International Business Management Plan: Whole Foods Market

Whole Foods Market is comprised of a chain of food-based supermarkets whose base is in Texas at Austin City. The main emphasis of the Whole Food Market is on the usage of organic and natural products. It has been prompted to be classified under one of the most responsible businesses socially. It has risen to be graded among the top 25 companies in the Green Power Partners.

1.      Company Background

a.      History

The Whole Foods Market began from a very humble beginning. It started as a single shop in a three-story building before becoming a multibillion entrepreneur. The company’s history could be traced back to 1975 when John Mackey was 25 years old. Mackey dropped out of college and borrowed a sum of $45,000 together with his 21-year-old girlfriend from friends and family in order to allow them set up a small food store. The store, then, was referred to as Safeway and has been dealt with natural foods only. The couple later, was evicted from their store because of using it for food storage purposes. They later moved in to live there. John Mackey subsequently entered into a partnership deal with Mike Skiles and Craig Weller. At this point, the Clarksville Natural Grocery was merged with Mackey’s Safeway to give birth to Whole Foods Market which now operates through many subsidiaries which are wholly owned.  (Petusevsky 31)

                    At the end of the company’s financial year in September 2011, it recorded $10107.8 million revenue. This was over 12.2% increase from the 2010 revenue, with its profit being $547.6 million forming an increase of over 25%.

Products

The products being offered by Whole Food are usually natural. The store should emphasize the fact that its products meet the standard level of foods that are free from additives, colors, artificial flavors, and preservatives among other food ingredients that are normally regarded as unsuitable for human consumption. (Petusevsky 23).

Whole foods announced in early 2007 that it would explore the acquisition of Wild Oats Market, which was by then the company’s closest and largest competitor in the market. This was to cost the company around $te.565 million and further an assumed debt of approximately $106 million. This has been the Whole Foods most expensive acquisition to date. It had yearly sales of above one billion in close to 100 stores and an employee base of over 8,500 people. (Paul 27)

b.      Sale Levels

The store offers online advertisement to the products that they offer. Its products can be acquired and ordered online. Furthermore, the products are sold in a variety of countries. Whole Foods grew, and by 2008, the month of September, the store has grown to have 264 stores situated in the United States and it also had 5 stores in the United Kingdom and among other various countries. This ensures that it has a large base of sales for its products. The store offers both retail and wholesale services in areas where they carry out their sales.

c.       Organization Structure: Strategy and Goals

The Whole Foods Market has an organizational structure which is sub-divided into twelve geographic segments. Each of these divisions is headed by a president which uses a market network known as Whole Foods Market in order to be effective in marketing strategies. There is a hierarchy of 4-phased employment from the Global Headquarters, Regional Offices, Facilities Employment, and down to the Stores Employment. Employees within the system are always encouraged to apply for jobs at the Whole Foods Markets. They focus on developing the employees’ skills and encourage working under no or minimal supervision (Paul54).

2.      Country Entry Product & Marketing

The Whole Foods Market is yet to set base in the United Arab Emirates. The UAE has been ranked as a rich country enjoying a GDP per capita that exceeds 2000 US dollars. Business in the UAE was ranked among the top 15 countries worldwide. It has a business environment that is conducive and its economy was strengthened. The economy in the United Arab Emirates is an open one, thus, allowing free business and investments without boundaries. With its GDP being the third (3^rd) in the world and places second in the Middle East, the United Arab Emirates offers a fertile ground for businesses. (Hodgetts,Luthans 98)

a.      Marketing Need

Whole Foods aims at expanding its businesses into the United Arab Emirates which is vastly becoming a business herb. Whole Foods, having recorded extreme success at home now, is greatly obligated to succeed overseas. The best choice for this expansion is in the United Arab Emirates. The store’s success was basically built upon extensive market research that is meticulous and planning well before venturing into the United Arab Emirates for the purposes of business. This market research ensures that the business venture is not an act of futility and that losses are not to be incurred later on. (Terterov 56). There is no room for underestimating the market temperament. In such ventures, surety and confidence does not overshadow the important aspects of market research. The new customers in the United Arab Emirates need to understand the patterns and impulses that shape their choices, preferences, and characteristics. Eventually, before expanding into the United Arab Emirates, there is the need to set up a business plan comprehensively which the Whole Foods have always done (Ireland,Hitt, Hoskisson & Hitt 132).

Existing Competition, Substitutes

Expansion into the United Arab Emirates needs adequate preparation and well-structured business plans which must be executed in a very rational manner. There is a lot of competition in the business field of UAE as a result of the open market environment in the region. This has seen established companies to continue dominating the markets while weaker companies disappear. In the UAE, it is fundamental that the products from a store should be of exceptional quality and unique in its own way. The products should also be of demand and effective if they are to stand the test of marketing. In other cases, there is a need to offer substitute products that serve the same purpose as the one in the market or more efficiently. These substitute products need to be better in terms of health matters, environmental concerns, and ultimately, of quality. The Whole Foods can withstand this market requirement given the fact that it deals mainly with organic products that are environmental friendly and good for health (Terterov 45).

Marketing Potential and Support

In order to survive and thrive in business in the United Arab Emirates, it is important for the market potential and support to be exploited. Whole Foods has to set a blueprint for all services and goods for marketing. It is also vital to be enfranchised by the competition and target customers. Marketing potential in UAE calls for a store to produce equally competitive goods and services at competitive prices. The products should be in an angle in which the rest of the competitors do not offer. Identification of locations, customers, and sale channels need to be hastened. This could be achieved if there is a laid down support system that supplements the functions and marketing in the store. Whole Foods has to implement these aspects if success in UAE has to be met.

b.      Marketing Mix

Marketing is very important in business success. Marketing mix refers to a tool in business that is always applied while marketing products and services. Marketing mix comes handy in the determination of brands being offered and determination of products. Every business entity has to build on the pricing, their products, promotion, and the place where the products and services are being offered. In contemplation to succeed in business in the United Arab Emirates, marketing mix must be observed. In service delivery, the consumer, cost, convenience, and communication to the consumers are vital. Due to the fact that in United Arab Emirates there is a free market, any business entity wishing to succeed must have an idea on what the rival companies offer. This will help to identify the reasons that lead to cheaper services and product sales by the other business rivals.  In UAE, market mix is important especially for stores and entities offering food products. Whole Foods, therefore, has to lay down a comprehensive marketing mix so as to evaluate their product and prices. This will go a long way in ensuring that the store offers products that are in line with the market environment and the needs of the citizens in the United Arab Emirates. There are 2 forms of marketing mix which include the producer and the consumer oriented model. In order to expand in the United Arab Emirates, Whole Foods has to embrace the producer model. This is in line with the food products that the Whole Food Market produces. Through the producer oriented model, the store would be able to match the free and open business economy of the United Arab Emirates. (Terterov & Shoult 55)

 

Four Ps: The Producer-Oriented Model

The four Ps is a producer-oriented model that was mainly based on the price, product, place, and promotion. The wants or needs of a consumer had to be satisfied. The item which satisfies the consumer’s wants or needs is referred to as a product. In business, the item can either be a service which is intangible, or a good that is tangible. Every business entity has to ensure that it produces products that are above reproach and of the desire quality in order to succeed in the United Arab Emirates. The products must have a specific life cycle and different levels of sales. There are times when the sale is always high, other times medium, while at times the sales are always low. For the sake of weathering all these stages, it is inevitable that the products produced should be in a position to meet the demand level. Product mix is also very important. An increase in the respective product line increases a product’s line depth. Whole Foods needs to consider the position of its products, know how to exploit the store’s brands, and know the position of its products in the United Arab Emirates if it wants to succeed in its expansion in the country. It is also important to note how the various products complement one another. . (Terterov & Shoult 73)

            The amount that was always paid by the customers in order to get a product or service is called the price. In order for any company to survive and make profits, it is very important that it takes a keen interest in its price. In the UAE, it is very sensitive when it comes to dealing with prices because adjusting the prices in the country has great impacts on the strategies of marketing, the sales, and demands of a product. It is important to identify the value of the customers so as to set prices.

Promotion of the products is also important in the marketing mix. This includes the necessary methods of communication as employed by the marketers in providing relevant information about the products. In promotion, advertising, personal selling, public relations, and promotion of sales are incorporated.

Lastly, the pricing is very important in expanding a business especially in another country. Place refers to the situation of a product which it is easily accessible. It also refers to the distribution of the products.

3. International Management

A. Strategy and Goals (Government Relations, Joint Venture)

Whole Foods needs to have a joint venture with other business entities in the United Arab Emirates in order to explore the country’s market. A joint venture is an agreement in business wherein two (2) or more parties came to an agreement of developing new entities and assets over a specific time span. In this agreement, the parties agree to contribute equitably and both are entitled to exercise control over the business and eventually sharing the expenses, revenues, and all the assets.  In joint undertaking, it is easier for Whole Foods Market to establish a base in the United Arab Emirates. The joint venture will assist the store to achieve a specific project in liaison with another business firm.  The joint venture could be aimed at achieving a specific project or in building a lasting business relationship. Such ventures can be entered through contracts, agreements in a rental way, or agreement contracts. In joint venturing, Whole Foods Market would be able to engage in other activities that will diversify the products which they will be offering in the United Arab Emirates. . (Terterov & Shoult 154)

There is also a dire need for having strain less and frictionless relation with the government in a foreign country if a business entity is to succeed. This applies to Whole Foods stores which look forward to expanding its productions to the United Arab Emirates. In this relation build up, the store will operate along the legal frame work and there will be a smooth relationship with the UAE’s government which is vital to succeeding in the country.

b.     International Structure (Where is the Power, Centralized or Decentralized?)

Whole Foods Market, being a multinational store, needs to set up international structures that are viable and have positive impacts to the business. International structures are vital in shaping the business field. In order to succeed in the business and marketing sector, it is important that a business entity understands the international structure and sets up a structure that will improve the business and maximize the profits. In these structures, the powers may either be centralized or decentralized. (Luthans 85)

In centralization of power, the decision making process and role was confined to a few people. The cohort of people makes all the decisions that are important and are tasked with approving all the decisions that are made at lower levels in the organization. The decision making process is always reserved in the top brass of the organization. It may take a structure, whereby, there are middle level managers who also make decision, but are subject to the top organ. Those in the lower area do take directions as issued from the top management which makes key decisions and pass them to the other levels to work on the implementation process. The Whole Foods could apply this centralized system in managing their international structures.

Decentralization of powers involves delegation of authority across various levels of management in the respective organization. The middle and lower levels of management are given authority to formulate minor policies. The top management is always tasked with making key decision and policies that affect the organization at large. Decentralization is always different from delegation. In decentralization, the lower authorities have some stake in formulating policies and are always given space and time. This decentralization formula could assist the Whole Foods in succeeding with managing its international stores.

c.      Staffing (Source of Managers and Source of Lower Level Employees)

In any business, managers and other employees play a major part in the development of a business entity. This ultimately leads to the success of business. Whole Foods needs to have competent, experienced, and qualified managers. This is difficult to achieve unless a comprehensive recruitment process is to be undertaken. It is also important to note that the fact that Whole Foods Market aims at expanding its stores to other parts like the United Arab Emirates, calls for a proper managerial and employees recruitment process. It is more effective to appoint a manager who is well acquainted with the business environment. In this case, if the Whole Foods is to effectively succeed in the United Arab Emirates, then, it must go on an outsourcing mission in the same country. This will improve the quality of products that will be produced due to the fact that the managers will be aware of the marketing scenario in the country. To further enhance the strength and efficiency of product provision, there is a need for the Whole Foods to employ local residents as low level employees. This will ensure that the productivity rate is high in the stores and will create a good rapport with the locals in the country. By having most of the staff members of an organization to take from the respective country, it is easier to create a concussive business environment that will play greater advantage of the store in a foreign country.(Luthans 112)

Nevertheless, there is no harm in outsourcing for managers from a different country especially in the event that quality and experience is needed. In fact, having few managers from a different country having a different business environment will eventually add to the new or different ideas in the business that may be implemented to aid more quality.

d.     Hours of Operation

Opening and closing times of a business is always important. This is for a fact that there are always some trustworthy customers who are usually loyal to a specific business entity. In order to get a grip on such customers, it is vital that a business stays up to as late as possible and ensure that whenever a customer needs an item, it will be available. There is also the need to avoid a scenario where a customer needs something from a store, but has to pick it from another store because the favorite store is closed.

In the event that the Whole Foods Market opens up in the United Arab Emirates, it will have to adjust its operating hours. This is basically because in the Unites States of America, shops and businesses close up earlier than those in the UAE. For instance, in the United Arab Emirates, shops and businesses open up at around 7 o’clock in the morning and close at around 10pm to 12 midnight. Such hours are longer as compared to those in the US. This, therefore, means that if the store is to succeed in making maximum profits in the United Arab Emirates, then, it is obliged to adjust its working hours.

e.      Reward and Punishment System

Rewarding of outstanding employees in a business contributes to the development of a business entity. When employees perform well in any business, rewarding them will lead to replication of the same good work and propel the business to have higher profits. At Whole Foods, there is a fundamental value of striving towards achieving excellence and happiness among its members. (Luthans,Doh 287). This has been done through rewarding those who do well in carrying out their duties as a means of showing that they are being appreciated for their good work in the store. Rewarding could take different shapes. There is the thing that we call an intrinsic and extrinsic reward. Intrinsic reward is an appreciation that is given by word of mouth. Such rewards do make workers feel appreciated in an organization. Extrinsic rewards include physical handing of rewards and prizes. This is always done mostly during companies’ meetings. Those who excel in their lines of duty are rewarded for their good efforts. Whole Foods Market applies different forms of rewarding their employees. Similarly, the employees are always given medical cover and insurance that highly motivates them and made them feel appreciated in their stores. Whole Foods Market’s stores further set aside funds from their budget to be used in evaluating and developing the employees among other incentives and benefits as a form of reward.

Despite the fact that there are rewards for those who excel, there are also punishments for those who contravene the principles; policies and ethics of the stores. There is always the need to have a committee which is bestowed with the responsibility of ensuring that discipline is maintained among the employees. Functioning as in case an employee is involved in graft cases, that measures could be taken like suspension or termination of contract. This ensures that there is discipline in the organization (Luthans,Doh 325).

f.        Control System

Control system is important in managing, commanding, regulating, or directing the functioning of other systems or devices. Control system is necessary in the success of any business. Whole Foods has a control system that is used to monitor and have a data base of all the aspects in the stores. In order to make more profits and succeed in expanding its business, there should be a more sophisticated and amalgamated control system that will come handy in easy management of the workers and all the employees in the stores.

Whole Foods Market has a setup of 17 companies. The different companies specialize in dealing with different types of products. There has been a horizontal integration and there were new stores opened to integrate the other stores. With the increase of demand for natural food products produced by the Whole Foods Market, there was an expansion program. There is a company culture at the Whole Foods Market; the stores highly regard its members.

g.      Social Image and Ethics

There have been mixed projections in terms of image and ethics at the Whole Food Market. In the recent past, Whole Foods has been subjected to a lot of boycotts and resistance in terms of locations of stores. There have been further criticisms on its policy that it uses to promote its brands. The policy has been termed as an aggressive one. It has also faced a lot of fructuous relations as a result of their issues on labor, business practices, and product selection.  (Luthans,& Doh 97)

On the other side, Whole Foods has experienced a series of positive image building and ethics. John Mackey, the company’s CEO was awarded the best CEO in the world. The company was later awarded a top honor by the Environmental Protection Agency in 2006 and was also awarded with a Green Power Leadership Award and Green Power Partner in the years 2004, 2005, and 2006. The store also became the 55^th largest revenue contributor in 2005 in the United States of America. The social image of the store was also boosted in 2003 when its CEO was named the Overall National Ernst and Young Entrepreneur of the Year. The Whole Foods has also won a number of retailers’ awards. Such awards have boosted the social and ethical face of the store. In the international front, the Whole Foods store is fast gaining prominence worldwide. Its quest of expanding its stores to the United Arab Emirates will be achieved only if the above factors will be taken into consideration. (Terterov & Shoult 134)

Works cited

Hodgetts,Luthans. International Management: Culture, Strategy, and Behavior.  London: Irwin/McGraw-Hill. 2000. Print.

 Ireland,Duane, Hitt, Michael, Hoskisson, Robert &. Hitt, Michael. Understanding Business Strategy: Concepts and Cases. Cengage Learning. 2008. Print.

 Luthans,Doh. International Management: Culture, Strategy, and Behavior.

            McGraw-Hill Companies, Incorporated. 2011. Print.

 Paul, JM. Whole Foods Market---A Communication Plan to Engage the German Market. California: University of Southern California Press. 2009. Print.

Petusevsky, Steve. The Whole Foods Market Cookbook: A Guide to Natural Foods with 350 Recipes. London: Crown Publishing Group. 2010. Print.

Terterov, Anthony Shoult. Doing Business with the United Arab Emirates. London: GMB Publishing. 2006. Print.

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Management Accounting- The Toyota Motor Corporation

Background to the company

The Toyota Motor Corporation is based at Toyota at Aichi in Japan. The multinational company is an automaker with a large employee base of over 400000 employees with the largest manufacturing capacity of automobiles and specifically the famous vehicle brand ‘Toyota’. It terms of world revenue, the Toyota Company sits at the eleventh position and had manufactured an estimated 200 million vehicles in July 2012. Founded in 1937 as a family company by Kiichiro Toyoda, the company has been keen to strategically manage its businesses. The Toyota Company has had a choice of leadership that has embraced the benchmark of quality, perfect practices and corporate responsibility in the wake of stiff competition and technological advancement in the global market. The strategies of the company have been deeply rooted in principles that have continued to improve the respect for people, their strategy framework as been gearing towards waste cutting, positive attitude building and maximum utilization of the inherent talents of the workers. The Toyota Company has managed to create an impression of social responsibility in the global market. The company has exploited a number of strategies with a view of being the best company in terms of product quality and service provision vis-à-vis matching growing customers’ needs and technological advancement. The management board of the Toyota Company has been vigil to clinch any opportunity in developing and growing the company’s worth, a strategy that has gone a notch higher to see the company explore options of developing hybrid cars among other market strategies. The underlying strategy of the Toyota Company is rooted in rewarding merit and identifying faults in an attempt to perfect the product and service delivery. Through this basic strategy, the Toyota Company has managed to propel its influence and achieve an extensive customer base.

Strategy and management

The success of the Toyota Company is attributed to its strategic management formula that has made them to remain competitive in the automobile market while maintaining the quality and efficiency of their products. The philosophy of management at Toyota Company has continued to evolve over a long period of time. This management philosophy has been built on the original value of the company which was centered on ‘Lean manufacturing and the concept of production in time. These two concepts have been vital in the development and growth of the company. The Toyota Company strives to produce designs of cars that are exclusively ideal and perfect. In its lean manufacturing policy, the company aims at achieving a customer ideal production which will eventually cumulate to customer satisfaction. In this quest, the Toyota Company has been producing different models of cars in order to meet the demands, taste and different preferences of its customers. This has enabled the company to remain competitive and to have a wider market area. The business strategies and managerial values have been collectively convened into a single structure referred to as the ‘Toyota Way’.

Processes, products and policies

The ‘Toyota Way”

                    The ‘Toyota Way’ was one of the strategies that the Toyota Company adopted in order to help them stay ahead in the automobile industry. It is a set of values guidelines of conducts that all the employees at Toyota are expected to embrace. The strategy had two main pillars; Continuous improvement and Respect for People. All the conduct guidelines and values of the Toyota Company are summarized into major principles of embracing challenge, striving to improve their services and products, respect to customers, teamwork and a ‘go and see’ slogan. This is a strategy that the company has employed to ensure that the employees not deviate from the main objectives of the company thus enhancing success in business thus working as a driving force towards an achievement. The strategy has also aided the formation of identity and has kept the spirit of quality and service which has helped the company to be outstanding among other automobile manufacturers. Alongside the Toyota Way are four other components that complement the strategy. These components include management decisions that are based on long term deliberations and a comprehensive problem solving process. Further, the aspect of focusing on the development of the people has added a lot of value to the organization. Consequently, the Toyota Company has embraced the art of organizational learning through solving the root problems continuously in the organization.

Electric technology

Strategic management is all about exploring the possible options that can assist a company to be elevated above its competitors. This means that every implemented strategy needs to be suitable to effectively achieve the mission, feasible to ensure that it is applicable and that the strategy is accepted by the stakeholders. The management team at Toyota Company has explored the application of electric technology which is feasible, acceptable and suitable. In this respect, the Toyota Company has gone a long way in releasing hybrid electric vehicles into the automobile market. It has been the first company to introduce and sell hybrid electric vehicles, thus shaping the face of the automobile industry. In 1997, the company introduced the Toyota Prius and started producing vehicles that were smaller but maintaining the luxurious touch. Such cars like Lexus and Camry were received into the automobile industry with excitement, a sign of an effective strategic management implementation. In 2012 October, the Toyota Prius became the hybrid car that was best sold in the whole world and this earned the Toyota Company about 2.8 million units. This high sale was replicated in most parts of the world. Later in 2012 October, the company was the first to manufacture a passenger car that was hybrid and a motor vehicle hybrid that was one plug in model. This model was availed to around 80 regions and countries worldwide. The company has an aim of achieving the launch of a 20 hybrid vehicles models at the end the year 2015.

Toyota’s Management accounting

Management accounting refers to a process which entails the preparation of the management reports and the accounts that contain information that is timely and accurate. The information therein does have the statistics that are useful to the managers in making of decisions on a day to day basis. Management accounting reports are usually produced on a weekly or monthly basis, unlike the financial accounting reports. The management account reports are purposed to be used by the organization’s internal audience which includes the chief executive officers and the various departments.

Contents of managerial accounts

The managerial accounts do contain variance analysis which may include the use of trend charts. Raw materials and inventories, outstanding debts and the state of account receivables and the accounts payable are also included. The report does contain the orders that are at hand, the revenue generated from the sales and the amount of cash that is available at the disposal of the organization.

The main Functions of the Toyota Management Accounting:

Cost analysis

This is intended to do an analysis based on the cost. This includes the cost that is incurred during the performance of a specific task or a project in a particular time span. The analysis is also based on establishing whether there is some effectiveness as far as the costs are concerned. Areas where cost controls are needed are highlighted.

Budgeting

Through budgeting, the management accounts tries to project the expenses and revenues for the future, and sets up a general budget on the same. This is a function that is crucial in as far as management accounting is concerned.

Increasing efficiency

Through the management account, there is an identification of the inefficiencies in the management. This is done through the identification of high cost areas and places where there is an excessive use of resources. A clear analysis of the same is therefore given.

Planning and controlling.

One of the management accounting’s main functions is to plan and control. This is achieved through the preparation of sales backlogs and revenue reports in trying to offer a clear direction to the company.

Coordinating

Management accounting is responsible for the coordination of various departments in the organization. This is done through an integrator process whereby the management accounting takes the future needs and works towards allocating resources towards them by means of budgeting.

Suggested Management Accounting Techniques

The Invest Appraisal

This is one of the tools that are vital in the measurement of the effectiveness of the domestic and overseas performance of a country. This aspect is then used to establish the potentiality of future investment by the company and to determine the extent to which the company needs to invest in new projects. Such investments do have long term benefits hence there is always need to use techniques that are proper in their establishment. An example of this includes the payback period calculation for a specific project and the various costs that are involved in giving the company an appraisal. Multiple projects can have their paybacks calculated and an individual performance of each project reviewed hence giving the company a clear picture with regards to the performance of the project over a given time frame.

Market Orientation

Market orientation is very important for the Toyota Company. This is especially because the needs and wants of the various target markets do change over a period of time. This change can be expressed through the profits and losses statements of the company.  The market orientation can be analyzed in respect to the profit and loss statements of the various territories or markets. Future planning and budget allocations greatly rely on the market orientation.

Cost Management

Getting good results in line the costs that have been incurred in various activities of departments depend on the analysis of the costs. The costs include costs of designs, marketing, distribution, resource planning, customer service, production, purchasing, development, research among others. The management of costs helps the management to establish whether there is wastage on the costs and on how the costs can be cut down for efficiency.

Stock valuation

The Toyota Company needs to carry out a valuation of its stocks due to the fact that it is a business that is based solely on manufacturing. The company has a lot of competition and the stock valuations should be done often in order to avoid the excessive costs.

Capital budgeting

Through capital budgeting, a company can be able to access the inflow and the outflow of the cash for effective usage. The capital budgeting technique that is deemed to be the best is referred to as the company’s Net Present Value. This is the cash flow value of the company minus the cash out flow present value.

The Strengths and Weaknesses of Analysis

Management accounting needs to be done on a regular basis in a company as it is crucial in advising on the decisions to be taken by the management of the company. The report from the management accounting may reveal very important aspects necessary for the management of the company.

Management accounting report works on the basis of real time data and is always done on a monthly or a weekly basis. The management accounting is usually done through the internal employees in the company that are in the department of accounting.

The company has to continue spending its money as characterized by the constant rise in the price of the crude oil, thus, causing a rise in the prices of spares and raw materials.

Despite the fact that cost management is essential in the company, at some instance it may not be possible to cut on the costs as there is need for an intensive marketing by the company in order to stay ahead of the potential competitors.

Conclusion

Ultimately, for the Toyota Company to experience a revamp in as far as its quality control is concerned, it needs to have a lot of effort inputted in the appraisal investment, cost management, capital budgeting and market orientation. These are issues that are vital in maintaining the context as it is presently. The company is also supposed to explore a lot more issues and options of having their way into the markets and strive in strengthening the existing market shares.

 

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Research Paper: Pay Grade/Pay Scale

 

Pay Grade/Pay Scale

Name
Institution
Date

0.0.Table of contents

1.0.Abstract……………………………………………………………………………………….3

2.0. Introduction………………………………………………………………………………….3

3.0. Pay grade…………………….………………………………………………………………4

3.1. Achieving a good pay grade…………………………………………………………….5

3.2.Qualification…………………………………………………………………...…………5

3.3.Impress the company……………………………………………………...……………..6

4.0.Using pay scale…………..………………………………………………………....…….7

5.0. Purpose of using pay grade…………………………………………………….……….8

5.1. Basics of pay grade………………………………………………………………….……9

5.2. The general schedule in hospitality industry………………………………………….10

5.3. Equity in payment………………………………………………………………...…….10

5.4. How a pay grade works in the tourism industry…………………………………..….11

5.4.a.       Setting pay scales………………………………………………………………..…..13

5.4.b.       Consider the pay grade………………………………………………………….….13

5.4.c.       Establish the rate range………………………………………………………..……13

5.4.d.      Job pricing……………………………………………………………………………13

5.4.e.       Midpoint………..…………………………………………………………………….14

5.5.Summary……………………..…………………………………………………………..14

5.6.Conclusion…………………………………………………………………………….….14

5.7.References………………………………………………………………………………..15

5.8. 

1.0.Abstract

Working is every human being’s duty and job is what defines what a human being is, being part and parcel of a human’s life. The assignment and allocation of job is always done on the level of skills and qualification that one has. Commonly, positions occupied by people in various jobs are always based on their degree qualifications though there are rare instances where there are those holding the higher positions without having adequate educational qualification. In this case, the individuals do have some skills or special attributes that lead them to be entrusted with the responsibilities that come with the job. The current situation in the job market is one of high competition where every individual has skills and is striving to land high profile jobs with higher pay.

2.0. Introduction

In the hospitality industry and especially the tourism industry, moving up in the employment scales without educational qualification is always difficult. The pay grade scale is usually determined by the post held by and individual. In this respect, the post that one rises to is squarely dependant on the level of academic qualification. There have been incidents where promotions have been blocked on the basis of inadequacy in academic qualifications.  Learning as much as possible should be an individual’s main aim. This is especially because the tourism industry is a very sensitive industry to handle as it entails even handling of strangers and foreigners. These foreigners always have an impression to them depending on the services that are accorded to them. Reaching a high pay grade scale in this industry needs one to have extensive knowledge which can only be measured in terms of the academic achievements and qualifications. Getting the opportunity to study and reach a level that earns one a higher pay grade scale is a rare opportunity that most people lack in the current society. Most people in the globe wish to achieve the high pay grade scale but fall short of the golden opportunity of attaining the high academic qualification that is required. Everyone in the job market aspires to reach the highest pay grade scale but is always held back by certain factors ranging from responsibilities to other personal incapability. This has most often than not led to the cancellation of a lot of promotions. Recruitment of people with high pay grade scale in the tourism industry is always based on qualifications as well as their performance records, just as it is in all the other industries. This is because high levels and grade mead an individual is to be in charge of the team in aspiring to reaching the goals of the industry. (Bohlander& Snell, 2009)

3.0. Pay grade

Pay grade refers to a scale that is used in controlling the pay grade system. It is a unit that is applied in the public service both in the military and the civil servants. Pay grade is also used in the private sector and in the companies. Through the pay grade, the employment is often facilitated through the provision of a framework that indicates the ranges of the salaries instead of the negotiation that is open. Pay grade is basically comprised of two different dimensions. There is a vertical range in the pay grade. This is a dimension whereby the levels correspond to the academic requirements and responsibilities that are attributed to the specific level. There is a horizontal scale dimension. This scale contains the compensations that are monetary based and depends on the length of service and the performance quality of the employees in question. In both the horizontal and the vertical dimensions, the employees progress based on the appraisals that are regular and constant. For one to move to higher pay grade within the tourism industry, there must be evaluations that are usually carried out by the concerned parties. These evaluations are usually done using more than one method. This is so because a rise in the pay grade means that one has more responsibilities bestowed upon them. It is always the desire of all the employees to reach a high pay grade scale in their jobs. This is always a very important issue for all those that are in the employment market, including those in the tourism industry. (Baum, 2006)

3.1. Achieving a good pay grade

As earlier stated, it is always the desire of every employee to attain a high pay grade. There are various ways that can be used to achieve this. The obvious fact is that all the humans have to continue doing their jobs throughout their entire lives. This is because it is the only way in which food can be got and be guaranteed. This has been the reason behind the desire for every employee to increase the income that he or she gets and the thought of how to get the increase in pay grade is everyone’s issue.

3.2. Qualification

Through qualification, an employee not only gets to increase on the knowledge that he or she has, but also gets to improve the pay grade that is usually much desired. With the current competition in the job market, and in a time when everyone is striving to attain the highest possible qualifications needed in the hospitality industry, employees are raising the bar much more higher for those seeking an increase in their pay grade. Companies are finding it more challenging to identify and recruit candidates as a result of nearly equal educational qualifications held by all the candidates. This therefore means that the company will always settle on the individual who is beast qualified above the rest seeking the same job. This qualification goes beyond just academic work. It also encompasses the experience and managerial aspect. Bohlander& Snell(2009) state that throughout the working period, an individual has to prove that he has a lot to offer for the company’s growth and development. One must show that one has a lot to offer in terms of quality service to the company so that the company can move to increase the rate of benefit of working with him or her as an employee. The sole way of attaining a high pay grade is therefore having adequate qualification that surpasses any doubt and limit. One must have qualification that is credible and that rises above the rest of the employees contesting for the job. Higher qualifications do invite high pay grade as it is the only way to measure someone’s worth for the high pay grade. (Barrows& Powers, 2008)

3.3.Impress the company

The employee must strive to impress the company is there is going to be a transition to a high pay grade. Through impressing the company, the employee gets to have an increase in the pay grade, thus, improving the amount of salary that he or she gets. This is yet another great way of improving the pay grade scale. Impressing the company can be done in various ways. Basically, the employee must show the boss of the company that he or she is a hard worker. The love for the company must be portrayed throughout the work of the employee and the must show the ability to work under various situations, be it strenuous or unfavorable. This is the concept that is usually employed in the private sector. Usually, the pay in private sector is higher than that in the government sector. This is basically because in the private sector, the analysis is always done on the worker’s abilities. This is always the base for payment setting. In this case, impressing the boss at the work place can greatly increase the pay grade scale of an employee. The achievement of a better scale of pay grade is what employees yearn to achieve as through that high pay grade, particular life’s goals are achieved.

4.0.Using pay scale

The use of pay scale is not usually applied by all companies to establish the amount of wages that the employees deserve to be given. In some companies, there is always an arbitrary agreement on the amount of wage to be given to an employee before the employee begins working for the company. There is always a determination of subsequent increments by the company. Companies that lack a pay scale that is standard do determine the payment of employees using their performance at work. In some instances, the companies do improve the pay grade in considerations to the general performance of the company in the previous financial years. In the tourism industry, the main pay grade determinant is the experience and qualification. In most cases, the companies dealing in tourism do not always want to gamble with those they employ. This is basically because the prosperity of the tourism industry is based on the type of services produced and the quality of these services. There is stiff competition in the hospitality industry and better still in the tourism industry. In this aspect, the tourism and other hospitality management companies do source for the best suited individuals to work in the companies. In other companies, there is lack of a pay scale that is formal on the rationale of payment to the employees. However, these companies do have a pay scale that is loosely created in order to help them determine the amount of wage to be given to employees on their employment into the companies. The same informal scale is usually used by the companies in the determination of the amount of pay increase to be given to the employees.

In the hospitality management field, pay scales are usually used. For instance, most tourism industries use a pay scale that is usually presented in the format of a table. There are positions in the company that do require that the employee have some special education or has undergone some special training. In such a position, there is always the experienced lined against the pay scale and there is always an indication of the level of education reached or the amount of training that the individual has underwent.

The employees do find the meeting point of the two factors to aid the decision on the amount of payment that the employee needs for a year. In the event that the job does not need any special training or education, there is always an indication of just how much the employee shall be paid based on the specific number of years of experience. Just like in other hospitality fields, the tourism industry has its union organization. The representatives from the union do meet with the employers from the company so as to determine the worthiness of the salary that has been presented on the pay scale. The union and the company usually develop a contract in with the pay scale is part of. The purpose of doing this is always to ensure that the employees at the industry are employed on fair basis, paid the amount that they deserve and that is in equal proportion to their experiences and academic qualifications. Through this manner, there is the elimination of favoritism in as much as salary payment scales are involved and fairness is overtly achieved across the employment field. Despite the fact that pay scale is commonly associated with businesses and companies that are unionized, those companies that d not belong to unions do apply the same as well.

5.0. Purpose of using pay grade

The prominence of the pay scale has since increased in the twenty first century. This was initiated into the federal government’s payment scheduled in what is referred to as General Schedule which is in turn in place for all the federal jobs. There are several employees in the private sector that have also adopted similar payment scale. The use of pay schedules that are structured is preferred by most human resource professionals and institutions as opposed to the pay that is market based. This is in order to ensure that there is equity and to achieve a reduction of the discrimination and potential lawsuits on payments that are market based. Most of the hospitality companies like the tourism industry apply the pay grade largely. This is because the industry basically demands an above reproach ability and experience in handling and managing the industry.

5.1. Basics of pay grade

According to Mathis and Jackson (2010), the pay grade has a basic structure with different levels of pay grade levels vis-à-vis various ranges of steps and placements which are at all the levels. The most basic pay grade structure is usually composed of three main levels namely the high placement, the moderate and the minimum level. These are always placed within all the pay grades. Through this, there is always a provision for a high pay for those employees that have more experience in the job specification. This same basic structure is applied in the tourism industry, which is among the hospitality management sectors. In the tourism companies, there are always various job levels with different specification. These levels do vary in terms of job specifications and academic requirements. There are certain posts that do not always need advanced levels of education while in others, there is always need for extensive experience and higher educational qualification. Such posts do come with responsibility that is larger and it is right that those employees in those positions receive their payments on affair scale in proportion to their experience and educational qualifications. This is where the pay grade structure does become effective and relevant.

 

 

5.2. The general schedule in hospitality industry

The General schedule is mostly used by the federal government. The pay grade system is very prominent and has also been applied in the hospitality industry. Most of the companies dealing with tourism pay the employees at various levels that are based on the schedule just as it are in the federal government. The payment schedule is also known as GC and contains fifteen different steps of payment with a variance in the job level. The tourism industry does have employees taking various levels of job. There are those in the clerical department and those providing unskilled labor. Such employees are not required to have high academic credentials and they are at lower levels. There is a point GS-5, which is a level whereby the employees are expected to be holders of degree certificates in order to get appointed or promoted to those positions. In the tourism industry, higher movement should be attained in equal proportions to the advancement of degrees. For an employee to reach the highest level in the industry there is need to have a legal and research degrees. Those holding managerial positions in the tourism industry are the ones who fall under this category.

5.3. Equity in payment

The pay grade schedules are always supposed to be used so as to achieve equitable and fair compensation in the tourism industry. Having equity internally in the tourism industry means that the companies involved should pay all the employees that are within the organization fairly and equitably. This has further prevents situations whereby there is discrimination in terms of pay. The background aligns the mode and structure of payment in the companies. The tourism companies also engage in comparisons in the pay schedules with other institutions and industries in order to achieve external equity. The competitive nature of the tourism industry has set precedence to the companies in the industry to establish payment schedules that will attract the top performers and talent in the field. This will avoid regular routine turn over in an attempt of remaining competitive in the industry. (Arboretum, 1989)

5.4. How a pay grade works in the tourism industry

A pay grade is often used in defining the amount that each and every employee is to be given in a company. In the tourism industry the pay grade is basically determined by the length of time that an employee has stayed in a particular post doing his job and also on the level of responsibility that the individual is subjected to at work. In the tourism industry, there is always a relationship between the horizontal axis and the length of time in which the employee has offered his services to the industry. The vertical dimension I the pay grade is always applied while dealing with the pay in terms of the academic qualification and the job requirements. Through the use of pay grade, tourism companies are able to determine the level of compensation that is needed and that is appropriate in every step that is undertaken in the process of employment. In the public sector, pay grades do take place in salary negotiations where contribution and fairness is always sought. The application of pay grades is also done in positions that are representative of the unions. (WorldatWork, 2007)

In the hospitality sector, new employees usually start in the first step of the pay grade range under their specific job. In the event that the employee stays on the same job title, the pay grade range starts to rise. This is usually after a span of every five years of working in the same job’s pay grade. Despite the fact that this compensation system that involves pay grades is always applicable in the employment in the public sector, military, universities and the federal government, the tourism industry also used the same model.

The pay steps of the pay grades differ in various organizations. There may be a difference of up to ten to fifteen steps that an employee needs to undergo before reaching the top position that warranty the payment of a high pay grade. Getting a pay rise once an employee attains the top most pay grade is dependent on the cost of living at the particular time, the increases or the allowances that the employee is entitled to. In the tourism industry, an employee always has an opportunity to be promoted or to be moved to another job that comes with different or more responsibilities. The employee therefore starts to move up the pay steps and to move into the next level of pay grade. In each step of the pay grade, there are always some over laps in the amount of salaries paid to the employees. For instance, a starter employee at the first grade of a job in the tourism industry that has 1 to 10 steps may be earning from 16000 dollars to 22000 dollars. When the employee moves to the second pay grade, the rates assigned to this grade may be from a minimum of 24000 dollars to a maximum of 23000 dollars. (Damp, 2008)

The tourism industry is composed of both government and private sectors. The pay grades are also used in the private sector in the tourism industry. The growth of a company is always characterized by the need for improving the pay scales so as to be fair and ensure that there is a similarity and uniformity in the payment across all the various positions of different job units and functions in the company. The retaining and attracting of good employees to various work units is mooted by similar responsibilities and job requirements. The tourism sector’s pay grades are often reached at through salary negotiations and the application of the discretion of the managers.

 

 

5.4.a.       Setting pay scales

The main use of pay scales is always to help the employers to determine the salaries and wages of the employees. The pay scales are usually listed in table form in which experience, education and other factors are always included. The pay scales help to maintain the consistency in pay and come handy in eliminating discrimination and favoritism. The compensation and human resource professionals in the tourism industries need to understand how to set the pay scales. In order to understand well, the following must be taken into consideration: (Sims, 2002)

5.4.b.       Consider the pay grade

There should be a comparison between the different ranks in the job. This is done through pay grades. The employers are supposed to use the nine factors of the BLR for analysis. The job then is evaluated and ranked on the basis of the duties assigned to the employee, experience, educational level and the skills. After considering these factors, it is then easy to assign the pay grade correctly in correlation to the salary range of the position that an employee holds.

5.4.c.       Establish the rate range.

The rate range is the spread out of the salaries. It is the examination of the various points comprising of the minimum point, the midpoint and the maximum point. The rate range is used in the establishment of how the payments are done.

5.4.d.      Job pricing

This is a process of the establishment of the three job ranges in relation to the grade of the labor. The study of salary and range survey helps the employers to make a comparison of wages that they offer their employees in their organization to those that are offered in the market. This is important as there is a lot of competition in the tourism industry. The knowledge of the wage scales can therefore help the employers to stay competitive in the labor market while ensuring that those who are of higher worth in the organization are paid more than those who are of lower worth. This thus strikes a balance between the external equity and the internal equity as well. (Armstrong & Baron, 1995)

5.4.e.       Mid point

The midpoint refers to a rate that is standard and tat all the employees who are performing and are qualified for the job remain at payment level which is acceptable and fair. Setting a rate range for any job requires the knowledge of the minimum point, midpoint and the maximum point.

5.5.Summary

Pay grade forms an integral aspect of the hospitality industry in general. In order to achieve equality and fairness in terms of payment, and to keep hold of the employees that one has, the employees need to apply the pay scales so as to satisfy their employees. This ranges from the laborers and unskilled employees to the highly qualified employees in the organizations. There can never be a better way of equally dealing with payments for employees apart from the use of a well structured pay grade.

5.6.Conclusion

The hospitality industry and the tourism industry specifically need a comprehensive pay grade. This is important if the companies involved in the sector are to maintain and keep up with the competition in the labor market. There is good labor that is always hard to come by. Once a company gets that good labor, it is often upon them to see that the labor is maintained. This can only be done through a fair and acceptable payment scheme. This can only be achieved through the application and use of the pay grade. (Walker& Miller, 2009).

  

  

5.7.References

Arboretum, D. (1989). How to Develop a Job Grade/pay Scale System. New York.

Armstrong, M.,  Baron, A. (1995). The Job Evaluation Handbook. London: CIPD Publishing.

Barrows, C,. Powers, T. (2008). Introduction to Management in the Hospitality Industry, Study Guide. New Jersey: John Wiley & Sons.

Baum, T. (2006). Human Resource Management for the Tourism, Hospitality And Leisure Industries: An International Perspective. NY: Cengage Learning EMEA.

Bohlander, G., Snell, S. (2009). Managing Human Resources. Mason: Cengage Learning.

Bohlander, G., Snell, S. (2009). Managing Human Resources. Mason: Cengage Learning.

Damp, D. (2008). The Book of U.S. Government Jobs - 10th ed. Bookhaven Press LLC.

Mathis, R. Jackson, J. (2010). Human Resource Management. New York: Cengage Learning.

Sims, R. (2002). Organizational Success Through Effective Human Resources Management. Westport: Greenwood Publishing Group.

Walker, J., Miller, J. (2009). Supervision in the Hospitality Industry: Leading Human Resources.New Jersey: John Wiley and Sons.

WorldatWork (2007). The WorldatWork Handbook of Compensation, Benefits & Total Rewards: A Comprehensive Guide for HR Professionals. New Jersey: John Wiley & Sons. 

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