Introduction Of Free Market Policies Management Essay
Globalisation and introduction of free market policies have encouraged corporations to trade all around the world and this has led to the emergences of Multinational Corporations (MNC). Multinational corporations are companies with “operations in more than one country” Porter (1990). If we trace the history of MNC’s it can be traced back to the age of colonisation when European companies went out to trade worldwide. At early stage of the process of globalisations i.e. during the colonisation overseas trading of trade companies were headed by a trader or a military leader. Leadership has always been an important part of corporations around the world.
As mentioned above leadership is an integral and important part of any industry, imperative of its mode and sector of operation. It is an indispensible skill in any corporation’s human resource ranks. With the changing environment and economic pattern, organisations need to adapt as well according to local culture in order to establish and continue a successful business. Human resource managers in these corporations are in constant need for people with skill to take initiative and lead the business ahead. With increasing competition and an unrelenting strive to generate more and more resources i.e. revenue, assets and goodwill corporations need human resource assets to accomplish these capitalistic requirements. This brings in the importance of human resources excellent leadership skills o achieve that.
Domestic & General is a warranty company specialising in breakdown protection on domestic appliances. They operate in 10 country supporting 150 brands and 110 companies. Their international market has been expanding steadily for the last 3 years including underwriting, claims handling, out-sourced repair networks etc. Domestic & General a UK based insurance company have started overseas trading in mainland Europe and Australia for the last 3 years. The international market business has doubled in the last year to £62.5m and is growing at a steady pace (Domestic & General report, 2008-09). The 2008-09 annual report of Domestic & General also points out that though the overseas business has doubled in relation to revenue but they are still lacking in market penetration. New country heads have been employed to handle overseas businesses but growth has been slow (Domestic & General report, 2008-09). This research report would be analysing the relation between leadership and growth in Domestic & General’s overseas business and how it can boost market penetration. The research would try to find out the impact and necessity of directional leadership in Domestic & General. In order to make the research easy the researcher has chosen employees of British nationality posted in Australia.
The research problem
According to Domestic & General’s 2008-09 annual report the international warranty business achieved a small operating profit of £ 0.9m. This is affecting the business as a whole because of the small contribution to the group’s overall revenue and profit. Significant rise in revenue generation in Germany and Spain has been recorded, but the revenue from Australia is quite low. The UK and international economic situations are making it more difficult i.e. fluctuation in currency conversions, increase in establishment costs and local staff remunerations in international sites. The penetration of the extended warranty business in Australia is low and there is scope of growth. Investment has been made in recruitment of human resources and in product promotions as well, still the revenue generation from new business has been below expectations. Therefore it is important to find out how effective is the present leadership in Australia and whether they need to review the staffs and reorganise them if necessary. It is also important to find out whether culture is playing a part in the problem and whether the managers are been able to understand the local culture and are adapting accordingly.
Research Question and objectives
The aim of this study would be to investigate and find out ‘How effective is the leadership in the Australia site and whether they have the necessary skills to lead a global business?’
To answer this above question the researcher needs to,
Examine Leadership skills in Domestic & General.
Find out what is meant by ‘Effectiveness’ in terms of Domestic & General’s expectations (i.e. more new businesses, more market penetration, and more revenue generation in Australia.)
Assess the current Domestic & General’s leadership in Australia and do they possess the necessary global skill.
Impact of culture in management leadership.
Multinational corporations to prosper globally and achieve their goals need direction which may be a provided either by an individual or a group of individuals. Leadership in an indispensible and integral part of any organisation and is a prerequisite in order to compete in the global market. Leadership may be defined as “a process whereby an individual influences a group of individuals to achieve a common goal” (Northouse, 2009.p. 3). From the definition we can see that leadership can contribute and influence action of an individual or a group of individuals.
DuBrin (2009.p. 27) defines Leadership as “the ability to inspire confidence in and support among the people who are needed to achieve organisational goals.” DuBrin (2009) further pointed out, that global leaders should have leadership styles that would encourage superior corporate performance based on four criteria and they are: 1) profitability and productivity 2) continuity and efficiency 3) commitment and morale and 4) adaptability and innovation. If we look at these four pre-requisites it can be seen that leadership in a multinational corporation needs to focus on efficiency, effectiveness, adaptability, innovation etc. If corporations want to operate globally they need to have leaders who would have the capability to bear the responsibility of doing the same.
There is a similarity between leadership and management in many ways as Northouse (2009.p.10) points out “leadership involves influence, as does management. Leadership is concerned with effective goal accomplishment, and so is management.” Some of the authors like Kotter (1990, cited in Northouse, 2009.p.11) have argued that leadership and management are different and distinct construct and so have Bennis and Nanus (1985, cited in Northouse, 2009.p.11). Northouse (2009) concludes that though there are obvious distinction between leadership and management they do overlap. He says that when leaders organises, plans and control they become managers and when managers influences staffs to achieve targets they become leaders.
Leaders in the present global scenario need to have the skill to accept new culture and adapt accordingly and use it for the benefit of the corporation. It is therefore important for a leader to understand the impact of globalisation and culture in his/her job. As (Goldsmith, Greenberg & Hu-Chan, 2003) points out “understanding the impact of globalisation on her or his business was the number one rated behaviour by the next-generation leaders”. As Northouse (2009) mentioned that leaders can be managers and vice versa, it can be deduced that managers do have traits of leaders and vice versa. Modern day managers either posses leadership characteristics or develop the skills over time. Leadership characteristics or skills according to (Cohen & Rath, 2007.p. 19) leadership characteristics can be divided in two types i.e. “traits and core values”. These two categories are basically constitute leadership skills but there are few important global leadership traits and as Cohen & Rath (2007.p.19) finds out from their survey that they are “being open to new experience, being curious about the world, being enthusiastic and energetic, being willing to listen and learn, being able to adapt rapidly to change, being willing to ask the right questions, being innovative and creative, being self-assured and being results-oriented.” Along with this traits and skills one should have the right knowledge, training and the chance to learn.
Culture is another important part of global leadership as MNC’s expand and setup business overseas the primary factor that they have to take into consideration. Cultural understanding of the native population where a corporation is venturing out is important as it will help to make the strategy accordingly. The increase of global trade doesn’t mean that cultural differences are fading to create a global culture. It might be the other way round as House (2004.p.5) points out “as economic borders come down, cultural barriers could go up”. When talking about culture in management it is not possible to overlook Hofstede and his cultural theory. Leadership skills for global managers can be assessed using the Hofstede’s model of cultural diversity and using his four dimensions, i.e. Power distance index, individualism index, masculinity index and uncertainty avoidance index (Duchalet, 1998)
Research Methodology is one of the most essential parts of the whole research process and selecting the right research method is imperative as well. According to Jill and Jones (1997), it is important to select the suitable research method in order to gain the necessary information and the essential balance of information to answer the research problem. For this research the researcher would be selecting and using the Case Study method and it is a qualitative method of research (Gerring, 2007). Dul & Hak (2007.p.4) defines case study as “a study in which (a) one case (single case study) or a small number of cases (comparative case study) in their real life context are selected, and (b) scores obtained from these cases are analysed in a qualitative manner”. Bell (1999) opines that “a case study approach is particularly appropriate for individual researchers because it gives an opportunity for one aspect of a problem to be studied in some depth within a limited time scale.”
Data or information is one of the most important parts of research and it collected using a data collection method. For my ‘Case Study’ method the researcher would be using survey questionnaire as the data collection method. Fink (2003.p.1) defines survey as “a system for collecting information from or about people to describe, compare, or explain their knowledge, attitudes, and behaviour.” The rationale behind using the Case study method with a survey questionnaire is that researcher would be researching and studying a certain problem in a certain organisation and wouldn’t relate it to any other organisation or the industry.
As the research is qualitative in nature use of inductive analysis would be constructive as qualitative research emphasises on inductive processing of information rather than deductive (Hatch, 2002). Nardi (2006) points out that inductive analysis is about constructing a broad approach of related statements, based on comprehensive study or practical information. The induction method allows the theory to be constructed from the outline emerging from the research data (Henn et al. 2006, cited in Brown 2008.p.191). Saunders et al. (2007) further points out that unlike the deductive method, inductive method is more flexible and uses qualitative data. For this reason the researcher would be using the inductive method.
Data collection method
The primary data is planned by the researcher to be collected via survey questionnaire sent out to workers in the offshore sites including Australia. The questionnaires would be emailed to the site operations manager for approval and subsequently sent out to the employees. The email addresses of the employees would be collected from the human resources department. A covering letter would be provided with the questionnaire to assure the participant of confidentiality and data protection. The covering letter would also give the instructions to fill-in the survey and how to send it back to the researcher. If any of the respondents want to contact the researcher for any clarification regarding the questionnaire. The electronic method is selected by the researcher as it not feasible practically or economically to conduct face-to-face interviews. This method of survey enhances the number of responses and it is fast as well.
The questionnaire that the researcher would be using will asks for following data:
Job title and job description
Duration of employment
Managerial hierarchy the respondent is linked to
How is leadership affecting the respondent
Whether the respondent is happy with the management
Are the manager culture sensitive
Do the respondent think that the management has the right leadership
What are the areas of management that are need to be addressed
How can it be done
Researches also need data’s which are already existing known as secondary data but collection of primary data is more expensive and difficult to collect. It is therefore imperative to collect the primary data and concentrate on the secondary data as and when necessary. As some of the primary data would have confidentiality and data protection issues so the researcher need to get the necessary permission to get access to those data. They might be:
Contract terms and conditions of managers.
KPI’s (Key Performance Indicators for managers).
Contribution to corporate planning.
The above data’s might be difficult to come across from historical records then the research would need to enquire for these data’s from the relevant department. This method also has another benefit i.e. it will help the researcher to double check the information given by the managers.
This is another important step in the research process and it involves selecting the sample upon which the research would be done. For this research the researcher would use 25 employees in managerial roles and 150 employees in non-managerial roles. The researcher would be using a non-probability sampling for this research and it would help the researcher to complete the research. As the data is obtained from two different sample types i.e. managers and non-managers the use of stratified random sampling will be useful.
4.4 Data analysis
Analysing the data is the next stage where the researcher would be evaluating the information gathered from the respondent. The researcher would split the data according to his need and label them separately before grouping them. The respondents answer would be classified according to their views on management i.e. successful or unsuccessful. In addition to this the data would be divided on the basis of the manager’s response according to their knowledge about global leadership styles and their cultural sensitivity.
The collected from the question would also include data which would be of no or little use to the researcher. The researcher need to isolate those data to get the ones that would be relevant to the research. The data would be divided on the basis of the respondent’s role in the organisation. The response from the non-managers would be examined and the research would also try to find out how the relationship between the respondent and the managers. The reason behind this investigation would help the researcher to isolate the data’s which might be skewed or biased for a personal reason. The success of this investigation would help the researcher to get unbiased response as far as possible.
Limitations, Validity and Reliability Issues
Like all research there is limitation, validity and reliability issue with this one as well. The sample size for this research is one of the main limitations as it might be classed as too small. One of the reasons behind this limitation is the nature of the business i.e. new venture with limited penetration in the market results in small workforce. As this research is done on global leadership skills only overseas managers are used as sample so the scope of the research is limited.
Questionnaire put through email has another limitation as (Bell, 1999) is small response rate and Gilbert (2001, cited in Bieske, 2007.p.4) states that response from electronically send questionnaire can be low as much as 20%. Targeted respondents (non-managers) may opt out of the research for the fear that their participation might put them in the bad books of the managers. Response of the managers might be colluded or there might be prevalence of miss-information.
Another limitation of this research is that the conclusion is dependent on the questionnaire and its responds. The questionnaire design is another factor that might affect the research as lack of appropriate question might affect the responds from the sample. A pilot research might be carried out on a small sample comprised of acquaintances or relations. This will enable the researcher to identify the drawbacks of the questionnaire and would be able to rectify the same.
Prejudice or preconception on part of the researcher is another limitation of this research and it might affect the research as a whole. The researcher needs to conduct the research without any biasness about the topic and the finding when analysing the data collected.
Reliability of the responses is another important issue that the researcher may take into consideration due to the nature of the research. As the questionnaire sent via an email the responses sent by the respondents might lack reliability because one simple reason that the researcher is not present in site to double check the responses and chase them to fill in the questionnaire correctly.
Any research irrespective of its scope or magnitude may face ethical issues and this research is no exception. An accepted level of professionalism should be maintained by the researcher and should carefully consider the rules of ethics. The research may also create situations where it might question or affect the integrity of the organisation, so the researcher should respect this and shouldn’t infringe them.
Best (2001) points out that the data or information collected should remain unbiased and relevant to the research. Therefore it is imperative on the part of the researcher to conduct the research at a highest possible ethical standard. As the research conducted may include individual’s honest view regarding the issue it is important on the part of the researcher to respect that and shouldn’t divulge the same to anybody not concerned with the research. The researcher might face many such ethical dilemmas but it is important on the researcher’s part to rise above these and conduct the research.
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