Japan’s Pain Is Wal-Mart’s Gain

Current event

Issue:

Wal-Mart and other discounters are expanding as a Japanese recession looms and after household income has fallen three straight years.

Overview:

With Japan’s economy on the bottom of a third recession since 2008, and household incomes falling for the last three years, more and more Japanese customers shop at discount stores. Japan’s economy shrank at a pace of 0.9 percent in the three months through September as government data shown. The country’s famously picky and brand-fascinated shoppers are changing to bargain-hunting style. Discount stores are gaining and expanding.

Wal-Mart’s Japan business is operating in name of Seiyu supermarkets and there is no stores operated under the Wal-Mart banner. Wal-Mart acquired a 6.1% state in Seiyu in 2002. In 2005, Wal-Mart acquired a majority interest in Seiyu, making Seiyu a Wal-Mart subsidiary, and in 2007, Wal-Mart increased its ownership stake of Seiyu from 50.9% to 95.1%. After acquiring the remaining shares, Seiyu became a wholly owned subsidiary in 2008.

Wal-Mart’s Japan business saw net sales rise 2 percent during second quarter. Its Seiyu unit will open seven new stores this year and three more in 2013. Steve Dacus, the CEO of the Japanese unit of Wal-Mart Stores Inc, said Seiyu has built a successful business model for food-oriented supermarkets. By thoroughly implementing the “everyday low price” strategy, same-store sales increased 1.9% on the year in the July-September quarter. Sales and profits will exceed year-earlier figures for the full year as well, he added.

However, Wal-Mart faces hurdles in others parts of Asia. In China, as more and more local retail discount stores is opening, Wal-Mart is adding fewer stores than previously planned. And its strategy in India has been hindered by regulations that until September banned foreign companies from investing supermarkets.

Managerial implications:

Wal-Mart expansion in Japan not only improve its revenue, but also can serve more Japanese customers, who are under rapid socio-economic changes - such as lower annual income, aging population increase, food price hike and etc, which fit Wal-Mart’s global mission of “save money, live better”.

1.     “Wal-Mart Bets on Japan’s Falling Income in Soft Economy: Retail” http://www.bloomberg.com/apps/news?pid=webport_news&tkr=MCD:US,PFE:US,WMT:US&tkr2=WMT:US&sid=ash921Sey6dw

2.     “Walmart moves on in Japan with 10 new stores”

http://theasiacareertimes.com/2011/11/walmart-moves-on-in-japan-with-10-new-stores/

3.    “Walmart Japan to open 22 SEIYU supermarkets by end 2013”

http://packwebasia.com/packaging-business/brnding-retail/business-development/2119-walmart-japan-to-open-22-seiyu-supermarkets-by-end-2013

Cross-sector Alliances for Corporate Social Responsibility Partner Heterogeneity Moderates Environmental Strategy Outcomes

Present day companies put quite some emphasis on economic, social and environmental sustainability which is ultimately termed as the Corporate Social Responsibility of a company. It is relatively easier to make Corporate Social Responsibility decision for an independent company. But it gets tougher and more convoluted when there is partner heterogeneity, cross sector alliances, cross or same industry alliances, etc.

Now days we see more and more corporations using strategic alliances to address different social aspects and more importantly environmental issues. It is crucial for a company to strategically choose its alliance/partners and they are generally judged by their alliances and associations. This paper helps explain how partner heterogeneity moderates an alliance’s ability to advance corporate social responsibility goals.

Strategic alliances have been growing at a rate of 25% annually, over the past decade and are expected to increase as organizations grow globally and what will ultimately seem like a global village. The author finds that in an alliance, there tends to be more innovative orientation and the partner with the alliance experience tends to moderate the alliance’s Corporate Social Responsibility decisions. The paper also has supporting data to prove that strategic alliances have more access to varied resources and that they are attempting to address more complex social, environmental and of late political goals. The author develops a cross sector partner diversity index and also an environmental strategy typology index which helps show that cross sector partners are generally associated with more proactive environmental outcomes.

Corporate Social Responsibility through alliances helps foster innovation which is aligned in some way to societal needs. The paper helps provide a new mechanism by testing a theory and hypotheses, of finding the driving factors that will help motivate a company or firm to seek more heterogeneous partners to form an alliance and how this ultimately influences the overall alliance’s Corporate Social Responsibility. Alliances definitely help develop and ensure open coalitions of cooperation and an enabling environment for joint Corporate Social Responsibility.

Resources:

Article: “Cross-sector Alliances for Corporate Social Responsibility Partner Heterogeneity Moderates Environmental Strategy Outcomes.” 

Article Source: Journal of Business Ethics; Oct2012, Vol. 110 Issue 2, p219-229, 11p, 1 Color Photograph, 1 Diagram, 2 Charts

ISSN: 01674544             DOI: 10.1007/s10551-012-1423-2          Accession Number: 80235138

Database: Business Source Complete

 

Collaborative Strategic Management: Strategy Formulation and Implementation by Multi-Organizational Cross-Sector Social Partnerships

Qualitative Article

The point of this article was to create a conceptual model for dealing with cross-sector social partnerships (CSSP).  CSSP is a viable plan when an organization faces either a social, economic, or environmental problem that they can not handle themselves.  The authors claim that there are few other models available, but they are all lacking in some way.  They put together a 5 stage process of their own then tested this on 2 cases out of Canada.  Their 5 stages are:

1.       Assessing the context and forming the partnership

2.       Forming the collaborative plan

3.       Strategy implementation by the partnership

4.       Strategy implementation per the organization

5.       Realized collaborative strategy implementation outcomes

The authors found that their process was a more complete model of discovering value added to the two cases.  They also were the first to have feedback loops integrated within the processes.  They found that these were an integral part of each of the studies successfully implementing their CSSP.  The authors stress that in order to have a CSSP be successful, there needs to be feedback and adaptation at all levels of the process.

Manger implications:

If a firm is going to get involved in any sort of social partnership, then it needs to have some method in place to determine how they are doing at each step of their process.  This will be the only way that the firm will be able to tell if what they are doing will have a successful outcome or not.  Without any sort of feedback loop in place, a firm could be heading for a disaster of a relationship and not even know it.

Resource:

Amelia Clarke, Mark Fuller “Collaborative Strategic Management: Strategy Formulation and Implementation by Multi-Organizational Cross-Sector Social Partnerships”. Journal of Business Ethics, 2010: 85-101

Integration without Employment

Something that is on the minds of most Americas while we vote this week for our next president is the state of nations healthcare system and the options that will be available to us in the days to come. One of the key topics that need to be addressed and is also the focus of this article is, how to address the risk of reduced payment by finding innovative ways to decrease the overall cost of the service but at the same time improving the quality of the service being provided.

This paper revolves around Accountable Care and the authors of this paper present three models for hospital physician alignment strategies which could be applied for Accountable Care:

§  Co-management arrangements

      §  Clinical joint ventures

§  Shared physician leadership structures (Professional services agreements with performance incentives)

Accountable Care proposes that hospitals get away from the traditional approach of having to rely on medical directors and administrative influence for inpatient operations and move towards a more robust system that consists of outsourcing the management of these services to a co-management company thus having access to more expertise and also experience be it doctors or medical staff. Thus ownership will be split between the hospital and the doctors / physicians as per the agreements with the co-management company. The goal is to eventually move the health care system away from a pervasive episodic payment approach and towards a more coordinated and preventive model of care delivery. 

Many critics argue that Accountable Care only gets us half the way and there are many challenges especially with most of the Accountable Care Organizations having to rely deeply on software tools to deliver a more cost effective patient care.  And it can also be noted that a failure to co-ordinate care can often lead to patients not getting the care they need, receiving duplicative care, and being at an increased risk of suffering medical errors.

But an improved co-ordination and communication among the providers, suppliers and doctors can definitely improve the quality of service being provided and also hopefully lower costs. And what remains to be seen in the days to come, is if our Health Care Managers of tomorrow will be able to cope with such a system and get off the vendor mentality back towards a healthcare provider mode thus bringing about changes and reform in the payment and delivery system.

Resources:

Article Source: HFM (Healthcare Financial Management); Aug2012, p54-62, 9p

Article : “Integration without employment”  http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=78388384&site=ehost-live
ISSN: 07350732     Accession Number: 78388384

 

http://www.healthcare.gov/news/factsheets/2011/03/accountablecare03312011a.html

http://en.wikipedia.org/wiki/Accountable_care_organization

http://www.accountablecarefacts.org/

 

 

 

 

How to Maintain Sustainability in Organizations

Sustaining Sustainability in Organizations

Qualitative

Sustainable development is described as development that meets the needs of the present without compromising the ability of future generations to meet their own needs. This definition highlighted the importance of environmental, social and economic factors when considering development. As rapid increase of population and production, many of the planet’s ecosystems are degraded, species are threatened, and global warming is becoming increasingly apparent. The importance of natural environmental problem and social issues get more people attention.

Since the term sustainability has entered the business world, more and more firms realize the importance of sustainability and emphasize the environmental and social goals of their organization. A large number of established literatures have been growing in the area of sustainability in organizations, especially business firms.

Most of these literatures in the sustainability research are to better understand why and how firms decide to adopt more sustainable practices. However, little attention was paid to how sustainable practices remain in place and continues to develop over time. This article is to address this gap by researching how sustainability is developed and maintained in organizations.

The authors found that there are three main topics in sustainability issue. First of all, reporting and monitoring may encourage companies’ sustainability performance. Another main topic of this issue is identifying antecedents of sustainability adoption. In this issue, the focus is on what these attributes are for maintaining sustainability in companies rather than examining factors affecting initial adoption. The last main topic of this issue is the international aspect of sustainability. We can gain better understanding how different types of organization maintain sustainability in the world scope. The author used six special papers to support the three main topics.

Reference:

1. The definition of sustainable development:

http://en.wikipedia.org/wiki/Sustainable_development

2. “Sustaining Sustainability in Organizations”

http://libproxy.uhcl.edu:2057/ehost/detail?vid=5&hid=9&sid=5933e9ab-cd66-4af6-92e4-0d990a99494f%40sessionmgr14&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bth&AN=80235139

Buyers perceptions and Relationship Outcomes in Interorganizational Networks

Quantitative

Sometimes when making purchases, its not about the price we pay but about whether or not we paid less than others who bought the same thing.  People feel great after thinking they got a deal on a certain product/service and they will probably returnto that same supplier hoping for a similar deal.  Conversely, if someone were to find out that they did not get the better deal, there is going to be some dissatisfaction with that supplier.  This is the basis for the following study.

This study focuses on the relationship between buyers and their suppliers (Business to Business), and the perceptions of how the buyer thinks they are being treated by their supplier.  The authors stress that it is not all about how an actual buyer is being treated but its how they think they are being treated in comparison to other buyers.  This study was done by proposing five different hypotheses about the supplier buyer relationship.  They are paraphrased as follows:

- H1:  A buyer's satisfaction with a supplier is dependent on the economic benefit that they get
 -H2:  In a cooperative buyer system (many buyers working together to increase buying power), buyer's are less satisifed if they think that someone else is getting a better deal than they are.
-H3:  The affects of H2 decrease over time.
-H4:  If all buyers in a group are getting a below average deal from their supplier, any inconsistency in pricing from the supplier will have a larger negative effect on the buyer's satisfaction of the supplier.
-H5:  If all buyers within a group are getting a below average deal from the supplier, then buyer satisfaction with the supplier will be lower.

The data was compliled by contacting one supplier and accessing a portion of their customer database (3,646 of 12,000 total).    From there they contacted the representatives of each firm and mailed questionnaires out.  They ended up with just over 1,300 usable surveys to compile their data. 

Based on their data, the authors were able to support hypotheses 1 through 4.  This means that buyers were satisfied when they recieve economic benefits from their suppliers.  At the same time, buyer satisfaction will decrease if they know that price discrimination exists, regardless of beginning level of satisfaction with the supplier.  Hypothesis 5 was the only one that was not supported, which means that if there is no price discrimination within a buyer's group then overall satisfaction will remain constant.

Manager Implications

What this study proves is that price discrimination has a negative effect on buyers who know what others are paying for the same product/service.  To make sure that buyers are satisfied, a supplier can do one of two things; they either need to make it so buyers do not know what others paid for the product (almost impossible) or have no price discrimination among buyers.  In a B2B case, it makes buyers responsible for their own profits by making them compete against each other on resale price.


Resources:

Link: Consistency Judgments, Embeddedness, and Relationship Outcomes in Interorganizational Networks

How Do Chinese Firms Deal with Inter-Organizational Conflict?----The Relationship Between Ethical Leadership and Inter-Organizational Conflict

Quantitative Article

Nowadays companies are spending a lot of efforts and money to demonstrate themselves as ethical and socially responsible organizations in the eyes of their customers and suppliers. After the bankruptcy of Enron, Lehman Brothers and failure of other organizations, people have started emphasizing the concept of ethical leadership. Ethical leadership enables the employees to engage in good practices which overall result in welfare of everyone in the society. Management's tone has a trickle-down effect on employees. If top managers encourage ethics and integrity so will employees. "But if upper management not cares about ethics and focuses solely on the bottom line, employees will be more prone to commit fraud and feel that ethical conduct isn't a priority".

Due to the importance of ethical leadership, the ethical approach adopted by the leaders has aroused attention in inter-organizational leadership research. Existing ethical leadership literature is exclusively based on the western culture context. The ideas may not suitable to other societal contexts, especially in Chinese business culture. Thus, this article proposes that the ethical leadership concept is especially crucial in the Chinese business culture. Even through this issue has been discussed by other authors; there is little published empirical evidence to evaluate these perceptions. So the authors wrote this article to respond this need.

The type of this research is hypothesis testing. The authors suggested two hypothesizes. The first one is "higher ethical leadership is associated with lower inter-organizational conflict, whether task or relationship". Another is task interdependence moderates the relationship of ethical leadership and inter-organizational. The research collected the data from external suppliers of large listed group company in China and then test the data collected. The results show that the more ethics related efforts the leader demonstrates, the better the understanding and relationship with the other partner could be created, and consequently the less conflict will exist in the inter-organizational cooperating process.

The first of good ethical leadership can improve competitiveness in inter-organizational collaboration. Leaders can effectively facilitate collaboration with external buyers or suppliers, because external stakeholders will adjust their behavior and decision-making in according with the common ethical values and images set by leaders. Another implication is that firms should pay more attention to ethical leadership in interacting with interdependent partners.

Resource:

1.     “How Do Chinese Firms Deal with Inter-Organizational Conflict?” http://libproxy.uhcl.edu:2057/ehost/pdfviewer/pdfviewer?sid=0e133ee1-94a0-47f8-8258-bf50acd4049f%40sessionmgr13&vid=4&hid=12

2.     “Why Is Ethical Leadership So Important?” 

http://www.blurtit.com/q466295.html

3.     “Tone at the top”:

http://www.ventureline.com/accounting-glossary/T/tone-at-the-top-definition/

4.     “Ethical leadership”

http://en.wikipedia.org/wiki/Ethical_leadership