considered, after all the work that Nike put into the program it is still chasing the best deal on the labour market. This has often led to Nike setting up businesses in countries that can offer the cheapest manufacturing costs and those countries who choose to continue to avoid areas in the world were trade unions are recorded (Hickman, 2010).
Writers have argued that previous research on Corporate Social Responsibility has looked at the issue from a management position and the policy that they have put together for the sake of the stakeholders and future research may be more beneficial as how it relates on the practice (Lauring et al., 2009).
In the case of Nike, they are were not looking for bad publicity but they had to be seen to be doing something. Nike are a business and they would prefer to have an excellent reputation and will go to some length to protect their brand image conscious. They also have to consider that they have shareholders for whom they must always provide and acceptable return on investment for their shareholders and that is always going to be a difficult call to make
Callan, S J and Thomas, J M. (2009) Corporate financial performance and social performance: An update and reinvestigation. Corporate Social Responsibility and Environmental Management 16(1): pp. 61-78.
Carroll, A B. (2008) A history of corporate social responsibility: Concepts and Practices, In The Oxford handbook of corporate social responsibility, Crane, A, A McWilliams, D Matten, J Moon and D S Siegel (eds.). Oxford University Press: Oxford. pp. 19-46.
Halme, M, Roome, N and Dobers, P. (2009) Corporate responsibility: Reflections on context and consequences, Scandinavian Journal of Management 25(1): pp. 1-9.
Hickman, M. (2010) Blood, sweat and tears: the truth about how your sportswear is made: Factories used by biggest brands abuse staff, employ children and pay pitiful wages – while stars earn a fortune, The Independent, Friday 1st October, 2010
Hopwood, B, Mellor, M and O'Brien, G. (2005) Sustainable development. Mapping different approaches, Sustainable Development 13(pp. 38-52.
Lauring, J and Thomsen, C. (2009) Collective ideals and practices in sustainable development: Managing corporate identity, Corporate Social Responsibility and Environmental Management 16(1): pp. 38- 47.
Moon, J. (2007)The contribution of corporate social responsibility to sustainable development. Sustainable Development 15(5): pp. 296-306.
Phillips, R, Freeman, R E and Wicks, A C. (2003) What stakeholder theory is not. Business Ethics
Quarterly 13(4): pp. 479-502.
Sethi, S P. (2002) Standards for corporate conduct in the international arena: Challenges and opportunities for multinational corporations, Business and Society Review 107(1): pp. 20-40.
Youseffi, P (2007) Generation III: A new era in NIKE’s strategy, in Embedding Human Rights in Business Practice II, United Nations, Global Compact
Is globalisation on the retreat in 2011?
By Gideon Rachman
Published: January 3 2011 22:36 | Last updated: January 3 2011 22:36
Rachman (2011) reported in the Financial Times that the recession may have been enough to call a halt to globalisation but after 30 years it does not look like it is slowing. China has a big part in the continued flow of goods and international trade but there is pressure from the worlds biggest economy to start to impose barriers on trade as the USA and China suggest the other is devaluing their currency to stimulate further growth.
China’s has continued to see its economy grow and it is officially the worlds second largest economy behind the USA having taken the second spot from Japan. Year on year growth has almost hit double figures with annual growth steady over the past decade at 9%. Foreign Direct Investment (FDI) has continued to flow across China's borders as international companies enter the market place. In 2002 China attracted more Foreign Direct Investment ($53.2 billion) that the United States ($52.7 billion) for the first time in history. China has established itself as a major trader worldwide and is forecasted for further growth. China has invested heavily in education and is building a huge pool of talent. Millions of technical engineers have graduated from Chinese Universities in the past decade (Lieberthal and Lieberthal, 2004).
China has seen continued economic growth over the past 30 years and has developed ‘comparative advantage through the development of labor intensive industry, the pursuit of an export-oriented economy, the introduction of foreign direct investment (FDI), and the growth of the non-state economy, to name a few’ (Fewsmith, 2010: 1). China has become a popular place to visit and to invest with some major international has developed world-class cities.
China is the No. 1 buyer of iron ore and copper and the second- biggest importer of crude oil, and no the biggest manufacturer of automobiles. Coca Cola was one of the first global companies to enter the market in China and has huge success that are many lessons to be learned for other companies looking to enter the market and service the Peoples Republic of China (Yan, 2004). Fewsmith (2010) believes China’s growth has been due to the amount of political stability it has enjoyed due to the political stability it has but that may become more difficult as China is not without its political problems. The government is considered corrupt and weak and this may ultimately cause the economic growth to come to a halt (Chang, 2001). Wilson (2009: 38) believes ‘state-run China will not be insulated from the current economic crisis, but its overall rate of growth should remain very strong at around 8.5 percent in 2009, compared to 9.7 percent in 2008. It is extremely important for China to continue to shift its economy to one fueled by domestic demand rather than over-reliance on exports.’
It is anticipated the cost of doing business in china is going to increase in the future and this may restrict economic growth (Barboza, 2006b). Beijing intends to introduce a fuel tax in 2007 to take advantage of the falling oil prices which will increase the cost costs of transportation and manufacturing (Huang, 2007). The new fuel levy and the increase in transportation costs may have an impact on decisions made by foreign businesses to set up production in China and as such may have a detrimental effect on the future economic growth of China.
China’s economy is the first challenge the country has grown rapidly over since it opened its borders in the late 1970’s and GDP has grown an average by 10 percent growth per year. Other nations in Asia have not been able to maintain two decades of high-speed growth before slowing down, but China has continued to grow year on year for the past 3 decades. It is inevitable that the rate of growth will slow down. It is predicted however that growth will continue at a lower annual rate or maybe 7 or 8 percent. The reduction in growth would be mainly due to the export markets being able to take in any further products from China as they have in the past. Although the focus has always bee on the GDP central revenues have grown twice as fast (Fewsmith, 2010).
China’s successful growth period has depended on a closed domestic financial system which had worked by channeling individual savings which accounted for approximately 40% of the GDP into state owned banks which have then invested the money into state owned businesses. The increase in funding have allowed those companies to increase capacity despite an oversupply in many markets. China now has major competition from other developing countries when it comes to is no longer an unlimited supply of low cost labor. The consequences of globalization should increase workers' pay and also improve their working conditions. Although experience has shown that businesses are low on ethics when it comes to the bottom line they are willing outsource to lower cost countries (Barboza, 2006b; Roberts, 2006a).
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