Challenges Faced By The Management Business Essay


For the next three years, China will be the main target for foreign investors to expand their businesses. From year after year, China has managed to increase Foreign Direct Investment tremendously from US$6.6 billion in 1990 to US$62.4 billion in 2000,' said Md. Saad Hashim, Deputy Head of the National Economic Action Council (NEAC) Secretariat.

The awakening of China poses great threat to countries in South-East Asia. China offers lower-cost and lower-tax environment, ideal manufacturing sites especially for the current economic slowdown. Furthermore, foreign investors hope the market opening will bring them new customers through easier access to the country's 1.3 billion people, and offer a more predictable business environment in which to locate low-cost manufacturing bases. The economic downturn has also triggered the senior management of most multinational companies to ensure cost effectiveness of their manufacturing plants. Therefore, many multinational companies have made prudent decision to relocate their manufacturing operations to China with the hope of cutting down the cost and gaining China's market share. In the Bayan Lepas Free Industrial Zone (FIZ), Penang, the relocation of several multinationals to China has resulted in a few thousand workers losing their jobs.

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Lowering cost structure is the key focus of many multinationals; they moved to contract manufacturing and improved productivity. Align with this effort; there is a trend of work schedule change among the multinationals such as Intel, Agilent, AMD and Komag. They switched from eight-hour three shifts to 12-hour two shifts, compressed work schedule. Would this trim down the manufacturing cost?

In order to stay competitive, Semiconductor Company in the Bayan Lepas FIZ recently embarked on cost reduction by changing work shift. The company is operating in a shift work system where the workers are divided into four crews called as crew A, B, C and D, running in three rotating shifts in order to be able to cover 24-hours operation in a day and seven days a week. The coverage is such where in any day there will be three shifts working for eight hours each in day, afternoon and night. In this rotating shift system, at any one day there will be a crew of workers on 'off' or rest day. Each crew will work for average of 10.5 days every fortnight, of there is any absenteeism, the 'off' or rest crew can be called to come in to work overtime to cover for the absenteeism.

The new shift system is operating with four crews, but its operating in 12-hours per shifts, two shifts a day. This means at any one day, there will be two crews of people working in a rotating two shifts, day and night. This working system even has a direct stretch of 12-hours working in a day, but the shift worker need to work for a stretch of three or four days in a week then they will be entitled for three or four days off or rest day. Each crew will work for average seven days, per fortnight. The total working per week or the total working hours per month still remained unchanged and it is within the labor law requirement.

Beside the shift pattern changes, the day shift working hours formally started t 6.45am is also changed to 7.00am. This change subsequently leads to other changes such as the employee attendance system, production operating system, charted busses schedule, etc. With the implementation of the new system, Mr Zulkifli, person responsible for the change, is having anxiety form the employees' negative responses related to the long working hours, work environment and wages. The employees' resistance might lead to even lower productivity. He needs to overcome all the resistance without fail.

Source: Adapted from a case developed as part of class assignment for AGW613 Management and Organizational Behavior, 2002-03 by Kesvakumar M, Henry Wong Kim Seong, Ang Choo Keong, et al., School of Management, Universiti Sains Malaysia.


Compare and contrast 2 types of organizations in terms of their structures and culture citing relevant examples.

Discuss the organizational theory that underpins the principles and practices that this company has taken to its management and leadership.

Discuss the different relevant motivational theories, and hence, apply one of the theories within this company in order to motivate its employees towards effectiveness.

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Discuss the nature of group behavior within this company, and hence, evaluate the factors that lead to effective teamwork using relevant examples.

Table of Content





Task 1

5 - 10

Task 2

11 - 12

Task 3

13 - 17

Task 4

18 - 21




23 - 24


Some decades back organizations were very simple, and the business were only local and were not done on international level. So, therefore, managing the organizations was quite easy and much much simpler than now. The people in the organizations used to be mostly males and of the same origin and background which means that the personnel or the workforce then was not as diverse as now. The new millennium has started and the competition these days has increased tremendously. Every firm and organization tries to compete with others. But firms can have an advantage over its competitors by having better people and personnel. So, as the competition increases emphasis on better and better personnel in an organization increases. Therefore, training better people and workers has become the main concern and issue for the managers. Managers and directors adopt established and new innovative techniques to lift the performance of their workers. So, there is when the importance of organizational Behavior comes into play. Organizational Behavior is simply "a way of managing the people and workers"


Today's management faces many challenges and difficulties. Some of the challenges facing management are downsizing, reengineering, knowledge and information explosion, global competition and total quality management. All these factors that are creating difficulties for the management and administrations of the companies can be called the new environment. So, every management has to cope with these difficulties.


The new environment; Globalization, Information technology, total quality and diversity and ethics:

1. Globalization

Due to the advancements in transportation and development in the field of science the world has become a smaller place and this is called globalization or global village where transporting goods and transmitting information is done in a very shorter period of time than a century ago. So, these advancements have made the world a smaller place and now companies can send and sell their services and products even to far away lands and areas.

2. Information Technology

The other major environmental development is that of the computers which poses a challenge to the management of organizations today. In other words, to perform better organizations must employ new technologies and inventions to remain competitive. As the advancements are so much in this field, organizations have to update their knowledge every few months later to a have knowledge of new software and equipments which is a problem and more importantly the organizations have to employee people that can use these new techniques and machines and training and employing these people is a very difficult thing to do.

3. Total Quality

Besides other factors the quality of products is given a great deal of importance, due to many choices the customers have, which means that the products and services of the organization has to be of good quality to compete. And this is another headache for the managers. Recently, beside other marketing activities companies should make their products and services so that it must have a better quality to be a success in the market, which increases the responsibilities of any management and people involved in it.

4. Diversity and ethics

Diversity means, that nowadays in an organization, people come from different parts of the world with different places and cultures with different ages, backgrounds, religions, ethnicities and values and norms. And managers should keep this in mind that the organization should be designed so that there should be no discrimination on the basis of gender, ethnicity or religion. So, formulating and maintaining such rules, policies and environment in an organization is difficult for its management.

Task 1: Compare and contrast 2 types of organizations in terms of their structures and culture citing relevant examples. B. Braun Malaysia

1.0 Introduction of B'Braun Company

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The company's history began on June 23, 1839, when Julius Wilhelm Braun took over the "Rosen-Apotheke" pharmacy in Melsungen and expanded it, now including a mail-order business for native herbs. Today, more than 170 years later, B. Braun is a global player with more than 40,000 employees and subsidiaries on five continents, in 50 different locations worldwide.

The main mission of the company is to provide medical supplies, pharmaceutical products, and surgical instrumentation to health care providers, end-users, professional customers, and strategic business partners and within its branch this company is the world-market leader.

They dedicatedly offer operational and logistics services that are not comparable with anyone of their competence in excellence. The business propositions are highly innovative and the company is always trying to advance in progress improving in the ways to do business.

With their innovative products and services, B. Braun helps to improve working procedures and treatments in hospitals and medical practices and so increases the safety of patients, doctors and nursing staff.

The brand has its strength in innovation from its corporative philosophy that is promoting the exchange of information and experience both within the company and between the professionals in the hospitals, always through dialogue, to use it effectively and expand it consistently and purposefully for the benefit of health.

Their goal is to acquire, preserve and expand knowledge for the healthcare market. B. Braun is responsible for transforming all their knowledge into products and services expressed through their three fundamental values of their corporate culture: Innovation, Efficiency and Sustainability.

Moreover with its over 5 000 employees worldwide B. Braun is the main employer in the region ?Nordhessen? and Germany?s best employer with full points graded in the fields of ?working conditions?, ?corporate culture? and ?business development? according a study of the CRF.

2.0 Introduction of Organization Structures

The organization structure is defined as the way the job tasks are formally divided, grouped and coordinated in an organization. The way an organization organizes itself in terms of who does what, and who reports to whom, is basically what organizational structure is concerned with. The structure of an organization needs to ensure that it is able to achieve its mission and objectives in an effective and efficient manner. In other words, an organization needs to be structured in an appropriate way to get things done, while also enabling d degree of flexibility that will enable it to meet what can often be fast-paced changes in the external business environment. Sometimes, management may decide that the structure of an organization needs to be change, and this is referred to as organizational design.

There are six key issues to consider in terms of organizational culture which are specialization, departmentalization, chain of command, span of control, degree of centralization and formalization. Specialization is that the work is divided into specific jobs and departmentalization is that the jobs are grouped together, often by function. Chain of command is explains who reports to whom and span of control is the number of staff a manager can effectively and efficiently manage at a given time. Degree of centralization is concerned with the question of whether decisions are made higher up the hierarchy, or further down the hierarchy and formalization is concerned with the level of formality required in the behavior of staff.

3.0 Structures of B Braun Company

B. Braun Medical Industries Sdn Bhd and 

B. Braun Asia-Pacific Regional Office

Our management consists of a diverse line-up of culture and talent, yet aligned in their focus to continue the B. Braun tradition of sharing, enriching and developing healthcare related knowledge.

The 5-board member team comprises (from left to right):

Dr Juergen Schloesser

Vice President, Operations & Centre of Excellence, Intravenous Access

Mr Manfred Mahrle

Vice-President, Finance, IT and Controlling Asia-Pacific

Mdm Yenni Lim

Vice-President, Operations/Supply Chain Management Asia-Pacific

Dato' Kim Hae Dong

President, B. Braun Asia-Pacific

Dr Heinz-Walter Große

Chairman of the Management Board

B. Braun Medical Supplies Sdn Bhd (BMS)

BMS is headed by Mr Lam Chee Hong who has been with B. Braun for over 20 years, having held positions in the local market as well as the Asia-Pacific region. He brought a wealth of experience with him when he took over the helm of BMS in 2006. Under his leadership, the organisation has thrived and made inroads into challenging markets. He is particularly passionate about creating a learning culture in the organisation. His goal is to create a Best Working Place; a place where employees have the opportunity to grow, be constantly challenged and enjoy what they do.

4.0 Introduction of Organizational Culture

The presence of a strong and appropriate organizational culture has become essential for an organization to function effectively and efficiently in the modern era. Organizational culture is the consciously or subconsciously accepted and followed way of life or manner of performing day-to-day activities in an organization. It plays an important role in determining and controlling employee behavior at workplace. The core values, assumptions, norms, procedures, etc. that are followed in an organization constitute its culture. These are more often than not, accepted and followed throughout the organization, without much deviation.

However, the presence of individuals from various social cultures and backgrounds in an organization, may lend a slight variation to the beliefs and ideologies of the organizational members. This difference results in the formation of subcultures within organizations. The presence of subcultures may be advantageous to an organization as the deviations from the norm may throw up alternatives to existing practices, which are often useful to the organization in adapting to changes in the external environment. Such adaptability is essential for the organization to survive.

However, if the differences in ideologies go beyond a desirable level, they may have a negative effect on the organization and undermine it. The strength of an organizational culture depends on the sharedness and intensity of the core values of the organization. A strong culture tends to enhance employee commitment and loyalty towards the organization. Organizational cultures have been classified into four major types - market culture, adhocracy, clan culture and hierarchical culture.

5.0 Organizational Culture of B'Braun Company

B'Braun Company in Bayan Lepas, Penang

Participating in the global market and supplying innovative products that are valued by healthcare practitioners has always been and continues to be our credo. All this is possible because B. Braun remains a family-owned company with values that promote growth without compromising on the personal touch.

Over 38,000 B. Braun employees around the world strengthen our competitive position. We are now an open and diverse but transparent culture of cooperation - spanning the entire globe - qualities that are the hallmark of our strength; that which gives us the confidence to move forward into the future.

B. Braun's diverse fields of expertise allow the company to view the healthcare system as a whole and offer healthcare solutions in addition to our products. Our four divisions orientate their products and services towards different medical fields: Hospital Care, Aesculap, Medtech and OPM. By networking our divisions' knowledge and developing solutions for the healthcare system, we transform products and services into integrated systems.

B. Braun is one of the leading global manufacturers of hospital equipment & pharmaceuticals.

With technical excellence stretching over 168 years, we have more than 38,000 employees worldwide contributing towards the organizational success.

B'Braun Company in China

In addressing the need to strengthen people competency, the company has devised a holistic change program called AP Winning Mechanism.The company defines competency as consisting of three components

skills, knowledge and personal attitude. Among the 3 components, personal attitude was seen as the biggest challenge, but if this component could be handled well, the positive impact on the company's performance would be long lasting. Personal attitude referred primarily to the mindset towards change. With the given sizeable work force and entrenched culture of stability, unless the mindset could be unlocked, otherwise all effort of change would yield minimum results. Senge (1990) highlights that the right mindset is the most critical factor for change success. Many other scholars concur and propose that the mindset problem can be overcome by establishing a culture that promotes learning among employees, and particularly employees at the managerial levels. Apart from the mindset challenge, the regional President identified two key competencies among other competencies that were regarded as strategically important, namely, leadership skill and environment agility or adaptability of the managers. Development of leadership skill is related to development of talent capability and that is consistent with the employee's ability to learn and adapt or being agile in the fast changing market environment. Hence, the principles of Learning Organization by Peter Senge (1990) formed the guiding principles to systematically and continuously encouraging employees to enhance their knowledge. Organizational learning is seen as a critical organizational capability for product innovation and creativity to sustain B. Braun's competitive position.

The top management of B. Braun Asia Pacific had to overcome the mindset problem and subsequently facilitate new knowledge acquisition and knowledge application to enhance organizational performance. With the learning culture well developed, the learning agility would become a strategic capability or a part of the DNA of the organization to create and sustain its

competitive advantage. Hence, initiatives to make Braun Asia Pacific a learning organization were introduced to build its strategic competencies. Since 2006, many initiatives had started and some of the key initiatives are discussed as follows.

Task 2: Discuss the organizational theory that underpins the principles and practices that this company has taken to its management and leadership.

1.0 Introduction of Leadership Theories

1.0.1 Fiedler Contingency Theory

The theory takes into account both the context and the situation and try to match up a particular leader to them. The theory purposes that an effective leader will be dependent on the setting. For example, depending on the type of relationship that exists between supervisors and workers, a particular type of leader could be chosen. If the relationship is a relaxed one, the organization may decide they do not require a tough leader. However, if relationship were strained, the organization could decide to appoint a leader with firm style.

1.0.2 Path-Goal Theory

This theory is all about employee motivation and how leaders motivate followers to achieve organizational goals. Here, the leader will work to remove any obstacles that are hindering the employees as they move towards their goal. This theory extends Fiedler contingency theory by taking account of the leader in addition to the particular context of task. The theory suggests that it is dependent on particular leadership styles being used at the right time to enable followers to achieve their goals.

2.0 Leaderships Theories Practiced at B'Braun Company

When the new regional President took over the helm in 2005, he noticed that B. Braun was a major market player in Korea and Indonesia, whereas its market share was small in Taiwan and Thailand in 2006. He ruled out the external market environment as the contributing factor for such variation in sales performance. Instead, he viewed the company's competitive position in the respective countries was the consequence of the local team's competency.

In fact, a consulting firm was engaged in early 2005 to conduct a benchmark analysis of the competencies of the existing sales and marketing teams. The analysis benchmarked B. Braun's sales and marketing competencies against those of the other pharmaceutical and medical device companies. The results indicated that the overall competencies of the sales and marketing teams were only mediocre. The marketing team significantly lacked strategic thinking and customer orientation, while the sales team was weak in leadership and the sense of competitiveness. In addition, the new regional President also noticed that the employee turnover rates in several regional offices were higher than the industry average. He found that almost 50% of the participants in many regional product trainings and meetings which were conducted every two years were new. Since in

depth therapeutic knowledge and customer relationship are critical for success in this medical device business, he began to know the reason for the lack of consistent sales growth in many of these regional offices.

In the meantime, B. Braun in Germany saw the opportunity to position the company as the safe medical device supplier particularly in the area of intravenous access product range in 2006. B. Braun's manufacturing site in Malaysia was instructed or designated by the head quarter in Germany as the Center of Excellence for the intravenous catheter portfolio. The development of the new devices not only demanded new product innovation but also innovation in production technology to ensure cost competitiveness. This strategic move further put pressure on B. Braun management to hasten acquisition of new knowledge and skills by the local workforce to ensure the technology change would be a success in the shortest possible time.

Task 3: Discuss the different relevant motivational theories, and hence, apply one of the theories within this company in order to motivate its employees towards effectiveness.

1.0 Introduction of Motivation

Motivation is the answer to the question "Why we do what we do?". The motivation theories try to figure out what the "M" is in the equation: "M motivates P" (Motivator motivates the Person). It is one of most important duty of an entrepreneur to motivate people. (I strongly believe that motivating people with visionary and shared goals is more favorable than motivating through tactics, incentives or manipulation through simple carrot and stick approaches  because motivating with vision is natural wheres the former is artificial and ephemeral).

Now, lets rise on the shoulders of the giants :

A Classification of Motivation Theories (Content vs. Process)

Motivation theories can be classified broadly into two different perspectives: Content and Process theories. Content Theories deal with "what" motivates people and it is concerned with individual needs and goals. Maslow, Alderfer, Herzberg and McCelland studied motivation from a "content" perspective. Process Theories deal with the "process" of motivation and is concerned with "how" motivation occurs.  Vroom, Porter & Lawler, Adams and Locke  studied motivation from a "process" perspective.

2.0 Introduction of the Theories of Motivation

(1) Abraham Maslow's  Hierarchy of Needs

When motivation theory is being considered the first theory that is being recalled is Maslow's hierarchy of needs which he has introduced in his 1943 article named as "A Theory of Human Motivation". According to this theory, individual strives to seek a higher need when lower needs are fulfilled. Once a lower-level need is satisfied, it no longer serves as a source of motivation. Needs are motivators only when they are unsatisfied.

In the first level, physiological needs exist which include the most basic needs for humans to survive, such as air, water and food.

In the second level, safety needs exist which include personal security, health, well-being and safety against accidents remain.

In the third level, belonging needs exit. This is where people need to feel a sense of belonging and acceptance. It is about relationships, families and friendship. Organizations fulfill this need for people.

In the fourth level, self-esteem needs remain. This is where people looks to be respected and to have self-respect. Achievement needs, respect of others are in this level.

In the top-level, self-actualization needs exist. This level of need pertains to realising the person's full potential.

(2) Herzberg's Two Factor Theory Herzberg, introduced his Two Factor Theory in 1959. He suggested that there are two kinds of factors affect motivation, and they do it in different ways:

1) Hygiene factors: A series of hygiene factors create dissatisfaction if individuals perceive them as inadequate or inequitable, yet individuals will not be significantly motivated if these factors are viewed as adequate or good. Hygiene factors are extrinsic and include factors such as salary or remuneration, job security and working conditions.

2) Motivators: They are intrinsic factors such as sense of achievement, recognition, responsibility, and personal growth.

The hygiene factors determine dissatisfaction, and motivators determine satisfaction. Herzberg theory conforms with satisfaction theories which assert that "a satisfied employee tends to work in the same organization but this satisfaction does not always result in better performance". In other words, satisfaction does not correlate with productivity.

(3) McClelland's Achievement Need Theory

in his 1961 book named as "The Achieving Society", David McClelland identified three basic needs that people develop and acquire from their life experiences .

Needs for achievement: The person who have a high need for achievement seeks achievement and tries to attain challenging goals. There is a strong need for feedback as to achievement and progress, and a need for a sense of accomplishment. The person who have a high achievement need likes to take personal responsibility.

Needs for affiliation: The person who have a high need for affiliation needs harmonious relationships with people and needs to be accepted by other people. (People-oriented rather than task-oriented).

Needs for power: The person who have a need for power wants to direct and command other people. Most managers have a high need for power.

Although these categories of needs are not exelusive, generally individuals develop a dominant bias or emphasis towards one of the three needs. Entrepreneurs usually have high degree of achievement needs.

3.0 Motivation Theory Practiced at B'Braun Company

B'Braun Company is applied Herzberg Two-Factor Theory to motivate its employees. This theory said that employees are motivated by two factors were referred to as hygiene (or maintenance) factors, and motivators (or growth) factors.

B'Braun provide its employees the Annual wage supplement and there is Result Bonus Program for employees too. This program is supports their culture of performance by providing rewards based on the achievement of results of their employee. There is also has Reward Bonus which rewards employees based on results achieved, reinforcing individual accountability for meeting business objectives. B'Braun also provide Stock Option Plan which provides an opportunity to reward and retain high-performing employees and promote employee ownership of the company.

B'Braun also has a good condition of working environment for employees. B'Braun has provides meal subsidy and an award-winning cafeteria, free snacks and coffee/tea daily to employees. It has also convenience store, automated-teller machines, and prayer rooms. Besides that, it also has on site sport and recreational facilities for employees to carry out sports activities.

Task 4: Discuss the nature of group behavior within this company, and hence, evaluate the factors that lead to effective teamwork using relevant examples.

1.0 Introduction of Group Behavior

A group may be defined as a collection of two or more people who work with one another regularly to achieve common goals. In a group, members are mutually dependent on one another to achieve common goals, and they interact with one another regularly to pursue those goals. Effective groups help organizations accomplish important tasks. In particular, they offer the potential for synergy - the creation of a whole that is greater than the sum of its parts. When synergy occurs, groups accomplish more than the total of their members' individual capabilities.

1.0.1 Role

Clearly defining employee roles in your company is vital to work efficiency. When employees understand what their role is in your company they will be more productive. Employees should also know what is expected of them and the work they produce. Knowing what your expectations are and understanding what role they play in your company will help success.

Employees that do not know what is expected of them or their role in your company can lead to unnecessary conflict and misunderstandings.

1.0.2 Norms

In sociology, norms are social expectations that guide behavior. Norms explain why people do what they do in given situations. For example, in the United States, it is a norm that people shake hands when they are formally introduced. This expectation accounts for why a job candidate extends a hand toward the interviewer upon meeting - as opposed, say, to giving the interviewer a hug. Some norms are enforced by legal sanctions; for example, walking nude in public is often a legal offence that could result in arrest. Mores are norms it is considered very serious to violate, such as the norm not to murder. Folkways are norms that are less strict. People typically feel strong pressure to conform to norms.

1.0.3 Cohesiveness

Group cohesiveness is the ability to think and act 'as one' if the group is physically together or not. It means supporting the group in whatever decision or action it takes even if a group member personally is not in favour of the act or thought. It does not mean supporting one person within a group (even though sometimes it may look like it).

2.0 Factors for Effective Teamwork

While many employees thrive in fulfilling a small project on their own without the input of others, there will be far more occasions when workers will be required to exist as part of a team, working together in order to achieve the end result.

An effective team breeds high morale in its members, allowing them to discover their own skills as well as how to harness the best qualities of their colleagues. Members of a team can help one another, supporting those who are perhaps not performing to the best of their abilities. A team can be considered a "living organism" in that it adapts and evolves to different projects, changing strategy and focus to achieve the end goal to the best of its abilities.

2.0.1 Cooperation

A spirit of cooperation for systematic integration of team members' work effort is important aspects of team management. The researches have documented the gains from cooperation to be more than the competition for achieving productivity and quality in organizations.

2.0.2 Communication

Management of various communication and patterns is another important aspect of effective team management. Communication helps in generating trust and harmony in team work.

2.0.3 Rewards

Team based incentives and rewards like gain sharing where the team members share in the gains accrued by cost savings motivates team members to work for shared goals.

3.0 Group Behaviors of B'Braun Company

Study Group behaviors concept was incepted in 2005 specifically for B. Braun's manufacturing plant in Malaysia with the main objectives to break down the silo mentality across departments and to involve the second tier experienced managers to spearhead the organization learning. The Study Group which consists of 6 to 8 members from various functional areas is led by a group leader who is the second tier manager. Each study group is to conduct an in

depth study of a given organizational issue to recommend areas for improvement. Upon endorsed by the management board, the Study Group can proceed to implement the proposals. Once the project is completed ,it is documented as a case study and deposited in the company's electronic database, the "eLibrary". Many initiatives documented are the results of proposals from the Study Groups. Some members of the Study Group later become the internal trainers.


Deciding on which motivational system to use depends on which efforts are determined to be the most important; in some cases, individual successes might be the most important, while in others an organizational sub-unit's (or group's) performance could well be the deciding factor. Knowing which techniques to use in a particular situation is a skill that takes time to develop, but it is important to know that even less than successful change implementations often result in enhanced skill development for would-be change agents. Each of the systems has advantages and disadvantages, and each has instances in which it is the most appropriate. Similarly, there is considerable overlap between the three as to which techniques work best; learning how and when to use a particular strategy is a lesson that can often be learned "on the job" through tweaking of the instructions and challenges given to the constituency.