Organizational and Managerial Characteristics of Market-Oriented Companies
Category : Organization & People
Business organizations are constantly seeking ways to enhance their performances in order to compete actively and aggressively in the market. Profit-seeking organizations have long recognized the importance of creating value in the products and services they offer to the customers all in the common objective to deliver commercial goods efficiently in order to increase the satisfaction of the existing customer-base. Aside from inculcating loyalty among the members of the clients and customers of a business organization, companies are likewise aware of the need to widen and extend the reach of the company’s products and services to new markets in order to increase its share on clients and customers. Strategies, plans and techniques in the areas of operations, communication and marketing, sales, supply chin, logistics, research and development, performance measurements as well as social and corporate obligations and responsibility are continuously improved all for the benefit of the target market. Once companies become successful in these organizational and managerial areas, sustained economic development is envisioned. This paper aims to present a discussion that illustrates arguments and debates regarding the importance of the concept of “market-oriented” companies in the current business environment. Existing literatures are reviewed regarding the organizational and managerial characteristics of market-oriented companies along with illustration using a sample company that exhibits the traits and attitude of being a market-oriented business organization.
Characteristics of Market – Oriented Companies
A number of existing literatures indicate the importance of being a market-oriented in the business environment among profit-seeking organizations (Jaworski & Kohli, 1993). These arguments are along with the claims of other experts regarding the limitations of being market-oriented since competing business organizations are likewise implementing market-oriented practices. According to DeGeus (1988), Dickson (1992) and Slater and Narver (1995) aside from having the market orientation needed in the business environment, companies should be able to imbibe faster-learning approaches relative to that of their competitors in order to ensure the success of their organization. Business scholars continue to engage in debates regarding the important managerial as well as organizational characteristics that contemporary companies should exhibit to guarantee success.
According to Lukas, Hult and Ferrell (1996) organizational learning will ensure the future success of business organizations contrary to traditional inclination and view towards the business organizations’ existing resources such as labor and capital as the primary means of achieving the performance goals and objectives of companies within the business industry (Hunt & Morgan, 1995). Others emphasized that information and knowledge are the main features of economic success (Bell, 1973). From these arguments and claims it could be assumed that being market-oriented leads to competitiveness in the business arena and that companies should be market-oriented in order to succeed (Day, 1994). As such, change is encouraged among business organizations for further development highlighting the relationship between being market-oriented and devising means to increase company performances. Moreover, the arguments further indicate that being market-oriented is only a start in initiating and ensuring success in the business environment (Slater & Narver, 1995).
Competitive advantage encourages business firms to invest on researches that will define their target customer groups that they believed they could serve best. Every business person is determined to know what kind of work they would and would not do for their customers and, in turn, they carefully learn how to fulfill the needs of each kind of customer in their target markets. Hessan & Whitely (1996) emphasized the idea to take advantage of the competitive situation not just by being better in how that product gets sold, serviced, and marketed at the customer interface. It requires that companies create breakthroughs in how they interact with customers, and design a way of interacting that makes an indelible impression on customers, one that so utterly distinguishes them from others that it becomes a brand in itself.
Organizations that capitalize on customers' active participation in organizational activities can gain competitive advantage through greater sales volume, enhanced operating efficiencies, positive word-of-mouth publicity, reduced marketing expenses, and enhanced customer loyalty (Lovelock & Young, 1979; Reichheld & Sasser, 1990). Rather than going after every potential source of revenue, companies eliminate useless assets that do not add value for customers’ satisfaction. Business organizations implement bureaucratic policies and procedures for the benefit of the staff, customers and the company in general. According to Bowers, Martin and Luker (1990), if consumers somehow become better customers -- that is, more knowledgeable, participative, or productive -- the quality of the service experience will likely be enhanced for the customer and the organization.
Meanwhile, performance appraisal serves as an important practice and approach among business organizations in order to facilitate control on the development of the company as well as to monitor the activities, plans and strategies from which the company will benefit. Performance appraisal is a process of assessing whether organizational objectives are met. It would evaluate how the employee’s performance has fared to satisfy the organization (Debrah, et al., 2003). Such evaluation seeks to monitor and improve effectiveness by giving the employee feedback on his/her performance. This process should be carried out at regular intervals and should follow specific protocols to maintain objectivity in the evaluation process.
This concept of performance appraisal has its strengths as defined by Caruth and Handlogten (1997) for it helps the manager to be able to identify individual present performance along with the employee’s future potential. Evaluation also assesses the weaknesses and the accompanying disciplinary actions. The third strength is that it can determine which training aspect should be developed for the particular employee. It also increases the communication line between the employer and the employee because of the feedback and evaluation process. Moreover, Spencer (2004) indicated that evaluation is also a way for the organization to assess the role of the manager as well for evaluation and supervision is interdependent because evaluation is a tool for measuring supervision. Moreover, another advantage is that evaluation aims to establish trust among the entire organization because objectivity and fair play are called into this task. Lastly, the evaluation process is a good way of providing employee satisfaction and maturation which will improve the performance in the future.
However, there are specific limitations when it comes to the application and implementation of the market-oriented approach business organizations. Slater and Narver (1995) and Argyris (1994) emphasized the possibility that market-oriented companies have the tendency to manage the business by not taking to many risks which could result to unawareness when it comes to alternative trends in the market and the emergence of new market players in the industry. Hayes and Wheelwright (1994) and Hamel and Prahalad (1994) likewise highlighted the implications of market-oriented behavior among business organizations that could leads to merely adaptive learning practices ignoring the latent needs in the market in the approach’s focus and centeredness on expressed market needs. Lastly, other experts indicated that the market orientation approach could likewise miscalculate and undervalue the capacity and capability of other sources of learning that maybe detrimental to the very existence of the business organizations (Achrol, 1991; Dickson, 1992).
From these enumerated limitations, Slater and Narver (1995) persuade business companies and other profit-seeking organizations to be learning –oriented instead of merely being market-oriented for the future and sustainable success in the existing commercial industries. This highlights the notion that being market-oriented is only the initial step towards being learning-oriented. In this light, companies and business organizations should invest resources towards the research and development initiatives to improve their performances through clear understanding of the internal and external environments of the business organization. Moreover, taking risks in order to facilitate change will contribute to business organizations’ goals and aims toward sustained development and success.
Companies employ detailed business plans and strategies in order to gain several benefits from its competitors such as increased profits and enhanced customer relations as company objectives. The application of strategies directed towards the achievement of these objectives naturally requires the allocation of financial resources. However, while the company is capable of providing a budget, the outcomes should be able to recover these allocations in order to prevent capital losses. Thus, the company should employ strategies and create objectives that are compatible to the capacity of the company and what it intends to achieve.
The best product and service providers continuously update and upgrade their service deliveries in order to answer the demands of their customers. Customers have the ever-increasing demand on getting their hands into the products which can lead to change in business establishment if expectations are not met. As industry leaders, owners of a chain of small retail outlet stores trend toward more reliable delivery services across their customers for efficient product and service distribution. However, problems of delivery and distribution are usually attended by most companies with either quick fixes that do not work or complete and comprehensive delivery and distribution designs that take too long and are expensive.
Along with the changing business world, customers change as well, becoming more demanding and knowledgeable than before. In turn, company management had shifted their focus on their clients or customers so as to stay successfully in business. This transition meant that organizations have to completely reformulate their conventional business aims and purposes from being process-focused to customer-centered.
Strategy perhaps, is the most important key to the successful implementation of customer relationship management. In order to do so, company management must realize that, either directly or indirectly, the achievement of its goals contributes much to the customers’ or clients’ general experience with the company. Successful incorporation of people, process and technology is probably the most efficient strategy in customer relationship management (CRM) implementation. These include the planning, organizing, directing and controlling procedures, which are all geared towards the customers (Lowenstein, 1997).
But CRM, also referred to as customer service management, encompasses more than the attainment of customer satisfaction. This change management is a balance between enhanced company processes and renewed objectives. In other words, customers should also feel that the companies and businesses they support and patronize give due importance, essentiality and vitality to their operations (Cohen and Moore, 2000). Hence, in order to bring out exceptional customer services within the company operations, the management should employ fine-tuned organizational restructuring. Moreover, employing proactive customer commitment involves the consideration on culture and infrastructure (Lowenstein, 1997).
Total Quality Management is a planned procedure for satisfying internal and external customers and suppliers by integrating the business environment, continuous improvement, and come through with advancement, growth, and safeguarding the cycles while changing organizational culture. Furthermore, TQM is an array of management system throughout the organization, geared to ensure that the organization to continuously attain or surpass customer requirements. Total Quality Management is a philosophy of management that is driven by the constant attainment of customer satisfaction though the continuous improvement of all organizational processes (Robbins, 1998). It is a management philosophy that seeks to integrate all organizational functions such as marketing, finance, design, engineering, production, customer service, and others to focus on meeting customer needs and organizational objectives (Hashmi, 2000).
Meanwhile, the supply chain is traditionally characterized as a stable system in which components and goods move smoothly from supplier to assembly customers. In addition, supply chain refers to the suppliers, distributors, wholesalers and retailers that involved in manufacturing a product and getting it to consumers (Lee & Billinton, 1995). Supply chain is also defined as a network of independent or semi-independent corporation bodies collectively accountable for procurement, developing and or manufacturing and distribution scheme connected with one or more groups of related products (Janyashankar et al, 1996).
A growing number of companies are deploying supply-chain management (SCM) systems to enhance efficiency across the product lifecycle by streamlining procurement, production, fulfillment, and distribution processes. To help ensure that an SCM solution provides the intended return on investment, the enterprise network infrastructure must work together seamlessly since its effectiveness depends on the ability of users to access up to the minute information across the supply chain. Organizations usually share proprietary corporate data with external suppliers and partners while ensuring maximum security. This requires integration of applications and data across multiple geographically dispersed supply chain partners, as well as internal integration with legacy systems.
Research study shows that supply chains increase in their complexity as the number of nodes increases (Berry et al 1998). They also argue that genetic algorithms can be an efficient method to locate a good solution quickly in one to fifty node networks. It is believed that as the number of nodes in the Supply Chain increases, logistical decisions about delivery operations, stockholding, warehousing and economies of scale get more complex solutions. Furthermore, Information Technology (IT) is being applied to the problems of virtual logistics, efficiency and the environmental impact of Supply Chain networking. Greater economies of scale can be achieved through Internet links to network Supply Chains. Efficiencies can be obtained by monitoring network dynamics that is more ecologically sustainable options for supply routing, product choice, pollution as well as blocking. Freight transport decision making is an integral part of a sustainable production and distribution Supply Chain.
Tesco is undoubtedly a whole mall in itself. Everything is literally found in one roof. No longer limited to grocery items, it offers services that would allow a customer to avail of everything in one stop. Besides the extra selling of books, cds, digital music, videos, flowers, games, gardening, gas, holidays and flights, they also provide financial services (e.g. credit cards, loans, mortgages, savings) insurance services (e.g. car, home, life, travel) telecoms services (e.g. Internet, home and mobile phone) and healthy living services (through its Tesco eDiets and healthy living club) .Tesco has developed various kinds of Tesco stores ranging from Tesco Extra, Metro Tesco and Tesco Express in its continuing quest to properly address the needs of their various customers when and where they want it (Tesco, 2005).
Advertising is done through personalities like Prunella Scales and Jane Horrocks. The grocery store is also mainly identified by a Clubcard from which a significant 80 percent of the sales are transacted. It also entails the use of vouchers which is also met with a similar success as over a billion vouchers are already given away. This much is the same for its program “Computers in Schools” although the video wonders whether the schools really benefit and if it is an acceptable marketing scheme (Tesco, 2005).
Tesco has effectively launched its online shopping site, Tesco.com by taking into account the capacities of its competitors. Considering that Iceland, Tesco’s closest UK competitor, offers frozen goods only; Asda postponed its Internet launch; Somerfield and Budgens have totally withdrawn from their online services; and Sainsbury has limited services in comparison to Tesco (McAuliffe, 2000), the UK retail giant was able to successfully launch its website and clearly positioned the company through online marketing.
By taking Tesco and its online marketing as an example, the significance of budget in marketing communication can be understood further. Tesco has naturally allocated financial support in order to pursue its online services. Since this online access will allow the increased consumer access to Tesco, the budget allotted for marketing communication will eventually be recovered through online purchases. True enough, Tesco was able to recover great profits out of the marketing communications employed. Thus, the company was able to obtain two forms of expected outcome; one is the attainment of the objective and the other is the implementation of this strategy within the allotted support. In 2000, Tesco was able to take about 60,000 online grocery orders every week, making the company the world’s largest Internet food shopping service. Moreover, the company’s home delivery services are able to generate £5m a week (McAuliffe, 2000).
The online service clearly recovered the allocated budget of Tesco as the strategy continuously generates income for the UK retailer. In 2004, the company was able to gain 12.2 per cent to £16.5bn with pre-tax profit up 24.4 per cent to £822m. The company sales have increased up to 11.5 percent totaling to £13.1bn, while the operating profit was up 13.3 percent totalling to £707m. In the recent company statement, Tesco noted that the services of the company are attracting several new shoppers, wherein the average total expenditure of a consumer has increased by almost seven percent (McCue, 2004). In this case, the company was able to undertake marketing communication within its objective and budget.
Companies employ detailed business plans and strategies in order to gain several benefits from its competitors such as increased profits and enhanced customer relations as company objectives. Gaining customer loyalty is a corporate challenge today in this increasingly competitive and crowded marketplace because of the eventual profitability it will provide. The changing business world allowed customers to change as well. Company management had shifted their focus on their clients or customers so as to stay successfully in business with the need to completely reformulate their conventional business aims and purposes from being process-focused to customer-centered. With the advent of technological innovations, logistical decisions about delivery operations, stockholding, warehousing and economies of scale get more complex solutions in today’s business environment.
Indeed, making a business successful in a particular setting demands crucial and detailed studies and examination of the factors that will generate the best results that will serve the aims and objectives of the company. In this light, owners of big business organizations operating in a competitive business environment should be in constant look out with its competitors and the overall status and events in the industry. Taking advantage of the opportunities and intensifying the strengths while minimizing the risks and weaknesses of a business firm greatly helps in predicting the success in business enterprise.
Examination on the business strategies and plans in order to answer to the demands of clients and customers through efficient delivery of such needs will not only increase the profit of an organization but will likewise gain the trust and competence of the clients and customers. Efficient management of delivery options in a particular company and looking into the problems encountered in operating the business may enhance the likelihood of a business corporation to attain its goals as enterprising organization.