Role of Hrm in Various Industries.Doc

HRM is a new discipline of Management, recently taking roots in Pakistan. Personnel Administration is its previous version that was mainly focused to strengthen of bureaucratic structure in the organization as compared to new facets of HRM that is more considerate to employees strategically aligned with the business, ultimately changing the ways organizations were run by. However it will take some time to be fully functional as it is still in its embryonic stage in most of the Pakistani organizations. WHY HRM IS SO IMPORTANT IN THE CURRENT BUSINESS DYNAMICS? ?RIGHT MAN FOR RIGHT JOB: HRM has marked its importance through TALENT SEARCH and TALENT DEVELOPMENT. Analyzing the top best 100 companies demonstrate one common characteristic i. e. Strengthened HR Departments that strategize RECRUITMENT & SELECTION PROCESS through policies of TOP MANAGEMENT. Every job got a person with the required skills, knowledge and traits that ensure right decision at the right time. ?TRANSPARENCY HRM ensures transparency in all aspects of an organization . i. e. ecruitment and selection, performance management, reward & punishment that are the baseline of employee’s motivation commitment to any organization. ?TIME SAVING HRM has been identified as tool of time saving through its various business linked strategies that saves time of business operations and processes by facilitating business clientele ultimately resulting in enhanced customer base and business results. ?COMPETITION HRM has encoura ged competition in and among organizations as the existing talent tries for excelling from each other and the same way organizations promote competition. MERIT BASED CULTURE HRM has encouraged competition that requires talented people to hold the important positions to excel in the current race of cut throat competition. The traditional approaches of nepotism are no longer to sustain in the business race. ?CAPACITY BUILDING Business world is changing every day. It requires new skills, knowledge and talents after every passing day. What works today, don’t work tomorrow. HRM is upgrading Human Resource through continuous trainings that cater for current skills inventory as well as developing for future requirements. ?IMPROVED WORK QUALITY HRM has proved helpful in improving the work quality through emphasizing provision of better working environment & conditions, focusing on employees health and counseling for employees problems that not only motivate them but also improve the quality of work. We can say that A MOTIVATED EMPLOYEE IS AN ASSET FOR ORGANIZATION WHILE A DEMOTIVATED EMPLOYEE IS A LIABILITY. ?BETTER COST / BENEFIT RESULTS A recent study published in Weekly Business Magazine, â€Å"FORTUNE† reveals that the top best 50 organizations with empowered HR functional Departments had better cost / benefit results than those with traditional Personnel Departments. INDUSTRIAL HARMONY HRM has proved itself through stabilizing industrial peace and promoting industrial harmony throughout the industry. HRM aspect of employee’s consideration reduced the communication gap between employees and top management, ultimately policies are being formulated having employees say that leads to corporate culture with ba lanced and harmonized environment. ?EMPLOYEES MOTIVATION HRM has been identified as a support function to employees through its various incentive & awards programs for employee’s encouragement that leads to enhanced employees retention trends. ?PRODUCTIVITY AND PROFITABILITY HRM basic function is to search out the best available market talent in order to maximize the organization out, contributing towards its goals and objectives that ultimately leads to increased production and profits. ?TRUE PICTURE OF MANAGENT VIEW Core HR practices reflect the Top Management’s view about employees consideration. HR policies reflect how much the Management recognize their employees contributions towards organization goals. In today’s business race, only those organizations can excel which have the best HR policies towards employees motivation, commitment and retention. OVERALL ORGANIZATIONIMAGE An organization with better HR practices is not only admired among it’s own employees but also among the employees of other organizations that have relatively weaker HR practices. Employees feel pride to have an affiliation with such organization as it becomes a symbol of social status that is a parameter of measuring an organization market image. In short if our organizations get better Human Resource, related policies and practices, they would be enjoying more productivity and related business results and ultimately contributing more towards stabilizing the state economy.

South Africa During and After Apartheid

South Africa is a land blessed with natural resources including fertile lands, metals and mineral resources such as platinum, gold and diamonds. The climate is mild which is ideal for land activities.The richness and potential of this country attracted Dutch and English in the seventeenth century. South Africa has one of the unique histories in the world. It is evident how colonial racism emanated from Europe. The whites invested power and politics which is still manifested today.In the seventeenth century, South Africa was colonized by English and Dutch. Boers and Afrikaners were the English domination of the Dutch descendants. The discovery of diamond and other mineral resources in 1900 motivated the English invasion as a result of Boer War. Racial discrimination in Africa started with the enactment of Apartheid laws in 1948.Apartheid was invented when an uneasy power- sharing between the Boers and Afrikaners held sway until 1940’s. Since Afrikaner National Party was able to gain strong majority, they established Apartheid as a means to reinforce their control over the social and economic system. Initially, the objective of the apartheid was to maintain white domination and leadership while extending racial separation (Chokshi, Carter, Gupta, Martin and Robert, 1995).The term Apartheid is from the African word for â€Å"apartness† was actually coined in the 1930’s and later used as a political slogan of the National party. The social and political custom of Apartheid was materialized under law after the primarily Afrikaner Nationalists came to power in 1948 (â€Å"Apartheid†).When Apartheid was institutionalized, racial discrimination started. Apartheid, as racism made law, consisted of numerous laws that denied basic human rights and political rights for black people. They were obviously exploited and their lives were segregated with the white people.People of mixed race like Asians and Coloureds were also exploited and terrorize.    It was a system dictated in the minutest detail as to how and where the large black majority would work, live and dies (â€Å"Human Rights, Historical images of Apartheid in South Africa†).The ultimate goal of Apartheid was to establish â€Å"racial separation legally† and to maintain the guarantee of white authority. The restrictions formulated by the Apartheid laws and effects placed the black people in the difficulties regarding land issues, living areas, jobs, personal relationship, political rights, constitutional and human rights.The Group Acts of 1950 divided the lands in which blacks and whites resided into distinct residential zones. The best urban, agricultural and industrial areas were expectedly given to whites while blacks were given only some distinct areas in South Africa. Blacks were not allowed to live and occupy areas that were named as â€Å"white zones†.Even marriage and relationships were so extensive and encompassing for blacks. It is illegal and against the law to marry a person of different race. Couples and families were strictly required by law to obtain state permission before they could live together and authorities had given any right to refuse such permission.Every black South African has their own passbook issued by the government that will determine where they could live and work which they have to carry every now and then.   In terms of Education, the Bantu Education Act of 1953 was instituted to provide black pupils with different way of learning than white students. Black students were given different orientation, expectations and future goalsWorks Cited:Chokshi, Monal., Carter, Cale., Gupta, Deepak., Martin, Tove and Robert Allen. 1995 â€Å"The history of Apartheid in South Africa†. Stanford Universityhttp://www-cs-students.stanford.edu/~cale/cs201/apartheid.ethics.html  Ã¢â‚¬Å"Africa-Apartheid†Africana, The Encyclopedia of the African and African American   Experience.http://www .africanaencyclopedia.com/selections.htmlâ€Å"Human Rigths, Historical images of Apartheid in South Africa†. United Nations 2008 http://www.un.org/  Spindle, Tim., Shafer, Rachel., Joliff, Kevin.,Henderson., Sarah.,Bradford, Stephanie   and David Weigman.†Laws and Effects of Apartheid†http://home.snu.edu/~dwilliam/f97projects/apartheid/Document5.htmlâ€Å"Apartheid, South Africa†.Wander the Planethttp://www.wandertheplanet.net/SouthAfrica/apartheid.htm

Caribbean Culture

Caribbean Culture Assignment Write an essay supporting the following arguments. Essay 1: The emergence of culture in the Caribbean. ?Culture is often hard to objectively define in a study, but can be simplified as the body of people's expressions, values, meanings and artifacts that anchor peoples' identity. Caribbean culture is identifiably linked to the approaches to survival taken by her peoples. Discuss this statement critically. Essay 2: The intellectual contribution of the Caribbean. Education has forever been a priority for the Caribbean region.From the mass of the Caribbean population have come some of the world's best minds, creative intellect and imagination. The common heritage of a history rooted in exploitation and the struggle for freedom and independence have formed the foundation of an extraordinary commitment to education on the part of Caribbean societies over the years. While some may argue that the quality of education in the region is on the decline there is no d oubt that Caribbean societies continue to maintain education as one of their highest priorities. Discuss this statement critically.Essay 3: ? Caribbean Integration It will be recalled that the Caribbean islands were among the first areas to be impacted by early globalization, in the form of European maritime expansion. The initial result was the extermination of the majority of the indigenous population. There followed mercantilism, slavery and the plantation system, and centuries of rivalry and wars among the major colonial powers. This left a legacy of political and linguistic fragmentation that constitutes the main obstacle to regional integration. Discuss this statement critically.

Criminology Theories Research Paper Example | Topics and Well Written Essays - 1750 words

Criminology Theories - Research Paper Example In this regard, the science of Criminology can be considered that deals with an understanding of the nature of crimes that occur within a society, thereby focusing on determining the cause of the crime and the prime suspects associated with a crime (Siegel 5). In relation to this science, there are certain theories – demonology, classical, positivism, psychological – that can be associated with particular crimes, in this study the cases being the above mentioned ones. Let us in brief understand what these concepts mean in order to relate them to these cases, as discussed later in the study. The concept of demonology in criminology attributes an act of crime to other forces in the world and not the individual performing it (Einstadter and Stuart 31). Thus this would consider outside factors to have influenced an individual towards committing a crime. The classical theory of crime  stresses that humans are individuals who are independent,  and hence a criminal act is committed by them following  sensible and cautious reckoning; the execution of a crime gives more contentment  as compared to pain (â€Å"Classical Theory of Crime Causation†). Positivism theory deals with a systematic application of the scientific method, the investigations based on legal terms, and statistics related to it (â€Å"Positivism†). Here the actor is assumed to be focused on more than the act. Lastly, the psychological theories of crime are of the bel ief that differences in behaviour among individuals are capable of making some people more prone to committing crimes. These differences arise from factors like the personality characteristics, biological factors, or interactions in the society (â€Å"Psychological Theories of Crime†). In the current study these four theories would be studied to understand how they are associated with the cases of mass or serial murders as

Partnership Agreement Case Study Example | Topics and Well Written Essays - 1000 words

Partnership Agreement - Case Study Example Except as Otherwise determined, all decisions shall be made by the partners whose capital accounts total a majority of the value of the capital accounts of all the partners 11. Bank Account. The partnership may select a bank for the purpose of opening a bank account. Funds in the bank account shall be withdrawn by checks signed by any partner designated by the partnership. 14. Transfers to a Trust. A partner may, after giving written notice to the other partners, transfer his/her interest in the partnership to a revocable living trust of which he/she is the grantor and sole trustee. 17. Voluntary Withdrawal (Partial or Full) of a Partner. Any partner may withdraw apart or all of the value of his/her capital account in the partnership and the partnership shall continue as a taxable entity. The partner withdrawing a portion or all of the value of his/her capital account shall give notice of such intention in writing to the Recording Partner. Written notice shall be deemed to be received as of the first meeting of the partnership at which it is presented. if written notice is received between meetings it will be treated as received at the first following meeting. In making payment, the value of the partnership as set forth in the valuation statement prepared for the first meeting following the meeting at which written notice is received from a partner requesting a partial or full

International risk management Assignment Example | Topics and Well Written Essays - 1250 words

International risk management - Assignment Example The paper looks at these strategies together with a contingency plan for the product we seek to develop. This strategy seeks to completely eliminate the risk of a project to level 0. With this strategy minimum allowable risk is zero (Darity, 2008). In other words risk avoidance will imply that the developers avoid undertaking the project if it has been identified to have a component of risk in it. The strategy is rarely used in risk mitigation because almost all projects to be undertaken have a risk component in them. If the strategy is employed to mitigate risk in the product, the developers will have to avoid the development of the product since it has inherent risks. Some of the inherent risks include; the power failure on the leds, the small switches failing to work, risk that the product wouldn’t gain market approval among other risks. Thus since the developers aim to go ahead with the entire project cycle, this mitigation strategy wouldn’t be advisable. Risk sharing as another mitigation strategy used as a suitable way of reducing the possible negative outcome inherent to developing a product. It is one of the most common strategies employed in risk management. Risk sharing according to Bolton and Harris (2010), is defined as a risk management strategy which aims at reducing risk exposure by ensuring that the risk component in a project is first identified. After identification, the burden of possible loss is spread among several entities, units of enterprises or other partners critical to the particular project development. This risk management method is also called risk retention. The technique is a way of self-insuring the risks taking into consideration a multiplicity of entities. In developing the product that seeks to increase the safety of those riding bikes in the urban areas either at night or in the early morning hours, risk sharing as a method of mitigating risk suggests the need to look for other entities that might be interested in

LL1014C CRIMINAL LAW I Case Study Example | Topics and Well Written Essays - 2000 words

LL1014C CRIMINAL LAW I - Case Study Example Murder is the specific intent crime and manslaughter is the basic intent crime. If he does not convicted under murder then he will be charged under constructive manslaughter. A person will be liable for murder if he unlawfully killing a reasonable person who is in being under the Queen's Peace with intention to kill [Moloney1, Cunningham 2, Vickers 3] or intention to cause grievous bodily harm [DPP v Smith 4], [Saunders 5]. Murder is unlawful homicide committed with 'malice aforethought' with the penalty of mandatory life imprisonment. 'Malice aforethought' describes the mens rea for a conviction of murder. In this question, Alan's intention was to kill Clive and Betty. May be he will charged under murder. However, if Alan does not convicted under murder then he will be charged under constructive manslaughter. The substance of this offence is that if he kills Clive in the course of doing an unlawful act or constructive manslaughter provided such act is not justified. Thus the 'unlawful act' must satisfy the criteria. Unlawful act must be more than merely negligent act (Andrew v DPP6). In Andrew, D had been driving dangerously s when he killed the deceased. Dennis, an old friend from the pub, staggers over to Alan and gives him a hard slap on the back. Alan stumbles whilst pulling the trigger and shoots a paraffin lamp on the bar. It ignites and the pub catches fire. The prosecution must prove that the death was caus... Alan may claim that Dennis's act was breaking the chain of causation. He can argue that his act was not legal cause of Clive or Betttty's death. However, the landlord of the pub, Ed, has piled beer crates in front of the fire exits so the only escape is through a narrow door. Clive dies in the fire and Betty collapses in the attempted escape. The accused conduct must be a sine qua non of the prohibited consequence. In R v White7 put cyanide in his mother's drink with intent to kill her later his mother was found dead with the glass containing the poisoned drink beside her three parts full. Medical evidence established that she had died of heart failure and not from poisoning. D was acquitted of murder as he had not caused her death and thus there was no actus reus. He was however, convicted of attempted murder. But here Alan's act is legal cause of Clive's death and Dennis's act did not break the chain of causation. Section 1(1) of the Criminal Damage Act 1971 provides that a person who without lawful excuse destroys or damages any property belonging to another intending to destroy or damage any such property or being reckless as to whether any such property would be destroyed or damaged shall be guilty of an offence. Section 1 (3) creates the offence of statutory arson-an offence committed by destroying or damaging property by fire. For the offence to be complete some property must be destroyed or damaged by fire. The damage may of course be quite insignificant (it would be enough, for example, that wood charged) In Cf Parkker8, the court held that no visible flame is necessary. In the Goodfellow9, D was convicted of

Analysis and Application Essay Example | Topics and Well Written Essays - 750 words

Analysis and Application - Essay Example In addition, violent gangs take part in theft and robbery of properties of their neighbors (Klein, 2005). Primary questions to the research were inquiring whether youth gang violence is as a result of illegal drugs and small arms, the contribution of the media in the problem, political and social problems to the problem, and the possible measures taken to alleviate the problem. Violent youth gangs have been blamed by the media for the increasing incidences of violence and crime in Central America cities. They have been blamed for all sorts of crime tat take place in the society. In addition, both the media and the government officials have linked the violent groups to terrorist groups such as al Qaeda (Pope, Lovell and Bradl, 2001). Some of the concepts discussed include the definition of â€Å"youth gang† youth gang is defined according to the composition of the gang, members, leaders and the structure of the gang. All these factors must be outlined I order to look at the problem effectively. This research is valid because it discusses the political and social contexts in which these violent youth gangs emerged. Some of the measures proposed in dealing with the issue include arresting the violent youths, removing them out of the streets as well as reducing their number in the overcrowded Central American prisons. Prison overcrowding by the violent youth gangs can lead to challenging situations such as prison riots and a number of deaths (Dvorak, 1995). The voices fro the field’s study also understands the situation of young people. It is discussed that politicization of the gang matter has exaggerated a clear understanding of the crisis as well as the attempts in coming up with suitable solutions. The study recommends that so as to successfully tackle the issue of youth gangs, proper therapy programs must be put in place. There has to be sufficient investments in the avoidance and remedy

Professional Identities and Practice Styles Personal Statement

Professional Identities and Practice Styles - Personal Statement Example For the past 15 years I have been a Physical Training Instructor and therefore involved heavily in the practice of teaching. My pupils have been both military and civilian and I have taught many subjects, both theoretically and practically. I feel confident teaching and felt that I had come across most of the likely situations a teacher experiences both in and out of the classroom. I had always empathised well with my pupils and could encourage the unmotivated. I placed motivation, enthusiasm and professionalism high on my agenda had lots of experience in both fields and was happy to switch between coaching and teaching if and when the need arose. I was given the enviable task of instructing 10 adolescent boys at HMS Raleigh. These young lads who were between thirteen and fifteen had been identified by the Police due to their involvement in petty crime. I introduced myself to the group and explained what I required from them. I emphasised the importance of commitment from them if they were to get the maximum from the two weeks. I quickly appreciated as I tried to march them round the base that they enjoyed rebelling against the discipline of their military environment. The programme had been organised for them to collect their equipment for the two weeks and then play football. I instigated a quick programme change and the students were marched to the Assault Course. I demonstrated every obstacle and then they were given the opportunity to go over it in slow time. As I had good technique and was physically strong all the obstacles looked easy to surmount. Some of the boys were over weight and most were not physically strong a nd due to this they all were surprised that they found difficulty with nearly every obstacle. They had all gone around the course once and lots needed to be physically dragged or pushed. The stronger members of the group were still very confident of their own ability and still showed an arrogance of the environment they had been invited to attend. I issued a challenge that the fittest three of them could race me and I would give them a 30-second start on me. If they could beat me them I would jump in the river, but if I won they would have to do the same. They readily accepted the challenge and were rejoicing at their imminent victory. I easily won and made a conscious effort not to gloat. After all the students jumped in I dived in and explained that being cold and wet was a part being a Commando. I reflect on this teaching period and appreciate that certain individuals would deem the lesson harsh, but it did achieve the desired effect. By the completion of the lesson I had gained their respect through physical prowess and they were now responsive to my teaching. After this lesson I realised I had the necessary skills to control what could have been a difficult situation. It was apparent from speaking to the teachers, after the first days activities had finished, that they felt they had little control over the students and also little incentive to actively seek control. After reflecting

If you were planning a new undergraduate nursing program, what is one Coursework

If you were planning a new undergraduate nursing program, what is one nursing theory( grand or middle -range) that you would incorporate into the curriculum Explain your reasoning - Coursework Example Therefore, in order to guarantee the establishment of an adequate foundation, the nursing curriculum should be designed to include Watson’s theory of human caring. Nursing revolves around the care, and the theory of human caring holds that human interpersonal relations are the primary aspects of caring (Watson, 2008). The primary ideas of Watson’s theory of human caring are grounded on the assumption that the principle and basis of nursing exist in caring science as the root of the profession of nursing (Watson, 2008). The human caring connection is transpersonal because it portrays a unique association with the other person. In such a transpersonal relationship, the students can be taught on how to understand the patient by showing compassion and care (Watson, 2008). Watson’s theory of human caring can offer a guide to nursing learners on how to enter into the patients’ world and form a union with them. Additionally, Watson’s theory of human caring gives ten carative aspects that nurses can observe as interventions that express the association between caring and love (Watson, 2008). Therefore, the theory of human c aring and the ten carative aspects can adequately guide nursing learners in their interpersonal relationships with patients and

Staffing and Training Essay Example for Free

Staffing and Training Essay As multinational firms globalise they must learn to co-ordinate efforts among an increasingly culturally diverse workforce and environment. Nowadays people tend to be very defensive of their cultural identity and caution by others has to be taken so that insult is not caused. Through the years success of Japanese organisations global strategies has encouraged American firms. Although many point out the advantages, cultural diversity may leads to conflict, misunderstanding and lack of cohesion. (Tung, [1993]) states that cross cultural training process, helps in the development of building relations between individuals or groups, especially individuals/groups with diverse cultural backgrounds. (Welch [1998]) defines cultural training as any form of guided experience helping people to live and work more contentedly in another culture. Such training encourages understanding about differences and acceptance of the multicultural work environment and helps create and retain effective work teams and expertise in dealing with multicultural management (Hartenian, [2000]) describes the multi-cultural workforce as a workforce that excludes no one, from top-level management to low-level employees. He sees the multi-cultural workforce has one of the main opportunities for an organisation. Although multi-cultural workforces are beneficial to organisations in relation to performance and profitability, they can be very hard to manage. According to (Hill, [92]) the key to managing multi-cultural workforces is the realisation that majority and minority cultures do not always share experiences. To solve this managers can adapt different strategies such as: developing programmes that promote awareness of different cultures, recognise common links among different ethnic groups and express concerns and confusions. (Hill [1992]) believes that if organisations use these strategies, economic benefits will be reaped. This may be easier said than done, (Harisis Kleiner, [1993]) argue that the implementation of such workforces are extremely difficult. They say that not only within American society and businesses but on a world wide scale there are widespread barriers. Such barriers include unwritten rules and double standards for success which are often unknown to women and minorities, stereotypes and their associated assumptions and lack of communication about differences. In global organisations it is essential that effective cross cultural training occurs in order to help individuals obtain both the knowledge and the tools needed to reduce misunderstandings and improper actions (Black Mendenhall [1990]) suggest that multi-cultural training provides individuals with greater self confidence and decreased narrow-mindedness about people from diverse cultures. In addition (Barlett and Ghoshal [1990]) also pointed out that establishing a multicultural training programme improved the companys ability to operate more efficiently in different cultural environments. Although many multicultural training programmes are undertaken to enhance cultural diversity they are not always successful. According to (Woods [1992]) a systematic approach should be taken towards training. (Woods [1992]) established a four step cycle: Firstly was to specify certain job task of individuals and assess the needs of the corporate culture. Secondly is the identification of training objectives. Thirdly was the establishment of the proper training content in which the following was used; sensitivity training, cultural awareness and orientation programs. In addition (Cox, [1993]; Gamio Sneed, [1992]; Tung, [1993]) introduced the communication competency program. In the final stage (Milkovich Boudreau [1991]) stated that training programs need to verify whether the training is successful in junior members of staffs performances at work. The cycle used was concerned with the effectiveness of the training, however, (Mendenhall Oddou [1986[ Tung [1981]) found factors that deterred individuals. These included lack of specialised trainers, cost and perceived lack of usefulness. Research carried out by (Gamio Sneed [1992]) found that the deterrence factors are of major importance. Take for instance the catering industry. Mangers in restaurants may blame high staff turnover rates on lack of multi-cultural training, therefore using these rates as the reason to ignore the need for training programs. (Jackson [1991]) believes that heterogeneity among team members contributes to high turnover rates within organisations. Researchers may find that the re lationship between cultural diversity and staff turnover is of major importance to all organisations. Hospitality researchers Results of this study have provided useful directions for future research in the area of multicultural training. Respondents in this study perceived more success in improving interpersonal skills than dealing with culturally diverse people because those skills are probably more easily observable and acquirable. A more rigorous research design is recommended before definitive conclusions about the efficiency of the training can be reached (Black and Mendenhall, 1990). Without identifying a baseline of knowledge and skills before starting the program, it becomes difficult to measure training effectiveness. Researchers can solve this problem by utilizing a pretest-posttest design with a control group, identifying two separate groups during pretest. One group would be tested before and after receiving the training. The other group would simply be tested twice once before and once after the program but they would not receive the training. By measuring both groups, training managers could fully assess the impact of the training program. Furthermore, the measurement of the training effectiveness needs to incorporate the trainees estimation about the program in addition to perceptions from directors of human resources. Alliger and Janak (1989) advocated that training needs to integrate two evaluation criteria: 1 Internal. For assessing how trainees feel about the training experience. 2 External. For estimating the changes in job behavior and organizational effectiveness (Milkovich and Boudreau, 1991). . Such training encourages understanding about differences and acceptance of the multicultural work environment and helps create and retain effective work teams and expertise in dealing with multicultural management. Full Text (2411 words) Copyright InfoWorld Publications, Inc. Apr 24, 2000 [Headnote] As the IT workforce grows more diverse, managers must improve awareness without creating inconsistency Diversity will have a significant impact on the hospitality industry. On one hand, diversity may cause problems, particularly in older, traditional organizations with a homogeneous workforce, including communication difficulties with supervisors and co-workers as well as with customers. Thus, group cohesiveness may be reduced by an increased cultural diversity among group members (Cox, 1993). The lack of understanding of different cultures may lead to ineffective management techniques in directing, motivating, and rewarding culturally diverse employees. On the other hand, diversity enriches a hospitality organization by adding new cultures, ideas, and alternative methods for solving problems.). What is not understood is what effects, if any, these changes will have on an organization and how it can respond in a proactive way to them. Recognizing the significance of managing diversity in the hospitality organization, Welch et al. (1988) suggest that developing cultural awareness in a company helps employees become familiar with different values, interpersonal interactions, and communication systems which must be understood for an effective multicultural working environment. Christensen (1993) emphasizes that organizations failing to acknowledge the full range of variety inherent in their employees and customer populations will have difficulty surviving . Restaurants need to have more thorough multicultural training programs, focusing on training goals which are practical and job-specific. Job result-oriented training goals, including increasing employee teamwork among culturally diverse employees and improving cross-cultural skills, must be a part of the training goals to encourage employee participation and eventually help in facilitating job performance in dealing with multicultural work environments. In addition, training methods should be more comprehensive rather than limited. As case 3 reported, minority mentor and advisory programs could be utilized to encourage full participation of ethnic minorities. These involvement efforts, with full support from upper management, would help change employees attitudes and lower barriers between diverse workers and promote ethnic minorities, and hopefully lead to less turnover generated from the feeling of isolation and difference. Furthermore, human resource directors may consider utilizing employees with multicultural experience. For instance, the company can hire managers who have hands-on experience with different cultures or language skills for efficient interaction with diverse employees and for multicultural training. These comprehensive training approaches can eventually generate productive training results and increase better understanding among employees from diverse cultural backgrounds. Hospitality researchers Results of this study have provided useful directions for future research in the area of multicultural training. Respondents in this study perceived more success in improving interpersonal skills than dealing with culturally diverse people because those skills are probably more easily observable and acquirable. A more rigorous research design is recommended before definitive conclusions about the efficiency of the training can be reached (Black and Mendenhall, 1990). Without identifying a baseline of knowledge and skills before starting the program, it becomes difficult to measure training effectiveness. Researchers can solve this problem by utilizing a pretest-posttest design with a control group, identifying two separate groups during pretest. One group would be tested before and after receiving the training. The other group would simply be tested twice once before and once after the program but they would not receive the training. By measuring both groups, training managers could fully assess the impact of the training program. Furthermore, the measurement of the training effectiveness needs to incorporate the trainees estimation about the program in addition to perceptions from directors of human resources. Alliger and Janak (1989) advocated that training needs to integrate two evaluation criteria: 1 Internal. For assessing how trainees feel about the training experience. 2 External. For estimating the changes in job behavior and organizational effectiveness (Milkovich and Boudreau, 1991). . In responding to the multicultural work environments and international scope of restaurant operations, the hospitality industry should provide proper training for line employees who require customer interactions during their routine jobs in addition to managers who deal with employee promotion and corporate culture. TRAINING Perlmutter identified three managerial attitudes toward international operations Managers with an ethnocentric attitude are home-country oriented. Home-country personnel, ideas, and practices are viewed as inherently superior to those from abroad and are used for evaluation purposes. A polycentric attitude is a host-country orientation based on the assumption that because cultures are so different, local managers know what is best for their operations. Managers with a geocentric attitude are world-oriented. Skill, not nationality, determines who gets promoted or transferred to key positions around the globe. This attitude attempts to maintain a balance between global standards and local discretion. A geocentric attitude can help management take a long step toward success in todays vigorously competitive global marketplace. complexity. Documentary programs. Culture assimilator. Language instruction. Sensitivity training. Field experience. TRAINING . . References 1. Alliger, G. and Janak, E. (1989), Kirkpatricks levels of training criteria: thirty years later, Personnel Psychology, Vol. 42 No. 4, pp. 331-42. 2. Andorka, F. (1997), Diversity task forces meet to set agenda, Hotel and Motel Management, Vol. 212 No. 4, pp. 32-6. 3. Barlett, C. and Ghoshal, S. (1990), Matrix management: not a structure, a frame of mind, Harvard Business Review, Vol. 68 No. 4, pp. 138-45. 4. Black, J. and Mendenhall, M. (1990), Cross-cultural training effectiveness: a review and a theoretical framework for future research, Academy of Management Review, Vol. 15 No. 1, pp. 113-36. 5. Bochner, S. (1982), Cultures in Contact: Studies in Cross-cultural Interaction, Pergamon Press, New York, NY. 6. Bond, R. and Bond, J. (1993), The Sourcebook of Franchise Opportunities, Business One Irwin, Homewood, IL. 7. Christensen, J. (1993), The diversity dynamic: implications for organizations in 2005, Hospitality Research Journal, Vol. 17 No. 1, pp. 69-86. 8. Clark, J. and Arbel, A. (1993), Producing global managers, The Cornell Hotel Restaurant Administration Quarterly, Vol. 34 No. 4, pp. 83-7. 9. Cox, T.H. (1991), The multicultural organization, Academy of Management Executive, Vol. 5 No. 2, pp. 34-47. 10. Cox, T.H. (1993), Cultural Diversity in Organizations, Berrett-Koehler, San Francisco, CA. 11. Franchise Directory (1992), 1st ed., Martin, S. (Ed.), Gale Research, Detroit, MI. 12. Fullerton, H. (1987), Labor force projections: 1986-2000, Monthly Labor Review, Vol. 110 No. 9, pp. 19-29. 13. Gamio, M. and Sneed, J. (1992), Cross-cultural training practices and needs in the hotel industry, Hospitality Research Journal, Vol. 15 No. 3, pp. 13-26. 14. Glick, W., Harber, H., Miller, D., Doty, H. and Sutcliffe, K. (1990), Studying changes in organizational design and effectiveness: retrospective event histories and periodic assessments, Organization Science, Vol. 1 No. 3, pp. 293-312. 15. Harris, K. and West, J. 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(1991), Business Research Methods, 3rd ed., The Dryden Press, Orlando, FL, pp. 3 Despite their popularity, the risk of failure of such ventures is high. There is a wealth of academic research studying the factors which may lead to greater success. Some authors suggest that greater attention up front to structural and partner characteristic dimensions will arrest the high failure rate (Parkhe, 1993). Recent research effort has been directed towards forwarding general prescriptions for managing the relationship once the alliance is under way Parkhe, A. (1993), Strategic alliance structuring: a game theoretical and transaction cost examination of interfirm cooperation, Academy of Management Journal, Vol. 36 No. 4, pp. 794-829. The work of Hofstede (1980), in particular, is considered the most comprehensive effort, involving analysis of a large scale questionnaire based survey of one large American corporation in 40 of its subsidiaries. Hofstede found that differences in national culture varied substantially along the four dimensions of uncertainty avoidance, individuality, tolerance of power distance and masculinity-femininity. Hofstedes work has frequently been used as a starting point to identify and model cultural clusters (Kogut and Singh, 1988; Ronen and Shenkar, 1985). Although the methodological approach has been extended to explore the effect of culture on international cooperation (Johnson et al., 1993; Graham, 1988) the difficulties of measuring and monitoring exchange processes have been noted. Indonesian culture, particularly Javanese and Sundanese culture (the latter from the region of Bandung) is very different from modern Western European and North American culture. Particular aspects of these cultural differences can affect the trust-building process. The case provides key episodes which illuminate these cultural trait differences and suggests methods to work within this cultural diversity. The critical involvement of stakeholders A key cultural dimension in SE Asian culture is the collectivist approach to business. This manifests itself in our case study through the critical involvement of stakeholders in the formation phase of the JV. The role of stakeholders and management of their interests is a key theme running through the paper. In particular, the case study suggests a need to systematically identify the power and interest of potential stakeholders and plan for and subsequently negotiate their roles and influence in the venture. These factors have led many Western companies to look for help and expert local advice through collaborative arrangements with ASEAN country partners. Market entry strategies have favoured equity JVs, which several ASEAN countries prefer in order to protect their own interests and ensure long-term growth (Lasserre, 1995; Mann 1996). The JV formation process: an analytical framework Lorange and Roos (1993) proposed a formation process model for JVs and strategic alliances which consisted of two areas of consideration; political and analytical and two phases of development; the initial and the intensive phase. This model has been modified and extended to create an analytical framework which derives from the Indonesian JV experience. The marketing and economic benefits from such a JV were apparent to Lucas at the time. Essentially the JV would provide abundant and highly skilled low-cost labour (with future joint product development a realistic possibility), made up of a loyal, dedicated and, importantly, reliable workforce with excellent proven machine tool skills and capabilities. Good rail and air transport links with markets in Europe, North America and Asia Pacific made it an attractive proposition along with a burgeoning Western market for low-cost high quality aerospace standard precision machined parts and components Westerners, particularly from Northern Europe and North America are generally viewed as particularists (Trompenaars, 1993). They rely heavily on rules and legal agreements to structure and provide governance to cooperative ventures. Trompenaars, F. (1993), Riding the Waves of Culture, Nicholas Brealey, London The most commonly utilized starting point for organizational development work on managing diversity is some type of employee education program. Human Resource Planning, June 2001 v24 i2 p10 Workforce Diversity Training: From Anti-Discrimination Compliance to Organizational Development. Marc Bendick; Mary Lou Egan; Suzanne M. Lofhjelm. Diversity is not just race and gender. It has a lot to do with communication styles and work styles,

Personal Responsibility Essay Example for Free

Personal Responsibility Essay Task Personal Responsibility Thesis Rough Draft Many people have different complex ideas of what the definition of personal responsibility is, I feel mine is simple. My definition of personal responsibility is, when someone takes accountability for their obligations. To me this means that if someone accepts to do a particular project or assignment they are responsible and accountable to make sure it gets done. College success very closely relates to personal responsibility in that, in order to be successful in college you have to take personal responsibility to complete your assignments and courses on time in order to graduate when you are scheduled to. I am going to put aside time each night and find a spot in my house where I can study without distractions to complete my course work on time. To be specific, having personal responsibility means you have to be accountable for your actions. When people are holding themselves accountable for their actions they tend to work harder to complete the task correctly. They also will be certain to turn it in when it is due. Another part of the equation is taking responsibility for yourself. Being responsible means you do your assignments on time. It also means you did them correctly. By being responsible you show others you can be depended upon to fulfill your part of the task. The final portion of my definition is feeling a sense of accomplishment. Finishing a task on time and correctly gives a person a great sense of accomplishment. Being able to contribute to the team goals and be acknowledged for it makes a person feel good. I know I take a sense of pride when I am able to accomplish something I’ve been tasked with and finish it to the best of my ability and the rest of the team is happy with my efforts. In conclusion, although some people rather let others handle things, people need to be accountable for their actions for three main reasons. First, if people keep themselves accountable they will do a better job and complete their tasks on time. Second, it gives a person a sense of accomplishment and they feel good about themselves. But most importantly, it shows the other members on the team that they will do their part and can be relied and depended upon and complete their portion of the work.

Synergies of Product Diversification Strategy

Synergies of Product Diversification Strategy Introduction Nowadays large firms have to survive in the face of economic competition. They have to keep an eye on the competitors performance. Managers try to progress and run their businesses well in order to grow and be competitive. When a large firm has reached a mature life-cycle stage it often has to explore the possibility of how to still grow. Ansoff (cited by Johnson, Scholes and Whittington, 1998) presents four basic growth alternatives: a) increased market penetration, b) market development, c) product development and d) diversification. Choosing the right path is major decision for managers. Finding out if there are reasons which may lead a large firm to prefer diversification, more specific, product diversification as the growth alternative strategy instead of other strategies is a main question. Firms who spread their activities and businesses across different product markets that are more or less related between each other are said to follow a product diversification strategy. (Pils, 2009, p.10) Product diversification strategy definition has evolved during the last decades. Some definitions are evolutional and complementary but some others contradict each other (Goold and Luchs, 1993). Therefore, it is important for managers to have a clear definition. The benefits of product diversification have been divided into two categories depending on the type of diversification: related or unrelated. Related product diversification refers to entries into new products or service businesses that have a connection to the firms existing markets (Peng, 2008). Researches (Hoskisson, 2007) and business experiences (such as Mondi AG, Procter Gamble, CHR plc., etc.) have proven that some of the benefits of this type of diversification are: Operational synergy: economies of scale Utilizing excess productive capacity Reinvesting earnings Unrelated product diversification refers to the development of products or services beyond the current capabilities and value network (Johnson et al. 2008). Some of the benefits and reasons for this type of diversification are: Financial synergy: economies of scope Increasing market power Spreading risk across a range of businesses The challenge for any large firm, once product diversification is chosen as the growth path, is to decide which type of diversification is most appropriate and what strategic plan to follow. Product diversification gives also other challenges to managers such as the need of new skills to manage a wider group of businesses, new techniques, sometimes new facilities, large capital to test the viability of the new product, produce it and market the product, hire and train new employees, etc. Therefore, diversification has some inconveniences as it involves taking a step into a territory where the parameters are unknown to the firm (Peng, 2008). Product diversification can be achieved by acquiring an existing firm in the business it wants to enter, starting up a new business subsidiary or entering into joint ventures. For large firms knowing the different growth strategies including its benefits and inconveniences is fundamental to giving managers practical recommendations. For a better understanding of these fundamental issues this research will analyze whether related or unrelated product diversification strategy leads large firms to exploit more synergies and creates more value for the firm. Based on this research question, the following sub-questions are going to be addressed in this research: Should large firms, such as Mondi AG, aim to focus on related or unrelated businesses to exploit operational synergies? How is Mondis life cycle related to the right time of diversifying? Which recommendations on product diversification strategy can be given to large firms regarding financial synergy? To answer the above questions, I will present a detailed and methodical literature review on product diversification strategy concept, categories, synergies, its relation with large firms life cycle and explore the effects of a financial crisis on large firms who have chosen this type of diversification to identify the appropriate strategy for the research goal. This research is based on the hypothesis that related product diversification is the right strategy to be chosen if operational synergies are to be achieved while for financial synergies, unrelated product diversification strategies are more appropriate. The strength of this hypothesis is tested through a case study of a large firm: The Mondi Group. The Mondi Group has been chosen as the large firm to be explored in this research because it is an international firm with one of its largest teams and headquarters in Austria. Trend, an Austrian financial magazine, ranked Mondi as the 13th top Austrian large firm out of 500 firms in 2008 having 5.159,00 Mio. Euro net sales and 26.425 employees worldwide. Product Diversification In the 20th century many researchers have written about product diversification strategy (PDS). This research will analyse how PDS is seen by managers because of the larger experience there is nowadays. Diversification has been specially growing after the whole post-war period. Whereas in 1950 only around one third of large firms in France, Germany, and the United Kingdom were diversified, by the 1990s it increased to two thirds or more (Whittington and Mayer 2003). Size and Product diversification strategy This research is focused on how large firms have reacted to the different paths of growth. The firm size: small, medium or large is an important parameter while analysing a firm strategy. In the financial and economical studies and researches the relation between size and firm variables remains a controversial subject. Some argue that size is the primary factor that determines structure whether others say that size is irrelevant (Jackson and Morgan, 1978). In my opinion, it is true that product diversification can be applied both by small and large firms, but I believe that a small firm has more limitations and can not fully develop this strategy in its organization due to limited resources: human, financial and technological. I also believe that as a consequence a firm applying product diversification strategy will increase its size. With larger number of products, the complexity of processes and production is greater. Therefore the craft needed is greater. As mentioned before, some researchers agree with this point of view like the study realized by Dewar and Hage (n.d., cited by Jackson and Morgan, 1978) which suggests that large firms facilitate changes in structure in a way that small firms can not afford. On the other hand, Woodward, Zwerman and Harvey (n.d., cited by Jackson and Morgan, 1978) concluded that instead of size, the production systems used by the firms are more connected and explain better the firm structure and feature. In other words, an efficient production system can explain the success of one large or small firm and therefore the relationship between size and differentiation is not linear. Diversification and Product Diversification Strategy Terminology Diversification The root of the word is, obviously, diverse. Pitts and Hopkins (1982) define it as literally meaning different, unlike, distinct, and separate (p.620). Therefore, if this definition is applied to the context of product diversification, we can say that it means firms having their products in various and different lines. Pils (2009) also confirms this definition as he points out that product diversified firms are understood to be active in multiple, distinct product-markets (p.10). The various definitions, forms and ways of managing diversification are the main topics of this research. Product diversification strategy There is a common denominator in the way product diversification is defined in the literature. For instance, Pils (2009) defines it as firms spreading their activities and products across different product-markets that are more or less related between each other. He also affirms that product diversification strategy determines which businesses a corporation should be in, defining the scope of the firms activities and being of high relevance for creating value for the firm. Berry (1971, p.380) defines product diversification as an increase in the number of industries in which firms are active. However, he does not point out that it can be also increasing the number of products in the current industry. Pitts and Hopkins (1982, p.620) consider firms product diversification if operating multiple different businesses at the same time. Hoskisson (2007), on the other hand, says that the firms level of diversification is a function of decisions about the number and type of businesses in whic h it will compete as well as how it will manage the business. These definitions have surely been influenced by the work of Ansoff (1957) in which he presented diversification as a possible growth strategy as mentioned in the introduction. Ansoff presented two ways of diversification: market diversification and product diversification. Although this research only focuses on the product diversification side, few lines are dedicated to explain the difference and characteristics of these two strategies. Market diversification is a strategy that takes the firm from its existing market to new ones. It exploits the current products and capabilities in new markets looking for geographical spread. This strategy is more and more used in the current times where globalization is facilitating the firms internationalisation. It also presents some challenges like cultural barriers, adding management costs and government restrictions among others. Product diversification is about adding new product to the firms portfolio whereas market diversification is about entering in new markets offering the firms current products. Reasons and Challenges Reasons and Motivations for Diversification: Any firm has a start. Normally starting as a small business it focuses on a single product. This is known as a single business strategy. The natural reasons are commonly due to a lack of cash, experience and know-how. Over time, the resources, capabilities and core competences are rooted and stabilized. At that point, firms may choose product diversified strategy, with two broad categories (related or unrelated). Large firms use product diversification strategy for a variety of reasons. Pearce and Robinson, (2005) and Hoskisson ( 2007) mention among others, the following reasons: To increase the growth rate of the firm For a better use of the companies funds than investing them into internal growth To balance the product line Diversifying the product line when the firm has reached its mature life cycle To increase efficiency and profitability, especially, if there is operational or financial synergy To increase the firms value by improving its overall performance To increase revenues or reduce costs To match and neutralize competitors market power To reduce managerial risk To increase the firms size and thus managerial compensation Product diversification challenges The above mentioned reasons and motivations for PDS can also bring along challenges and costs. One could say that PDS needs new facilities, technologies, skills, know-how, employee and managerial training, etc. It is important to know that it can have a great negative impact on the firms current products if a new product is launched with the firms brand name and the product is not well accepted in the market. The reasons for the market rejection can be e.g. lower quality than expected from the firm, high price, poor distribution, etc. At that point, the whole company will be negatively affected by a bad move. This argument is also supported by various authors such as Hoskisson, (2007); Grant, Jammine, and Thomas (1998); Goold and Luchs (1993), (cited by Pils, 2009). They state that some of the challenges are information processing, coordination, and control problems due to increase of information asymmetries difficult for a single business to deal with. In case of applying a PDS a fi rm has to change its structure and adopt new systems. Moreover Hoskisson (2007) elaborates that the data and information a firm using PDS requires is substantially greater. Furthermore increasing portfolio diversity may involve inefficiencies due to growing conflict on top management and a lack of adaptability to environmental change. Product Diversification Strategy Categories: Related Unrelated Product Diversification Strategy As mentioned before, there are two broad categories of PDS: Related and Unrelated. Some authors such as Richard Rumel (cited by Lovallo and Mendoca, 2007), Peng (2008) also categorize PDS as: focused, moderately and highly diversified. These three categories are not deeply explored in this research. But to dedicate some words, it should be mentioned that Richard Rumelt, in 1972, was the first person to statistically prove the linkage between corporate strategy and profitability. He concluded that moderately diversified firms outperform more diversified ones. Lovallo and Mendoca (2007) sustain that this finding has been valid more than 30 years of research. Moreover, a contemporary author, Peng (2008), also points out that some moderate level of diversification is the most optimal. The main focus of this research is whether a related or unrelated strategy is more suitable for large firms while diversifying. Therefore, in the following lines a definition and a detailed explanation of both is presented. Related product diversification can be defined as a strategy that firms can choose as a growing path. As the word related signals, this diversification strategy is focused on products that have a correlation between each other and are related in some way, especially in their core competences. Normally, firms that choose related product diversification as a strategy are sharing a common factor such as the raw material, the technology or the know-how needed to produce different products. Moreover, the products offered by the firm do not necessarily need to be similar. For instance, a firm running a cinema complex and also offering soft-drinks to be sold at the movie theatres is using a related PDS. Even if their products may not be related, they must share some common ground on their value or supply chain. In this case, the customers targeted are the same. Pearce and Robinson,(2005) confirm this by defining related businesses as those relying on same or similar capabilities in order to have success and achieve competitive advantage in their product markets. Major advantages of related PDS are: concentration of strength, exploitation of a market niche, and the development of synergies. A good example, of a firm applying this strategy is CRH, an Irish company who operates in 35 countries with more than 93.500 employees. The CRH Corporate Social Responsibility Report (2007) states that the firm is a diversified building materials group which manufactures and distributes building material products from the fundamentals of heavy materials and elements to construct the frame, through value added products that complete the building envelope, to distribution channels which service construction fit-out and renewal. CRH has three closely related core businesses: primary materials (aggregates, cement, asphalt and ready mixed concrete); value-added building products (pre-cast, architectural, construction accessories, clay, gas, insulation, building envelope products); and specialist building materials (CRH, 2009). CRH initially decided to diversify to gain economies of scope and also to stretch the corporate parenting capabilities. While CRH diversified its market its power i ncreased and consequently it could afford to cross-subsidise one business from the surpluses earned by another, in a way that competitors could not. As an effect, it could drive out competitors. Before going into further details regarding related PDS, a definition of Unrelated Product Diversification is given. In this case, as the word unrelated points out this diversification strategy focuses on firms offering products that have no relation, are not complementary between each other and do not have necessarily the same raw material as their prime and main composition. Moreover, they do not need to share any part of their supply chain (customers, distributor, manufacturer, logistics, etc). For instance, the Easy Group Company is present in several industries and services that have actually no relation. Some of them are: travel companies, car rentals, internet-cafes, cinemas, cosmetics, etc. Stelio Haji-Ionannou, the founder of the company has developed a cost strategy that pretends to apply in all its businesses. It seems that he believes that his formula is valid for any business. Normally the reason why firms choose this path is known to reduce their financial risks. Peng (2008) refers to unrelated PDS as firms entering into industries new lines that have no evident connections to the present firm line of businesses. Furthermore, Hoskisson (2007) says that unrelated PDS occurs when there are no overlapping capabilities other than financial resources. This strategy is also known in the financial literature as conglomerates (Hoskisson, 2007; Peng, 2008; Pearce and Robinson, 2005) It has been widely discussed whether related is more successful or unrelated. To be able to answer this fundamental question the following pros and cons are explored: Human resources: Related product diversification is characterized by the ease of human resources relocation because the skills and capabilities needed for the introduction of the new products are very similar. On the other hand, unrelated PDS requires recruiting new personnel or training current employees in the new fields. (Tallman, 2003) Technologies Obviously, if a firm chooses unrelated PDS, it will probably not be able to share technologies. Therefore, the investment needed to apply this kind of diversification is greater than by applying a related one. Related PDS is characterised by sharing technologies needed to produce the new products. For example, a firm which produces shampoo and introduces hair conditioner may use the same technology. In that way it reduces the investment costs for the new production and gain economies of scope (also see 2.5). Tallman (2003) confirms that related products can increase the use of existing fixed investments and existing capacity for more purposes and more intensively, gaining efficiencies that reduce costs. Additionally, he says that it can improve the efficiency of its existing resource infrastructure by increasing the flow of product to a wider range of customers. Management For managers it is easier to introduce related products than unrelated ones because they are familiar to the industry and can apply the same or similar strategies. For unrelated ones, managers have to learn about the new products and often the strategy used for the current products is not applicable for the new ones. Therefore, managers should experience new strategies which at the beginning may fail. Prahalad and Hamel (1990), said that it is likely that firm managers of unrelated products may be ineffective because the routines and capabilities they have already developed are not applicable one to one to the entire range of businesses. On the other hand it could be argued that it can be effective as top management can concentrate on financial management and costs controls while leaving operational control with each business unit. Competitors It is easier for competitors to imitate the financial economies of a firm than the operational synergies derived from a related PDS. This is due to the fact that operational synergies derived from the use of current know-how, facilities, capabilities and experiences are more difficult to imitate than realizing that a firm is diversifying into new unrelated products based on the percentage of the revenue it can gain. Therefore, it is less likely that competitors will imitate a firm which introduces new related products. Peng and Delios, (2006), and Khanna and Palepu, (2005), (cited by Hoskisson, 2007) sustain that competitors find it easier to imitate financial economies than replicating the value gained by related PDS from the economies of scope developed through operational relatedness. Control Mechanism The principle control mechanism for related diversification is strategic control with rich communication between corporate and business units managers. Financial results are obviously not a fair means to measure the functioning of each business unit. One business unit may have low revenues but its main function is to support the others. For unrelated products, the best way to control is exactly the opposite. The emphasis has to be on financial control (return and investment) to evaluate the units performance. (Peng, 2008) Market saturation When the product a firm is offering is close to a market saturation or obsolescence, the best thing a firm can do is to enter into another market offering unrelated products. In that way the company has an opportunity to grow. It would be a great mistake in a saturated market to introduce related products because the competition is already very high and to get a profitable market share is unlikely. Stabilize Earnings Another reason would be to stabilize the earnings and dividends of a firm in a cyclical industry. In that case, the firm should diversify into an industry with complementary cycles independent of the relation with the current products. Independency Firms that are uncomfortable to be dependent on one product line should diversify into other businesses or industries. In that way the risk is spread and all the weight is not in one product line. All in all the benefits of both categories of diversification do not appear as the result of a magic formula that just happens but as Tallman (2003) and Peng (2008) also sustain it is the result of an active management of resources and capabilities with potential for broader application. Product diversification synergies need to be explored in more detail. Therefore the following section is dedicated. Product Diversification Synergies Pils (2009) explains that the word synergy is derived from the Greek word synergos and literally means working together. In business terminology, synergy is used to describe the ability of two or more business units or firms to make greater value working together than they would do independently (Goold and Campbell, 1998, p.133). Diversifying a large firm is considered economically positive only if synergetic effects between the different businesses units are achieved. As a consequence, the idea of maximizing synergies as the main objective of diversification strategy is presented below. Operational Synergies The emphasis of product related diversification is on operational synergies because in this strategy production resources are shared to have a cost competitive advantage. In the financial literature, the term operational synergy has been used as a synonym for economies of scope (Tanriverdi and Vendkatraman, 2005). Economies of scope and/or operational synergies are the result of two or more business units that share and transfer factors of production, its resources and capabilities. As a consequence the shared production costs will be lower than production costs of each one separately. Peng (2008) defines it as competitiveness increase beyond what can be achieved by engaging in two product markets separately. In other words, firms benefit from lowering unit costs by gaining advantage from product relatedness, i.e. 2+2=5. Some sources of operational synergy are (Peng, 2008): Technologies, such as common platforms Marketing, such as common brands, and Manufacturing, such as common logistics Conscious of these possible synergies, Zodiac a French large firm who in 1930 was focused on inflatable boats and had strong ties to the French army started to introduce new related products to its portfolio. Zodiac created 5 different divisions having inflatable materials as a common denominator. These divisions have been: marine division (recreation, military, professional, safety of life at sea, environmental solutions); pool division (pool sector and pool care and water cleaning, heating, pumps, filters); airline equipment division (passenger seats and on-board toilets and sanitation systems); aerosafety systems division (aircraft escape slides, parachute systems, helicopter floats, and flexible fuel tanks); technology division and aircraft system division. (Zodiac Aerospace, 2009) Zodiac has benefited from the operational synergies through the use of inflatable products technology and has also used market synergies because it has supplied the same customers with different produc ts. Conversely, unrelated diversification does not need to have advanced levels of operational relatedness. Rather, each business unit has its own strategic and operational responsibility and the management can focus on the financial synergies. (Tallman, 2003) Investment synergies are very much related to the operational synergies. It can be argued that one is the consequence of the other or that they are developed hand in hand. Investment synergies are the result of products sharing the same plant, resource and development (RD) and machinery. This is more probable to happen with a related product diversification because of the previous explanations. For unrelated products, the machinery is improbable the same and each product need its own RD. Financial Synergies The means obtaining financial synergy is different from obtaining operational synergies. The key role of firms is to identify and find profitable investment opportunities. The parameter to measure if financial synergies are to be achieved is whether managers can exceed the job of identifying and taking advantage of profitable opportunities compared to external capital markets (Peng, 2008). Hoskisson (2007) defines financial synergies as cost savings realized through a better use of financial assets based on investments inside or outside the firm. Competent internal capital distribution can lead to financial synergies and reduces risk between the firms businesses (Higgings and Schall, 1975). A firm using unrelated PDS may grow, but only internally in each business unit and will not reach operational efficiencies but financial ones. That means, the revenue of each business unit will be greater when functioning as a conglomerate rather than functioning independently. This idea is supported by Peng (2008) who states that competitiveness increases for each unit financially further than what can be achieved by each unit competing independently as an individual firm. Many different products that are not necessarily related offer opportunities of high returns. If a firm is only interested in the returns, unrelated product diversification may be a right path of growth. Sales synergies: These occur from sharing salespeople, warehouses, distribution channels, and advertising. Salespeople have more chances to be able to sell to the same customer a wide range of related products than unrelated ones. Salespeople will try to sell a complete pack of product to the same customer and in that way take advantage of the sales synergies that related product diversification presents. Imagine a company selling sport shoes and refrigerators, in a selling process it is more unlikely to be able to sell both products to the same customer than if he would offer sport shoes and sport clothes. On the other hand, if a firm has developed a well-known brand, the use of the brand-name in other products, related or unrelated, can increase and facilitate sales because it can have build before customer loyalty to the brand. For example, Mars chocolate confectionery successful launched ice-creams. Much of it success could be related to the brand name. So, sales synergies do not occur only withi n related products but also within unrelated ones if the brand name is positively perceived and recognized by the customers. Management synergies It arises from managers accumulating experiences from handling problems in one business unit that can be applied and used to solve problems in a related business unit. Even more, the accumulated experience and know-how allows answering faster to the industry trends and challenges. Managers are able to transfer their skills, experiences and strategies (Enz, 2009, p.222). Contrarily, unrelated product managers can not apply the experience gained from solving the problems of one unit to the other in most cases because the problems are specific for each product. All these synergies can be undermine due to additional layers of management, delays due to organization and information complexity, communication costs for coordination, imaginary synergies that in fact do not exist, incompatible production processes, etc. Therefore while choosing between related and unrelated PDS the mentioned synergy risks have to be taken into account. Research Methodology In this section an explanation of how the data for the case study was collected and how it was analyzed is presented. It is important to know how the data was collected because the method chosen affects the final findings. The information and content of The Mondi Group Case Study was obtained through an expert interview with Mr. Wolfgang Kropiunik, Mondis Marketing Manager of Uncoated Fine Paper. A questionnaire was sent as a guide and overview of the face-to-face interview questions. A meeting for a 40 minutes exploratory semi-structured interview was organized on the 24th of November 2009 at Mondi Headquarter, Vienna. Mondi Group was chosen as the large firm to be analyzed as it is a large firm with more than 33.000 employees worldwide and has its headquarter in Vienna (Mondi, 2009). Therefore the results presented in this research are very much related to Mondis functioning and successful method. It might be possible that if the studied firm had been another one, the results of the research question could have been different. The interview was recorded and the data obtained was transcribed (see appendix). The transcription of the interview allowed a deeper comprehension of Mondis product diversification strategy, synergies and challenges. Moreover, the recommendations presented to the company (see 4.7) are inspired from the challenges Mr. Kropiunik mentioned during the interview. The interview gave a number of information about Mondis life cycle, PDS and challenges especially during the current financial crisis The Mondi Group Case Study Mondi is a large and international packaging and paper firm represented in around 35 countries. In 2008, it had revenues of 6.3 billion EUR and about 33.400 employees (Mondi, 2009). It has a strong presence in Western Europe, Russia and South Africa. Mondis Europe and International Division has its headquarter in Vienna while the corporate headquarter is located in Johannesburg. In Vienna, there are three businesses: Uncoated Fine Paper, Corrugated and Bags Specialties. Mondi has reached to be fully integrated having the control of its supply chain. It grows trees, manufactures pulp and paper and converts packaging paper into corrugated packaging an Synergies of Product Diversification Strategy Synergies of Product Diversification Strategy Introduction Nowadays large firms have to survive in the face of economic competition. They have to keep an eye on the competitors performance. Managers try to progress and run their businesses well in order to grow and be competitive. When a large firm has reached a mature life-cycle stage it often has to explore the possibility of how to still grow. Ansoff (cited by Johnson, Scholes and Whittington, 1998) presents four basic growth alternatives: a) increased market penetration, b) market development, c) product development and d) diversification. Choosing the right path is major decision for managers. Finding out if there are reasons which may lead a large firm to prefer diversification, more specific, product diversification as the growth alternative strategy instead of other strategies is a main question. Firms who spread their activities and businesses across different product markets that are more or less related between each other are said to follow a product diversification strategy. (Pils, 2009, p.10) Product diversification strategy definition has evolved during the last decades. Some definitions are evolutional and complementary but some others contradict each other (Goold and Luchs, 1993). Therefore, it is important for managers to have a clear definition. The benefits of product diversification have been divided into two categories depending on the type of diversification: related or unrelated. Related product diversification refers to entries into new products or service businesses that have a connection to the firms existing markets (Peng, 2008). Researches (Hoskisson, 2007) and business experiences (such as Mondi AG, Procter Gamble, CHR plc., etc.) have proven that some of the benefits of this type of diversification are: Operational synergy: economies of scale Utilizing excess productive capacity Reinvesting earnings Unrelated product diversification refers to the development of products or services beyond the current capabilities and value network (Johnson et al. 2008). Some of the benefits and reasons for this type of diversification are: Financial synergy: economies of scope Increasing market power Spreading risk across a range of businesses The challenge for any large firm, once product diversification is chosen as the growth path, is to decide which type of diversification is most appropriate and what strategic plan to follow. Product diversification gives also other challenges to managers such as the need of new skills to manage a wider group of businesses, new techniques, sometimes new facilities, large capital to test the viability of the new product, produce it and market the product, hire and train new employees, etc. Therefore, diversification has some inconveniences as it involves taking a step into a territory where the parameters are unknown to the firm (Peng, 2008). Product diversification can be achieved by acquiring an existing firm in the business it wants to enter, starting up a new business subsidiary or entering into joint ventures. For large firms knowing the different growth strategies including its benefits and inconveniences is fundamental to giving managers practical recommendations. For a better understanding of these fundamental issues this research will analyze whether related or unrelated product diversification strategy leads large firms to exploit more synergies and creates more value for the firm. Based on this research question, the following sub-questions are going to be addressed in this research: Should large firms, such as Mondi AG, aim to focus on related or unrelated businesses to exploit operational synergies? How is Mondis life cycle related to the right time of diversifying? Which recommendations on product diversification strategy can be given to large firms regarding financial synergy? To answer the above questions, I will present a detailed and methodical literature review on product diversification strategy concept, categories, synergies, its relation with large firms life cycle and explore the effects of a financial crisis on large firms who have chosen this type of diversification to identify the appropriate strategy for the research goal. This research is based on the hypothesis that related product diversification is the right strategy to be chosen if operational synergies are to be achieved while for financial synergies, unrelated product diversification strategies are more appropriate. The strength of this hypothesis is tested through a case study of a large firm: The Mondi Group. The Mondi Group has been chosen as the large firm to be explored in this research because it is an international firm with one of its largest teams and headquarters in Austria. Trend, an Austrian financial magazine, ranked Mondi as the 13th top Austrian large firm out of 500 firms in 2008 having 5.159,00 Mio. Euro net sales and 26.425 employees worldwide. Product Diversification In the 20th century many researchers have written about product diversification strategy (PDS). This research will analyse how PDS is seen by managers because of the larger experience there is nowadays. Diversification has been specially growing after the whole post-war period. Whereas in 1950 only around one third of large firms in France, Germany, and the United Kingdom were diversified, by the 1990s it increased to two thirds or more (Whittington and Mayer 2003). Size and Product diversification strategy This research is focused on how large firms have reacted to the different paths of growth. The firm size: small, medium or large is an important parameter while analysing a firm strategy. In the financial and economical studies and researches the relation between size and firm variables remains a controversial subject. Some argue that size is the primary factor that determines structure whether others say that size is irrelevant (Jackson and Morgan, 1978). In my opinion, it is true that product diversification can be applied both by small and large firms, but I believe that a small firm has more limitations and can not fully develop this strategy in its organization due to limited resources: human, financial and technological. I also believe that as a consequence a firm applying product diversification strategy will increase its size. With larger number of products, the complexity of processes and production is greater. Therefore the craft needed is greater. As mentioned before, some researchers agree with this point of view like the study realized by Dewar and Hage (n.d., cited by Jackson and Morgan, 1978) which suggests that large firms facilitate changes in structure in a way that small firms can not afford. On the other hand, Woodward, Zwerman and Harvey (n.d., cited by Jackson and Morgan, 1978) concluded that instead of size, the production systems used by the firms are more connected and explain better the firm structure and feature. In other words, an efficient production system can explain the success of one large or small firm and therefore the relationship between size and differentiation is not linear. Diversification and Product Diversification Strategy Terminology Diversification The root of the word is, obviously, diverse. Pitts and Hopkins (1982) define it as literally meaning different, unlike, distinct, and separate (p.620). Therefore, if this definition is applied to the context of product diversification, we can say that it means firms having their products in various and different lines. Pils (2009) also confirms this definition as he points out that product diversified firms are understood to be active in multiple, distinct product-markets (p.10). The various definitions, forms and ways of managing diversification are the main topics of this research. Product diversification strategy There is a common denominator in the way product diversification is defined in the literature. For instance, Pils (2009) defines it as firms spreading their activities and products across different product-markets that are more or less related between each other. He also affirms that product diversification strategy determines which businesses a corporation should be in, defining the scope of the firms activities and being of high relevance for creating value for the firm. Berry (1971, p.380) defines product diversification as an increase in the number of industries in which firms are active. However, he does not point out that it can be also increasing the number of products in the current industry. Pitts and Hopkins (1982, p.620) consider firms product diversification if operating multiple different businesses at the same time. Hoskisson (2007), on the other hand, says that the firms level of diversification is a function of decisions about the number and type of businesses in whic h it will compete as well as how it will manage the business. These definitions have surely been influenced by the work of Ansoff (1957) in which he presented diversification as a possible growth strategy as mentioned in the introduction. Ansoff presented two ways of diversification: market diversification and product diversification. Although this research only focuses on the product diversification side, few lines are dedicated to explain the difference and characteristics of these two strategies. Market diversification is a strategy that takes the firm from its existing market to new ones. It exploits the current products and capabilities in new markets looking for geographical spread. This strategy is more and more used in the current times where globalization is facilitating the firms internationalisation. It also presents some challenges like cultural barriers, adding management costs and government restrictions among others. Product diversification is about adding new product to the firms portfolio whereas market diversification is about entering in new markets offering the firms current products. Reasons and Challenges Reasons and Motivations for Diversification: Any firm has a start. Normally starting as a small business it focuses on a single product. This is known as a single business strategy. The natural reasons are commonly due to a lack of cash, experience and know-how. Over time, the resources, capabilities and core competences are rooted and stabilized. At that point, firms may choose product diversified strategy, with two broad categories (related or unrelated). Large firms use product diversification strategy for a variety of reasons. Pearce and Robinson, (2005) and Hoskisson ( 2007) mention among others, the following reasons: To increase the growth rate of the firm For a better use of the companies funds than investing them into internal growth To balance the product line Diversifying the product line when the firm has reached its mature life cycle To increase efficiency and profitability, especially, if there is operational or financial synergy To increase the firms value by improving its overall performance To increase revenues or reduce costs To match and neutralize competitors market power To reduce managerial risk To increase the firms size and thus managerial compensation Product diversification challenges The above mentioned reasons and motivations for PDS can also bring along challenges and costs. One could say that PDS needs new facilities, technologies, skills, know-how, employee and managerial training, etc. It is important to know that it can have a great negative impact on the firms current products if a new product is launched with the firms brand name and the product is not well accepted in the market. The reasons for the market rejection can be e.g. lower quality than expected from the firm, high price, poor distribution, etc. At that point, the whole company will be negatively affected by a bad move. This argument is also supported by various authors such as Hoskisson, (2007); Grant, Jammine, and Thomas (1998); Goold and Luchs (1993), (cited by Pils, 2009). They state that some of the challenges are information processing, coordination, and control problems due to increase of information asymmetries difficult for a single business to deal with. In case of applying a PDS a fi rm has to change its structure and adopt new systems. Moreover Hoskisson (2007) elaborates that the data and information a firm using PDS requires is substantially greater. Furthermore increasing portfolio diversity may involve inefficiencies due to growing conflict on top management and a lack of adaptability to environmental change. Product Diversification Strategy Categories: Related Unrelated Product Diversification Strategy As mentioned before, there are two broad categories of PDS: Related and Unrelated. Some authors such as Richard Rumel (cited by Lovallo and Mendoca, 2007), Peng (2008) also categorize PDS as: focused, moderately and highly diversified. These three categories are not deeply explored in this research. But to dedicate some words, it should be mentioned that Richard Rumelt, in 1972, was the first person to statistically prove the linkage between corporate strategy and profitability. He concluded that moderately diversified firms outperform more diversified ones. Lovallo and Mendoca (2007) sustain that this finding has been valid more than 30 years of research. Moreover, a contemporary author, Peng (2008), also points out that some moderate level of diversification is the most optimal. The main focus of this research is whether a related or unrelated strategy is more suitable for large firms while diversifying. Therefore, in the following lines a definition and a detailed explanation of both is presented. Related product diversification can be defined as a strategy that firms can choose as a growing path. As the word related signals, this diversification strategy is focused on products that have a correlation between each other and are related in some way, especially in their core competences. Normally, firms that choose related product diversification as a strategy are sharing a common factor such as the raw material, the technology or the know-how needed to produce different products. Moreover, the products offered by the firm do not necessarily need to be similar. For instance, a firm running a cinema complex and also offering soft-drinks to be sold at the movie theatres is using a related PDS. Even if their products may not be related, they must share some common ground on their value or supply chain. In this case, the customers targeted are the same. Pearce and Robinson,(2005) confirm this by defining related businesses as those relying on same or similar capabilities in order to have success and achieve competitive advantage in their product markets. Major advantages of related PDS are: concentration of strength, exploitation of a market niche, and the development of synergies. A good example, of a firm applying this strategy is CRH, an Irish company who operates in 35 countries with more than 93.500 employees. The CRH Corporate Social Responsibility Report (2007) states that the firm is a diversified building materials group which manufactures and distributes building material products from the fundamentals of heavy materials and elements to construct the frame, through value added products that complete the building envelope, to distribution channels which service construction fit-out and renewal. CRH has three closely related core businesses: primary materials (aggregates, cement, asphalt and ready mixed concrete); value-added building products (pre-cast, architectural, construction accessories, clay, gas, insulation, building envelope products); and specialist building materials (CRH, 2009). CRH initially decided to diversify to gain economies of scope and also to stretch the corporate parenting capabilities. While CRH diversified its market its power i ncreased and consequently it could afford to cross-subsidise one business from the surpluses earned by another, in a way that competitors could not. As an effect, it could drive out competitors. Before going into further details regarding related PDS, a definition of Unrelated Product Diversification is given. In this case, as the word unrelated points out this diversification strategy focuses on firms offering products that have no relation, are not complementary between each other and do not have necessarily the same raw material as their prime and main composition. Moreover, they do not need to share any part of their supply chain (customers, distributor, manufacturer, logistics, etc). For instance, the Easy Group Company is present in several industries and services that have actually no relation. Some of them are: travel companies, car rentals, internet-cafes, cinemas, cosmetics, etc. Stelio Haji-Ionannou, the founder of the company has developed a cost strategy that pretends to apply in all its businesses. It seems that he believes that his formula is valid for any business. Normally the reason why firms choose this path is known to reduce their financial risks. Peng (2008) refers to unrelated PDS as firms entering into industries new lines that have no evident connections to the present firm line of businesses. Furthermore, Hoskisson (2007) says that unrelated PDS occurs when there are no overlapping capabilities other than financial resources. This strategy is also known in the financial literature as conglomerates (Hoskisson, 2007; Peng, 2008; Pearce and Robinson, 2005) It has been widely discussed whether related is more successful or unrelated. To be able to answer this fundamental question the following pros and cons are explored: Human resources: Related product diversification is characterized by the ease of human resources relocation because the skills and capabilities needed for the introduction of the new products are very similar. On the other hand, unrelated PDS requires recruiting new personnel or training current employees in the new fields. (Tallman, 2003) Technologies Obviously, if a firm chooses unrelated PDS, it will probably not be able to share technologies. Therefore, the investment needed to apply this kind of diversification is greater than by applying a related one. Related PDS is characterised by sharing technologies needed to produce the new products. For example, a firm which produces shampoo and introduces hair conditioner may use the same technology. In that way it reduces the investment costs for the new production and gain economies of scope (also see 2.5). Tallman (2003) confirms that related products can increase the use of existing fixed investments and existing capacity for more purposes and more intensively, gaining efficiencies that reduce costs. Additionally, he says that it can improve the efficiency of its existing resource infrastructure by increasing the flow of product to a wider range of customers. Management For managers it is easier to introduce related products than unrelated ones because they are familiar to the industry and can apply the same or similar strategies. For unrelated ones, managers have to learn about the new products and often the strategy used for the current products is not applicable for the new ones. Therefore, managers should experience new strategies which at the beginning may fail. Prahalad and Hamel (1990), said that it is likely that firm managers of unrelated products may be ineffective because the routines and capabilities they have already developed are not applicable one to one to the entire range of businesses. On the other hand it could be argued that it can be effective as top management can concentrate on financial management and costs controls while leaving operational control with each business unit. Competitors It is easier for competitors to imitate the financial economies of a firm than the operational synergies derived from a related PDS. This is due to the fact that operational synergies derived from the use of current know-how, facilities, capabilities and experiences are more difficult to imitate than realizing that a firm is diversifying into new unrelated products based on the percentage of the revenue it can gain. Therefore, it is less likely that competitors will imitate a firm which introduces new related products. Peng and Delios, (2006), and Khanna and Palepu, (2005), (cited by Hoskisson, 2007) sustain that competitors find it easier to imitate financial economies than replicating the value gained by related PDS from the economies of scope developed through operational relatedness. Control Mechanism The principle control mechanism for related diversification is strategic control with rich communication between corporate and business units managers. Financial results are obviously not a fair means to measure the functioning of each business unit. One business unit may have low revenues but its main function is to support the others. For unrelated products, the best way to control is exactly the opposite. The emphasis has to be on financial control (return and investment) to evaluate the units performance. (Peng, 2008) Market saturation When the product a firm is offering is close to a market saturation or obsolescence, the best thing a firm can do is to enter into another market offering unrelated products. In that way the company has an opportunity to grow. It would be a great mistake in a saturated market to introduce related products because the competition is already very high and to get a profitable market share is unlikely. Stabilize Earnings Another reason would be to stabilize the earnings and dividends of a firm in a cyclical industry. In that case, the firm should diversify into an industry with complementary cycles independent of the relation with the current products. Independency Firms that are uncomfortable to be dependent on one product line should diversify into other businesses or industries. In that way the risk is spread and all the weight is not in one product line. All in all the benefits of both categories of diversification do not appear as the result of a magic formula that just happens but as Tallman (2003) and Peng (2008) also sustain it is the result of an active management of resources and capabilities with potential for broader application. Product diversification synergies need to be explored in more detail. Therefore the following section is dedicated. Product Diversification Synergies Pils (2009) explains that the word synergy is derived from the Greek word synergos and literally means working together. In business terminology, synergy is used to describe the ability of two or more business units or firms to make greater value working together than they would do independently (Goold and Campbell, 1998, p.133). Diversifying a large firm is considered economically positive only if synergetic effects between the different businesses units are achieved. As a consequence, the idea of maximizing synergies as the main objective of diversification strategy is presented below. Operational Synergies The emphasis of product related diversification is on operational synergies because in this strategy production resources are shared to have a cost competitive advantage. In the financial literature, the term operational synergy has been used as a synonym for economies of scope (Tanriverdi and Vendkatraman, 2005). Economies of scope and/or operational synergies are the result of two or more business units that share and transfer factors of production, its resources and capabilities. As a consequence the shared production costs will be lower than production costs of each one separately. Peng (2008) defines it as competitiveness increase beyond what can be achieved by engaging in two product markets separately. In other words, firms benefit from lowering unit costs by gaining advantage from product relatedness, i.e. 2+2=5. Some sources of operational synergy are (Peng, 2008): Technologies, such as common platforms Marketing, such as common brands, and Manufacturing, such as common logistics Conscious of these possible synergies, Zodiac a French large firm who in 1930 was focused on inflatable boats and had strong ties to the French army started to introduce new related products to its portfolio. Zodiac created 5 different divisions having inflatable materials as a common denominator. These divisions have been: marine division (recreation, military, professional, safety of life at sea, environmental solutions); pool division (pool sector and pool care and water cleaning, heating, pumps, filters); airline equipment division (passenger seats and on-board toilets and sanitation systems); aerosafety systems division (aircraft escape slides, parachute systems, helicopter floats, and flexible fuel tanks); technology division and aircraft system division. (Zodiac Aerospace, 2009) Zodiac has benefited from the operational synergies through the use of inflatable products technology and has also used market synergies because it has supplied the same customers with different produc ts. Conversely, unrelated diversification does not need to have advanced levels of operational relatedness. Rather, each business unit has its own strategic and operational responsibility and the management can focus on the financial synergies. (Tallman, 2003) Investment synergies are very much related to the operational synergies. It can be argued that one is the consequence of the other or that they are developed hand in hand. Investment synergies are the result of products sharing the same plant, resource and development (RD) and machinery. This is more probable to happen with a related product diversification because of the previous explanations. For unrelated products, the machinery is improbable the same and each product need its own RD. Financial Synergies The means obtaining financial synergy is different from obtaining operational synergies. The key role of firms is to identify and find profitable investment opportunities. The parameter to measure if financial synergies are to be achieved is whether managers can exceed the job of identifying and taking advantage of profitable opportunities compared to external capital markets (Peng, 2008). Hoskisson (2007) defines financial synergies as cost savings realized through a better use of financial assets based on investments inside or outside the firm. Competent internal capital distribution can lead to financial synergies and reduces risk between the firms businesses (Higgings and Schall, 1975). A firm using unrelated PDS may grow, but only internally in each business unit and will not reach operational efficiencies but financial ones. That means, the revenue of each business unit will be greater when functioning as a conglomerate rather than functioning independently. This idea is supported by Peng (2008) who states that competitiveness increases for each unit financially further than what can be achieved by each unit competing independently as an individual firm. Many different products that are not necessarily related offer opportunities of high returns. If a firm is only interested in the returns, unrelated product diversification may be a right path of growth. Sales synergies: These occur from sharing salespeople, warehouses, distribution channels, and advertising. Salespeople have more chances to be able to sell to the same customer a wide range of related products than unrelated ones. Salespeople will try to sell a complete pack of product to the same customer and in that way take advantage of the sales synergies that related product diversification presents. Imagine a company selling sport shoes and refrigerators, in a selling process it is more unlikely to be able to sell both products to the same customer than if he would offer sport shoes and sport clothes. On the other hand, if a firm has developed a well-known brand, the use of the brand-name in other products, related or unrelated, can increase and facilitate sales because it can have build before customer loyalty to the brand. For example, Mars chocolate confectionery successful launched ice-creams. Much of it success could be related to the brand name. So, sales synergies do not occur only withi n related products but also within unrelated ones if the brand name is positively perceived and recognized by the customers. Management synergies It arises from managers accumulating experiences from handling problems in one business unit that can be applied and used to solve problems in a related business unit. Even more, the accumulated experience and know-how allows answering faster to the industry trends and challenges. Managers are able to transfer their skills, experiences and strategies (Enz, 2009, p.222). Contrarily, unrelated product managers can not apply the experience gained from solving the problems of one unit to the other in most cases because the problems are specific for each product. All these synergies can be undermine due to additional layers of management, delays due to organization and information complexity, communication costs for coordination, imaginary synergies that in fact do not exist, incompatible production processes, etc. Therefore while choosing between related and unrelated PDS the mentioned synergy risks have to be taken into account. Research Methodology In this section an explanation of how the data for the case study was collected and how it was analyzed is presented. It is important to know how the data was collected because the method chosen affects the final findings. The information and content of The Mondi Group Case Study was obtained through an expert interview with Mr. Wolfgang Kropiunik, Mondis Marketing Manager of Uncoated Fine Paper. A questionnaire was sent as a guide and overview of the face-to-face interview questions. A meeting for a 40 minutes exploratory semi-structured interview was organized on the 24th of November 2009 at Mondi Headquarter, Vienna. Mondi Group was chosen as the large firm to be analyzed as it is a large firm with more than 33.000 employees worldwide and has its headquarter in Vienna (Mondi, 2009). Therefore the results presented in this research are very much related to Mondis functioning and successful method. It might be possible that if the studied firm had been another one, the results of the research question could have been different. The interview was recorded and the data obtained was transcribed (see appendix). The transcription of the interview allowed a deeper comprehension of Mondis product diversification strategy, synergies and challenges. Moreover, the recommendations presented to the company (see 4.7) are inspired from the challenges Mr. Kropiunik mentioned during the interview. The interview gave a number of information about Mondis life cycle, PDS and challenges especially during the current financial crisis The Mondi Group Case Study Mondi is a large and international packaging and paper firm represented in around 35 countries. In 2008, it had revenues of 6.3 billion EUR and about 33.400 employees (Mondi, 2009). It has a strong presence in Western Europe, Russia and South Africa. Mondis Europe and International Division has its headquarter in Vienna while the corporate headquarter is located in Johannesburg. In Vienna, there are three businesses: Uncoated Fine Paper, Corrugated and Bags Specialties. Mondi has reached to be fully integrated having the control of its supply chain. It grows trees, manufactures pulp and paper and converts packaging paper into corrugated packaging an