Auto Dealerships Adapt to Reverse Showrooming

Todd Benschneider – University of South Florida
October 7, 2013
Reverse Showrooming Trends Benefit Automobile Dealerships
A current trend in consumer spending known as “showrooming” has deterred many retailers from investing in additional brick and mortar stores. “Showrooming” consumers first visit storefront locations to try on sizes or look at samples; however, those shoppers purchase the goods later through the website or from a lower priced competitor. Long term trends of declining incomes from storefront locations have influenced large chains to reevaluate the return on investment that storefronts will generate in the 21st century. The widespread arrival of mobile technology magnified storefront spending gaps, as many tech savvy consumers now use price comparison apps to reduce the time and fuel spent in pursuit of the lowest prices.

In contrast to showrooming, a new retail trend is emerging as a byproduct of social media; a new breed of reverse showroom shoppers are arriving in stores ready to purchase. In reverse showrooming, a potential customer is exposed first to the new product online by a mention or recommendation from a friend’s social media post, often the posts include price and store location. The recommendation leads the reader to believe that their friend had done the price research for them which prompts the shopper to visit the storefront and make a similar purchase. Research found that while 41% of social media users browse online; they however made the purchases at a store. Further contributing to the growing trend, are recent changes in sales tax laws which eliminate tax savings previously available through online purchases.

Retail automobile sales are an industry uniquely suited to gain from these reverse showrooming trends. Car dealerships have been protected from showrooming behavior; because licensing, financing and insurance regulations require customers to verify proof of identity, sign legal documents and finalize title transfer at brick and mortar franchises. As a result, every internet automobile shopper essentially becomes a reverse showroom buyer.

The internet car shopping experience allows customers to gather comparative information such as fuel economy, safety and reliability ratings without facing the pressure many shoppers can perceive while visiting a dealership showroom to collect brochures and pricing. Buyer’s aversion to interpersonal confrontation may have previously limited automobile sales. In response to customer aversion to dealer showrooms, auto manufacturer websites have responded with new website tools allowing shoppers to build and price each model to exact specifications and locate a match on a dealer’s lot.

Initially many automobile dealerships cursed the arrival of the internet for providing confidential cost information to buyers, which resulted in reduced profit margins. The internet further leveled the playing field by providing buyers a new negotiation tool, email, which allowed consumers to email requests for written proposals in order to create bidding wars among many dealerships. Recently however, dealerships have adapted to this new age of self-service sales, by reducing sales staff, trimming advertising budgets and reducing inventory carrying costs.

Today many dealerships carry lower ratios of stocked inventory per unit sold then in the pre-internet era. This is now possible by capitalizing on website tools that allow customers to effectively imagine what their dream car will look like in combinations of interior and exterior colors, without the need to stock every color combination. The shopping process is further streamlined once the preferred vehicle color and equipment is selected, buyers can simply drive a similarly equipped vehicle at the dealership to test the ride and handling. Once customer selection is confirmed the dealer can transport the exact unit from storage lots within days. To further facilitate the new process, manufacturers have provided assistance to diminished profit margins with generous contributions to dealer compensation through sales quota bonuses.

Many dealerships have survived the arrival of the Web 2.0, those franchises have done so by developing finance and insurance departments that offer cost-effective services that are less effectively shopped through the internet than the car itself. Auto loans, leasing terms, insurance and service contracts have costs dependent on variables such as credit scoring and their vehicle specifics; the combination of these factors become difficult to build accurate proposals in email correspondence, and give dealerships the ability to finalize pricing after the buyer has an escalated level of commitment, which results in greater opportunity to close the deal with higher profit margins. Additionally, increased buyer commitment allows sales managers to focus on the handful of customers present to purchase rather than pinpointing serious buyers from the dozens of casual shoppers browsing from the pre-internet era.

I have watched 15 years of adaptation of the automobile sales process, and see that it would have been difficult to predict shoppers arriving with mobile devices and apps capable of locating specific cars, calculating pricing, estimating trade values and providing interest rates, based on what other buyers obtained on similar vehicles. These customer to customer comparisons are in essence the foundations for what later evolved into social media.

Today, retailers can find ways to make reverse showrooming work to their advantage by utilizing funds available from reduced advertising costs, carrying costs, and labor costs. Armed with these liberated resources retailers can reinvent themselves and create web commerce portals that serve company objectives rather than becoming the idle servants of web demand. We need to prepare a vision to enhance the Web 2.0 tools to our advantage and prepare for a future of unimagined supply chain models made possible through instant mobile spending and speedy shipping options. Survival has always required adaptation, and unlike print media, the automobile industry remains many generations away from the social extinction.

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Fitbit, IPO Superstar Struggling for Survival

Todd Benschneider, Qingqi Meng, Jesse Rubin, Lisa Velesko, Xueying Zou

University of South Florida
February 3, 2018

 Company Overview

Fitbit was founded in 2007 in San Francisco, California by James Park and Eric Friedman with a vision to help people lead healthier, more active lives by empowering them with data to reach their fitness goals. Since its founding, Fitbit has become the leading global wearables brand and its products have helped users track and get motivated for everyday health and fitness. Fitbit offers an innovative lineup of popular activity trackers including the Fitbit Surge, Fitbit Blaze, Fitbit Charge 2, Alta HR, Alta, Fitbit Flex 2, Fitbit One and Fitbit Zip, as well as an accessory line featuring the Fitbit Ionic smartwatch, Fitbit Flyer wireless headphones and Fitbit Aria and Fitbit Aria 2 Wi-Fi Smart Scales. Fitbit products are carried in 46,000 retail stores across 78 countries around the globe. Fitbit’s platform delivers personalized experiences, insights, and guidance through leading software and interactive tools. The success of these functionalities has grown the Fitbit social community to over 25 million active users in 2017. The International Data Corporation (IDC) forecasts that the wearables market will nearly double by 2021, leaving the door open for Fitbit to grow and continue its market leading footprint in this category.

Founders

James Park, who serves as the CEO and President of Fitbit, was a Harvard dropout with a computer science background. He was also co-founder of two tech startups, Windup Labs and Epesi Technologies, prior to founding Fitbit. His second startup, Windup Labs, an online photo-sharing company, was acquired by CNET Networks in 2005. James then went on to serve as the director of product development at CNET. James’s diverse background in tech startups also included a stint at Morgan Stanley where he built trading software and developed trading strategies for the bank.

Eric Friedman serves at the CTO of Fitbit. He was a co-founder of both Epesi Technologies and Windup Labs with James Park, and served as an engineer manager at CNET following Windup’s acquisition. Eric earned both his undergraduate and masters degrees in computer science from Yale University.

Neither Park nor Friedman had any manufacturing experience when they came up with the idea to create a wearable product that would change the way people move. They had attended and spoke at the TechCrunch50 conference in 2008, hoping to get 50 preorders. Instead, in one day they received 2,000 pre-orders for the product launching their idea into a true product that had real demand. They had spent several months in Asia looking at suppliers and, according to the founders, nearly crashed and burned seven times (Marshall, 2016). They were already serial entrepreneurs at this point, which gave them an advantage as they traversed the struggles of launching and perfecting a new product.

Financing History

After its founding in 2007, Fitbit went through several rounds of successful seed funding. Funding came primarily from venture capital firms to fund its high growth as an early stage fitness technology company.  The founders were able to raise an initial four hundred- thousand dollars from friends and family to get their idea up and running, but the cash ran out quickly (“Fireside Chat with Fitbit”, 2017). In October 2008, Fitbit closed on its first round of Series A funding, raising $2 million in venture capital from True Ventures, SoftTech VC and several angel investors. This was the company’s first round of institutional funding and the company reportedly met with 40 VCs only to be rejected by all of them (“Fireside Chat with Fitbit”, 2017). Two years later, in September 2010, Fitbit closed a Series B funding round of approximately $9 million. As the company continued to innovate and introduce new products to the market, its need for additional capital also continued. In January 2012, Fitbit raised an additional $12 million in a Series C funding round from its existing investors Foundry Group, True Ventures, SoftTech VC and Felicis Ventures.

A little more than a year later, in September 2013, Fitbit was looking to raise additional capital at a $300 million valuation and secured $43 million in Series D funding from Qualcomm Ventures, Sapphire Ventures and SoftBank Capital, along with its existing shareholders Foundry Group and True Ventures. Only six years after its founding, the company had grown exponentially and raised nearly $66 million in seed capital to fund its operations, innovation and growth and was on its way to going public. Finally, in June 2015, Fitbit completed its Initial Public Offering (IPO) on the New York Stock Exchange at $20 per share, raising $731.5 million in capital. The IPO was comprised of 22,387,500 million new shares offered by Fitbit for a total of $447.75 million in fresh capital for the company and 14,187,500 million shares offered by the selling shareholders. This was the largest ever IPO at the time for a company dedicated to wearable technology. On its first day of trading, the shares of the company popped by 54% and again by 20% on the second day of trading on high demand and trading volume on the NYSE. It is important to note that Fitbit took advantage of the Jumpstart Our Business Startups Act (JOBS Act) of 2012 and registered as an “emerging growth company” (revenues less than $1 billion). This action eased the financial disclosure requirements, thus lowering the cost of going public. Just five months after the IPO closed, Fitbit and its shareholders once again went back to the capital markets and registered a follow-on offering in November 2015.

Unfortunately, market demand for the company’s shares had declined when the follow-on was initiated, which led to the offering being downsized from 7 million to 3 million new shares plus 14 million shares being sold down by current holders. Fitbit was still able to raise $87 million in fresh capital at a $29.00 per share offer price to use for potential acquisitions, working capital and other general corporate purposes, including research and development, sales and marketing activities, general and administrative matters and capital expenditures. Fitbit has not raised any additional equity capital since 2015, but instead has seen its stock price slide to under $6 per share as of January 2018 and its market cap drop from over $6 billion at IPO to under $1.5 billion.

Board of Directors 

Fitbit’s board of directors is comprised of two insider executives and five outside directors. According to Investopedia, the average corporate board size is 9.2 members, so Fitbit may have fewer advisors on its board than its competition. It is important that the founders and company executives surround themselves by intelligent individuals who can help guide the company through its growth and a period of increased competition. Moreover, as the competition in the wearables space increased significantly since the company went public with the introduction of the Apple Watch and other comparable devices, the company will need sound advice for staying competitive. The following table shows the individuals that make up Fitbit’s current board of directors and the important reasoning behind some of their selections as a board member:

Board Member Joined Board Background Reason for Board Selection
James Park Day 1 CEO and President of Fitbit Chairman of the board
Eric Friedman Day 1 CTO of Fitbit Executive Officer of the board
Christopher Paisley January 2015 Executive Professor of Accounting at Santa Clara University. Christopher also sits on the board of 4 corporations in addition to Fitbit Extensive board and operational experience
Laura Alber June 2016 Current President and CEO of Williams-Sonoma Extensive retail industry, merchandising, and operational experience
Jonathan Callaghan September 2008 Founder and Managing Partner of True Ventures Extensive experience with technology companies
Glenda Flanagan June 2016 CFO Whole Foods Market Extensive experience with leading consumer and health-related brands and expertise and background regarding accounting and financial matters
Steven Murray June 2013 Partner at SoftBank Capital Extensive experience with technology companies

 

 

FITBIT’S GROWTH CURVE 

Fitbit’s formation in 2007 was inspired by the fitness potential of the 2006 release of the Nintendo Wii. Park theorized that exercise data could be harvested from the Wii game sessions and the resulting feedback metrics would create friendly competition among friends on metrics for health and fitness accomplishments, capitalizing on the social appeal of video game scoring. At eighteen months, the company had released its first fully functional prototype: the Fitbit tracker, which took second place at the 2008 TechCrunch50 conference. Because of the publicity of Fitbit’s second place finish among a field of respectable competition, the young company received a surprising 2,000 preorders for the $99 clip-on device. With those pre-orders, a successful track record from previous ventures and that technology award, Fitbit had gained enough credibility to attract a variety of venture capitalists (Marshall, 2016). 

The first $2 million in venture capital came within two months of the TechCrunch50 publicity allowing the founders to quickly select a production location in Singapore and contract a manufacturer to build the devices. Their initial prototype, a simple pen sized pod which collected motion activity through a gyroscopic sensor like the one found in a Nintendo Wii controller, contained an integrated Bluetooth transmitter and onboard memory. Park was confident this simple design would prove easy enough to mass produce. However, the design and arrangement of the components did not translate well into mass production, causing several complete redesigns before Fitbit had a product that was compatible with an assembly line manufacturer.

Despite promises that the 2,000 preorders would be filled by December 2008, the deadline proved impossible to meet and the first Fitbit’s did not ship until September 2009, nearly two and a half years after the company’s formation and nine months behind schedule. In the remaining months of 2009, 5,000 additional units were sold. In the first year of distribution, reports of software accuracy problems surfaced, several exercise researchers found that Fitbits activity algorithms greatly overestimated the calorie burn rates, resulting in low levels of weight loss success among Fitbits earliest customers. (Koch, 2016).

Core Vertical Operations 

Fitbit’s original business model disrupted a market of more sophisticated fitness devices, such as heart rate monitors from Polar, Garmin and Magellan. The fitness market of 2007 was served by complex sports watch and chest strap combinations, together they measured exercise intensity and estimated the calories burned by monitoring the electronic signals of heart rate and broadcasting the readings to a sport watch for data storage, then were uploaded by a micro USB cord to a PC for processing and storage. The technology in those heart rate monitors was evolving in 2009 as the Fitbit finally arrived on store shelves, with competing fitness trackers offering more precise GPS features to record distances traveled during exercise. Those emerging sports watches combined the distance data along with a user’s height and weight data and the resulting heart rate to provide workout intensity information and more precise calorie burn estimates (Koch, 2016).

The disadvantages of the heart rate monitor technology of Fitbit’s competitors was that the device sensors required a wide elastic belt to be worn around the chest, which many users found awkward and uncomfortable and regardless of how well these transmitters fit, they often lost signal during exercises involving twisting motions (Kerner, 2017).  Fitbit’s one-piece solution simplified calorie burn estimates by utilizing pre-calculated burn rates based on physical motion, factoring in the wearer’s weight and age, which was surprisingly accurate at estimating calorie burn rates almost as precisely as the more sophisticated heart rate system. It is through this minimalistic hardware and multi-day battery life combined with sophisticated software that Fitbit chose to build their first vertical.

A third area of Fitbits design advantage was its freedom from GPS and cellular connections, the competitors in the heart rate and GPS systems were only marginally accurate at measuring distances, and in doing so they consumed considerable battery power; in addition, most the competing GPS watches required an overnight recharge for every three hours of activity monitoring. The amount of hardware and sophisticated technology in Fitbits competitors also added to the costs with a 2008 price range of between $300 and $800 per device. The combination of awkward chest straps, inconvenient recharging times and high price limited the market appeal of those original GPS fitness trackers to serious athletes and extremely health conscious consumers (Seitz, 2016).

Fitbit’s superior solution simplified fitness trackers, because the designers realized that heart rate and distance were not an absolute requirement to estimate calorie burn for casual exercises. Fitbit’s proprietary technology used a more energy efficient pedometer that detected motions generated by walking and combined that multi-sport motion sensing technology. The Fitbit software could decode the detected movements and estimate what type of exercise was being performed, and estimate the number of calories being used, the wristbands were capable of storing days’ worth of data to later be uploaded to their website for analysis and initial studies found that Fitbit’s projected calorie burn was nearly as accurate at calculating the calorie conversions made by more sophisticated hardware used by Garmin and Polar (Huang, 2016).

In comparison, Fitbit’s simplified wristband motion trackers could also easily be worn around the clock to provide a more comprehensive overview of total activity, including sleep data. The system’s energy efficiency allowed the wristbands to last up to five days between charges and the accompanying fast-chargers could recharge the Fitbit in less than an hour. The comfort and convenience of this revolutionary design combined with the simple technology allowed the devices to sell for a fraction of the price of existing fitness monitors. Fitbit’s original business model also planned for an additional revenue stream created by premium website services such as long-term data storage, charts and analysis for an annual subscription cost of $50, this plan would allow sustainable income after market saturation was eventually reached. All of these competitive advantages created a new vertical product in the health and fitness technology market and Fitbit was the first name that any consumer thought of if considering an inexpensive and simple calorie and exercise tracker (Koch, 2016).

Building substantial height to its core vertical, Fitbit pioneered a corporate wellness sales division, a move that has kept the company ahead of its competitors in the workplace wellness marketplace. These partnership’s competitive advantages have been sustained by Fitbit’s unique customization of user data to comply with the recently passed Health Insurance Patient Privacy Act-HIPPA (Seitz, 2015).

Unmet Market Need Aim & Missed Opportunities

Today, Fitbit continues to face tough competition from the Apple Watch and new fitness technology that offers precision level EKG quality heart rate hardware. Apple was quick to acquire the company who created this technology, with hopes of integrating it into a new market of heart conscious consumers. The future possibilities for the Apple Watch include sending 911 notifications if the user’s heartbeat stops or sending an alert to a user when one’s pulse indicates a warning of an oncoming heart attack. The technology could also prove valuable in solving crimes by alerting authorities the precise time and location of a murder or fatal accident. If Apple pioneers such lifesaving technology in an affordable package with a multitude of companion features, it would be safe to assume a dimmer forecast for Fitbit’s market niche (Feel the Beat of Heart Rate Training, 2017).

Competitive Advantage 

Fitbit’s key early advantage was being the first wearable fitness tracker to market. James Park seized the opportunity to address the unmet market need, developing the first few models that set the bar across the market and Fitbit soon became a household name. The simplicity of the initial out of the box setup and continuous wear and convenience made Fitbit the device of choice with consumers looking for daily encouragement to reach personal health and fitness goals.

With over 25 million current Fitbit active users, Fitbit’s community has become the largest activity tracking population. New consumers are also attracted to join the Fitbit community to chat and challenge brand-loyal friends. Maintaining an active online community has been essential for Fitbit’s most recent technical developments. The more people who track their fitness, find opportunities for improvement and provide feedback, the better the next generation product can be. However, it didn’t take long for tech industry giants to catch up and surpass a device, which was once only a pedometer, with their own patented technology (Entis, 2017).

Today, Fitbit’s greatest advantage is its affordable price. Consumers can purchase a new Fitbit for only $100 compared to the lowest grade of the Garmin watch, the Forerunner, which costs $105 and the original Apple Watch priced at $179. This advantage will continue to attract people interested in tracking their health who don’t want to break the bank on GPS satellite accuracy and smartphone compatibility. As Fitbit adds new features to its product set, as done with its newest model, the Ionic, the price gap is slowly closing and the entrance of $25 rivals from several Chinese manufacturers is squeezing the profits in the market (Lashinsky, 2016).

An additional threat to Fitbit’s future growth is the entry of conventional watch companies such as Timex and Casio offering less expensive $30 competitors in addition to luxury brands such as Tag Heuer, Seiko and Ferragamo that offer integrated activity tracking sensors into conventional jewelry timepieces. The entry of the conventional watchmakers eliminated one common complaint of prospective Fitbit buyers, since many users do not choose to wear a simple rubber wristband in place of or in addition to a conventional watch (Seitz, 2016).

Unique Products and Services that Create Barriers to Entry from Competitors 

Fitbit has been able to defend its position as a market leader through its design simplicity. No competitor has managed to offer novice fitness consumers a smoother transition to integrate a tracking device into their daily routines. The loyalty of Fitbit’s existing customers is reinforced by the storage of historical weight and fitness history through the supporting website and phone applications. If a current user switched brands, they would lose the integration of historical charts and graphs comparing current fitness progress to their own previous levels. Additionally, Fitbit has captured the first mover advantage in corporate wellness programs and has maintained that position through a well-developed Health Information Privacy Law department that protects its corporate clients from employee lawsuits. The base model Fitbit’s simplicity also provides competitive advantages in the corporate wellness market, since its lacks GPS and heart-rate capabilities which eases employee fears of health condition discrimination or inappropriate employee location tracking (Farr, 2016).

Home Office and Distribution

Headquartered in San Francisco, California, the company has expanded its distribution around the world after nearly a decade of development. In addition to North America, Fitbit has a presence in Latin America, Europe, the Middle East, Africa and Asia Pacific with offices in large cities including Boston, Dublin, Hong Kong, Shanghai, Seoul, Tokyo, New Delhi and Singapore.

But how does Fitbit expand markets and sell their products in other regions? Take China as an example. Fitbit formally entered the Chinese market in June 2014, following its sales footprint in 42 countries around the world. But why did Fitbit choose to enter the Chinese market in 2014? Fitbit studied the research reports on the health status of Chinese consumers.

In fact, the future health of the Chinese people deserved attention. China’s overweight population has risen from 25% in 2002 to 38% in 2012 and this number reached 50% by 2015. In terms of body fat index, on average, Chinese are not as overweight as Westerners, but the incidence of diabetes in Chinese people is as high as 11%, similar to that of the United States. Furthermore, people categorized as obese now accounts for 11% of the total population. Fitbit can help Chinese consumers become healthier, because it has a lot of measurement functions, such as the number of steps walked, steps climbed, heart rate, quality of sleep, and other personal needs involved in fitness. Fitbit’s products function for sports, diet, sleep and weight management and include peripheral systems to help people build healthier lives (Koch, 2016).

In terms of sales channels, Fitbit understands that online sales in China are very important. Following Best Buy, which uses Jing Dong is its online distributor, Fitbit products have started distribution with Jing Dong.

In addition, Fitbit’s products are now manufactured in Shenzhen, China, an area that is quickly becoming the technology manufacturing region of the 21st century (Entis, 2017). Fitbit also opened a flagship store in Tian Mall. Additionally, conventional distribution channels such as Amazon, sporting goods stores and most large department store chains all carry Fitbit products. The primary mission of the Chinese team is to broaden Fitbit’s brand awareness so that everyone knows what Fitbit is, how it helps people live a healthier and happier life.

Diversity 

Unlike the wide array of applications, functionality and color provided by their wearable trackers, Fitbit is guilty of lacking diversity in the workplace. Like many tech software companies, Fitbit perpetuated a serious gender imbalance in favor of men. The firm took memorable heat from the press in 2015, as their all male Board of Directors generated attention. Even though women dominate the wearable activity tracker consumer base, Fitbit didn’t see it necessary to include females on their board or in leadership positions. The media isn’t the only source reporting misrepresentation. There is a clear consensus among employee reviews on job sites like Glassdoor and Indeed that expose the company as “extremely white-washed” with very little opportunity for growth for minorities that manage to make it in the door. Unfortunately, lack of gender and cultural representation is an all too popular trend in STEM industries and tech software companies in particular.

Recently, Fitbit has made notable strides to diversify its workforce. Two women have succeeded retired board members, while two more have moved up into Vice President roles. As for the inclusion of minorities, Fitbit has yet to demonstrate progress toward their promise to attain an ethnically proportionate workforce. We are hopeful that the firm’s welcome to fair hiring is genuine and Fitbit can create a more inclusive company and culture.

Sustainability 

Today’s most successful new companies clearly published policies and strategies to achieve the Triple Bottom Line results. Like their stances on diversity and global responsibility, Fitbit’s formal policies on sustainable business practices are also non-existent. We can conceive the attention extended to healthcare and fitness, but what about the well-being of the environment? From what we can gather on Fitbit’s consumer output, their products are relatively easy to recycle. Once users decide to give up a wearable tracker or upgrade to the newest version, they can either sell or donate the device. But soon, these old technologies will become obsolete. Their capabilities will prove to be outdated and inaccurate, rendering the whole device useless. In the case that the bracelets are not in reusable condition, there is no solution to keep them from piling up in landfills.

This is where a true opportunity lies for Fitbit. Like the Apple take back system, Fitbit can receive old devices at their end of their life to disassemble into separate, reusable parts. Though this prove an initial cost for Fitbit, they can deliver a new sustainability platform to their consumers and save on usable electronic parts in the long-term. 

Competitor

  • Apple Watch

Fitbit Ionic vs Apple Watch Series 3: Design

There’s no doubt that the Fitbit Ionic lacks a conventional aesthetic appeal; however, it won’t burn your eyes off. Recently Fitbit has been focusing on integrating style into their designs. The Ionic contrastes the Blaze’s angular look, and while we found it grew on us during testing, it’s sure to put a lot of people off.

On the other hand, the Ionic is impressive in how it crams a whole bunch of technology into a slim, lightweight case. You’ve got GPS, NFC, enough battery for four days of life and multiple sensors in a 50m waterproof square. Like the Blaze, there are three buttons on display here. You can use the display to touch your way around Fitbit OS, but if your hands are wet or if you’re in the water you may have an easier way around with some tactility.

With excellent clarity in both low light and glaring sunshine. You’ll get the Ionic in three flavors: a silver watch case with a blue/grey band, a graphite grey case with a charcoal band and a “blue orange” case with a slate blue band. But in case you’re not down with stock bands, you’ll also be able to purchase some nice accessories. There are two-toned breathable sport bands for purchase in three colorways as well as handcrafted Horween leather bands in midnight blue and cognac.

However, Apple watch keeps a design that’s nearly three years old, but the watch is easier on the eyes. Take apple watch series 3 as an example, it stills provide several models to users to choose. There are two different case sizes (38mm and 42mm), three different materials (aluminum, stainless steel and ceramic) and a whole lot of different colors. With the Series 3, you can get the LTE in the whole range, but non-LTE only comes in aluminum. There are also endless band options, from the low-end nylon and sport bands to high-end Milanese Loops and leather bands.

The major differentiator between these two is in the build. If you’re looking for something to complement every outfit in your wardrobe, and you have no problem with collecting an army of bands, the Apple Watch wins. Apple watch offers very limited styles for users to select, if people who want to have different styles smartwatch, Fitbit absolutely a better choice.

Fitbit Ionic vs Apple Watch Series 2: Battery

For as long as the Apple Watch has been around, it’s gotten about a day of battery life. Sometimes it’ll do less, but most of the time you get about a day – a day and a half to two days if you make deliberate efforts to avoid high consumption apps. With a mixture of both LTE and non-LTE features in the Series 3, you should still get around that, but using the call feature will cut it dramatically. In fact, Apple quotes only an hour of continuous talk time on the Watch.

The Ionic, Fitbit, will net people up to five days of battery life, or up to 10 hours when using GPS or playing music. That’s decent from such a slim device with as much power and many features as it has. If you have to make your decision based on battery life, the Fitbit is the clear winner here. Those extra days mean it’s much more viable as a sleep tracker too.

Fitbit Ionic vs Apple Watch Series 3: Price

The Apple Watch Series 3 has a wide range of prices, starting as low as $329 without LTE, $399 with the cellular connection, and then climbing up further depending on your choice of materials. It really depends on what you’re looking for, and how chic you’re willing to go. Bands will cost you at least $50, but again climb up into the hundreds. The Ionic, on the other hand, goes on sale for $299.99 on 1 October. You’ll also be able to purchase some bands for $29.99 to $59.99. Thus, Fitbit could easier to get access into market.

Fitbit Ionic vs Apple Watch Series 3: Fitness

There is usual standard of Fitbit fitness features, like Smart Track, VO2 Max and Sleep Stages. The Apple Watch, on the other hand, doesn’t officially recognize as many workout modes as the Ionic. For instance, it doesn’t have a mode for weights or interval training. The Apple Watch also doesn’t automatically track your workouts like the Fitbit does for running, heart beat tracking.

The Ionic is only the second Fitbit to utilize GPS, after the Surge, allowing it to match the Apple Watch in this regard. In our test we found the data of GPS to be pretty on the money, and it didn’t take too long to actually lock on either.

Finally, Fitbit is debuting Fitbit Coach on the Ionic. It’s basically a new version of Fit star, giving users a curriculum of workouts, the company says will tailor to your personal needs the more you use it. With watch IOS 4, the Apple Watch does some light personalized coaching, but it’s mostly on how to close your rings, giving Fitbit the nod here.

Fitbit Ionic vs Apple Watch Series 3: Smart features

Speaking of ecosystems, the Ionic is Fitbit’s best go yet at creating one. There’s an app store here, which Fitbit refers to as a ‘Gallery’. It debuted with just apps from Pandora, Starbucks, Strava and Accu Weather, but that has grown, adding apps from the likes of The New York Times, Nest and more. Apple has had a head start in getting developers in tow, and it’ll take a bit for Fitbit to catch up.

There’s 2.5GB of space for you to either store offline music from Pandora or from your own library. However, since the Ionic doesn’t have cellular capabilities, people can hardly stream music without your phone around.

Fitbit Pay is that company’s foray into payments, thanks to its purchase of Coin. You can take your American Express, Visa or MasterCard and link it up to Fitbit Pay, as well as debit cards from “top issuing banks”. You can link up to six payment cards to Fitbit Pay, while you have a limit of eight on Apple Pay.

While the Ionic plays some good catch up in the realm of music and NFC payments, the maturation of Apple’s ecosystem gives it a bit of a nudge here. However, as Fitbit gets more time to get major apps up and running, Apple may have a serious competitor to worry about, LTE or not, especially as more Pebble developers join Fitbit’s budding platform.

Fitbit vs Garmin

Both have their obvious strengths, but how do their wearable platforms match up? We’ve broken it down to hardware, features, apps, fitness and sports tracking to see whether it’s Garmin or Fitbit that comes out on top.

 

Garmin vs Fitbit The Hardware

Fitbit has actually been creeping into the world of smartwatches for a while now, with its Fitbit Blaze and Fitbit Surge acting as introductory “fitness watches”, but that doesn’t change that Fitbit got where it is today because of its fitness trackers like the Charge, Alta and Flex.

While the fitness trackers are the spine of Fitbit, its flagship is the Ionic. It’s a big riposte to the Apple Watch, with an app store that’s still growing, contactless payments and more. It’s the most fully featured Fitbit yet, as it pools together smartwatch-like features with both 5ATM water resistance and built-in GPS – features that previously were limited to select Fitbit lines. It’s also built for the future, intended to eventually have features like sleep apnea and atrial fibrillation detection.

As for Garmin, well, things are a little more complicated, such is the depth on offer. In terms of fitness trackers, the headliner is currently the Garmin Vivosport – its latest attempt to compete with Fitbit. While it’s got GPS, heart rate monitoring and VO2 Max, it’s also got a bit of a small and overly sensitive display. It also offers more basic options like the Vivofit 4 that focuses solely on those standard fitness tracking features. So steps, calories, distance and standing hours.

It’s the little things that separate these two. For example, Fitbit will generally provide users with more stylish wearables and much more customization, while Garmin’s devices tends to lean towards a masculine look. To offset this, of course, you’re given a host of physical options to choose from.

Garmin vs Fitbit: Sports Tracking

Not only can you track the likes of running, trail running, hiking, cycling, swimming, skiing, rowing, triathlon training and more, but you can also do this with the in-built GPS or Garmin’s UltraTrac, which conserves battery to keep tabs on your activity over longer distances. Heart rate is also a mainstay within the higher end of Garmin’s range, giving you ample insights into heart rate zones and heart rate variance.

Garmin vs Fitbit: Price

As always, price is something you have to consider, too. While the notable members of Fitbit’s range begin at $99.95 and max out at the $299.95 mark, that barely makes a dent in Garmin’s family. While there’s the $299.99 Vivoactive 3, if you want the latest from the Fenix or Forerunner series, your wallet will be roughly $500 lighter, and that’s a big financial commitment to consider alongside the ecosystem and general features on offer.

Garmin vs Fitbit: The Apps

Take Fitbit, which, while maybe not providing the most detailed after workout metrics in the business, still manages to offer one of the more rounded fitness platforms. This is particularly the case for beginners, who are able to dive into trends, dedicated workouts, sleep tracking and social aspects, such as linking with friends and challenges.

With the Ionic, Fitbit has also launched an app store. It was rough going at first, with only a couple of apps, but the store has gradually grown over the past couple of months, with the likes of The New York Times, Philips Hue, Yelp and more joining the fray.

As for Garmin, you’ll be dealing with Connect, the home of your activity, and ConnectIQ, the store for you to pick up apps and new watch faces. As with Fitbit, we have a comprehensive look on how to run better with Garmin Connect and a Garmin Connect IQ app store guide, but we’ll skim through the highlights here.

The companion app, which is compatible with all Garmin devices and available on desktop, offers you a place to plan, track and review your workouts. So, whether you’re preparing for a marathon and setting monthly goals or simply looking to beat other runners’ best times in local areas, the platform has you covered.

When compared to its Fitbit counterpart, more serious exercisers will find little comparison – Garmin gives you an incredibly detailed look at your activity once you dive past its handy Snapshots, while also allowing you to upload data to the likes of Strava and understand elements like heart rate zones. Even better, Garmin has recently updated ConnectIQ to be more convenient to use for beginners, with an easy-to-digest home screen filled with your stats and metrics.

 

Geographic area

Headquartered in San Francisco, California, the company has expanded its distribution around the world after nearly a decade of development. In addition to North America, Fitbit has a presence in Latin America, Europe, the Middle East, Africa and Asia Pacific with offices in large cities including Boston, Dublin, Hong Kong, Shanghai, Seoul, Tokyo, New Delhi and Singapore.

But how does Fitbit expand markets and sell their products in other regions? Take China as an example. Fitbit formally entered the Chinese market in June 2014, following its sales footprint in 42 countries around the world. But why did Fitbit choose to enter the Chinese market in 2014? Fitbit studied the research reports on the health status of Chinese consumers. In fact, the future health of the Chinese people deserved attention.

 

China’s overweight population has risen from 25% in 2002 to 38% in 2012 and this number reached 50% by 2015. In terms of body fat index, on average, Chinese are not as overweight as Westerners, but the incidence of diabetes in Chinese people is as high as 11%, similar to that of the United States. Furthermore, people categorized as obese now accounts for 11% of the total population. Fitbit can help Chinese consumers become healthier, because it has a lot of measurement functions, such as the number of steps walked, steps climbed, heart rate, quality of sleep, and other personal needs involved in fitness. Fitbit’s products function for sports, diet, sleep and weight management and include peripheral systems to help people build healthier lives (Koch, 2016).

In terms of sales channels, Fitbit understands that online sales in China are very important. Following Best Buy, which uses Jing Dong is its online distributor, Fitbit products have started distribution with Jing Dong. In addition, Fitbit’s products are now manufactured in Shenzhen, China, an area that is quickly becoming the technology manufacturing region of the 21st century (Entis, 2017). Fitbit also opened a flagship store in Tian Mall. Additionally, conventional distribution channels such as Amazon, sporting goods stores and most large department store chains all carry Fitbit products. The primary mission of the Chinese team is to broaden Fitbit’s brand awareness so that everyone knows what Fitbit is, how it helps people live a healthier and happier life.

Factors that Contribute to Innovation 

Fitbit’s products pioneered cross-brand compatibility with devices that seamlessly interface with nearly all brands of smartphones and tablets on the market, a key advantage which contributed to their early revenue growth. Today, many smart wristbands and watch products remain limited to either the Android or Apple systems, an obstacle which alienates those consumers who have both types of devices in their household, and while there are also many products that are compatible with both  the iOS  and Android operating systems, most fitness systems continue to ignore the Windows system users. Fitbit in comparison, has managed to build long-term loyalty by creating products that  can be simultaneously operated on IOS, Android and Windows systems, so that their consumers can be assured that the Fitbit app will always be compatible with their future choices in smartphones. The founders philosophy can is evident by their open source access to fitbit servers to allow third party developers to create unique interfaces to the users data files because as founder James Park stated “In an open market, we can better cooperate with local partners. After all, they know more about the local market than we do.” (McNew, 2015).

In addition to their hardware interface versatility, Fitbit’s strategy is aimed at encouraging an open software platform, because Fitbit believes that more innovative ideas can be better exploited through openness and absorption. According to a developer, Fitbits platform has a port opening of the application works in both directions, Fitbit users cannot only send their data through Fitbit to a third-party application. If a user thinks a third-party app is great, they can also send data from a third-party app to Fitbit. For example, a male consumer is very concerned about his diet. He found a great application for eating and drinking, and he was able to import third-party applications into Fitbit via its interface. He can see and record calories on the Fitbit and so on (Schwahn, 2017).

In addition, Technology is a key factor of Fitbit innovation. Since 2009, it has released 15 different products, each of which is an update to the previous one. For example, Fitbit One, released on September 17, 2012, is an updated version of Fitbit Ultra with a more vivid digital display. It has independent clips and separate charging lines and wireless synchronization. Fitbit One is the first wireless activity tracker to synchronize with Bluetooth 4.0 or Bluetooth smart. Wireless synchronization is currently available on iOS and Android devices. Fitbit One can record several daily activities, including but not limited to the number of steps, distance, floors climbed, calories burned, active minutes and sleep efficiency (Jary, 2018).

Competitors in the same field are also important aspect of Fitbit’s innovation processes. Apple, for example, released the Apple watch series 2 in September 2016. The Apple Watch series 2 has better waterproof features, can be worn when swimming or surfing, and can support up to 50 meters of water pressure. Fitbit also took immediate steps. Fitbit Flex 2 was released on 2017, replacing the original Flex, the lowest end of the Fitbit wristband line. This is the first model that was waterproof with swimming tracking. The tracker can be worn on the wrist, pendant or carried in a pocket. When receiving a phone call or text message it provides alerts movement alarm and vibration functions (Jary, 2018).

Entrepreneurial Improvements 

To stay competitive in the wearable tracker market, Fitbit needs to aggressively invest in hardware research in addition to integrating additional richness to their software platform in order to maintain consumer loyalty. Low price is no longer a guaranteed winning strategy in the fitness market, with the differences between style and performance rapidly shrinking, Fitbit needs to enter another business vertical that sets its products apart. We recommend a steady progression into a closely neighboring market of medical devices. We propose Fitbit aim to align with various medical associations to discover best healthcare practices and create apps for physical treatments fighting illness and disease. If the highly accurate heart rate monitor can identify specific exercises performed by the readings of active heart rates, why can’t it detect palpitations and arrhythmias?

Along with alerts to potential health irregularities, Fitbit should develop software to allow consumers to easily share their tracked data with their healthcare professional. Organizing this data to be analyzed by physicians can open a dialogue with patients to work toward their goals in a safe, customizable fashion. Breaking into healthcare software opens the door to high potential revenue growth, if Fitbit is the first to curb this market.

 Unmet Markets and Missed Opportunities 

In 2014, just four years after Fitbit’s initial distribution, advancements were made in optical heart rate monitoring technology, now Garmin and Polar are producing similar activity trackers at a similar price points. While emerging technology would soon drive additional demand for wristband fitness trackers that increases the size of the pie, it will also breed new competitors who were better positioned to capitalize on consumers with special concerns for heart health along with athletes desiring deeper training feedback metrics.

These advancements in heart rate monitoring technology allowed those serious athletes and health-conscious consumers to abandon their chest strap transmitters for a single unit, rechargeable wrist monitor that integrated real-time pulse-rates along with 24-hour wear ability (Cook, 2017). As a result, Fitbit’s previous competitive advantage of one-piece simplicity was disrupted. To compound Fitbit’s new competing technology, they failed to license the technology in time to be the first to market with the new optical heart rate and activity wearables. Instead, a new competitor, Epson, led the optical heart rate integrated monitors a full year prior.

Fitbit’s first entry in the new market, the Charge HR, missed its planned holiday 2014 release date, instead arriving late to market with an underwhelming level of fanfare in January 2015 (Seitz, 2016). The Charge HR was quickly overshadowed by an improved Apple Watch only three months later. As with many Apple products, the features of their new watch were widely publicized through a big budget marketing campaign, which was the first to educate mainstream consumers on the benefits of wrist worn heart rate monitors. However, Fitbit did outmaneuver one of its main competitors, Polar, which lagged a year behind Fitbit in its release of a pulse monitoring wristband (Lashinsky, 2016).

Today, Fitbit continues to face tough competition from the Apple Watch and new fitness technology that offers precision level EKG quality heart rate hardware. Apple was quick to acquire the company who created this technology, with hopes of integrating it into a new market of heart conscious consumers. The future possibilities for the Apple Watch include sending 911 notifications if the user’s heartbeat stops or sending an alert to a user when one’s pulse indicates a warning of an oncoming heart attack. The technology could also prove valuable in solving crimes by alerting authorities the precise time and location of a murder or fatal accident. If Apple pioneers such lifesaving technology in an affordable package with a multitude of companion features, it would be safe to assume a dimmer forecast for Fitbit’s market niche (Feel the Beat of Heart Rate Training, 2017).

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Data Analytics: Influences of Gross Film Revenue Across Three Decades

 

Data Analytics: Influences of Gross Film Revenue & Opportunity Analysis

December 6, 2017

Todd Benschneider, Austin Deno, Leigh Harris, Sarah Lassiter, Lisa Velesko
Table of Contents

Problem Significance:                                                                                                         3-4

Data Source & Preparation:                                                                                               4-5

Variable Selection:                                                                                                              5

Preliminary Analysis:                                                                                                          6-8

Models:                                                                                                                                  8-12

Insights:                                                                                                                                 12-13


Problem Significance:

Several societal trends can be mined from the data captured in consumer spending patterns of the film industry, especially a comparison of different genres of films which indicate rising and falling patterns of popular fiction. Films, more so than television, literature, or music, closely correlate with upcoming trends by using a responsive pull towards consumer tastes in fiction-fantasy and most accurately reflects the psyche of a generation and its ever shifting emotional underpinnings. The nimble demand responsiveness of filmmakers has become astoundingly proficient at catering to the emotional voids that drive the fiction market and are reflected with clarity in the ever changing mix of successful films. Through the unspoken demand for clearly defined types of storylines, these quickly produced films reveal a meaningful cross-section of a society’s unfulfilled drives and highlights which particular aspects that a society’s members yearn for in their own life situations.

In addition to trending popularity of varying scripts, other valuable economic indicators can be harvested through reverse engineering techniques to capture the downward trending genres that clarify the contextual changes that indicate which previous underlying drives have since been fulfilled through sociological evolution. Marketing professionals are wise to take note of the peaking decline of each passing trend, as those peaks and valleys encapsulate at a macro level of measure, the unspoken barometers reflected in the overall mood of a culture.

In the industries of entertainment and media, consumer spending directed towards different types of fiction produces great insight into the long-term patterns of emotional and economic wants, that are as useful to producers of consumer goods, as they are to providers of entertainment. It is imperative for businesses to be on the forefront of any trend.

Our data set summarizes three decades of consumer spending trends on tales that potentially reveals early predictors of future spending behaviors. It is through the trend forecasting of these patterns of film revenue data, that a business can be on the forefront of meeting changing consumer tastes, whether that firm creates new movie plots, automobiles, or widgets. With insight into the deepest desires of the society around it, a business can tailor its marketing message to align its product with a representative cross-section of every consumers vision, of not who they are, but instead, what they want to be. Few other data sources can provide the insights into the self-identity of fantasy characters as well as film plots and with this three decade dataset, we expect to gauge the tipping points of long term trends and witness the rebounds that those tipping points predicted.

Our team viewed the movie revenue data from the perspective of a movie merchandiser, evaluating which unreleased movies in production would provide our firm with its highest return on investment for movie-themed posters, toys, clothing and related merchandise. The highest budget films command the highest royalty percentages and also require the greatest undiversified commitment of our manufacturing lines to individual movie projects. Because of the risk and profitability factors affiliated with marketing the high budget prospects, our team instead drilled down into the data looking for the more cost effective prospects. Films that maximize the return on investment allow our firm to utilize a more diversified portfolio of projects with more promising cash flows.

With this goal in mind, we chose instead, to use regression models to dig deeper into other categorical data from the set, hoping to find other actionable predictors that could be valuable on a shorter time-line. With that goal, we evaluated the given variables in search of the most significant predictors to cinematic success to determine the confidence of future investments.

Data Source & Preparation:

The data set was originally gathered from IMDb and then sourced directly from Kaggle using 6,820 movies from 1986 to 2016 and includes details such as budget, gross revenue, the production company, country of origin, director, primary genre, movie name, motion picture rating, date released, runtime, IMBd user score, lead star, IMBd user votes, writer, and year released.

Not all movies contained information regarding the budget of the movie.  Those were removed as it was critical in our analysis to be able to collate the relationships for complete data points, especially in regards to budget.  We also investigated the relationship between profit and return on investment between gross and budget independently.

Tableau and Excel were first used to identify the greatest amounts in each respective variable.  This allowed us to postulate our first level of filtering.  R was then used to plot data using histograms, box plots, and scatter plots to consider outliers, run regression models, multicollinearity and direct correlations, identify R-squared and adjusted R-squared, along with Aikaike Information Criterion (AIC) and Bayesian Information Criterion (BIC), to determine goodness of fit, utilized numeric and qualitative predictors, and with interaction.  Charts in Tableau were generated to visually verify the interaction effects.  Tableau, Excel, and R were all used collectively to ultimately determine the strongest correlation, interaction, numeric, and qualitative predictors in using the variables.

Variable Selection:

Response Variable: In our effort to uncover the driving forces behind blockbuster films, we questioned what causes box office achievement. There are far too many flops in show-business; artistic potential is drowned out, consumer trends are completely misinterpreted, and lucrative investments are wasted. We must review success in cinema and provide a supportive study to investors in major motion pictures to appease the masses and create a stable platform for performers, thereby providing a concrete analysis of how gross revenue is determined. We therefore selected “Gross”, defined by our IMDb source as “gross revenue at the box office” as our response variable for all data modeling in this study.


Predictor Variables:
In order to evaluate the best variables to test against our response variable, we created a correlation table (below) to test the relationship amongst the quantitative variables. We focused on which variables could have a strong effect in deciding gross. The motive in tracking down the most determinant variables is so the investor can later account these factors into their decision to support a film.

Correlation Chart Budget Gross Runtime Score Votes
Budget 1 0.680033 0.313064 0.073579 0.451467
Gross 0.680033 1 0.253273 0.229552 0.642904
Runtime 0.313064 0.253273 1 0.417031 0.359817
Score 0.073579 0.229552 0.417031 1 0.470648
Votes 0.451467 0.642904 0.359817 0.470648 1

To no surprise, the correlation that stood out the most was between gross revenue and budget with .68003256. This correlation suggests that a higher budget movie will most likely fund a movie that generates more revenue. As we believe budget is the heaviest deciding factor in funding the crucial elements for a financially successful film, we regard it as our primary predictor variable which our other qualitative and quantitative variables will be matched against.

 

The second highest correlation was found between “gross” revenue and “votes” (that is IMBd viewer reviews on a scale from 1 to 10) at .642904. We can justify this correlation two-fold. First, more “votes” logically means more tickets were purchased to watch the movie in theaters. Second, a high number of votes can drive consumer demand, influencing movie-goers who have not yet viewed the film to either watch or avoid depending on how positive the review was. While our first conclusion is provided after the fact of viewership, the second has the potential to boost viewership, making this variable causal. However, since we cannot account for whether “votes” were causal or coincidental, and since the standard error in a simple regression with gross is very large, we decided not to make it a popular predictor variable in our study. Derived from the votes, we deemed “scores” as unacceptable variables in our models because we cannot control the scores that are given by the reviewers.

 

As “runtime”, the final quantitative variable which refers to the length of the film expressed in minutes, has a relatively moderate correlation with “gross” at positive .2532733, we must take into consideration what this logically means. The correlation expressed as runtime increases, gross revenue also increases. We know that this statement has a limit because if movies were formatted into countless of hours, we cannot logically expect the popularity to rise accordingly. In support we also can see from a simple regression that, like the “votes” variable, “runtime” standard error at 52262 is unacceptably high.

 

As far as qualitative data, we opted to use both primary “genre” and motion picture “rating” as major predictors of gross, as supported by their high multiple r-squared values. We determined these were likely predictors of movie success based on consumer taste.

 

Finally, we decided not to use the production company, country of origin, director, movie name, date released, and year released as these factors would be completely out of control of the film investors. This is due to the variables being too widely diverse to classify accurately since they are spread so thinly across the data.

Preliminary Analysis:

Following our variable selection, we began looking at patterns surrounding the relationships between revenue and movie genre and motion picture rating. It’s important for investors to stay current on consumer trends in order to predict where the big money will be made in the film industry.
Hypothesis Testing:

 

Hypothesis 1:

  1. Since the Action genre and PG-13 rating have the highest gross revenue out of all movies, it is logical to assume that these types will also generate the highest return on an investor’s funding once the production hits the theaters. We have solid evidence that this is true because budget accounts for over 47% of the prediction of a high grossing movie.

H0: Action genre and PG-13 rating have the highest return on investment and an Action PG-13 rated movie will generate the most dollars per dollars invested.
Ha: Action genre and PG-13 rating do not have the highest return on investment.

Genre:

After realizing high correlations between gross and motion picture genre, we dove into separating genres to see which classifications raked in the most at the box office. We found that the movies with the highest gross revenue were Action with
a combined total of over $708 million. By seemingly no coincidence we also noticed that Action movies
had a higher total budget than all other genres. Since budget has a strong linear correlation with gross, we can assume that Action will produce the highest return on investment than any other genre.
Rating:

We similarly compared motion picture ratings to gross revenue to identify that PG-13, R, and PG, respectively, generated the most revenue over the course of the 30 year history and looked at the gross revenue and budget within each sector.


Hypothesis 2: Since popular actors have a strong influence over consumer taste, we can assume that starpower has a significant effect on gross revenue. Since high budget is needed we can also assume that as budget increases, more coveted actors can be casted, resulting in a very popular, high grossing film.

 

H0: Movies with budgets in the upper 3rd quartile will have a significant relationship between star and gross.
H1: Movies with budgets in the upper 3rd quartile will have no relationship between star and gross.

 

Star: We attempted to identify the correlation of stars to gross revenue by exploring the total number of movies that they been the lead in and the sum of the gross revenue for those movies using Tableau.  We believed that particular stars would impact the budget and also impact the gross revenue.  Frequency of a star being in movies could also lead to their popularity and consequently generate more box office revenue as consumer-demand increased to see that star.  In running a regression model, there were specific stars, such as Chris Pratt(1), Daisy Ridley(1), Ellen DeGeneres(1), Felicity Jones(2), Heather Donahue(1), Jennifer Lawrence(8), Louis C.K(1), Neel Sethi(1), Paige O-Hara(1), Quinton Aaron(1), Sam Neill(3), Sam Worthington(4), Scott Weinger(1), and Taylor Kitsch(1) that had significant influence as interacted with budget to predict gross revenue.  With all but Jennifer Lawrence being listed as the star in less than five films and most less than two, as indicated by the number next to each star, we determined that there were additional factors driving this further, such as co-star, if the movie already had a cult following, was a book first, etc.  We did run a sample test using Jennifer Lawrence and Will Smith to note that, at least for these two stars, there was a positive correlation between gross revenue and budget as depicted in the scatterplot below.

   


Models:

Model 1<-lm(d$gross ~ d$budget)

The correlation chart was a basic look at the significance between gross revenue at the box office and film budget. We soon affirmed our prediction that the correlation between budget and gross was causal by running a simple regression. With a multiple r-squared value of .4624, this model shows that 46.24% of gross revenue can be explained by the budget. Budget also has a very low p-value (2e-16), proving to be a significant factor in predicting a high gross. A higher budget movie has greater potential to purchase the necessary artists, talent, and advertising to create a higher grossing product.
Model 2<-lm(d$gross~d$budget+as.factor(genre), data=d)

Using the as.factor for genre we are able to build a second model that explains how a movie budget and genre affects the revenue of a movie. This model had a slightly higher adjusted R-square with .4691. This model also shows that out of all the genres, the most significant ones were Action, Adventure, Animation, Comedy, and Horror. This indicates that these five genres will be more impactful on the revenue of a film with knowledge of the budget of the film. However, without knowing the budget, Comedy, Drama, and Horror have the most significant impact on gross revenue.
However, we know that correlation does not translate to causation. We carefully curbed our analysis with a linear regression model, placing “Gross” as the response variable and “Budget” as a factor of “Genre”. We used budget as a control because we want to know how the effect of dollars invested in a movie, and more specifically movie genre, would be returned. To our surprise, Action was not the most significant factor, Animation was, as confirmed by a lower p-value and a higher coefficient. In fact, the regression explained that with a hypothetical budget of $0, an Animation movie would produce $22.2M more in revenue than an Action movie. This was an astonishing and valuable discovery.  We noted that Action, Adventure, Animation, Comedy, and Horror all had significant influences.
Model 3<-lm(d$gross~d$budget+as.factor(genre)+d$budget*as.factor(genre), data=d)

For our third model we adjusted it to show a model that explains gross revenue with the budget and genre of the film and the interaction effect between budget and genre. This model was slightly better with an adjusted R-Square of .4696. The model showed that a specific genre budget has a slight effect on gross revenue. Budget is more significant for the Action, Comedy, Drama, and Horror genres.

Model 4<-lm(d$gross~d$budget+as.factor(rating)+d$budget*as.factor(rating), data=d)

For our fourth model, we looked at gross revenue with the interaction between budget and rating. This helped us narrow our data to find the most significant rating for gross revenue as budget increases. This model had an adjusted r-square of .4736. Out of all the different ratings, rated R and G movies were the most statistically significant.

 

Looking at just the adjusted r-squared and the AIC/BIC; the fourth model was the best predictor of increasing gross revenue. However, the rating to budget interaction was only slightly better than the genre to budget interaction. Both our third and fourth model narrowed down our data because they took into consideration the genre and rating with respect to budget of the film. These two qualitative variables were the most significant in predicting the gross revenue outside of just the movie budget.  In joining the interaction together, PG-13 and Horror had the highest and only interaction, with a slightly higher R-squared but higher AIC and BIC, therefore prompting us to return to the previous model and generating the below chart to illustrate our findings.

 

Confidence Interval Testing:

 

With the information we gathered from the regression models, we now have an in-depth look at the effect of budget on genre and rating as they relate to gross revenue. However, these findings contradict our earlier hypotheses. To examine our original assumptions, we performed confidence interval testing.

 

First, we subsetted the data by creating a new dataframe with only Action genre movies rated PG-13. Then we created another variable, ROI, by implementing the ROI formula using budget and gross data sets. We took a summary of the data discovering the mean ROI for PG-13 Action movies was .1666255 or 16.67%, which seems reasonable. If an investor was to invest $100,000, they could expect an average gross return of $116,000 after the movie hits theaters. With a sample size of 468, we used the normal distribution and with 97.5% confidence to determine that the range for ROI on this type of movie would fall between .0899811 and .4232491. This is a fairly large range. But we can say confidently that the largest return on investment should be 42.32%.

 

Using the assurance of strong significance, and high coefficient strength of our regression models, we will use the same confidence interval testing on an R rated Horror film to test the strength of our first null hypothesis. We performed the same subsetting technique to attain a dataframe of only R rated Horror movies to gather a set of 173 movies. After removing two extreme outliers, the mean ROI was pinpointed at 2.6610 or 266.1%. The testing gave us 97.5% confidence that the range of expected ROI should fall between 113.89% and 646.1%.

 

Concluding, R rated Horror movies have a 97.5% confidence in producing a high of 646.1% ROI compared to the maximum potential of 42.32% of a PG-13 Action movie.
We can view this practically and justify the logic in Horror movies having the highest total ROI. When looking at the data it seems that horror movies can be made with relatively low budgets and yield much higher profit. Movies like Paranormal Activity and The Blair Witch Project (the two outliers we removed before confidence interval testing) are prime examples of this phenomenon. The Blair Witch Project cost only around $15,000 to make, but made $107,918,810 in box office revenue, a 7,193% ROI. This data will allow us to make the most informed decision in consideration for investing or merchandising.

 

Insights:

In analyzing the data, we uncovered that budget had the strongest significance and correlation to gross revenue.  Genre as a factor of budget, nor rating, influenced the gross revenue more than the budget itself but were highly significant subfactors.  Ratings of “R” and “G” along with genres of Action, Comedy, Drama, and Horror, had the highest significance when factored with budget to gross revenue, as depicted in the charts above.

As score and and votes would come after the fact, an investor or merchandising company looking to predict which movies would gross the highest revenue and consequently have the potential to yield the highest returns on product related to that movie, we would look to an “R” or “G” rated movie that is an Action, Comedy,Drama, or Horror genre specifically. This can be demonstrated by the movie “The Hangover,” which led to a major economic impact in Las Vegas.

In conclusion, while we have familiarized ourselves with the tools and theories of data mining for business applications, the most important lesson we have learned, has been to view data insights with cautious skepticism. We are confident that our regression analysis was accurate and that our data source appeared reliable; however, few of us are prepared to wager our professional reputations by advising a CEO to allocate millions of dollars of investor capital into the actionable insights that we are recommending. In the actual practice, we would be recommending finding alternate sources of similar data sets to verify these conclusions. In addition to our newfound perspective on the practical values of data mining, we are now prepared to temper future data sourced predictions with a managerial “P-Value”, named the “Group 6 N-Value” to represent common sense and intuition. We therefore recommend, that when proposed data sets lead us down a path of  assumptions based on high P and Adj R sq values, but contradict our own personal “N-Values”, we should first pursue additional data sets and alternate models to demonstrate, without doubt, that those high statistical probabilities are indeed replicable and justifiable in the abstract science of strategic management and consumer behavior.

Italian Assignments, Navigating Cultural Differences

Italian Assignments – Guidelines for Navigating Cultural Differences

University of South Florida

December 4, 2017

Todd Benschneider, Gabriel Bussell, Ali Dogan Sivritepe, Pam Sundown

 

Table of Contents

 

 

  1. Employee Responsibility and Preparing for Success
  2. Bureaucratic Tasks and Tips
  3. Anticipated Economic Adjustments
  4. Schooling for Children
  5. Transportation
  6. Housing
  7. Medical Care
  8. General Business Etiquette
  9. Effective Negotiation Styles
  10. Dress Code and Personal Fashion
  11. Dining Etiquette
  12. Gifts
  13. References

Employee Responsibility

Please understand that your assignment is first and foremost to serve as a corporate diplomat for your employer: Interglobal. One thing that is certain, you should expect that the progress toward your business objective to take much longer than you anticipate, so please adjust the timelines of your assignment objectives to accept these differences, a good rule of the thumb is U.S. estimated timeline multiplied by 2.5 (20). It will also benefit you to resign to the fact that controlling your Italian business partners sense of urgency or work ethic will usually damage relationships. With that stated, your first task will be to adapt your pace to the Italian partner’s timeline.

 

In addition, it is your duty to understand the Italian’s “Ugly American Stereotype”, and avoid reinforcing any negative preconceptions such as: Americans are rude, self-righteous and condescending towards their Italian hosts. It is imperative to understand that over 30% of American expats abandon their first foreign assignment in the first twelve months, the high failure rate is easily reduced by intensive culture preparation like the training course you have been provided (20).

 

Another obstacle in cultural acclimation is the preparation of your family for the assignment, which is why they will also be participating in preparatory conditioning for the cultural adventure the family is about to embark upon. Success on a foreign assignment will prove your resourcefulness and adaptability and be an important stepping stone in the advancement of your areas of responsibility here at Interglobal.

BUREAUCRATIC REQUIREMENTS FOR YOUR EXPAT ASSIGNMENT

For Italian work assignments that last longer than three months, US citizens are required to obtain a “National Work Visa”. Most companies handle the application on your behalf; however, the approval process usually takes six to nine months; therefore, it is imperative that you follow the status of the application and understand your company’s policy. Family visas are comparatively simple to acquire after your National Visa has been granted, your family will only require a written request and valid passport to join you (12).

 

Depending on the living arrangements provided by your employer, you will probably need also to apply for a residency permit to rent or purchase a home. With a residency permit, you will need to apply for tax number, this number, much like a social security number will be required for many routine family needs such as obtaining insurance or healthcare (12).

 

In addition, most expats learn the hard way that their U.S. mobile plan does not transfer to Italy and that roaming charges can rack up a frightening bill unless you modify your plan to an international package prior to your arrival. For business purposes it is standard to have a prepaid Italian SIM card installed on your mobile phone which can convert your current smartphone to a local Italian phone number. When you want to switch back to your American number, you just swap back to the original SIM. A popular technology in Italy has become dual SIM mobile phones that allow you to carry two independent phone lines on a single phone, one as your personal number and the other as your work number (19).

 

ANTICIPATED ECONOMIC ADJUSTMENTS

The cost of living in Italy is not significantly higher than in the US, but the regionally adjusted income to cost of living equates to around 50% higher depending on region. The first observations many expats realize is are larger pay gaps between junior and mid-level managers, this may be a factor of the Hofstede Power Distance Index of 50 compared to the US score at 40 (9). The Hofstede-insights.com website is a valuable tool to use in understanding international cultural differences. For example, Italy pays its young workers the lowest entry level wages when compared to its western European neighbors, you can expect to find students from with excellent academic credentials hiring in at a 2016 average starting pay that equates to $32,500. In contrast nearby Switzerland offers its new graduates an average starting salary equal of $99,300. In the United States you are accustomed to working with young college graduates that typically hire in at $50,200. Fortunately for our prospective mid-career expats you will learn that Italy uses the money saved on young employee salaries to compensate older workers. While still at 11th of 15 western European countries Italy pays its mid-level supervisors the equivalent of $84,100 annually, which climbs quickly as you climb in the corporate ranks (14). These salary differences are partly cultural and due to the fact that Italy has limited resources that impact its current potential GDP. On the following page are detailed comparisons of each region’s major city with cost of living compared to Tampa. You will notice surprisingly inexpensive rents but low local purchasing power due to lower average salaries and higher tax rates (13).

 

 

Milan’s Local Salary Purchasing Power is 50% lower than Tampa’s

Rome Local Salary Purchasing Power 49% Lower than Tampa

Naples’s Local Salary Purchasing Power is 59% lower than Tampa’s

 

 

SCHOOLING FOR CHILDREN

Most expat families send their children to international schools to alleviate the challenges of mastering academic fluency in a second language. The benefit of attending an accredited international school, is that these institutions provide a standardized coursework that transfers into other international locations and can increase chances of being accepted into the most selective international universities (11).

 

In Italy, schooling is broken into three cycles plus kindergarten, which begins with three years of optional kindergarten through age six, then a mandatory elementary school through age 11, during this cycle Italian education system requires all students to learn two foreign languages, the first is typically English which is introduced while children are seven years old, a second foreign language is required at age eleven (7).

 

Following the elementary school cycle, Italian children enter middle school for ages eleven through fourteen. At fifteen they begin the third cycle that we call high school which they are required to take an admission test to qualify for the academic courses to prepare them for the universities. If their academic skills lag their peers, they will typically be assigned to a vocational training school rather than a high school (11).

 

 

 

 

TRANSPORTATION

You should plan on relying on public transportation for the first several months, since you are legally required to carry an International Driving Permit to rent a car. In addition, expect to pay about 60% more for gasoline, however on the bright side, Italians also drive on the right side of the road and most major highways have no speed limits (7).

 

Public buses and trains are the most affordable and reliable mode of transportation in major cities, many expats use the iBus line.  Fortunately, Uber has become very popular in Italy’s major cities in recent years and is often the most affordable mode of transport in many areas, however the Uber network is not well developed in smaller towns (7). Unlike Uber, many taxi drivers will frequently take advantage of foreigners by insisting on payment much higher than the meter reading (7).

 

HOUSING

While many of you will be taking advantage of housing provided by the company, some may choose to explore alternative housing, especially those who find a work from home culture. In Milan and Rome, many prime apartments are being bought up by investors and utilized as AirBNB rentals, which is a type of personal Home to rental Hotel room application that works on a similar principal as Uber as does for personal transportation, this trend is creating a shortage of small apartments with a view of the city (12); however, it is an excellent way to rent for a short while in different parts of the city prior to signing rental contracts.

 

 

MEDICAL CARE

Italian employers are required to contribute to the government health insurance of their workers. Unemployed and retired are covered by the government plan which ensures that as a nation, Italians are well cared for. In comparison to other overseas assignments, Italy provides some of the best healthcare for its residents, including expats. Expats may want to consider private add-on insurance to expedite the timeliness of their medical care visits, especially on assignments where they may not qualify for the host company insurance provisions. As a general rule of thumb, medical attention is given to all regardless of insurance coverage, add on insurance speeds the process and covers most items not covered by the government health insurance. Consult with other expats in your region for their recommendations on medical centers that are familiar with the expat health insurance requirements (12).

 

GENERAL BUSINESS ETIQUETTE

As a rule, Italians have difficulty trusting strangers and most business relationships require and introduction by a third party from the host culture. It is generally considered unprofessional to approach executive level business partners and introduce yourself to begin pitching them your ideas, instead you would normally be introduced to them by someone of similar rank that vouches for your expertise and trustworthiness and begins the conversation for you mentioning your expertise on solutions (10).

 

While English is often the preferred second language of Italian international firms, you should understand that most professionals expect you learn Italian to be accepted into the inner fold of office politics. The Italians are very proud of their heritage, language and culture, and have a hard time building relationship with foreign business associates that are not interested in learning their language. Remarkably, even if you have a mastery of the standard Italian dialect taught to American students, you should expect to be puzzled by the countless number of local dialects that distinguish one region from another (8).

 

NEGOTIATION STYLE

Overcoming the differences in negotiation styles between the American approach that you might take for granted and the decision-making processes of your Italian counterparts has the potential to make or break your success on the assignment. In the first year on your Italian assignment you will wise to negotiate using a host country assistant since mistakes made during this period can cause long term damage to your relationships. You can expect to have a difficult time gaining access to decision makers above your own rank, in the Italian business world, the decision makers are rarely in the meeting where the negotiations take place, because of this you can expect that no hard decisions are normally made during the meeting. You are simply presenting your side and responding to their objections, the junior associates at the meeting will relay the information to the decision makers and who may mull over the proposal for months before responding that they are interested (22).

 

In Italy, decision makers are expecting to deal with someone their own level of seniority, so if you are under 35, it will be wise to reconsider representing yourself in the negotiations, the Italians can feel insulted that they are not dealing with your boss, even if you are the sole decision maker. With that in mind, if the Italians send older representatives to the negotiating table, be certain to address them first, last and with a great deal of deference, even if you are unsure that they are the true decision makers.

 

Italian corporate culture typically requires that a respected host country executive introduce the interested parties, during that introduction day, avoid talking business unless a senior member of their team specifically brings up business matters. Expect several weeks to pass and several visits before the prospects bring up business. It is at these critical points that you be patient and respect their business traditions, this is an area where many Italians expect you to turn into “an ugly American” and try to rush them into viewing you as a trusted business partner. Your Italian partners feel that high pressure tactics are an indicator that they are being tricked into an agreement that is not in their best interest, by instead drawing out the agreement they are comforted by the fact that you are comfortable with them looking at your proposal at every angle. Once they see that you have their best interests at hand when proposing what should appear to be a “win-win” collaboration of resources in your first few agreements your future partnerships will progress with less effort (22).

 

Italians will avoid being direct and often ignore your demands for an immediate acceptance or refusal of terms. It will be rare to hear host country partners use the word “No” during negotiations; instead, they will change the focus to a different part of the agreement or skirt away from business talks and ask about your family. Patience will become a daily mantra during your first year in Italy, without patience your business objectives will often fail to win the cooperation needed from your Italian counterparts. Compare the graphics below to gain a deeper understanding of the difference in the negotiating process (21).

(21)

 

DRESS CODE AND PERSONAL FASHION

Dress codes vary by region and climate; however, you can expect that your Italian coworkers invest a larger portion of their income in their clothing and spend a larger amount of time evaluating their wide range of potential outfits for the day at hand. At first glance you might be misled by the lower number of white shirt and tie dress codes than in the United States; however, if you look closely you may find that knit crew neck shirt is anything but a t-shirt, instead it could be a meticulously pressed merino wool knit that might cost several hundred dollars, the type of attire that Americans would save only for weekend social events.  For example, few American workers with salaries under $100,000 even consider purchasing a $500 pair of shoes or a $2000 handbag; however, it is common in Rome and Milan to notice that some junior level managers own several pairs of $500 designer shoes and a couple of $2000 bags, and what astounds most Americans is that they wear such expensive fashions to work on a daily basis. Forget about the American concept of “work clothes” being the ones that you are not concerned about getting soiled or torn. With that in mind, Italian business people take great care of their clothing, most items are professionally laundered after each day’s wear with the exception of wool suits which are usually hand steamed at home before returning to the closet. As for sneakers or sneaker inspired casual shoes, they are not often seen inside a business office, so when in doubt plan to limit your sneakers to the gym or the ballfield and the same can also be said of typical American jersey cloth sweat suits.

For women, take note that colored nails are uncommon, and makeup is light or often non-existent inside the workplace and is generally considered tacky and the hallmark of a stereotypical tourist. Instead of makeup, women invest their primping time into the preparation of their hair to achieve the best possible shape and shine. You will often be surprised as well to learn that even junior level females commonly spend $100 per week to have their hair care maintained by the countless number of highly respected salons across the major cities, in Milan stylists at the most elegant salons make over $100,000 year (19).

 

While women’s business attire might initially seem sexier than you might find in an American business environment, you will notice that it comes from Italian clothes to be form fitting rather than expose skin, so be cautious about the low-cut blouse or high hemmed skirt that is considered acceptable in American offices. You will later gain an overall perspective on where each culture places its discretionary income, when those Milan coworkers are shocked to learn that you had two $40,000 cars in your garage back in the United States at your pay level.

 

DINING ETIQUETTE

Italians take food very seriously, and take their time enjoying the food experience. When at a restaurant, it is not uncommon to spend several hours enjoying the company of those you came with. Expect to be at a restaurant for a minimum of 1-2 hours, possibly more, especially on Sundays. Each region, and sometimes even individual cities, have their own specialty dishes, so the best way to immerse yourself in the local culture is to ask your server about the specialties. A full Italian meal typically consists of an appetizer, a first course, and a second course with a side dish.

Most Italians drink mineral water and/or wine with meals and you can expect to see a charge on your bill even for tap water. Coffee is not served until after the meal. Italians usually eat late meals, where lunch will not start until approximately 1pm, and dinner not until 8pm. Nearly all shops and restaurants are closed for three to four hours between lunch and dinner; however, in large tourist areas, one may find restaurants open all afternoon. Because Italians spend significantly more time at restaurants than Americans, the server will almost never bring the bill to the table until asked to do so. In addition, table etiquette is similar to most countries in terms of utensil use. However, forearms (not elbows) should rest on the table, not on the lap, which is common in American culture.

Large tips are frowned upon in Italy; most wait staff are viewed as distinguished professionals and receive a respectable living wage salary. In most regions a “service fee” or table fee is included in on the bill which represents a built-in tip, in these situations it would be uncommon to leave an additional tip. Therefore, the most valued tip is enthusiastic praise to the chef and server. Ask your business associates for their recommendations on tipping practices in the area that you will be working, they will appreciate your concern for adapting your behavior to the local practices and be more willing laugh off any inappropriate mistakes made along the way.

GIFT GIVING

Italians like Americans have corporate restrictions on receiving gifts from vendors, so gifts are not expected from business associates, but are common when invited to a home for a dinner party. Typical gifts are inexpensive and often representative of your home country such as American liquors or chocolate, when in doubt flowers are suitable for any occasion, however avoid chrysanthemums which are used for funerals and never given an even number of flowers as it is considered bad luck.

 

REFERENCES

  1. Alm, J., Bernasconi, M., Laury, S., Lee, D. J., & Wallace, S. (2017). Culture, compliance, and confidentiality: Taxpayer behavior in the United States and Italy. Journal of Economic Behavior & Organization,140, 176-196. doi:10.1016/j.jebo.2017.05.018
  2. Business etiquette. (n.d.). Retrieved December 04, 2017, from http://businessculture.org/southern-europe/business-culture-in-italy/business-etiquette-in-italy/
  3. Cost of Living in Italy – International Living Countries. (n.d.). Retrieved December 04, 2017, from https://internationalliving.com/countries/italy/cost-of-living-in-italy/
  4. Curtis, M. B., Vinson, J. M., Conover, T. L., Lucianetti, L., & Battista, V. (2017). National Culture and Ethical Judgment: A Social Contract Approach to the Contrast of Ethical Decision Making by Accounting Professionals and Students from the U.S. and Italy. Journal of International Accounting Research,16(2), 103-120. doi:10.2308/jiar-51824
  5. Dining Out in Italy: How to Enjoy an Italian Meal. (n.d.). Retrieved December 04, 2017, from https://www.tripsavvy.com/eating-out-in-italy-1547406
  6. Doing business in Italy: 5 Tips for Foreigners. (n.d.). Retrieved December 04, 2017, from https://www.italybeyondtheobvious.com/tips-on-doing-business-in-italy
  7. Education and Transportation in Italy. (n.d.). Retrieved December 04, 2017, from https://www.internations.org/italy-expats/guide/living-in-italy-15326/education-and-transportation-in-italy-2
  8. Executive MBA IN Italy. (n.d.). Dictionary of Marketing Communications. doi:10.4135/9781452229669.n3250
  9. Hofstede, G. (2016, October 14). Country Comparison Italy vs United States . Retrieved December 04, 2017, from https://www.hofstede-insights.com/country-comparison/italy,the-usa/
  10. Inge, S. (2013, December 02). Six tips for Italian business etiquette. Retrieved December 04, 2017, from https://www.thelocal.it/20131202/six-tips-for-italian-business-etiquette
  11. Italian education system, italian schools, schooling in italy, Italian nursery school, primary schools in italy, italian middle school, high school, secondary schools in italy, vocational studies in italy, academic schools, Italian universities. (n.d.). Retrieved December 04, 2017, from https://www.understandingitaly.com/profile-content/education.html
  12. Italy Pros and Cons for an Expat Assignment. (2012, October 25). Retrieved December 04, 2017, from http://www.expatarrivals.com/italy/pros-and-cons-of-moving-to-italy
  13. Italy vs United States Cost of living Stats Compared. (n.d.). Retrieved December 04, 2017, from http://www.nationmaster.com/country-info/compare/Italy/United-States/Cost-of-living
  14. Local, T. (2016, February 17). Young Italian workers are among worst paid in Europe. Retrieved December 04, 2017, from https://www.thelocal.it/20160217/young-italian-workers-are-among-the-worst-paid-in-europe
  15. Miller, D., Breton-Miller, I. L., Amore, M. D., Minichilli, A., & Corbetta, G. (2017). Institutional logics, family firm governance and performance. Journal of Business Venturing,32(6), 674-693. doi:10.1016/j.jbusvent.2017.08.001
  16. Raspadori, P. (2011). Inequality and culture: geographical differences in the access to cultural enrichment in Italy (1863–1992). Continuity and Change,26(02), 219-241. doi:10.1017/s0268416011000105
  17. Rosch, D. M., & Haber-Curran, P. (2013). Learning Leadership Abroad. Journal of Leadership Education,12(2), 148-154. doi:10.12806/v12/i2/148
  18. Rosen, E., & Rizzo, G. B. (1961). Preliminary Standardization of the MMPI for Use in Italy: A Case Study In Inter-Cultural and Intra-Cultural Differences. Educational and Psychological Measurement,21(3), 629-636. doi:10.1177/001316446102100309
  19. Starr, G. (n.d.). Facts About Italy & Fashion. Retrieved December 04, 2017, from http://traveltips.usatoday.com/italy-fashion-13086.html
  20.   Expatriation: Why does it fail? (n.d.). Retrieved December 04, 2017, from http://www.expat-us.com/expatusblog-relocationusa/2014/9/2/expatriation-why-does-it-fail-
  21. Lubin, J. G. (2015, August 14). 23 fascinating diagrams reveal how to negotiate with people around the world. Retrieved December 04, 2017, from http://www.businessinsider.com/how-to-negotiate-around-the-world-2015-8/#italians-regard-their-languages-as-instruments-of-eloquence-and-take-a-verbose-flexible-approach-to-negotiations-6
  22. R. (n.d.). Negotiating styles in Italy. Retrieved December 04, 2017, from http://www.minorccbs.com/skills/negotiations/item/negotiating-styles-in-italy

 

StratSim Marketing Simulation

StratSim Automobile Industry Marketing Simulation Case Study

Todd Benschneider, Nadia Kaminskaya, Sam Mohammad

University of South Florida –  Dr. James Stock

July 8, 2017

 

EXECUTIVE SUMMARY

Current Marketing Situation:

As the Stratsim Automobile Industry simulation began, the market was split equally into four firms A,B,D and our own firm C. Each company produced three products, an economy car, a family sedan and a pickup truck. All three market offerings were priced identically for each competing firm and each product began with identical features and marketing budgets.

At the close of the game, team D was spending $610 million to generate a 13.2% brand preference. In comparison, our team C led the game with a 43% consumer brand preference a similar with marketing expenditures of $690 million. These final round numbers tripled the opening round’s baseline marketing costs of $215 million for all teams.
Market Environment:

The auto industry is one of the three largest industries in the U.S., which dictates the need for a well engineered marketing strategy and long term brand development consistency. The auto industry operates with little pressure of government regulations and relatively low expectations of social responsibility. Despite the lack of formal regulation, the industry operates in a conservative, understated communication of brand trumpeting.

 

 

 

Target Audience:

Our team targets the upper end of the mid-level market, middle class and high income families who prefer the most value for the dollar. Our customers compare product quality, performance and safety prior to comparing pricing. We aim for a broad spectrum of ages, from young singles and stylish economy cars, middle age families who desire larger, high performance cars  to those retirees who prefer a premium quality touring sedan. Our trucks, with their large size and powerful engines, are directed at small business owners and skilled tradesmen who view their truck as a symbol of their quality work and professionalism.

 

Distribution Channel Review:

The vehicles are sold through independently owned franchised dealers that share the advertising costs in their local market through advertising fees built into their franchise agreements. The dealers are rewarded through discounts and bonuses for achieving sales volume and customer satisfaction targets. Since the dealerships compete against each other over pricing and inventory levels, the dealer performance ratings diminish as overall dealer coverage increases. Profitable and stable dealerships attract the highest quality employees and provide customers with a better experience in both sales and service after the purchase. No vehicles are sold exclusively online or direct to consumers from the manufacturers. The barriers to entry and exit are great due to the capital requirements of billion dollar manufacturing facilities.

 

Marketing Goals and Strategy:

Team C creates a consistent and profitable demand by producing technologically advanced cars with above average performance and carefully tailored product features. Our brand identity is communicated with campaigns featuring quality, safety and performance. Through advanced feature and quality products, our vehicles are considered an investment that savvy buyers choose to protect their families from accidents and their pocketbooks from unexpected maintenance costs.

 

Action Plans:

Team C prioritizes the use of model specific advertising, with a heavy allocation toward direct marketing of vehicles to specific demographics. Brand value is enhanced by using dealer cash rebates, large negotiable dealer profit margins and supported consumer financing to allow greater affordability than the vehicle MSRP would suggest. The premium price point of the MSRP is the backbone of developing our premium brand image.
Budget:

Team C allocates triple the amount of budgeting expenditures per vehicle sold at nearly $300 per car in comparison to the budget brand marketing strategies. The large marketing budget is of little concern to a brand which averages a contribution margin of nearly $5000 per vehicle sold in comparison to $2000 margins of the low cost leaders in the market

 

Mission Statement:

Through manufacturing technology, we strive to produce vehicles on the leading edge of safety, quality, and reliability with our cars and trucks.

 

 

 

The Marketing Simulation Game Progression Timeline:

 

The StratSim marketing exercise simulated the competitive environment of four auto-manufacturing firms across a five-year span of customer and environmental variables, including interest rates, fuel prices, raw material costs and personal income levels. As each round progressed, the competing firms chose brand identity strategies, marketing budgets, product development, consumer research and financing strategies. The base round referred to as “the -1 round” set some standard industry average values to build an initial strategy from. The simulation was detailed and intricate with hundreds of options for cross industry analysis research studies of consumer preferences.  In the early rounds, the complex depth of the game took dozens of hours to comprehend and decisions from the early rounds revealed costly mistakes from poor consideration of the interactions the design costs, pricing and market targeting.

 

ROUND 0

Our team felt that we had an experience advantage in the game, with Todd’s experience in automobile sales and service, Sam’s six sigma and supply chain experience, and Nadia’s marketing talents. The experience of the team, however, did not automatically find quick success in competing against the other firms. In the early rounds we confidently rushed to decisions without fully testing the weight of each decision in the simulation’s “pro forma” estimated results. In fact, we did not fully understand how to use the pro-forma decision simulator until the 3rd round. In addition, during round zero we had miscalculated the due date of the upload and had only a partial collection of decisions uploaded. Fortunately the game automatically reloaded the values of the baseline round into any variable that we had not changed.

Our overall strategy was influenced by the game’s 5 year limit. Only 3 additional models of car could be introduced during the game and those would not go on sale until the 4th round. With the limitations of being unable to pursue a wide range of alternative models such as SUVs, vans, hybrids and sports car we chose to adopt a Honda style model mix, specializing in high quality, moderately equipped, safe vehicles at the upper end of the mid-level price point, all sold at a generous profit to both the dealer and manufacturer. We aggressively marketed our pickup truck, adding size and power to our model from the baseline. We noticed that the baseline contribution margins to the pickup were $5197 as opposed to the $1495 margin of the economy car, while the sales volumes between them were similar at 392,000 and 323,000 respectively. With a lack of other alternatives to cars, we expected to be able to double the sales volume of the pickup by carefully adapting our truck to the buying preferences uncovered in the consumer trend studies. Our intuition was correct and by the fourth round, we had nearly double truck volume and secured a number two ranking in truck sales at 749,000 units, despite being priced at $25,750, which was $2750 higher than the market leader that sold 859,000 with a large surplus remaining. The market leader had a slight advantage because we had run short of inventory in that 4th round; the game estimated that demand for our truck was 30% greater than we had produced.

In the zero round we decided our initial strategy was to begin major technology upgrades to our pickup, applying customer preferences gathered from focus groups, we increased the horsepower from 190 to 210, the size from 70 to 80 and increased interior, style, safety and quality all by two points. Fortunately, we did not notice that all those dramatic improvements had also increased the costs of building that now premium truck by 10%. Had we noticed the $2477 per truck increase in manufacturing costs we probably would have reduced the number of those improvements. Luckily, the results later revealed that truck buyers were willing to pay even 30% higher prices to get the features they wanted and subsequent studies later showed that customers wanted even more horsepower and size than our market leader. In later rounds, our truck was selling out of available inventory while trucks priced $4250 lower had surplus inventory even at half the manufacturing volume. The result managed to create the market position we had in mind to be a premium mid-level brand while the other three firms battled over positioning to be the low cost leader.

We also began a major upgrade to the cash cow of our models, increasing the size of the family sedan from 28 to 38 and horsepower from 145 to 165, we also increased the interior and quality by two points and the safety by one point. These changes increased the future cost of each sedan by $1702, which also was unnoticed by our team and would later haunt us in round two when the upgrades launched at the higher cost after we had lowered our selling prices to better compete with the battle among low-cost leaders. Later our larger sedan size added power commanded a large premium over the cost leader firms.

Planning to capitalize on the untapped market for larger vehicles in later rounds, we hoped to launch both a large family van and an SUV, so we began construction on another development center needed for the assembly plant. We later botched this idea because we did not notice that once the construction was complete on that center that we had to place the concept model into it to begin the 3-year production development. We did not notice what had gone wrong until the 4th round when it was too late to launch. This may have ultimately worked in our favor because the product would have been a poor fit for the 5th round’s consumer demand and complicated our predictions for an appropriate marketing mix.

For the zero round, we increased our price on the family sedan from $20,350 to $23,000, while increasing its marketing budget by 10%. We also increased the price on the truck from $20,498 to $22,500, nearly doubled its marketing budget and increased the dealer profit margin from 12% to 14% to encourage dealers to push the model. We maintained the price of the economy car and slightly increased its marketing budget. We chose to lower production levels by about 10% on all models to burn up round -1’s carry over inventory and test the waters of the higher price’s effect on sales volume.

An error that we made that probably cost us the first place ranking in net income was our choice to buy 500,000 in additional plant capacity to prepare for the later rounds when our new products went into production. That plant capacity cost us $3.57 billion, which we never fully utilized because of our lower volume higher profit strategy. Had the other two new models gone into production as planned, the investment would have allowed us to produce the adequate volume for the higher market share. However, because the added plant volume was never utilized, the investment cost us nearly two rounds of profit and reduced the performance of our otherwise superior round zero income statement to a paltry $1.2 billion despite our average contribution margin of $3830 per vehicle sold.

To finance the round zero investments we sold the maximum allowed stock issue of $3.5 billion and sold $6.6 billion in bonds at 5.5%, we used portion of those proceeds to pay off the $6.6 billion short-term loan that was accumulating 7.5% interest.

A mistake we also later regretted was paying $900 million in dividends back to stockholders rather than holding them as retained earnings. We rationalized that the standard 6% return to investors was needed to pump up our stock prices. Later we realized that holding that $900 million would have nearly doubled our annual earnings for the year. The contextual relationships among the costs and profits between 10 of millions and hundreds of millions and billions was difficult to grasp in the reporting format of thousands of dollars on some columns and millions on other columns rather than simple exact value.. Had it not been for the added plant capacity purchase and the poor choice to issue dividends we would have dominated round zero income statements among the competition through the strengths of our hefty contribution margins.

In round zero we also began our strategy to increase the number of dealerships. We maxed out the allowable by adding 48 dealerships and increasing dealer training to 14 million which equated to $29,167 per dealership compared to the $20,978 average default from round -1. Adequate dealership coverage was imperative to our strategy. Another mistake we had made here was our not understanding that adding all of these dealerships would be reducing the profitability of our existing dealerships if we continued to sell the same annual volume, this was later found in our low dealer ratings among the competition. Fortunately, we had increased the dealer profit margin as part of our marketing strategy, which offset a portion of the damage done by the oversaturation of dealerships. Had our original plan to launch two new models and grab a large share of the existing markets actually worked as designed the increased sales volume would have given those new dealers profits and allowed us the distribution network to outmaneuver competitors through community presence.

 

ROUND 1

Our initial strategy was to focus on the value seeker and family segments. After running some marketing research tests, those segments seemed to most profitable with our vehicle models at the time. We wanted to see what was important to those segments in terms of vehicle attributes. After running some focus groups and other market research, it was clear that there was an overwhelming demand for quality and safety with all the vehicles we made. Therefore, we invested heavily in technology. Investing in technology would allow us to have a competitive advantage over the competitors that stayed stagnant. In addition to revealing important ISSQ attributes, the focus groups also showed us consumer demands for vehicle size and engine power. We adjusted accordingly because we wanted to be proactive to market conditions – not reactive.

Another important part of our initial strategy was to begin developing new vehicle products to satisfy market demand for families. After conducting some market research like concept tests and perceptual mapping, it was clear that two new vehicle lines would mesh well with our brand image of serving families. We began development of a minivan and a utility vehicle, with the idea in mind that as families grew, more seating would be needed.

In round one, we paid the price for an overly optimistic production volume as we increased production of the family sedan to 603,000 and only sold 399,000. Our contribution margins dropped to an average of $2342 from round zero’s $3830 per car. Our marketing expense had attached a $400 burden to the cost to every family sedan sold and in addition, we lowered the price by $2000. Both changes failed to gain additional market share because teams B and D chose minor upgrades to their family sedan. Those minor upgraded sedans hit the market before our major upgrade at a $2000 lower price and captured the bulk of the family sedan market for round 1, even A team’s sedan was at the same specs as ours at a $2000 lower price. This left us with 250,000 unsold units that cost us 4.71 billion to build but not sell in that round, this would be compounded in the next round when our major upgrade launched, causing those 250,000 unsold units to be dumped at a large loss.

Another mistake along the way was that we had unwittingly put our economy car into the 3rd development center for a major upgrade that would add $500 to its cost, and in doing so prevented us from being able to add our van concept to the manufacturing plant. In hindsight, the minor feature changes that we made to the model could have been accomplished using the minor upgrade option and released from the development center a round earlier and given us another year of sales for the more competitive product. Another hindsight error we found, was choosing to reduce the size of our economy car from 12 to 8, while the 2E focus group in that round rated 8 as good for size, the same group later rated even 10 as too small for an economy car. The small size alienated the 2nd largest demographic for economy cars, the 4E customer, as well as overflow 2F buyers. We should have spent some more research money comparing the 10 or 11 size concepts in addition to comparing the needs of the 4E consumer focus group. In the following rounds, we should have retested customer preferences and adapted to the trend direction of larger economy cars.

Round one also saw damage done to the truck market, while holding our price to $22,500, team D’s truck was launched using a minor upgrade to the quality rating, gaining one point edge over ours and pricing at $20,499. While it was assumed that the D team would capture the market, they only produced about 1/3 of the demand volume, which allowed us to capture 400,000 in sales at a $2,000 per vehicle premium and finish above team D in profits.

Due to inadequate cash flow from round zero to round one, we generated a short-term loan of $1.688 billion, which we paid off by another $1.5 billion stock issue and an issue of $3 billion in bonds at 6.5%. Again, we made the poor choice in round one to issue $900 million in dividends as opposed to holding them as retained earnings, which lowered our real income from $1.13 billion to $203 million, pushing us down from 1st place to 3rd place in annual income. In nearly every measure of performance, our group C fell to near last place rankings.

 

ROUND 2

Here is a textbook example of how things can go wrong if the team is slow to learn the pro forma simulated round results. A multitude of mistakes combined with some rushed last minute decisions to set the semester record for most money lost in a single round at $3.4 billion. The largest mistake was not realizing that our major upgrades to the truck and family car went into effect that round, adding about $2000 per car to their manufacturing costs. In the same round, last minute reservations about our price point in the market prompted a revision to cust price increases by $1000 and to further drop production levels. The lower prices caused a sellout shortage exceeding 30% on trucks and sedans at minimal contribution margins as the market responding positively to the added features of the upgraded cars.  Adding to the poor performance was our overproduced stale economy car, causing a carryover production of 54,000 units that cost the round two bottom line $540 million.

Another misunderstanding was that the round one, carryover inventory of 25,000 family sedans would add to the income of round two. Somehow, in a manner that we still cannot comprehend, those units were sold at a loss and their income placed into round one profits. We expected those units to fulfill some of the round two demand and instead found ourselves underproduced by nearly 500,000 units in the family sedan that at a $3000 contribution margin would have generated another 1.5 billion in profits.

In round two financing, there was not a cash shortage, instead $500 million in stock was repurchased to take advantage of low stock prices caused by several rounds of mediocre income performance. Additionally a $2.5 billion CD was purchased at 3% interest because neither of the bonds were callable for an amount less than $6 billion.

Altogether, our heads are still spinning on how we could have made so many consecutive errors in cost to pricing and manufacturing volumes. We can only hope that the other teams makes similar mistakes before the game ends. However, we did learn from these mistakes.

 

ROUND 3

Round three is when we started to figure out where to go in the game to test pricing and predict sales volume. We read in the market news that car sales were expected to rise by 30% and therefore adapted our manufacturing volume, assuming that demand for our superior cars would lead us to victory. Fortunately, the demand for our large, high performance truck allowed for spectacular contribution margins of $6200 per truck and created an average contribution margin of $5176 per car sold of all our models. With confidence that several focus groups indicated that customers were willing to pay much higher prices than the recent market had expected, as two of the four automakers battled for low cost leadership, and the third wanted the middle ground in price point. In round three we lead the round with a profit of $1.131 billion and a second place market value of $15 billion, much of which could be attributed to a complete sellout of inventory which eliminates the cost of cars which get manufactured but not sold in the same round. All of our models had 30% higher demand at their pricing than we produced which meant that, had we been more confident in the appeal of our products we could have increased our income by over $2 billion with an adequate inventory despite being priced thousands above most of our competitors.

In round three, we repurchased $1.5 billion in stock with excess cash and bought a $3 billion CD. We cut the advertising back to try to maintain a marketing budget under $200 per car for each model as the focus groups showed little effect on expected market share for advertising above $100 per vehicle. We focused on controlling expenses and optimizing selling price to bring the contribution margins of the economy car back to $1500 per car sold, up from the low of $762 in the previous rounds.  In round, three we also did not invest in production or technology but stepped up on direct and social media marketing adding 20 million to each.

We also could not figure out why our dealer satisfaction ratings were lower than most of our competitors, we thought perhaps that we had failed to factor in enough dealer support. Our reaction to ramp up dealer ratings we increased dealer training and support from $20,000 per dealer to $210,000 per dealer. We were disappointed to find in round four that the additional spending had little benefit to our dealer ratings. We still failed to uncover all of the reasons for our low dealer ratings, but suspect that our lower sales volume was spread across a greater number of dealers, causing them to be less profitable than our competitors that had fewer dealer locations.

We also started to suspect that the competing firms have not realized that the cost to build the cars has gone up 8% in materials and labor; in addition, inflation has caused a 7% devaluation of the dollar since round zero. The steady price level on the economy car was becoming a costly liability of several hundred dollars for each car sold. We also noticed that our competitors have not reflected that market share does not equal total profit and suspect that they also had not been checking their pricing decisions against the pro forma estimator. In addition, the competition seemed oblivious to how much more the buyers were actually willing to pay, their strategy to hold prices near the -1 round was probably due to a lack of concept studies that showed that consumers were not as price sensitive as the competition believed. The competitors pricing also worked against us because we were competing against an unprofitable market. The odd thing to us was that only one of the other three competitors raised their prices when they saw us outsell them at 10-20% higher prices. The A team even dropped prices further than the beginning round started at.

 

ROUND 4

Round four’s decisions were based on news forecasts that gas prices would rise from $3.50 to $4.90 and real GDP growth will drop 1.5%. In a gas-crisis recession, trucks and larger sedans sales diminish considerably. In the real market, truck sales dropped around 30% in both 2008 and 2009 when fuel prices went from $2.90 to $3.57 with the least fuel-efficient like ours dropping 50%. Since the market news forecast predicted fuel prices to rise $1.40 we anticipated a 45% drop in demand for trucks and struggled to decide whether to eliminate all unneeded spending on product development and marketing to allow for the lower expected sales volume. In the real market history of vehicle sales there has never been an increase of even $1 average fuel price, so there was no historical precedence to predict the impact on the market mix.

Despite the predicted recession, the industry report expected sales to increase by another 20%; however, in round three we learned that historically these industry sales projections had been delusional optimistic. However, it seemed logical that sagging demand for economy cars would rebound, as consumers with long commutes would be forced into more fuel-efficient replacements. We expected our historical demand for economy cars to grow by 25% from 300,000 to 400,000 units and theorized that if the other teams did not increase production of the unprofitable economy car segment that we could capture half of the expected 1,300,000 new car market demand. If our competitors failed to recognize the changing marketplace, we could make a run at capturing a 700,000 unit share.

We pulled the sales trends of 2008 and 2009 to compare market direction and reasonable sales expectations. The wildcard in this round was the unknown, of new model market entrants, if any of the other teams would be launching new products that might take market share from the current players in each demographic. This observation greatly influences our pricing strategy. We could see that two of the other three teams had built the development centers to launch new products, but since they had not arrived by round four, we had assumed that teams A and B had made the same mistakes that we made by not transferring the concept prototype into the development center for production in round one. In hindsight, we should have begun our new concepts in one of the two existing development centers rather the new center because they would have launched in round three rather than round four since they would not have to wait for the center’s construction to be completed. In addition, we decided not to release our minivan and SUV in this round because of the forecasted gas prices.

In planning for round five, we assumed that total car sales would decline 20% or 13000 units. We decided that we were at a disadvantage on the family sedan market because our sedan had the largest size and highest horsepower, which reduces its appeal in years of skyrocketing fuel prices. In an attempt to compete in the new marketplace, we chose a minor upgrade and reduced engine size by five horsepower, but in a contradictory move increased size from 38 to 40 and added one point to every other metric for more of a long-term plan than an actual recession strategy. We initially expected the arrival of large SUVs and vans by this round to fill the customer demands for larger models, it appeared that those demands remained and probably would offset fractional disadvantages in fuel economy. We were surprised to see that these sweeping changes only increased the cost of each sedan by $550; those changes aligned us with customer preferences from the focus groups, which indicated that customers would consider the specifications of the product to be a good value even at $27,000. However, we were nervous about how accurate those value expectations would be in an uncharted recession marketplace.

The other three teams were competing at $20-$22,000 pricing and we had been outselling them priced at $24,000 going into round four. Team B priced theirs at $21,700 and even had a better-rated sedan than ours, but failed to produce enough to satisfy the market which gave us their spill-off, allowing us to sell out with a shortage of more than 30% less than demanded. Team A sold only 642,000 sedans with a surplus remaining; in comparison, our teams sedan was a 957,000 unit sellout despite being priced at $4000 higher than the similarly rated A team product. The sales volume cannot be explained entirely by model features because the A team had already upgraded theirs to be within one point of our sedan on nearly every measure. We believe that the premiums that our sedan sold at were a result of its larger size and increased horsepower, in addition to a larger dealer network and higher profit margins allowed to those dealers.

At the beginning of round four, our team no longer held the same great advantages in quality, safety, style and interior ratings and we expected that the two of the other three teams would launch additional minor upgrades to mimic our products and market those models at much lower prices. In fact, the B team had substantially surpassed our ratings for safety in every model and surpassed us in quality in the sedan market and two of the three other competitors outscored our sedan in style. Only our truck held great advantages over competitors in the market and team B had even surpassed its safety ratings. All of these observations support the conclusion that model size and performance had dramatic influences on customer demand that were beyond the measures of quality, safety and style rankings.

The main priority of round five was to end the game with sellout inventory to maximize the income statement and prevent disastrous consequences of over-producing vehicles in a recession gas-crisis. Overproduction could erase the profits from all five rounds while underproduction could still generate a modest $1.2 billion profit and retain our $11 billion gains in accumulated market value. The question we wrestled with was how far to decrease production? It made sense to cut truck production in half even at the cost of half our annual profits, the truck carried a round three, contribution margin of $6100 and still sold out. However, our truck was the largest and least fuel-efficient vehicle on the market so it made sense that our truck sales would take a disproportionate brunt of the decline. We could not afford to have 400,000 units carry over past the final graded round, those 400,000 would equate to an annual loss of $8.6 billion in net income

Our team then had to estimate how many sedans to produce; while we had taken a 29% share of the sedan market in the 4th round, at 957,000 units sold. We were at high risk for the market trend to turn against our high-priced gas guzzler and leave us with a 4th place finish at around a 19% market share of a 30% smaller pie, which would equate to around 441,000 units. Our sedan had a $6100 contribution margin, so we could even lower our prices beneath the competition to hold a greater piece of our market share or we could retain our contribution margins and lower production to one-half the previous round’s sales. Either strategy netted similar results on the pro forma. However, total sales could surprise us and remain near constant with the migration trends away from trucks to carry into sedans, which may hold total sales steady in sedans, which could justify producing as many as 5 million units. The night before the final round, we were still planning on the conservative play of cutting total production in half. Another change in strategy was to change our advertising direction from “safety” to “quality”, since all three competitors chose safety and two of the three matched or exceeded our safety rating on the sedan. Only one competitor exceeded our quality rating and with the minor upgrades we should take a solid first place ranking in the customer hotspot of quality.

On the surface it seemed like a natural plan to nearly double production of the economy car, which historically gains sales in a gas crisis; however, we had previously only allocated 300,000 in production facilities to the economy line. The low manufacturing capability greatly increased our retooling costs to ramp up production, what we found was that due to the economy car’s low $1600 contribution margin, the added retooling costs ate up the additional profits that 300,000 in additional unit sales would generate. To add to the overproduction risk, our economy car was priced $2000 higher than any of our competitors economy products were priced at and the features we had built into the car prevented us from competing at their pricing. In order to generate the $1500 contribution margin, we needed the higher price but our features did not provide high enough ratings to justify the premium price. In addition, our small size showed that we had fallen out of touch with demand for larger economy cars. This smaller size 8 mini would reduce our ability to cross sell to the family demographic that was seeking economical alternatives to the sedan market in the recession economy. As with the sedan we were at risk to have our sales volume to drop in half which and stick us with $49 billion in unsold inventory.

We realized looking at the round four results that the competitors we beginning to surpass our ratings and we could no longer justify premium prices in a recession market, faced with two choices to lower our prices or perform minor upgrades to align with our premium brand image. We launched two minor upgrades that were cost effective due to our zero unit carryover inventory, the sedan changes cost about $500 of our $6100 contribution margins. In addition, we planned to lower prices somewhere between $1000 and $2000 per unit, with the lower price and the premium features it seemed unlikely that we could end up with a carryover of round five inventory.

Feature upgrades to the economy car increased the cost by about $250 but allowed us to justify our premium prices. The economy car we increased the price enough to offset the added production costs because we believed that our competitors would fail to produce enough economy cars to meet gas crisis demand and we would sell out from the spill off effects. Both upgrades also supported our overall brand image for producing premium quality cars and the changes would be a symbolic gesture of our long-term planning past the end of the game.

If we could only predict what our competitors had planned for round five we could adapt our decisions to offset theirs. If any of them launched upgrades, we would surely lose market share even if they increased their prices, we doubted that any of the three competitors would increase their prices by more than 10% as evidenced by their past aversion to price increases. We suspected that at least one of the competitors would fail to read the market outlook and see the impending recession and gas crisis, if so the truck market would be saturated with less expensive and more fuel efficient trucks. In addition, if two of the three competitors failed to see the switch to economy cars, the market would run short of demand, which could allow us to sell out of the economy model. However, the recession in the auto industry of 2008 and 2009 demonstrated that all product sectors dropped in sales, the economy sector only dropped by a lower percentage than the gas-guzzlers. If all teams maintained economy production, we would probably end up with carryover of our own economy car. This observation prompted us to hold our economy production steady and consider scaling back rather than ramp up production, it was lower risk and more profitable per unit since we did not have the added costs of retooling for increased production volumes. In the gas crisis of 2008 truck sales dropped; but, there remained at least some market demand for consumers who used trucks for work or did not commute far. With that in mind, we assumed that we could hold our market share and assume a 50% drop in the market demand; to reinforce our market placement we lowered the pricing on our trucks to become more competitive in case the recession market placed a heavy penalty on price points. As mentioned before, the $1.40 per gallon increase in gas would create market disruption at levels beyond prediction; it seemed possible though that the forecasts would prove to be far inflated from the reality of round five results. We could assume that sedan sales would drop 30% and that our share would drop further than the market. However, the results of round four indicated that we had missed the market demand by more than 30%, which meant that our true market share would have been 1.3 million units instead of 957,000. With that in mind a drop to 600,000 units of production seemed appropriate.

 

In the final hours before the 11pm deadline for round four decisions needed to upload we realized that overproduction would not actually hurt our net income line, they only cost us on the cash flow report. Most importantly we had discovered that we were able to simulate more income using inflated pricing to make large profits on what we did sell and let what did not sell roll into the round six liabilities. With this discovery we readjusted our economy car production from 299 to 450 units adding $1000 for a price of $13,650. We increased trucks from the half volume that we expected at 250 up to a more optimistic but still greatly reduced 450, but increased the price from the initial plan to discount the trucks and instead added another $500 to price it at a lofty $27,000, nearly $2000 more than prior round. We kept the sedan production at 770 which would represent a 20% decline in volume from the previous round; however, increased the price by almost $2900. The strategy had expectations of 50% carryover inventory but a higher income that would be reported on the round five results. Regardless, our downside  income exposure seemed capped at a $2 billion loss even if we sold nothing or a $3.5 billion gain if we sold out according to the pro forma estimates. The potential upside to get us beyond our $1.2 billion profit prediction that we were able to generate by playing it safe with lower volumes at lower prices, motivated us to take the risk and overproduce at the higher prices.

 

ROUND 5

Tuesday Morning results surprised us with only a 17% decline in vehicle demand overall, the worst drop of 25% in was in sedans instead of trucks which shocked us by posting a mere 17% drop in reaction to the $1.40/gallon increase in gas prices. Economy car sales only climbed 12% and we were amazed to see that our competitors had all scaled production back on their economy cars, possibly they assumed every other team would pursue the economy market and underproduce for the sedan market.

Our strategy worked and despite being priced $5000 higher than historical market price maximum, we managed to sell out of every model and even at that. But we still missed meeting the demand by another 30%. We once again gained the largest share of the market on every model except the sedan only to be nudged out by D teams version which sold 787,000 at a $5000 lower price and they were plagued by leftover inventory even at that price. In the end, our team was in first place in terms of

  • Stock price ($70.65)
  • Total shareholder return (15.8%)
  • Firm preference (43.3%)

 

CONCLUSION

The results of the game reinforced the the philosophy, that price alone rarely wins the market share in major purchases. In fact, features and performance at a premium price do not automatically correct the shortcomings of bare bones pricing either. Automobiles are unique products in their ability to generate sales through each customer’s self-identity. Similar to how many customers would not buy a Wal-Mart branded sneaker or jeans, few customers want their self-identity  to be represented by an unstylish entry level vehicle. The slightest perception of substandard quality becomes a product liability to marketers and pricing the product at the bottom of a market nearly ensures that consumer will perceive the product to be a poorly-made substitute to the average quality market offerings. Competitive advantage is imperative.

Customers at times will even pay a premium for the same product for simply being marketed as a more prestigious product. One example is a $4 Starbucks coffee compared to $1 gas station house brand. Or Bud Light compared to the nearly identically flavored recipe of Busch Light which sells at a 20% discount and only captures a mere ⅕th the volume of the Anheuser Busch’s flagship product. Perception is reality in marketing.

Our results proved that the two teams that battled for the lowest price were outperformed by the other two firms who marketed premium priced vehicles at higher MSRP. At times, especially in the 4th round, product ratings of B and D firms ranked higher than C team’s vehicles selling at a 15% premium. If buyers were strictly logical beings, C team should not have been able to sell a single car in the sedan and economy sectors, but we even outsold the superior lower priced competitors.

 

FUTURE RECOMMENDATIONS

We believe that C team should advance its premium place in the market moving slightly further into luxury brand identity from premium product placement. The margins allow high revenues at a lower market share which reduces our risk of overproduction losses and need for expensive capital production facilities. Premium retail prices can weather market downturns when parlayed into affordability through manufacturer subsidized financing and lease programs. Large rebates can also be added to the marketing mix to tempt the bargain hunters and those products can still be sold at respectable profit margins.

Once gas prices decline to average prices, the C team should release the premium featured large van into the marketplace to corner niche markets that are not met with competitors products. Two rounds after the van introduction, if positive results are generated by the product, we would release a mid-grade SUV to cater to family’s whose tastes run the middle ground between the  family and the truck market.

Our fundamental brand placement would be based on the a mid-level marketing, this would prevent alienating the more modest and proudly “sensible” consumers who would avoid products that are seen as pretentious and extravagant. Just as some consumers will avoid entry level products, a portion of customers will avoid products that seem excessive, regardless of the quality the product offers.

With this strategy of a balanced brand placement that can appeal to both the middle ground and the luxury markets, we plan to avoid the pitfalls of luxury market position while also providing the profits that provide the greatest return on investment. With these profits, we can continue to fund the product development to lead the industry into the fastest technology evolutions. With our superior products, we can better withstand market volatility in the future.

Pharmaceutical Price Points – Pricing the EpiPen

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Marketing Case Study: Pharmaceutical Price Points – Pricing the EpiPen

Todd Benschneider – University of South Florida – Dr. James Stock

June 29, 2017

 

Introduction

Mylan Pharmaceuticals gained front page notoriety in 2016 for its part in sweeping allegations of price gouging and Medicaid abuses among large pharmaceutical companies. Consumer backlash to the rising costs of healthcare fueled a hailstorm of media attention, spotlighting Mylan’s unprecedented price inflation of several older generic drugs. The Mylan product at the forefront of the debate was the EpiPen; an emergency treatment device that assists patients in self-administering adrenaline (epinephrine) during severe allergic reactions. The device had grown into a household brand over the 30 years since its introduction and EpiPen’s brand loyalty provided the foundations for one of the industry’s most successful, and now most questionable, brand revitalization campaigns ever launched.  The marketing vision began in 2007 when Mylan Pharmaceuticals purchased the rights to the EpiPen brand inside a $6.6 billion packaged deal of 434 generic drugs from Merck Pharmaceuticals. Shortly after the acquisition, Mylan began increasing prices by increments of 10% per quarter until the EpiPen’s price had grown by over 600% in ten years that followed (Darden).

 

Mylan management defends the increases, claiming to have invested over $20 million in product and distribution chain improvements since acquiring the product (Koons). The firm’s executives cite that former owner Merck’s initial price of $94 per package generated a comparatively low 8.9% net profit in 2007. Defendants of the price increases also argue that price adjustments were necessary to create a sustainable supply chain of the lifesaving medicine (Lee).

 

The combined sum of those arguments were unable to pacify the critics after an investigative report by Ben Popkin of NBC news revealed that “from 2007 to 2015, Mylan CEO Heather Bresch’s total compensation went from $2,453,456 to $18,931,068, a 671 percent increase. During the same period, the company raised EpiPen prices, with the average wholesale price going from $56.64 to $317.82 per pen, a 461 percent increase, according to data provided by Connecture.” In a historical pricing perspective of the brand, Bresch’s salary increases alone increased the cost of manufacturing the EpiPen by nearly $5 per package; which, when contrasted to Merck’s original pricing, would have cost the product nearly its entire profit margin. The attention garnered by the compensation of CEO Bresch, along with the observation that over 40% of Mylan’s annual profits were now being generated by the EpiPen price increases, compounded Mylan’s public relations woes as a symbol of management’s greed, drawing nationwide criticism on executive pay excess and pharmaceutical anti-trust laws (Bastick).

 

Today Mylan has arrived at a strategic crossroads in its marketing vision. The firm’s 90% market share of epinephrine injectors will certainly be jeopardized if revised pricing fails to satisfy expectations of corporate responsibility, and the potential loss of the EpiPen market could cost stakeholders $847 million in annual earnings (Ubel). In addition, the brand collapse would generate a multi-billion dollar capital value loss of resale value of the brand. Since EpiPen’s patents will soon expire, Mylan’s original plan to sell off the division for a fast profit would be hampered by the devaluation of the EpiPen brand name, rendering the manufacturing facilities, goodwill and marketing capital worthless to prospective buyers.

 

Background

Unlike other pharmaceutical structure pricing bands, the EpiPen injector pricing was relative to the mechanical engineering patents contained within its dosing syringe system, rather than the chemistry of its medicine. The generic hormone solution inside the applicator has been widely available for years at prices less than $2 per dose; however, the precision, spring-loaded application syringes cost approximately $35 to manufacture. Critics claim that excessive marketing spending under Mylan’s management inflated the total cost to manufacture, market and distribute the device, from $80 to as much as $450 per package (Popkin). EpiPen had enjoyed a unique advantage in the drug market, because its mechanical design the EpiPen had been protected through engineering patents which were outside the pharmaceutical anti-trust regulations of the FDA (Darden). In addition, the arrival of new entrants to the market had been limited by the historically low profits earned by these injection devices (Lee).

 

 

The patents alone however, did not allow for a market domination, Pfizer had patented a rival product, the Adrenaclick, which was released for exclusive distribution through Wal-Mart in 2010. The new entrant, however, faltered due to limited brand awareness and its restrictive distribution exclusivity to Wal-Mart stores. In two years following its introduction, Adrenaclick failed to capture more than a 7% market share, despite selling at a price point of 1/3rd that of the EpiPens. In 2012 the maker of Adrenaclick sold off its manufacturing equipment and the product temporarily left the market, under the assumption that the timing was not right to continue challenging the EpiPen for market share (Bastick). Internationally EpiPen competed against a French rival the “Auvi-Q” which was sold in Europe at around $100 per package; however, Auvi-Q initially chose not to apply for U.S. distribution due to possible U.S. patent overlaps with some of EpiPen’s design. The continued existence of this international competition in the injector market remains the driving force behind why EpiPen prices in Europe have remained near their original 2007 prices, at around 1/5th the price of EpiPens sold in the U.S.

 

Much of Merck’s pre-2007 decisions for U.S. price points near the $100 mark were justified by the international price competition of the French Auvi-Q. Merck management believed that if U.S. market profits grew too lucrative, that Auvi-Q would challenge its U.S. patent rights, generating a legal battle that would cost years of EpiPen’s profits along the way. In addition to Auvi-Q, a new rival was introduced to the U.S. market in 2005 named Twinject which was marketed at a lower price point, at the time, than the $90 EpiPen. With pricing influenced by anticipated market competition of 2007,  the 25 year old EpiPen line had been generating less than $17 million in profits from about $200 million in sales. Even Mylan executives had initially planned to spin off the EpiPen line from its new portfolio purchased in the Merck deal (Koons). However, CEO Heather Bresch saw a golden opportunity for the product and persuaded the board of directors to use EpiPen as a sample case for the future marketing of its generic brands. Mylan took on a revitalization marketing campaign and set its sights on capitalizing on the remaining untapped profits from its captive mechanical syringe market (Koons).

 

Pricing the EpiPen was a great challenge, since strategies in drug pricing are deeply complex; pharmaceutical makers are faced with a more complicated marketing landscape than manufacturers of retail goods. Prices for the same drug can vary widely from one country to the next, for example an EpiPen is priced in Great Britain at $69, in Germany at $190 and in the U.S. at $600. This variation among pricing processes reflects the complexities of distributing a product to meet a variety of competitors and price-influencing criteria in each market. For example in the U.S. the FDA along with private insurers utilize a market driven price allowance, in the spirit of capitalism, a drug maker can charge nearly any price for its products, a policy that is intended to draw new entrants into the market and drive prices down and quality up. In comparison, many European countries require an approved “reference pricing model”, which dictates the fair insurance reimbursement value of a drug is based on the costs of its alternatives. Some countries such as France include negotiable “price band” restrictions that cap the maximum price the drug can be sold at as an allowable percentage over the lowest price which the company sells the drug in other nations. Because of these price regulations some pharmaceutical firms choose not to distribute their products in highly regulated markets such as France and Switzerland (Rankin).

In 2009, the anticipated arrival of new entrants to the market became a reality when French rival Auvi-Q applied for North American distribution. Auvi-Q was expected to challenge EpiPens U.S. patent rights; however, Auvi-Q withdrew from the U.S. market entry after a series of safety recalls crippled their brand’s market value, they too believed the timing was not optimal to challenge the EpiPen for market share. Bresch’s strategy flourished by the subsequent delay of new competitors to the market and EpiPen found a growing market, even at much higher prices. The CEO’s belief was, that through an increased profitability of the mature market, Mylan had created an incentive for competitors to join with their own rival products in the final years remaining, until 2025, when the EpiPen patents would expire. The resulting lucrative margins created by the new higher prices would provide an improved resale market for the EpiPen division or the future licensing of its technology (Koons).

 

Mylan expected that the new players in the market would quickly drive EpiPen prices back to near its original $90 per package through price wars. During the eight year period of price increases, EpiPens previously stalled sales volume, even grew by 67%.  Mylan had successfully expanded the existing market by lobbying for revisions to school medical restrictions which had prevented school staff from administering the shots to students in emergencies. With the restrictions lifted, Mylan further lobbied for tax subsidies to donate free EpiPens to schools, increasing goodwill and lowering corporate tax burden by $600 per package rather than the $100 per package deduction which would have been captured in the previous price formula. The theoretically deductible donations allowed Mylan to pay an effective 20% U.S. corporate income tax rate in 2015, saving it nearly $100 million in tax liabilities (Lee).

 

Bresch’s short-term strategy was directed at harvesting larger profits in the U.S. market through price increases, brand recognition and distribution expansion for several years until competitors could mobilize new products. From Bresch’s long term perspective, once that competition arrived to the market, Mylan could sell off the EpiPen brand and its soon expiring patent protection to the new competitors. However, in the eight years that followed the campaign launch, the anticipated competitive price pressure never materialized, as both Auvi-Q and Twinject suffered public relations problems and financial difficulties during the recession which caused both competitors to withdraw from the U.S. market by 2014. Capitalizing on the limited competition, Mylan increased prices by about 10% per quarter per year, gradually bringing the price from $90 per pair of EpiPens to over $600 per pair.

 

Alternatives

Mylan executives forecasted the introduction of EpiPen rivals by 2010, however the recession and other unforeseen regulatory factors delayed the arrival of that competition by nearly a decade. Bresch defends Mylan’s aggressive pricing strategy, justifying the tactics by capitalizing on the opportunity to harvest an additional $600 million per year in profits for every year that competition failed to materialize. Executives such as Bresch could claim a fiduciary obligation to the investors to exploit market gaps for shareholder gain and to pad the company cash reserves to fund new drug products (Koons).

 

In addition, Mylan leadership claims that they did not believe that they were creating a public safety crisis of affordability, because the allergic reactions could be just as effectively treated with an economical alternative which utilizes a $2 syringe and $5 vial of epinephrine. They pointed to the low switching costs of those alternatives and pointed to the examples of emergency responders that had converted back to dosing patients from syringes in addition to the arrival of free clinics which guided the uninsured on the creation of their own emergency kits for a fraction of the cost of a preloaded EpiPen (Rankin).

 

Mylan’s leadership could not have reasonably anticipated the market’s reluctance to self-dose from conventional syringes. Bresch initially believed that the primary competitive advantages envisioned for the EpiPen were limited to small children who could not administer epinephrine through syringes and to schools which were only protected from legal liability by using the EpiPen or an approved similar device (Koons). Regardless of price, consumer’s fear of incorrect dosing or injecting air into their bloodstream stalled the advancement of self-administered syringes (Bastick). The media scrutiny chose not to address that the EpiPen price should have little effect on affordable healthcare since it is viewed by medical practitioners as a simple convenience, rather than a medical necessity (Lee).

 

The lack of mounting competition for the past decade could not have been foreseen by management either, as three attempts at injector market entry by other firms failed due to poor timing or marketing. The introduction of a generic EpiPen competitor by Israeli firm Teva Pharmaceuticals was also denied by the FDA in 2016 further diffusing competitive influences. However, in late June of 2017, the FDA approved the next major player in the epinephrine injection market, Adamis Pharmaceuticals introduced their own injector under the brand name “Symjepi” a cheaper alternative to Mylan’s EpiPen, but expected to price higher the Adrenaclick (Bastick). Auvi-Q has also been approved to market their rival injector beginning in 2017 and Adrenaclick and Twinject have announced their returns to the market.

In response to consumer backlash and the coming arrival of generic substitutes, Mylan has announced that it will release a generic version of the EpiPen priced at around $300 per package of two. Analysts suspect that Mylan will continue to donate the EpiPen brand version to schools for a write off of $600 per package to maintain their tax savings and continue to promote the EpiPen brand to those whose insurance allows for brand name premiums. Despite the announcement, Mylan has not been quick to launch the distribution of its half priced generic alternative (Bastick).

 

Proposed Solution

The arrival of the new competitors, the aging patents, along with the media scrutiny makes a clear case for drastically reducing the EpiPen price. It stands to reason that competition among new firms will drive prices back down to the mid-$100’s per package or possibly even lower by 2025. The inevitable loss of EpiPen’s mechanical patent protection will soon render the brand’s competitive advantages obsolete. The EpiPen brand appears to have run its lifecycle and while the marketing tactics of Bresch succeeded at capturing an astounding quantity of remaining value from the brand; a change of course is needed to salvage the remains of Mylan’s public image and diffuse additional conflicts with lawmakers. The negative publicity around the EpiPen pricing is a driving force that pressured lawmakers to fine Mylan $465 million in 2016 for exploiting a regulatory misclassification to increase Medicaid reimbursement rates. It is likely that regulatory backlash will begin impacting the future FDA cooperation of Mylan’s other products. Continued friction between government regulators and Mylan could delay the FDA approval of more profitable new products and increase scrutiny into other areas of taxation and accounting regulations.

According to Porter’s five forces, over the next 10 years, EpiPen will suffer the fate of many other mature, low technology products which survived by the slight advantages of their distribution chain efficiency and became unable to grow and generate premium profits through technology advantages. For a firm such as Mylan, their interests would be best served by directing their focus toward the development of new products rather than expending administrative resources on the low-margin, maintenance of a supply chain distribution in a mature market.

 

Recommendations

Selling off the EpiPen brand and facilities to rival Teva Pharmaceuticals seems to be the most logical course of action. Teva’s acquisition of a widely recognized brand such as EpiPen would gain them access to the U.S. market which had recently been denied to them by the FDA’s rejection of their competitive product. The brand development value to Teva appears to exceed the future earnings potential of the EpiPen division to Mylan and could allow the firm to negotiate a premium sale price. However, there is some friction remaining between the leadership of both companies after Teva’s 2015 failed takeover attempt of Mylan.

The logical course of action, would be to advise Mylan’s CEO, Bresch, to contact leaders at Adrenaclick, Teva and Adamis to locate the highest bidder for the sale of the EpiPen brand prior to Mylan’s own launch of the generic version. By leveraging Teva’s offer, Mylan may be able to tempt either Adrenaclick or Adamis to pay a similar premium price for the brand. In addition, by delaying the generic marketing launch, a new competitor could capture the generic market by utilizing their own marketing campaign budget already allocated toward their entrance to the market. By allowing the new entrants to control the price band, the strategy could allow the entrants to more efficiently gain control over the adrenaline injector market, allowing the fewer remaining players to enjoy greater profit margins. It should be expected that EpiPen’s $800 million in annual profits will soon diminish back near the $18 million level of 2007 in the face of international competition and public scrutiny.

 

Conclusions

Mylan’s success at capturing untapped profit potential from a low-profit, mature market provided a valuable case study in both brand management strategies and an application of SWOT metrics. While the long-term brand potential remained limited, CEO Heather Bresch demonstrated great insight by capitalizing on EpiPen’s remaining market strengths and leveraged those strengths through marketing to exceed all foreseeable expectations of profit potential for the lackluster brand. Some analysts calculate that Bresch harvested more than three times the profits from EpiPen in the 10 years at the end of its patent protected lifecycle than the profits from all of the other companies combined, that owned the product along the 35 years that EpiPen was on the market (Koons).

The negative press would likely have been unforeseen by anyone, since the catalyst for the media scrutiny was originally aimed at Turing Pharmaceuticals and its outspoken CEO Martin Shkreli for their price hikes on lifesaving AIDS treatments. Mylan’s own negative press exposure was viewed by many as unjustified collateral damage, which brought an unfavorable spotlight on Bresch’s strategy and may have accelerated the entrance of new competitors which had been waiting patiently to exploit the optimum timing to reduce switching costs for consumers (Lee).

The public relations opportunity that Mylan probably missed was to demonstrate an empathy toward the uninsured by launching a parallel campaign to provide a package of free EpiPens a year to the uninsured or low-income underinsured customers, rather than their chosen direction of providing “$100 off” coupons that were limited only to those with commercial health insurance. Mylan’s disregard for the underinsured struck a nerve with the low-income masses and fueled the media frenzy that surrounded the executive pay scandals. The public relations damage to Mylan’s brand value and the resulting lack of political cooperation that will follow could be estimated to cost several billion dollars in the coming years as lawmakers begin to apply their own pressure by withholding cooperation and avoiding any compromises that appear to benefit Mylan.

 

 

Exhibit 4. Expert Financial Analysis

Martin Zweig Analyst Commentary on Recent Financial Performance of Mylan: Guru Score 62%

P/E RATIO: [PASS] The P/E of a company must be greater than 5 to eliminate weak companies, but not more than 3 times the current Market P/E because the situation is much too risky, and never greater than 43. MYL’s P/E is 38.62, , while the current market PE is 19.00. Therefore, it passes the first test.

TOTAL DEBT/EQUITY RATIO: [PASS] A final criterion is that a company must not have a high level of debt. If a company does have a high level, an investor may want to avoid this stock altogether. MYL’s Debt/Equity (128.91%) is not considered high relative to its industry (152.29%) and passes this test.

 

 

SOURCES

“10 New Years Resolutions for the Pharmacy Industry”. 2017. Medreps.com

https://www.medreps.com/medical-sales-careers/10-new-years-resolutions-for-the-pharma-

industry/

Bastick, Erin. 2017. “EPA Approves EpiPen Rival”. Formulary Journal.

http://formularyjournal.modernmedicine.com/formulary-journal/news/fda-approves-epipen-rival

Lee, Jaime. 2016. “Mylan CEO defends EpiPen strategy, questions pricing model in the U.S.” MMM   

         Online. http://www.mmm-online.com/commercial/mylan-ceo-defends-epipen-strategy-questions-        

          pricing-model-in-the-us/article/576448/

Koons, Cynthia. (2015). “How Marketing Turned EpiPen into a Billion Dollar Business”. Bloomberg

          Business Week. https://www.bloomberg.com/news/articles/2015-09-23/how-marketing-turned-

the-epipen-into-a-billion-dollar-business

Mattingly, Joseph. 2017. “Drug Price Wars, Episode VII: The General Assembly Awakens”. Mattingly  

            Report. https://www.mattinglymanagement.com/2017/02/generalassemblyawakens/

Popkin, Ben. (2016). “Mylan’s CEO Pay Rose over 600% as EpiPen Prices over 400%”. NBC News. http://www.nbcnews.com/business/consumer/mylan-execs-gave-themselves-raises-they-hiked-epipen-prices-n636591

“Pricing the EpiPen: This is Going to Sting”. (2016). Darden Business Publishing University of Virginia.

https://cb.hbsp.harvard.edu/cbmp/product/UV7186-PDF-ENG

Rankin, Peter. 2014. “Global Pricing Strategies for Pharmaceutical Product Launches”.

www.pharmaceticalpricing.com Sourced:

https://www.crai.com/sites/default/files/publications/Global-Pricing-Strategies-for-

Pharmaceutical-Product-Launches.pdf

Ubel, Peter. 2017. “What is Maddening About Pharmaceutical Prices”. Forbes. 

          https://www.forbes.com/sites/peterubel/2017/04/28/what-is-maddening-about-pharmaceutical-

prices/2/

Zweig, Martin. 2017. “Mylan Guru Performance Assessment”. NASADQ.

http://www.nasdaq.com/symbol/myl/guru-analysis/zweig#anchor2

 

Marketing: AccorHotels – Leveraging Online Content

content strategy  

AccorHotels Case

Todd Benschneider, Nadia Kaminskaya, Sam Mohammad

 University of South Florida

26 June 2017

Dr. James Stock

 

AccorHotels Case

       Over the past decade, technologies like smartphones and the internet have evolved rapidly. These advancements have ushered in new ways for consumers to buy from and communicate with businesses. AccorHotels, one of the most renowned hotel corporations in the world, is trying to find ways to keep up with the new demand for online presence and e-reputation. Olivier Arnoux, SVP Customer Experience and Satisfaction, has two weeks to present a plan for integrating a digital platform strategy into Accor’s brand image.

AccorHotels

50 years ago, owning and running a hotel consisted of a completely different dynamic which relied on travel agents, connections, and customer feedback cards. Today, the hotel industry has evolved into its very own beast. Consumers are informed, you can book a hotel with a click of a button, and you can customize your experience as you like. Today AccorHotels has over 4,000 hotels, 570,000 rooms, and is located in 95 countries.

As the dynamics of the hotel world changed, so did the leadership. In 2013 AccorHotels appointed Sebastien Bazin as its fifth CEO in 8 years. With Bazin AccorHotels embarked on a new strategy that was asset-light in certain markets but at the same time actively buying new properties in emerging markets. The new strategy separated AccorHotels into two business units with separate balance sheets: HotelInvest and HotelServices.  Accor’s hotels spanned all the major market segments – economy, midscale, and luxury/upscale. The major focus was on midscale which had a combined portfolio focus of 45%, economy was second with 39% , and luxury/upscale was 16% (Dubois).  With all of the changes AccorHotels has tried its best to keep up, the analysis of their 50 years to today shows the extensive changes in the lodging industry.

AccorHotel’s 50 Year Perspective of the Lodging Industry

     Imagine the business landscape of the lodging industry during Accor’s entry to the market in 1967,  in contrast to the data rich industry of today. Across that 50 year divide, Accor has successfully adapted to countless changes in the ways that customers interacted with hotels and how those hotels generated profits. Nearly every aspect of the host to guest exchange has changed since 1967, customer preferences have evolved through many changes in value perception as well as the emotional processes which influence prospects to choose one hotel over another.

    Convenience was a driving factor in the late 1960’s, but a convenient payment infrastructure remained absent for another 20 years. The lack of a remote payment system limited a hotel’s ability to collect reservation deposits. While credit cards were in use by 40% of U.S. households in 1967, their utilization for telephone reservations was restricted by the banking regulations of the day. Credit Card Companies required card imprints and physical signatures on those imprints, a process that limited a hotel’s ability to enforce cancellation fees (Durkin). The lack of a practical remote payment method created a “first-come, first-serve” market where fewer than 20% of hotel rooms were, on average, booked by reservation in years prior to 1970 . Since the internet would not arrive until three decades later, guest communications were handled by mail or a phone call from the customer’s home to the exact hotel branch. Centralized nationwide 1-800 reservations centers would not become widely used until the late 1980s (Bearne).

    Mobile phones remained an additional two decades away from improving communication convenience for travelers, so hotel customers stopped along the travel route to make calls to the hotel from a payphone to cancel reservations if there was a change in their travel plans. Because of these logistical obstacles many hotels routinely rented rooms out from under those who held  reservations once the recommended 6:30pm check-in had passed. The limited communication and payment options contributed to a hotel market that was driven by its location, billboards and highway visibility. In comparison, 45 years later the mobile phone tapped into the internet and instant access to price and vacancy were found with just a few finger swipes, no matter where the customer was located. In fact today many travelers double check advertised room rates and make modifications to their reservation “online” while they are waiting “in-line” to pick up their keys from the desk clerk  (Benschneider).

1970’s: Sales Pressure Success and the Leverage of the Escalation of Commitment

    From the 1960’s through the 1980’s, the typical traveler would choose a hotel after arrival to their destination, often stopping for pricing and room availability at several hotels prior to making a decision amongst those local competitors. In that period of the industry, location, brand reputation, lobby appeal and desk clerk’s salesmanship were the influential factors that differentiated local competitors. Interpersonal sales skills were greatly valued traits in desk clerks throughout the 70’s. In those years, desk-clerk sales practices for mid-level to luxury brands included a tour of the hotel and a visit to the room prior to the presentation of  the exact rate quote for that room.. Sales bonuses were a standard employee incentive practice, paid in proportion to the desk clerk’s prospect to guest conversion ratios in addition to their average “room-price” booked. Consumer criticism about wide deviations paid between guests reflected the low bargaining power of hotel guests and prompted regulations requiring maximum rate cards to be posted on the inside of each room door (Bearne).

    The sunken time investment required to get a precise rate quote and hotel tour deterred those tired travelers from comparing more than two or three hotels. Much like the car buying process today, deliberate sales tactics stalled the customer at the front desk for as long as possible before quoting the nightly rate, if the customer balked at the rate, savvy desk clerks were trained to ask the prospect for memberships and organizations they might belong to, that might “entitle” them a “preferred rate”. If the customer interview revealed them to have “no qualifying memberships”, the clerk would further detain the guest by “paging a manager” to request an “unprecedented one-time rate discount”. Research of the period studied the buying behaviors and documented, that through the psychological “escalation of commitment principle”, that each minute a guest remained in the hotel past the 10 minute mark, the odds exponentially climbed that the guest would agree to the rate, succumbing to the inertia of the stop, rather than continuing down the road to compare rates at the next hotel. Oftentimes, the guest would relent to the convenience of location, renting from the third hotel even when they preferred the first. The stresses of driving back to find the first hotel again in an unfamiliar city without navigational guidance outweighed the benefit of renting a better room. The convenience appeal of renting from the current hotel rather than the next stop hotel on the guest’s comparison list allowed larger margins as the bargaining power of consumers was very limited in comparison to modern online price comparisons (Harrington).

Late 1970’s – Advances in Telecommunications Improve Bargaining Power of Consumers

     Simple long distance telecommunications technology similar to fax transmission networks provided the infrastructure for the growth of travel agencies in the late 1970s. These agencies enabled reservation cancellation penalties by accepting the cash or check payment locally, while guaranteeing payment to the destination hotel through a commercial line of credit. The technology spawned the arrival of discount programs for travelers who prepaid. Travel agencies popularity also grew in popularity through the arrival of more affordable airline travel. A travel agency’s main products featured intricately designed “travel packages” which bundled specific hotel and airline combinations. Travel agency services dominated the long-distance travel and tended to direct the guests to those hotels which offered the largest agent commissions, regardless of brand recognition, location or lobby appeal (Bearne).

    Airline travel was considered a luxury product at the time, a service with enough margin to provide handsome commissions back to the travel agents, allowing those successful travel agents to enjoy respectable earnings potential until the mid-1980s. The bundling of hotel reservations into airfare packages allowed airlines to circumvent the FAA regulated minimum airline rates which contained large profit margins to prevent price wars between airlines. Until airline deregulation in 1978, airlines routinely offered kickbacks to hotel chains in exchange for discounts on bundled room rates to package into their travel services, these discounts allowed airlines to circumvent the regulated minimum seat prices and undercut competitors to gain market share. In addition, the customer’s inexperience with air travel,  reduced the percentage of customers willing to purchase their tickets in person through the airline kiosks at airports (Highly).

     The expensive risks of booking incompatible connecting flights among competing airlines deterred even the most experienced travelers from self-booking air-inclusive travel plans. Most travelers chose to employ a professional travel agent, their expert guidance also provided a guaranteed delivery of the travel contract, as the agency, hotels and the airlines cooperated to insure the fulfillment of the itinerary. Those guarantees were influential at a time when a round trip cross country airline ticket cost nearly a month’s wages. In inflation adjusted dollars, the lowest possible price for a round trip, red-eye connecting flight from New York to Los Angeles was $1444 in 1974, where today that same ticket can be found as a direct, round trip flight for under $400. The bargaining power of the airline industry supplier’s in that period justified large travel agent commissions and airline subsidized hotel rates. With the guaranteed income from airlines and travel agencies, hotels were less dependent on the street level consumer that arrived seeking lower room rates and competitive hotel amenities. The efficiencies of a demand influenced hotel industry were diffused by the travel agents influence on demand (Thompson).

1980’s: Credit Card and Airline Deregulations Increase Customer Bargaining Power

     A loosening of credit card regulations arrived in the 1980’s that allowed hotels to take payment in full or charge enforceable cancellation fees over the telephone. Those remote electronic payments in combination with the prior airline deregulations of 1978 enabled customers to book their own airfares by phone, bypassing the travel agents who previously held a captive market in airline ticket sales. These changes allowed travelers to cherry pick their precise wants on each day of their trip rather than accepting a plain vanilla bowl of prepackaged hotel offerings, the changes in payment infrastructure resulted in the improved bargaining power of hotel customers (Durkin).

    Hotels began to produce color catalogs listing their locations in a state by state directory with actual photos, contact information, local maps and advertised nightly rates. This fresh recipe provided a consistent and convenient platform for travelers to prepay their reservations for added discounts. The publication of room rates in directories allowed consumers additional bargaining power through the quick comparisons of dozens of hotels near their destination, a factor that allowed hotels with less desirable locations to compete with those flagship hotels in downtown areas. Travelers began to frequent hotels that were located between their destinations rather than at their eventual location to lower the overall expense of their trips. Subsequent hotels were built on the inexpensive real estate along rural stretches of interstate highways. These rural hotels were not only less expensive, but also offered ample parking and relief from the stresses of comparison shopping hotels on the busy downtown streets of unfamiliar cities (Benschneider).

1990’s: Mobile Phones and the Popularity of the Travel Clubs

   The early 1990’s brought the arrival of the mobile phone in addition to an increased consumer confidence in paying by credit card over the phone. These market changes fueled the introductions of travel clubs which provided catalogs that featured detailed state maps which soon replaced conventional travel atlas’ maps. These travel club catalogs highlighted their participating hotel partners and those hotel locations within both state and local maps.  The catalogs contained new driving-directional details which lent themselves well to attracting mobile travelers looking for the least-expensive hotel nearest a particular exit of a highway. Travel club popularity grew quickly, pioneered by Citi-group subsidiary, Citi-Travel, which was the 1990’s incarnation of Priceline.com, the club functioned like a wholesale club, leveraging the bargaining power of millions of members to pressure hotel’s into deeper discounts. Travel clubs featured the participating hotel’s names and addresses as well as their discounted member rates, amenities and distances to major attractions. The 1990’s catalog approach to hotel marketing brought changes to hotel construction and location in order to create offerings that most importantly “looked good on paper”(Bearne).

    In order to utilize the travel club system, members normally paid fees from $100-$250 per year in 2017 dollar equivalent. In order to buy at the “member rate”, customers were required to call a central 800 phone number to request reservations, even if they were already standing in the hotel lobby. This captive reservation system ensured that the travel clubs would be paid their commission on the booking. The club’s hotel catalog was arranged by city and sorted by rates from low-high, a factor that strongly incentivized hotels to shave their margins thinner to capture a larger percentage of the members passing through their city. Travel clubs pre-negotiated rates resolved the variable hotel rate shell game that travelers found distasteful. To combat the leverage of travel clubs, hotels introduced rewards clubs and credit cards that required customers to book their trip direct to the hotel rather than through a travel club. Room rates for “rewards club members” and were similar to the discounts of the travel clubs but pressured the customer to use their company rooms throughout a trip. The publication of those discounted rates laid the foundation for ever increasing bargaining power of customers, in a formula that would later evolve into the travel booking websites of today (Bearne).

Today’s Lodging Market

     In the current U.S. lodging market, hotels are enjoying the highest occupancy rates since 1984, with an average occupancy rate of 66% for 2016 (Edelson). Accor and most other chains have reduced on their reliance on Online Travel Agents (OTA) such as Expedia or Travelocity which still provide about a third of their bookings while currently a quarter of the average hotel industry bookings come through the corporate hotel websites, roughly 10% of bookings are made by inbound phone calls and the balance are a variable and wide mix of rewards clubs, organization referrals and repeat customer walk ins (Edelson). Accorhotels will need to plot their course into the 2020’s, allocating resources to hold or grow their market share utilizing search engine optimization and organic social media brand recognition  We will answer the questions on how Accorhotels can enhance their “Online Travel Agent” relationships, harvest brand value through social media and integrate loyalty rewards clubs. In addition, we can demonstrate how the supplementation of conventional strategies such as charitable contributions and alternating waves of well-designed television, billboard and print advertising can increase in effectiveness when leveraged across online platforms.

       Today, brand recognition for a company is heavily dependent on search engine rankings with those most searched brands returning the highest in search engine results. Search engine optimization, the ability for a company to climb higher in the search engine results, for as an example “Best hotel in Tampa?” is dependent on web traffic that refers to “Hilton, Tampa” or “Accor Tampa”. If web mentions of “Best Hotel” are most often correlated with AccorHotels Tampa than “Hilton Tampa” than the Accor results will show up nearer the top of the page in a search. For a company to fully optimize its search engine rankings, it must depend on consumer posted references of its brand name which have greater influence on rankings than those from corporate public relations websites (Perrin).

    In the internet marketing world, a company that utilized its name brand in most of its products such as “Disney” will have a search engine advantage over an equal sized company that has diversified its brands into independently named products; for example Coca-Cola=Coke, Sprite, Mello-Yello, Barq’s,Seagrams, Nestea, Dasani ect… In an internet optimized world, a hypothetical soft-drink company would be best served to use the word “Coke” in all its offerings and advertising such as Coke-Lemon, Coke-Root Beer, Coke Tea ect to leverage its brand strength in web searches. Today, cost-effective marketing campaigns include the parent brand along with the subsidiary brand name mention in the post titles to pull in larger share of search results. Search engine keyword selections dictate how search engine steer web traffic down the path to the desired content and repeated use of those keywords train search engines to direct similar searches to the intended online content (Campbell).

 

Competition

AccorHotel is one of the largest international hotel chains in the world. The company’s biggest competitors include Starwood, Marriott, Hilton, InterCon, and Wyndham (Exhibit 2). The hotel industry is highly concentrated worldwide. Almost every hotel offers the fulfilling of the same need – a temporary room in which to stay. Because hotels corporations offer near-identical services at similar prices, differentiation in features and minor details is vital. There are two ways to differentiate and obtain a competitive advantage: either vertically or horizontally (Becerra, Santalo, & Silva, 2013).

Differentiation

Vertical differentiation occurs when a company’s product or service is objectively better than the competition’s.  For example, Ferrari makes cars of much higher quality than Toyota, so they can charge significantly more. Since hotel rooms are so similar, vertical differentiation is likely not an attainable strategy for AccorHotel to differentiate from its biggest competitors.

Horizontal differentiation is valuable for gaining market share in industries like that of the hotels. This is attained through offering minor features or distinctions not offered by the majority of competitors (Piana, 2003). Using cars as an example again, Ferrari and Lamborghini offer similar products: high quality sports cars. However, Ferrari generally has always been deeply involved in Formula One racing – a detail that potentially captures more market share.

In the hotel industry, customers are influenced by location, room price, service, quality, reputation, security, and cleanliness (Becerra, Santalo, & Silva, 2013). It would make sense for AccorHotel to differentiate more horizontally because the possibilities are virtually endless as to the features and distinctions of a hotel room that can be offered, both physically and digitally.

Prior to the evolution of digital technologies, hotels found success differentiating horizontally by including pools, gym rooms, and breakfast. Eventually, demand for these extras became mainstream, so other methods of differentiation ensued. Major hotel chains began strategically forming collaborations with airlines, cruises, restaurants, and travel agencies for deals that were mutually beneficial for both the customers and partnering businesses.

Wyndham

No other hotel chain in the world operated more hotels than Wyndham, with over 7,800 facilities around the world (Exhibit 3). They dominated the economy/budget segment of the hotel industry, making them direct competition to Accor in that sector. Both Wyndham and Accor were the biggest players in the low-cost hotel room sector, where the number of rooms offered targeting economy class were 64% and 47%  respectively of their portfolios. Wyndham and Accor were the only two major hotel chains to successfully operate in all three segments – economy, midscale, and luxury.

Wyndham found differentiation by entering the resort and timeshare field. They launched Wyndham Vacation Ownership in 2004, attracting independent timeshare and hotel developers to participate in franchise and affiliation opportunities (“History of Wyndham Resorts”, 2017). Wyndham would later rebrand into Club Wyndham, the umbrella brand from three primary groups: Wyndham Vacation Resorts, WorldMark by Wyndham, and Wyndham Resorts Asia Pacific).

Starwood

Although one of the biggest hotel chains in the world, Starwood operated fewer hotels and rooms than other major competitors. They were the only major international hotel chain in which 100% of their rooms were of the luxury/upscale segment, where AccorHotel was only 16% (Exhibit 4).

Starwood was the first hotel chain to differentiate themselves through collaboration with the airline industry. In 2013, they teamed up with Delta Airlines to offer a unique reward point system called Crossover Rewards. The new point system would allow customers to use accumulated points interchangeably to redeem rewards with either Delta Airlines or Starwood. The new reward system was a major success, winning the Industry Impact award and changing the way the industry rewarded customers. Five months after Starwood was awarded for success with their Crossover Rewards system, some competitors followed suit.

Marriott

Similar to Starwood, Marriott hotels mainly centered on luxury/upscale class. Only 15% of their hotels were not luxury. The three biggest players controlling the upscale hotel segment were Marriott, Starwood, and Hilton – Hilton being the largest. Marriott bought Starwood in 2015 for $12.2 billion, surpassing Hilton in the number of luxury hotel facilities and rooms worldwide.

Marriott discovered a successful differentiation strategy through founding a travel agent training program called Hotel Excellence! (HE!) in 1999. HE! would educate travel agents on the general hotel industry and Marriott’s portfolio, offering special certification and discounts through using Marriott hotels. This strategy aimed at influencing customer decisions at an important point of their inquiry process, knowing that customers relied heavily on travel agents for availability information, price listings, deals and discounts (Dubois, 2016).

Hilton

Hilton hotels mainly target the upscale hotel segment, where 99% of their rooms were of the luxury/upscale type. Hilton, Doubletree, Embassy Suites, Hampton Inn, Hampton Inn & Suites, and several other subsidiaries. They were the first major hotel chain to incorporate the use of balanced scorecards, a concept developed in the early 1990’s that helped Hilton manage its performance of value to customers and stakeholders (Huckstein & Duboff, 1999). The scorecards pointed out a gap between franchised and company-owned properties in meeting basic customer needs of a clean, quiet, comfortable room. A new customer-focused strategy was formed, helping the company continuously evaluate their commitment to customer demands, priorities, and expectations. This approach led to a clear vision for Hilton employees to follow, empowering team members with a sense of pride in creating value for customers.

InterCon

Intercon owned hotel brands like Holiday Inn, Candlewood Suites, and Crowne Plaza. They are the only major hotel company to focus most of their targeting on the midscale segment was InterCon. Over 2/3 of their 744,364 rooms were midscale-focused, more than any other competitor. They wanted to serve the ‘everyday heroes’ of society, like firemen, sports coaches, and teachers. The InterCon strategy was directed at making guests stay comfortable, starting at the entrance. They decluttered lobbies and implemented peaceful sounds and scents for guests upon arrival (Rooney, 2009). Inside guest rooms, bedding and bathroom amenities were of the highest quality for the average mid-scale hotel room.

Airbnb

One of the biggest disruptions to the hotel industry was the launch of Airbnb in 2008. Its founders, Brian Chesky and Joe Gebbia, were roommates that rented out an air mattress of their San Francisco apartment during a local conference in which all nearby hotels were sold out. After recognizing its potential, they create an online platform that allowed travelers to link up with locals. They expanded the idea and have exploded in growth ever since (Exhibit 5). In 2015, the company received a total of $25.5 billion in funding, surpassing the market cap of hotel chains like Marriot, Starwood, and Wyndham (Dubois, 2016).

Airbnb offers a completely different experience for travels than a traditional hotel. Customers are accommodated with choices from a plethora of residential location to stay for the night. Not only are many offerings cheaper than hotels, but the experience is inherently different. Unlike hotels, travelers establish a one-on-one relationship with their host to feel more like a local than a tourist. Not only is the experience a major differentiator for Airbnb, but the listings are much more unique, where customers a can stay in RVs, Boats, and even castles (Exhibit 6)

Technology

 

Technology Disruption #1: Internet Pricing Search Engines

    The internet arrived in the late 1990’s to spawn a disruptive revolution in customer bargaining power with the arrival of Priceline.com, which unlike a Citi-Travel club, was a free service paid for by its hotel partners rather than club members and its live streamed pricing and room availability information allowed online shoppers to even pick specific rooms from a hotel chart for a better view or preferred location near the pool (Bearnes). However until early 2000’s most customers remained cautious about typing their credit card and personal information into the unfamiliar digital void and instead typically called operators at Priceline to pay for their reservations. Priceline and its imitators were able to publish live discounted pricing and real-time availability from custom built itineraries of airfare, hotel and rental cars rather than prepackaged bundles of the travel agencies of the 70’s and rolled those a-la-carte selections into those familiar guaranteed terms that made the travel agencies of the 70’s popular (Highly).       

      Today, internet shopping is the go-to for Millennials, Generation Z, and even Generation X and Baby Boomers. The advancement of sites such as Expedia.com, Booking.com, Agoda, KAYAK, TripAdvisor, and Google Bookings has completely changed the way consumers plan trips and book hotels. 148.3 million consumer make travel bookings online, ⅔ of these consumers booked their stay online. The reason for this shift is not only convenience, but also reduced costs. For example, you can book a hotel on Expedia.com that can be almost half the price of booking from an agent.

Technology Disruption #2 – Social Media

As the 21st century progressed, social media and customer ratings began to steer customers away from hotels that featured misleading pictures, an area of customer dissatisfaction that emerged with advancements in online marketing. Customer ratings and reviews revolutionized the customer service factor of the travel industry, not only was the shell game of front desk pricing removed; but, overly flattering hotel pictures and descriptions were exposed to those who were considering a booking. Since customers continued to gain confidence in the online security of their banking information, online purchases exploded and luxuries such as the travel industry grew into the most searched categories of search engine activity (Teicher).

    Today potential customers put greater trust in the feedback from strangers than they afford the public relations campaigns of business owners. Online review sites have magnified the bargaining power of customers and held entire brand names accountable for the wrongs weakest personnel links.  In the social media age, hotel manager’s performance bonuses are directly tied to the metrics of their online customer ratings. Modern desk clerks are no longer recruited for their sales closing ratios and average booking price, instead they are measured by a newly discovered tangible: “customer enthusiasm” which generates high ratings on customer review sites through the gratuitous use of smiles, welcoming body language and energetic verbal skills. Studies revealed that the first ten minutes of a guest’s arrival had become the most critical in generating positive guest ratings throughout the rest of their stay. Every step of the arrival process was refined, from the street signage that guided the guest to the unloading zone through the design of the doorknob that opened the door to their room every detail of the arrival experience was reevaluated (Hognas).

     Social media review scores provided a previously unmeasurable insight into every detail of the customer’s experience, which typically features positive feedback from the guests. IN the past previous attempts to solicit feedback through email and guest card surveys had typically gathered only negative experiences, which only increased the management’s awareness of what customers did not like, where social media was able to articulate and advertise what each hotel’s strengths were in customer appeal. The barriers to entry of new hotel chains and single location boutique hotels were dramatically lowered through social media and brand reputation became less important as customers spent less time browsing the online catalog of hotels from a single brand and instead turned to a google search of hotels near a certain address. Existing hotel chains that had large sunken costs in marketing departments, brand research and advertising contracts found themselves burdened by the high carrying costs of their own operational infrastructure (Mckinsey.com).

    By 2006 family owned bed and breakfasts were able to surpass nearby chain hotels in web traffic and search engine rankings by utilizing a few thousand dollars in servers and then staffing the hotel with pioneers of grassroots social media optimization which was enabled by the arrival of millennial born employees. This new generation of employee was able to reach the digitally influential millennial customers that were coming into their own period of buying power. The social media conscious young employees were often able to push their employer’s search engine rankings ahead of the established hotel chain competition through the simple amplification of their own personal Klout scores which was attached through affiliation to the hotel’s own social media efforts (Teicher).

    The technological disruption of social media is a positive aspect for lodging businesses. Through social media, AccorHotels can connect with the consumers on a day to day basis, instantly. One of the most important technologies that should be utilized is Social Media Listening (SML) which allows for hotels to acquire information easily, brands can also reply to criticism or negative reviews quickly and efficiently to make sure that they do not become a problem and ruin the brands image. For example the Swiss-based Nestle brand developed an internal task force to monitor and respond to potential attacks, criticisms, and negative reviews. Another famous example is Wendy’s, who utilize social media as a brand building mechanism, they use Twitter, Facebook, and Instagram to reply to consumers directly, making them feel special and engaged.    

2009 – Technology Disruption #3 – Airbnb

      EBay introduced a pioneering business model in 1998 that reduced the risks of buying items from unfamiliar sellers in the mysterious, digital void of internet commerce. EBay’s unique escrow partner PayPal guaranteed refunds if seller failed to deliver on the transaction. User ratings allowed both buyers and sellers to rate each other on each transaction and attach those scores to the buyers own public reputation. 11 years later Uber launched a ride sharing system on top of eBay’s escrow payment and peer rating model. Uber’s success is forecasted to become the revolutionary disruption that will reshape the foundations of the 21st century auto industry.  However Uber would have not been able to gain the needed foothold in transportation-for-hire sector, if it had not been for the deregulation of the taxi industry. Today the hotel industry is waging a regulatory battle against the likes of the Uber-esque lodging start-up, Airbnb, to protect their industry from following in the footsteps of the declining taxi industry. The popularity of Uber with millennials has led its customers and investors to expect great success from the business model of Airbnb, a lodging broker that enables hosts to rent rooms in their homes, guesthouses or offer their entire dwelling for short term vacation rentals (Yu, 2017).

Hotel Industry analysts are struggling to determine if AirBnB has added 3% to the total lodging market or taken a 3% share away from existing hotel operators. Regardless of the impact on the distribution of market shares, AirBnB has surprised analysts by increasing in value despite generating operating losses over its nine years in business. In fact today the total market value for AirBnB is 30% greater than that of Accorhotels, despite the 40 year age difference. However, the valuation of Airbnb may be misleading since the startup’s capital value is based mostly on speculative stock value, where over 40% of Accor’s  market value is based on its ownership of sellable capital infrastructure such as hotels, office buildings and furnishings (Stone). The most unique aspect of Airbnb’s  market appeal was the discovery that customer demand for alternative lodging options was not being driven by a demand for lower rates, in fact AirBnB hosts charge average nightly rates 25% higher than those charged by hotels. However, that figure also may prove to be misleading because much of the price premium reflected in the Airbnb rates could be attributed to the higher percentage of “whole-house” vacation rentals that drive up Airbnb’s average nightly rates, these house rentals are difficult to compare since they would equate to three or four hotel rooms.  The arrival of peer to peer lodging sales and the infrastructure that overcame the safety risks that had previously deterred the rental practice may become the biggest disruption that the hotel industry has encountered. Since May of 2016 over 20% of U.S. travelers have used Airbnb at least once for their lodging needs (McDermott).

      In the first quarter of 2017 Airbnb generated an operating profit for the first time since its launch in 2008. Despite the inadequacies of its revenue generation, Airbnb surpassed the then 47 year old Accor’s market value only six years after it opened and today Airbnb is valued at nearly three times the market capitalization of Accorhotels. While Airbnb may only hold 3% of the market share, the capital efficiency of its infrastructure could soon harvest the lion’s share of lodging industry’s profits. The true measure of success remains to be seen as the privately held Airbnb’s true market value will remain unknown until it goes public, but its potential influence to reshape both the housing and lodging markets will have  the potential to make history as one of the greatest digital disruptions in history (Ting).

    Airbnb is one of the greatest threats to the lodging industry, and it has become the go to for young HENRYs (High Earners, Not Rich Yet) , entrepreneurs, college students, and young couples. The CEO Bazin was quoted as saying “I would have loved to participate in Airbnb.” Airbnb provides any experience you desire that can be authentic, welcoming, and engaging. The hardest aspect for hotels is to keep up with the trend. For example AccorHotels has a luxury hotel in China, that is in a garden and was part of the Emperor’s castle. Authenticity and uniqueness is what draws consumers in today.

Recommendations

 

  • Content and the customer journey.

 

    1. Steps of the customer journey.
      1. The customer experience begins with educational content, a prospect realizes that they have a problem to solve and have turned to the internet to search for solutions. “How To Videos” are a great tool in creating brand and product awareness. For example Accor could create a youtube series of short videos that highlight how to have unique travel experiences in each of the cities that it services. Content should genuine and avoid excessive brand trumpeting. Additional video series could feature travel tips such as how to fold clothes in a suitcase to avoid wrinkling or life hacks on best ways to  how to hail a cab or save time utilizing street vendor dining during your vacation. The second step in the customer journey is the customer’s readiness for the explanation pitch. These are storytelling examples utilizing a case of a customer and how your hotel overcomes their specific travel inconveniences. Here is where customers want to hear how your service works and defines what you can do for them. This is where you would post blog or video on the range of travel services that are included with a nights stay at an Accor hotel. An example would be how the free morning breakfast is made from superior all fresh ingredients or how the fleet of hotel shuttles at each property are happy to drive you to dinner or pick you up at a bar as a free alternative to Uber. Each video should wrap up with a call to action and clear brand trumpeting. An example of this would be: “You will never need to call a cab if you stay at an Accor hotel, because Accor cares about customer convenience!”. The third step in the customer experience requires added confidence to choose your solution over alternatives. Here is the opportunity for endorsements and testimonials. Highlighting positive reviews and awards in the corners of the rate and room content pages is a good example of this strategy’s application. The fourth step of the customer experience is to be sure to express your gratitude for their patronage. In addition to the standard emailed “thank you for your stay”and survey, by utilizing SML’s you can locate the customer’s posts and add an enthusiastic reply to a positive tweet, rating or geo-check in the guest  made on social media. Supporting posts of others demonstrates that the organization is genuinely happy for the customer and proud to have been a participant in creating the best experience for that guest. The fifth step is continued engagement with customers after their stay is completed. This can be accomplished by emailing the customer links about new features or locations for them to try.
  1. Which types of content efficiently improve each of the different stages of customer experience such as triggering brand awareness or changing customer perceptions?
    1. Short sharable how-to videos are an effective device to introduce the company for brand awareness without the hard sale approach of an advertisement.
    2. Once a customer is aware of the brand, descriptive videos or meme style posts on company facebook page are another type of content exposure to trumpet the competitive advantages of the Accor hotel chains over its competitors. Many companies post action pictures of happy guests and smiling employees with their day to day messages.
    3. Ratings and endorsements further guide the customer along the path to the confidence they need to choose Accor over the competition. A system to encourage satisfied and influential customers to post positive reviews will advance Accor’s own marketing efforts with little to no cost to the bottom line.
    4. Follow up emails that feature upcoming events, discounts or informative links to lifehack videos can maintain the relationship after the stay is over.

 

 

  • How to leverage content?
  • For Accorhotels to become “customer-centric” across digital platforms it must first quantify a real-time, single-view of each customer as an individual entity. This can be achieved by isolating the user’s email, phone number, social media profile. By identifying and cataloging an individual user, that person’s online presence and posted feedback can allow Accor insight to how that user and corresponding demographic interacts with, not only Accor, but other people and businesses. Web content posted by that individual can provide insight on how that person might be expected to interact with Accor’s business offerings and allow the firm to adapt its offerings to best serve the largest majority of like-minded consumers. Big Data analyst Vamsi Chemitiganti captured the customer-centric vision of today when he said “The only way to attain Digital success is to understand your customers at a micro level while making strategic decisions on your offerings to the market. Big Data has become the catalyst in this massive disruption as it can help business in any vertical solve their need to understand their customers better. It aids this by providing foundational platform for amazing products.” To launch the data collection process we  recommend that Accor hire the experienced big data software firm Eleks to design a database to harvest customer data and provide guidance on how to interpret and integrate the data into the Accor business model.
  • The online content should first be intuitively responsive to customer posted content gathered by “Social Media Listening Software” that will be designed into Elek’s data analytics product. We recommend that Accor reduce its conventional advertising department by three people to be reallocated to the communication of the Accor corporate vision with the recommended social media marketing firm “Friendemic”. We propose that Friendemic in conjunction with your existing brand managers handle the launch of the multi-platform social media campaign, where the Accor brand can be molded into a carefully groomed online presence by a social media firm with seven years of experience managing campaigns for companies such as Fiat and the Habberstat Group.
  • Social media is a major influencer of customer decision making. According Andrew Perrin of the to the Pew Research Center (2015), most adults use at least one form of social media – and the trend is growing (Exhibit 7); usage grew from only 7% in 2005, to 65% in 2015. Advertising on social media can be an effective way of reaching customers, even before they begin their own independent research. Because Accor does not specialize in creating digital content, it is recommended that they hire in-house employees that are expert in creating social media content that can capture interest. Centralizing the flow of online traffic can be helpful in uniformity, as well as evaluating which personnel and techniques work best. Hiring employees to manage this component can ensure that a consistent image is projected, as opposed to leaving all decisions to a 3rd party social media company to do so. In addition to existing conventional media efforts, we are recommending a strong investment in social media content generation such as youtube, Facebook, Twitter, instagram and WordPress. The content should include travel blogs, destination photos, employee photos, stories and fun, informative one minute videos. The staff should also closely monitor yelp, tripadvisor, google reviews and other ratings sites to gather feedback on areas for improvement.

 

      1. Youtube is the primary platform to post videos longer than 15 seconds, while Facebook would be the platform to post a mix of links, company news, photos of Accor’s hotels, destinations and happy guests. Twitter is the channel to post very brief news updates and funny stories of less than 140 characters while on the other end of the spectrum WordPress would be the ideal platform to post commentary on the industry or the company history. Review websites like TripAdvisor influence customer decision-making early, so getting guests to leave reviews during or after their stay is critical. According to Dubois’ article (2016), “95% of customers check reviews and research about destinations and rooms”. One way Accor can get more guests to leave reviews is by incentivizing them with discounts on their next visit. For example, upon completion of an online review, customers can receive a promo code to receive 15% off their next visit when booked directly from the company website. In addition, each Accor employee should be encouraged to create LinkedIn profiles that are linked to the main Accor profile, Friendemic consultants should assist and train employees on ideal LinkedIn career content. The more employees who list Accor as their employer, the higher the social media ranking that Accor will reach, especially true for employees who themselves have high Klout scores.

 

  • How to become a content-driven organization?
  • In addition to creating digital content, monitoring what guests are talking about can be pivotal to Accor’s brand. Technology companies like HootSuite and Social Sprout provide software that allows the monitoring of a company’s entire social media presence.  The software can immediately alert the hired campaign managers of customer posts, allowing for timely responses to any complaints that arise. Accor managers can regularly check the aggregate data to better understand what they are doing right, and to fix what customers say they are doing wrong. This is a fast, reliable way for Accor to become customer-centric.
          Through a combinations of the analytics software designed by Eleks to monitor Accor’s online traffic and the outbound social media pictures and stories from the Friendemic we plan to quantify gains in online presence through  a dashboard of standardized social media metrics. One primary measure of online influence is taken from an organization’s Klout score, a metric which measures web traffic interactions with Accor’s corporate home page and select social media sites: Facebook, LinkedIn,Twitter, Instagram, WordPress, youtube and google+ platforms. In addition we recommend the use of social media tools “Wildfire Monitor”, “Mention” and “Trackur” to compare the trends and performance of competitors Marriott, Hilton and Wyndham in “Wildlife Monitor” and Klout scoring metrics against the social media performance of Accor’s campaign content.
  • The most important guiding principles of a corporate online presence is above all else, do no harm to the anyones perception of the organization, avoid controversial topics and when confronted by a hostile critic, to immediately respond by posting the customer satisfaction help number encouraging that critic to call with the promise that a manager will be happy to help resolve the issue for them. To build brand value it is important that the company post positive and supportive messages of affirmation to others in the online community even congratulating its competitors for acts of  altruism. To be effective it is critical that posts are interesting, entertaining and image rich original content rather than simply sharing or retweeting the posts of others, pictures and videos are especially effective at generating content. Most importantly create a posting protocol that requires a marketing manager with social media training approve all content prior to posting.
  • Marketing or Public Relations employees can post company news and should quickly respond to customer comments on the corporate pages. However, we recommend leaving the foundation content to the professionals and suggest hiring Cox Media to film short and fun informational videos featuring real employees from Accor to demonstrate travel tips, lifehacks and offer local recommendations for fun tourism experiences in the areas around Accor’s various locations. We also recommend leaving the timing and mix of postings to the professionals at Friendemic until the Accor marketing professionals master the concepts through feedback metrics.We recommend bringing in both Cox Media and Friendemic on annual vendor agreements while also seeking out a third Social Media Management firm at the  six month mark to audit the work of all three online content partners: Cox, Friendemic and Eleks.

 

    1. We recommend that no hard and fast rules be applied to differentiation between each level until the social media partners have initially rolled out a universal marketing campaign.  One year from now Accor will be able to compare the responses to the social media campaign and tweak the content mix for each of the brands. However we do recommend that the Accor parent brand name be included in all content in addition to the subsidiary brand names to leverage the web traffic from all the brands into a single larger and more influential entity.
    2. The success of the social media campaign will be partly dependent on the “buy-in” depth and organizational changes of the Accor staff. Incentive bonus’ for each property’s online ratings and Klout scores should be added to employee’s current compensation plan. Since effective social media marketing can reduce Accor’s dependence on the more expensive advertising in conventional media platforms such as television, print and radio could social media performance bonuses would be a justified through the added payroll expense. There are several recommendations that could help with Olivier’s task. The customer journey taken to reserving hotel rooms typically begin with some research. To get Accor employees on-board with the new digital transformation, an online review system can be sent to guest with a section to rate customer service by employees. This was previously accomplished through client feedback cards which grew into a computerized platform consistent with the digital movement and simplifies tracking. In addition to identifying low customer service score locations, employees of high customer services rating can be rewarded with praises or raises.
    3.      We strongly recommend that employee’s current pay level not be docked for poor social media performance, as negative backlash from the perceived punishment will hinder the enthusiasm needed to drive cultural changes. We recommend that Accor fully integrate social media feedback metrics into their ROA calculations and post each property’s social media influence and customer ratings in common employee areas. Additional bonuses should be awarded properties with the highest scores as compared to other Accor locations to create teamwork and peer pressure within each property to adapt the new directive. We believe that no reasonable business argument could made in favor of remaining absent from social media marketing investments and that Accor should plan to reduce its conventional marketing budget to reallocate it in small incremental fractions into social media development and analysis.

 

 

 

 

 

 

 

 

 

 

Exhibits

 

Exhibit 1

New Player Example
Online Travel Agents (OTA) Booking.com, Agoda,  Expedia
Aggregators-Metasearch sites Trivago, Tripadvisor, KAYAK
Review Sites Tripadvisor, Dianping
Travel Blogs and Forums Lonely Planet
Social Media Sites Facebook, Twitter, Instagram
Alternative Lodging Platforms Airbnb, Homestay

Latest Search Engine Highways Driving Traffic to Hotel Brand Content: Dubois, D. (2016)

Exhibit 2

Dubois, D. (2016)

 

Exhibit 3

Dubois, D. (2016)

Exhibit 4

Dubois, D. (2016)

Exhibit 5

http://www.businessinsider.com/airbnbs-summer-reach-has-grown-by-353-times-in-5-years-2015-9

Exhibit 6

https://www.smartertravel.com/2015/09/09/airbnb-reports-17-million-guests-this-summer/

Exhibit 7

http://www.pewinternet.org/2015/10/08/social-networking-usage-2005-2015/

 

 

 

References

Bearne, S. (2016). “How Technology has Transformed the Travel Industry”. The Guardian             https://www.theguardian.com/media-network/2016/feb/29/technology-internet-transformed-travel-industry-airbnb

Becerra, M., Santalo, J., & Silva, R. (2013, February). “Being Better vs. Being Different: Differentiation, Competition, and Pricing Strategies in the Spanish Hotel Industry”. Tourism Management, Vol. 34, p.71-79. USF Libraries.

Benschneider, Carla. “A Travel Agent Perspective on the Evolution of the Hotel Industry.” Personal interview. 15 June 2017. From 16 year old Hotel Greeter to Travel Trade Manager for Disney Resorts

Campbell, K. (2016). “How to Drive Organic Search Results for Hotels”. Hotel News Now             http://hotelnewsnow.com/Articles/29352/How-to-drive-organic-search-results-for-hotels

Chemitiganti, V. (2016). “How to Create Customer Centric Digital Transformation”. Hortonworks
https://hortonworks.com/blog/create-customer-centric-digital-transformation/

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Applications of Management: Proposed Business Model for Premium Service Grocery Chain – University of South Florida -2016

Integrated Management Research Project- Applied Strategy and Policy Simulation

University of South Florida School of Business

 November 28, 2016

245 pages by

Todd Benschneider – Kayla Canup – Savanna Moeller -Johanna Quintana

400dpilogo

Table of Contents
Company Name and Logo – 3
Nature of Business – 3
Vision Statement – 13
Mission Statement – 13
Goals – 13
Values – 14
Ethics – 15
Triple Bottom Line – 32
Stakeholders – 33
Competition – 34
International Considerations – 34
Legal Considerations – 34
Company Structure – 38
Organization Structure – 40
Job Descriptions – 41
Planning Process – 144
Budgeting Process – 146
Organizational Culture – 151
Recruiting Process – 155
Facilitating Feedback – 160
Facilitating Teamwork – 162
Compensation Policies – 164
Motivation – 168
Job Satisfaction – 171
Turnover Reduction – 172
Conflict Resolution – 174
Discipline Policy – 177
Disaster Plan – 184
Performance Evaluation – 203
Economic Performance KPIs – 205
Social Responsibility – 209
ISO Standards – 225
Anticipated External Trends and Threats – 227
Preparing for Change – 238
Overcoming Resistance – 241
Becoming a Learning Organization – 242
COMPANY NAME – Greenfield’s Click and Pick Grocery (GCPG)

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NATURE OF OUR BUSINESS

 
Greenfield’s Click & Pick Grocery provides the most advanced grocery, deli and fresh cooked  foods distribution network in the United States. GCPG is dedicated to restructuring the fabric of modern society by liberating the hours that the typical family spends shopping  for, cooking and cleaning up after their meals. 

Greenfield’s not only provides full featured  conventional storefront supermarket designs for shoppers to browse, but GCGP provides  premium time saving services featuring fresh, wholesome food in environmentally friendly packaging, with express meal preparation plans and several delivery options

Our customers can exercise a wide range of grocery services from standard shelf picked,
self-cook groceries to pre-cooked restaurant quality, nutritionist-designed family meal plans,  available for pickup or delivery on pre-portioned, cleverly recyclable, individual serving plates.  

Every Greenfield’s meal is designed with items that were custom tailored for each client’s taste preferences based on feedback from Greenfield’s proprietary the taste preference genome database. 

Portions and meal items are carefully planned by certified chefs from each customer’s profile from each member’s favorites foods, dietary goals and allergies.

 Optional new menu items referred to as “recommended try” are included to expand meal variety based on each family member’s past taste-preference from the Pandora style database. 

These full service meal options offer a competitive advantage for customers on special reduced calorie, fat or sodium restricted diets allowing them to dine with confidence that their meal serves their dietary goals.

Greenfield’s first mover advantage captured this emerging market by being the first to apply self-reported customer feedback into a sophisticated genome database for automated selections and recommendations. 

The first mover market advantage has been sustainable due to a natural reluctance for customers to be inclined to start their taste preference database from scratch as imitators to the service emerge. 

Competitive advantages of our premier grocery superstore are made possible by pioneering the latest e-commerce technology on the foundation of our state of the art customer-centric database, serviced through a sophisticated smartphone application that empowers customers to create a wide menu of time-saving choices, tailored to taste rating feedbacks from each family member in the household. 

Greenfield’s strategic offerings revolve around its deeply personal understanding of each customer’s individual tastes which are incorporated into the easy to use communication interfaces such as:
1- The “Click & Pick” Shopping List – provides a time saving grocery experience that allows customers to select groceries on the smartphone app from drop menus which are pre populated from past selections to their online “cart”, or suggested from a “recommended-try” lists which are generated from a Pandora-style taste preference genome database. 

Bargain hunter have powerful tools to select from the weekly sale menus and all shoppers can seek out variety items through a simple voice activated keyword search.

 After grocery selections are made, simply choose the one-click pay checkout, specifying store location and time for pick up. 

Selections will be pulled, bagged and triple checked for accuracy and stored in temperature appropriate pickup rooms awaiting customer anticipated arrival. 

The GPS feature in the customer’s phone application will alert baggers to pending arrival of a nearby customer to facilitate final staging of the order curbside where they will be served in one of the plentiful drive-up receiving lanes with the customer’s name and lane number posted at parking lot entry, all these well designed features work together for optimal time efficiency, allowing customers to pull-up, pop trunk and exit with selections within a goal time of 90 seconds per order.
In fact research has uncovered that most GCPG customers further save shopping time by utilizing the shopping app to preload their cart throughout the day during previously
unproductive time, such as waiting in lines, on call-holds and stuck in traffic jams. 

Our efficiency experts estimate that on average our Click & Pick shoppers free up over 2 hours per week compared to conventional grocery shoppers. 

GCPG has been the pioneer of a multitude of time-efficiency engineering processes throughout our distribution chain, which combined with the taste preference genome database has been able to create a first mover competitive market advantage, sustained by customer loyalty from the years of taste preference feedback they have invested into the GCPG taste suggestion database

2- Scheduled Stock-Order – GCPG also provides a system that encourages customers to schedule automatic weekly restock shipments of their routine pantry staples to be drop shipped fresh from suppliers via parcel post. 

Most Greenfield’s customers choose to receive their dry packaged foods, canned goods, and beverages on this cost-efficient delivery option but prefer to visit the store occasionally for produce and meat selections. 

However, carefully engineered shipping containers are now available that also allow meat, produce, bread, eggs and dairy to be delivered via express parcel post for customers in search of maximum cost and time savings. 

The convenience and cost savings of Scheduled Stock Orders reduces parking lot traffic congestion, shelf space requirements and shortens checkout lines at our storefront locations allowing customers a less crowded in store shopping experience for a double edged competitive advantage.
3- Express Delivery – utilizes the click and pick app to make selections but also provides
immediate home delivery by UBER-Eats subcontractors. 

Delivery contractors that utilize alternate fuel delivery vehicles are paid a premium by the store and typical delivery fees cost less than $15 in most locations, the fee is billed onto the grocery order. 

Express delivery is a favorite among dual income family structures who place a high value on their time at home with their families, single car families and customers located in traffic congested neighborhoods.
4 – Hot Meal Express – Utilizing the hot foods section of the Click & Pick app, customers can schedule restaurant menu style ordering from the Chef’s Kitchen, where meal favorite histories and dietary restrictions are taken into consideration for every person at the “virtual table”, this hybrid of grocery and restaurant allow for a great deal of customization while ensuring that each person’s meals are prepared with their personal preferences in mind with an efficiency that was not possible without the customer genome database. 

Discounted pricing is offered for “family-style orders” where all members share large portion items. In home delivery Hot Meal express is a favorite of dual income parents with teenagers at home. 

The intricately personalized preparation of each person’s meal, in combination with the Greenfield’s assurance that all meals are prepared fresh from premium suppliers of non GMO and hormone free food sources and dietary restrictions as well as the automatic calorie counting portion control service provide advantages over most meal delivery alternatives. 

Hot Meals are available for in store dining, express pick up or express delivery by way of UBEReats subcontractors. Market research shows that Hot Meal Express is most commonly utilized to deliver meals to the
workplace, with this observation in mind, GPCG representatives are assigned to further develop joint ventures with large employers to provide discounted corporate services that encourage employers to include meal service in the compensation and reward plans. 

Greenfield’s leadership believes that workplace meal delivery and catering provides the largest growth segment in the food industry for the next decade and achieving first mover advantage to service this market is our highest priority.

5 – Grandma Greenfield’s Daily Dinner Schedule – offers busy families a nutritious and complete pre-planned meal service, with a randomly revolving menu prepared on a specified schedule by our highly automated kitchen from the highest quality fresh ingredients. 

The primary advantages offered by the scheduled dinner are based on the elimination of the daily decision of what to plan for dinner, the automated system simply picks a combination of meal favorites for the family.

 In the manner that could be expected from a genome database, the automated kitchen adjusts to each family member’s preferences from feedback each person gives on their meal through the app. 

This evolving database menu and seasoning adaptation provides customers with meal satisfaction results and menu variety far beyond what a competitors can provide. 

Like “Hot Meal Express” the automated system adjusts portions, seasonings and menu items to match the nutritional goals of each family member. 

The high volume, high efficiency automated kitchen is capable of producing these meals in a cost effective manner for a price much lower than a comparable meal for 4 would be priced at in a conventional menu restaurant. 

The elegantly designed, rinse and return meal packaging provides no hassle cleanup with minimal environmental impact. 

At the current time the Daily Dinner is available for express pickup or express delivery through UBEReats contractors. 

Our efficiency experts calculate that a family of four gains 6 hours of free time per week while participating in Grandma Greenfield’s Daily Dinner Plan. 

Like all GCPG products the Daily Dinner service leads the grocery industry into the new era of fast food service, and as the first mover in pre-planned dinner services combined with the taste preference genome data, Greenfield’s analysts expect to maintain a slight sustainable advantage in this soon to be competitive market.

OUR VISION
Our company vision is to become the number one food retailer in the country by making
life simpler for the everyday family.
OUR MISSION
To be the leading grocery retailer in the country; providing our customers with easy
access to groceries allowing them to spend more quality time with loved ones. With that, we commit to be: passionately focused on offering value through exceptional service, quality, freshness, customer value, intolerant of waste, while being dedicated to the dignity, value, and employment security of our associates.
GOALS
1. To earn a fair return on the investment of our shareholders while balancing the interests
and wellbeing of all GCPG stakeholders and the communities that we serve.
2. Maintain a business model that factors in ecological sustainability into all of our operation processes.
3. Create a safe, supportive and positive work environment for all of our store associate partners, and make effort to promote from within and enrich the futures of our associates.
4. Establish mutually beneficial relationships with suppliers who share Greenfield’s corporate values, and provide them with fair dealings and support to aid in their sustainability.
5. Revolutionize the food supply chain with time efficiency engineering designed into every aspect of our processes to allow us to supply our customers with services that allow them more hours every week to enjoy the best things in life.
VALUES
The following list of core value reflects what is truly important to us as an organization
● Quality : Offering our customers the best shopping experience providing the highest
quality of our products by exceeding their expectations
● Social Responsibility : caring about our communities and our environment and we try to
give back as much as possible through different corporate social responsibilities.
● Teamwork: Supporting team member happiness and excellence meeting our challenges
and opportunities as: one team, focused on common goals.
● Customer Satisfaction: Customer are our number one priority; for this reason, our main
goal is satisfying and delighting our customers
● Respect : Every person in the organization is important for us and deserve treating with
respect and dignity. (colleagues, customers, suppliers, and vendors)
● Excellence: striving for excellence and working to improve every day.
● Accountability : holding ourselves accountable for delivering results and always doing
the right thing.
POSITION ON ETHICS, INCLUDING ETHICS POLICY AND ENFORCEMENT
MECHANISM ABOUT THE CODE OF BUSINESS CONDUCT
Purpose
The Code of Business Conduct is designed to promote a responsible and ethical
work environment for all Greenfield’s Click and Pick Grocery associates and members of
the Greenfield’s Click and Pick Grocery Board of Directors. The Code contains
guidelines on proper behavior in the workplace and contact information to be used in the
event you have questions or concerns. The Code applies to all GCPG and Board
Members, as well as consultants and agents doing business on behalf of Greenfield’s
Click and Pick Grocery .
Your Responsibilities
In performing your duties for Greenfield’s Click and Pick Grocery, you are
responsible for abiding by Greenfield’s Click and Pick Grocery policies and all local and
national laws in all countries in which the Company does business. You are also
obligated to comply with all other applicable laws, rules and regulations of any regulatory
organization, licensing agency, or professional association governing your professional
activities. You are responsible for knowing and following the laws and policies that relate
to your duties, including the policies in the Code and all other Company policies, such as
those found in the General Information Guide. If you have questions about specific laws
that may apply to your activities or about whether particular circumstances may involve
illegal conduct, contact the GCPG’s General Counsel. You should also contact the
General Counsel if you think a provision of this Code may conflict with an applicable
legal requirement or a provision in the GIG or another Company policy.
Violating the Code or other Company policies may result in corrective action up
to and including discharge, and Greenfield’s Click and Pick Grocery may seek to recover
damages or file criminal charges. However, most problems can be easily avoided by
simply using good judgment and seeking guidance when questions arise. It is your
responsibility to raise questions, make appropriate disclosures and bring potential
problems to the Company‘s attention.
Obtaining Additional Information
If you have questions about the policies outlined in the Code or would like
additional information, talk with your Team Leader, or contact the Ethics Committee
directly by email at ethics@GCPG.com unless a particular provision of the Code says
otherwise. Executive officers and Board Members should contact the General Counsel.
Reporting Code Violations
As part of our shared fate philosophy, we believe that we all share responsibility
for ensuring that Greenfield’s Click and Pick Grocery as a whole conducts itself
according to the highest ethical standards and strives to avoid even the appearance of
impropriety. If you know of or suspect a violation of the Code, we urge you to report it
through one of the means provided in this policy. You may report suspected violations of
the Code, and any other ethics or integrity issues, to your Team Leader, by email to the
Ethics Committee or by calling the Team Member Tipline. The Team Member Tipline
can also be used to report questions or concerns involving the Company‘s accounting,
auditing, financial reporting or internal controls. Reports to the Tipline may be made
confidentially and anonymously, although you are encouraged to provide your name to
facilitate investigation and follow-up. Neither your Team Leader nor the Company will
take any action against you for reporting suspected misconduct in good faith. Information
about how to contact the Ethics Committee and the Team Member Tip Line appears
under ―Greenfield’s Click and Pick Grocery Market Contact Information‖ at the end of
the Code along with other important contact information.
If you are an executive officer or Board Member, you should contact the General
Counsel. Reports of potential misconduct will be taken seriously and investigated
promptly and thoroughly. Except where disclosure is required to investigate a report or
by applicable law or legal process, all reports will be kept confidential to the extent
reasonably possible.
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No Retaliation
It is against company policy, and in some cases against the law, for the company
to take any action against a team or board member, vendor or agent of the company for
reporting or threatening to report a violation of this code or cooperating in investigations
relating to code violations, provided that the person has acted in good faith and with a
reasonable belief that the information provided is true.
Waivers
Waivers of this code will be granted only in exceptional circumstances. The
provisions of this code may only be waived by the Ethics Committee or, in the case of
executive officers and Board Members, by our Board of Directors or an appropriate
Board committee. Any waiver of this Code for an executive officer or Board Member
will be promptly disclosed in accordance with applicable legal requirements.
Ethics Committee
The Ethics Committee is appointed by the Nominating and Governance
Committee and is responsible for setting policy reviewing questions and issues submitted
by associates or others, and reviewing the results of the annual conflicts of interest
questionnaire completed by Store, Facility, Regional and Global Support leadership.
Although membership may vary over time, the Committee is generally comprised of
Global Support leaders in the areas of operations, finance, legal, real estate and internal
audit. Associates may contact the Ethics Committee directly by email.
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General
All business decisions should be made solely in the best interests of the Company,
not for personal benefit. Therefore, you should avoid any actions that create, or appear to
create, conflicts of interest with the Company. A ―conflict of interest‖ may occur when
an individual‘s own interests (including the interests of a family member or an
organization with which an individual has a significant relationship) interfere or appear to
interfere with the interests of the Company.
Many conflicts of interest or potential conflicts of interest may be resolved or
avoided if they are appropriately disclosed and approved. In some instances, disclosure
may not be sufficient and the Company may require that the conduct in question be
stopped or that actions taken be reversed where possible.
Questions about potential conflicts of interest and disclosure of these situations as
they arise should be directed to the Ethics Committee or your Team Leader or Team
Member Services representative. Executive officers and Board Members should contact
the Chairperson of the Nominating and Governance Committee.
While it is not possible to list all potential conflicts of interest, several examples
of different situations are presented in the sections below. Regional policies may also
apply to the situations described below, and associates should consult their GIG for
information about any such policies.
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Gifts & Entertainment
Associates should not give anything of value to anyone, or accept anything of
value from anyone, when doing so might compromise or appear to compromise the
objectivity of business decisions. Except as specifically noted below, this includes giving
to, or accepting from, a current or prospective supplier, vendor, vendor representative
(including but not limited to organizations representing multiple producers, such as a
regional food group), landlord or competitor of the Company any gifts, entertainment or
any form of compensation. Associates are prohibited from receiving any samples or gifts
at home – all samples and gifts must be sent to their primary work location. Team
Members and Board Members are prohibited from accepting any loans or services from
any Greenfield’s Click and Pick Grocery vendor who is not otherwise in the business of
providing such loans or services, and any such loans or services provided must be
provided on fair market value terms. Associates are prohibited from buying products
directly from any Greenfield’s Click and Pick Grocery vendor at a discounted rate not
available to all associates.
Some gifts and entertainment are allowed as follows:
(1) Gifts with an established value of $25 or less are generally allowed.
(2) Business-related meals of nominal value are allowed, subject to specific requirements
in the GIG.
(3) Gift baskets or flowers may be accepted within reason, but they must be made
available for sharing with everyone at the Team Member‘s store or location.
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(4) Promotional items, such as those bearing a vendor‘s logo, may be accepted up to total
estimated value of $25. (5) Existing associates may accept samples of new or
reformulated products, and new associates may accept samples of existing products (one
time only). It is not acceptable for associates to receive for their personal use multiple
samples of the same product from a vendor.
(6) Effective January 1, 2013, no Team Member may accept any vendor-paid trip. Prior
to January 1, 2013, store-level associates may accept a vendor-paid trip (for travel
completed before January 1, 2013) made for the sole purpose of education and training;
the vendor may pay for all expenses including airfare, accommodations and meals; there
is a one-time limit on vendor-paid trips unless there is a significant change in products,
programs or business practices; regional associates may not have any expenses for a trip
paid by the vendor.
If someone tries to give you a prohibited gift, you should also tell your Team
Leader. Then, either return the gift or personally reimburse the giver of the gift for its full
value.
Doing Business with Spouses, Relatives, Friends or Your Own Business
Associates should not use their positions at Greenfield’s Click and Pick Grocery
for personal gain. Generally, it is not permissible to conduct business with an associate
or associates spouse, relatives or friends if the Team Member‘s role allows him or her to
influence purchasing decisions for the team, store, facility or region where he or she
21
works. Other Team Member/vendor relationships should be evaluated as follows to
determine whether they are permitted:
a) Investment in a company that is a vendor – This is allowed, but the investment must
be less than 5% of the Team Member‘s total assets, and the products that the company
sells cannot be part of a line for which the Team Member has purchasing responsibility.
b) Team Member has a side business and sells products to Greenfield’s Click and
Pick Grocery – This is allowed as long as the Team Member does not make or influence
the purchasing decisions surrounding these products. For example, it would be allowed
for a front end Team Member to sell products to the grocery team as long as the Team
Member does not impact grocery purchases.
c) Team Member has a full-time business and sells products to Greenfield’s Click
and Pick Grocery – This is not allowed.
For permitted situations, it may be necessary to inform the Store or Facility Team
Leader and appropriate regional coordinator so that they may monitor and evaluate any
relevant changes in circumstances. Associates are prohibited from being involved in any
formal or informal negotiations or related discussions between Greenfield’s Click and
Pick Grocery and a vendor when the Board Member or Team Member has any
employment relationship, board membership or direct or indirect ownership interest in
the vendor.
Additionally, it is considered a conflict of interest for any Board Member or
Greenfield’s Click and Pick Grocery Leadership Network member to hold a 5% or greater
interest in any vendor, lender, or major customer of GCPG.
22
Associates (other than executive officers) may apply to the Ethics Committee for
approval of particular transactions or situations, and executive officers and Board
Members may apply to the Nominating and Governance Committee.
Outside Employment or Service as Director or Officer
The Ethics Committee must approve any circumstance in which a Team Member
(other than an executive officer) serves as an employee, director, officer, partner, agent or
consultant to any Greenfield’s Click and Pick Grocery vendor, lender or competitor. The
Nominating and Governance Committee must approve of any circumstance in which an
executive officer serves as an employee, director, officer, partner, agent or consultant to
any Greenfield’s Click and Pick Grocery vendor, lender or competitor.
Associates may serve on the board of a not-for-profit organization without prior
approval, as long as the organization is not related to Greenfield’s Click and Pick Grocery
. A Team Member serving on such a board should be aware of Company policies
regarding donations and other payments, which are discussed below.
Any member of the Board of Directors wishing to serve as an employee, director,
officer, partner, agent or consultant to any Greenfield’s Click and Pick Grocery vendor,
lender or competitor must obtain approval from the Nominating and Governance
Committee.
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Financial Interest in a Competitor
A conflict may exist if a Team Member or Board Member (or any of their
immediate family) holds a financial interest in a competitor, other than a financial interest
which constitutes not more than 5% of the outstanding voting securities of a competitor.
Associates should contact the Ethics Committee for guidance on whether a particular
financial interest represents a conflict of interest. Executive officers and Board Members
should contact the Chairperson of the Nominating and Governance Committee. For
purposes of this Code, except for Greenfield’s Click and Pick Grocery itself, a business
shall be a competitor‘ if it is engaged in the ownership or operation of any retail
supermarket, retail food store, retail natural food enterprise, or other retail outlet
associated with natural foods; it being understood that a business which is predominantly
manufacturing or wholesaling in foods with less than 10% of their revenue derived from
retail sales, or which is a restaurant business, shall not be deemed competitive.
Donations and Other Payments
Associates are prohibited from authorizing donations or other payments from
Greenfield’s Click and Pick Grocery to outside organizations such as not-for-profits with
which they or a member of their immediate family serve as an officer or employee.
Additionally, any donation in excess of $50,000 per year shall be approved by two or
more of the Company‘s executive officers. No contributions, gifts or payment may be
made from Greenfield’s Click and Pick Grocery to any political party, candidate,
lobbying organization, etc. without the prior approval of the CEO.
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Opportunities Related to the Company’s Business
Associates may not take for themselves opportunities related to the business of
Greenfield’s Click and Pick Grocery or opportunities that they discover through their
positions with Greenfield’s Click and Pick Grocery or through the use of Greenfield’s
Click and Pick Grocery property or information.
Extensions of Credit
Associates are prohibited from extending any form of credit from Greenfield’s
Click and Pick Grocery to any organization with which they or a member of their
immediate family have a personal affiliation. Further, no extension of credit from
Greenfield’s Click and Pick Grocery may be made to any organization without the
specific prior approval of one of the CEOs. The only exceptions to this rule are accounts
receivable from customers arising in the ordinary course of business and loan programs
previously approved by one of the CEOs.
Leasing Property and Equipment
Any property or equipment lease between Greenfield’s Click and Pick Grocery
and a Team Member (other than a member of the executive team, which is dealt with in
the following paragraph) or the Team Member‘s immediate family or any organization
with which they are affiliated must be approved in advance by the Ethics Committee.
Any property or equipment lease between Greenfield’s Click and Pick Grocery
and a Board Member, a member of the executive team, the executive‘s or Board
25
Member‘s immediate family, or any organization with which they are affiliated must be
approved in advance by the Nominating and Governance Committee.
Consulting and Other Professional Services
Associates are prohibited from providing consulting or other professional services
to Greenfield’s Click and Pick Grocery for payment outside of their normal
compensation.
Any situation in which Greenfield’s Click and Pick Grocery would retain the services of a
professional services firm with which a Team Member (other than a member of the
executive team, which is dealt with in the following paragraph) or a Team Member’s
immediate family is affiliated must be approved in advance by the Ethics Committee.
Any situation in which Greenfield’s Click and Pick Grocery would retain the services of a
professional services firm with which a Board Member, a member of the executive team,
or a Board Member‘s or executive‘s immediate family is affiliated must be approved in
advance by the Nominating and Governance Committee.
Examples of professional services include (but are not limited to) accounting, auditing,
architectural or design, engineering, investment or commercial banking, legal services,
project management and computer programming.
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COMPANY INFORMATION AND ASSETS
Confidentiality
Associates are expected to protect confidential or proprietary information about
Greenfield’s Click and Pick Grocery , to use this information only for business purposes,
and to limit dissemination of the information (both inside and outside Greenfield’s Click
and Pick Grocery ) to those who have a need to know the information for business
purposes.
Associates are also expected to protect any confidential or proprietary information that
comes to them, from whatever source, in the course of performing their responsibilities
for Greenfield’s Click and Pick Grocery . This includes information received from or
relating to third parties (such as vendors) with which Greenfield’s Click and Pick Grocery
has or is contemplating a relationship.
Confidential or proprietary information includes all non-public information
relating to Greenfield’s Click and Pick Grocery or a third party. Examples include
material non-public information about store operating results, new store development
plans, and most associate information. If you are unsure whether information is
confidential, contact your associate services representative or email the Ethics
Committee. Associates should consult the GIG for information about additional policies
on confidentiality.
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Insider Trading
The U.S. federal securities laws prohibit insider trading – that is, buying or selling
a company‘s securities at a time when a person has material information about the
company that has not become publicly available. Material information is any information
that a reasonable investor would consider important in making an investment decision.
Insider trading is a crime punishable by civil penalties of disgorgement (return of the
profit gained or loss avoided on a transaction) and fines of up to three times the profit
gained or loss avoided, criminal fines (no matter how small the profit on the transaction)
of up to $5 million, and up to 20 years in prison. Companies also may face civil penalties
for insider trading violations by their employees and other agents.
As a Greenfield’s Click and Pick Grocery Team Member or Board Member, you
are not allowed to trade securities, or to tip others to trade securities, of Greenfield’s Click
and Pick Grocery or other companies when you are aware of material information that
has not been made available to the public. Anyone who shares material non-public
information with others can be subject to the same insider trading penalties that apply if
they had engaged in insider trading directly, even if they do not derive any benefit from
the other person‘s trades. The same restrictions that apply to associates also apply to their
family members and others living in their households.
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Media Inquiries
Associates may not speak to reporters or members of the media on behalf of the
Company without going through the proper channels, as doing so may risk providing
incorrect information or revealing proprietary strategies. Except as provided below,
inquiries made to associates from members of the media should be directed to your
Regional Marketing Coordinator, Regional PR contact, or to the Global Communications
Team. Inquiries made to associates from any third party about Greenfield’s Click and
Pick Grocery ‘s financial condition, business or about current developments relating to
Greenfield’s Click and Pick Grocery, should be directed to Investor Relations and
Shareholder Services at the Global Support Office.
Board Members should consult the Director Media Policy prior to speaking with
any reporter or member of the media about the Company.
Online Forums
The Company realizes the importance of communicating proactively and
responsively on the Internet and at the same time the importance of communicating
responsibly—i.e., avoiding misrepresentations of facts as well as the intentional or
inadvertent violation of laws, regulations or company policies. Accordingly, we have a
strict policy regarding postings by Company Leadership to non-Company-sponsored
Internet chat rooms, message boards, web logs (blogs), or similar forums, concerning any
matter involving the Company, its competitors or vendors, as follows:
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Postings by a member of Company Leadership must be approved by Chief Financial
Officer, Global Vice President of Investor Relations or General Counsel. A posting by
any of these three individuals must be approved by one of the other two.
Any postings which refer to a governmental agency or any legal matter must be approved
by the GC. Postings made anonymously, under a screen name or through another person
are prohibited. Violation of this policy will be grounds for dismissal. For purposes of this
policy, ―Company Leadership includes each Company Board Member, Executive Team
Member, Global Vice President and Regional President. For other associates, other
policies may apply and they should consult their GIG.
Financial Integrity; Maintaining Books and Records
Accurate records are essential to the successful operation of Greenfield’s Click
and Pick Grocery. Associates are responsible for preparing accurate and complete
Company records, information and accounts. For example, claims on an expense report
or time record, payments and other transactions must be correctly recorded and accounted
for, and properly authorized in accordance with Company policies.
All business records should be clear, truthful and accurate. Keep in mind that
business records and communications may become subject to public disclosure through
government investigations, litigation or the media. Business records are Company assets
and must be retained or destroyed in accordance with applicable policy.
All associates must comply with Company policies, procedures and controls
designed to promote accurate and complete recordkeeping. Accounting for, and financial
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reporting of, actual transactions and forecasts must follow the Company‘s accounting
policies as well as all applicable generally accepted accounting principles and laws.
If you have questions or concerns about the Company‘s accounting, auditing,
financial reporting or internal controls, you may contact your Team Leader or email the
Ethics Committee.
No Improper Influence on Audits
All associates are expected to cooperate fully with Greenfield’s Click and Pick
Grocery ‘s internal and external auditors. You must not directly or indirectly take any
action to coerce, manipulate, mislead or fraudulently influence any public accountant
engaged in the performance of an audit or review of Greenfield’s Click and Pick Grocery
‘s financial statements. Further, any associate involved in the preparation of financial
statements or Greenfield’s Click and Pick Grocery ‘s independent audit should avoid a
personal relationship with any member of the audit engagement team, other than a casual
friendly relationship.
Company Property
Greenfield’s Click and Pick Grocery property (for example, inventory, supplies
and equipment) should be used for business purposes. Greenfield’s Click and Pick
Grocery property should be cared for and used responsibly, and it should be protected
from misuse, improper disclosure, theft and destruction. Taking or using Company
property of any value for personal purposes without appropriate permission from the
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Company is stealing. However, using Greenfield’s Click and Pick Grocery property (such
as telephones, computers and fax machines) for incidental personal activities is permitted.
Regional policies also apply to the use of various kinds of Company property, and Team
Members should consult the GIG for information about these policies.
COMMITMENT TO TRIPLE BOTTOM LINE
“GCPG mission ‘to promote the vitality and well-being of all individuals by supplying
the highest quality, most wholesome food available by distributing wholesome foods to our
customers in a manner that best serves our long term environment. These goals will be made
possible by strategically creating value added services that benefit our shareholders, employees
and the communities that we serve”. GCPG food retail emphasizes it is mission – driven
company and believes in providing an empowering work environment for their associates. As a
result, it has a number of Corporate Responsibility Initiative in place. Greenfield’s Click and Pick
Grocery is committed to sustainable agriculture, wise environmental practices and internal and
external social programs. Greenfield’s Click and Pick Grocery is focused on creating a
sustainable food chain by focusing on the four primary areas listed below:
1. Sustainable agriculture: We support organic farmers, growers and the environment
through our commitment to sustainable agriculture and by expanding the market for
organic products.
a. Leads the movement for sustainability in advocacy of organic foods and believes
that companies and individuals must share their portion of responsibility as
tenants of the earth.
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b. Strong advocates of fewer and safer pesticides in non- organic foods. Provides the
customer with education surrounding the negative effects of pesticides and
questionable food additives. Works with manufactures to ensure foods meet strict
quality standards.
2. Wise environmental practices: We respect our environment and recycle, reuse, and
reduce our waste wherever and whenever we can.
a. Heavy promoters of less-toxic cleaning products. Provides customers with
education on the subsequent positive impact that can be made to water an air
quality
b. Received the first “Green Building” award in Austin Texas by using sustainable
material specifications and conscientious construction methods.
c. Green audits are conducted at store in an attempt to spark new ideas to minimize
Greenfield’s Click and Pick Grocery impact on the environment
3. Community Citizenship: Greenfield’s Click and Pick Grocery is clearly focused on
traditional community involvement
a. Focused on charitable contributions and contributing products to food banks.
4. Integrity in all business relationships
STAKEHOLDERS – GCPG is committed to a focus on the customer and balancing the needs of
all stakeholders (customers, shareholders, employees, communities). It’s a simple formula treat
employees well and they will treat your customers well.
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COMPETITION
Our main competitors are the national grocery chains such as Kroger, Harris Teeter,
Wal-Mart Markets, Winn Dixie and Publix. GCPG’s state of the art mobile app and online
grocery buying services allow us to prevail over our competitors. We will continue to focus on
making crucial advances allowing our customers to spend less time shopping and more time with
their families.
INTERNATIONAL CONSIDERATIONS
GCPG makes every effort to source our goods from local producers to ensure the freshest
produce grown and processed according to the highest USDA standards. When local suppliers
are unavailable or out of season, GCPG searches the globe for international suppliers who agree
to cooperate with the following supplier policies.
1. No child labor be used for the harvest or processing of the goods
2. No pesticides banned within the United States be applied in production
3. No Genetically Altered foodstuffs are acceptable
4. All foodstuffs must be produced and handled in a similar manner representing a
reasonable compliance to USDA policies
5. No bribes be paid to public officials to facilitate export processes
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LEGAL CONSIDERATIONS
GCPG was founded on integrity and honesty. At GCPG, we believe in conducting
everyday business ethically, efficiently, respectfully and we are dedicated to serving our
customers the way we would want to be served. The GCPG legal department has continuously
shown commitment to the mission through dedication, inclusion and diversity. The mission of
the legal department is to not only provide timely service but also cost effective legal services, in
order to maintain the vision of GCPG, as being the country’s top quality food retailer. The legal
department is committed to understanding GCPG’s business and legal needs. GCPG’s legal
department services a large range legal aspects. These involve reactive legal services and
proactive legal services. This can include responding to a specific legal matter or development of
compliance programs, policies, and guidelines. The proactive legal aspect is to minimize the
number of legal opportunities that may arise, which could include litigation.
Risk Management
The Risk Management department of GCPG legal department handles more than
insurance alone. Risk management focuses on the highest risks to our associates and
customers. This can include safety, with food and in-store, as well as, our dedication to
environmental compliance.
The team within Risk Management is solely dedicated to protecting and
preserving GCPG assets, mainly, its associates and customers. GCPG is able to do this
with responsive claims management and risk funding. One of the teams is the Worker’s
Compensation Claims Management team, which provides an accurate administration of
injury claims from employees, in a timely manner. Our team investigates, evaluates and
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negotiates workers’ compensation claims. It also authorizes and pays medical care and
medical compensation bills. The department has a high priority on assisting those injured
associates in getting back to work after their full recovery. The second team is the
General Liability team. It administers customer incidents and claims, while coordinating
vendor insurance information.
Bribes and Improper Payments
Associates of Greenfield’s Click and Pick Grocery should never promise to pay or
authorize payment, directly or indirectly, of money, products, services or anything of
value to any government official or agent (including employees of a state-owned or
state-controlled business or other entity), or any other individual (including political
figures or relatives of government officials) or entity in any country in order to influence
acts or decisions of government officials, to receive special treatment for the Company,
or for personal gain. While certain minor payments to certain non-U.S. government
officials made to expedite or secure the performance of certain routine governmental
actions may not violate the law, you must consult with the General Counsel prior to
making or authorizing any payment of this type. All Greenfield’s Click and Pick Grocery
associates worldwide must abide by the United States Foreign Corrupt Practices Act in
addition to local laws. Associates who are working for or with the government should has
for more assistance through the General Counsel.
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Antitrust Laws
Associates are required to comply with the antitrust and competition laws of the
countries where we do business. In general, Greenfield’s Click and Pick Grocery
associates must avoid agreements, understandings or plans with competitors that limit or
restrict competition, including price fixing and allocation of markets.
Fair Dealing
Associates and Board Members should always deal fairly with Greenfield’s Click
and Pick Grocery ‘s customers, suppliers, vendors, competitors and employees. They
should not take unfair advantage of anyone through manipulation, concealment, abuse of
confidential information, falsification, misrepresentation of material facts or any other
practice involving intentional unfair dealing. This provision does not alter existing legal
relationships between the Company and its associates, including any at-will employment
arrangements.
Complaints to Government Agencies
Occasionally, a job applicant, customer, or current or former associate may file or
threaten to file a complaint against Greenfield’s Click and Pick Grocery with the
government. If an associate or Board Member is notified about such a complaint, they
should immediately contact the General Counsel.
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Workplace-Related Laws and Policies
Associates should consult the GIG for information regarding the Company‘s
equal employment opportunity policy and compliance with other employment-related
laws and policies such as the Immigration Reform and Control Act of 1986 and the
Health Insurance Portability and Accountability Act (HIPAA), as well as Company
policy on drugs and alcohol, workplace violence, weapons, harassment, open door
communications, solicitation and distribution, and nepotism and favoritism.
THE COMPANY STRUCTURE
Greenfield’s Click and Pick Grocery’s organizational structure is mechanistic and
tall. GCPG operates this way due to being in a steady and stable market. Management
and employees have individual job specializations, where employees are given
designated tasks that are stable and controllable. There is low integration between the
departments due to the employees having their own individual tasks. Majority of the
time, the functional areas are not dependent on each other because management makes
the decisions, the information is passed along to employees, and they are responsible for
completing the tasks within their job specialization. This increases the communication
within that specific department so that managers and employees can work more
effectively in their designated areas. Because of this, communication is centralized and
management does the decision making based on information from directors and district
managers.
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GCPG maintains its competitive advantage with this organizational structure
because of the industry it is in. GCPG has a tall structure which starts with the President
and Vice President, then works down through directors, district managers, supervisors,
management teams and store employees. With the organizational complexity of the
company, GCPG strives to make employees feel appreciated and also provide them with
opportunities for career advancement due to the tall structure.
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Greenfield’s Organizational Chart with Definitions
President, Organization
Grade: 43
40
Reports to: Board of Directors Department: Executive
Classification: Salary Executive Division:Administrative
Date: 9/29/2016 Approved: TSB
Job Summary:
Oversee and manage all aspects of Division operations in order to ensure maximization of
company profits. Provide leadership, direction, and administration of all aspects of the Division
activities to ensure accomplishment of objectives.
Essential Functions:
1. Maximize profits through establishing business plan, achieving forecasts, and ensuring
customer satisfaction.
2. Coordinate short- and long-range financial development and management of the
Division.
3. Communicate with corporate office to achieve corporate goals, as well as division goals.
Overall responsibility for recruitment, hiring, staff development, work scheduling,
evaluation, discipline, salary recommendations, terminations, and retention of Division
staff.
4. Establish and assess employee goals; review employee performance by identifying
strengths and weaknesses.
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5. Motivate all employees to meet goals.
6. Ensure Division is in compliance with the company’s policies, procedures, and
corporate compliance program, as well as with federal, state, and local regulations.
7. Provide regular reports to the corporate office regarding Division activities.
8. Approve all sales contracts.
9. Maintain current market information.
10. Meet with banks to facilitate financing for Division.
11. Approve all advertising and marketing.
12. Maintain professional affiliations and enhance professional growth and development to
keep current in latest issues related to industry.
13. Maintain Division’s positive reputation within the community. When necessary, attend
hearings for proposed projects and meet with government officials.
QUALIFICATIONS:
1. Bachelor’s degree in business, marketing, finance, or related field. Master’s degree
preferred.
2. At least 10 years’ industry experience; some accounting, real estate, or marketing
experience.
3. Knowledge of organization policies, procedures, systems, and objectives.
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4. Knowledge of fiscal management and human resources management techniques.
5. Knowledge of governmental regulations and compliance requirements.
6. Skill in planning, organizing, and supervising.
7. Skill in exercising a high degree of initiative, judgment, discretion, problem solving,
and decision making.
8. Skill in developing and maintaining effective relationships with management, staff,
board of directors, policy-making bodies, banking personnel, and the public.
9. Good negotiation skills.
10. Ability to produce and implement sales and marketing programs.
11. Skill in developing effective divisional policies and procedures.
12. Effective verbal and written communication skills and ability to prepare comprehensive
reports.
Vice President, Operations
Reports to: President
Department: Administrative
Classification: Salary
Division: Executive
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Date: 9/29/2016 Approved: TSB
JOB SUMMARY:
Plans, organizes, directs, and controls the activities of the Operations function of the division.
Responsible for the performance of all Department functions — Retail, Manufacturing, Material
Management, Order Services, Engineering.
ESSENTIAL FUNCTIONS:
1. Reviews and approves adequate plans for the control of planned outputs, budget spending,
labor efficiency, material efficiency, engineering effectiveness, customer service, and order
entry efficiency, along with human utilization.
2. Reviews performance against operating plans and standards. Provides reports to subordinates
on interpretation of results and approves changes in direction of plans.
3. Presents monthly reports on performance as requested by the Chief Executive Officer.
4. Develops and presents to the President matters requiring a decision.
5. Develops and recommends corporate operations policy within the Operations Department.
6. Defines and recommends objectives in each area of Operations. Develops specific short-term
and long-term plans and programs, together with supporting budget requests and financial
estimates.
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7. Reviews and approves cost control reports, cost estimates, and manpower and facilities
requirements forecasts.
8. Coordinates and collaborates with other departments of the corporation in establishing and
carrying out responsibilities.
9. Reviews and approves the setting of budgets throughout the Operations Department.
10. Reviews and approves Operations major projects involving major functional changes within
the Department’s functional areas.
11. Develops plans for new areas of technology for the manufacturing functions along with
sufficient planning for areas that support the mission of the Corporation within Operations.
MANAGEMENT RESPONSIBILITIES:
1. Reviews and approves the implementation of manufacturing and organizational plans that
support the Operations Master Plan.
2. Establishes objectives and procedures governing the performance of assigned activities.
Issues specific annual objectives to immediate subordinates and reviews objectives of the
Operations management.
3. Selects and maintains qualified personnel in all positions reporting directly and recommends
compensation for them.
4. Directs, monitors, and appraises the performance of units immediately reporting and provides
the necessary coordination between activities.
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5. Identifies training needs, initiates development of subordinates, recommends effective
personnel action.
6. Maintains appropriate communications within area of responsibility.
7. Keeps employees informed as to company/department plans and progress.
8. Coordinates activities of assigned units with those of other company units. Seeks mutual
agreement on problems involving coordination.
9. Consults with all segments of management responsible for policy or action. Ensures
compliance within area of responsibility. Makes recommendations for improving
effectiveness of policies and procedures.
10. Reviews and endorses or revises budget proposals received from direct reports. Submits
budgets for assigned activities in accordance with the budget procedure. Approves budget
expenses up to authorized dollar amounts.
ADDITIONAL RESPONSIBILITIES:
1. Assumes other activities and responsibilities from time to time as directed.
2. Provides orientation and on-the-job training for subordinates and ensures that the authority
and responsibility for each position are defined and understood.
3. Ensures that duties, responsibilities, and authority and accountability of all direct
subordinates are defined and understood.
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EDUCATION AND EXPERIENCE:
1. B.S., Engineering or Business discipline.
2. Affiliation with successful manufacturing companies.
3. A minimum of three (3) years as a Vice President of Operations in a manufacturing company,
with the responsibilities of producing, purchasing, inventory control, production control,
and engineering, as well as shipping, receiving, and warehousing.
4. A minimum annual production value of sales of $15 million with a minimum of 200 direct
labor employees.
5. Sound administrative skills, well-developed management skills—principles and people.
6. Experience in working in a nonunion environment.
7. Proven ability to recruit, train, and motivate personnel in order to balance staffing strength
with profitability and growth.
PERSONAL CHARACTERISTICS:
1. Strong analytical, numerical, and reasoning abilities.
2. Participative management type—advocates team concept.
3. Well-developed interpersonal skills. Ability to get along with diverse personalities. Tactful,
mature.
4. Ability to establish credibility and be decisive—but able to recognize and support the
organization’s preferences and priorities.
5. Satisfactory communication skills, written and verbal.
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6. Results oriented with the ability to balance other business considerations.
Vice President of Administration and Finance
Grade: 42
Salary Executive
Reports to President
Job Summary:
Direct a diverse organization that provides financial, business, and administrative support
services that are fundamental to both the conduct of the operations of the division and the
achievement of its operational and financial objectives. Ensure the accurate appraisal,
interpretation, and analysis of financial results, while also providing analyses, interpretation, and
justification of budgets, forecasts, and long-range plans.
Principal position in the divisional finance and administration organization. Reports to division
president and is a member of the president’s staff. Has direct responsibility to the group
controller and the corporate vice president–finance.
ESSENTIAL FUNCTIONS:
1. Set divisional financial objectives, policy, and practice.
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2. Direct the development, implementation, operation, maintenance, and control of
essential business, information, and operations support systems.
3. Serve as focal point for defining key divisional objectives, supporting their
achievement, and measuring and reporting results.
4. Exercise considerable autonomy within a wide latitude in accomplishing these
responsibilities.
5. Make well-informed decisions, assign correct priorities, and ensure appropriate resource
acquisition and application.
6. Responsible for MIS and other systems, such as voice and data communications,
essential to the functioning of the division.
7. Interact with customers and government on pricing and audit matters.
8. Analyze budgets and forecasts.
9. Support and be responsive to both setting priorities and resolving issues consistent with
internal requirements, as well as governing regulation or law.
10. Accountable for critical path EDP systems, including planning, reporting, routing,
controlling, and shipping systems that are vital to all sectors of plant operations, as well as
payroll, customer billing, and vendor-payment routines.
11. Ability to assimilate, evaluate, and correlate associated risk/benefit trade-offs and their
relative impact on affected departments or capabilities.
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12. Accountable for the implementation of new systems and major modifications to
existing systems.
13. Maintain high-level interaction with the division president and staff, corporate offices,
customers, and government agencies. Advise president on financial issues.
14. Develop sound business plans for new products, including creative pricing policies that
maximize profit.
15. Direct a continuing review of the division’s accounting practices to ensure their
correctness, appropriateness, and conformance to generally accepted accounting principles
(GAAP), Federal Acquisition Regulations (FAR) Cost Accounting Standards (CAS),
Accounting Policy, Corporate Accounting Procedure Requirements, Corporate Control
Objectives, Plant Accounting Bulletins, and Computer Requirements Manual, and tax laws.
QUALIFICATIONS:
1. Strong management and delegation skills.
2. Intimate knowledge of and personal involvement with financial and administrative
systems and methodologies.
3. Minimum of a bachelor’s degree in accounting or finance; Master of Business
Administration preferred.
4. Certified Public Accountant status preferred.
5. Extensive experience (at least 10 years) in the finance function in an industrial or
manufacturing company.
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6. Strong leadership ability, presentation skills, and ability to translate financial terms into
understandable terms for line managers.
PRINCIPAL ACCOUNTABILITIES:
1. The accurate, complete, and timely submission of required financial reports, forecasts,
quotations, budgets, rates, and analyses.
2. The cost-effective maintenance, development, and implementation of centralized
services, systems, and management tools that support divisional operations and contribute
to improved cost, quality, productivity, and/or a competitive position.
3. The timely and correct interpretation, implementation, and/or maintenance of divisional
and corporate financial policies, practices, and procedures, including provision of effective
controls and audit capabilities.
4. Effective and compliant management of financial accounts, including payables,
receivables, payroll, overhead, and capital.
5. Provision of competent, responsive financial counsel to the president and executive
staff, providing necessary coordination with divisional and corporate financial, legal, and
government staff.
6. The acquisition and maintenance of skilled staff and resources necessary to meet
functional charter obligations.
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Vice President, Products and Services
Grade: 42
Reports to: President Department: Administrative
Classification: Salary Division: Executive
Date: 9/28/2016 Approved: TSB
Job Summary:
Leads and oversees all programs within the product development group. Accountable for
managing all program management staff, providing leadership, and mentoring.
Essential Functions:
1. Communicate with stakeholders and collaborate with a variety of functional areas in
order to deliver program results that contribute to a world-class product development
capability.
2. Ensure all products created adhere to company quality standards and are responsive to
the customers’ needs and market opportunities.
3. Lead and mentor program managers in all areas of project management skills and
knowledge.
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4. Contribute to program planning, strategic planning, budgeting, and departmental
process improvement initiatives.
5. Manage cross-functional projects and teams, including functional areas within product
development and representatives from engineering, product marketing, school services, and
operations.
6. Review work of program managers and all project key decisions to ensure company
objectives are met and execution of program/project budgets and schedules for each
approved initiative.
7. Maintain schedules and project plans, track program interdependencies, milestones, and
deliverables to ensure successful implementation and deployment.
8. Communicate progress through weekly status reports.
9. Provide consistent issue management resolution, prioritizing between competing
agendas and resources, building projects from the ground up, and establishing relationships
and processes.
10. Maintain project processes, best practices, and other documentation.
11. Lead cross-functional team meetings.
12. Plan, organize, and control assigned program activities from conceptual stages to final
stages of program product life cycle.
13. Optimize profit and meet growth objectives.
14. Identify and implement process improvement initiatives.
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15. Ensure that all program activities are executed in accordance with established processes
and procedures.
QUALIFICATIONS:
1. Bachelor’s degree and a minimum of 10 years of experience in project and program
management.
2. A Project Management Professional (PMP) certification is desired, as well as
demonstrated success tracking and meeting schedules on large-scale projects.
3. Solid knowledge of financial concepts and ability to use financial tools to make
strategic decisions and business forecasts.
4. Strong business process improvement capability required and the ability to identify and
implement best practices and ongoing performance measurement.
5. Excellent negotiation, organizational, leadership, customer relations, strategic thinking,
and communication skills.
6. Solid working knowledge of product development life cycles desired.
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Vice President, Human Resources
Grade: 44
Job Summary:
Manages the Human Resources department, developing policies and programs to provide an
employee-focused, high-performance culture. Major areas of responsibility include
organizational planning and development, regulatory compliance, recruiting and staffing,
performance management and improvement, employee orientation and training, employee
relations, employee communications, compensation, benefits, employee wellness, safety and
health, and employee services and counseling. Assists and advises senior management on Human
Resources issues.
ESSENTIAL FUNCTIONS:
1. Formulates and recommends human resources policies and objectives focused on
establishing a high-performance culture that emphasizes quality, productivity, the
achievement of goals, professional development, and the recruitment and retention of a
highly qualified workforce.
2. Develops and monitors the human resources operating budget to support company goals
and objectives. Manages the selection and use of Human Resources information systems to
support goals and objectives.
3. Leads company compliance with all federal, state, and local labor and employment law
requirements including, but not limited to, those related to Equal Employment Opportunity
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(EEO), the Americans with Disabilities Act as amended (ADA), the Family and Medical
Leave Act (FMLA), the Fair Labor Standards Act (FLSA), Employee Retirement Income
Security Act (ERISA), Worker Adjustment and Retraining Notification Act (WARN),
Occupational Health and Safety Act (OSHA), Fair Credit Reporting Act (FCRA),
Uniformed Services Employment and Reemployment Rights Act (USERRA), workers’
compensation, and employment tax laws. Monitors exposure of the company. Directs the
preparation of information requested or required for compliance. Approves all information
submitted. Acts as primary contact with labor counsel and outside government agencies.
4. Protects interests of employees and the company in accordance with company Human
Resources policies and governmental laws and regulations. Approves recommendations for
terminations. Reviews employee appeals through complaint procedure.
5. Directs a process of organizational planning that evaluates structure, job design, and
manpower forecasting throughout the company. Coordinates activities across division
lines. Evaluates plans and changes to plans. Makes recommendations to senior
management.
6. Directs a process of organizational development that primarily addresses succession
planning throughout the company. Coordinates activities across division lines. Evaluates
plans and changes to plans. Makes recommendations to senior management.
7. Establishes wage and salary structure, pay policies, performance appraisal programs,
employee benefit programs and services, and company wellness, safety and health
programs. Monitors for effectiveness and cost containments.
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8. Establishes recruitment and placement practices and procedures aimed at developing a
talent pool of highly qualified candidates and hiring the most qualified candidate for each
position. Reviews variances to schedules. Interviews executive-level candidates.
9. Establishes in-house management training programs that address company needs across
division lines (e.g., sexual harassment training, conducting performance appraisals,
interviewing, performance management).
10.Oversees implementation of programs through Human Resources staff. Monitors
administration to standards. Identifies opportunities and resolves discrepancies.
11.Selects and coordinates use of Human Resources information systems, consultants,
insurance brokers, insurance carriers, pension administrators, training specialists, labor and
employment counsel, and other outside resources.
12.Conducts a continuing study of all Human Resources policies, programs, and practices
to keep top management informed of new developments.
13.Directs the preparation and maintenance of such reports as are necessary to carry out the
functions of the department. Prepares periodic reports to top management, as necessary or
requested.
14.Keeps supervisor informed of significant problems that jeopardize the achievement of
objectives and those which are not being addressed adequately at the line management
level.
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15.Directs the work of the managers of recruiting and staffing, organizational development,
compensation, benefits, payroll, training, employee relations and legal compliance, HRIS,
and wellness programs.
ADDITIONAL RESPONSIBILITIES:
Assumes other duties as assigned by supervisor.
QUALIFICATIONS:
1. Bachelor’s degree or equivalent in Human Resources or a related field.
2. Specialized training in organizational planning, compensation, and preventive employee
and labor relations. SPHR certification preferred.
3. From eight (8) to ten (10) years’ experience gained through increasingly responsible
management positions within Human Resources.
4. A minimum of three (3) years’ recent experience as the top Human Resources executive
of a company with 800 to 1,000 employees in a nonunion manufacturing and office
environment.
5. Generalist background with broad knowledge of employment, compensation,
organizational planning, employee relations, and training and development.
Well-developed administrative skills. Strong management skills—principles and people.
Experienced working with more than two divisions.
6. High energy level, comfortable performing multifaceted projects in conjunction with
day-to-day activities.
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7. Superior interpersonal abilities. Ability to get along with diverse personalities, tactful,
mature, flexible. Participative management style.
8. Superior oral and written communication skills.
9. Results oriented with sound business judgment.
Vice President of Marketing
Grade: 43
Reports to: President Department: Administration
Classification: Division: Executive
Date: 09/28/2016 Approved: TSB
JOB SUMMARY:
To develop and supervise all marketing activities. Works under the chief operating officer and
develops sales forecasts as well as advertising and promotional programs and pricing strategies.
Directs the sales and marketing managers and, through them, the entire sales and marketing
forces.
ESSENTIAL FUNCTIONS:
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1. Develops and evaluates all advertising and promotional programs. Must personally approve
all major marketing campaigns.
2. Works with the chief financial officer to develop pricing strategies for all products.
3. Reports directly to the chief operating officer with all proposals and prepares periodic
reports giving results of marketing and sales efforts.
4. Gives direct supervision to national sales and marketing managers and, through them, the
entire sales and marketing forces.
5. Prepares sales forecasts, and predicts future profits based on volume and costs projected by
the accounting department.
QUALIFICATIONS:
1. Bachelor’s degree or equivalent required; M.B.A. or C.P.A. degree preferred.
2. Over 10 years of experience in sales and marketing management with supervising a diverse,
national sales force preferred.
3. Good knowledge of accounting and finance to analyze and evaluate marketing programs
and pricing policies.
4. Demonstrated creative ability to evaluate advertising and promotional programs.
5. Excellent oral and written communication skills to develop an enthusiastic and competent
sales and marketing staff.
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Marketing Manager:
POSITION SUMMARY:
Plan, direct, or coordinate marketing policies and programs, such as determining the demand for
products and services offered by a firm and its competitors, and identify potential customers.
Develop pricing strategies with the goal of maximizing the firm’s profits or share of the market
while ensuring the firm’s customers are satisfied. Oversee product development or monitor
trends that indicate the need for new products and services.
ESSENTIAL FUNCTIONS:
1. Formulate, direct and coordinate marketing activities and policies to promote products
and services, working with advertising and promotion managers.
2. Identify, develop, or evaluate marketing strategy, based on knowledge of establishment
objectives, market characteristics, and cost and markup factors.
3. Direct the hiring, training, or performance evaluations of marketing or sales staff and
oversee their daily activities.
4. Evaluate the financial aspects of product development, such as budgets, expenditures,
research and development appropriations, or return-on-investment and profit-loss
projections.
5. Develop pricing strategies, balancing firm objectives and customer satisfaction.
6. Compile lists describing product or service offerings.
7. Initiate market research studies or analyze their findings.
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8. Use sales forecasting or strategic planning to ensure the sale and profitability of
products, lines, or services, analyzing business developments and monitoring market
trends.
9. Coordinate or participate in promotional activities or trade shows, working with
developers, advertisers, or production managers, to market products or services.
10.Consult with buying personnel to gain advice regarding the types of products or services
expected to be in demand.
11.Conduct economic or commercial surveys to identify potential markets for products or
services.
12.Select products or accessories to be displayed at trade or special production shows.
SKILLS:
1. Active Listening —Giving full attention to what other people are saying, taking time to
understand the points being made, asking questions as appropriate, and not interrupting at
inappropriate times.
2. Critical Thinking —Using logic and reasoning to identify the strengths and weaknesses
of alternative solutions, conclusions, or approaches to problems.
3. Persuasion —Persuading others to change their minds or behavior.
4. Social Perceptiveness —Being aware of others’ reactions and understanding why they
react as they do.
5. Speaking —Talking to others to convey information effectively.
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6. Judgment and Decision Making —Considering the relative costs and benefits of
potential actions to choose the most appropriate one.
7. Monitoring —Monitoring/Assessing performance of yourself, other individuals, or
organizations to make improvements or take corrective action.
8. Active Learning —Understanding the implications of new information for both current
and future problem-solving and decision-making.
9. Coordination —Adjusting actions in relation to others’ actions.
10. Operations Analysis —Analyzing needs and product requirements to create a design.
KNOWLEDGE:
1. Sales and Marketing —Knowledge of principles and methods for showing, promoting,
and selling products or services. This includes marketing strategy and tactics, product
demonstration, sales techniques, and sales control systems.
2. Customer and Personal Service —Knowledge of principles and processes for
providing customer and personal services. This includes customer needs assessment,
meeting quality standards for services, and evaluation of customer satisfaction.
3. English Language —Knowledge of the structure and content of the English language
including the meaning and spelling of words, rules of composition, and grammar.
4. Administration and Management —Knowledge of business and management
principles involved in strategic planning, resource allocation, human resources modeling,
leadership technique, production methods, and coordination of people and resources.
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5. Communications and Media —Knowledge of media production, communication, and
dissemination techniques and methods. This includes alternative ways to inform and
entertain via written, oral, and visual media.
6. Computers and Electronics —Knowledge of circuit boards, processors, chips,
electronic equipment, and computer hardware and software, including applications and
programming.
ATTRIBUTES:
1. Oral Comprehension —The ability to listen to and understand information and ideas
presented through spoken words and sentences.
2. Oral Expression —The ability to communicate information and ideas in speaking so
others
will understand.
3. Deductive Reasoning —The ability to apply general rules to specific problems to
produce answers that make sense.
4. Written Comprehension —The ability to read and understand information and ideas
presented in writing.
5. Fluency of Ideas —The ability to come up with a number of ideas about a topic (the
number of ideas is important, not their quality, correctness, or creativity).
6. Speech Recognition —The ability to identify and understand the speech of another
person.
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7. Written Expression —The ability to communicate information and ideas in writing so
others will understand.
8. Inductive Reasoning —The ability to combine pieces of information to form general
rules or conclusions (includes finding a relationship among seemingly unrelated events).
9. Originality —The ability to come up with unusual or clever ideas about a given topic or
situation, or to develop creative ways to solve a problem.
10. Problem Sensitivity —The ability to tell when something is wrong or is likely to go
wrong. It does not involve solving the problem, only recognizing there is a problem.
EXPERIENCE AND EDUCATION:
Bachelor’s degree in business, marketing or related field. Master’s in business administration
preferred.
Marketing Research Consultant
Grade: 36
Reports to: Marketing Manager Department: Marketing
Classification: Hourly Division: Administration
Date: 9/27/2016 Approved: TSB
JOB SUMMARY:
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To expand our company’s sales and profits by developing a loyal client base of customers for our
customized marketing and marketing research programs designed, in turn, to increase the clients’
sales and profitability.
ESSENTIAL FUNCTIONS:
1. Explains and sells the variety of marketing research services available.
2. Interviews clients to ascertain their goals and their perceived marketing challenges.
3. Develops customized marketing services and research based on the particular needs
of each client.
4. Implements and supervises marketing research programs to increase sales and
profitability for both the client and our own company.
5. Works with the client to analyze research results and adapt its sales programs and
marketing methods in accordance with test results.
6. Provides training for client’s staff as necessary to carry out marketing program.
7. Builds effective, long-term relationships between marketing company and clients.
8. Devises new marketing research programs to add value and profitability to services
provided.
QUALIFICATIONS:
1. Bachelor’s degree or equivalent.
2. Five or more years of experience in market research.
3. Proven expertise in consultative selling.
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4. Effective and persuasive communication skills.
5. Demonstrated ability to design and manage a multifaceted marketing program.
Vice President Accounting
POSITION SUMMARY:
Reports to President
Direct financial activities, such as planning, procurement, and investments for all or part of an
organization.
ESSENTIAL FUNCTIONS:
1. Prepare and file annual tax returns or prepare financial information so that outside
accountants can complete tax returns.
2. Prepare or direct preparation of financial statements, business activity reports, financial
position forecasts, annual budgets, or reports required by regulatory agencies.
3. Supervise employees performing financial reporting, accounting, billing, collections,
payroll, and budgeting duties.
4. Delegate authority for the receipt, disbursement, banking, protection, and custody of
funds, securities, and financial instruments.
5. Maintain current knowledge of organizational policies and procedures, federal and state
policies and directives, and current accounting standards.
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6. Conduct or coordinate audits of company accounts and financial transactions to ensure
compliance with state and federal requirements and statutes.
7. Receive, record, and authorize requests for disbursements in accordance with company
policies and procedures.
8. Monitor financial activities and details such as reserve levels to ensure that all legal and
regulatory requirements are met.
9. Monitor and evaluate the performance of accounting and other financial staff,
recommending and implementing personnel actions, such as promotions and dismissals.
10. Develop and maintain relationships with banking, insurance, and nonorganizational
accounting personnel to facilitate financial activities.
11. Coordinate and direct the financial planning, budgeting, procurement, or investment
activities of all or part of an organization.
12. Develop internal control policies, guidelines, and procedures for activities such as
budget administration, cash and credit management, and accounting.
13. Analyze the financial details of past, present, and expected operations to identify
development opportunities and areas where improvement is needed.
14. Advise management on short-term and long-term financial objectives, policies, and
actions.
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15. Provide direction and assistance to other organizational units regarding accounting and
budgeting policies and procedures and efficient control and utilization of financial
resources.
16. Evaluate needs for procurement of funds and investment of surpluses and make
appropriate recommendations.
17. Receive cash and checks and make deposits.
18. Perform tax planning work.
SKILLS:
1. Complex Problem Solving —Identifying complex problems and reviewing related
information to develop and evaluate options and implement solutions.
2. Critical Thinking— Using logic and reasoning to identify the strengths and weaknesses
of alternative solutions, conclusions, or approaches to problems.
3. Active Listening— Giving full attention to what other people are saying, taking time to
understand the points being made, asking questions as appropriate, and not interrupting at
inappropriate times.
4. Reading Comprehension— Understanding written sentences and paragraphs in
work-related documents.
5. Judgment and Decision Making— Considering the relative costs and benefits of
potential actions to choose the most appropriate one.
6. Speaking— Talking to others to convey information effectively.
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7. Writing— Communicating effectively in writing as appropriate for the needs of
the audience.
8. Active Learning— Understanding the implications of new information for both
current and future problem-solving and decision-making.
9. Coordination— Adjusting actions in relation to others’ actions.
10. Management of Financial Resources— Determining how money will be spent to
get the work done and accounting for these expenditures.
KNOWLEDGE:
1. English Language —Knowledge of the structure and content of the English language,
including the meaning and spelling of words, rules of composition, and grammar.
2. Economics and Accounting— Knowledge of economic and accounting principles and
practices, the financial markets, banking, and the analysis and reporting of financial data.
3. Administration and Management— Knowledge of business and management
principles involved in strategic planning, resource allocation, human resources modeling,
leadership technique, production methods, and coordination of people and resources.
4. Mathematics— Knowledge of arithmetic, algebra, geometry, calculus, statistics, and
their applications.
5. Law and Government— Knowledge of laws, legal codes, court procedures, precedents,
government regulations, executive orders, agency rules, and the democratic political
process.
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6. Personnel and Human Resources— Knowledge of principles and procedures for
personnel recruitment, selection, training, compensation and benefits, labor relations and
negotiation, and personnel information systems.
7. Customer and Personal Service— Knowledge of principles and processes for
providing customer and personal services. This includes customer needs assessment,
meeting quality standards for services, and evaluation of customer satisfaction.
8. Education and Training —Knowledge of principles and methods for curriculum and
training design, teaching and instruction for individuals and groups, and the measurement
of training effects.
ATTRIBUTES:
1. Oral Expression —The ability to communicate information and ideas in speaking so
others
will understand.
2. Deductive Reasoning— The ability to apply general rules to specific problems to
produce answers that make sense.
3. Oral Comprehension— The ability to listen to and understand information and ideas
presented through spoken words and sentences.
4. Problem Sensitivity— The ability to tell when something is wrong or is likely to go
wrong. It does not involve solving the problem, only recognizing there is a problem.
5. Speech Clarity— The ability to speak clearly so others can understand you.
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6. Written Comprehension— The ability to read and understand information and ideas
presented in writing.
7. Near Vision— The ability to see details at close range (within a few feet of the
observer).
8. Speech Recognition— The ability to identify and understand the speech of another
person.
9. Category Flexibility— The ability to generate or use different sets of rules for
combining or grouping things in different ways.
10. Inductive Reasoning— The ability to combine pieces of information to form general
rules or conclusions (includes finding a relationship among seemingly unrelated events).
EXPERIENCE AND EDUCATION:
Bachelor of Science degree in Accounting or Finance required. CPA required. Minimum of 8
years’ experience and 2 years as a controller.
Chief Accountant (Accounting Supervisor)
JOB SUMMARY:
The Chief Accountant (Accounting Supervisor), under the direction of the Vice
President—Fiscal Services, is responsible for supervision and control of the general accounting
area, and for financial statement and report preparation.
The employee in this classification is responsible for the supervision and control of the general
accounting functions. This includes the general ledger, payables, payroll, property, budget
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reporting, and statistical accumulation. This individual is also responsible for financial statement
and report preparation on a regular and special request basis; assisting departments with annual
budget preparation and budget reviews; assisting in the hospital’s annual budget preparation;
reviewing entries to the general and statistical ledgers to assure accuracy; and assisting in
recruitment of personnel.
The employee will work under the direction of the Vice President—Fiscal Services; will operate
standard office equipment including a microcomputer; and will design and utilize computer
reports and output. The employee’s work setting will normally be the office. The employee will
need to be familiar with current and new regulations and guidelines relating to hospital finance
and accounting principles.
ESSENTIAL FUNCTIONS:
1. Supervises and trains those employees in accounting, payroll, and accounts payable.
2. Regularly reviews entries to the general and statistical ledgers to assure accuracy and
compliance with established accounting principles and procedures. Prepares general and
statistical ledger entries.
3. Prepares financial and statistical reports as required.
4. Coordinates and prepares for financial audits as required by hospital policy,
governmental regulations, or other organizations.
5. Assists departments in the review of budget reports and in preparation of annual
capital, expense, and activity budgets.
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6. Assists in the preparation of the annual budget and coordinating the completion of the
State Hospital Commission reports.
7. Prepares and/or reviews required tax returns.
8. Recommends changes in financial policies and procedures, as necessary.
9. Monitors established internal controls to assure proper compliance.
ADDITIONAL RESPONSIBILITIES:
1. Assists in the preparation of cost reimbursement reports and other interim reports as
may be required.
2. Assists with planning and implementing changes in the accounting system.
3. Assists in the recruitment of personnel and evaluates personnel under own supervision.
4. Performs other duties as assigned.
The preceding examples are representative of the assignments performed by this position and are
not intended to be all-inclusive.
JOB QUALIFICATIONS:
1. This position requires a bachelor’s degree in Business Administration with a major in
Accounting and three (3) years’ experience in hospital or public accounting assisting
hospitals; or any combination of experience, education, and training which would provide
the level of knowledge, skill, and ability required. A CPA is also highly desirable.
2. Knowledge of technical and professional principles and skills of accounting and
hospital finance.
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3. Knowledge of data processing capabilities and procedures, including the use of
microcomputers.
4. Knowledge of appropriate management and supervisory skills to supervise general
accounting staff.
5. Knowledge of requirements and regulations set forth by FDA, IRS, and other related
agencies.
6. Ability to maintain good working relationships with co-workers, supervisor,
management, and department head staff and various agency personnel.
7. Ability to communicate both orally and in writing with a wide range of people.
Senior Accounting Clerk
Grade: 27
Job Summary:
To ensure complete and systematic accounting records of receipts and disbursements within the
organization. Duties include performing a variety of complex clerical and bookkeeping tasks,
applying accepted procedures to the preparation and maintenance of accounting records. Reports
to the head of the Accounting department. May supervise designated junior clerical personnel as
head of section.
ESSENTIAL FUNCTIONS:
1. Receives and/or disburses funds related to the assigned area of responsibility.
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2. Checks work of junior clerks and posts to databases, journals, and general ledgers.
3. Makes depreciation and other adjusting entries as required.
4. Posts and analyzes trial balance and ledger accounts.
5. Prepares summary sheets for use by supervisor, managers, or auditors in preparing
comprehensive financial statements.
6. Supervises preparation of payroll information for vendor and verifies resulting
printouts.
7. Monitors payroll tax deposits and quarterly tax filings.
8. Audits and proofs accounting reports for clerical accuracy and conformance to company
procedures.
9. Maintains cost system and allocates expenditures to accounts in accordance with
established procedures.
10. Maintains perpetual inventory of supplies and materials; assists in taking and valuing
physical inventory as required.
11. Supervises and trains junior accounting clerks in procedures and software.
KNOWLEDGE, SKILLS, AND ABILITIES:
1. Sound knowledge of bookkeeping theories, practices, and accepted office procedures;
some knowledge of intermediate accounting procedures.
2. Competence working with computerized accounting systems and software.
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3. Excellent keyboarding skills.
4. Excellent organizational, interpersonal, and communications skills
5. Ability to establish and maintain effective working relationships with coworkers and
vendors.
6. Leadership or supervisory capabilities.
TRAINING AND EXPERIENCE:
1. High school diploma or its equivalent, including courses in bookkeeping and computer
science; associate’s degree in business or accounting preferred.
2. Proficiency with computers and bookkeeping and Accounting software programs.
3. At least 3 years of increasingly responsible experience in Accounting department
assignments involving advanced recordkeeping. Related business school or college courses
may be substituted for up to 1 year’s experience.
4. Alternate combinations of training and experience will be considered if requisite skills
are demonstrated.
5. Acceptable background for bonding.
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Junior Accounting Clerk
JOB SUMMARY:
To enter routine data into accounting records, such as accounts payable, billing and receivables
journals, do routine filing and updating of records. Supervisor closely monitors all work and
assigns work as needed.
ESSENTIAL FUNCTIONS:
1. Uses computer to enter data as assigned.
2. Assists with mailing of monthly statements to customers.
3 Under supervision, assists with disbursements of petty cash when senior clerk is unavailable.
4. Matches packing slips to invoices. Requests information from shipping department in case of
discrepancies.
5. Checks statements from suppliers against invoices received, approved, and posted, and against
payments made. Requests verification if the statement does not agree with internal records.
Brings differences to attention of supervisor.
6. Maintains small supply of commonly used office supplies and gives them to other departments
upon request. Notifies supervisor of need to order items from office supply company.
7. Makes copies of reports and distributes them as directed.
8. Assists with answering telephone when requested.
QUALIFICATIONS:
1. High school diploma or equivalency certificate.
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2. Familiarity with computer operation and common office machines. Some training in
bookkeeping is desirable.
3. Friendly, courteous telephone manner.
4. Basic verbal and mathematical skills.
Vice President, Management Information Systems
JOB SUMMARY:
Reports to President
Plans, directs, and manages the MIS Department in order to ensure the development and
implementation of cost-effective systems and efficient computer operations to meet current and
future decision making requirements. As a corporate officer, the incumbent provides company
wide direction in areas of policy and planning for data processing and related functions
(communications, office systems, etc.).
ESSENTIAL FUNCTIONS:
1. Provides information processing, systems counseling and guidance to management
personnel throughout the corporation.
2. Plans and controls departmental staffing, development, organization, hardware
acquisitions, and facilities to ensure that they are consistent with the business plan of the
corporation.
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3. Directs the design, development, and maintenance of systems, programs, and systems
software to meet management’s information needs.
4. Establishes MIS policies, standards, practices, and security measures to ensure effective
and consistent information processing operations and to safeguard information resources.
5. Administers the department’s expense budget within budgetary guidelines to contribute
to cost-effective operation of the corporation.
6. Selects, develops, and motivates qualified staff to effectively carry out department
functions and provide for the continuity of managerial and specialized skills.
7. Maintains knowledge of developments in the area of systems and hardware and
incorporates new developments into future systems of the corporation.
ADDITIONAL RESPONSIBILITIES:
None listed.
MAGNITUDE AND REPORTING RELATIONSHIPS:
1. Operating Budgets:
MIS Dept.$8.5 million
Div. D.P. 7.0 million
Communications 6.5 million
2. Staff Size:
Exempt 99 management and professional staff
Nonexempt 34
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Perm & Temp. PT 13
3. This position reports to the Vice President—Finance and Treasury as do the following
positions: Vice President and Controller, Assistant Treasurer, and the Director—Corporate
Personnel.
4. The following positions report directly to the Vice President—Management
Information Services (MIS):
a. Manager—Development Services: Directs the development of corporate and
selected division information systems, and provides operations research support to
division and corporate.
b. Manager—Midwest Region Data Center: Manages the MRDC location, which
provides systems planning, development support, and on-line as well as batch
operations of existing systems.
c. Manager—Operations Services: Manages the planning, installation, operation,
and maintenance of corporatewide data/voice communications and computer
production services for corporate and selected divisions.
d. Manager—Support Services: Evaluates, selects, and negotiates with vendors for
procurement of all hardware, software, and services; and manages the information
center, corporate standards, and MIS general administration functions.
e. Manager—Office Services: Provides mail, switchboard, typing pool, and
duplication service for corporate facility.
JOB CONTEXT:
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MIS is a service-oriented function providing a resource for corporate headquarters departments
and division management. It enables the development and operation of cost-efficient
applications for which separate units do not have the expertise or economy of scale to develop in
a cost-efficient manner. Involvement with any department or division may be initiated by the
unit manager, a corporate officer, or by a MIS staff member who identifies opportunities for
information processing services.
Although the information processing function is centralized, the corporation has a decentralized
operating philosophy.
The MIS Steering Committee (MISSCO) is a committee of top corporate executives, which
oversees the MIS function by reviewing and approving the long-range plans submitted by the
Vice President of MIS and establishing priorities to guide the allocation of resources as the
long-range plan is implemented.
JOB FUNCTION:
A primary function of this position is the identification and presentation to corporate top
management of the best long-term direction for the MIS function as well as the direction for the
information processing departments at individual operating units. Once the general direction and
budget figures have been approved, the Vice President—MIS works with the MIS management
team to translate the strategic plans into more-specific three-year plans and one-year operating
budgets, which detail cost projections for review and approval by the corporate
planning/budgeting committee and MISSCO.
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The incumbent remains apprised of the progress of major projects, and pays particular attention
to any developing problems and participates in major problem resolution. It is the Vice
President’s responsibility to communicate and explain to corporate and division top management
significant deviations from the plan.
The Vice President—MIS reviews the performance and potential of individual staff members
and makes and/or approves decisions relating to MIS personnel matters.
PRINCIPAL CHALLENGES:
The major challenge facing the incumbent is identifying the proper long-term direction for the
MIS department and division information processing departments in a decentralized
environment. Tradeoffs between economies of scale and the decentralized operating philosophy
must be evaluated and decisions made that will have long-term consequences. The incumbent
must effectively communicate a highly technical and constantly changing subject in nontechnical
business terminology to corporate and division managers so that sound decisions will be made.
Managing a large organization of the highly motivated, yet independent, technicians and
specialists typical of the computer field poses difficult personnel problems. The unfavorable
supply/demand imbalance of the professionals with the required MIS talent adds pressure to the
management process.
JOB LATITUDE:
Once the annual operating budget has been approved, the Vice President—MIS has authority to
initiate any action within the broad limitations defined by the rather large MIS department
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budget (approved additions to staff, purchase/lease of equipment, etc.). Any significant
allocation of company resources beyond the approved budget requires review and approval by a
higher level of management.
This position provides input to top corporate operating management on the feasibility of projects
and equipment selection. Recommendations from the Vice President—MIS on operating
company information processing matters weigh very heavily in the management
decision-making process, particularly in decisions involving hardware selection. This is true to
the point of having near veto power over operating company decisions. However, the officer
over the operating unit has final authority on such matters.
The MISSCO is involved in setting company priorities when there are conflicts on the allocation
of MIS resources to major projects.
KNOWLEDGE AND SKILLS:
Considerable interpersonal skills are required to deal with the personnel situations arising in the
large MIS staff. The need to persuade and sell in the liaison role with divisional and corporate
department heads calls for a high degree of human relations skills.
Considerable management skills are required to successfully perform the planning, directing,
reporting, and administrative responsibilities of this position.
A comprehensive knowledge of the general direction of the data processing industry and
technology (evolving products, services, etc.) is required in this position, although a thorough
understanding of technical details is not necessary.
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EDUCATION AND WORK EXPERIENCE:
The knowledge and skills required for this position are typically acquired in 10 to 15 years of
experience in managing one or more major information processing functions (operations,
development, etc.) and/or through advanced college training in management.
Frequent reading of periodicals and other literature on the state-of-the-art and data processing as
well as attendance at vendor-sponsored and other seminars are required in order to maintain the
level of familiarity with the subject matter required to fill this position.
Computer and Information System Manager
POSITION SUMMARY:
Reports to Vice President of Management Information
Plan, direct, or coordinate activities in such fields as electronic data processing, information
systems, systems analysis, and computer programming.
ESSENTIAL FUNCTIONS:
1. Review project plans to plan and coordinate project activity.
2. Manage backup, security and user help systems.
3. Develop and interpret organizational goals, policies, and procedures.
4. Develop computer information resources, providing for data security and control,
strategic computing, and disaster recovery.
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5. Consult with users, management, vendors, and technicians to assess computing needs
and system requirements.
6. Stay abreast of advances in technology.
7. Meet with department heads, managers, supervisors, vendors, and others to solicit
cooperation and resolve problems.
8. Provide users with technical support for computer problems.
9. Recruit, hire, train and supervise staff, or participate in staffing decisions.
10. Evaluate data processing proposals to assess project feasibility and requirements.
11. Control operational budget and expenditures.
12. Review and approve all systems charts and programs prior to their implementation.
13. Direct daily operations of department, analyzing workflow, establishing priorities,
developing standards, and setting deadlines.
14. Assign and review the work of systems analysts, programmers, and other
computer-related workers.
15. Evaluate the organization’s technology use and needs and recommend improvements,
such as hardware and software upgrades.
16. Prepare and review operational reports or project progress reports.
17. Purchase necessary equipment.
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SKILLS:
1. Reading Comprehension —Understanding written sentences and paragraphs in
work-related documents.
2. Active Listening —Giving full attention to what other people are saying, taking time to
understand the points being made, asking questions as appropriate, and not interrupting at
inappropriate times.
3. Critical Thinking —Using logic and reasoning to identify the strengths and weaknesses
of alternative solutions, conclusions, or approaches to problems.
4. Complex Problem Solving —Identifying complex problems and reviewing related
information to develop and evaluate options and implement solutions.
5. Monitoring —Monitoring/Assessing performance of yourself, other individuals, or
organizations to make improvements or take corrective action.
6. Writing —Communicating effectively in writing as appropriate for the needs of the
audience.
7. Coordination —Adjusting actions in relation to others’ actions.
8. Speaking —Talking to others to convey information effectively.
9. Judgment and Decision Making —Considering the relative costs and benefits of
potential actions to choose the most appropriate one.
10. Social Perceptiveness —Being aware of others’ reactions and understanding why they
react as they do.
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KNOWLEDGE:
1. Administration and Management —Knowledge of business and management
principles involved in strategic planning, resource allocation, human resources modeling,
leadership technique, production methods, and coordination of people and resources.
2. Customer and Personal Service —Knowledge of principles and processes for
providing customer and personal services. This includes customer needs assessment,
meeting quality standards for services, and evaluation of customer satisfaction.
3. Production and Processing —Knowledge of raw materials, production processes,
quality control, costs, and other techniques for maximizing the effective manufacture and
distribution of goods.
4. English Language —Knowledge of the structure and content of the English language
including the meaning and spelling of words, rules of composition, and grammar.
5. Personnel and Human Resources —Knowledge of principles and procedures for
personnel recruitment, selection, training, compensation and benefits, labor relations and
negotiation, and personnel information systems.
6. Telecommunications —Knowledge of transmission, broadcasting, switching, control,
and operation of telecommunications systems.
7. Economics and Accounting —Knowledge of economic and accounting principles and
practices, the financial markets, banking and the analysis and reporting of financial data.
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ATTRIBUTES:
1. Written Comprehension —The ability to read and understand information and ideas
presented in writing.
2. Oral Comprehension —The ability to listen to and understand information and ideas
presented through spoken words and sentences.
3. Oral Expression —The ability to communicate information and ideas in speaking so
others will understand.
4. Problem Sensitivity —The ability to tell when something is wrong or is likely to go
wrong. It does not involve solving the problem, only recognizing there is a problem.
5. Deductive Reasoning —The ability to apply general rules to specific problems to
produce answers that make sense.
6. Inductive Reasoning —The ability to combine pieces of information to form general
rules or conclusions (includes finding a relationship among seemingly unrelated events).
7. Written Expression —The ability to communicate information and ideas in writing so
others will understand.
8. Information Ordering —The ability to arrange things or actions in a certain order or
pattern according to a specific rule or set of rules (e.g., patterns of numbers, letters, words,
pictures, mathematical operations).
9. Near Vision —The ability to see details at close range (within a few feet of the
observer).
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10. Speech Clarity —The ability to speak clearly so others can understand you.
EXPERIENCE AND EDUCATION:
Bachelor’s degree with study in computer science, programming, or related field. Previous work
experience preferred.
Computer and Information System Manager
POSITION SUMMARY:
Plan, direct, or coordinate activities in such fields as electronic data processing, information
systems, systems analysis, and computer programming.
ESSENTIAL FUNCTIONS:
1. Review project plans to plan and coordinate project activity.
2. Manage backup, security and user help systems.
3. Develop and interpret organizational goals, policies, and procedures.
4. Develop computer information resources, providing for data security and control,
strategic computing, and disaster recovery.
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5. Consult with users, management, vendors, and technicians to assess computing needs
and system requirements.
1. 6. Stay abreast of advances in technology.
7. Meet with department heads, managers, supervisors, vendors, and others to solicit
cooperation and resolve problems.
8. Provide users with technical support for computer problems.
9. Recruit, hire, train and supervise staff, or participate in staffing decisions.
10. Evaluate data processing proposals to assess project feasibility and requirements.
11. Control operational budget and expenditures.
12. Review and approve all systems charts and programs prior to their implementation.
13. Direct daily operations of department, analyzing workflow, establishing priorities,
developing standards, and setting deadlines.
14. Assign and review the work of systems analysts, programmers, and other
computer-related workers.
15. Evaluate the organization’s technology use and needs and recommend improvements,
such as hardware and software upgrades.
16. Prepare and review operational reports or project progress reports.
17. Purchase necessary equipment.
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SKILLS:
1. Reading Comprehension —Understanding written sentences and paragraphs in
work-related documents.
2. Active Listening —Giving full attention to what other people are saying, taking time to
understand the points being made, asking questions as appropriate, and not interrupting at
inappropriate times.
3. Critical Thinking —Using logic and reasoning to identify the strengths and weaknesses
of alternative solutions, conclusions, or approaches to problems.
4. Complex Problem Solving —Identifying complex problems and reviewing related
information to develop and evaluate options and implement solutions.
5. Monitoring —Monitoring/Assessing performance of yourself, other individuals, or
organizations to make improvements or take corrective action.
6. Writing —Communicating effectively in writing as appropriate for the needs of the
audience.
7. Coordination —Adjusting actions in relation to others’ actions.
8. Speaking —Talking to others to convey information effectively.
9. Judgment and Decision Making —Considering the relative costs and benefits of
potential actions to choose the most appropriate one.
10. Social Perceptiveness —Being aware of others’ reactions and understanding why they
react as they do.
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KNOWLEDGE:
1. Administration and Management —Knowledge of business and management
principles involved in strategic planning, resource allocation, human resources modeling,
leadership technique, production methods, and coordination of people and resources.
2. Customer and Personal Service —Knowledge of principles and processes for
providing customer and personal services. This includes customer needs assessment,
meeting quality standards for services, and evaluation of customer satisfaction.
3. Production and Processing —Knowledge of raw materials, production processes,
quality control, costs, and other techniques for maximizing the effective manufacture and
distribution of goods.
4. English Language —Knowledge of the structure and content of the English language
including the meaning and spelling of words, rules of composition, and grammar.
5. Personnel and Human Resources —Knowledge of principles and procedures for
personnel recruitment, selection, training, compensation and benefits, labor relations and
negotiation, and personnel information systems.
6. Telecommunications —Knowledge of transmission, broadcasting, switching, control,
and operation of telecommunications systems.
7. Economics and Accounting —Knowledge of economic and accounting principles and
practices, the financial markets, banking and the analysis and reporting of financial data
.
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ATTRIBUTES:
1. Written Comprehension —The ability to read and understand information and ideas
presented in writing.
2. Oral Comprehension —The ability to listen to and understand information and ideas
presented through spoken words and sentences.
3. Oral Expression —The ability to communicate information and ideas in speaking so
others will understand.
4. Problem Sensitivity —The ability to tell when something is wrong or is likely to go
wrong. It does not involve solving the problem, only recognizing there is a problem.
5. Deductive Reasoning —The ability to apply general rules to specific problems to
produce answers that make sense.
6. Inductive Reasoning —The ability to combine pieces of information to form general
rules or conclusions (includes finding a relationship among seemingly unrelated events).
7. Written Expression —The ability to communicate information and ideas in writing so
others will understand.
8. Information Ordering —The ability to arrange things or actions in a certain order or
pattern according to a specific rule or set of rules (e.g., patterns of numbers, letters, words,
pictures, mathematical operations).
9. Near Vision —The ability to see details at close range (within a few feet of the
observer).
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10. Speech Clarity —The ability to speak clearly so others can understand you.
EXPERIENCE AND EDUCATION:
Bachelor’s degree with study in computer science, programming, or related field. Previous work
experience preferred.
Logistics Divisions:
Director of Warehousing & Transportation
JOB SUMMARY:
To manage, develop, and supervise operations of a full-scale logistics facility and
distribution center offering public warehousing, distribution, full-service transportation,
materials management, and fulfillment services.
ESSENTIAL FUNCTIONS:
1. Oversees development of facility to provide a wide range of services in order to meet
customer needs for multimodal transloading, just-in-time shipping, inventory management,
a customer call center, distribution, and fulfillment.
2. Supervises and works with finance department to prepare budgets, forecast expansion of
operations, develop sales projections, achieve cost-saving initiatives, and analyze results on
a regular basis.
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3. Interacts with customers to become aware of opportunities for new services and
expansion of logistics facility.
4. Selects and supervises managers of all logistics functions to coordinate departmental
interaction and provide cohesive and efficient service to customers.
5. Studies areas in which goals have not been achieved; analyzes and develops new ways
to overcome problems.
6. Keeps abreast of technological developments that will facilitate expansion of operations
to better coordinate relationship between producers and end-users.
EDUCATION AND EXPERIENCE:
1. Bachelor’s degree in business administration, logistics, computer science, transportation,
or related field. M.B.A. preferred, but not required.
2. At least 10 years of experience in the distribution or transportation industry.
3. Excellent demonstrated management and analytical skills to handle a wide range of
duties.
4. Excellent oral and written communication skills.
5. Competence in computer-based management systems for inventory control, shipping
operations, and fulfillment services.
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Warehouse Supervisor
JOB SUMMARY:
Trains and directs a group of union associates in the movement of merchandise through the
department within specified productivity, cost, and quality standards.
ESSENTIAL FUNCTIONS:
1. Assigns, directs, and monitors the work of union associates.
2. Designs and implements work methods and procedures to increase productivity and
improve service within an assigned department.
3. Motivates associates to ensure that predetermined productivity, cost, and quality
standards are achieved or exceeded.
4. Ensures safety and housekeeping.
5. Trains new union associates.
6. Prepares and submits daily and weekly paperwork.
7. Recommends daily manpower requirements based on volume.
JOB IMPACT:
1. Measure and size of financial responsibility:
Payroll Budget: $250,000
Expense Budget: $40,000
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2. Number of associates reporting to this job:
Nonexempt: 25-50
3. Most frequent contacts: Union chief steward and ship stewards
4. Responsibility for providing functional guidance to other individuals,
departments, divisions, etc. Provides optimum handling alternatives to other facility
operating departments.
JOB LATITUDE:
1. Utilizes experience, intelligence, and ingenuity in developing new strategy on the
expeditious movement of merchandise.
2. Ensures uniform execution of policies and procedures to all union associates within
union contractual agreement.
3. Works within facility budgets.
4. Disciplines associates in accordance to union contract; fires associates who have not yet
attained union status.
5. Recommends termination to facility management of union associates.
6. Recommends extraordinary achievers for merit increase consideration.
7. Recommends modifications or innovative ideas to operations manager in order to
improve merchandise handling procedures.
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JOB KNOWLEDGE:
1. Minimum formal education: Associate’s degree in Business.
2. Minimum job content knowledge: Basic knowledge of economy of motion techniques.
Ability to handle people under high-stress situations.
3. Minimum experience: Six (6) months’ distribution or manufacturing experience.
4. Specific jobs that could prepare an individual for this job: Work managing or
supervising in a production environment; Operations Scheduler; Merchandise Coordinator,
Loss Prevention Supervisor.
Warehouse Order Clerk
JOB SUMMARY:
To prepare purchase orders to restock warehouse according to automatic reorder levels set
by the inventory control program. To monitor goods received to ensure that orders are
received on schedule, enter items into inventory, and notify accounting department so that
invoices can be entered into the accounts payable system.
ESSENTIAL FUNCTIONS:
1. Checks inventory reports daily to get list of items for automatic reorder.
2. Checks to see if a blanket order is in place. Authorizes new release of material and
updates balance remaining on blanket order.
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3. Prepares purchase order for items not covered by a blanket order. Proceeds unless there
is a change in price or terms that must be approved by the purchasing department.
4. Prepares list of inventory items for which purchasing department must choose vendor
and approve price.
5. Enters purchase orders in the inventory control system.
6. Monitors receipt of shipments and notifies accounting department so that they can
process invoices for payment.
QUALIFICATIONS:
1. High school diploma or equivalency degree.
2. Ability to maintain computerized inventory system promptly and accurately.
3. At least a year’s experience in warehouse and familiarity with inventory control system.
4. Ability to interact effectively with warehouse and accounting personnel as
Required.
Forklift Operator
Grade: 8
Reports to: Warehouse Supervisor Department: Logistics
Classification: Hourly Division: Warehousing
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Date: 9/28/2016 Approved: TSB
JOB SUMMARY:
To operate the warehouse forklift and perform various material handling duties.
ESSENTIAL FUNCTIONS:
1. Prior to signing out equipment performs operations and safety check, including battery,
brakes, lift controls, and fire extinguisher.
2. Signs out equipment daily on release form.
3. Proceeds safely to assigned area to pull, load, and move merchandise, checking locator
cards and all documents specific to each type of merchandise.
4. Uses equipment appropriate to each type of movement.
5. At each day’s end, returns equipment to correct charging station, and prepares
equipment for daily (overnight) charge.
Equipment: Stacker, Counterbalanced Forklift, Electric Jack,—Single and Double Pallet
Capacity.
JOB QUALIFICATIONS:
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· Good (9th grade) math, language, reading skills.
· Responsible with equipment and vehicles.
· Clean driving record (no property damage accidents, or DUIs within the past three
years).
· Vision: 20/20 corrected, and normal hearing range.
· Good physical condition, able to lift 50 lbs. safely.
· Good eye/hand coordination and good motor skills.
· Must be dependable, reliable, and mature enough to handle equipment safely and
sensibly.
Strategic Division
Director of Real Estate
POSITION SUMMARY:
Reports to Vice President of Operations
Plans future store locations and manages real estate decisions surrounding existing
locations to ensure every Greenfield’s store is ideally situated in its community for optimal
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travel efficiency for customers and delivery drivers. Negotiates the purchase and sale of all
Greenfield’s Owned property.
ESSENTIAL FUNCTIONS:
Studies geographical traffic patterns and metropolitan growth trends
Monitors real estate offerings in future market areas
Coordinates with dozens of independent regional real estate agents to monitor market shifts
and valuations
EXPERIENCE & EDUCATION
Bachelor Degree and Commercial Real Estate Brokers License
Director of Purchasing
POSITION SUMMARY :
Reports to Vice President of Operations
Plan, direct, or coordinate the activities of buyers, purchasing officers, and related workers
involved in purchasing materials, products, and services. Includes wholesale or retail trade
merchandising managers and procurement managers.
ESSENTIAL FUNCTIONS:
Represent companies in negotiating contracts and formulating policies with suppliers.
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Direct and coordinate activities of personnel engaged in buying, selling, and distributing
materials, equipment, machinery, and supplies.
Interview and hire staff, and oversee staff training.
Locate vendors of materials, equipment or supplies, and interview them to determine
product availability and terms of sales.
Prepare and process requisitions and purchase orders for supplies and equipment.
Develop and implement purchasing and contract management instructions, policies, and
procedures.
Maintain records of goods ordered and received.
Participate in the development of specifications for equipment, products or substitute
materials.
Analyze market and delivery systems to assess present and future material availability.
Resolve vendor or contractor grievances, and claims against suppliers.
Control purchasing department budgets.
Review, evaluate, and approve specifications for issuing and awarding bids.
Review purchase order claims and contracts for conformance to company policy.
Administer online purchasing systems.
Prepare reports regarding market conditions and merchandise costs.
Prepare bid awards requiring board approval.
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SKILLS:
Coordination —Adjusting actions in relation to others’ actions.
Active Listening —Giving full attention to what other people are saying, taking time to
understand the points being made, asking questions as appropriate, and not interrupting at
inappropriate times.
Critical Thinking —Using logic and reasoning to identify the strengths and weaknesses of
alternative solutions, conclusions or approaches to problems.
Speaking —Talking to others to convey information effectively.
Management of Personnel Resources —Motivating, developing, and directing people as
they work, identifying the best people for the job.
Negotiation —Bringing others together and trying to reconcile differences.
Persuasion— Persuading others to change their minds or behavior.
Social Perceptiveness —Being aware of others’ reactions and understanding why they
react as they do.
Time Management —Managing one’s own time and the time of others.
Judgment and Decision Making —Considering the relative costs and benefits of potential
actions to choose the most appropriate one.
Monitoring —Monitoring/Assessing performance of yourself, other individuals, or
organizations to make improvements or take corrective action.
105
Reading Comprehension —Understanding written sentences and paragraphs in work
related documents.
Writing —Communicating effectively in writing as appropriate for the needs of the
audience.
Service Orientation —Actively looking for ways to help people.
Active Learning —Understanding the implications of new information for both current and
future problem-solving and decision-making.
Instructing —Teaching others how to do something.
Learning Strategie s—Selecting and using training/instructional methods and procedures
appropriate for the situation when learning or teaching new things.
Management of Financial Resources —Determining how money will be spent to get the
work done, and accounting for these expenditures.
Complex Problem Solving— Identifying complex problems and reviewing related
information to develop and evaluate options and implement solutions.
Systems Analysis —Determining how a system should work and how changes in
conditions, operations, and the environment will affect outcomes.
Management of Material Resources —Obtaining and seeing to the appropriate use of
equipment, facilities, and materials needed to do certain work.
Systems Evaluation —Identifying measures or indicators of system performance and the
actions needed to improve or correct performance, relative to the goals of the system.
106
KNOWLEDGE:
Administration and Management —Knowledge of business and management principles
involved in strategic planning, resource allocation, human resources modeling, leadership
technique, production methods, and coordination of people and resources.
English Language —Knowledge of the structure and content of the English language
including the meaning and spelling of words, rules of composition, and grammar.
Production and Processing —Knowledge of raw materials, production processes, quality
control, costs, and other techniques for maximizing the effective manufacture and
distribution of goods.
Law and Government —Knowledge of laws, legal codes, court procedures, precedents,
government regulations, executive orders, agency rules, and the democratic political
process.
Mathematics —Knowledge of arithmetic, algebra, geometry, calculus, statistics, and their
applications.
Customer and Personal Service —Knowledge of principles and processes for providing
customer and personal services. This includes customer needs assessment, meeting quality
standards for services, and evaluation of customer satisfaction.
Transportation —Knowledge of principles and methods for moving people or goods by
air, rail, sea, or road, including the relative costs and benefits.
107
Economics and Accounting —Knowledge of economic and accounting principles and
practices, the financial markets, banking and the analysis and reporting of financial data.
Personnel and Human Resources —Knowledge of principles and procedures for
personnel recruitment, selection, training, compensation and benefits, labor relations and
negotiation, and personnel information systems.
ATTRIBUTES:
Oral Comprehension —The ability to listen to and understand information and ideas
presented through spoken words and sentences.
Oral Expression —The ability to communicate information and ideas in speaking so others
will understand.
Speech Clarity —The ability to speak clearly so others can understand you.
Speech Recognition —The ability to identify and understand the speech of another person.
Written Expression —The ability to communicate information and ideas in writing so
others will understand.
Deductive Reasoning —The ability to apply general rules to specific problems to produce
answers that make sense.
Fluency of Ideas —The ability to come up with a number of ideas about a topic (the
number of ideas is important, not their quality, correctness, or creativity).
Written Comprehension —The ability to read and understand information and ideas
presented in writing.
108
Problem Sensitivity —The ability to tell when something is wrong or is likely to go
wrong. It does not involve solving the problem, only recognizing there is a problem.
Information Ordering —The ability to arrange things or actions in a certain order or
pattern according to a specific rule or set of rules (e.g., patterns of numbers, letters, words,
pictures, mathematical operations).
Originality —The ability to come up with unusual or clever ideas about a given topic or
situation, or to develop creative ways to solve a problem.
Category Flexibility —The ability to generate or use different sets of rules for combining
or grouping things in different ways.
Inductive Reasoning —The ability to combine pieces of information to form general rules
or conclusions (includes finding a relationship among seemingly unrelated events).
Mathematical Reasoning —The ability to choose the right mathematical methods or
formulas to solve a problem.
Number Facility —The ability to add, subtract, multiply, or divide quickly and correctly.
Near Vision —The ability to see details at close range (within a few feet of the observer).
Selective Attention —The ability to concentrate on a task over a period of time without
being distracted.
Perceptual Speed— The ability to quickly and accurately compare similarities and
differences among sets of letters, numbers, objects, pictures, or patterns. The things to be
109
compared may be presented at the same time or one after the other. This ability also
includes comparing a presented object with a remembered object.
Selective Attention —The ability to concentrate on a task over a period of time without
being distracted.
EXPERIENCE AND EDUCATION:
Bachelor’s degree required. 3-5 years of related experience required.
Purchasing Manager
POSITION SUMMARY :
Plan, direct, or coordinate the activities of buyers, purchasing officers, and related workers
involved in purchasing materials, products, and services. Includes wholesale or retail trade
merchandising managers and procurement managers.
ESSENTIAL FUNCTIONS:
Represent companies in negotiating contracts and formulating policies with suppliers.
Direct and coordinate activities of personnel engaged in buying, selling, and distributing
materials, equipment, machinery, and supplies.
Interview and hire staff, and oversee staff training.
Locate vendors of materials, equipment or supplies, and interview them to determine
product availability and terms of sales.
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Prepare and process requisitions and purchase orders for supplies and equipment.
Develop and implement purchasing and contract management instructions, policies, and
procedures.
Maintain records of goods ordered and received.
Participate in the development of specifications for equipment, products or substitute
materials.
Analyze market and delivery systems to assess present and future material availability.
Resolve vendor or contractor grievances, and claims against suppliers.
Control purchasing department budgets.
Review, evaluate, and approve specifications for issuing and awarding bids.
Review purchase order claims and contracts for conformance to company policy.
Administer online purchasing systems.
Prepare reports regarding market conditions and merchandise costs.
Prepare bid awards requiring board approval.
SKILLS:
Coordination —Adjusting actions in relation to others’ actions.
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Active Listening —Giving full attention to what other people are saying, taking time to
understand the points being made, asking questions as appropriate, and not interrupting at
inappropriate times.
Critical Thinking —Using logic and reasoning to identify the strengths and weaknesses of
alternative solutions, conclusions or approaches to problems.
Speaking —Talking to others to convey information effectively.
Management of Personnel Resources —Motivating, developing, and directing people as
they work, identifying the best people for the job.
Negotiation —Bringing others together and trying to reconcile differences.
Persuasion— Persuading others to change their minds or behavior.
Social Perceptiveness —Being aware of others’ reactions and understanding why they
react as they do.
Time Management —Managing one’s own time and the time of others.
Judgment and Decision Making —Considering the relative costs and benefits of potential
actions to choose the most appropriate one.
Monitoring —Monitoring/Assessing performance of yourself, other individuals, or
organizations to make improvements or take corrective action.
Reading Comprehension —Understanding written sentences and paragraphs in work
related documents.
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Writing —Communicating effectively in writing as appropriate for the needs of the
audience.
Service Orientation —Actively looking for ways to help people.
Active Learning —Understanding the implications of new information for both current and
future problem-solving and decision-making.
Instructing —Teaching others how to do something.
Learning Strategie s—Selecting and using training/instructional methods and procedures
appropriate for the situation when learning or teaching new things.
Management of Financial Resources —Determining how money will be spent to get the
work done, and accounting for these expenditures.
Complex Problem Solving— Identifying complex problems and reviewing related
information to develop and evaluate options and implement solutions.
Systems Analysis —Determining how a system should work and how changes in
conditions, operations, and the environment will affect outcomes.
Management of Material Resources —Obtaining and seeing to the appropriate use of
equipment, facilities, and materials needed to do certain work.
Systems Evaluation —Identifying measures or indicators of system performance and the
actions needed to improve or correct performance, relative to the goals of the system.
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KNOWLEDGE:
Administration and Management —Knowledge of business and management principles
involved in strategic planning, resource allocation, human resources modeling, leadership
technique, production methods, and coordination of people and resources.
English Language —Knowledge of the structure and content of the English language
including the meaning and spelling of words, rules of composition, and grammar.
Production and Processing —Knowledge of raw materials, production processes, quality
control, costs, and other techniques for maximizing the effective manufacture and
distribution of goods.
Law and Government —Knowledge of laws, legal codes, court procedures, precedents,
government regulations, executive orders, agency rules, and the democratic political
process.
Mathematics —Knowledge of arithmetic, algebra, geometry, calculus, statistics, and their
applications.
Customer and Personal Service —Knowledge of principles and processes for providing
customer and personal services. This includes customer needs assessment, meeting quality
standards for services, and evaluation of customer satisfaction.
Transportation —Knowledge of principles and methods for moving people or goods by
air, rail, sea, or road, including the relative costs and benefits.
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Economics and Accounting —Knowledge of economic and accounting principles and
practices, the financial markets, banking and the analysis and reporting of financial data.
Personnel and Human Resources —Knowledge of principles and procedures for
personnel recruitment, selection, training, compensation and benefits, labor relations and
negotiation, and personnel information systems.
ATTRIBUTES:
Oral Comprehension —The ability to listen to and understand information and ideas
presented through spoken words and sentences.
Oral Expression —The ability to communicate information and ideas in speaking so others
will understand.
Speech Clarity —The ability to speak clearly so others can understand you.
Speech Recognition —The ability to identify and understand the speech of another person.
Written Expression —The ability to communicate information and ideas in writing so
others will understand.
Deductive Reasoning —The ability to apply general rules to specific problems to produce
answers that make sense.
Fluency of Ideas —The ability to come up with a number of ideas about a topic (the
number of ideas is important, not their quality, correctness, or creativity).
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Written Comprehension —The ability to read and understand information and ideas
presented in writing.
Problem Sensitivity —The ability to tell when something is wrong or is likely to go
wrong. It does not involve solving the problem, only recognizing there is a problem.
Information Ordering —The ability to arrange things or actions in a certain order or
pattern according to a specific rule or set of rules (e.g., patterns of numbers, letters, words,
pictures, mathematical operations).
Originality —The ability to come up with unusual or clever ideas about a given topic or
situation, or to develop creative ways to solve a problem.
Category Flexibility —The ability to generate or use different sets of rules for combining
or grouping things in different ways.
Inductive Reasoning —The ability to combine pieces of information to form general rules
or conclusions (includes finding a relationship among seemingly unrelated events).
Mathematical Reasoning —The ability to choose the right mathematical methods or
formulas to solve a problem.
Number Facility —The ability to add, subtract, multiply, or divide quickly and correctly.
Near Vision —The ability to see details at close range (within a few feet of the observer).
Selective Attention —The ability to concentrate on a task over a period of time without
being distracted.
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Perceptual Speed— The ability to quickly and accurately compare similarities and
differences among sets of letters, numbers, objects, pictures, or patterns. The things to be
compared may be presented at the same time or one after the other. This ability also
includes comparing a presented object with a remembered object.
Selective Attention —The ability to concentrate on a task over a period of time without
being distracted.
EXPERIENCE AND EDUCATION:
Bachelor’s degree required. 3-5 years of related experience required.
Purchasing Agent
JOB SUMMARY:
Reports to Purchasing Manager
To purchase goods and service for the company in an efficient and economical manner following
established policies and procedures in processing purchase orders.
ESSENTIAL FUNCTIONS:
1 Follows firm’s policies and procedures for the purchase of goods and services.
2. Follows policies and procedures established by the purchasing manager and monitors
activities of purchasing clerks.
3. Negotiates cash discounts, volume purchasing discounts, and OEM pricing, etc.
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4. Selects vendors on the basis of price, capability, and past performance following departmental
guidelines.
5. Makes certain that purchasing documents are completed properly and the terms and conditions
of purchase are appropriate.
6. Keeps accurate records, including price histories and any problems in doing business with
particular vendors
7. Works closely with managers scheduling production to maintain a “just-in-time” level of
inventory.
QUALIFICATIONS:
1. Bachelor’s degree and two years of purchasing experience or an associate’s degree with five
years of purchasing experience.
2. Ability to work independently and also as a team member.
3. Strong communication skills.
4. Good PC skills.
Director of Administration
JOB SUMMARY:
Reports to Vice President of Operations
To fill the role of corporate administrator, corporate assistant secretary, personnel manager,
and legal counsel for the company.
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The individual will review all joint venture, real estate, and other legal documents and
serve as personnel manager. The individual will also maintain corporate records and
tickler systems to ensure timely completion of certain filings and documentation and will
oversee office manager activities.
ESSENTIAL FUNCTIONS:
1. Administration and Real Estate Transactions
a. Joint ventures and direct ownership:
1. Assists all officers in the coordination of all legal matters.
2. Acts as expeditor for the review and execution of documentation.
3. Ensures completion and maintenance of deal document volumes and post-closing items.
4. Ensures that the financing and legal reporting requirements of each deal are met on a
monthly, quarterly, and annual basis.
5. Maintains post-closing check-off list.
6. Maintains tickler system for leases, partnerships, etc.
7. Reports as needed to money partners where the company is the managing partner.
b. File system supervision/archives/purge policies:
1. Direct responsibility for the maintenance of the main office real estate files and
administration files.
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2. Indirect (policy guideline) responsibility for other files.
2. Assistant Corporate Secretary
a. Maintains minutes books.
b. Maintains stock books and stock certificates.
c. Maintains corporate secretary books.
d. Acquires federal employer ID numbers.
e. Maintains tickler system for corporate form filings. Ensures that annual report forms,
etc., are filed on time.
3. Personnel
a. Takes responsibility for personnel policies.
b. Coordinates recruitment, testing, and interviewing for professional personnel.
c. Oversees the recruiting, testing, and interviewing of clerical personnel and other
activities in the assistant personnel director function.
d. Oversees the preparation and maintenance of the personnel manual.
4. Investor relations—ensures that all reports and information are distributed to investors
and money partners in a timely fashion.
ADDITIONAL RESPONSIBILITIES:
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1. Coordinates documentation and presentations necessary for Board of
Director/Officers/other meetings.
2. Coordinates/prepares/distributes notices, proxies, and unanimous consent resolutions.
3. Oversees office manager function and receptionist positions.
JOB QUALIFICATIONS:
1. Bachelor’s degree in a pertinent field (i.e., Real Estate, English, Accounting, Business,
etc.), and a law degree.
2. One (1) to three (3) years’ experience in a real estate related field.
3. Must possess strong administrative, organizational, and communication skills.
Administrative Clerk
Grade: 29 Hourly
Reports to Administrative Director
Job Summary:
Provides clerical and reception support for the administrative and program staff of the
agency, including answering telephones, greeting clients and visitors, making appointments
and referrals, keying, and filing.
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ESSENTIAL FUNCTIONS:
1. Greets and refers clients and visitors.
2. Composes correspondence, reports, forms, and other documents independently or from
transcribing machines, notes, or general instruction from supervisor and staff.
3. Proofreads material and corrects grammar, spelling, or word usage; receives and screens
callers with complaints or problems and directs them to the appropriate party for
disposition.
4. Makes appointments, coordinates meetings, and schedules conference rooms for
supervisors and staff using an online calendar system; arranges hotel and airline
reservations and local travel plans for supervisors and staff.
5. Compiles budget data from financial records; prepares claims; maintains records of
budget transfers; establishes filing system for accounts payables, purchase orders, and
equipment inventory; maintains and controls confidential employee or departmental files;
schedules maintenance of office equipment.
6. Often develops and maintains computerized spreadsheets and databases to enter
information and generate reports; produces, revises, or refines formal presentation
materials using presentation software such as PowerPoint ® .
7. Answers main telephone system, makes referrals, takes messages, and directs incoming
calls appropriately.
8. Receives and logs incoming mail.
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9. Types and/or reproduces reports, forms, correspondence, checks, grants, and other
material as generated by agency staff.
10. Duplicates, collates, and prepares for mailing reports, lists, correspondence, etc.
Additional Responsibilities:
May perform other duties as deemed necessary by supervisor.
QUALIFICATIONS:
1. Ability to accurately key a minimum of 50 wpm.
2. Ability to operate standard office machines.
3. Knowledge of efficient office procedures and recordkeeping practices; standard word
processing, spreadsheet, database, and presentation software; e-mail systems; proper
English usage, spelling, and punctuation.
4. Ability to answer telephones and greet the public in a friendly and courteous manner.
5. Ability to perform assigned duties with a minimum of supervision; identify problems
and implement or recommend solutions; interpret and apply policies and procedures within
limits of authority.
6. Ability to interact with tact and discretion with supervisors, officials, employees, and
the general public.
7. Ability to learn and adapt to new technology relating to office practices and procedures;
maintain confidentiality of information; pay attention to detail; and work effectively
despite interruptions.
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8. Ability to plan, organize, and prioritize work; proofread documents; use a computer and
related software, transcribing equipment, and other standard office equipment.
9. Ability to speak in a clear and understandable manner and write legibly.
10.Bilingual (English-Spanish) speaking and writing skills preferred.
11.High school graduate or equivalent.
12. 1 year of clerical work experience.
Retail Division
Regional Director of Operations
Report to Vice President of Operations
JOB SUMMARY:
Manage, direct, and implement operations strategies and objectives to ensure the
achievement of division’s goals. Focuses for short-term goals are on-time delivery, cost of
sales, quality and gross margin, and human resources. Focuses for long-term goals are the
formulation, planning, and implementation of strategies.
DIMENSIONS:
• Total of 814 people report to operations which has an estimated payroll of $17
million at different locations.
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• Capital equipment budget of $1.6 million.
• Division sales estimated at $72 million.
• Direct or indirect responsibility for meeting the cost of sales, estimated at $69
million or as set by the Vice President of engineering and operations budget.
• Responsibility for keeping delinquencies to less than two percent of sales.
ESSENTIAL FUNCTIONS:
1. Manage the operations function concurrent with:
a. Business growth
b. Introduction of new operational systems
c. Meeting division financial objectives
d. Major cultural changes demanded by military customers
e. Product mix change (components/system)
f. Meeting divisional goals in relation to safety, quality, and on-time delivery of
products.
2. Assess and assist in upgrading the management talent base within operations to
achieve growth and meet market needs (i.e. reduced cost, shorter manufacturing/product
introduction cycle times and on-time delivery.
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3. Conceive, research, plan, target, and control reductions in cost and product lead
times on existing and new products.
4. Manage and assist in coordinating effort between support departments within the
organization.
5. Participate in the implementation of advanced manufacturing technology to
improve cost of sales and promote on-time delivery.
6. Establish more uniform methods of manufacturing similar product.
7. Create a productive department through written and verbal communication.
8. Is a member of the Vice President of engineering and operations staff and is a key
contributor to:
a. The overall long range planning process.
b. Establishment and assessment of the division’s annual operating budget as agreed to by
the Vice President of operations.
c. Achievement of monthly, quarterly, and yearly goals as set forth in the budget.
d. OPS Reviews, covering current and future forecasts and delinquencies.
e. Quote participation as required in new business.
9. Is chairperson of the SPC Board and has responsibility for the company-wide “Zero
Delays” program. This person also serves on numerous other committees for product line
management.
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10. Achieve the division’s yearly financial objectives, for all departments reporting to the
incumbent, through planning, directing, controlling, implementing, evaluating, monitoring,
and forecasting as needed to achieve budgets and cost of sales.
11. Project a positive image to peers and subordinates, to the customers we serve, to the
industry in which we participate, and to the community in which we live by producing a
cost-efficient, quality product in a productive environment.
12. Plan, prepare, control, monitor, and forecast departmental direct and/or indirect
budgets.
13. Participate in actions to maximize division’s “win” posture for follow-on contracts
involving existing products, such as reduction programs, etc.
14. Coordinate needed support to operations areas through intradepartmental interface for
smooth work flow and cost-efficient product.
15. Work with the Vice President of engineering and operations to select and establish
quality initiatives such as product support teams and statistical process control techniques
as well as pursuing current quality programs to reduce scrap and rework while achieving a
“Zero Delay” mindset in manufacturing operations and keeping delinquencies at less than
2% of sales.
16. Continuously improve customer satisfaction through programs to reduce delinquencies,
provide for on-time delivery, and meet customer quality and cost expectations. Actively
seek customer interfaces to communicate and facilitate customer needs within the
organization.
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17. Participate in the implementation of new manufacturing processes, product and systems
technology to meet the division’s objectives.
18. Participate, plan, and prepare the LRP as related to departments reporting to the
incumbent to support the division’s strategic goals.
19. Provide a leadership role in the integration of efforts within operations, quality, and
engineering for the effective introduction of new quality systems and technology within
operations.
20. Establish, prepare, implement, revise, and maintain policies and procedures related to
operations.
21. Administer and manage the division’s safety and quality to provide an adequate and
safe working environment.
ADDITIONAL RESPONSIBILITIES:
None listed.
JOB QUALIFICATIONS:
The incumbent needs a diversified background with strong technical, business, and
managerial skills. Decisions are made, based on inputs provided by superiors,
subordinates, and peers, consistent with company goals.
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District Retail Manager
Grade: 38
Reports to: Director of Operations Department: Administrative
Classification: Salary Division: Executive
Date: 9/28/201 Approved: TSB
JOB SUMMARY:
Administers, coordinates, and implements all retailing activities within the region; and
supervises all new branch installations or existing branch modernizations and/or
relocations.
ESSENTIAL FUNCTIONS:
The primary challenges of this position are to successfully integrate national retailing
programs into the region, to promote the sales of company-branded products and sundry
items (i.e., produce, package meats, frozen meals etc.), to achieve maximum market
penetration, and to attain both short- and long-range objectives for retail sales growth. The
incumbent has a functional responsibility to the zone managers in the area of retail sales.
Regional retail sales are approximately $4,500,000 per year, and are generated through 52
branch locations.
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The incumbent is responsible for the strategic business planning for the retail segment of
the region’s business. This includes forecasting sales per branch, as well as the profit
expected from the sales. He or she develops the local advertising budget for the region, in
consultation with the zone managers and his or her superior.
The incumbent spends approximately 70 percent of his or her time traveling to and
working at branch locations to provide retailing and merchandising expertise to branch
personnel. This includes advising them on how to properly merchandise the unit; selling
methods and techniques; handling promotions; supervising demonstrations and clinics on
effective store displays, Deli Menus, shelf positioning etc.
The incumbent spends approximately 15 percent of his or her time planning and
implementing new branch locations or relocations, in close coordination with the manager
of branches department. This includes the responsibility for final inspection of a new
branch, prior to the company accepting it, to ensure that it conforms to company
specifications. He or she has the sole responsibility for setting up a new branch from its
conception through the grand opening, including planning the store layout, the product
display, etc. within the parameters of the approved standard floor plan. After the grand
opening, the line responsibility for the store operation transfers completely to the store
manager, and the incumbent is divested from its operation except as an advisor on retailing,
etc.
The incumbent is required to periodically develop store layout changes to meet changed
business plans and/or needs. After a distribution unit manager accepts the incumbent’s
plans, it is the D/U manager’s responsibility to obtain cost estimates, completion dates, etc.,
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from an area contractor. The incumbent initiates a CER to affect layout changes or
improvements only after approval by the D/U manager and his or her superiors. He or she
then follows the job through to completion to ensure that it is completed according to
specifications. The incumbent is also responsible for ordering all fixtures and
materials-handling equipment for both new and renovated distribution units.
The incumbent keeps the regional manager of branch operations informed of his or her
activities via a weekly route sheet and trip reports. He or she generally has wide authority
in performing most aspects of the job, such as scheduling his or her own workload and
making day-to-day decisions necessary to perform his or her function. The incumbent has
no personnel supervisory responsibilities, and is not required to recommend or initiate
salary adjustments, promotions, terminations, or hires. He or she participates in the
quarterly retail planning meeting by presenting new sales plans and programs.
1. Sets up all new units within the eastern region to ensure maximum sales and profits.
2. Plans and supervises promotions and demonstrations at various retailing units to
maximize sales and profits.
3. Advises the unit and zone managers on store layout changes and/or improvements in
line with new merchandising techniques.
4. Trains retailing unit personnel in proper merchandising methods, selling procedures,
and the running of various types of clinics.
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5. Provides input and recommendations to the national retail sales manager on product
requirements and needs, merchandising requirements on promotional pricing needs, point
of sale, in-store needs and advertising needs, store layout changes, etc.
6. Keeps informed of competitors’ activities through review of information from the
field or from other sources.
ADDITIONAL RESPONSIBILITIES:
1. Assists the zone managers with retail manpower forecasts and salary budget plans to
be included in the SBP.
2. Assists in the development of retail sales at the unit.
JOB QUALIFICATIONS:
The talents required for this position include an excellent knowledge of retail selling with
an extensive knowledge of merchandiser retailing, including advertising and
merchandising planning, inventory turnover, return on investment, and sales per square
foot, plus the overall ability to use tact and discretion to achieve his or her purposes
through others. In addition, he or she must remain knowledgeable about the fast-moving
developments in the retailing and merchandising fields.
In order to fulfill the requirements of this position, it is highly desirable for the incumbent
to: have 8-10 years of business experience with at least 5 years’ experience in retail sales
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and marketing and several years’ experience in general management concepts such as
planning, accounting, administration, and economics, with specialized on-job training in
real estate construction, leasing, site selection, etc. The education level required for this
position is a bachelor’s degree, or equivalent, in marketing, business administration,
economics, or finance.
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Branch Store Manager
Reports to District Manager
Salary plus profit share
JOB SUMMARY:
To manage operation of branch store, following company wide schedule of promotions and
specials, scheduling working hours and supervising salesclerks in stocking merchandise,
arranging displays, operating checkout stations, and providing customer service.
ESSENTIAL FUNCTIONS:
1. Interviews job applicants for sales positions; checks references and hires personnel.
2. Supervises training of new clerks to operate cash registers, handle credit card sales, treat
customers in a courteous manner, and become familiar with merchandise and its location
within store.
3. Follows company schedule for special promotions and sales. Oversees merchandise
displays and overall appearance and cleanliness of store. Makes sure any special price
signs are posted and registers have been updated to reflect daily price changes.
4. Schedules work hours for all personnel with extra personnel assigned to handle peak
customer traffic while minimizing total hours worked.
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5. Oversees ordering of merchandise from distribution center according to inventory
automatic replacement system. Makes periodic physical spot checks of inventory to ensure
that computerized records are being maintained accurately.
6. Checks daily sales reports and cash receipts. Makes sure all monies are deposited
regularly and reports are sent to the central accounting office in a timely manner.
7. Monitors activity within store to observe quality of customer service and provide
assistance as required.
QUALIFICATIONS:
1. Bachelor’s degree and at least two years of retail experience is desirable, but less formal
education and more on-the-job experience may be substituted.
2. Good organizational skills as well as an ability to motivate and communicate effectively
with staff.
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Store Level Staffing Positions as Follows:
Assistant Store Manager :
Reports to Store Manager
Responsible for assisting the Store Manager. In the absence of the Store Manager, the
Assistant Manager is in charge of the store, with analogous authority, duties and powers
as the Store Manager. The ASM is responsible for the supervision of all store employees
and handles/delegates employee-related issues.
Book inventory The stock that should be on hand according to the accounting records.
Qualifications: Associate’s Degree with more than five years experience and a track
record of exceptional customer service and team support
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Department Managers are held accountable for their departments’ results in providing superior
service, increasing sales, improving gain, and containing cost, as well as training, supervising,
scheduling, and assigning duties to clerks in their department. Department Managers are also
responsible for performing all Clerk-related duties within their departments.
The Department Manager is found in each perishable department in the store:
Bakery Manager :
Reports to Assistant Manager
designs and implements the recipes for fresh baked breads, pastries and cakes and is
responsible for maintaining bakery equipment, automation and robotics.
Qualifications: High School Diploma or equivalent, clean criminal background, and to or
more years experience in grocery industry
Dairy Manager :
Reports to Assistant Manager
oversees dairy department stockers to oversee optimal stock rotation to ensure stock
freshness
Qualifications: High School Diploma or equivalent, clean criminal background, and to or
more years experience in grocery industry
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Grocery Manager :
Reports to Assistant Manager
Oversees packaged item stockers to ensure optimal shelf placement and display
effectiveness, also ensures freshness through shelf rotation.
Qualifications: High School Diploma or equivalent, clean criminal background, and to or
more years experience in grocery industry
Liquor Manager :
Reports to Assistant Manager
Supervises liquor clerks to ensure age ID protocol is followed and monitors alcohol
products with liquor department specific security processes are employed to prevent
shoplifting and employee theft.
Qualifications: High School Diploma or equivalent, clean criminal background, 25 years
or older and to or more years experience in grocery industry
Floral Manager :
Reports to assistant store manager
Responsible for floral arrangement design and order fulfillment, coordinates floral
delivery times and drivers.. Also responsible for displays in greeting card and party
supply aisles.
Qualifications: High School Diploma or equivalent, clean criminal background, and to or
more years experience in grocery industry, drivers license
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Meat Manager :
Reports to Assistant Manager
Certified Journeyman Meat Cutter who oversees meat cutting and storage. Responsible
for all meat department employees to ensure meat cut and delivered to the shelves in a
manner to minimizes waste while maximizing freshness and sanitation.
Qualifications: High School Diploma or equivalent, clean criminal background, and to or
more years experience in grocery industry, completed Meat cutters apprenticeship
Produce Manager:
Reports to Assistant Manager
Oversees produce truck unloading to minimize produce exposure to weather, oversees
produce employees and their schedule to ensure adequate staffing is available for
shipment receipts. Also responsible for hand picking choice vegetables upon delivery and
transporting them to the deli for use in salads and delivered meals. Also responsible for
testing produce for pesticides and researching shipment sources to ensure that produce is
from certified non-GMO farms.
Qualifications: High School Diploma or equivalent, clean criminal background, and two
or more years experience in grocery industry.
Deli Food Services Manager :
Reports to Assistant Store Manager
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Responsible for designing menu of hot foods, delivered meal plans and pre cooked deli
meats and cheeses.
Calibrates, programs and maintains automation and robotics equipment used to produce
hot meal plan products. Schedules deli department employees and coordinates hot meals
delivery schedules with delivery driver contractors.
Qualifications: High School Diploma or equivalent, clean criminal background, and two
or more years experience in grocery industry.
Front End Manager
Reports to Assistant Manager
The front part of the store where the checkstands are located.
Front End Manager Oversees Checkers by approving certain transactions and ensuring
Checkers provide effective customer service. Fills in as a Checker when lines get long;
minimizes theft and shrink.
Qualifications: Associate’s Degree or equivalent, clean criminal background, and 4 or
more years experience in grocery industry
Grocery Manager :
Reports to Store Manager
Supervises and coordinates the activities of the Grocery Department and its employees,
including ordering, merchandising, and labor control. Facilitates the movement of
product from the receiving area; stocks product on the shelves including facing, cleaning,
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and rotating product. Assist the Store Manager and Assistant Store Manager in
supervising the operations of the store. Ensure the production of quality merchandise and
service consistent with Greenfield’s standards.
Qualifications: Associates Degree and more than 4 years experience in grocery industry.
Inventory Control Clerk (ICC ):
Reports to Grocery Manager
The receiver in the store; oversees all back-door deliveries and backroom inventory;
manages the inventory levels of a store.
Qualifications: High School Diploma or equivalent, clean criminal background, and two
or more years experience in grocery industry.
Meat Manager :
Reports to Assistant Store Manager
The Department Manager of the Meat Department. Assigns daily duties to meat clerks
and meat cutters. Prepares and cuts meat in accordance with company standards on
merchandise presentation, safety, sanitation, customer service and suggestive selling.
Orders, stocks and displays all fresh meat, fish, poultry and prepackaged products.
Qualifications: High School Diploma or equivalent, clean criminal background, and two
or more years experience in grocery industry.
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Cashier :
Reports to Front-End Shift Supervisor.
The primary function of this position is to operate computerized cash register to itemize
and total customer’s purchases. The Cashier collects payment from the customer, process
transactions, places purchased items in bags, and checks identification for liquor and
tobacco purchases. The Cashier may also return defective or unwanted merchandise,
troubleshoot card reader and scanner errors, replace paper in printers, deal with customer
complaints or price disputes, and answer the store telephone.
Qualifications: Clean criminal history, pleasant personality, 16 years and older
Checker :
Reports to Front-End Shift Supervisor
Operates the checkstand to process customer purchases; provides customer service.
Qualifications: Clean criminal history, pleasant personality, 16 years and older
Night Crew Consists of the Night Crew Supervisor, Night Crew Stockers, and Night
Crew Order Writer. See below.
Night Crew Stocker :
Reports to Department Manager
Faces merchandise on shelves in the store for attractive appearance; stocks items on store
shelves; dusts and washes shelves as needed; checks temperatures in cold cases, coolers,
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and freezers. Also responsible for store security, maintaining aisles with a clear walkway
and may occasionally function as cashier/checker.
Qualifications: High School Diploma or equivalent 18 or older
Night Crew Supervisor:
Reports to Assistant Manager
Supervises night stocking staff; fills, rotates and faces shelves with stock. When no other
management is present, acts as the senior person in the store; all questions and problems
may be referred to him/her. Also responsible for store security and cashier duties as
necessary.
Qualifications: High School Diploma or equivalent, clean criminal background, and two
or more years experience in grocery industry.
Order Writer :
Reports to Grocery Manager
Responsible for daily reviewing of the Out of Stock reports and ordering grocery
products. Out of Stocks (OOS) Items not available on the shelf for the customer.
Qualifications: High School Diploma or equivalent, clean criminal background, 18 or
older.
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Receiving Clerk:
Reports to Grocery Manager
Also known as the Back Door Receiving Clerk (BDR). Oversees the delivery of all
grocery item inventory.Definition of Terms
Qualifications: High School Diploma or equivalent, clean criminal background, and two
or more years experience in grocery industry.
MULTI-STEP PLANNING PROCESS
Management planning is the process of assessing an organization’s goals and creating a
realistic, detailed plan of action for meeting those goals. Much like writing a business
plan, a management plan takes into consideration short- and long-term corporate
strategies. The basic steps in the management planning process involve creating a
roadmap that outlines each task the company must accomplish to meet its overall
objectives.
(1)Establish Goals
The first step of the management planning process is to identify specific company goals.
This portion of the planning process should include a detailed overview of each goal,
including the reason for its selection and the anticipated outcomes of goal-related
projects. Where possible, objectives should be described in quantitative or qualitative
terms. An example of a goal is to raise profits by 25 percent over a 12-month period.
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(2)Identify Resources
Each goal should have financial and human resources projections associated with its
completion. For example, a management plan may identify how many sales people it will
require and how much it will cost to meet the goal of increasing sales by 25 percent.
(3)Establish Goal-Related Tasks
Each goal should have tasks or projects associated with its achievement. For example, if a
goal is to raise profits by 25 percent, a manager will need to outline the tasks required to
meet that objective. Examples of tasks might include increasing the sales staff or
developing advanced sales training techniques
(4)Prioritize Goals and Tasks
Prioritizing goals and tasks is about ordering objectives in terms of their importance. The
tasks deemed most important will theoretically be approached and completed first. The
prioritizing process may also reflect steps necessary in completing a task or achieving a
goal. For example, if a goal is to increase sales by 25 percent and an associated task is to
increase sales staff, the company will need to complete the steps toward achieving that
objective in chronological order.
(5)Create Assignments and Timelines
As the company prioritizes projects, it must establish timelines for completing associated
tasks and assign individuals to complete them. This portion of the management planning
process should consider the abilities of staff members and the time necessary to
realistically complete assignments. For example, the sales manager in this scenario may
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be given monthly earning quotas to stay on track for the goal of increasing sales by 25
percent.
(6)Establish Evaluation Methods
A management planning process should include a strategy for evaluating the progress
toward goal completion throughout an established time period. One way to do this is
through requesting a monthly progress report from department heads.
(7)Identify Alternative Courses of Action
Even the best-laid plans can sometimes be thrown off track by unanticipated events. A
management plan should include a contingency plan if certain aspects of the master plan
prove to be unattainable. Alternative courses of action can be incorporated into each
segment of the planning process, or for the plan in its entirety.
MULTI-STEP BUDGETING PROCESS
At GCPG, the budgeting process works bottom-up, with top management setting the direction,
while lower-level and mid-level managers develop the budgets and submit them for approval.
When the budgets are consolidated, senior managers can determine whether GCPG’s budget
objectives are being met. Then the budget is either approved or sent back down the hierarchy for
additional refinement.
Our budget process is characterized by several essential features including: incorporating a
long-term perspective, establishing linkages to broad organizational goals, focusing budget
decisions on results and outcomes, involving and promoting effective communication with
stakeholders, and providing incentives to GCPG management and employees.
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Types of Budgets Used by GCPG
● Sales Budget: This data includes the sales budget forecasts by month, sales area and
product.
● Production Budget: This budget is expressed in physical units which includes capacities
of machines, economic quantities to produce and availability of materials.
● Cost Budget: The cost budget is used for areas of the organization that incur expenses but
no revenue, such as human recourses and other support departments.
● Cash Budget: This is essential to GCPG. It is prepared after all other budget estimates are
completed. The cash budget shows the anticipated receipts and expenditures, the amount
of working capital available, the extent to which outside financing may be required, and
the periods and amounts of ash available.
● Capital Budget: The capital budget is used for the cost of fixed assets like buildings and
equipment. These costs are treated not as regular expenses but as investments because of
their long term nature and importance to GCPG’s productivity.
● Master Budget: The master budget includes all the major activities of GCPG. It brings
together and coordinates all the activities of the other budgets and can be thought of as
the budgets of budgets.
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The following are the steps of the budgetary and financial planning process for GCPG:
Step one
Develop GCPG financial goals
This includes financial knowledge, management and perspective. Sales, production, cost,
cash, and capital.
● Identify and write down GCPG goals
○ Make sure they are Specific, Measureable, Achievable, and Time-bound
○ Organize GCPG goals by time frames
○ Evaluate GCPG progress
○ Reevaluate GCPG goals regularly
○ Develop a Spending Plan
● Examine GCPG income and expenses
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● Track GCPG spending
○ After tracking, make a budget
Ways that GCPG decreases spending:
● Eliminate an unnecessary purchase every month
● Evaluate wants vs. needs
● Think twice before spending that does not help reach your financial goals
● Plan and save rather than using credit
Options:
1. Monthly Payment Schedule or Calendar
2. Budget Box
3. Computer Spreadsheet
4. Recordkeeping
5. Expense Envelope System (if you pay your bills in cash)
Step two
Identify resources
● Cash
● Liquid securities
● Credit lines
Step three
Identify alternative courses of action and consult past plan
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Developing alternatives is crucial for making good decisions. Although many factors will
influence the available alternatives, possible courses of action usually fall into these
categories:
● Continue the same course of action: We may determine that the amount saved
each month is still appropriate.
● Expand the current situation.
● Change the current situation.
● Take a new course of action.
● Creativity in decision making is vital to effective choices. Considering all of the
possible alternatives will help to make more effective and satisfying decisions.
Step four
Evaluate alternatives
Every decision closes off alternatives. Opportunity cost is what the company gives up by
making a choice
● Assess: risk, time value of money;
● Consider: current situation, values, economic factors.
● Evaluating Risk: Uncertainty is a part of every decision.
Step five
Create and implement a financial action plan
This step involves developing an action plan that identifies ways to achieve our goal and
then executing those plans after completing the four steps listed above first.
Step six
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Review and revise financial plan
Spending plan periodically (about every 6 months)
Financial goals and spending priorities after 12 months or any life changing event
Credit report every 4 months (once a year from each credit reporting agency)
Much of this includes, identifying and evaluating potential opportunities, estimating operating
and implementation costs, estimating cash flow, assessing risk and implementing plan.
Greenfield’s uses a balanced scorecard, in which managers use a number of different financial
and operational metrics to track performance and control GCPG. All budgets are reviewed
monthly, with the exception of the Master budget which is reviewed yearly.
ORGANIZATIONAL CULTURE
Greenfield’s Click and Pick Grocery’s organizational culture is mainly focused on teams.
However, the company also maintains other cultural variables that contribute to business
performance. The most important characteristics of GCP’s organizational culture are as follows:
1. Commitment to environmental sustainability
2. Commitment to ethical decision making
3. Focus on teams
4. Encourage Participation
5. Sponsor Employee Semi-formal interactions
6. Promote Transparent Reporting
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Commitment to Environmental Sustainability:
Greenfield’s founders built the business model around a a series of services that not only save
customers time but also reduces their carbon footprint by increasing energy efficiency in the
processing used to create the final products and reduce all packaging wastes. Customers who
utilize the delivery services reduce greenhouse emissions and fossil fuel consumption through
the use of electric delivery vehicles that are charged from certified near zero emissions power
sources. Greenfield’s onboarding process dedicates 20 hours of classroom training on carbon
emissions, waste management and fossil fuel consumption and sustainability and describes the
carefully engineered processes utilized by the Greenfield’s Click & Pick business model. Every
year each Greenfield’s associate is required to attend a one day class on environmental impacts of
the grocery industry and participate in at least 2 days of environmental volunteering to qualify
for bonus paid time off opportunities.
To encourage the advancement of Greenfield’s sustainability technologies, associates are
rewarded for submitting suggestions for environmentally beneficial operating processes.
Rewards for ideas that become implemented, based on the magnitude of impact range from
recognition plaques to cost savings royalty bonuses.
Commitment to Ethical Decision Making:
Greenfield’s management believes that quality of earnings that the company can generate for its
employee shareholders requires the application of ethical considerations for all business
decisions. Every new hire must complete a four hour course on how ethics apply to the grocery
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providing business where role playing simulates many ethical dilemmas that an associate may
face over the course of their career.
The enforcement of these ethical values is supported by an anonymous tip line to the Human
Resources Vice President. In addition every Greenfield’s employee is required to complete an
annual two hour updated course on ethical scenarios in the workplace.
FOCUS ON TEAMBUILDING
Greenfield’s organizational culture is most noted for its emphasis on teamwork. Every level of
the organization has teams. Even the Vice President’s function as Co-Presidents. This feature of
GCPG’s organizational culture enables the company to optimize employee morale and reduce
turnover. Employee morale and perception is important to the company. In fact, one of
Greenfield’s core values is “Supporting team member happiness and excellence meeting our
challenges and opportunities as: one team, focused on common goals.” Thus, the company’s
organizational culture contributes to human resource resilience.
To foster teamwork philosophy, every Greenfield’s location selects a “teammate of the month”
award from nominees emailed from store members to the location’s assistant manager. The
monthly winner receives two consecutive paid days off.
Participation . GCPG also supports extensive employee participation in the context of its
organizational culture. For example, in the company’s hiring process, employees participate in
selecting their team members. In addition, the firm’s organizational culture encourages various
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social gatherings, such as the company’s “Vision Days,” which reinforces the GCPG Visions.
This characteristic of the company’s organizational culture enhances cohesion and morale among
workers.
Three visionary team members from management roles are selected by region for their
elaboration and implementation of the Greenfield’s vision, the winners are granted an additional
week of pair time off.
Semi-formal interactions . Greenfield’s is also known for semi-formal interactions at its stores.
This feature of the firm’s organizational culture is observable in the lively and meaningful
conversations employees have with each other and even with customers. GCPG also maintains
onboarding programs where new hires build social relations with other employees. This
characteristic of the company’s organizational culture supports rapport among workers and
customers.
Greenfield’s sponsors and encourages weekly participation on company softball team, bowling
league and golf clubs. Regional team outings are held quarterly with large sponsored events such
as the annual company picnic, zoo day, and adventures that have included mountain climbing,
paintball, whitewater rafting and ziplining for the whole family.
TRANSPARENCY
GCPG’s organizational culture also integrates the principle of transparency. The company aims
to keep stakeholders informed. Greenfield’s provides financial reports not just to investors but
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also to employees. Employees use this information to understand the firm’s situation. This
characteristic of GCPG’s organizational culture strengthens workers’ appreciation of the
business to motivate them for higher productivity and minimal turnover.
To ensure a culture of honesty and transparency, quarterly catered lunch meetings feature
presentations from one of the company Vice-Presidents who will explain changes in strategy as
well as policies and issue Greenfield’s Goals and Objectives progress updates.
RECRUITING AND SELECTION PROCESS
Recruiting
Greenfield’s uses a simple plan for recruiting and selecting employees to be hired for a variety of
positions. At GCPG, employees are highly valued. Therefore, the first people to be considered
for openings within the company, are current employees. The GreenHire website is provided to
employees who are looking to move, whether it is the same position or for a promotion. With
this process, managers are able to review candidates to determine if they are the right fit for the
position. These postings will be available internally for two weeks. If a suitable candidate is not
found, it will be posted on the GCPG Careers website for external applicants. For those
interested in other store based positions, they can apply online or leave their resume with a store
manager. From there, they will be added to a waitlist if no positions are currently open or if an
internal search is in progress. For specialist positions, GCPG advertises the position externally
through the website and online advertisements.
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At GCPG, we strive to use the most cost effective route for recruiting employees. We make it
simple for all applicants to find out about available positions and the application process is easy.
By visiting the GCPG Careers website (external) and GreenHire website (internal), applicants
can find out about local jobs, managerial positions, and main office positions. Both websites
have a Quick App feature, which allows applicants to submit applications directly.
Selection Process
Greenfield’s prides themselves on customer service and being the best grocery store in the
nation. This is only possible due to the employees who run the company. The selection process
for external applicants for managerial positions will be reviewed and the most qualified
candidates will receive an initial phone interview. The top three candidates from the phone
interviews, will be asked for an in-person interview with current management of that location or
surrounding locations. From there, the most qualified applicant will be selected based on the
requirements for the job position.
The selection process for internal applicants is much faster due to GCPG and management
knowing the individual applying for the position. Many items are considered when hiring an
internal applicant for other positions or the same position at another location. These include,
attendance, disciplinary history, teamwork and qualifications for the position open. For all
positions and candidates, timeframe, nature of work, resource complexity, problem solving,
change, natural teamwork and external interaction are all considered. During the interviews,
candidates are challenged with team building exercises and problem solving activities. The
purpose of this is to provide examples of situations which happen in the workplace and for
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management to learn how the applicant would respond. Candidates approved will be offered job
positions once the full assessment and process has been completed.
TRAINING PROCESS
In Greenfield’s Click and Pick Grocery (GCPG) training is essential to our success and essential
to helping our associates achieve their own success. The Education, Training and Development
(ETD) team creates on-the-job training programs for a variety of associates, including processes
for retail hourly associates, technical and operational training for managers and leadership
training for the company’s executives. Training Specialists facilitate training classes and
workshops to deliver technical, general management, leadership and cultural change courses to
Greenfield’s managers at all levels. Additionally, they deliver training necessary for the
implementation of innovations at Greenfield’s. Here are two positions in the Education, Training
and Development team: training developer, and training specialist
Training is provided in three venues:
1. Through on-the-job training from department experts or store managers
Our stores has “in-store educators” or “store trainers” and many individual teams have a
team trainer.Throughout the company various learning techniques are utilized for
training, including personal one-on-one, group, video, computer-based and printed study
materials. If you join us, here are some of the ways you will learn about our business:
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● New team member orientation: culture, benefits, team structure, who’s who,
core values
● Store tour: walk the store, meet co-workers
● Department-specific training: core job responsibilities and “how to”
● Product knowledge training: our product categories, product use/preparation,
taste-testing
● Customer service training: how to “wow” our most important stakeholder
● “Good Organics” training: product segregation and handling requirements per
the USDA Organic Rule
● “Green Mission” training: recycling and composting at GCPG.
● Safety training: how to work safely and avoid on-the-job safety hazards
● Benefits training: preparation for enrollment, being a wise health care
consumer
● Employment-related training: preventing workplace harassment, diversity in
the workplace, etc.
● Computer training: on- and off-site training for company-specific applications
● Buyer/Specialist training: margin math, paper flow, managing inventory
● Career development and leadership training: see below
2. In computer training available in the store
Our online ” Greenfield’s Click and Pick Grocery University” (GCPG- U) was created to
provide team members with information and education on a vast array of topics.
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GCPG-U taps into the great wealth of information and creativity found among our team
member base and in our company’s leadership, making learning personal and fun.
The education and development tools available through GCPG-U— which include
self-paced courses and video vignettes — are intended to connect team members and
team leaders to our core values, and to improve and deepen their knowledge of our
company and our industry.
The GCPG-U website is accessible internally to all team members, and is frequently
updated and enhanced. Examples of self-paced courses available to all team members:
● Introduction to Organics
● Dietary Supplements and the Law
● Introduction to Quality Standards
● Gainsharing for Team Members
3. At workshops with peers, held at various locations
Some workshops with peer training is as basic as how to use a particular knife to cut meat
or in what order ingredients should be placed on bread. There are thousands of basic
skills being taught in our stores each day. They are every bit as important as the more
complex skills taught in off site workshops.
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Some training is more difficult, such as courses in Food Safety, First Aid and Bloodborne
Pathogens, and Store Accounting. And then there are the more abstract skills that we try
to teach as clearly as possible, such as Exploring Leadership Styles and Mastering
Effective Communication.
When associates feel they have mastered the skills in one position and want to advance to
an entry-level management position or into a higher management position, they can
notify the company of their interest .
FACILITATING COMMUNICATION AND FEEDBACK
Consistent with Greenfield’s structure as an employee owned enterprise, we place the highest
priority to gathering and evaluating the input from employees at all levels to ensure that every
business decision is made with the best information available. It is vital that the pathways for this
employee feedback mechanism are cultivated and nurtured throughout all pay levels and that any
employee found discouraging feedback from subordinates be disciplined. Innovation and
efficiency improvements by employees will be rewarded through recognition, paid time off and
at times, at the highest levels will include financial royalties to be paid to team members who
designed and implemented the innovation. We believe that an additional annual idea royalty
bonus encourages the innovators to further develop their ideas in ways that overcome
implementation obstacles that often plague process improvements. The following processes will
be an integral part of the culture of Every Greenfield’s Click & Pick location:
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1. Internal Greenovation Dept : fully funded branch of R&D that collaborates with
employees of other departments throughout the organization in development of employee
generated innovations and cost cutting processes. Department is responsible for creating
and enforcing and implementing employee innovation rewards.
2. Anonymous Hotline: to report policy violations and disparaging treatment by
supervisors regarding innovation 1-888-GREEN4U
3. Idea Box: located in every breakroom for suggestions and to recommend coworkers for
recognition for excellent acts of service
4. HR- Direct Hotline : for anonymous questions or concerns on how policy might apply to
particular situations.
5. President’s “Greenovations Direct” direct email: ensures all process innovations
submitted get appropriately credited to the correct employee and when appropriate,
assigned the R&D budget for prototype testing.
6. Greenthink Lab: a resource room at every Greenfield’s location that showcases
successful implementation of employee innovations which features a scale model of
store, supply chain, budget implementation and efficiency impacts in addition to weekly
visits by R&D engineers to brainstorm and further develop new ideas. Employees are
welcomed to participate in the lab for one paid hour a week if they choose or unlimited
participation during off clock hours.
7. Store Manager Walk-Through: Monthly store manager schedule to meet with each
employee for a 5 minute break and encourage sharing of observations of areas that might
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be improved, during which time manager also distributes bonus checks and recognition
awards.
8. “Greennovation Royalties Rewards” : compensation plan that shares 2% of the profits
of an implemented employee proposal, paid monthly for the first 12 months of innovation
implementation. Royalties extended further for continued development of their initial
idea.
In any workplace, forming a strong team to work together to achieve a common vision, project or
goal is a huge advantage.
FACILITATING TEAMWORK
Strengthening teamwork in an office environment can contribute to a greater sense of unity,
improved productivity, and employee satisfaction. Establishing team-building goals, clarifying
employee roles and responsibilities, holding regular team meetings, and organizing social
activities are all effective ways to increase camaraderie and cooperation. Ideally, the lessons
learned during teamwork-building exercises will carry over into day-to-day operations, making
everyone work better and more efficiently.
Step 1
Share a common goal. At its core, a team is a group of people working together to accomplish a
shared goal. In any teamwork-building effort, you’ll need to remind your employees that they
need to work together to accomplish that common goal.
Remind employees why the team they’re on exists, and emphasize the importance of
collaboration and cooperation. Prioritize team efforts based on the common goal being worked
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towards. Consider creating a motto, award, or motivational poster that emphasizes and rewards
teamwork.
Step 2
Develop a vision statement reflecting your goal. In addition to having a shared goal, you may
want to consider drafting a vision statement for your employees to follow. Your vision statement
should reiterate the importance of teamwork, shared values, and inclusion in the workplace. Your
vision statement should specify what inclusion should look like in the workplace.Try to establish
specific behavioral expectations of your team. These expectations should foster a trusting, open,
and cooperative environment. Give concrete recommendations for your employees. Don’t use
abstractions or metaphor; be clear, concise, and specific.
Step 3
Reinforce office roles. As a manager or supervisor, your role is sort of a coach to your
employees. But each employee should have a role as well. These roles should be clear to the
employees, and should help work towards the shared goal you have for your company.
Review each employee’s role from time to time, and remind your employees what their roles are.
Reiterate responsibilities and expectations when delegating work and assignments. Help your
employees find ways to help one another.
Step 4
Promote open communication. Miscommunication is threatening to the wellbeing of any
organization. It could cause the team of employees to lose focus, trust, and morale. It’s better to
accidentally over-communicate than to risk under-communicating.
Try to understand every aspect of the issue at hand.
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Clarify errors and clear up misunderstandings as soon as they arise. Reinforce teamwork and
cooperation, and recognize your employees’ efforts.
Step 5
Address non-cooperative behavior. At some point, if you oversee operations and lead a team of
employees, you may encounter someone who rejects teamwork and has a hard time being a team
player. This person may be a “loner” type, or might simply not believe in the shared goals you’ve
laid out for your employees. No matter what the situation may be, you’ll need to address this
behavior head-on to prevent your other employees from being affected. Have a calm, direct
conversation with your employee to address his behavior. Explain why his behavior is a problem,
and encourage him to modify his behavior for the betterment of your work environment.
Remind your employee that he’s part of a team, and he must embrace the ethics and morale of
that team.
Try creating a special niche role for your employee that he can successfully and productively fill.
Take his experience, skills, and length of employment into account when designing a role for
him.
COMPENSATION POLICIES
In keeping with Greenfield’s employee owned enterprise beliefs that are founded on
compensation by performance, the base pay plans will reflect a 10% lag behind local median
market pay for similar job classifications. However, with the costs of a comprehensive full time
benefits package factored into the equation, Greenfield’s associates typically enjoy pre-bonus
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compensation at levels competitive to the local labor market for similar job classifications. Stock
option bonuses issued to all employees further enrich the compensation using the formula:
Hours worked x years of service x management ranking = number of stock options
Because Greenfield’s believes in a flat compensation hierarchy, promotion from within and a
stabile and enthusiastic team of associates, these bonus plans are designed to provide very
aggressive compensation in profitable years, with formulas that allow the potential for many
management and skilled class employees and many senior tenured employees to receive stock
option bonuses that often exceed their own base annual pay. In this system, during lean years
labor costs shrink, which allows the sustainability of the firm. With that philosophy Greenfield’s
utilizes annual salary caps on top executive pay at $1 million dollars; however, qualifying
bonuses beyond the annual salary cap can be rolled forward to subsequent years at times when a
highly compensated executive may fall short of the salary cap bonus level. Greenfield’s believes
that this unique executive compensation plan fosters decision making strategies that result in
long term earnings quality and circumvents management strategies to exploit short term gains.
All Greenfield’s salaries are based on percentages of local market wages adjusted from previous
year Bureau of Labor Statistics using the base metric of median market wages for the region that
each store operates. However, corporate assigned employees pay utilizes a hybrid formula for
national and local adjustments in order to recruit talent from higher paying locales.
Any employee’s assignment within those ranges in each salary tier are determined by the Human
Resources, using flexible assessments of each employees current and future potential value to the
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organization in skills, value as a cooperative team member, track record of strategically
successful decision making, years of tenure and relevant training for the position. Because
Greenfield’s believes that familiar faces are a key strategy in creating community loyalty, it
would be expected that personnel in identical positions may have considerable different
compensation due to the multiplication of tenure variables. By applying such a policy the
organization intends to reward loyalty among career employees regardless of education, training
or career path, stability is the foundation on which Greenfield’s bonus structure is founded upon.
Pay Grades By Level
Executive – 1: CEO, President, Vice Presidents range 300%-1000% of local market median
wages. Performance awarded bonuses are awarded for quality earnings and sustainability. Ideal
annual performance in these roles can expect annual stock bonus values to reach as high as the
mid to upper six figure range in addition to base pay. Total compensation, capped at $1 million
with excess earnings deferred to bonus future earnings.
Executive – 2: Division managers, Licensed Professionals i.e. Certified Staff Accountants,
nutritionists, engineers and attorneys 250%-500% of local market median labor wages.
Management – 1: Facilities managers, store managers, system managers, personnel managers
225%-400% of local market median wages weighted to budget volume and number of
subordinates managed
Management – 2: Assistant store managers, department managers, office managers, inventory
managers, process managers= 125%-250% of local market median wages
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Skilled Hourly – 1: accountants, meat cutters, chefs, nutritional analysts, information technology
technicians, paralegals, licensed maintenance positions. 115%-225% of local market median
wages
Skilled Hourly – 2 : uncertified maintenance specialists, menu designers, research support staff,
marketing staff, lower level supervisory positions and customer service operators 90%-200% of
local market median wages.
General Hourly – positions not requiring supervisory duties or budgetary responsibilities. Begin
at state minimum wage and progress up to 150% of local market wages relative to skill scarcity,
credentials, and tenure.
Greenfield’s values their employees families and therefore provides 1 month paid maternity for
both new fathers and mothers, limited to two leaves per decade in addition to standard FMLA
offered.
Hourly employees paid overtime in flex hours, or at discretion of management, time and half
rate, which can be rolled forward for period no longer than 3 years.
Paid Vacation: 1 year= 1 week, 5yrs= 2 weeks, 10 or more years= 3 weeks
Annual bonus common stock issue of 10 shares issued for every year of tenure in December of
every fully employed year issued December 1st.
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Additional bonus stock options issued at rate of 5% of declared corporate profits of previous
year, divided among employee in formula of : management tier (1-50) x hours worked x years
tenure= assignment number of profit share in stock options.
Innovation Royalty Pay Bonus at sole discretion of Human Resource Department with no
guarantees or expectations of continuation implied.
MOTIVATION FOR THOSE WHO WORK FOR THE COMPANY
At Greenfield’s we believe employees, and customers are the most valuable resource and do
everything to ensure they are motivated and successful. We provide a great work environment to
give them the best chance to develop and succeed as team members in any part of the company.
Motivation is alive through all levels of positions at Greenfield’s. GCPG motivates employees in
many different ways in order to prove that the company not only cares about profit they can gain
from employees, but also employees’ needs.
Happy employees make happy customers; for this reason, Greenfield’s invests in intrinsic and
extrinsic rewards.
Intrinsic reward is the reward achieved by having a motivation that is driven by an interest or
enjoyment in the task itself, and exists within the individual rather than relying on external
pressure or desire for reward.
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Greenfield’s Click and Pick Grocery takes all of its effort to make employees feel like they are
part of the company, one of the facts proved about this reward is the use of term “association”
instead of “employee”, by referring the employees as associates, it can make them feel more
engagement with the company. Another fact would be by calling all their levels with their first
name and only displays the first name on the ID badge. Sooner, from hourly associates to top
managers or even company founder call each other by their first names only. Everyone in the
company is getting more involved by calling the other’s first name because it can create a
family-oriented business instead of boss-oriented one.
Greenfield’s also makes sure their employees are given jobs that are not easy, instead they give
them challenging ones, they encouraged competition among their associates in order to keep
them on their toes and working hard, Greenfield’s also advocated a term called
‘cross-pollination’, whereby managers from different departments would switch jobs with each
other in order to stay challenged. By doing this, the employees will feel respected because they
are believed that they have the potential to achieve challenging task and make a good
performance results.
Greenfield’s knows that educated employees working for the company will be lead to a positive
working environment and high customer satisfaction from the knowledge gained by attending
college in hopes of graduating with a college degree. College assistance is given to employees to
attend college and Greenfield’s works with each individual’s schedule while attending college.
Employees can hold their full – time job and still attend college throughout the work week.
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Greenfield’s employees understand and appreciate how the company promotes from within and
how the company assists with the employee’s college education giving each employee a positive
experience while employed at Greenfield’s.
Extrinsic reward is a reward such as money, gifts, promotion and recognition. Greenfield’s also
had implemented employee of the month award every month an employee with exceptionally
good performance will be chosen; his or her photo will be posted on the “Best Employee of the
Month.” Another implementation are bonuses like cash incentive plan for employees to get
additional income depend on company’s performance. In addition, in Greenfield’s every staff
receives a recognition card, which can be used to get discounts when purchasing at the store;
food and drinks will be provided for overtime workers. Those reward are used by Greenfield’s
to motivate their workers, for extrinsic motivations Greenfield’s encourage their workers
through health care benefit and financial benefit. All associations at Greenfield’s and their
immediate family can get a health insurance at a very low price which includes primary doctor,
pharmacies, vision, and dental. For financial benefit, Greenfield’s workers also given a
lower/discount price to buy stock from Greenfield’s , and sometimes the workers can get
additional income depending on the company performance.
As a result from both extrinsic and intrinsic motivations, Greenfield’s has created an exciting
environment workplace with respect, prospective, and value. Beside emotional motivation,
Greenfield’s also provides educational motivation via many training programs such as
technology, leadership, and management to all of it associates.
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JOB SATISFACTION, EMPLOYEE QUALITY OF LIFE, AND WORK/LIFE
BALANCE
One of the Greenfield’s Click and Pick Grocery main goal is excellent customer services, and the
only way to achieve this goal is through this formula
Happy managers = happy workers= happy customers
For this reason, GCPC works in this formula in order to create job satisfaction for employees and
also give the employee opportunity to exchange opinions and ideas creating employee quality
and work/ life balance
● GCPC involves employee to social events and parties: parties or special events are held
for important holidays( ex: Christmas, Easter, company’s anniversaries.)
● Encourage social activities like potluck, employee talent show. Sign up sheet for
employees who are interested
● Provide free lunch;more set up small recreational facilities
● Total Health Immersion: Greenfield’s Click and Pick Grocery offers Team Members
four Total Health immersion programs (two in the spring, two in the fall), which provide
the knowledge, tools and support they might need to create and sustain long-term healthy
lifestyle changes. Each program features a variety of intensive health and wellness
program experiences, presented by expert doctors known in their field for cutting-edge
preventive medicine. The programs include lectures, cooking demos, guided workouts,
field trips and more, which take place over the course of a week at different resort
destinations around the U.S.
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● Rally Health: Through this personalized digital experience, Team Members and their
UnitedHealthcare enrolled spouses/domestic partners have access to programs for losing
weight, reducing stress, quitting smoking, and much more. Participants receive support to
easily track their progress, stay on course and earn rewards while doing so.
● Team Member Volunteer Program: Through this program, Team Members can travel for
2-3 weeks to the communities where Greenfield’s sources products and funds microcredit
clients through its Green Planet Foundation. On these trips, Team Members can immerse
themselves in a new language and culture and make a lasting contribution to the
communities by fulfilling community needs (i.e., helping to build a school or plant
gardens).
REDUCTION OF TURNOVER
In an effort to reduce turnover, GCPG adheres to these ten simple concepts:
1. Development of Employees:
CPG focuses on employee development and enjoy higher employee satisfaction, which
leads to lower turnover. Each employee has a development plan that is reviewed annually
and contains a variety of growth opportunities.
2. Recognition of Good Performance:
Greenfield’s reinforces people for doing good work and lets them know they are
appreciated. Tangible and intangible rewards from management for appreciation for
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workers who excel. This improves morale and makes sure employees receive sincere
appreciation by management on a continuing basis.
3. Build Trust:
By extending trust to our employees and creating a real environment, leaders willingly
support the employees working for GCPG. Due to this, employees have a higher trust
towards the company.
4. Reduce Boredom:
It is important to GCPG and managers to craft job duties and responsibilities such that
people are actively engaged in the work every day. No employee is over or under
utilized.
5. Communicate more:
Communication takes many different forms and is a constant priority for all levels of
management. GCPG encourages communication through email, website, Idea Box,
anonymous hotline, internal Greenovation Department, Greenthink Lab, and the
President’s Greenovation Direct.
6. Cross Train:
Many employees can be trained on several different jobs and recognize they are of higher
value to the organization. Along with the pleasure of having more variety of work, GCPG
employees appreciate the ability to take on additional skills. Having good bench strength
allows the organization to function well, even during times of high vacation or illness.
7. Don’t over tax:
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Greenfield’s main resource is the employees. GCPG realizes this resource can only be
stretched so far. The goal is to maintain a normal workload for employees in order to
keep employees healthy and happy.
8. Keep it light:
At GCPG, we strive to keep employees motivated and not overloaded. To do this, we
work with the employees to set attainable but challenging goals for them. This keeps the
pressure for success at a reasonable level.
9. Feedback Performance:
Management provides feedback to employees when requested and on a weekly basis to
keep communication open. This maintains GCPG employee performance and gives them
feedback on areas they are great at and areas that may need additional training.
10. Train Leaders:
All levels of management and supervision are highly proficient at creating an
environment where the culture is upbeat, positive, and has high trust. GCPG emphasises
the need of senior leadership to make sure there are no weaker areas in the management
chain.
CONFLICT RESOLUTION PROCESS
It is important to be able to identify conflict in the workplace and know how to quickly and
effectively resolve the underlying issues in a positive way. Resolving conflict in a positive
manner can lead to much-improved professional and personal relationships. Mastering a few
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fundamental conflict resolution skills can enable you to become a better leader, decision-maker,
co-worker and friend.
Whether dealing with a disagreement between co-workers or breaking through a standstill in a
job contract negotiation, conflict resolution is best approached through a deliberate process that
considers the different conflict resolution styles of each participant. Done well, conflict
resolution can save relationships, time and resources, while improving productivity and helping
move projects forward toward completion.
Five Steps to Conflict Resolution
1. Set the Scene
Promoting good relationships through mutual respect and courteous behavior is most important.
Keep the problem separate from the person and debate the real issues.
Pay attention to each person’s interests; listen carefully and respectfully.
Be open to exploring all options.
In this phase, active listening skills are essential. Restate or paraphrase others’ positions to be
sure you hear and understand them correctly.
2. Gather Information
An important conflict resolution tool, especially in a human resources setting, is the ability to go
deeper than the surface to really get an understanding of an individual’s underlying needs,
concerns and point of view. To do this effectively, be objective – not personal; and try to view
your actions from the standpoint of the other person.
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Here are four ways to effectively gather information:
Identify the issues. Be clear and concise; don’t try to solve too many problems at once.
Listen with empathy. Put yourself in the other person’s shoes and try to really understand how
the problem is affecting him or her. Use “I” statements. Rather than starting sentences with
“you,” which might sound accusatory or lead to defensiveness, try conveying only how you feel
and what you observe: “I feel that this problem is affecting the work environment,” or “I’m
hearing that this issue is causing you stress outside the office. Is that accurate?” Clarify feelings.
For instance, don’t assume that a supervisor is angry with a staff person when he actually feels
frustrated about their conflicting communication styles.
3. Agree to the Problem
Conflict resolution skills can only come into play when the true problem is identified. Be sure
everyone agrees on what the problem is before moving forward. Remember that different roles,
interests and conflict resolution styles can cause people to perceive problems very differently.
Putting aside individual goals to come to a mutually agreeable and beneficial solution is an
important step in conflict resolution.
4. Brainstorm Possible Solutions
Gathering the involved parties together for a brainstorming session not only helps to resolve the
problem quickly, but it makes everyone feel like they are part of the solution. Here are a few tips
for successful brainstorming: Be open to all ideas. Think “quantity” over “quality.” You’ll
probably discard most ideas before the exercise is over. Move quickly. Avoid clarifying or
evaluating each idea – either can stop creative thinking in its tracks. List every idea. Whoever is
listing the ideas should not be in charge of editing them. Expand on each other’s ideas. Ask for
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input from the group – this is where solutions are born. Be creative. Allow for out-of-the-box
ideas, controversy, and even silly ideas. You never know what will inspire the thought that can
become the actual solution.
5. Negotiate a Solution
By this point, it’s possible that all parties better understand each other’s positions and have
resolved the conflict. If not, it may be necessary to step in and negotiate a mutually satisfying
solution.
DISCIPLINE POLICY
The purpose of this policy is to clarify guidelines for employee conduct.
Employment with Greenfield’s Click and Pick Grocery is “at will,” which means it is subject to
termination by either GCPG or the employee at any time, for any reason. There are no
contractual relationships between GCPG and an employee, and letters, benefits or policy
statements, performance appraisals, employee handbooks or other employee communications
should not be interpreted as such. No one has the authority to enter into any oral or written
employment contract without the signed explicit written approval of a GCPG officer, and no
written employment contract will be valid without the signature of the president of GCPG. To
monitor this at-will relationship, GCPG has developed guidelines to track performance.
Responsibilities of Employees
It is the duty and the responsibility of every GCPG employee to be aware of and abide by
existing policies and work rules.
It is also the responsibility of employees to perform their duties to the best of their ability and to
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the standards set forth in their job descriptions or as otherwise established. Employees are
encouraged to take advantage of all learning opportunities available and to request additional
instruction when needed.
Responsibilities of Supervisors, Managers and Directors
The immediate supervisor, manager or director should approach corrective measures in an
objective manner.
If the employee’s performance of assigned tasks is the issue, the supervisor, manager or director
should confirm that proper instructions, appropriate orientation and training have been given and
that the employee is aware of job expectations. Not only single incidents, but also patterns of
poor performance, should be of concern as these are indicative of overall performance.
If misconduct is the issue, the supervisor, manager or director should take steps to ensure that the
employee has been made aware of the company’s policies and regulations regarding the
infraction.
If, in either case, appropriate instruction or information was not communicated, a plan for such
communication should be immediately developed and reviewed with the employee.
Progressive Discipline Process
GCPG supports the use of progressive discipline to address conduct issues such as poor work
performance or misconduct to encourage employees to become more productive workers and to
adapt their behavior to company standards and expectations. Generally, a supervisor gives a
warning to an employee to explain behavior that the supervisor has found unacceptable. There
are two types of warnings: verbal and written.
A verbal warning occurs when a supervisor verbally counsels an employee about an issue of
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concern. A written record of the discussion, noting the date, event and recommended action, is
usually placed in the employee’s file for future reference.
Written warnings are used for behavior or violations that a supervisor considers serious or when
a verbal warning has not helped change unacceptable behavior.
Whenever an employee has been involved in a disciplinary situation that has not been readily
resolved or when he or she has demonstrated an inability to perform assigned work
responsibilities efficiently, the department head, in consultation with the human resource (HR)
department or designate, may place the employee on a performance improvement plan. This
status will last for a predetermined amount of time not to exceed 90 days. Within this time
period, the employee must demonstrate a willingness and ability to meet and maintain the
conduct and work requirements specified by the supervisor and the organization. At the end of
the performance improvement period, the employee will either be returned to regular employee
status, or, if established goals are not met, dismissal may occur.
GCPG reserves the right to administer appropriate disciplinary action for all forms of disruptive
or inappropriate behavior. Each situation will be dealt with on an individual basis.
Employee Conduct That Can Result in Disciplinary Action
GCPG has established general guidelines to govern the conduct of its employees. No list of rules
can include all instances of conduct that can result in discipline, and the examples below do not
replace sound judgment or common-sense behavior.
Examples of employee conduct that would lead to discipline and the usual course of disciplinary
action have been separated into four groups, according to the usual severity and impact of the
infraction. Different violations may be handled differently depending on the group they are in.
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GCPG reserves the right to determine the appropriate level of discipline for any inappropriate
conduct, including demotion, oral and written warnings, suspension with or without pay, and
discharge. Because of Fair Labor Standards Act (FLSA) requirements, exempt employees should
not be suspended without pay for less than a week.
Group 1
Disciplinary process:
1st offense: Documented verbal warning.
2nd offense: Documented written warning.
3rd offense: Three-day suspension.
4th offense: Termination of employment.
Examples:
Creating conflict with coworkers, supervisors, visitors or volunteers.
Failing to follow practices as needed for the specific job assignment.
Contributing to unsafe conditions.
Smoking in nonsmoking areas.
Leaving the assigned work area or facility without the supervisor’s permission.
Loitering or loafing while on duty.
Using facility telephones for unauthorized purposes.
Disregarding the organization’s dress code.
Damaging or using organization-owned equipment without authorization.
Abusing lunch and break periods.
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Removing, posting or altering notices on any bulletin board on company property without
permission from the employee’s manager or HR department.
Eating food or drinking beverages in undesignated areas.
Violating other rules or policies not specifically listed.
Group 2
Disciplinary process:
1st offense: Written warning.
2nd offense: Suspension.
3rd offense: Termination.
Examples:
Failing to report injuries, damage to or an accident involving company equipment.
Violating any safety rule.
Acting negligently.
Engaging in horseplay that results in personal injury or equipment damage.
Spreading malicious rumors.
Engaging in vulgar or abusive language or conduct toward others.
Copying facility documents for personal use.
Using facility communication systems inappropriately.
Treating customers or coworkers in a discourteous, inattentive or unprofessional manner.
Quitting early without notification or permission.
Being absent for less than three days without notification or permission.
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Not complying with personnel file maintenance.
Not following department guidelines concerning notification of absenteeism.
Group 3
Disciplinary process:
1st offense: Dismissal.
Dismissal is an immediate termination of employees for serious breaches of responsibility,
unsatisfactory performance or misconduct. A supervisor or department head may impose
dismissal after consultation with the HR department.
Examples:
Being absent for three or more days without notification or permission (also referred to as a
voluntary quit or job abandonment).
Fighting
Demonstrating insubordination, including:
Refusal to do an assigned job.
Refusal to work overtime when required.
Refusal to render assistance.
Refusal to accept holiday work when assigned.
Insolent response to a work order.
Delay in carrying out an assignment.
Being dishonest, including deception, fraud, lying, cheating or theft.
Having time card violations.
Sabotaging the facility, grounds or equipment.
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Falsifying company records, such as employment applications and time cards, in any way.
Engaging in indecent behavior.
Possessing, being under the influence of or drinking intoxicants on the job.
Sleeping while on duty.
Concealing defective work.
Carrying a weapon on company property, including in the parking lot.
Disclosing confidential records or information.
Soliciting gifts or tips from business-related contracts.
Using the facility’s computer systems, including accessing confidential computer files and data,
without authorization.
Demonstrating gross misconduct or other serious violations of GCPG policies or procedures.
Failing to comply with licensure and certification requirements.
Group 4
Unscheduled, unexcused absences due to injury or illness, even when following appropriate
guidelines, may still be deemed excessive.
Discipline for otherwise unexcused tardiness and absenteeism is generally applied as follows: the
first two violations will result in written warnings; the third, a three-day suspension; and the
fourth, dismissal.
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EMERGENCY PREPAREDNESS & DISASTER PLANS
In the event of disaster, especially in instances where community infrastructure damage results in
prolonged power supply failure, every Greenfield’s location must have an assigned emergency
preparedness co-ordinator, at most locations this role will be assigned to the Assistant Store
Manager or at non–retail locations the duty will be delegated to maintenance department’s
Facilities Manager.
In retail food services and warehousing, the Emergency Coordinator must complete training
program on crisis leadership and on USDA Food Safety and Emergency Procedure Compliance
to the following Federal Regulations:
8-404.11 Ceasing Operations and Reporting.
(A) Except as specified in ¶ (B) of this section, a PERMIT HOLDER shall
immediately discontinue operations and notify the REGULATORY AUTHORITY if
an IMMINENT HEALTH HAZARD may exist because of an emergency such as a
fire, flood, extended interruption of electrical or water service, SEWAGE backup,
misuse of POISONOUS OR TOXIC MATERIALS, onset of an apparent
foodborne illness outbreak, gross insanitary occurrence or condition, or other
circumstance that may endanger public health.
(B) A PERMIT HOLDER need not discontinue operations in an area of an
establishment that is unaffected by the IMMINENT HEALTH HAZARD.
8-404.12 Resumption of Operations.
If operations are discontinued as specified in Food Code § 8-404.11 or otherwise
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according to law, the PERMIT HOLDER must, when required, obtain approval
from the REGULATORY AUTHORITY before resuming operations.
The Greenfield’s Policy is to followed as described below:
Step 1
Appoint an emergency program manager with full oversight authority. Emergency oversight
responsibilities typically include ensuring emergency plans comply with food safety and any
federal, state and local health and safety regulations; conducting emergency response training for
employees; and ensuring plans can be easily accessed by every store employee. Check with your
local water and fire department, as well as your state and local Department of Health or Food
Safety Department to identify regulations or procedures your emergency plan must include
Step 2
List emergency situations in order of how likely the emergency is to occur. For many, a power
outage is the most likely, followed by a water service interruption, sewage backup, fire and
flood. Then, conduct a business impact analysis by listing and prioritizing the critical business
functions — those most vital to store operations — that each type of emergency is likely to affect
both operationally and financially. In a power outage, for example, critical functions include
maintaining safe food temperatures in freezers and refrigeration units, providing upfront and
back room safety lighting and maintaining store security.
Step 3
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Go through the store and conduct a step-by-step risk assessment, looking for ways to reduce risks
and plan ahead for emergency situations. For example, if the store has a backup electricity
generator, make sure it’s in working order; if the store does not have a generator, consider
purchasing one. Call around and, if possible, prearrange for priority ice delivery service. Make
sure your store is in compliance with fire safety regulations and that all fire extinguishers are in
working order.
Step 4
Draft a written emergency response plan for each emergency you listed. Include a prioritized list
of emergency contacts along with their contact information as well as action steps that address
each critical business function. Response plans should be detailed, leaving no room for
individual interpretation. This means an instruction such as “Do not open freezer or refrigeration
unit doors” is appropriate. Write up an evacuation plan that includes helping customers exit the
building safely and duties that grocery store personnel must complete before exiting. Include
alternatives for communicating, such as two-way radios, battery operated phones or personal cell
phones.
Step 5
Distribute a copy of your emergency response plan to each employee, assign specific duties and
make sure each employee knows how to respond to each type of emergency. Although you most
likely can’t conduct drills during open store hours, you can conduct off-hour drills or video
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demonstrations. Department managers can also conduct training on some of the more common
types of emergencies.
Localized Emergency or Event
When an emergency event impacts a single facility or operation, it is recommended that
the permit holder take the following action:
1. Conduct an evaluation of the operation, as it relates to the emergency situation,
to determine if a safe operation can be maintained in accordance with applicable
regulations.
2. Discontinue operation at the facility or in affected areas of the establishment if a
safe food operation cannot be maintained using appropriate emergency
procedures.
3. If a safe food operation can be assured, the establishment can remain open
provided the establishments’ emergency plan is followed or with the approval of
the Regulatory Authority.
4. Notify the Regulatory Authority where appropriate or if there is an imminent
health hazard and discuss emergency operating procedures that will be used.
5. A food establishment or an area within the facility that was ordered to cease
operations due to an imminent health hazard may not reopen until authorization
has been granted by the Regulatory Authority.
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EARTHQUAKE
If you are inside a building:
● Stay where you are until the shaking stops. Do not run outside. Do not get in a doorway
as this does not provide protection from falling or flying objects, and you may not be able
to remain standing.
● Drop down onto your hands and knees so the earthquake doesn’t knock you down. Drop
to the ground (before the earthquake drops you!)
● Cover your head and neck with your arms to protect yourself from falling debris.
○ If you are in danger from falling objects, and you can move safely, crawl for
additional cover under a sturdy desk or table.
○ If there is low furniture or an interior wall or corner nearby, and the path is clear,
these may also provide some additional cover.
○ Stay away from glass, windows, outside doors and walls, and anything that could
fall, such as light fixtures or furniture.
● Hold on to any sturdy covering so you can move with it until the shaking stops. Stay
where you are until the shaking stops.
If getting safely to the floor to take cover won’t be possible:
● Identify an inside corner of the room away from windows and objects that could fall on
you. The Earthquake Country Alliance advises getting as low as possible to the floor.
People who use wheelchairs or other mobility devices should lock their wheels and
remain seated until the shaking stops. Protect your head and neck with your arms, a
pillow, a book, or whatever is available.
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ARMED ROBBERY
This particular type of crime is broken down into two types of robbery; professional and
nonprofessional.
The professional robber will generally be someone who is organized, has the robbery thought-out
in advance, will be in and out quickly and is very sure of himself or herself.
The professional robber will convince you that he or she is armed and may or may not show you
the weapon. This type of robber has staked out your store and knows where the safe is, who has
keys, and when deposits are made.
The non-professional robber will generally be someone who is very nervous and usually
disorganized. The non-professional robber may have a weapon. This is a potentially dangerous
situation due to the inexperience and emotional state of the thief.
Below are suggested steps to take if you are involved in an armed robbery at a Greenfield’s retail
store.
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• Keep it short. The longer the robbery takes, the more nervous the robber becomes. Handle the
entire procedure as if your were handling a check for a customer. The average robbery occurs in
less than two minutes.
• Do exactly what the robber demands, as soon as possible. You decrease your chances of injury
by cooperating. Stay as calm as possible. The longer it takes you to obey the demands, the more
nervous the robber will become. DO NOT VOLUNTEER INFORMATION. Volunteering
information can increase the time it takes to comply with the demands and confuse the robber.
• Advise the robber of any surprises. Be sure the robber knows of any employees in the back
room or restrooms who could surprise the robber by sudden movements. Tell the robber of any
movements you must make to obey the demands. For instance, you may have to reach in your
pocket or purse for your wallet or keys.
• Be observant. Try to get a good description of the robber. Note in your own mind the physical
characteristics (height, weight, color of hair and eyes, scars, tattoos, etc.) of the individual as
well as the type and color of clothing they are wearing. If possible, get a description of any
vehicle used, including the license number.
• Hands off. Avoid touching anything the robber touched.
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• Keep the cash loss confidential. Discussion with the news media may encourage others to try
when they read the amount of money kept in the restaurant. Discourage your employees from
talking to reporters.
• Hold a staff meeting. As soon as possible discuss the robbery and bring any fears or concerns
out in the open. Ask for suggestions regarding how restaurant security can be improved.
Commend staff members for remaining calm and following prescribed procedures during the
robbery.
ACTIVE SHOOTER PREPAREDNESS
Good practices for coping with an active shooter situation
• Be aware of your environment and any possible dangers
• Take note of the two nearest exits in any facility you visit
• If you are in an ofce, stay there and secure the door
• If you are in a hallway, get into a room and secure the door
• As a last resort, attempt to take the active shooter down. When the shooter is at close range
and you cannot ee, your chance of survival is much greater if you try to incapacitate him/her.
CALL 911 WHEN IT IS SAFE TO DO SO!
BOMB THREAT PREPAREDNESS
Take the caller seriously.Ask a lot of questions, (see list below).
Take notes on everything said and heard, including background noise, voice characteristics, etc.
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Keep the caller on the line as long as possible by asking questions
If the caller hangs up do not use the telephone on which the threat was received.
Call local police immediately after call from another telephone, or ask another person call the
police immediately.
Notify supervisor or department head.
Police will determine if you need to evacuate. If you do evacuate, move to your emergency
assembly area, to await further instructions.
Do not re-enter the building until instructed to do so.
Do not search for the explosive device or touch any unusual or suspicious objects.
Questions to Ask the Caller
1. When will the bomb explode?
2. Where is it?
3. What does it look like?
4. What kind of bomb is it? 5. What will cause it to explode?
5. Why was it placed in the building?
6. Did you place the bomb?
7. What is your name?
Observe the Caller
Try to identify the following about the caller:
1. Caller’s gender
2. Approximate age
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3. Voice characteristics, accents, etc. Is the voice familiar?
4. Background noises
5. Treat language-educated, incoherent, foul, taped, read, etc.
Suspicious Package/Mail
If you receive a suspicious package, letter, or object under any circumstances. Do not touch it,
tamper with it, or move it. Report the package to police immediately.
Suspicious Package Characteristics
● Origin — Postmark does not match the city of the return address, name of the sender is
unusual or unknown, or no return address given.
● Balance — The letter is lopsided or unusually thick, the letter or package seems heavy
for its size.
● Contents — Stiffness or springiness of contents; protruding wires or components; oily
outer wrappings or envelope; feels like it contains a powdery substance.
● Smell — Particularly almond or other suspicious odors.
● Writing — Handwriting indicates a foreign style not normally received, cut-and-past
letters or rub on block letters are used. Common words, titles or names are misspelled.
TORNADO THREAT
Preparedness involves a continuous process of planning, equipping, training and exercising.
Planning for tornadoes requires identifying a place to take shelter, being familiar with and
monitoring your community’s warning system, and establishing procedures to account for
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individuals in the building. Employers may need to obtain additional equipment and/or resources
(e.g. Emergency Supply Kits) identified in the plan. In addition, workers need to be trained and
plans need to be practiced to ensure that personnel are familiar with what to do in the event of a
tornado.
Planning
Identifying Shelter Locations
An underground area, such as a basement or storm cellar, provides the best protection from a
tornado. If an underground shelter is unavailable, consider the following:
● Seek a small interior room or hallway on the lowest floor possible
● Stay away from doors, windows, and outside walls
● Stay in the center of the room, and avoid corners because they attract debris
● Rooms constructed with reinforced concrete, brick or block with no windows and a heavy
concrete floor or roof system overhead
● Avoid main aisle areas that have flat, wide-span roofs.
Personnel should also be aware of what to do if caught outdoors when a tornado is threatening.
Seek shelter in a basement or a sturdy building. If one is not within walking distance, try to drive
in a vehicle, using a seat belt, to the nearest shelter. If flying debris is encountered while in a
vehicle, there are two options: 1) staying in the vehicle with the seat belt on, keeping your head
below the windows and covering it with your hands or a blanket, 2) if there is an area which is
noticeable lower than the roadway, lie in that area and cover your head with your hands
TORNADO PREPAREDNESS
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The following steps are recommended to help ensure the safety of personnel if a tornado occurs
Tornado Watch – Tornadoes are likely to occur in the watch area. Be ready to act quickly and
take shelter, and check supply kits. Monitor radio and television stations for more information.
Tornado Warning – Imminent threat – A tornado has been sighted in the area or has been
indicated by radar. Take shelter immediately.
Your local emergency management office can provide information about your community’s
tornado warning system.
● Develop a system for knowing who is in the building in the event of an emergency
● Establish an alarm system to warn workers
○ Test systems frequently
○ Develop plans to communicate warnings to personnel with disabilities or who do
not speak English
● Account for workers, visitors, and customers as they arrive in the shelter
○ Use a prepared roster or checklist
○ Take a head count
● Assign specific duties to workers in advance; create checklists for each specific
responsibility. Designate and train workers alternates in case the assigned person is not
there or is injured.
TORNADO RESPONSE PLAN
. Though Emergency Action Plans primarily involve evacuations, emergency planning for
tornadoes involve identifying safe places of refuge for workers to go to in the event of tornadoes.
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Equipping
● Get emergency supply kits and keep them in shelter locations
○ Basic Disaster Supplies Kit
● Learn more about NOAA Weather Radio.
Training and Exercises
● Ensure that all workers know what to do in case of an emergency.
● Practice shelter-in-place plans on a regular basis.
● Update plans and procedures based on lessons learned from exercises.
WIDESPREAD REGIONAL EMERGENCIES WITH LOSS OF UTILITIES
Some emergencies may impact multiple facilities over a larger geographic area. During
such an event, it is recommended that the same procedures listed under a localized
event be followed for each establishment. A widespread event may make it difficult to
reach the Regulatory Authority; therefore, the permit holder should ensure the
emergency plan is followed and if appropriate, notify appropriate authorities of an
imminent health hazard as soon as possible. Close the establishment if a safe operation
cannot be assured.
Verification
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When ordered to cease operations, a food establishment should verify that the order came from
the appropriate Regulatory Authority. Likewise, a utility company may notify a food
establishment of a temporary disruption affecting electrical power or water supply for
repairs or other service. Such information should be verified with utility company officials
and when possible arrangements for such disruptions should be made in advance.
The written food safety plan includes the steps you will take during an emergency.
Remember that there may be regulations/ordinances that apply and consultation with
local regulators may be appropriate. When managing Time/Temperature Control for
Safety (TCS) food during an emergency, the facility must have a written plan prepared
in advance. This plan should be maintained at the facility and available to the public.
People:
1. Identify the person(s) who have responsibility for implementing the plan.
2. Identify people/positions that are “critical” and what tasks must be
performed.
3. Maintain a current list of emergency contacts. In addition to updating
contact information for people within your company, include information for
those who can help with the emergency such as utility companies (water,
power, sewer, gas, etc.), garbage hauling service, dry and frozen ice
suppliers, refrigerated trucking companies, food warehouses, septic tank
pumping services, local and state health departments, fire, police, state
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emergency management agencies, emergency broadcast station
frequency numbers and other pertinent regulatory authorities, etc
4. Remember that computers and phones may not be operable and
alternative communication methods may be necessary.
Equipment:
1. Identify the equipment and supplies needed. This may include large items
such as generators and refrigerated trucks.
2. List items needed to perform tasks such as thermometers, insulated
covers, caution tape, certain types of cleaning supplies, hand hygiene
chemicals, etc.
3. List any necessary personal protective equipment (PPE) such as
protective clothing, goggles or gloves needed to protect employees from
potential hazards.
4. Consider having Emergency Kits available for different types of
emergencies such as a kit for fire response, power outages, etc.
Menu :
1. Prepare an “emergency menu” in advance including a reduced number of
recipes for food items that require limited preparation.
Instructions for Performing Tasks:
1. Provide detailed step-by-step procedures for performing each task. For
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example, explain how to calibrate equipment, how to take temperatures,
how to clean spills, etc. These can be written in the form of a standard
operating procedure (SOP).
2. Explain how, when and where the task will be performed.
Monitoring:
1. Identify what food units, holding cases and equipment will be monitored or
what food products will be checked.
2. Detail how frequently the task will be performed (hourly, daily, etc.).
3. Explain what methods will be used and the tools needed (thermometers,
etc.) to perform monitoring tasks.
4. Include details regarding who will perform the monitoring.
5. Identify what records need to be kept.
6. Provide copies of the reporting forms, data logs and checklists that will be
used to record the data and information.
7. Procedures for monitoring temperatures of TCS food should ensure the
warmest portion of the food is checked unless an ambient air temperature
thermometer is in place and monitored to ensure the safety of the food.
When monitoring refrigerated cases, the temperature should be measured
in the part of the unit where food temperatures will be the warmest.
Waste Disposal
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1. Determine how you will handle waste, including discarded food.
2. Consider the likelihood that waste disposal services may be interrupted or
erratic.
3. Include method for handling small volumes of food that have been
denatured or destroyed before placing in an outside refuse bin (closed,
sealed container). Consideration will also need to be made for large
volumes of food refuse that will have to be held and transported to a
licensed landfill whenever pickup service is available.
4. Contact your disposal company to pre-plan for emergencies; when
possible, have additional waste disposal units delivered onsite.
Refrigeration
Emergency Procedures
1. Note the date and time the power outage begins.
2. Monitor and record equipment and TCS food temperatures from the start of the
power outage. The Emergency Plan should include specific details on where to
take temperatures, how frequently temperatures will be monitored and where to
record the information.
3. Open upright retail cases without doors and small reach-in cases should be
monitored more frequently since they will lose temperature faster than other
equipment.
4. Keep refrigeration equipment doors closed. For open retail cases without doors,
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use insulated covers, cardboard, plastic or equivalent to retain cold air.
5. Relocate product in cases that cannot maintain safe temperatures to walk-in
coolers, freezers, or reefers (refrigerated trucks).
6. Use tape and signs to alert staff to keep doors to walk-in coolers closed.
7. Seal display case doors with tape to prevent customers from opening them.
8. Do not put hot food into refrigeration equipment.
Methods for Maintaining Cold Food Temperatures
Refrigerated trucks: Refrigerated trailers and trucks with insulated storage
containers may be on-site or delivered to the food establishment during an
emergency. Issues to consider include distance and time for delivery, ability to gain
physical access to the location, source of fuel or energy to maintain truck
refrigeration systems, manpower for food transfers, potential temperature abuse of
foods awaiting transfer and security.
Warehouse:
Determine if a refrigerated warehouse that is unaffected by the power
outage or that has a back-up generator or alternate power source is available.
Assure that the food can be transported and stored under adequate refrigeration.
Transport to offsite storage will require access to vehicle(s), control of temperature,
manpower, protection of food from contamination and secure holding capability.
Ice or frozen gel packs: These can be used to help keep food cold. Plan how and
where you can obtain these items when they are in high demand by the general
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population. Issues of use include the ice/gel pack source availability, volume
needed, transportation capability, and site handling of ice and melting ice waste
water. Your plan should include procedures for how to use ice and/or gel packs to
prevent cross-contamination of food. Consider storing frozen gel packs on-site to
use during short term emergencies.
Dry ice: Dry ice is frozen carbon dioxide (CO2) gas that changes back to CO2 gas
when exposed to normal environmental temperatures. It is dangerous to handle
because it is so cold. Also CO2 gas is heavier than air and can displace the oxygen
we need to breathe. If dry ice is used in enclosed spaces (i.e., a walk-in cooler)
employee and customer safety precautions must be followed because of the
potential buildup of CO2 gas and displacement of oxygen. Do not place dry ice into
a sealed room, cooler or container without allowing a means for the gas to escape
as it changes from its solid to gaseous state. If dry ice is used, pack TCS food tightly
together and place dry ice above foods to allow the cold CO2 gas to sink and fall
over the food items. Precautions must be taken to avoid burns when handling dry
ice, such as wearing insulated gloves. Refer to the material safety data sheet for
specific hazardous identification, personal protective equipment requirements,
ventilation, exposure controls and handling practices. Issues of use include dry ice
availability, volume needed, transportation, and site handling and safety.
Other Power Sources – Prioritize the equipment or systems that must be supported by
supplemental power sources
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Generators
Determine which equipment is operated by the generator. Generators may not routinely
have the capacity to operate critical equipment such as refrigeration and freezer units.
In that case, consider additional generators for maintaining refrigeration, including
portable generators (owned or rented) that can be transported to the facility during an
emergency.
1. A plan should be in place to refuel generators during long term power outages.
2. Make certain that individuals are trained to operate the supplemental power
equipment safely. Be sure to consult with a licensed electrician.
3. The electrical utility company should be advised if you are using a generator as a
safety precaution for utility workers
Water and Sewage
1. See “Interruption of Water Service” procedures.
2. If sewage ejector pumps are inoperable discontinue operations.
3. Contact the local health department for possible alternative options.
ASSESSMENT AND EVALUATION OF PERFORMANCE
At GCPG, a “Judgemental Evaluation” is used to assess and evaluate performance. This means
the evaluation focuses on providing positive feedback and promotes constructive criticism.
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Greenfield’s uses a Graphic Rating Scale which is a 5 point scale, 1 being the lowest and 5 being
the highest. For assessments, a 360-Degree Feedback assessment is used, where supervisors,
fellow employees and the employee themselves, can assess their performance.
Greenfield’s managers are able to print an Assessment and Evaluation of Performance form to
complete for each employee. These evaluations occur monthly to maintain employee goals,
performance and morale. There is a final evaluation of the year in December of every year the
employee works. Employees may request copies of their completed evaluation forms for their
own documentation and improvement.
The following fifteen items are listed on the Assessment and Evaluation Form and are rated on
the 5 point scale listed above:
1. Quality/Accuracy of Work
2. Quantity of Work
3. Dependability
4. Attendance/Punctuality
5. Professional Communication Skills
6. Customer Focused Communication Skills
7. Teamwork
8. Ability to Work Independently
9. Open to Feedback
10. Willingness to Take on Additional Responsibilities
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11. Complies with Company Policies and Procedures
12. Exhibits Effective Problem Solving Skills
13. Eagerness to Learn a New Job Related Skill
14. Asks Questions and Seeks Guidance When Needed
15. Makes Progress Towards Professional Development Goals
Also included in the evaluation are:
Concerns, Developmental Goals, Training Needs, Employee Comments, and a signature space
for the employee, manager and HR.
ASSESSMENT AND EVALUATION OF ECONOMIC PERFORMANCE
Greenfield’s financial performance and corresponding managerial decisions will be based on the
following financial performance standards:
1. (EPS) : EPS = Net Income – Dividends on Preferred Stock / Average Outstanding Shares
2. Return on Equity (ROE): Formula for calculating ROE are as follows:
ROE = Earnings x Sales x Assets/ Sales Assets Equity
3. Return on Assets (ROA): ROA is calculated as: ROA = Net income/ Total assets
4. Return on net worth (RONW): RONW is the net income divided by owner’s equity.
RONW is used to measure performance in the perspective of shareholders. RONW is
calculated as: RONW = Net income/Net worth
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5. Return on Capital Employed (ROCE): Capital employed is defined as gross capital
employed or net capital employed. The primary of the investment decision in any
business is to earn satisfactory return on capital invested. Thus the return on
capital employed is used to measure of success of a business in realizing the final
objective of the shareholders to get respective return. Return on capital employed
provides the relationship between the net income and the net asset invested. It provides
the percentage of return on net asset invested in the business and is also used to know the
overall profitability and efficiency of the business. Capital employed refers to total
capital, capital reserves, revenue reserves, debentures and long term loans. Capital
employed is calculated from the asset side by adding the following:
The fixed assets should be included at their net values at original cost or at replacement
cost after deducting depreciation. During the inflation period fixed asset must be
transferred to replacement cost i.e. the current market value of the asset.
Investments inside the business: All current assets such as cash in hand, cash at bank,
sundry debtors, bills receivables, stock etc.
6. Shareholder’s value creation: The ability of the business to create shareholder wealth is
increasingly seen as the key indicator of management and business performance. Total
return to shareholders is one of the shareholder value measures and most direct measures
of the return received by shareholders. Shareholder value analysis provides a framework
for linking management decision and strategies to value creation. Shareholder value
analysis insists the managers to take decision that can create value for the shareholders.
The management is required to pay attention to such value for shareholders while
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taking investment and financing decisions. Shareholder value analysis helps the
management to concentrate on activities which create value to the shareholders rather
than short term profitability. Managers should identify value drivers which lead to
increase shareholder’s value. Shareholder’s investment in the business is totally excluded
in traditional financial measures and is ignored inappropriately to handle many business
decisions that are tradeoffs between profit margin and capital utilization.
Created Shareholder’s value = Equity Market Value * (Shareholder return – Ke) (6)
Where,
Ke = (Risk free rate + Risk Premium)
Shareholder value added is the term used for the difference between
the wealth held by the shareholders at the end of a given year and the wealth they held the
previous year”. The increase of equity market value is not the shareholder value added.
Shareholder value added is defined as the difference between the values of shares held by
shareholders at the end of a financial year to the wealth held in previous year. For the
calculation of Shareholder value added, changes in market price of shares during the
financial year and the dividend or return paid to the shareholders is required.
Greenfield’s Foundation Key Performance Indicators
Greenfield’s will compare those financial metrics in contrast to operational performance metrics
in a manner that allows appropriate budgeting to be allocated to operations that create the
greatest return. The foundation Greenfield’s KPI’s are as follows:
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1. Customer Turnaround Time : Number of minutes customer spends in their grocery visit
from entering the parking lot to exiting. Measures efficiency engineering, current
benchmark is 14 minutes
2. Items per minute : the average number of items customer purchases per minute of
customer turnaround time. Measures multiplication of expenditure per visit with turn
around time, current benchmark 1.2 items per minute
3. Percentage of customers utilizing the Click & Pick mobile app : measures marketing
effectiveness of differentiation strategy, current benchmark 46%
4. Customer expenditure per visit : measures the effectiveness of upsell product placement
and inventory controls. Current benchmark $38
5. Customer Satisfaction Score in Deli Food recipes: measures appeal of chef’s recipes, 10
point scale current benchmark 8.6
6. Customer Checkout Time: measures checkout system efficiency, number of minutes
from arrival to checkout to departure from exit doors. Current Benchmark 4.1 minutes
7. Multi-Service Penetration : measures marketing effectiveness of greenfields strategic
differentiation percentage of customers utilizing 3 or more of Greenfield’s specialty
services.
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Guidelines for Creation of New Key Performance Indicators
1. Available and Measurable : You can use only those metrics as KPIs which are available to
you in the first place. For example if ‘Net Promoter Score’ metric is not available, then should
not be used as a KPI. KPI’s need to be measurable (unlike ‘frustration level of customers who
abandoned the shopping cart for the 3rd time’) When creating KPIs, verify that there is a
mechanism/tool available out there to measure and report your KPI in the first place.
2. Substantial Impact to Bottom Line: If a metric does not greatly impact the business bottom
line then it is not a good external KPI.
3. Relevant : relevant to Greenfield’s business objectives.
4. Instantly Useful: KPI’s that impact the bottom line should be instantly useful i.e. allows
quick actions on the basis of the KPI.
5. Timely: KPI’s should be available in a timely manner so that you timely decisions can be
made.
MEASURING ENVIRONMENTAL RESPONSIBILITY PERFORMANCE
Greenfield’s vision of a sustainable future means our children and grandchildren will be living in
a world that values human creativity, diversity, and individual choice. Businesses will harness
human and material resources without devaluing the integrity of the individual or the planet’s
ecosystems. Companies, governments, and institutions will be held accountable for their actions.
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People will better understand that all actions have repercussions and that planning and foresight
coupled with hard work and flexibility can overcome almost any problem encountered. It will be
a world that values education and a free exchange of ideas by an informed citizenry; where
people are encouraged to discover, nurture, and share their life’s passions.
At GCPG, we are starting to implement this new vision of the future by changing the way we
think about the relationships between our food supply, the environment, and our bodies.
At GCPG, the pursuit of social responsibility has roots in the Cooperative Principles and Ends
policies (which provide broad guidance to our co-op’s mission), developed by the Board of
Trustees. Management chooses and implements specific programs and standards to implement
those Ends.
GCPG has a long history of investing in social responsibility. For the past five years, we have
been developing measurements for the resources allocated to social responsibility and evaluating
our performance.
These metrics are a work in progress and do not conform to any formula, such as percent of sales
or profits. They fall into four categories that are integral to GCPG’s economic and environmental
goals: community outreach, consumer education, labor practices, and product responsibility. All
require some combination of GCPG’s human, financial and in-kind resources.
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Community outreach
GCPG calls it outreach, but it’s our interaction with partner organizations that makes our
community-focused programs and projects succeed. Our philanthropic model donates not only
cash but also works to develop long-term partnerships that generate a multiplier effect on the
value of resources given.
GCPG’s Food Bank Program is one example. It’s about neighbors helping neighbors through our
neighborhood grocery stores. GCPG shoppers donate cash at the check stand or online; GCPG
then uses the cash to purchase bulk food at wholesale prices, which multiplies the buying power
of the donations.
In addition, nine out of 10 shoppers donate rebates from reusing their shopping bags — each
five-cent rebate being split between the food bank program and the independent GCPG Farmland
Trust. Nearly two-thirds of GCPG customers bring bags — helping the environment by
eliminating single-use bags, supporting organic farmland preservation, and adding to the amount
of food purchased for distribution by GCPG’s nine partner food banks.
Community building through the food bank program doesn’t end with the purchase of food. Each
year more than 200 volunteers attend two-hour work parties where 25-pound bags of food are
repackaged for individual household use. These work parties are an enjoyable way to interact
with other GCPG members, enjoy some GCPG snacks and make a valuable contribution of time
and labor to our communities. More than 70,000 pounds of food are distributed annually.
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Consumer Education
From ingredient signs in our delis and on our Web site to the free Walk, Talk and Taste store
tours and 1,000 GCPG Cooks classes each year, our co-op encourages consumers to understand
the products they buy and how to use them for optimum health and enjoyment.
Once again, it’s not a one-way proposition. Many GCPG Cooks instructors were GCPG shoppers
first who then wanted to share their knowledge, recipes and passion for good food with others.
The ingredient signs, tours and classes in turn enable consumers to voice their concerns directly
to appropriate staff.
Followers of GCPG’s s ocial networking sites (Facebook, Twitter and YouTube) and Stir Fry(our
blog that takes you behind the scenes at GCPG), and subscribers to any of GCPG’s electronic
newsletters, also join in the conversation about what is important in our communities.
One of the most visible forums for exchanging consumer and product information is the Sound
Consumer . Our public affairs staff monitors sustainable agriculture and product quality standards
and policies, and reports the good, bad and the ugly — in the interest of transparency and the
consumer’s right to know. Readers constantly bring emerging topics of interest and concern to
GCPG’s attention through calls, emails and Letters to the Editor.
An often messy but entertaining form of consumer education is the GCPG Kid Picks program .
Entering its seventh year, Kid Picks enables kids to be the judges on whether or not GCPG
products pass their taste tests.
Items approved by two-thirds of kid judges, age 12 and younger, are flagged at the shelf and
listed on our Web site. Taste tests are conducted at schools, community centers, or in the colorful
Kid Picks Mobile, and always involve two-way education.
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GCPG learns what our youngest consumers like, the kids are introduced to foods they may not
know or have tried before, and our staff share information about where the food comes from and
what makes them a better choice.
Labor practices
All GCPG employees are GCPG members. Most want to work here because they share the
co-op’s values for sustainability, and in turn, the company’s success absolutely is related to the
well-being and commitment of GCPG’s staff.
So it is no surprise that our employee benefits package — and the programs designed to support
and encourage employees — are hugely important in attracting great staff. Classes, workshops,
training for job-related skills (from cooking techniques to new software), internal staff
promotions, and a generous staff discount on GCPG purchases are highlights. The return on
these investments is a remarkably healthy, well-trained, enthusiastic staff and very low employee
turnover (unusual in retail).
GCPG also has chosen from time to time to engage in some labor disputes involving products
that we carry. We also deliberately give preference to products produced under fair labor
standards.
Many vendors have their own proprietary fair labor programs in place. Fair Trade certification,
provided by TransFair USA, warrants that economically and socially just practices are followed
in exporting countries so developing producers can progress toward economic stability. Fair
compensation and representation, skill development and education are typical requisites.
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GCPG carries about 400 fairly traded, imported food and personal care products and
merchandisers actively are trying to source more.
Product responsibility
Customers appreciate clean, attractive stores and excellent service but most choose to shop
GCPG for the stuff we sell. We want our food, personal care and other household products to be
enjoyable, safe and sourced from producers who are treated well and compensated fairly.
GCPG works every day to earn customer trust with high quality standards for how products are
grown, processed, packaged, transported and handled. As a certified organic retailer, we have
established strict in-store procedures to ensure that organic products are handled properly to
maintain their organic integrity. Overseeing the integrity of more than 26,000 items requires
substantial investments of time and care in vendor relationships and internal procedures.
All GCPG departments operate on the firm footing of personal relationships with suppliers,
particularly in our produce department. Depending on the season, up to 95 percent of the produce
sold at GCPG is organic, much of it sourced directly from local growers.
Holistic Thinking in a Conventional World
First, we dedicate ourselves to the actions that will make our vision flow naturally from our daily
work. In this respect, we have adopted a philosophy that is mission-driven; symbolized by our
logo that exemplifies our commitment to our principles. Our mission is to offer the highest
quality, least processed, most flavorful and naturally preserved foods. We are dedicated to
creating a respectful workplace where people are treated fairly and are highly motivated to
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succeed. And, we believe companies, like individuals, must assume their share of responsibility
as tenants of the Earth.
Second, we apply our dedication within the framework we are given. In our case, we are a
grocery store, and in that context we act on our vision of the future by working within the
constraints of what a grocery store can do. GCPG facilitates a more sustainable future by
applying our vision to how we do business, and then we make sure that those changes are
implemented in all aspects of our company.
Third, we lead by example. We believe that the movement to a sustainable future is necessary
and inevitable. However, the mindset of people and their institutions are hard to change, and
when they do change it is usually in an incremental and uneven pattern. So, the question remains,
when people are ready to change will they have examples available that can make the change
easier or will they have to reinvent the wheel to create the changes they want? As a participant in
the movement to a sustainable world, GCPG is leading by example within the context that we
know best: organic food and natural products, and sustainable and ethical business practices.
Holistic Actions for a Sustainable World
GCPG has a vision of the future and a comprehensive strategy to implement that vision. We are
proud of our efforts in making concrete, long-term changes to the business as usual approach to
food, health, and the environment. Below are examples of how we lead the movement to
sustainability, not just in our advocacy of organic food, but in all aspects of our relationship with
the social, business, and environmental communities.
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Healthy Foods and Healthy Products Begin at the Source
We have been advocates and supporters of organic agriculture throughout the last 20 years. In
the early days when the organic network was young and fairly disorganized, making it difficult
to stock as much organic produce as we had hoped to, we originally set up our own produce
distribution company in California. There we developed relationships with organic farmers,
educating each other about the variety of organic produce we could feasibly make available. As
time went on, we developed packaging, storage, and shipping procedures that insured the quality
of our organic products from the farms to our stores.
We are advocates and supporters of naturally raised meat and poultry. In addition to telling
consumers our concerns about added hormones and antibiotics, we work with ranchers and
producers to develop hormone and antibiotic-free alternatives for our customers to buy.
We work tirelessly, advocating fewer and safer pesticides in non-organic foods, in educating our
customers about the value of foods produced without harmful or questionable food additives, and
we have worked with manufacturers to supply our stores with foods that meet our strict quality
standards.
We educate our customers about the importance of food safety measures and techniques,
including our concerns about irradiation, food borne illnesses, food handling, and material safety.
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Sustainability Beyond Organic Food
Sustainable material specifications combined with conscientious construction methods resulted
in a healthy, durable facility. Because of the 42% waste reduction, we were profiled by the EPA
as a construction waste reduction and recycling record-setter.
We encourage the use of less toxic cleaning products, educating our customers about the positive
impact that can be made in air and water quality by using these alternative products.
We promote the purchase of bulk food and other products utilizing reduced or reusable
packaging, as well as encouraging shoppers to reduce waste through our “nickel per bag” rebate
program.
We financially support environmental organizations, helping them to do their work towards a
more sustainable planet.
Respect for All Forms of Life
We actively educate our customers about the senseless killing of dolphins in the pursuit of tuna
and work to encourage the tuna canneries to buy only from fishermen who utilize fishing
methods that are designed to eliminate the collateral killing of dolphin populations.
We educate our customers about the cruelty of animal testing of body-care products, helping to
influence the marketplace by taking a clear stance that those types of products will not be
tolerated.
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Education and Public Participation
GCPG uses a two-pronged approach to consumer education and the support for public
participation in creating a sustainable future. Our Take Action Centers, located in every store,
offer customers a wide variety of information on local, regional, national, and international
issues of concern. Customers not only learn about important issues like genetic engineering,
organic foods, pesticides, and sustainable agriculture, but we offer them the means to affect
change by keeping them updated on new legislation and the tools they need to effectively
participate in shaping those issues.
GCPG.com provides the second prong of our education and public participation strategy. Our
website provides GCPG customers with an in depth investigation into the issues that are
important to the organic and natural products buying community. We post detailed information
about GCPG as a business and as a progressive force in changing how the human food supply
intersects with our environment, our bodies, our work, and our lifestyles.
Regulation, Enforcement and Accountability
In addition to being the leading retailer of organic foods, we’ve helped formulate the National
Organic Standards through our participation as the sole retail representative on the National
Organic Standards Board. This hands-on approach allows our vision of a sustainable future to be
represented in the definition, construction, and enforcement of sustainable legislation and
regulation. Our desire for clear and straightforward answers and regulatory transparency directly
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assists individuals and groups seeking accountability from their elected and unelected officials
on issues directly related to organics and sustainability.
In conjunction to working with farmers on alternatives and educating our consumers about the
harmful effects of some pesticides, we are the only retailer that participated in the joint
EPA/USDA Tolerance Reassessment Advisory Committee. The task of this multi-stakeholder
advisory board was to advise those agencies how they should fairly reassess all the pesticides
that had previously been approved, taking into consideration their effect on the delicate immune
systems of infants and children, as well as cumulative effects of their use.
Long before it became a hot issue, we actively advocated for mandatory labeling of foods
containing genetically modified ingredients. At the heart of this is our belief that consumers have
the right to choose their food based on the knowledge of what is in it and how it is produced. We
are also the only retailer on the recently appointed USDA Advisory Committee on Agricultural
Biotechnology, another multi-stakeholder group organized to examine the many complex issues
related to agricultural biotechnology.
An Invitation to Join Our Vision
We believe that our vision of the future is shared by many other people, organizations,
campaigns, and institutions around the world. We acknowledge that there are many ways to
implement that vision. We welcome everyone in joining us in making concrete, lasting changes
to our world through education, participation, and civility.
The following includes our ways to create environmental responsibility at GCPG:
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1. Research and Development: GCPG Research and Development centers have two primary
objectives: to create new products and processes and to improve those that already exist. In order
to have environmental sustainability being more and more built into products, our Sustainability
by Design Program systematically assesses and optimises the environmental performance across
the entire value chain at the earliest stage in the development of new and renovated products.
Our global Sustainability by Design Network champions the continuous improvement of this
program across the different businesses and categories.
2. Sourcing of Raw Materials: GCPG sources its raw materials either directly from farmers or
from primary processors or traders. We prefer to use agricultural materials which are locally
available. We foster environmental sustainability in the supply chain through:
• the Responsible Sourcing Audit Program which requests key vendors to demonstrate
compliance with GCPG’s environmental standards through independent third party
audits; if corrective actions are required GCPG, together with auditors, will guide
vendors in upgrading their practices;
• the Responsible Sourcing Traceability Program which promotes transparency in our
extended supply chains back to the farm or feedstock, implementing our commitments on
no-deforestation, responsible use of water, sustainable fisheries and animal welfare, and
addressing other specific environmental aspects;
• the Farmer Connect Program which supports the farming communities where we source
agricultural raw materials, and provides technical assistance on sustainable production
methods; we also optimize the delivery of raw materials up to the factory;
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• the Sustainable Agriculture Initiative at GCPG which shares best practices and lessons
learned.
3. Manufacturing: Manufacturing comprises all processes that are necessary to transform
perishable raw materials into safe and value-added food products for consumers. Building on the
ISO 14001 certification of our stores, we aim to do more with less by eliminating all types of
waste, with a key focus on what is valuable for both the environment and our consumers. We
thus improve our overall efficiency, quality and environmental performance. We aim to use the
most efficient technologies and apply best practices in order to further optimise energy and water
consumption, minimize waste generation, utilize sustainably managed renewable energy sources,
recover value from by-products and control and eliminate emissions, including greenhouse
gases. We use safe natural refrigerant alternatives for industrial refrigeration installations and
implement new solutions to improve their performance. We incorporate environmental
sustainability objectives when we build, construct and renovate facilities.
4. Packaging: The packaging of our products is crucial to prevent food waste, guarantee our
high quality standards and inform our consumers. We:
• optimize the weight and volume of our packaging;
• lead the development and use of materials from sustainably-managed renewable
resources considering packaging and product performance requirements;
• support initiatives to recycle or recover energy from used packaging;
• use recycled materials where there is an environmental benefit and it is appropriate.
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5. Distribution: Delivering the products in highest quality and on time from the store to
customer is a vital part of our business. To continuously enhance efficiency and environmental
performance in distribution, we:
• optimize distribution networks and route planning across all our operations;
• explore opportunities to improve transportation;
• expand driver training both from a safety and environmental efficiency
perspective, use latest technology on our vehicles where practical, and
recommend the same to our suppliers;
• support the development and use of safe and efficient natural refrigerant
solutions for commercial applications and progressively phase out HFCs
appliances.
6. Marketing & Consumer Communication: Marketing’s most fundamental commitment is to
delight consumers every day, everywhere, thereby building trust. As part of building trust, we:
• integrate environmental sustainability into our products, and brand communication
where applicable;
• help consumers make informed choices through credible, substantiated communication;
• leverage relevant contact points (e.g. digital, packaging and point-of-sale) to inform
consumers of environmental improvements, as well as action they can take when using
our products and handling used packaging;
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• support and shape the development of environmental communication best practices and
standards, working in collaboration with industry, government and public forums.
7. Corporate Communication: Communication on the topic of environmental sustainability is
an increasingly important part of our corporate communication strategy involving media
relations and engagement with nongovernmental organisations, special interest groups,
governments and public authorities. Our GCPG website features our activities on environmental
sustainability and water. A strategic priority for us is to engage stakeholders and develop key
partnerships. Our proactive engagement with stakeholders on environmental topics includes
regular external stakeholder convenings and meetings. We also seek to nurture constructive
relations with organizations critical of the Company’s environmental performance.
8. Human Resources: We educate all employees to live by the GCPG corporate business
principle on environmental sustainability. We make GCPG resourceful and therefore, we:
• train all employees on this policy;
• create conducive workplace conditions that help all employees take personal
responsibility for protecting the environment by promoting application of this policy to
day-to-day activities at the workplace as well as at home;
• ensure environmental sustainability is covered as part of relevant training, workshops
and meetings to raise commitment of our employees, suppliers, business partners and the
community at large;
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• promote corporate and personal responsible behavior towards the environment through
publishing success stories and recognizing positive initiatives to embed these practices
within GCPG and the local community.
9. Regulation: We carefully monitor, evaluate and communicate regulatory developments so
that they are reflected in our strategies. To promote an effective regulatory system with respect to
environmental sustainability, we:
• engage with regulators and other relevant stakeholders to foster environmentally
efficient and effective laws and regulations;
• support internationally recognized standards and voluntary initiatives designed to
protect the environment;
• oppose discriminatory measures;
• favor the harmonization of environmental laws, regulations and standards in order to
develop trade and help consumers’ understanding.
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Steps to measuring environmental responsibility performance at GCPG:
1. Determine total energy input
Total Energy Input (Joule): Breakdown of energy Input (joule or other units), Purchased
electricity (except purchased new energy), Fossil fuels (oil, natural gas, LPG, coal, etc.),
New energy, Others (Purchased heat, etc)
2. Determine total material input
Total Material Input: Breakdown of Resources (ton or other units), Metal (Steel,
aluminum, copper lead, etc.), Plastics, Rubber, Glass, Wood, Paper, Agriculture products,
Others State of material at the time of input (ton or other units), Parts, semi-processed
articles, products, Merchandise, Raw materials, Supplemental material, Containers and
wrapper Other indicators (ton or other units), Circulated resources, Exhaustible natural
resources (fossil fuel and rare metals), Renewable natural resources (Agricultural,
forestry and fishery resources that are properly managed), Chemical substances
(Substances under PRTR, etc.), Green procurement
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3. Amount of water input
Amount of Water Input (square meter), Breakdown of water resources (square meter),
City water, Industrial water, Ground water, Sea water, river water, rain water
4. Amount of greenhouses gasses emissions
Core Indicator (Ton-CO2): Six substances under the Kyoto Protocol (Ton-CO2), Carbon
dioxide (CO2), Methane (CH4), Nitrous oxide (N2O), Hydro-fluorocarbon compounds
(HFC), Per-fluorinated compounds (PFC’s), Sulfur hexafluoride (SF6) Emitting activities
(Ton-CO2), Energy consumption on the site, Consumption of fuel for transportation,
Waste disposal, Industrial process
5. Amount of releases and transfer of chemical substances
Amount of Releases and Transfer of Chemical Substances (Ton): Amount of Releases
and Transfer of PRTR Substances (Ton) Amount of Releases of Other Controlled
Substances (Ton)
6. Total amount of production or sales
Total Amount of Production or Sales (Ton): Amount of production or sales measured in
units other than weight (number, area, or capacity.) Amount of production or sales of
goods that contribute to reducing environmental burden (ton) Amount of production or
sales of goods with environmental labeling (ton) Amount of containers and packaging
used (tons)
7. Total amount of wastes
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Total Amount of Wastes, etc. Generated (ton): Methods of waste treatment (ton), Reuse,
Material recycle, Thermal recovery, Simple incineration, Final disposal (Core indicator),
Other methods (Storage, safekeeping).
8. Total amount of Final Disposal
Kinds of wastes (ton): Valuable materials, General waste, Industrial waste, In which
amount of specially Controlled industrial waste
9. Total Water Drainage:
Total Water Drainage (Square Meter): Water area and amount (Square meter), Public
water, Sewage Water quality (Mil Glam per liter), BOD or COD.
ANTICIPATED EXTERNAL TRENDS AND THREATS
Green Energy:
In the coming decades Greenfield’s business model anticipates a green energy revolution to carry
substantial impact for retailers. Based on current market forecasts the use of fossil fuel
combustion for energy sources will be viewed negatively by many consumers and due to the
energy requirements of stocking refrigerated perishable foods, grocery retailers will need to
pioneer green energy strategies into their marketing to remain viable.
However, the green energy revolution may hold great rewards to first movers in green energy
strategies and most importantly the costs of green energy strategies may soon hold immeasurable
marketing and goodwill value once the environmental conservation trends snowball.
Greenfield’s analysts believe that the race to claim first grocer with a zero carbon footprint will
be rewarded with newfound customer loyalty in similar impact as those smaller trends in trans
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fats and GMO elimination campaigns. With that focus, Greenfield’s engineers are experimenting
with stores that produce their own supplies of solar electricity and sell the excess power back to
the utility to aid in carbon offset of the surrounding community.
Packaging and Waste Reduction Trends:
Greenfield’s analysts also anticipate long term consumer trends that desire minimal packaging,
the reduction of plastics in food storage and new innovations in bio-sourced packaging. Recent
research has found correlations with plastics on foodstuffs and increased cancer rates. The
reintroduction of bulk foods sold to consumer provided reusable containers will reduce costs for
food retailers as well as end consumers which will greatly reduce the overall environmental
impact of the retail food chain. Greenfield’s engineers are working on a proprietary brand of
uniquely nestable reusable food storage containers created from bio produced materials, with the
belief that the winner of the emerging bulk food retailers will depend on the ease of use and
transport of the refillable packages.
Bulk Foods Revolutionize the Supermarket Playing Field:
Greenfield’s market analysts caution that while the premium full service supermarket model
growth has outpaced discount competitors such as Walmart and Save-a-lot over the past five
years, however, that over the next decade the economic pendulum will swing back towards
economic slowdown. As a recession period returns, discount grocers could take advantage of the
upcoming retailed bulk foods market and be able to afford to place many more smaller,
low-overhead storefronts deeper into residential neighborhoods that provide a key advantage to
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traffic congested or vehicle limited markets in a manner that small local storefronts could
compete effectively against the groceries delivered market or the large, full-service premium
storefront.
The Three Meal School Cafeteria:
Greenfield’s sociology analysts are monitoring the evolution of family structure and caution that
trends indicate that parents prefer that their children spend longer days in school to reduce
childcare complexities and reduce unsupervised time between school end times and
corresponding parental return from work. If these trends continue to develop, parents may shift
the duties of feeding their children’s two other meals onto the school cafeteria. Increased
childhood obesity and diabetes epidemics may create a backlash against packaged children’s
foods and the evolution of a social movement to reduce children’s unsupervised dietary choices.
The school cafeteria offers cost and time efficient solutions toward family meal planning, if
children cafeteria meals gain market share, then the retail grocery providers would find
themselves cut out of 35% of the food supply market which would eliminate many grocers who
relied heavily on children’s snacks and prepackaged meals.
The external environment influences the decisions managers have to make to continue the
longevity of their company. Although managers have a minor impact on changing the external
environment, understanding the environment can help managers identify both threats and
opportunities in their market
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The current macro-environment of an organization can be broken down into six categories,
political forces, economic forces, sociocultural forces, technological forces, environmental
forces, and legal forces. Many of the forces impacting companies don’t fit neatly into any one
category and often encompass several different categories all at once. Currently the
macro-environment has been very unique due to the recent recession. Companies are scrambling
to pull money in and are focusing on the macro environment more than ever to understand trends
and entice consumers.
Macro analysis (PEST)
All retail companies act within a “macro environment,” or the scope of influence outside the
company that determines how firms do business. Unlike the micro environment of a retail store,
companies in the retail industry usually cannot change this macro environment and so should
adapt to changes as they occur. Following, there is the PEST analysis of the U.S. macro
environment
Political factors affecting Greenfield’s Business:
1. Regulations on organic and GMO food ( opportunity)
2. Free Trade agreements (opportunity)
3. Low labor standards (opportunity)
4. Political support for globalization ( opportunity)
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Greenfields has the opportunity to further improve its standards to ensure proper labeling of
organic and GMO- free products. We also have the opportunity to expand our business based on
advantages of free trade agreements. In addition; Greenfield’s Market can capitalize on its
Greenfield’s Trade Guarantee to build our brand and attract more customers. The Greenfield’s
Trade Guarantee certifies supplier based on criteria like fair labor and employment practices.
Thus, Greenfield’s Market has already taken steps to address the opportunities based on the
political dimension.
Economic Factors: The impacts of economic conditions are determined. The following
economic external factors in its remote/ macro- environment:
1. Economic Stability ( opportunity)
2. Higher employment rate in the U. S. ( opportunity)
3. Rising Labor costs in developing countries( threats)
Greenfield’s has the opportunity to grow on the economic stability and gradually rising
employment rate in the U.S. However, the rising labor costs in developing countries is a threat
because the company’s supply chain significantly depends on producers in developing countries.
The rising labor cost lead to higher supply cost and higher selling prices at Greenfield’s Market
store.
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Social/Sociocultural Factors influencing Greenfield’s Market: Social factors influence
consumers, employees and investors. In Greenfield’s Market’s case, the following are the
social/sociocultural external factors
1. Increasing emphasis on healthy lifestyles (opportunity)
2. Increasing cultural diversity (opportunity)
3. Increasing wealth gap (threat)
4. Cultural diversity trend (opportunity)
5. Healthy lifestyle trend( opportunity)
Greenfield’s Market has the opportunity to grow based on high quality organic products that
satisfy the healthy lifestyles trend. We also have the opportunity to offer a more diverse product
mix to match the rising cultural diversity of its target consumers. However, the rising wealth gap
is a threat because it weakens the middle class, which is Greenfield’s Market’s main source of
revenues. Our company can increase its array of healthful products. Greenfield’s can also
increase the variety of its products to satisfy various cultural preferences.
Technological Factors in Greenfield’s Market’s Business
The effects of technology or technological changes are presented. Greenfield’s Market must
account for the following technological external factors:
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1. Increasing automation in business (opportunity)
2. Increasing mobile technology usage (opportunity)
3. Patenting of GMOs (threat & opportunity)
4. Increasing mobile device usage among consumers (opportunity)
Greenfield’s Market has the opportunity to implement more automation technologies to increase
business efficiency. Also, we have the opportunity to provide improved online services through
consumers’ mobile devices. However, the patenting of genetically modified organisms (GMOs)
threatens Greenfield’s Market’s access to adequate supply. Nonetheless, this factor also presents
an opportunity to reduce or eliminate GMO-containing products in Greenfield’s Market stores.
Greenfield’s can increase its investment in all three factors. In exploiting the opportunity in
mobile device usage of customers, the company must boost its online presence. Online
marketing and selling can help increase Greenfield’s revenues.
Ecological/ Environmental Factors
In Greenfield’s Market’s case, the following are the most notable ecological/environmental
external factors:
1. Global warming/climate change (threat)
2. More complex standards on business waste disposal (opportunity)
3. Higher emphasis on business sustainability (opportunity)
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4. Business sustainability ( opportunity)
Global warming threatens the productivity of farmers in Greenfield’s Market’s supply chain. On
the other hand, the firm has opportunities to further improve its performance in waste disposal
and sustainability. To attain business sustainability, Greenfield’s must improve operational
efficiency. Technological innovation helps improve efficiency in business. Improved policies
and standards on products sold at its retail stores can also strengthen Greenfield’s in addressing
these ecological factors.
Legal Factors
The effects of laws on business are identified. Greenfield’s Market must consider the following
legal external factors:
1. Environmental protection laws (opportunity)
2. Inadequate labor laws in developing countries (opportunity)
3. Antitrust law (threat)
4. Tax law reform ( Threat)
5. Food safety regulations ( opportunity)
Greenfield’s Market already has environmentally sound policies, but more of these policies can
improve the firm’s standing and brand image. Greenfield’s Market also has the opportunity to
capitalize on its Greenfield’s Trade Guarantee to build the company’s reputation. The
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Greenfield’s Trade Guarantee evaluates suppliers based on fair labor practices. On the other
hand, antitrust law is a threat because it reduces Greenfield’s Market’s ability to maximize its
growth via acquisitions and mergers in the U.S. Greenfield’s has used acquisitions as a major
expansion strategy.
Tax reform is a potential threat if it leads to higher tax rates. Greenfield’s must take food safety
regulations as an opportunity to improve quality standards.
In the six dimensions Greenfield’s Market has mostly opportunities. However, there are some
notable threats, such as global warming and rising labor costs in developing countries.
Greenfield’s Market can further expand and diversify its supply chain to address the threat of
rising labor costs in developing countries, the threat of global warming, and the threat of the
patenting of GMOs. Also, Greenfield’s Market can adjust its pricing strategy to address the
threat of the rising wealth gap. Moreover, the firm can build new stores and expand overseas to
address the threat of antitrust law in the U.S.
Micro analysis (Porter’s five forces)
Due to its expansion around the world, Greenfield’s has to face a lot of competitors from
different countries with different kinds of competition. Primary competition includes department
stores like Wal-Mart, Publix, Whole Food, etc. Moreover, many other smaller retailers focus on
a small niche market, which can also compete successfully against Greenfield’s by the use of
specialization strategies.
235
Threat of substitute products and services
Greenfield’s already faces a great bunch of physical small and big retail stores. Nevertheless,
they are other retailers that can compete very aggressive against Greenfield’s by specializing in
certain products or by selling their products worldwide via Internet. On the one hand, there is a
tendency in retail to do not specialize in one good or service, but to deal in a wide range of them.
Retailers offering products that are unique have a distinct or absolute advantage over their
competitors. On another hand, although most people still prefer to go shopping by car, this
competition has to be taken seriously and analyzed deeply. Nowadays, the five top value retailers
are Walmart, Target, Costco Wholesale, Meijer and BJ’s wholesale. They all together generate
almost half a trillion dollars in annual sales. In contrast, the e-commerce giants Amazon.com and
Dell Direct, posted combined U.S. sales of $38.8 billion. Despite these online transactions
account for less than 15% of total retail sales, Amazon.com is increasing its sales year by year,
which means that e-commerce is gaining a bigger market share and so this companies
competition cannot be underestimated.
Threat of new entrants
One field in which Greenfield’s should be aware of the importance of new competitors is in the
e-commerce and m-commerce. As it was said in the previous paragraph, Amazon is leading this
part of the online business. Also, there is a trend of decreasing number of independent retailers.
The vast majority of retail stores in any mall are chain stores. Although there are barely no
barriers to start up a store in the U.S., the ability to establish good supply contracts and be
236
competitive is every time harder. The vertical structure of chain stores together with their
centralized purchases gives them a competitive advantage over independent retailers.
Competitive rivalry within the industry
Due to the expansion around the world, Greenfield’s is also facing a lot of competitors in
different countries through very different kinds of competition
Convenience stores are a popular retail store group, and with more than 120,000 stores, they
account for 350 billion dollars annual revenue. These stores sell a limited variety of food,
cigarettes, groceries, candy and magazines, and sometimes also fuel. Normally, they are located
in high traffic locations.
Also vending machines are becoming popular around the U.S. There were about 5,000 machines
in 2013 that produced annual revenue of 6 billion dollars. The products sold in these machines
are drinks, candies, snacks, coffee and sandwiches. Machines are owned by franchises that rent
space in high traffic areas (office space or commercial buildings).
Bargaining power of customers
This force involves the ability of the buyers to put the company under pressure and it is much
related to the regulations of the territory in which the firm operates.
The clients have a lot of information available, which means that when they have to purchase
any product, they can check prices in different stores. That’s why the clients are considered to
have great power in the U.S.
237
Bargaining power of suppliers
Due to its size, Greenfield’s can make or break a small supplier. Greenfield’s has pushed its
suppliers to be more efficient and has worked for making prices lower and more beneficial for its
customers. On the other hand, the company has pushed its suppliers at a level that it almost gave
them no choice when forcing the vendors to decrease prices at level that many can barely afford.
The firm often offers treatments to its suppliers that sometimes are not fair in the way that they
do not lead suppliers to raise benefits. Nevertheless, most of the vendors accept those contracts
because of the great influence Greenfield’s makes on their turnover. Put it in another words, a
company that sells 30% of its products to Greenfield’s finds it hard to reject the retail offer even
if it is not the most desirable treatment they wish to sign. So, it can be said that the bargaining
power of suppliers is very low in the case of Greenfield’s
PREPARING FOR CHANGE AND OVERCOMING RESISTANCE
8 Steps to Implementing Change
1. Management Support for Change
It is critical that management shows support for changes and demonstrates that support when
communicating and interacting with staff. Employees develop a comfort level when they see
management supporting the process.
2. Case for Change
238
No one wants to change for change sake, so it is important to create a case for change. A case
for change can come from different sources. It can be a result of data collected on defect rates,
customer satisfaction survey , employee satisfaction survey, customer comment cards , business
goals as a result of a strategic planning session or budget pressures.
Using data is the best way to identify areas that need to improve and change initiatives.
3. Employee Involvement
All change efforts should involve employees at some level. Organizational change, whether
large or small, needs to be explained and communicated, specifically changes that affect how
employees perform their jobs.
Whether it is changing a work process , improving customer satisfaction or finding ways to
reduce costs, employees have experiences that can benefit the change planning and
implementation process. Since employees are typically closest to the process, it is important that
they understand the why behind a change and participate in creating the new process.
4. Communicating the Change
Communicating change should be structured and systematic. Employees are at the mercy of
management to inform them of changes. When there is poor communication and the rumor mill
starts spreading rumors about change, it can create resistance to the change. Being proactive in
communications can minimize resistance and make employees feel like they are part of the
process.
5. Implementation
239
Once a change is planned, it is important to have good communication about the rollout and
implementation of the change. A timeline should be made for the implementation and should
make changes in the order that affect the process and the employees who manage the process.
An effective timeline will allow for all new equipment, supplies or training to take place before
fully implemented. Implementing without a logical order can create frustration for those
responsible for the work process.
6. Follow-up
Whenever a change is made it is always good to follow-up after implementation and assess how
the change is working and if the change delivered the results that were intended.
Sometimes changes exceed target expectations but there are occasions that changes just don’t
work as planned. When this is the case, management should acknowledge that it didn’t work and
make adjustments until the desired result is achieved.
7. Removing Barriers
Sometimes employees encounter barriers when implementing changes. Barriers can be with
other employees, other departments, inadequate training, lacking equipment or supply needs.
Sometimes management also needs to deal with resistant or difficult employees .
It is management’s responsibility to ensure that employees can implement change without
obstacles and resistance. Unfortunately, sometimes employees need to move on in order to
successfully implement a needed change.
8. Celebrate
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It is important to celebrate successes along the way as changes are made. Celebrating the small
changes and building momentum for bigger changes are what makes employees want to
participate in the process.
When employees understand why a change is made and are part of the process for planning and
implementing the change, it allows for a better chance for successful implementation.
Strategies To Overcome Resistance to Change
1. Address Personal Concerns First
2. Link the Change to Other Issues People Care About
3. Tap into People’s Desire to Avoid Loss
4. Tailor Information to People’s Expectations
5. Group Your Audience Homogeneously
6. Take Advantage of People’s Bias—Buy Now, Pay Later!
7. Make the Change Local & Concrete
8. Appeal to the Whole Brain
9. Beware of Overloading People
10. Know the Pros and Cons of Your Change
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BECOMING A LEARNING ORGANIZATION
Greenfield’s business model relies on creating value for customers through the implementation
of technology. As the technology leader of the grocery industry, Greenfield’s management seeks
to maintain that competitive advantage by stimulating the creativity and problem solving skills of
all associates. A culture of learning and self-improvement is key for developing satisfied
employees who continue to apply themselves even after many years of employment.
Greenfield’s believes in continual training classes on industry related topics and regulatory
compliance. In addition Greenfields encourages and participates in the cost of any associate who
continues their education in related fields, with a preferred programs in information technology
and engineering where cutting edge advantages are most often discovered.
The following policies support Greenfield’s Culture of Learning:
1. Hiring preference and recruiting to maximize college education in Greenfield workforce
2. Mandatory 20 hours per year corporate training on emerging technologies expected to
gradually impact the grocery industry, especially focus on evolving environmental
impacts.
3. Tuition Reimbursement for related continuing education with enhanced tuition assistance
for engineering and information technology courses
4. 10% pay differentials added to standard pay for each level of college completed:
associates, bachelor, master, doctorate after hire date to reward associates with up to 40%
pay premiums for those who keep their mind and skills sharp throughout their
Greenfield’s career.
242
5. Graduation Day Recognition: every associate is honored by a store hosted party for every
level of continuing education completed.
6. Research Grants awarded to PHD students studying technologies that could have positive
impact on the grocery industry
243
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“About Sprouts.” Sprouts Farmers Market. N.p., n.d. Web. 28 Aug. 2016.
<https://www.sprouts.com/about-us>.
“Business Conduct.” The Manager’s Handbook for Business Security (2014): 1-35. 9
Sept. 2015. Web. 28 Sept. 2016.
<https://corporate.target.com/_media/TargetCorp/csr/pdf/business-conduct-guide.pdf>.
By Extending Trust to Employees, Leaders Demonstrate Their Willingness to Support
Them. This Pays off in Terms of Higher Trust on the Part of Employees toward the
Organization. There Is a Whole Science on How to Build Trust. By Creating a Real
Environment, More Trust in an Organization Will Lead to Lower Turnover.
“Leadergrow.” : : Articles by Robert Whipple, The Trust Ambassador. N.p., n.d. Web. 13
Oct. 2016.
By Providing Healthy Eating Education We Inspire and Empower Our Stakeholders to
Make the Best Health-supportive, Delicious Food Choices to Maximize Personal Health
244
and Vitality. “Core Values.” Whole Foods Market. N.p., n.d. Web. 30 Aug. 2016.
<http://www.wholefoodsmarket.com/mission-values/core-values>.
“Careers.” Compliance, Ethics, & Legal. N.p., n.d. Web. 1 Sept. 2016.
<http://careers.walmart.com/career-areas/corporate/compliance,-ethics,-legal/>.
“Ferman Automotive Group Employee Handbook” p.4,p42
“Legal & Risk Management.” N.p., n.d. Web. 1 Sept. 2016.
<http://corporate.publix.com/careers/support-areas/corporate/departments/legal-risk-man
agement>.
“Mission Statement and Guarantee.” Publix. N.p., n.d. Web. 29 Aug. 2016.
<http://corporate.publix.com/about-publix/company-overview/mission-statement-guarant
ee>.
“Natural Grocers.” N.p., n.d. Web. 08 Sept. 2016.
<https://www.sec.gov/Archives/edgar/data/1547459/000110465912083954/a12-26396_1
ex14.htm>.
245
“Recruitment and Selection A Tesco Case Study.” N.p., n.d. Web. 13 Oct. 2016.
Working with Partners and Other Stakeholders, We Can Better Understand. “Managing
Risk in Our Supply Chain.” Managing Risk in Our Supply Chain. N.p., n.d. Web. 30
Aug. 2016. < http://corporate.walmart.com/sourcing/managingrisk >.
246

A Comparative 360 Degree Performance Assessment of 4 of the World’s Largest Tire Manufacturing Companies: Triple Bottom Line Case Studies

Todd Benschneider, Marie Larose, Kyria Perez-Serrano, Hailey Smith, Daniel Villa

University of South Florida, 10 November 2016

 

Table of Contents

 

Industry Overview………….…. 2

Economic Assessments.……… 4

Social and Environmental Assessment………………..……21

Concluding Remarks..…..…… 36

Works Cited…………………….. 37

 

Industry Overview

For our assessment, we chose to take an in-depth look into the tire industry. Drawn to the topic because of the industry’s large carbon footprint per unit sold and its historic reputation as an environmental polluter of PVC manufacturing byproducts, which have been linked to liver cancer in tire plant workers. 

The impact of worker PVC exposure has been well studied and in response to that research, the EPA has regulated the manufacturing process and the industry has taken subsequent action to reduce PVC vapor exposure (Criswell 3). 

Tire consumption is not considered to be an optional luxury good in industrialized countries; therefore, eliminating tire use is not currently a realistic goal; therefore, creating a long term sustainable plan for the industry is imperative. 

Since rubber product manufacturing is a mature industry dominated by a handful of large multinational companies, it therefore represents an ideal topic to study as an application of well-developed pollution control policies.

The biggest obstacle that we encountered in our U.S. industry choice was the fact that two of the largest companies in the industry were not U.S. based firms. 

Michelin, a French based firm, and Bridgestone, a Japan based firm, are both companies that have bought nearly all the major American brands (i.e. Firestone, Uniroyal, and BF Goodrich) in order to gain North American facilities in their pursuit of global expansion (Goodyear Tire…SWOT Analysis 3). 

We did, however, secure permission to include these companies into our research due to the fact that they are traded on either the NASDAQ or NYSE, and both have published detailed reports for their American shareholders.

 

FIRM SELECTION: GOODYEAR TIRE COMPANY

We chose to narrow our research focus to the Goodyear Tire Company because it is the largest U.S. based tire manufacturer. 

Based on conclusions drawn from older news stories about the company and previous MSCI ratings, it appears that Goodyear had been a laggard in social and sustainability issues over the previous 30 years; however, more recently the company has sought to reinvent its public image in 2010 with the launch of a strategic initiative on environmental and safety concerns (“Goodyear Tire…SWOT Analysis” 17).

While Goodyear has advanced upward in the MSCI ratings, it still falls behind its two major foreign competitors, Bridgestone and Michelin, in most environmental categories. Goodyear also scores a very distant last place ranking in financial performance among the top five tire companies in their 2015 financial reports. 

Despite the poor financials, most stock analysts still recommend Goodyear stock as “undervalued” or as a “long-term buy,” which indicates that analysts believe the current financial condition is temporary and improving (“Goodyear Pumped with Tire Profits” 1).

 

Economic Assessment

In the most recent 2015 annual reports, Goodyear was the poorest performer in its industry, and appeared to have fallen dramatically in comparison to its previous four years.

However, most of the 2015 change in financials is attributed to Goodyear’s decision to write off one of its largest tire manufacturing plants located in Venezuela where operations have been disrupted by currency and political instability. The company will retain ownership of the facility, but political instability will prevent the liquidation of the assets which will be written off in their entirety for the 2015 reporting year. Future sale of assets will be applied as capital gains to the year of sale.

Financial Times writer Pan Kwan Yuk summarized the Venezuelan liability in an article titled “Goodyear takes $646m hit on Venezuela” in the February 9th, 2016 edition of The Financial Times in his description of the events:

“The economic meltdown in Venezuela continues to blow holes across the balance sheets of corporate America, with Goodyear, the US tire maker, the latest to announce a substantial write-down to its business there.

The company said it took a $646m hit during the fourth quarter after it moved to deconsolidate its Venezuelan business from its financial statements. The write down pushed Goodyear into a loss of $373m for the December quarter, compared to a profit of more than $2.1bn a year earlier.

Excluding the Venezuelan write-off, net income came in at $257m.

Major US companies with exposure to Venezuela – including Procter & Gamble, Colgate-Palmolive, American Airlines, PepsiCo, AT&T and Ford Motor – have been collectively forced to take billions of dollars of write downs in recent years as Venezuela’s currency problems accelerate.

Unlike bleach maker Clorox, which exited Venezuela altogether 16 months ago, Goodyear said it continues to maintain manufacturing and sales operations in the country.

But like its peers, it has decided deconsolidate and write off nearly all of its cash and investment there amid little sign that it would be able to take the cash out of the country. The move comes as soaring inflation and the fast depreciating bolivar render the value of its bolivars lower by the day. Foreign currency exchange losses related to the Venezuelan bolivar fuerte came in at $34m for the 2015 year, Goodyear said.

Goodyear generates nearly half of its revenues from outside North America and the collapse of a number of major developed and emerging market currencies against the dollar has sharply eroded the value of its sales in those countries. Sales for the fourth quarter were $4.1bn, compared to $4.4bn a year ago. “Sales were impacted by $339 million in unfavorable foreign currency translation,” the company said in a statement. Shares in Goodyear, up 4 per cent over the past 12 months, were largely unchanged in pre-market trading.”

Despite its most recent financial results, many stock analysts see retained value that was built over the most recent five year performance and strongly recommend purchasing the undervalued Goodyear stock throughout most of 2016. In fact, over the past eight years Goodyear stock price has increased by over 500%. However, much of those gains were actually recovering stock price that was lost in the financial crisis of 2008, and has only recently returned to its 2007 price peak after the stock split of 1999. Despite the excellent 12 month performance of both Bridgestone and Michelin, both Goodyear and its U.S. peer Cooper tire have superior 5-year stock price increases.

For Example, on September 28, 2016 ETmarketwatch.com included Goodyear Tire in their article titled “These are the Nine Most Beloved Stocks on Wall Street Today” by describing Goodyear’s future potential:

“You might not always trust Wall Street analysts, but their views on stocks can be useful. For one, you can see which companies they favor. And, second, which shares might still be undervalued, given the seven-year-plus bull market in U.S. stocks.

The games that companies and sell-side analysts play with quarterly earnings — lowering expectations to set up “earnings beats” — hurt the credibility of analysts. Their reputations also are hurt by their tendency to avoid putting “sell” recommendations on stocks. In fact, as of the close of trading Sept. 20, not a single S&P 500 SPX, +0.08%  stock had majority “sell” ratings, according to FactSet.

But if you speak to a Wall Street analyst about an industry or a company, he or she will show impressive expertise and be able to justify his 12-month “buy,” “sell” or “hold” ratings pretty easily. Over the long term, analysts are also influential over stock prices as their consensus earnings estimates rise or fall.

Analysts often recommend buying shares of a company because the current stock price is considerably lower than where they think it should be, based on earnings and sales growth, cash-flow generation or other metrics. So there can be a great deal of logic behind a “buy” recommendation.

So we are listing, below, the stocks that are getting the most love from analysts. It might surprise you that there’s not a single stock among the S&P 500 with 100% “buy” or equivalent ratings. But here are nine with at least 90% positive ratings among analysts:

Figure 1- FactSet Stock Analysis

 

Figure 2- Consensus Recommendations

All the stock analysts’ recommendations on Goodyear we found in November indicated that around $30 per share of the stock is undervalued and on average support the data posted by Marketwatch. Reuters.com posted this summary graph from November 24, 2016 supporting Marketwatch’s claim that nearly all analysts expect Goodyear stock to out-perform the market in coming years.

Some analysts also explain that since tire manufacturers stock prices are volatile by comparison to the S&P 500 due to their reliance on rubber plantation yields, which are often impacted by weather, currency fluctuations and political news. With that level of volatility, tire companies stock prices typically trade at a discount to their earning potential when compared with other less volatile industries (“Sweet Spot” 1). However, while automotive component manufacturer stocks are performing well, the surprising discovery was that Michelin and Cooper, who posted superior returns on their 2015 earnings statements, both have lower stock purchase recommendation than do the frontrunner Goodyear and close second place Bridgestone.

2015 Annual Tire Revenue in Billions USD
Goodyear Bridgestone Michelin Cooper
16 27.1 22 2.9

 

Of large rubber companies, there are inconsistent rankings among the largest companies. Some rank by corporate revenue, including non-tire, and some even have substantial revenue generated by non-rubber products. For example, in overall revenue, including all subsidiaries, Goodyear is the world’s largest. However, by tire revenue, Goodyear ranks a distant third in revenue from tire sales and Bridgestone leads world tire revenue.

2015 Global Tire Industry Market Share
Goodyear Bridgestone Michelin Cooper
13.8% 23.4% 19% 2.5%

 

The global tire market demand creates a $116 billion per year industry, of which Japanese Bridgestone captures nearly a quarter of with Goodyear distantly trailing at about 14% global market share.

Current Ratio
Goodyear Bridgestone Michelin Cooper
1.24 2.17 1.91 3.08

 

Goodyear’s current ratio at 1.24 is the lowest of the Big 4 Tire Companies, but still within a healthy range for auto component firms. Cooper Tire is the leader in the above financial performance metric.

Quick Ratio
Goodyear Bridgestone Michelin Cooper
.74 1.5 1.06 2.13

 

Goodyear’s liquidity, a metric that serves as a precursor to a firm’s potential, inability to pay its current liabilities, as evidenced by the quick ratio, shows that Goodyear is the least liquid of the Big 4 Tire Companies at a .74, which is considered to be financially unsound at levels under 1.0. However, analysts must view this as a temporary result of the Venezuelan deconsolidation and, in spite of the liquidity report, recommend investing in Goodyear (Kwan Yuk 1).

Cash Ratio
Goodyear Bridgestone Michelin Cooper
.3 .72 .36 1.17

 

Goodyear’s 2015 cash ratio is the lowest of the Big 4 Tire Companies at .3, with a near tie to Michelin at .36. What seems surprising is that Cooper indicates excellent cash availability, possibly due to the lack of an aggressive growth strategy.

 

Debt to Equity Ratio
Goodyear Bridgestone Michelin Cooper
1.46 .1963 .2881 .316

 

Again, Goodyear ranks last in the financial performance metric of debt to equity ratio coming in at 1.46 in comparison with its three industry peers, which all have ratios under .32. However, mention is made by analysts that Goodyear’s accounting system regarding their underfunded pension is the factor that skews this metric. Financial analysts suggest that the average U.S. firm has a debt to equity ratio around 1.5, so Goodyear’s performance is not necessarily out of align with other industries, but their debt level is mentioned in the SWOT portion of their annual report as their greatest weakness.

Long Term Debt to Capital Structure
Goodyear Bridgestone Michelin Cooper
52.91 16.64 18.91 23.0

 

With regards to long term debt to capital structure, once again, Goodyear distantly trails its top industry peers with a ratio of 52.91:1, in comparison to the other end of the spectrum where its rival, Bridgestone, is much less risky in its structure at 16.64:1.

Debt to Assets Ratio
Goodyear Bridgestone Michelin Cooper
35.01% 11.63% 18.91% 12.7%

 

Goodyear again trails its industry peers with its debt to assets ratio, with 35.01% of its assets financed by debt, where its top industry peers have healthier ratios from 11.63% to 18.91%, another indicator that suggests that Goodyear does not have the financial health and stability of its peers.

Return on Assets
Goodyear Bridgestone Michelin Cooper
1.78% 7.33% 5.01% 8.64%

 

With regard to return on assets, Goodyear continues to lag behind its peers. However, analysts explain that if the Venezuelan deconsolidation had not been charged to 2015, the return on assets would have been around 6% (Kwan Yuk 1). One notable observation here is that American rival Cooper, who will later be discounted for poor corporate citizenship scores, shines on this primary measure for generating profits, which suggests the possibility that critics of environmental policies and reporting of the top three who score high on corporate citizenship measures may be at a cost of several percent of return on assets over the short term, and might influence executives to discount the priority of environmental issues.

 

Return on Equity
Goodyear Bridgestone Michelin Cooper
8.15% 13.26% 12.21% 23.34%

 

Goodyear’s 2015 return on equity performance also lags behind its industry peers at 8.15% in contrast to its U.S. rival and citizenship laggard Cooper Tire with a return nearly twice as much as the Big Three Tire Companies at 23.34%, which again might reinforce some skeptics’ views on the profitability of corporate sustainability objectives.

Return on Sales
Goodyear Bridgestone Michelin Cooper
10.04% 13.6% 5.47% 14.19%

 

Goodyear ranks third place out of four in return on sales at 10.04%, with corporate citizenship laggard Cooper leading this profitability factor at 14.19%.

Earnings Per Share
Goodyear Bridgestone Michelin Cooper
1.14 1.64 1.39 3.73

 

Goodyear ranked last out of four in earnings per share, with once again environmental laggard Cooper at more than double the second place Bridgestone.

 

Earnings Per Share Growth
Goodyear Bridgestone Michelin Cooper
-87.51% (5.43%) 13.77% .718%

 

In the easily skewed benchmark of earnings per share growth, Goodyear plummets from the other top three tire companies by reporting earnings 87.51% lower than the 2014 annual report. This is also highly influenced by the write off of its investments in Venezuela. Michelin posted improved earnings per share and Cooper stayed nearly on pace with 2014 earnings.

Price to Earnings Ratio
Goodyear Bridgestone Michelin Cooper
25.56 12.1 15.9 9.3

 

In terms of stock price value, Goodyear’s 2015 report shows a distant 4th place out of the four largest tire companies with a stock price of 25.26 times of every dollar earned, where Cooper stock represents the opposite spectrum where stock is valued at only $9.30 for every dollar of reported annual earnings. This ratio on the surface would not seem to support analysts’ purchase recommendation for Goodyear, however the record low earnings of 2015 as Goodyear wrote off $646 million dollars of Venezuelan assets skewed the single year earnings (Kwan Yuk 1).

Growth in Share Price
Goodyear Bridgestone Michelin Cooper
(11.8%) 9.68% 6.84%

(5.2%)

 

Figure 3- Goodyear 5 yr Stock Price Chart – Marketwatch.com 11/24/2016

Along with the previous influence of the Venezuelan write off, the 2014-2015 share price growth for Goodyear ranks it a distant last place among the Big 4 tire companies at -11.8%, where on the other end of the scale Bridgestone’s stock prices climbed 9.68% in the same year.

5 Year Average Growth in Share Price per year
Goodyear Bridgestone Michelin Cooper
51.8% 32.2% 43% 59.3%

 

However, as evidenced by the above 5-year graph of Goodyear stock, it becomes more apparent why analysts are recommending clients to buy Goodyear stock. It can be seen that over the previous five years Goodyear stock values have increased by an average of 51.8% per year, and recent negative financial data is quite likely limited to a single non-recurring economic anomaly of the Venezuelan deconsolidation, which should have a beneficial effect on 2016 and future financials that will no longer be reduced by continued losses from the sinking Venezuelan location (Kwan Yuk 1). While both Michelin and Bridgestone post more stable financial condition than Goodyear, those competitors are inferior in shareholder value enhancement over the past 5 years. However, it once again needs to be noted that Corporate Citizenship laggard Cooper leads the Top 4 by a sizable margin in this measure of profitability.

Asset Turnover
Goodyear Bridgestone Michelin Cooper
.95 .98 .92 1.2

 

In the asset turnover benchmark, Goodyear ranks third of four among closely scored competitors at .95. This area most likely was improved by the write off of Venezuelan assets. Once again, it must be noted that the leader of this metric is the laggard Cooper as its efficiency generating sales from its assets is 1.2.

Equity Turnover
Goodyear Bridgestone Michelin Cooper
3.96 1.753 2.07 3.38

Goodyear did show top industry performance in equity turnover as they generated $16.40 of revenue in 2015 from only $4.142 billion in shareholder equity for an equity turnover ratio of 3.96, in comparison to Bridgestone which only managed to double its assets worth in annual sales. This benchmark provides some insight to the majority of financial analysts who are bullish on Goodyear’s future stock value.

Revenue Growth
Goodyear Bridgestone Michelin Cooper
(2.02%) 3.17% 8.42% (13.2%)

 

In the 2015 year-over-year revenue growth, Goodyear ranked third of the Big 4 at 2.02% loss in revenue from the 2014 annual report. This could be partially attributed to when the income from Venezuela was no longer being measured. This is the first major financial benchmark where Cooper had fallen to a distant fourth place. As little as year-over-year performance might actually mean, Cooper’s loss of market share may be attributed to the launch of high tech fuel efficiency and electricity generating tires being patented by its three rivals, where Cooper has not yet become a player in this tire technology design.

Five Year Average Revenue Growth
Goodyear Bridgestone Michelin Cooper
(2.68%) 5.78% 3.45% (2.42%)

 

Figure 4- Goodyear Growth Chart from CSImarket.com 11/24/2016

Five year average revenue growth is a more reliable indicator of management and industry performance. Here, Goodyear scores at an average annual loss of 2.68%, roughly a 15% decline over half the decade. However, Goodyear had been purposely exiting some tire markets and selling off lower profit lines to concentrate on high value tires and focus on its electricity generating electric car tires, which is later evidenced by its five year increase in profit margins. Here again, Cooper’s lack of investment in high value technology tires is most evident as they may maintain on units sold, but lose out on premium priced tires to inherit the low price leftovers of the Big 3. Bridgestone, which has expanded more deeply into heavy equipment and agriculture lines, taking up some of Goodyear’s void left after their exit from some of those lines, increased in sales revenue by nearly 30% over the past three years from its product line expansion (Pierce 1). Michelin gained about 15% in sales from its expansion into low rolling resistant tires for the hybrid and electric car markets.

Stock analyst buy recommendations may also be influenced by patents that Goodyear has applied for in a tire design that harnesses the heat generated from hot roads and friction, and converts it into electricity for hybrid and electric vehicles (“Tech News: Goodyear Unveils Electric Car Tires” 1). The technology is performing well in testing, and if manufacturing costs can become competitive on the designs, then the value of licensing the technology will become even more valuable than producing the actual tires, and would have a very positive effect on Goodyear stock prices. Alan Pierce wrote an industry reaction to the release of the prototype in the 75th issue of Tech Directions (2015) in an article titled “The Goodyear BHO3–A Car Tire That Generates Electricity.” The following summary:

“The Achilles heel of all electric vehicles is how far they can travel before their batteries need recharging. At the 85th Geneva International Motor Show, The Goodyear Tire and Rubber Company unveiled their BHO3 prototype tire. This tire has a built-in electricity-generating system that can partially recharge the batteries on an electric vehicle without breaking any of the laws of thermodynamics. To avoid breaking the laws of thermodynamics, their tire breakthrough has to generate electricity without changing the amount of energy used by the electric motor during the normal operation of the vehicle. Without changing how much energy it takes to roll the tire, the BHO3 prototype turns tire heat and tire deformation—which are caused by the normal rolling of the tire—into electricity. Tires are usually designed to run as cool as possible. Goodyear has intentionally designed this tire to run as hot as possible to maximize the amount of heat available for conversion into electricity. This tire is designed to absorb heat even when the car is parked. So even if the car isn’t running, its hot tires will be generating electricity to charge the car’s batteries. All ambient heat is converted into electricity by a thermo-piezoelectric layer that covers the full internal surface of the tire. Getting the tires hot is a priority, so the outer shell of the tire has a special black texture specifically designed to absorb sunlight and convert it into heat. The tread is also designed to absorb and transmit heat, created by the friction of the road surface, to further raise the tires’ temperature. Goodyear system that keeps the outer temperature of the tire reasonable while it is extremely hot inside. The goal here is to not melt the blacktop on the road’s surface or burn a person’s hand if they touch a tire. Goodyear’s goal is to get every bit of otherwise wasted energy converted into electricity. To convert the physical deformation of the tires where they touch the road, Goodyear built a separate piezoelectric layer that converts into electricity the physical flexing of the tire as it rolls. These tires are extremely rugged and they can run safely at 50 miles per hour for up to 50 miles even after suffering a puncture. Photo 2 shows what the Goodyear BHO3 prototype tire display looked like at the Geneva Switzerland International Motor show. You can view a video introducing the BHO3 at www.youtube.com/ watch?v=ViMqrtq4aYg. The Goodyear press release that I received did not indicate how the electricity will be transferred from the tires to the batteries, how much electricity the system can generate, or how soon this prototype tire will find its way into commercial use. However, down the road, when it is introduced it might increase the range of the all-electric vehicle enough to make the all-electric vehicle practical.”

The growth potential for electric automobiles could disrupt the 100 year old auto industry once consumer demand for electric models snowballs or once legislators increase tax penalties on combustion powered vehicles. Either way, non-combustion powered vehicles appear to be drawing near on the horizon, and companies that continue to invest in development of gas powered models may find themselves left behind when the change takes place. Goodyear had already lost first mover advantage in 2006 for low rolling resistance passenger car designs to Michelin, but came back in 2010 to patent unique technology to become the low rolling resistance pioneer in heavy truck tires in their recently released “Fuel Max” line that has analysts bullish on Goodyear’s stock performance.

To help detail Goodyear’s logic behind the contradictory financials, Dow Theory Forecasts published this article in on September 12, 2015 titled “Goodyear Pumped with Tire Profits” with the following explanation:

“Formed in 1898, Goodyear Tire & Rubber ($30; GT) initially sold bicycle and carriage tires, horseshoe pads, and poker chips. By the 1980s, Goodyear had grown into a bloated conglomerate that built wheels, aircraft canopies, and even dabbled in gas pipelines. Today those businesses not related to rubber are long gone, as Goodyear has refocused on its core operations. New tires accounted for 87% of Goodyear’s revenue last year, the remainder coming from rubber-related chemicals and about 1,200 tire and auto-service shops. Goodyear tends to be a jittery stock, with exposure to the highly volatile market for synthetic and natural rubber. For now, commodity-price trends tilt in Goodyear’s favor. The company’s raw-material costs fell 9% last year and are projected to decrease 12% in 2015. The stock’s volatility seems well discounted in its price. In Quadrix®, Goodyear scores in the cheapest quintile for price/sales, price/cash flow, and price/earnings ratios using both trailing and estimated current-year profits. At 11 times trailing earnings, the stock trades in line with its 10-year average. Goodyear, earning a Value rank of 95 and Overall rank of 98, was initiated in the June 29 issue as a Long-Term Buy.

Prizing profits over sales have declined 7% to 8% in each of the past three years, hurt by foreign-currency headwinds, weaker pricing, and soft volumes. But Goodyear has a knack for wringing more profits out of less revenue. Net income has surged in recent years on lower raw-material costs and the divestment of high-cost plants. In 2014, Goodyear posted its highest operating profit margins since 1996. Encouragingly, tire volumes are starting to improve. Goodyear’s volumes rose 2% in the March quarter, and the company projects a gain of 1% to 2% for the year. Moreover, Goodyear announced in June plans to dissolve a venture that involved joint ownership of Dunlop branded tires in the U.S., Europe, and Asia. Goodyear will pay a net price of $271 million to take full control of the venture in Europe, divest the North American venture while still retaining the right to sell Dunlop tires in most markets there, and gain full ownership of the Goodyear brand in Asia. As a result, Goodyear expects annual revenue to decline by $100 million, though per-share profits should rise $0.15 to $0.18 due to the reduction in non-controlling interest expense. Operating cash flow totaled $1.62 billion for the 12 months ended March, nearly five times higher than the prior 12-month period. Goodyear has also generated $651 million in free cash flow over the past year.

Investors may have to wait until 2016 for sales to begin growing again. But Goodyear continues to improve efficiency, last month announcing plans to shutter a plant in England and move operations to lower-cost regions. The consensus calls for 5% higher per-share profits in 2015, despite 9% lower revenue.”

The article encapsulates the perspective of stock traders who see great future value in the Goodyear Company based on past ability to overcome adversity and adapt to economic change. Many stock traders see Goodyear’s recent setbacks as an opportunity to obtain the stock for a discount.

 

Social and Environmental Assessment

Goodyear has a global stake in community engagement, and their personal social assessment of the company is broken down amongst four different categories: Safe, Smart, Associate Volunteerism and Sustainable (“Community Support”). The grant programs that Goodyear has set in place are meant to better the community as it applies to each of the four categories. These grants are part of the Goodyear Better Future platform.

Safe: This category encompasses finding support for safe travel and mobility within communities. Along those lines, Goodyear has four programs in place worldwide. The Safe Mobility Program (which is detailed further in the sustainability report below), the Safe Way to School project in Poland that helps teach first graders safety while walking to school, the Rainy Season Awareness campaign in Guatemala that helps prep drivers for travel in the rainy season, and Race Collaboration in Spain that teaches road risk prevention and responsible road behavior (“Safe”).

Smart: This area includes supportive programs for adults and children in the hopes of educating and inspiring creativity and innovation. Along with the STEM programs detailed later in the report through the sustainability report section, Goodyear has two other programs including the Student Environmental Program in Turkey that gives university students field-based training on environmental support for the future, and the Hope School Project in China that gives students a positive educational environment (“Smart).

Associate Volunteerism: Goodyear encourages its associates worldwide to get out into the community and get involved. They have established programs such as the Hand in Hand program in Slovenia that connects schools through social media, and the safe driving Road and Tire Safety Campaign in Indonesia (“Associate Volunteerism”).

Sustainable: Goodyear has many programs set in place to assure that environmental protection is a key driver for the company. The “Pay Attention! To The Environment” Campaign, which they started in 2010, involves a waste-management collaboration between 60 institutions to reduce high school carbon footprints in Slovenia. Brazil recently received the Goodyear company sustainability award for conservation, in Thailand received the country’s Environmental Good Governance award, and two plants in Turkey held a drawing contest to fill their yearly calendars with images drawn by children highlighting environmental safety and protection. These are all instances of good environmental sustainability efforts that Goodyear is proud to highlight (“Sustainable”)

The Goodyear Foundation is another program designed to fit alongside Goodyear’s social responsibility strategies, but this program focuses on individual funding efforts whereas the others are more community support focused.

GREENWASHING AND BLUEWASHING CLAIMS

Despite Goodyear’s below industry average current “BB” MSCI ratings, the company appears to be growing into a good corporate citizen based on the five year score improvements against higher scoring industry peers. Due to stricter regulations in their home countries, both Bridgestone and Michelin have a longer history of environmental stewardship policies. Goodyear and it U.S. rival Cooper are the only companies from the top five world tire manufacturers that are not members of the United Nations Global Compact. Instead, Goodyear has adopted the lightly regarded WBCSD (World Business Council for Sustainable Development), as well as the WRI (World Resource Institute) environmental impact reporting standards, and Cooper refuses to disclose sustainability reports (“Goodyear 2015 Annual Report” 42-44).

In addition to lack of GRI reporting, Goodyear also could be considered to be greenwashing its efforts since does not use an outside environmental audit firm to verify its impact reports. Among its industry peers, Michelin enjoys a recently upgraded “A rating” on its proprietary impact reporting system, and only “BBB” rated Bridgestone, BB rated Continental and B rated Pirelli utilize independent auditors to verify their environmental impact claims.

Despite Goodyear’s 2015 third place ranking in the big three tire companies, a look at the past three year’s ratings show that, in recent years, Goodyear had been close to the first place with its B and BB rankings in three of the past five years. It should be noted that in the most recent two years, all three tire companies upgraded by one or two grades in MSCI ratings.

The Goodyear website and annual reports have large sections dedicated to publicizing their corporate citizenship goals. Many of these goals seem to be conservative when compared to environmental activist firms like Patagonia or Interface. However, Goodyear received worldwide accolades for its seven consecutive years of zero Landfill success. As taken from Goodyear’s own website, here is the abbreviated front page summary of their 23 pages of corporate citizenship goals and policies.

GOODYEAR’S 2015 SUSTAINABILITY REPORT

“ENVIRONMENTAL STEWARDSHIP

Sharing the planet responsibly with customers, employees, shareholders, communities and suppliers is the impetus behind key sustainability objectives at Goodyear. Our sustainable activities mirror this commitment.

21 Species of plants and animals protected on site of new Goodyear plant in Mexico.

While a site survey for Goodyear’s new plant in San Luis Potosi identified only a single cactus as a protected species in Mexico, 20 other plants and animals were recognized as protected by the Convention on International Trade in Endangered Species of Wild Flora and Fauna (CITES). These species are not endangered or facing extinction, but their survival requires special consideration. As a company committed to caring for our environment and communities, Goodyear relocated all to safe and compatible habitats.

510,731 GHG emissions reduction in metric tons compared to 2010, our baseline year. In 2015, Goodyear exceeded a five-year goal of reducing greenhouse gas (GHG) emissions by 19%. Part of our strategy to reduce GHG emissions is to address the entire lifecycle of our products, including reducing emissions from supplied materials through manufacturing, during use and final end of product life.

23% water use reduction since 2010, our baseline year. While the majority of Goodyear’s manufacturing facilities are in areas unaffected by water scarcity concerns, it is still important to us that we continuously reduce our impact on local water resources. We have reduced our water use by implementing leak detection programs and water conservation strategies, and investing capital into water reuse and treatment systems at select facilities.

15% reduction in energy consumption since 2010, our baseline year. In 2015, Goodyear achieved its five-year goal of reducing energy consumption by 15%. Each of our regions has a full-time energy manager engaged in implementing steps to reduce the use of energy in our facilities around the world.

38% solvent reduction in the last five years. Goodyear continues to be an industry leader in efforts to reduce solvents in our manufacturing facilities. Our use rate in 2015 was 0.69, a further reduction from 2014. Our focus remains on the global application of best practices to further reduce this rate.

0% amount of waste any Goodyear manufacturing facility is permitted to send to a landfill. For the past seven years, Goodyear has maintained Zero Waste to Landfill, a program that applies to all manufacturing facilities. This corporate initiative reduces our environmental impact by requiring all manufacturing plants to reduce, reuse and recycle waste.

OUR PEOPLE

At Goodyear, we are one team working together to drive performance on the road, in the marketplace and throughout the company. To reach our full potential as associates and deliver on business goals, we strive for five interdependent behaviors: Act with Integrity, Promote Collaboration, Be Agile, Energize the Team, and Deliver Results.

65,000 + employees Completed compliance and ethics training events. Associates around the globe completed online and in-person training events on topics such as the Business Conduct Manual, anti-bribery, competition laws, financial integrity, conflicts of interest, privacy, and protecting company information.

4= Current number of Employee Resource Groups.

Employee Resource Groups (ERGs) benefit Goodyear associates by providing access to invaluable coaching, mentoring, professional development, training and seminars, as well as opportunities to expand their professional network within the organization. In 2015, Goodyear had four ERGs —Goodyear Veterans Association, Goodyear Women’s Network, Goodyear Black Network, and Next Generation Leaders. Goodyear has plans to add another ERG in 2016 to promote diversity and inclusion.

66,000 Associates around the world.

We encourage a culture where associates own their own development and managers provide opportunities, coach and support their people throughout the development journey. Our leaders are held accountable for inspiring their teams, growing the business and acting with integrity, and their own talent management by honoring their commitments to associates.

HEALTH, SAFETY & WELLNESS

At Goodyear, we continue to build a culture where safety and wellness are values to each and every associate. By doing so, we will continue our drive toward zero incidents.

36% Injury reduction in the past five years. At Goodyear, our goal for safety performance is for every Goodyear associate around the world to go home injury-free every day. Our ultimate goal is for zero incidents. Examples of this focus include programs such as Target Zero, which focuses on near-miss reporting, and our global audit program that helps us strive for full compliance and continuous improvement in our environmental, health, safety and sustainability systems.

18 Health and wellness program and communications channels in place. Goodyear’s wellness initiative for associates, GoodLife, provides the information, tools and programs that foster an atmosphere of wellness and promote a culture of health at Goodyear. A new channel, the GoodLife app, is scheduled to launch in 2016.

OUR INNOVATIONS

Innovation excellence drives our technological advances and enables us to create products and services that are valued and sought out by consumers and customers. Our solutions respond to the needs of an increasingly complex market and help to set us apart from the competition. Innovations our customers want and need.

Innovative Tires: Among other important attributes, Goodyear conducts research to make tires environmentally friendly and fuel efficient in a variety of ways, such as by reducing tire weight. For example, Goodyear is the first manufacturer to incorporate silica derived from rice husk ash into its tires. Aside from making tires more fuel efficient, this innovation has the potential to eliminate millions of tons of rice husk from the waste stream. Visit our Corporate Responsibility website for more information about our award-winning innovations.

SmartWay®-verified products on the roads.

A total of 21 Goodyear truck tire products that increase fuel efficiency and provide low rolling resistance have received SmartWay verification from the U.S. Environmental Protection Agency (EPA). The EPA established low rolling resistance requirements for retreaded truck tires in 2012, and verified tires must help reduce truck fuel consumption by at least 3%.

669 New worldwide patents received.

In 1900, when automotive tires were little more than oversized bicycle tires, Goodyear designed a better tire, thus creating the enduring Goodyear legacy of continuous improvement and innovation. Today, our success continues to be driven by innovation, and our associates around the world create innovative products, including those with low rolling resistance and other sustainable considerations.

COMMUNITY ENGAGEMENT

Goodyear has a long history of supporting its communities around the world. We strive to build and support collaborative programs that create positive outcomes for people, communities and the world around us. This mindset is reinforced through the company’s ongoing commitment to care for our communities.

2100 Students, parents and teachers in attendance at Goodyear’s 16th annual STEM Career Day.

In Akron, Ohio, Goodyear’s annual STEM Career Day engages local middle- and high-school students in challenging, hands-on STEM instruction and activities. More than 300 Goodyear associates volunteer their time to plan and supervise the event, which includes $40,000 in scholarships to deserving students.

Over $1 Million in funds raised for local charities by Goodyear Blimps since 2012.

Among other corporate responsibility programs, Goodyear supports the fundraising efforts of local charities by providing once-in-a-lifetime opportunities to ride the Goodyear Blimp at our Blimp locations in California, Florida and Ohio.

In 2015, for a fifth year, Goodyear hosted events for the general public at its three blimp bases to benefit the U.S. Marine Corps Reserve Toys for Tots Program. Attendees were invited to see the blimps up close while donating toys and cash to a worthy cause. More than 58,000 toys and $141 thousand have been donated since inception of the program in 2010. This includes a special donation in the form of a check for $10,000 from Goodyear made directly to the Marine Toys for Tots Foundation in 2015. Goodyear is recognized as a national sponsor and is a recipient of the Foundation’s Commander Award.”

With the above declarations of corporate responsibility, it should be noted that Goodyear has not always embodied the corporate values they’ve claimed in the annual report. Over the past 40 years, Goodyear has been associated with multiple hazardous waste lawsuits including the famous Love Canal site, which may explain why management’s most successful stretch goal was to eliminate waste disposal (“Company Spotlight: The Goodyear Tire & Rubber Company” 3). Goodyear also had been sued for worker safety concerns and consumer safety issues that have been blamed for thousands of automobile deaths. In 2003, Goodyear was forced to restate five years of its previous earnings that reduced declared earnings by over $100 million due to earnings management practices engaged in by management of European subsidiaries.

In addition, Goodyear was a party in three now famous precedent setting Supreme Court cases: one for equal pay, one for international judicial jurisdiction and another for improper evidence disclosure in a product liability suit. Dozens of other product liability and worker safety suits have been filed against the Goodyear Corporation over the past 10 years. However, for a company that employs 67,000 workers across the globe, the percentage of alleged wrongdoing appears to be minimal.

The most famous Goodyear lawsuit, which ruled in favor of the company, now has a law named after it as the legal structure was changed to protect workers in the future. The history of that law can be summed up in this summary of the original case ruling written by Linda Barkacs in the 2009 volume 12 of the Journal of Legal, Ethical and Regulatory issues titled “THE TIME IS RIGHT – OR IS IT? THE SUPREME COURT SPEAKS IN LEDBETTER V. GOODYEAR TIRE & RUBBER CO.”

“The plaintiff, Lilly Ledbetter (“Ledbetter”), began her career at Goodyear Tire and Rubber (“Goodyear”) in 1979. For most of her twenty year career at Goodyear, Ledbetter was the only female manager. Initially, Ledbetter’s salary was the same as that of the male managers. However, over time, Ledbetter’s salary slipped relative to that of the male managers. By 1997, Ledbetter was not only the sole woman manager, she was also the lowest paid manager. Ledbetter’s monthly salary at the time of her departure was approximately $3,700 per month. Similarly situated male managers at Goodyear made between $4,200 and $5,200 per month. In 1998, Ledbetter filed an administrative claim of discrimination with the Equal Employment Opportunity Commission (“EEOC”). She alleged that Goodyear violated Title VII of the Civil Rights Act of 1964 by paying her a lower salary because of her sex. Ledbetter’s claim eventually went to a jury who found in her favor. The District Court (in Alabama) entered judgment for Ledbetter for back pay, damages, attorney fees, and costs.”

Goodyear appealed the ruling based on the fact that the plaintiff had waited nearly 20 years to file a complaint for back pay, and the Supreme Court overturned the verdict in Goodyear’s favor. Legislation that prevents the recurrence of similar cases is now called the “Lilly Ledbetter Act.”

A second precedent setting Supreme Court case was Goodyear vs Brown, a case in which the tire company’s European subsidiaries won against the families of two boys from North Carolina who were killed in a tire blowout accident while in France on vacation. The Supreme Court ruled that the state of North Carolina could not bring suit against the French subsidiary of Goodyear due to lack of personal jurisdiction over a foreign company in a foreign country.

STAGES OF CORPORATE CITIZENSHIP

It would appear that Michelin and Bridgestone and Germany’s Continental have attained the innovative stage of corporate citizenship, with Goodyear, Sumito and Pirelli two stages behind at the Engaged level, followed by both Korean tire makers, Hankook and Kumho, and by the only other U.S. tire manufacturer Cooper, which lags far behind in the elementary stages of citizenship. However, despite comparatively low citizenship ratings, Goodyear is a world leader in waste management, having attained 100% landfill free sustainability, in which all of its waste products are recycled or consumed internally. Goodyear also ranks above its peers in water conservation and overall carbon emissions. Those waste management claims appear to be substantiated by credible news stories citing Goodyear’s zero landfill success (Criswell 1). With wide support of environmental critics on its landfill policy, it appears that greenwashing of environmental reporting is limited. In addition, the fact that the firm does not claim ties to the UN Global Compact and limits environmental credibility claims, it does not appear that Goodyear relies on bluewashing as a marketing tool.

CITIZENSHIP OVERVIEW OF SELECTED FIRMS

Bridgestone -BBB Rated – BRDCY

Starting with the world’s largest tire manufacturer, the Japanese owned Bridgestone Tire Company recently nudged its rival Michelin out of first place in global market share. However, in dollars of sales, Bridgestone has long dominated the world tire market in sales revenue and is considered by analysts to be environmentally focused in its policies (Bridgestone Corporate Website).

  • Utilizes Japanese reporting guidelines & Global Reporting Initiative (GRI Standards)
  • Environmental reports are verified for accuracy by the “Bureau Veritas”
  • Japanese company that bought up American tire maker Firestone
  • Auto industry leader in carbon reduction strategy and improvements
  • BB Rating from recent consumer safety recalls
  • Goal 35% carbon emissions reduction from 2005-2020
  • First to adopt non-petroleum based rubber ingredients

 

Michelin- MSCI A-rated

Reports Environmental Data in UNGC standards and GRI

  • 2nd largest tire mfg. French bought US tire makers – Uniroyal-Goodrich-Riken
  • Proprietary reporting program: MEF– Michelin Environmental footprint
  • Set target to reduce their “MEF” by 40% from 2010-2020
  • Environmental data required by regulators of industry
  • Sustainability is high corporate priority
  • EPA national performance track program participants (Michelin Corporate Website)

Goodyear-BB-rated

  • American company – World’s 3rd largest tire maker
  • Global EHS reporting standards (environmental-health-safety)
  • Focused on landfill and toxic waste reduction
  • Less focused on greenhouse gases
  • Slow to respond to initial green tech markets such as energy efficient tires
  • Carbon emissions per tire have dropped 21% in past 6 years (Goodyear Corporate Website).

Cooper Tire-BB-Rated

Cooper is second largest American tire company and the 10th largest in the world. Among the top 10, only Cooper and the two Korean tire companies Hankook and Komho refuse to publish environmental impact statements or discuss corporate citizenship goals in their annual reports. Because tire manufacturing is regulated by the EPA, Cooper does have some environmental data harvested from those compliance reports. There is no mention of carbon emissions on the Cooper investor website, however, Cooper is listed as very strong in energy efficiency policies on the MSCI data (Cooper Corporate Website).

As the metrics of corporate citizenship are compared, Cooper’s lack of investment in environmental technology becomes apparent as it trails the Big 3 by more than 10%, and Japanese Bridgestone leads the closest competitor by about 15%.

 

MSCI Carbon Footprint Ratings
Goodyear Bridgestone Michelin Cooper
5.1 6.9 5.6 4.6

 

MSCI Total Carbon Emissions
Goodyear Bridgestone Michelin Cooper
9 9.1 8.9 6.1

 

2015 MSCI ratings for total carbon emissions are very close among the Big 3, and the less environmentally concerned Cooper trails by nearly 30%.

MSCI Toxic Waste Ratings
Goodyear Bridgestone Michelin Cooper
5.6 5.7 7.8 4.4

 

In a surprising outcome for toxic waste ratings, despite Goodyear’s Zero Landfill Waste Campaign, Goodyear trails Michelin by a large margin, and Bridgestone by a smaller one. This may be attributed to PVC vapor escape rather than physical toxic waste dumping. As would be expected, Cooper tire trails the BIG 3 by about 20%.

 

MSCI Clean Technology Development Ratings
Goodyear Bridgestone Michelin Cooper
4.3 5.7 6.1 4.0

 

When it comes to a company’s investment in environmentally beneficial products, Michelin leads from its early introduction a decade ago in low rolling resistant tires, a market that Goodyear has recently began to dominate with a fuel saving heavy truck tire line-up. This does not, however, seem to be reflected in these ratings, as well as the potential upcoming release of Goodyear’s patented electricity generating tires, which could move them much higher in the clean technology ratings (“Goodyear Launches New Fuel Max LHS Tire” 1). Again, Cooper lags behind the Big 3 on this research and development category.

 

MSCI Water Stress Ratings
Goodyear Bridgestone Michelin Cooper
7.3 6.3 3.4 Unrated

 

In this metric, Goodyear leads with its water stress ratings. Goodyear plants are designed to capture rainwater for use, and also filter and reclaim used water for steam needs. To reduce potential environmental pollution, no Goodyear plant is supposed to have wastewater drains that lead off their self-contained property (2015 Goodyear Annual Report). Bridgestone joins Goodyear in high marks where normally high ranking Michelin lags, and Cooper refuses to report its water handling and usage policies.

 

 

MSCI Product Safety and Quality Ratings
Goodyear Bridgestone Michelin Cooper
3.3 3.3 1.2 3.6

 

With product safety to consumers, all of the Tire Industry falls below industry norms due to the competitive balance between product price competitiveness and the high level of liability that accompanies a tire failure. It seems that, historically, the ranking among the tire manufacturers varies with Michelin currently the target of dangerous tire failures to consumers.

 

MSCI Labor Management Ratings
Goodyear Bridgestone Michelin Cooper
3.9 2.2 5.0 4.6

 

Goodyear ranks third of the four companies in labor relation policies, with Japanese owned Bridgestone a distant last place. Several labor relations issues followed when they acquired U.S. based Firestone in 1988 as Japanese management policies have been at odds with U.S. union labor culture for decades. Many analysts believe that either poorly trained strike breaking workers or intentional poor workmanship by disgruntled workers was the root cause of one of the product liability’s largest recalls in history: the 2000-2002 Ford Explorer Firestone tire blowout crashes that resulted in costs of $3 billion dollars (“Strikes, Scabs and Tread Separations: Labor Strife and the Production of Defective Bridgestone/Firestone Tires” 255-258).

 

 

                                                          MSCI Health and Safety Ratings
Goodyear Bridgestone Michelin Cooper
8.7 7.6 5.3 Not Rated

 

In employee health and safety ratings, Goodyear leads its peers by a large margin. The costs of settling several large lawsuits over the past 20 years has motivated management to create strict workplace safety regulations. French owned Michelin came in a third place and American rival Cooper was unrated for health and safety.

 

MSCI Corporate Governance Ratings
Goodyear Bridgestone Michelin Cooper
5.1 6.3 7.9 6.8

 

Goodyear held a last place ranking on corporate governance rankings. Analysts’ commentary on the matter suggest that until recently Goodyear’s board of directors was comprised of an excess number of current and former insiders (“Consider Goodyear for the New Year” 1).

 

Anticompetitive Practices
Goodyear Bridgestone Michelin Cooper
4.2 4.2 5.0 Not Rated

 

Goodyear tied Bridgestone for second place in ratings for anticompetitive practices. In 1995, all four companies were investigated for alleged violations of U.S. antitrust laws. The 1995 justice department probe was the fourth for Goodyear, each investigation yielding insufficient evidence to bring charges. However, Cooper’s European subsidiary was convicted of violation of trust regulations in England, which was later reversed on appeal. The capital intensive barriers to entry of the tire industry for new competitors leaves the industry ripe for price cooperation among existing companies.

 

Business Ethics and Fraud
Goodyear Bridgestone Michelin Cooper
4.2 5.0 5.0 Not Rated

 

The MSCI ratings for management ethics and fraud are relatively consistent among the Big 3 with Cooper tire again unrated on this metric. However, Goodyear does rank last of the Big 3, with some of its score discounted, possibly due to the four antitrust investigations and  large civil settlement and precedent setting court case “Bahena vs. Goodyear,” where evidence showed that Goodyear managers deliberately withheld evidence in a product liability suit  (www/leagle.com/nco 201007 p235).

 

Concluding Remarks

Based strictly on MSCI corporate responsibility ratings, Goodyear would rank third of the four companies studied with its American rival Cooper in a distant 4th place, despite the fact that the overall MSCI score for both was a “BB”. A-rated Michelin leads “BBB” rated Bridgestone by a small and historically temporary margin. Over the past five years ratings, Michelin had averaged a single “B” rating behind Bridgestone’s average double “B”MSCI Rating. In financial performance, Goodyear appeared to rank last place of the four firms studied, with Cooper tire posting financials considerably higher than the Big 3, however Cooper’s short term profitability seems to be relative to their lack of leveraged growth and sustainability investments.

Despite Goodyear’s position in the rankings, analysts’ stock predictions for Goodyear’s future potential financials are more optimistic than any of the other companies. The support of stock analysts suggests that Goodyear is, at the core, a sound and responsible firm going through a temporary set of setbacks that began with the 2008 recession, and has been slower to recover than its foreign based peers. Overall, based on the unique industry hazards and Goodyear’s history of making corrections to its corporate direction following lapses of ethical behavior as can be evidenced by their superior handling of worker safety and waste dumping, we believe that Goodyear is an above average corporate citizen that recently has underperformed when compared to its peers in financial measures.

 

Works Cited

“Associate Volunteerism.” Goodyear Corporate. The Goodyear Tire and Rubber Company, 2016. https://corporate.goodyear.com/en-US/responsibility/community/community-support.html. Accessed 27 November 2016.

“Community Support.” Goodyear Corporate. The Goodyear Tire and Rubber Company, 2016. https://corporate.goodyear.com/en-US/responsibility/community/community-support.html. Accessed 27 November 2016.

“Company Spotlight: The Goodyear Tire & Rubber Company.” Marketwatch: Automotive 7.3 (2008): 15-22. Business Source Alumni Edition. Web. 23 Nov. 2016

“Consider Goodyear For The New Year.” Dow Theory Forecasts 72.1 (2016): 8. Business Source Alumni Edition. Web. 23 Nov. 2016.

Criswell, Kristen. “Breaking through: Goodyear Tire & Rubber Co.” Tire Review 2016: 16. Business Insights: Essentials. Web. 23 Nov. 2016.

“Goodyear in Global Shake-Up In Pursuit Of ‘Added-Value’.” European Rubber Journal (2016): 0009. Business Source Premier. Web. 23 Nov. 2016.

“Goodyear Launches New Fuel Max LHS Tire.” Bulk Transporter 77.11 (2015): 47. Business Source Alumni Edition. Web. 23 Nov. 2016.

“Goodyear Pumped With Tire Profits.” Dow Theory Forecasts 71.27 (2015): 8. Business Source Alumni Edition. Web. 23 Nov. 2016.

“Goodyear Fined For Conveyor Death.” Industrial Distribution 88.5 (1999): M4. Supplemental Index. Web. 23 Nov. 2016.

“Goodyear picks PPG silica for SUV tire.” European Rubber Journal 2015: General OneFile. Web. 23 Nov. 2016

McNulty, Mike. “Goodyear Fined $1M+ For Danville Deaths.” Tire Business 34.15 (2016): 0003. Business Source Premier. Web. 23 Nov. 2016.

“Natural rubber demand risks Asia’s ‘biodiversity’.” Tire Business 2015: Business Insights: Essentials. Web. 23 Nov. 2016

Pan Kwan Yuk “Goodyear takes $646m hit on Venezuela” Financial Times. Feb 9. 2016.

Pierce, Alan. “The Goodyear BHO3–A Car Tire That Generates Electricity.” Tech Directions 75.4 (2015): 8. Business Source Alumni Edition. Web. 23 Nov. 2016.

“Safe.” Goodyear Corporate. The Goodyear Tire and Rubber Company, 2016. https://corporate.goodyear.com/en-US/responsibility/community/community-support.html. Accessed 27 November 2016.

“Smart.” Goodyear Corporate. The Goodyear Tire and Rubber Company, 2016. https://corporate.goodyear.com/en-US/responsibility/community/community-support.html. Accessed 27 November 2016.

“Sustainable.” Goodyear Corporate. The Goodyear Tire and Rubber Company, 2016. https://corporate.goodyear.com/en-US/responsibility/community/community-support.html. Accessed 27 November 2016.

“Sweet Spot.” Tire Business 34.5 (2016): 0013. Business Source Premier. Web. 23 Nov. 2016.

“Tech News: Goodyear unveils electric car tires.” Electronics For You 2015: General OneFile. Web. 23 Nov. 2016.

“The Goodyear Tire & Rubber Company SWOT Analysis.” Goodyear Tire & Rubber Company SWOT Analysis (2015): 1-9. Business Source Alumni Edition. Web. 23 Nov.

General Motors: Social Stigmas Faced By Industrial Workers

Todd Benschneider

September 16, 2012

General Motors Recovery and the Influence of Social Stigmas Faced By Industrial Workers

           The 2008 bailout of General Motors remains a focal point of economics analysts and political journalists. Today, nearly four years after its corporate collapse, reporters alternate between glowing praise and sharp criticism. However, regardless of journalistic viewpoint, one fact cannot be ignored: General Motors has clawed its way back up Fortune Magazine 2012 rankings into 5th place of America’s largest revenue corporations (Morgenson 1).

The second observation that can not be ignored is that the press and public opinion during the recovery period have focused heavily on corporate leadership and the politicians who engineered the bailout.  A crucial factor missing from the news articles: The devotion shown by designers and assemblers at General Motors who have banded together to prove that they can produce a world class product at a competitive price. The thousands of headlines during the period the followed the auto industry meltdown reflect the values with which modern Americans view industrial workers, providing recognition to white collar workers and leaving unmentioned of the achievements from the engineering and the industrial trades, this shift in values may be contributing to declines in domestic production.

Much of this anti-union and industry sentiment results from taxpayer resentment of the government rescue of the world’s largest automaker General Motors, that left the American taxpayers owning 31.9% of the common stock. Today GM rightfully wages a daily war on two fronts: normal industry competition and now the new front of public relations, under a microscope of press scrutiny and public opinion. While this scrutiny seems to have generated results with increased accountability,  as units sales climb, product ratings improve and as profitability reaches new levels. This can be seen in the 2012 employee profit sharing plans, which will provide dividends to compensate for a large portion of the pay cuts hourly employees had accepted as part of the restructuring plan. According to an article in the New York Times that for 2012 it is projected that “45,000 union workers would receive profit-sharing checks averaging $4,300, the most in the company’s history” (Morgenson 4).

However, many industry critics present pessimistic statistics possibly influenced by political agendas and an ingrained anti-industrial sentiment. In an example, an article that opens with anti-Obama critique, industry writer Louis Woodhill wrote a scathing review of GM products in the August edition of Forbes under the shocking title “General Motors is Headed for Bankruptcy—Again”. In the article Woodhill interprets a scoring aspect of recent “Car and Driver” review with:

“Not only was the 2013 Malibu (183 points) crushed by the winning 2012 Volkswagen Passat (211 points), it was soundly beaten by the 2012 Honda Accord (198 points), a 5-model-year-old design due for replacement this fall. Worst of all, the 2013 Malibu scored (and placed) lower than the 2008 Malibu would have in the same test.”

Despite a moderate share of negative press many Americans, influenced by recession and unemployment are reconsidering purchasing American industrial products in hopes that their support will result in a mutually beneficial environment for the American economy. This attitude is shared in the New York Times news article titled “General Motors 2012 Earnings: Second Quarter”, which while presenting a negative spin on GM’s European subsidiary, the article does present a positive spin on GM’s domestic operations with the paragraph:

“In its new carnation, the automaker is proving that it can be profitable at a lower sales volume. The company announced in February 2011 that it earned 4.7 billion in 2012, the most in more than a decade. It was the first profitable year since 2004 for G.M. which became publicly traded in November 2012, ending a streak of losses totaling about $90 billion” (Morgenson 1).

However recently an equal number of industry writers have taken a middle of the road stance on the American auto industry such as the CNN Money article entitled “A Recovering GM is Losing Ground at Home” which despite opening with the statistic that GM lost nearly 2% of the domestic market share in 2012, the article goes on to cite the influence of external factors by quoting auto industry economist Sean McAlinden with “Its very complex, the latest downturn isn’t from lack of sales, it is the result of GM closing down 3 million units of production facilities to improve profitability.” The article also offers hope in the second paragraph with “The Cadillac division in coming months will benefit from two key new model introductions” (Levin 1).

Economists and political journalists write about GM leadership strategies and shareholder returns but ignores those autoworkers putting in the effort day after day to prove that they can once again dominate the global automobile market.  This critical public opinion of American manufacturers and the negative stigma of industrial trades is withoutquestion the greatest obstacle of corporate moral. The resulting negative self-image among industrial workers slows the progress of American industry and that anti-industrial sentiment begins with the attitudes that modern Americans view those industrial jobs.

Over the past 150 years careers in manufacturing goods that were once viewed as hi-tech careers are perceived by many with a negative stigma. This negative connotation is fostered through the American educational system, especially seen in views of the parents of school children in manufacturing communities. The attitudes being imbedded in schoolchildren are that by studying hard and earning professional credentials that they could escape a dirty and dangerous, low paying life of industrial work. Those children later grow into consumers that believe that through hard work and achievement that they “escaped industrial servitude” with careers in medicine, science and especially education and who grow  up to resent industrial workers earning similar wages who in their eyes have not earned the right to those wages through scholastic self-improvement. What many educated professionals do not realize is that those high paying industrial jobs need to offer compensation levels that can attract reliable workers to fill jobs with much less desirable working conditions.

These anti-industrial trade values are crippling todays American manufacturing companies, especially in the automobile industry. A slow drive throught the parking lot of any white collar company such as JP Morgan here in Tampa and you can count that nearly 85% of white collar workers in non-industrial cities buy foreign produced automobiles and the  15% of the exceptions to that rule are almost exculsively those few who desired the largest of SUV’s that do not have foreign counterparts. Polling these owners for an explanation, uncovers the nearly universal response offered by import owners, is their belief that the American manufacturers produce an inferior, unreliable product. Many that offer this assumption often admit that they had never owned a new American car for comparison, and deveolped these opinions from information from the press.

The declines in American manufacturing will likely continue until society offers industrial achievement similar recognition to those contributing to the advancements in computer technology and finance professions. You can not build a championship team without being able to recruit the best engineering talents entering the workforce and you can not obtain those cream of the crop graduates to accept a job in an industry with a sinking prestige factor.

Work Cited

Levin, Doron. “A Recovering GM is Losing Ground at Home”. CNN Money. May 11, 2012

http://features.blogs.fortune.cnn.com/2012/05/11/gm-2/

Ed. Morgenson, Gretchen. “General Motors 2012 Earnings: Second Quarter”. The New York  

Times. August 2, 2012

http://topics.nytimes.com/business/companies/general_motors_corporation/index

Woodhill, Louis. “General Motors is Headed for Bankruptcy –Again” . Forbes. August 15, 2012

http://forbes.com/sites/louiswoodhill/2012/08/15/general-motors

Che Guevara – Revolutionary Idealist or Fanatic

The life and times of 1960’s cultural icon Che Guevara remain a topic of heated debate, with a growing legion of modern American supporters who idolize him as a Robin Hood Revolutionary contrasted against opponents who despise him as ruthless, aspiring dictator. Extremes of each belief are heavily influenced by which period of Che’s life falls under critical scrutiny, his behavior in his early twenties could support an argument for sainthood, in his later years the evidence could support the accusations of madness.

Guevara first gained political notoriety as the right hand of Fidel Castro during the Cuban Revolution, however his career later ended while plotting a foiled coup de taut against the Bolivian government. In modern American culture in recent years his legend was reignited with recent award winning films about the journals he wrote during humanitarian mission in South America researching leprosy while studying medicine. Today his admirers envision him as a selfless revolutionary, liberating the common people from corporate exploitation, poverty and oppression.

Che’s critics suggest that he was a narcissist, power-hungry dictator, driven by his own vanity and addiction to adventure and chaos. Some critics claim that his underlying motives were only to exploit popular anti-government sentiment to build a power base in his climb toward dictatorship with empty promises for wealth to the poor as his justification for terrorist tactics.

One thing that both sides seem to agree on was that Che was focused on eliminating United States political presence in the Spanish speaking regions of the Americas, which easily made him a hero to many South Americans. The actions of his 40 year life were influential enough to land Guevara on Time Magazines “100 most influential people of the 20th Century”.

His beginnings, biographers on both sides unanimously agree that Che was born Ernesto “Che” Guevara to a prominent and politically active Argentinian family. Influenced by his father’s friends comprised of intellectuals, politicians and powerful businessmen, he showed an interest in political leadership at an early age. As a boy Ernesto overcame asthma to excel in athletics and academics. He was remembered as an aspiring medical student, fascinated with the psychological principals of Sigmund Freud and the political philosophies of Nietzsche and Machiavelli. His own father made many references to Che’s persistent lifetime conflict with authority figures and was quoted with “Ernesto was born with the blood of Irish Rebels coursing through his veins”. On several occasions Che was reprimanded by the Catholic elementary school he attended for condescending remarks he had made about the church (Guevara Che Prologue). 

Guevara is most widely known in modern American culture for the diaries he kept during a 5000 mile 1951 road trip across South America to volunteer at a village of lepers in Peru which became the inspiration for a best-selling book titled “The Motorcycle Diaries”, later made into a popular film in 2004 by the same name. His area of study in medical school was on the disease of leprosy (Guevara Motorcycle 146-149). His emotionally charged speeches on poverty and the corporate exploitations of peasant workers are considered by many intellectual critics to be the wisdom of an insightful philosopher. During his now famous trip across South America he was caught up in the revolution to liberate corporate owned land in Guatemala and redistribute that land to the peasants who farmed it. The Guatemalan revolution was quickly put down by U.S. troops, which forced Guevara to leave the country (Guevara Che 24).

Near Mexico City, after his escape from Guatemala, Che was introduced to a like-minded revolutionary named Fidel Castro, who was dedicated to overthrowing the corrupt Basque leadership in Cuba. At this time, several biographers noted that Guevara seemed to grasp the importance of propaganda in their revolutionary tactics as he began to publish a newspaper that criticized the opposition to the movement and later a started radio station he called “The Voice of Free Cuba” (135). During this period he first became feared as a leader who killed any members of the revolution that deserted the cause to return home or serve as informants for the opposing government. Several military analysts credit Guevara with brilliant combat and counterintelligence tactics. His surprising successes earned the respect of his opponents of the US military, conceding that he possessed an apparently brilliant military intuition and found that Che’s unique guerilla tactics very surprisingly effective  (Guevara Che 8).

The period that Guevara served with Fidel Castro building a newly communist Cuba is the period of his life that is most publicized by his critics. During his tenure in Cuban government Guevara managed to redistribute land and factories owned by capitalists to the working class of the Cuban population, however he also made it his personal goal to educate the peasant population and managed to quickly raise the rural literacy rates from 70% to 96%. The sincerity of his humanitarian gestures is uncertain, but these policies did prove effective at loaning Guevara positive image to offset the ordered executions of political prisoners that soon followed (Guevara Che 93-95).

Che’s military successes as well as administrative effectiveness led to his promotion to Cuban Finance Minister.  Revered for working for days without rest, never stopping to eat or sleep, earned the respect of his followers. However his ineffectiveness as finance minister became his political undoing and is seen as the first failure of his career, undermining public support of the Cuban Revolution. Guevara’s assumption that citizens would be more productive under communism proved to be much less effective than he expected. His perceived failure governing the economy and later his own disillusion following Soviet concessions during the Cuban Missile Crisis may have been the catalyst driving Che to leave Cuba to serve as an anti-capitalist spokesman around the world. He disappeared quietly from Cuba to join a band of revolutionaries in the Congo of Africa (Guevara Che 167-176).

In Africa Guevara joined an army of Cuban-African guerilla fighters who were attempting to overthrow the government of the time. Detractors believed that Che envisioned himself becoming the Castro of the Congo if their coup was successful. However, Guevara underestimated how much the Swahili language barrier would limit his ability to lead and inspire the people. Ultimately his leadership of the Africans is universally seen as a humiliating failure that began to cast doubt even among his supporters Che’s political wisdom (Fontova 167-174).

A year and half after aborting the African campaign, Guevara disappeared into the Bolivian jungle to train an army of guerilla fighters for an attempt to overthrow the Bolivian government. Che’s critics believe his motives were to gain power needed to become the new dictator of Bolivia if the overthrow was successful. It was a fear of his future power that motivated the CIA to locate him and secretly undermine his effectiveness in Bolivia. It is believed that in his 11 month stay Bolivia that United States CIA were using traitors close to Che to sabotage his radio equipment, intercept his supplies and spread anti-Guevara propaganda to potential local supporters, all of which ultimately left the Che’s guerilla army isolated, starving and in need of medical supplies. Political theorists attribute Che’s harsh and condescending attitude to other guerilla leaders undermined his ability to gain the financial and political support needed to grow his revolutionary movement (Guevara Che 147).

Guevara’s condescending attitude toward other party leaders remains a recurring theme in his diaries, the December 31st  1966 diary entry describes a clash of egos on his first meeting with Mario Monje, head of the Bolivian communist party who was about to extend the political support of the party to Che’s revolution. Monje’s only request in the discussions was to be considered to be the leader of the revolution movement that took part on Bolivian land, however Che insisted that he was the self-appointed leader of all procommunist revolutionary activity in South America. The incident even in Guevara’s own self-delusional spin reveals his Achilles heel as a complete lack of interpersonal tact with other party leaders and hints that his true aspirations were to become the totalitarian ruler for all of South America, if indeed his revolution proved to be a success (Guevara Che 125-140).

In a story that sounds remarkably similar to the recent capture and execution of Osama Bin Laden, a group of 1800 soldiers led by US Special Forces surrounded Che’s camp and overtook it in a quick battle. Che was taken wounded, interrogated, then by order of Bolivian president, executed immediately before news of his capture could incite supporters. After he was shot he was put on public display for proof of his death and his hands were amputated and sent to Buenos Aires where fingerprints on file could confirm that it was indeed Che Guevara’s body. Much in line with the stories of Osama Bin Laden’s burial at sea, Guevara’s remains were disposed in an undisclosed location by Bolivian soldiers. Years later a Bolivian General, divulged that the body had been buried in a mass grave near an airstrip. Archeologists located the grave and confirmed remains to be Guevara and transported to Cuba for formal burial (Fontova 209).

Today Che Guevara’s legend seems to have more followers that idolize him than those who demonize his life. In 2008 the Bolivian government released several of Che’s diaries taken during his capture, these recent publications have sparked a renewed interest in the life and times of Che Guevara, the context of his final writings has caused a swing of public opinion that many view him now to be a Robin Hood martyr at best to be worthy of sainthood rather than the murderous egomaniacal dictator that his detractors believe. Regardless of his motives, it seems evident that his actions were all ultimately leading to his self-appointment to position of dictator in any country he could gain control of in effort to apply his visions of a communal utopia.

From the reading and research I completed for this paper, I conclude that the anti-Guevara theorist Fontova’s book is so heavily contaminated with emotional bias and blatant anti-Castro propaganda on the life of Che that it is difficult to take his accusations against Guevara seriously. The book draws some hard character conclusions that would seem unlikely for Fontova  to support with real evidence.  Fontova makes little attempt to cite academically credible sources in his expose on Guevara; however I do assume that there must be some first-hand historical sources and personal interviews that lend might him some credibility on the subject to gain the support of the publisher.

The extremity of radical accusations made by Fontova prompted me to research the credibility of Fontova as a political analyst, from what I could gather, outside of a degree in political science, Fontova has spent most of his career writing for hunting and fishing magazines, later writing two fictional adventure books. Fontova’s own self-promotional website even further undermines my ability to consider his point of view as a self-declared expert. I did not find much evidence that Fontova was a qualified expert on US foreign affairs and his short childhood in Cuba does not qualify in my opinion qualify  as enough first-hand experience to be the expert on Cuban politics that he claims to be.

In my opinion Fontova’s book can be criticized under the same principles that he charges Guevara with,  Fontova’s book seems intended to incite hatred against supporters of socialized ideals or those who oppose democratic expansionism, just as Che sought to create fear and hatred in opposition of capitalism. Today’s society recognizes the dangers of radical idealists and fear targeted propaganda. In hopes of preventing future wars, individuals must examine emotionally charged propaganda like Fontova’s book “Exposing the Real Che Guevara and the Useful Idiot’s Who Idealize Him” with a critical eye and question the simple logic that millions of people supported the ideals that Che proposed were as purely evil as Fontova would like us to believe.

For the Guevara supporters, they have the luxury of Che’s first hand opinions, in his own handwriting, on those historical events. What I detect in those diaries were not the personal private thoughts of Guevara as much as his own propaganda tools, I suspect that no man in a position of power writes his beliefs down in a notebook and expect them to never be read by prying eyes. Over his lifetime, his diaries were often left behind at deserted guerilla campsites and  found by opposing troops, because of this pattern I believe that the contents of those diaries were his weapons in the propaganda war.

However much that Guevara tried to spin the events to paint himself in a favorable light, it is not a far stretch to assume by reading between the lines of Guevara’s two diaries that he was driven by a manic fueled sense of self-delusion that evolved from compassionate ideals  into sociopathic behaviors. I can see that it is his eloquent writing and his ability to spin events with a flattering self-delusion to portray himself as a heroic martyr that masks his underlying obsession with thrill seeking adventure and a quest to obtain legendary power and fame.

I believe that ultimately Che Guevara suffered from the grandiose delusions, often observed in cult leaders, referred to as “The Messiah Syndrome”, self-appointed leaders who believe that they were put on earth by a higher power to change the future of the world. In layman’s terms we typically label those cult leaders as “Madmen”. A clue to this personality disorder is a very revealing tale that childhood classmates at Guevara’s elementary school shared during  interviews for biography on the Discovery Channel, they recited a  story about an outburst Che had in a discussion about the sainthood of Jesus Christ, where Che exploded and insisted that Jesus was (in loose translation) “Overrated” and that Che planned to make Jesus’ accomplishments pale in comparison. Many years later, during a public address he is cited with one of the most damning quotes of his career when he declared: “In fact, if Christ himself stood in my way, I, like Nietzsche, would not hesitate to squish him like a worm”. To further support conclusions of madness, in Che’s Bolivian Diary he confesses to stabbing his horse in the neck for walking too slowly, two journal entries later, Che makes a reference to the horse stabbing and questions his own sanity. There is certainly an opportunity to publish a very critical view on Guevara’s life today, however Fontova’s radicalism on the topic has done very little to advance the cause of Guevara critics.

Work Cited

Fontova, Humberto. Exposing the Real Che Guevara: And the Useful Idiots Who Idolize Him.

New York: Penguin Books, 2007. Print.

Guevara, Ernesto. Che: The Diaries of Ernesto Che Guevara. Melbourne, AU:

Ocean Press, 2008. Print.

Guevara, Ernesto. The Motorcycle Diaries: A Journey Around South America.

                 London: 1996. Print.

Big Sugar: Florida’s Sugar Industry and its Influence on U.S. Economic Policy

Research Article by Todd Benschneider:

Taxpayer subsidies of United States agricultural commodities have survived over 90 years of political attacks since their introduction in The Farm Bill of 1922. Today U.S. taxpayers pay nearly 20 billion dollars per year in direct farm subsidies, of which about 3% are spent on the Federal Sugar program. Farm Bill critics claim that farm price subsidies are counterproductive and restrict international trade. Supporters of the Federal Sugar Program argue that price supports are needed to compete in the international marketplace against the most economically advanced countries of the European Union and Japan that spend twice the amount per capita in agricultural subsidies. Subsidy supporters argue that price supports level out the peaks and valleys of price fluctuations which result in economic and government stability (Sumner, 2008).

In 1996, in response to growing voter outrage over the taxpayer support to some of Florida’s wealthiest and politically connected elite, Al Gore launched an attack on Florida’s sugar industry, promising to cut the subsidies to wealthy sugarcane growers and rescue the Florida Everglades from further agricultural contamination. However, Gore underestimated the political clout that the sugar growers possessed and found he was unable to deliver on that very heavily publicized campaign promise (Roberts, 1999).

The political influence that sugar growers continue to accumulate could be attributed to the millions of dollars in campaign contributions made by Florida sugar producers. According to investigative journalist Paul Roberts (1999):

“from 1990-1998…. sugarcane producers spent at least $26 million on everything from referendums to supporting Jeb Bush for governor in 1998 ….. and, America’s sugar industry is among the most subsidized on the planet, enjoying a domestic price of 22 cents a pound while producers in much of the rest of the world get about 8 cents. Each year, critics say, the federal sugar program not only adds $1.4 billion to consumers’ bills but funnels some $560 million of it back to domestic producers, who then funnel some back to Congress, which ensures the program’s reauthorization under the once-every-six-years Farm Bill. It’s a classic political love triangle, obscenely lucrative for the big corporate farms–Florida Crystals makes an extra $64 million annually under the program, followed closely by U.S. Sugar, at $55 million.”

Public backlash for Florida’s sugarcane industry is often attributed to several highly publicized expose’s that showed taxpayer money funnels straight into the pockets of wealthy sugar baron heirs, who use the monies to buy additional political alliances. Outspoken critics, such as Senator Charles Schumer of New York, described the subsidy as “one of the most invidious, inefficient, Byzantine, special-interest, Depression-era federal programs.” And according to Paul Roberts (1999) current perception has grown to believe that rather than provide aid to small family farms that the sugar subsidy actually serves to pamper several billionaire Miami playboys. Roberts describes in his Harpers article The Sweet Hereafter:

“The (Fanjul) brothers’ reclusiveness isn’t surprising. Whereas Fairbanks and U.S. Sugar have continued to bank on their image as sugar pioneers with close ties to the land, the Fanjuls have no such cachet. Rich, controversial, and Cuban-born, with Palm Beach mansions and a $500 million fortune (note: 2012 estimates of Fanjul brothers combined net worth estimate nearly to $100 billion) the brothers are easy targets for muckrakers from 60 Minutes to the National Enquirer, most of whom portray the Fanjuls, in not so subtle racist undertones, as symbols of why America is going down the toilet.”

Ending the cycle excesses allotted to Florida sugar barons are difficult to implement, because those subsides include allocations for many small farm operators in the mid-west who produce sugar beets, honey, maple syrup and corn. These subsidies are woven into the fabric of the American food supply chain and the sugar industry has grown so essential that price subsides are needed to create a diverse collection of producers. The governmental support functions as a hedge against shortages that would occur if any large region would suffer catastrophic crop losses (de Gorter etal, 2008).

Critics of the 1.4 billion dollar Federal Sugar program claim that it adds about 14 cents to every pound of sugar produced in the United States when compared to world sugar exports on the open market.  of which $560 million is sent directly to producers and estimates that $50 million goes directly into the pockets of the Fanjul family (Van Wyk 2013). Supporters of the domestic sugar program argue that foreign produced sugar also reaches the global marketplace with the aid of price supports from their exporting countries. In fact on supermarket shelves US sugar retails for around 39 cents per pound, priced much lower than sugar sold in France for 68 cents or Japan at $1.04 per pound (Pye-Smith, 2002). Paul Roberts (1999) summarized global sugar market data with: “When analysts factor in all sugar programs worldwide, the adjusted world price is around 16 cents a pound–or about a nickel less than American consumers are forced to pay.”

However unjustified the payments to the wealthy Fanjul family seem in the present political environment, it would be easy to overlook how sugar subsidies came into play and how the Fanjul family gained its political favors. The Fanjul family sugar venture began as a heavily subsidized pro-American propaganda tool at the height of the cold war. The Fanjul family, at one time, controlled the sugar production in Cuba until their family’s cropland was confiscated by Fidel Castro during the Cuban Revolution. The Fanjul family was forced to flee to Florida without much of their Cuban wealth and the plight of the once powerful Fanjul family became world news. The US government seized the international publicity as a propaganda opportunity and provided support to the Fanjuls to launch an American based sugar venture with the hope that their success would advance global support for American capitalism. If successful the new American sponsored Fanjul empire could also be used by politicians flood the world market with taxpayer subsidized sugar and devastate the rival Cuban economy that relied heavily on sugar exports. Success of American sugar would provide clear proof that capitalism would prevail over communism, and hopefully slow the communist global expansion (Warben, 2004).

However, today using tax dollars to support land that can barely support sustained sugar production no longer makes economic or political sense. “Paying lavish subsidies to produce sugar in Florida makes as much sense as creating a federal subsidy program to grow bananas in Massachusetts,” quips James Bovard of the virulently anti-subsidy Cato Institute. “The only thing that could make American sugarcane farmers competitive would be massive global warming (Roberts, 1999).”

Despite the widely publicized excesses and abuses of farm subsidies in general and the sugar program in specific, one simple truth continues to recur: Despite decades of  opposition, commodity subsidies including agricultural price supports have continued to survive unhampered by the best efforts of disgruntled taxpayers and political opposition. Price support advocates insist that price support programs are much more complicated than the limited perspective seen as increasing producer profits. Supporters of subsides suggests that subsidies need to protected in the interests of national security and global self-sufficiency. Many supporters believe that it is vital to economic growth to maintain domestic supplies of social and industrial staples such as agricultural commodities, petroleum, mining and timber. While most analysts agree that Americans could import these same commodities for lower costs than they are supplied domestically; however, doing so would result in dependence on those exporting nations which may be a larger risk that than the cost of subsidizing domestic production (De Gorter etal, 2008).

A supporting argument could be made that the United States is not alone in subsidizing major commodities, in fact every one of the top ten countries in GDP per capita production also subsidizes raw materials and agricultural commodities (Sumner, 2008). It could be argued that regardless of the drawbacks of taxpayer price supports that a century of economic natural selection suggests that the benefits of these supports outweigh negative impact that they have had on these nations’ economies. In Daniel Sumner’s article Agricultural Subsidy Programs he summarized:

“The highest national average support equivalent rates, across all major commodities, are offered in Norway, Switzerland, and Iceland, with average subsidies of about 65–75 percent of the value of production, and in Japan and Korea, with support rates of 60–65 percent. The lowest subsidy rates (less than 4 percent) are found in Australia and New Zealand. The average support rate in the European Union is about 35 percent of the value of production (Sumner, 2008).

It also seems worth noting that according to 2005 data published on the United Nations Development Programs website (data.undp.org/dataset/GDP) that four of the five countries providing the highest percentage of agricultural subsidies are also among the top twelve ranked countries in GDP per capita. Decades of agricultural subsidies among prosperous companies would suggest that it would be unlikely to conclude that the cost of the farm subsidy programs outweigh the economically stabilizing benefits. The website also provides a “Quality of Life Index for 2014” that ranks the top countries in the following order: Switzerland, United States, Germany, Sweden and Finland in terms of standards for living. All five top countries are also criticized for commodity subsides and production quotas (Zhu, 2010).

In conclusion, while the obvious costs and abuses of the Florida Sugar Industry are very similar to the drawbacks found in the national welfare system. In the American welfare system there are many obvious cases of abuse and excess; however, it would be difficult to predict how the economic impact if the social safety nets were removed. Much like the commodity subsidies, social welfare programs exist in every global superpower. Cutting costs on welfare programs has historically resulted in increased spending on law enforcement, expense in housing prisoners and mediating the costs of property crimes. The explosion in destitute poverty could quickly climb as citizens who have failed to assimilate into the workforce could no longer provide essential food and shelter, the civil unrest that often coincides extreme poverty often results in political instability. So much like welfare programs, the stability that results from supporting prices of commodities such as the sugar, oil and timber industries are not an easily measured expense to those of us who see only a small slice of how such subsidies are spent.

Historically individual grain and livestock farmers are capped to receive a limit of $100,000 per year in taxpayer subsidies to support their single family production operations, many with annual revenues of less than $200,000 per year. However; the design of the sugar program circumvents per farmer subsidy caps by way of subsidizing the market price of sugar by the pound rather than allocated as grain farmers in per acre farmed. This form of price support lends itself to exploitation by the two large corporate producers who control the production of 80 percent of American grown sugarcane, and as a politically embarrassing result funnels between $50 and $100 per year into the pockets of two immigrant billionaires: Alfy and Pepe Fanjul. Several million per year that the Fanjul brothers then kick-back to state and federal politicians who protect the sugar bill from tax reformers, environmentalists, labor lawyers (Pye-Smith, 2002). However, if history repeats itself, economic Darwinism will prevail and like the fate of many fortunes before, America can expect that it will be unlikely that this subsidized monopoly will survive for the heirs of the Fanjul fortune in the hundred years to come.

Work Cited

Bezdek, Roger H. “Oil And Gas Subsidies In Perspective.” World Oil 232.5 (2011): 21.

Business Source Premier. Web. 22 Jan. 2014

Daniel A. Sumner, “Agricultural Subsidy Programs.” The Concise Encyclopedia of Economics.

2008. Library of Economics and Liberty. 22 January 2014.

<http://www.econlib.org/library/Enc/AgriculturalSubsidyPrograms.html>.

de Gorter, Harry, David R. Just, and Jaclyn D. Kropp. “Cross-Subsidization Due To

Inframarginal Support In Agriculture: A General Theory And Empirical Evidence.” American

      Journal Of Agricultural Economics 90.1 (2008): 42-54. Business Source Premier. Web. 22

Jan. 2014.

Heitmann, John. “Raising Cane In The ‘Glades: The Global Sugar Trade And The

Transformation Of Florida, By Gail M. Hollander.” Journal Of Regional Science 51.1

(2011): 205-207. Business Source Premier. Web. 21 Jan. 2014.

Javers, Eamon. “Lobbyists Who Want Nothing.” Businessweek 4018 (2007): 72. Business Source   

         Premier. Web. 14 Jan. 2014.

Katel, Peter. “Letting The Water Run Into `Big Sugar’s’ Bowl.” Newsweek 127.10 (1996): 56.

Business Source Premier. Web. 21 Jan. 2014.

Peltier, Robert. “Busting myths.(Speaking of Power)(US government renewable energy subsidies

exceed those of fossil fuels)(Column).” Power 2011: 6. Academic OneFile.

Web. 22 Jan. 2014.

Pye-Smith, Charlie. The Subsidy Scandal : How Your Government Wastes Your Money To Wreck

       Your Environment / Charlie Pye-Smith. n.p.: London ; Sterling, VA : Earthscan, 2002.,

2002. University of South Florida Libraries Catalog. Web. 25 Jan. 2014.

Roberts, Paul. “The Sweet Hereafter.” Harper’s Magazine 299.1794 (1999): 54-68. OmniFile

        Full Text Mega (H.W. Wilson). Web. 21 Jan. 2014

“Sugar Reforms Hard To Swallow For Exporters.” Emerging Markets Monitor 11.25 (2005): 21.

Van Wyk, Sydney. THE WASHINGTON TIMES. “A Fresh Attack On Sugar

Subsidies.” Washington Times, The (DC) (2013): 2.Regional Business News. Web. 14 Jan.

2014. Business Source Premier. Web. 14 Jan. 2014.

Warben-Findley, J. “Cold War In South Florida: Historic Resource Study.” Public Historian 28.2

(n.d.): 95-97. Arts & Humanities Citation Index. Web. 23 Jan. 2014.

Zhu, Xueqin, and Alfons Oude Lansink. “Impact Of CAP Subsidies On Technical Efficiency Of

Crop Farms In Germany, The Netherlands And Sweden.” Journal Of Agricultural

       Economics 61.3 (2010): 545-564. EconLit. Web. 22 Jan. 2014.

Consumer Resistance to Superior Technology: General Motors Hybrids, Siri and Video Messaging, Why are We So Slow to Adopt?

Todd Benschneider

University of South Florida
Revised 4/23/2018

When I first wrote the foundation for this article on “Consumer Resistance to General Motors Hybrid Vehicles” nearly six years ago, I was hoping to make sense of the unexpected marketing challenges that we uncovered when Americans proved surprisingly reluctant to purchase the General Motors electric and hybrid option vehicles in 2012.

The market timing of 2009-2012 seemed ideal for electric automobile technology, with record high fuel prices, deeper understandings of global warming and the inevitable decline of petroleum production in the coming century.

On the surface, it seemed to be a reasonable assumption in 2012, that industry projections for alternate fuel vehicles would become a reality and “most cars of  the future” (by 2020 was the expectation) would employ some form of electric or hybrid powertrain.

It is ironic how eight years into the future seemed limitless in its potential; but, eight years ago, feels like it was just yesterday.

How could anyone not want inexpensive clean energy cars; especially, ones that cost less than a dinosaur powered vehicle?

Few people would even argue that oil reserves could possibly sustain our current demand for gasoline for future generations.

The proposed electric car technology was reliable, those powertrains had proven their reliability for a decade of testing.

The price was certainly right, General Motors hybrid options for Buick Lacrosse and Chevrolet Malibu were priced the same as the gas versions and, as bonus, the hybrids were even more powerful and provided income tax credits.

How could that not sell like a syrup covered hot cake????

I still shake my head in amazement at how difficult it was to get rid of the hybrids we ordered in 2011 at our Buick-GMC store. Several sales managers would have probably been fired if our veteran inventory manager Sandy had not pushed back and insisted that we limit our initial order to six units rather than the twenty that I thought was a very modest forecast …. this was not her first rodeo.

Sandy probably saved my job and managed to dealer trade most of those six aged units from our inventory and I for one, learned a valuable lesson in product development: think twice before building a superior solution for customers who do not see a problem worth solving.

Since that realization I, like many in the industry, have concluded that unless government intervention mandates the phase out of petroleum powertrains, the adoption rate of electric-powered vehicles could take another two decades. Looking ahead now from 2018, I have adjusted my expectations down a few notches from back in 2012; now, I suspect that relying on the market demand alone to bring electric powertrains to full-scale adoption would be overly optimistic.

I find myself taunting the overzealous Tesla enthusiasts with history trivia that the automaker Detroit Electric nearly overtook gas automobiles in the early 1900s, selling over 13,000 electric cars that had top speed of 20 mph and a recharge range of 80 miles. A current Tesla 3 base model is rated for 220 miles of recharge range and with modern production capability has only recently surpassed 200,000 units sold. That seems like a miniscule amount of progress made across the 100 years of technology that evolved between the two.

It also seems unlikely that government intervention will mandate the phase-out of the internal combustion engine. Some assumptions could be made regarding the far-reaching economic disruptions to foreign trade markets, devastation to the economies of export countries, displaced petroleum workers, and the reallocation of every dollar generated throughout the gasoline supply chain, not to mention the economic impact to the plastics and chemical industries which rely on the waste byproducts of oil for cheap fundamental ingredients.

So, despite being a GM guy whose career was built on gas engine emissions and combustion technology, I must admit that I had been rooting for Elon Musk’s solar-powered auto revolution.  Mostly because, I hoped to avoid becoming one of those cynical old guys who fights progress, for no reason other than, maintaining a comfortable status-quo.

I am still optimistic that electric powertrains will become mainstream and that automobiles will convert to solar charged electricity before the rest of the power grid. However, I am imagining that the solar revolution will plod forward slowly for decades in a long-drawn-out guerilla war due to the lack of strong market pull for those alternative fuel vehicles while the petroleum industry survives long enough to support the codependent  plastics industry until renewable sourced manufacturing ingredients are developed.

Hopefully Tesla investors are long-range thinkers and have prepared for the long road ahead when consumer demand someday aligns with electric automobile technology. Recently Tesla’s investors had their confidence shaken when company stock prices dropped over 60% during the first week of April over a combination of news that was only slightly negative. If that bearish responsiveness is any indicator of the market, we could expect that a prolonged loss of investor confidence could snuff out the young company before they make it to the finish line.

Few people in the auto industry expect the Tesla plants to disappear or its existing cars to become obsolete. However, a sharp drop in Tesla market value will most likely lure General Motors or Toyota in to absorb the brand at a bargain price in the coming years. Unfortunately, if that happens, a Tesla surviving without Musk at the helm will probably see electric car technology being pushed to the back burner, adding several additional decades to reach full market potential.

It is times such as this that it becomes apparent that consumers (and voters) stated principals fail to correlate with their actions. This anomaly of consumer behavior manages to slow the adoption of superior technology for reasons that will remain a mystery.

My personal experience from being on the front lines, trying to persuade General Motors customers to buy the hybrid powertrain has burned this demand paradox into my view of most technological advances.

For now, we can appreciate how one man, Elon Musk, passionate about his vision for solar power has managed to get far enough to pose a serious market threat to all three economic super powers: auto manufacturing, petroleum and the global power grid. I tip my GM hat to the relentless visionary and hope he makes it to the finish line to prove the naysayers wrong.

tesla

As a matter of fact, back in 2012, I used to tell a similar story to this one about rates of technology adoption, it was my own story about the technology predictions of a decade earlier. In 2002, a full two years before Elon Musk joined Tesla, while he was busy building PayPal, I enrolled in an Automotive Technology program and was introduced to Professors suggesting that our class focus on the General Motors hybrid trucks and Chevrolet EV1 electric prototypes from the parking lot, since they would be the products in the market when we finished the program in 2005.

Not taking any credit away from the Tesla contributions, but electric and hybrid gas/electric models were well-developed by several large automakers and proven in field testing long prior to 2002. General Motors introduced the GM Impact electric car prototype in 1990 and revised it several times into the EV1 in 1996, adding the S10 EV truck in 1997, the duo sold around 1600 units from 1996 through 2002 when they were discontinued due to high replacement battery costs.

GM prepared the next generation of alternative fuel powertrains, this time using smaller batteries in combination with the standard gas engine, allowing drivers to select between gas and electric modes. The added value proposition to hybrid technology being that the hybrid optioned car could still be driven in standard gasoline mode if the customer chose not to spend the $10,000 plus to replace the batteries required for the electric mode.

In 2002, most of us in the GM world thought this hybrid technology would provide the company with the competitive edge needed to fend off the Japanese competitors in the global market. Inside GM, everyone seemed fully committed to the project and the service press even printed the repair manuals and training materials for an expected hybrid truck product release.

We were told that the first hybrids would release no later than 2005. Surprisingly though, with the exception of the quiet release of a small batch of hybrid tucks in 2005, General Motors delayed the marketing air campaign for hybrid offerings until 2009. The marketing launch failed to build the required buzz among consumers and even with $4 gas, the hybrids were seen by most as a dismal market flop. Some environmental critics claim that the marketing campaign was designed to flop with a hope of preserving GM’s previous investments in gas engine technology while also winning support of environmentally focused politicians.

Regardless of the motives of the ineffective marketing campaign, I was there when new customers came to our showrooms to test drive hybrid models, then agreed with the proposition of the revolutionary technology; but, when it came time to sign the finance contracts, the agreement fizzled out. Many of these deals fell apart in the finance office, when the customers began contemplating uncertain future repair costs, trade in values, warranty extensions and differences in insurance rates. It seemed like many feared that hybrids would be a passing fad and they could be stuck investing in a car that would have limited resale or trade in value.

In fact, from 2008 to 2018 the General Motors dealership I worked at sold around 8000 new vehicles and despite the huge bonus offered to sales staff and managers to improve sales of hybrids, the store sold a whopping total of sixteen hybrid cars in those nine years and nearly all of those were leases.

These thoughts came to mind earlier this week when having a conversation with friends about another ambitious prediction in tech news that, by 2020, over 90% of web traffic will be video rather than the text and image data of today.

Being jaded now by these types of predictions, I shared with them another related story, that just a couple of years earlier I had read a similarly optimistic prediction, that by 2020, few people would be texting and reading from their phones; instead, we would all be using Siri-like voice translators and listening to the replies of others through our cordless ear buds.

With the 2020 model year now only fifteen short months away, I realize that most of the auto manufacturing line equipment is currently tooling for that year’s production and my friends in engineering tell me that they are working from forecasts that fewer than 7% of GM vehicles sold in 2020 will be ordered with the hybrid powertrains.

With that fresh on my mind, I am sitting in the atrium lounge of the University of South Florida, surrounded by nearly a hundred of the youngest millennials and realized that they were all still texting from their phones and reading the responses. I will curb my enthusiasm for consumer technology adoption projections in the future…..  I am starting to see how old guys become so cynical

 

 

The foundation article from back in 2012, here is the research  on the state of fuel economy technology and the obstacles to adoption:

Continued Consumer Resistance to General Motors Hybrid Vehicle Technology  – November 7, 2012

EPA policies that affect the economy become front page news in an election year and the hot topic for 2012 is the Corporate Average Fuel Economy (CAFE) revisions, requiring automakers to improve average automobile fuel economy from 29 mpg to 54.5 mpg over the next 13 years. Agreements to these revised fuel efficiency standards were concessions made by automakers during the industry bailouts of 2009.

In the backlash of that federal bailout, critics have been quick to fault American manufacturers for their lack of long-term planning. However, in defense of management strategy, the automakers have for decades been doing what profitable businesses do best, responding to consumer demand (Vlasic).

The press often suggests that domestic auto sales recovery will depend on the fuel economy of the products that manufacturers can provide. These critics assume that consumers make purchase decisions using primarily math and logic; but, those of us in the auto industry experience firsthand that purchase motives are more akin to purchasing fashions or artwork. To most Americans, their car is a part of their self-image, not just a tool that converts dollars into miles traveled.

Journalists such as News-Herald’s John Lasko write articles that with opening lines such as, “With gas prices hovering near $4 a gallon, many are opting to trade in their gas-guzzlers for more fuel-efficient vehicles.” With news headlines like those, it is easy for the public to conclude that the US automakers lack of sales was due to its heavy reliance on gas guzzling models. However, those assumptions are based on popular ideas that the domestic manufacturers previously lacked the capability to produce fuel-efficient vehicles. In their defense, the simple reality remains, the automakers must make their first priority to produce those vehicles that sell well in the domestic market.

The critics overlook the 3 million Chevrolet Chevettes that were produced between 1976 and 1987 or its domestic counterparts, the Plymouth Horizon and the Ford Fiesta that provided fuel efficiency equal to most economy cars on the market today. For example, the Chevrolet Chevette was for nearly a decade, the American flagship economy car, selling millions by providing a real world fuel economy of 25 city/ 30 hwy, or with a popular diesel engine option reaching 33 city/41 hwy. The Chevette was sold with a base price, that inflation adjusts to about $11,000 in today’s dollars and consistently surpassed the fuel economy ratings of it’s main Japanese competitor, the Toyota Corolla by nearly 2 mpg for nearly a decade (fueleconomy.gov).

Compare those cost and fuel efficiency ratings to today’s most economical products available in the US, the Korean made 2013 Hyundai Accent with an MSRP of $10,665 that is rated at 29 city/39 hwy. The comparison of these cars in the context of the 25 years of technology that evolved between them should dispel assumptions that Asian economy cars have enjoyed decades of superiority in fuel economy (fueleconomy.gov). However, in the American car market, every one of those fuel sipping economy cars was discontinued in the late 1980’s when sales dried up as the pendulum of automobile fashion swung toward a return of larger and more powerful transportation, with the introduction Sport Utility vehicles and the return of V8 powered high performance sedans.

By 1990, it became increasingly unfashionable to be seen in fuel-efficient cars, American auto style entered the age of the 1993 Jeep Grand Cherokee, offering a taller ride height for a better visibility in traffic and providing the owner with a sense of safety and rugged capability. The Grand Cherokee became the benchmark to measure style popularity, marketed with an image of recreational outdoor travel and adventure rather than previous trend for economical commuter transport. These mid-sized all terrain Sport Utilities grew especially popular with female buyers in northern states, at the same time four-door 4×4 pickups became increasingly popular with young male buyers seeking that “Eddie Bauer” outdoorsy image.

Critics often ignore the strategic decisions that allocated research and development funding away from fuel economy and directed budgets to safety, performance and durability to meet the consumer demand curves. Over the past 15 years the average vehicle age alone has grown by a third to 10.8 years old with advancements in vehicle durability (USA Today). Additional progress that was made during that period to improve braking distances and implement crash avoidance technology reduced accident frequency and cut the percentage of crash fatalities in half. In an effort to appeal to consumer demands for more powerful accelerator pedals, 0-60 acceleration times have improved by over 40%. And to counter the reliability critics of the domestic cars from the 1980’s, the inflation adjusted annual maintenance costs have dropped by more than 80% (NADA.COM).

Today even after the industry collapse, American manufacturers once again dominate automobile industry technology development, General Motors again was ranked the 2011 No. 1 innovator in automotive patents by US patent board (Tuttle). However, consumer demand trends in automobiles are similar to those in fashion, with opposing trends recurring in 10-year cycles, such as style trends toward skinny jeans from bell bottoms and short carefully styled hair to today’s bushy headed natural hairstyles. Sociologists attribute 10-year style cycles to be dependent on the needs for generational self-image, as each generation makes fashion and identity statements to differentiate them from the previous generation.

Business Times writer Brad Tuttle suggests that the fuel economy trend that began in 08 will continue to gain momentum:

“A new True Car post traces the average miles-per-gallon rise among new cars sold
in the US… all of the top seven automakers posted dramatic year over year
increases in average miles per gallon. In 2011 the average new Ford got just 17.3
mpg compared with 22 mpg in February of 2012 … the rise comes primarily as a
result of Ford doubling sales of small cars such as the Fusion and Focus”
However, despite increases in economy cars sales, auto sales as a whole have risen, the demand is also increasing on 5-year-old full size SUV’s.

According to industry writer Nick Bunkley,
“Retail prices for five-year-old full size S.U.V.’s are 23 percent higher than a year ago
according to Edmunds.com, an automotive information Website. That is more than
double the average price increase of 11 percent for all five-year-old vehicles.”
One constant in the automobile industry, vehicle selection is an emotional decision more than it is an economic one. Customer buying motives first and foremost are influenced by how the vehicle makes them feel, a vehicle becomes one with the driver, it can allow them to feel bigger, more secure or more powerful. I recently encountered a perfect case that really defined the influence of self-identity on vehicle selection.

Carolyn, a 60-year-old widow and retired guidance counselor arrived at our Buick-GMC showroom in a well maintained, three-year-old, luxury four-wheel drive truck. Carolyn had gotten a letter from our used car department that high demand for trade-ins like her truck had currently driven trade-in values up thousands over the previous year. The letter encouraged her to consider upgrading soon, to take advantage of current trade in values for used 4×4’s.

The timing of the letter was perfect for Carolyn, since she had recently moved to Florida from the Midwest and no longer had the need for wintertime four-wheel drive; to further complicate matter the garage of her new condo also couldn’t accommodate the truck. She explained when she arrived, that she really wanted to reduce her fuel budget and downsize into one the new hybrid Buick Regal sedans she had been reading about in the newspapers, rated for twice the fuel economy of her truck.

Over the following week Carolyn test drove over a dozen of fuel-efficient sedans from ours and different dealerships including the Hybrid Regal that she initially planned to purchase. Despite our best efforts to persuade her to choose our last remaining hybrid, she instead opted to buy the high performance Regal T Type, performance sedan, that ironically provides an only a slight fuel economy advantage of 15% over the truck she was trading in and was priced thousands higher than the $28,000 hybrid version.

Carol admitted that when driving the cars rated highly for fuel efficiency she felt as if she had sacrificed the power that she was accustomed to and those low powered cars made her feel old and slow behind the wheel, she insisted that she “wasn’t ready to feel like an old lady toodling down the right lane, holding up traffic”. Carol’s time behind the wheel of the Regal Turbo made her feel young and put a smile on her face every time she pushed down on the accelerator pedal. For the sake of “feeling young” she was perfectly content to pay an extra $90 in monthly car payment for the high-performance engine and luxury options and disregard the $65 month in fuel savings that the hybrid version offered.

Think of the vehicle choices by comparing it to an airplane selection; imagine choosing between airplanes, where you could select a 2 seat Cessna that might make you feel like buzzing mosquito, or for another $150 a month, you could pilot the F-16 fighter jet or a Boeing 747 to work, ….to you, which of those options excites you? The difference it capability seems huge and imagine if the difference in increased fuel costs was only an additional $100 a month. The thrill of becoming something larger and more powerful and the status that comes with that ownership has an attraction beyond what can be measured in simple terms of transportation costs per mile. American buyers have consistently demonstrated that they are willing to sacrifice a larger part of their income to enjoy vehicles that provide them with excitement.

Current sedan trends are influenced by the fuel-efficient designs from Asian manufacturers, designed to handle the high taxes on Japanese gas and the shortage of open roads and parking space on the islands of Japan. Understanding the American tastes requires us to understand the differences in our driving habits and the luxuries of smooth, open roads that Americans can enjoy, foreign drivers are often limited in their ability to appreciate American tastes for size and horsepower.

However, in Australia, with road systems similar to the US, a huge market still exists for large SUV’s, trucks and big engine cars. A market that was penetrated in the 1990’s when many Japanese automakers began to design vehicles to cater to the American influenced market, with large gas guzzlers like the Nissan Armada, Toyota Sequoia and Honda Ridgeline ensured import survival during the SUV years, and most notably even those Japanese trucks and SUV’s suffer from slightly lower fuel economy ratings than the American SUV competitors.

It has been easy for the press to fault American automakers for their lack of vision in developing economy vehicles, and to blame management for not remaining competitive in fuel efficiency technology. However, despite almost a total lack of advertising dollars for large engine SUV’s, compounded by the handicaps of stale, aged-out designs and a decrease of sales incentives offered, the demand for large SUV’s is climbing back to nearly 2008 levels despite continued fuel cost nearing $4.

Over the past 30 years American consumers have voted with their wallets, fuel economy was considerably less important to them than size, safety, reliability and performance. The challenge that lies ahead is not to build smaller, less powerful cars as much as the need to direct energy-saving technology development at the powerful SUV’s and spirited sedans that consumers demand (nada.org).

Because for many Americans the automobile is more than transportation, it is a fashion decision as much as a financial decision, and many Americans have proven for decades that are perfectly willing to pay a premium to enjoy a few more smiles-per-gallon.

 

Work Cited

 

Bunkley, Nick. “As Car Owners Downsize, the Market Is Strong for Their Used S.U.V.’s.” New

York Times. 07 2012: n. page. Web. 7 Nov. 2012.

“Side By Side Economy Comparison.” fueleconomy.gov. US Environmental Protection Agency,

07 2012. Web. 7 Nov 2012.

Lasko, John. “Gas Prices Have Car Makers, Sellers, Buyers Looking at Fuel Efficiency.” The News

Herald. 30 2012: n. page. Web. 7 Nov. 2012.

. “Guidelines.” nada.com. National Automobile Dealers Association, 07 2012. Web. 7 Nov 2012.

Tuttle, Brad. “Even with $4 Gas, Few Drivers Choose Electric Cars – Or Even Hybrids.” Business

Time. 12 2012: n. page. Web. 7 Nov. 2012.

Vlasic, Bill. “U.S. Sets Higher Fuel Efficiency Standards.” New York Times. 28 2012: n. page. Web.

7 Nov. 2012.

“Our Cars are Getting Older, too: Average Age now 10.8 years.” USA Today. 01 2012: n. page.

Web. 7 Nov. 2012.

General Motors Recovery and the Influence of Social Stigmas Faced By Industrial Workers

General Motors – Overcoming Stigmas Facing American Industrial Workers – Todd Benschneider

The 2008 bailout of General Motors remains a focal point of economics analysts and political journalists. Today, nearly four years after its corporate collapse reporters alternate between glowing praise and sharp criticism. However, regardless of viewpoint one fact cannot be ignored: General Motors has clawed its way back up Fortune Magazine 2012 rankings into 5th place of America’s largest revenue corporations (Morgenson 1). While the press and public opinion continue to focus on corporate leadership and the politicians who engineered the bailout, they tend to ignore the most important factor in the recovery, the devotion shown by workers at General Motors banding together to prove that they can produce a world class product at a competitive price. Modern America offers recognition to white collar workers and disregards achievement in engineering and the industrial trades, this shift in values may be contributing to declines in domestic production.

Much of this anti-union and industry sentiment results from taxpayer resentment of the government rescue of the world’s largest automaker General Motors, that left the American taxpayers owning 31.9% of the common stock. Today GM rightfully wages a daily war on two fronts: normal industry competition and now the new front of public relations, under a microscope of press scrutiny and public opinion. While this scrutiny seems to have generated results with increased accountability, as units sales climb, product ratings improve and as profitability reaces new levels. The 2012 employee profit sharing plans will provide dividends to compensate for a large portion of the pay cuts hourly employees had accepted as part of the restructuring plan. According to an article in the New York Times that for 2012 it is projected that “45,000 union workers would receive profit-sharing checks averaging $4,300, the most in the company’s history” (Morgenson 4).

However, many industry critics present pessimistic statistics influenced by personal political agendas and an ingrained anti-industrial sentiment. In an article that opens with anti-Obama critique, industry writer Louis Woodhill wrote a scathing review of GM products in the August edition of Forbes under the shocking title “General Motors is Headed for Bankruptcy—Again”. In the article Woodhill interprets a scoring aspect of recent “Car and Driver” review with:

“Not only was the 2013 Malibu (183 points) crushed by the winning 2012 Volkswagen Passat (211 points), it was soundly beaten by the 2012 Honda Accord (198 points), a 5-model-year-old design due for replacement this fall. Worst of all, the 2013 Malibu scored (and placed) lower than the 2008 Malibu would have in the same test.”

Despite a moderate share of negative press many Americans, influenced by recession and unemployment are reconsidering purchasing American industrial products in hopes that their support will result in a mutually beneficial environment for the American economy. This attitude is shared in the New York Times news article titled “General Motors 2012 Earnings: Second Quarter”, which while presenting a negative spin on GM’s European subsidiary, the article does present a positive spin on GM’s domestic operations with the paragraph:

“In its new carnation, the automaker is proving that it can be profitable at a lower sales volume. The company announced in February 2011 that it earned 4.7 billion in 2012, the most in more than a decade. It was the first profitable year since 2004 for G.M. which became publicly traded in November 2012, ending a streak of losses totaling about $90 billion” (Morgenson 1).

Some industry writers take a middle of the road stance on the American auto industry such as the CNN Money article entitled “A Recovering GM is Losing Ground at Home” which despite opening with the statistic that GM lost nearly 2% of the domestic market share in 2012, the article goes on to cite the influence of external factors by quoting auto industry economist Sean McAlinden with “Its very complex, the latest downturn isn’t from lack of sales, it is the result of GM closing down 3 million units of production facilities to improve profitability.” The article also offers hope in the second paragraph with “The Cadillac division in coming months will benefit from two key new model introductions” (Levin 1).

Economists and political journalists write about GM leadership strategies and shareholder returns but ignores those autoworkers putting in the effort day after day to prove that they can once again dominate the global automobile market. This critical public opinion of American manufacturers and the negative stigma of industrial trades is withour question the greatest obstacle of corporate moral. The resulting negative self-image among industrial workers slows the progress of American industry and that anti-industrial sentiment begins with the attitudes that modern Americans view those industrial jobs.

Over the past 150 years careers in manufacturing goods that were once viewed as hi-tech careers are perceived by many with a negative stigma. This negative connotation is fostered through the American educational system, especially the parents of school children in manufacturing communities. The attitudes being imbedded in schoolchildren are that by studying hard and earning professional credentials that they could escape a dirty and dangerous, low paying life of industrial work. Those children later grow into consumers that believe that through hard work and achievement that they “escaped industrial servitude” with careers in medicine, science and especially education and grow to resent industrial workers earning similar wages despite similar number of training hours to obtain that salary level.

This anti-industrial job mentality is crippling American manufacturing companies, especially in the automobile industry. A look in the parking lot of any white collar company such as JP Morgan here in Tampa and you can see that nearly 85% of white collar workers in non-industrial cities buy foreign produced automobiles and the exceptions to that rule are those few who desired the largest of SUV’s that do not have foreign counterparts. The reasoning typically offered by import owners, is the belief that the American manufacturers produce an inferior, unreliable product. Many that offer this excuse often admit that they had never owned a new American car for comparison.

The declines in American manufacturing will likely continue until society offers industrial achievement similar recognition to those contributing to the advancements in computer technology and finance professions. You can not build a champtionship team without being able to recruit the best engineering talents entering the workforce and you can not onbtain those cream of the crop graduates to accept a job in an industry with a sinking prestige factor.

Work Cited

Levin, Doron. “A Recovering GM is Losing Ground at Home”. CNN Money. May 11, 2012

http://features.blogs.fortune.cnn.com/2012/05/11/gm-2/

Ed. Morgenson, Gretchen. “General Motors 2012 Earnings: Second Quarter”. The New York

Times. August 2, 2012

http://topics.nytimes.com/business/companies/general_motors_corporation/index

Woodhill, Louis. “General Motors is Headed for Bankruptcy –Again” . Forbes. August 15, 2012

http://forbes.com/sites/louiswoodhill/2012/08/15/general-motors

Analytical Profiling of Job Candidates by Personality Type

The young science of personality type analysis and implementation of behavioral pattern predictors provide Human Resource managers with new tools to aid in selecting high level candidates for positions of high level responsibilities and leadership. Careful candidate selection for upper level executive positions is of crucial importance to an organization’s long term viability. An organization’s success is as dependent on the compatibility of its people as it is on marketplace competitiveness. By combining questionnaires such as the Meyers-Briggs Personality Assessment, resume history profiling and body language analysis, today’s Human Resource managers have powerful tools to reduce hiring candidates that may prove to be a poor fit.

As early as the 1500’s the godfather of political science Niccolo Machiavelli wrote his still famous book “The Prince” on topics of distinct patterns of behavior that proved consistent among successful rulers of the time. Machiavelli served as a trusted political adviser to rulers of his time and was trusted to teach his scientific approach to the applied psychology of leadership to the future successors of power. It is his study of applied social psychology and his beliefs that public perception of a leader are more likely the product of careful marketing rather than actual leadership competency is the founding principal of political science. One of the most often quoted Machiavellian lines that captures personality profiling for rulers of his era is: “What makes the prince contemptible is being considered changeable, trifling, effeminate, cowardly, or indecisive; he should avoid this as a pilot does a reef, and make sure that his actions bespeak greatness, courage, seriousness of purpose, and strength” (Machiavelli 46)

The United States military later furthered the application of this science as far back as the 1800s and later became one of the first to nations to invest millions of dollars in computer software to calculate which enlisted men that would make the most effective military officers.  It was believed that the officers to be trusted to follow and confidently implement orders from the chain of command fit a very small minority of the general population. It was generally agreed that the position did not rely as heavily on intelligence or charisma as it relied on an unwavering confidence in the mission’s orders. In fact it is rumored that unusually high intelligence is a disqualifier for entry level officer positions, however the military selection criteria are carefully guarded secrets. It would be safe to assume that the judging criteria is confidential to protect against potentially resourceful candidates from teaching themselves how to mimic the qualifying behavioral patterns (Ramsden 5-9).

For hundreds of years since political parties carefully study which potential nominees to back in order to ensure that the ideal candidate receives their financial backing. The party hopes that through superior job performance the correct candidate will provide his party with the greatest prestige, which in turn will provide increased power and financial backing for the party. The stakes are great not just for the political parties but the results of the actions of the new leaders will have far reaching and long term effects on an entire world of people. Selecting the best candidates for these positions of power justifies development of very precise tools to aid the selection process (Ramsden 43).

In the corporate world the stakes can run almost as high as the politics or military positions, since jobs, evolving technology and economies of great scale can have a great impact on a society. For example corporations such as Wal-Mart and General Motors have annual revenues greater than all but the most advanced countries gross national product. Selecting the top leaders of organizations of their scale justifies a considerable investment of technology, time and money. What research has shown is that the personality assessment tests and body language patterns among potential and retired upper management of these massive corporations is surprisingly similar (Tiger 21). However, upper management in other industries indicate different personality profiles than those largest blue chip corporations, while the profile of long term successful leaders in those industry remained consistent (Ramsden 174).

Leadership profiles for science and engineering fields are often measured by their natural process of problem solving and creative ingenuity, however personality profiling for upper management is weighted very heavily on the candidate’s process of information, tolerance for risk and resulting command for action as well as their interpersonal diplomacy (Cascio 395). In different industries various combinations of priority must be taken in relations to the investigative, exploring, determining, evaluating, commitment and timing of strategy changes. For instance in fast paced technology fields such as software an ideal candidate might be best suited to possess traits that causes them to skip quickly through the determining and evaluating stages of the process to get unique ideas onto the marketplace ahead of competitors.  However successful candidates for mature, low tech industries with high environmental risks such petroleum production would be better suited to possess traits that prioritize determining and evaluative stages of decision making (Ramsden 266).

The field of human resources is widely recognizing that success in a particular type of industry almost routinely predicts failure at the helm of a company in another industry. However, many managers craving new challenges defect in response to offers from other industries. If the industry requires similar traits the new position will likely enjoy some success (Ramsden 328). However when moving to an industry of considerably different skill sets, the transition often results in a disaster. Imagine the founders of Google trying their hand at managing a corporation that produces nuclear power.

Understanding the importance of identifying personality types that have proven successful in similar companies or similar positions is the first step. Consistently identifying those personality types among the applicants is the second step. Some of the clues will be found on the resume with what types of jobs the candidate has the longest experience with, it is unlikely to find someone such as a detail oriented analyst that would fit an opening for the new staff accountant that also has a 5 year history in outside sales on his job history. It is equally unlikely to discover a successful candidate for software developer position has resume history that includes of 12 years as a bartender (Ramsden 146). On a very consistent level people are drawn to careers that they are most comfortable with and 10 years or more in the workforce typically reveals a gradual migration to positions where the job requirements mirror the person’s talents (Oglive).

In today’s hiring processes most large organizations require candidates for all positions to complete a Myers-Briggs style personality preferences questionnaire while submitting the standard application for employment. The 70-210 question test uncovers if the natural decision making preferences of the applicant coincide with the duties they will likely find in their new position. Many applicants do not have a clear vision of what the daily work regimen would be like in the position they are applying for. If hired into a position that requires them to perform tasks far outside of those they are most comfortable with, both the employee and the employer suffer.

A large mature company may have hundreds of employees in similar positions that an applicant is applying for, the personality assessments for those contented and productive employees can be analyzed and compared to the personality preferences of potential applicants. The same company will likely also have data records of new hires that did not work well in the position and can use this data to discover that their profiles differed considerably from those successful new hires. Myers-Briggs style personality assessments uncover preferences that can identify which candidates are not only qualified, but those who will also enjoy the work and work well with teammates (Oglive 3).

The latest tool integrated into the process was popularized by the 1993 book that founded the science of body language analysis written by Pamela Ramsden and Jody Zacharias titled “Action Profiling –Generating Competitive Edge Through Realizing Management Potential.” Ramsden’s research added a new abstract art to the science of behavioral profiling. Their revolutionary book is still considered the reference book that founded the scientific study of body language profiling as a predictor in upper management candidates success. The book provides initial analytical interview notes and the subsequent long term performance case studies of 15 high level corporate executives. These long term case studies showed that the prototype analytical system used during the interview process accurately predicted these executives long term success with their new employer. “Action Profiling” had later become so highly regarded in the field of human resources that it had become required reading for Harvard Business School MBA program for several years (Ramsden 3).

Over the past 30 years the interpretation of body language analysis has earned its place as a credible subset in the sciences of applied psychology. Gradual technological advancements in high speed digital cameras and computerized analysis are building a precision field of body language profiling. For example with extremely high levels of consistency individuals that test high in the test area of Sensory inclinations areas also exhibit erect postures a graceful gait and typically have a history of athletic success.  With some measure of predictability these erect sitting stiff candidates are also measurably less likely to have graduate degrees or excel in positions that require creative outputs. In another example candidates that walk with an exceptionally fast pace regardless of where they are walking to typically test high in Decisiveness and are also normally extremely well groomed and dressed, these types also routinely prefer positions with authority to manage subordinates (Oglive 4)

Long term studies of predictive reliability of pre-employment Meyers-Briggs self-assessment questionnaires give hope that once broken down into consistently measurable analytical parameters employee productivity and further developed that body language analysis can become one of the highest profit tools in business management (Tracy 36).  Analytical models for body language predictors were based on finding consistent correlations between patterns of body language types and their remarkably consistent Meyers-Briggs answers (Demarais 18). It is with those correlation findings that psychology researchers are gaining confidence that long term behavioral patterns can be predicted by combining a battery of written tests along with an interview to help isolate which candidates will ultimately provide a large organization with its most effective leadership qualities (Cascio 53).

Ultimately much is at stake in the selection process of top level executives and a successful human resources manager will employ an arsenal of scientific tools to aid in making the best selection of available candidates for the position. Beginning with resume history, criminal and personal credit evaluations, candidates that have successful experience in similar positions will be invited to take skills based testing and Meyers-Briggs style personality assessments to further identify candidates most likely to excel in the job description. Once the field has been trimmed to the final 10% of qualified applicants, a multi session personal interview with several trained analysts in separate settings is justified. These interviews should include evaluations by several body language experts to confirm that the personality measured on their Meyers-Briggs is consistent with body language interpretation. The economy of massive scale that depends on CEO level positions performance justifies the application of as much science and research as is available to protect against the costs of a bad hire at the highest levels.

Work Cited

Cascio, William F. Applied Psychology in Human Resource Management Sixth Edition.

             Upper Saddle River: Pearson Publishing, 2005. Print.

Demarias, Ann. First Impressions: What You Don’t Know About how Others See You.

             New York: Bantam Dell Publishing, 2004. Print.

Machiavellli, Niccolo. The Prince. Second Edition. London: W. Norton and Company Publishing,

1992. Print.

Ogilvie, Rosemary. Understanding Personality Types – Extrovert or Introvert.  Her Magazine

August 2009. Internet June 18, 2012

http://flokka.com/you/understanding-personality-types-extrovertorintrovert/

Ramsden, Pamela. Action Profiling: Generating Competitive Edge Through Realizing

             Management Potential. Brookfield: Gower Publishing, 1993. Print.

Tieger, Paul D. The Art of Speed Reading People: Harness the Power of Personality Type.

Boston: Little, Brown and Company Publishing, 1998. Print.

Tracy, Brian. Hire and Keep the Best People: 21 Practical and Proven Techniques. San Francisco:

Berrett-Koehler Publishing, 2001. Print.

Birth Order Effect on Personality Development

Image

Abstract

The long term

influence of a child’s birth order has been a deeply debated and thoroughly

researched aspect of developmental psychology. Society has embraced birth order

theory as popular psychology and many psychologists agree that influence of

birth order shapes our later life choices which impact our social interactions,

choice of professions and relationship strategy. Critics of birth order theory

argue that changes measured in later life are shown that can alter the previous

influence of the birth order, therefore this contradiction would indicate that

birth order is a temporary environmental influence which can be eliminated by

later life environmental changes rather then a steady biological factor of

imbedded trait development.

 

Birth Order Influence on Childhood Personality Development

 

Austrian Psychoanalyst Alfred Adler published initial

papers on Birth Order Theory in the early 1900’s. Adler defined his theory that

the oldest child’s personality develops differently after he is “dethroned” by

the next child who then becomes the new focus of his parent’s attention, he is

then assigned a unique role as a surrogate parent to help raise his younger

siblings at the sacrifice of his own self interest. The youngest child or only

child does not grow through a period of mentoring subordinate siblings and

therefore lacks some developmental character building experience into adulthood

(Adler 1928).  For many years since birth

order stereotypes have been a common household belief, society had previously

found little reason to question the early scientific studies that reaffirmed

Adler’s original concept.

However more recent research pointed out a lack of

consistent evidence for birth order influence on adult personality on a large

scale. And studies in late adulthood fail to find remaining influences of birth

order behavioral traits. Using more precise scientific controls for statistical

reliability, modern researchers have failed to produce statistically

significant evidence to support these widely believed stereotypes of birth

order behavior (Paulhus, 1998).

Birth Order Traits

Oldest Child Traits

Oldest children are observed to be

intelligent, energetic, logical, ambitious, enterprising, conscientious,

punctual, scholarly, socially conservative, emotionally neurotic and self

confident. Eldest children have shown a measurable intelligence advantage over

their younger siblings. The intelligence advantage is reliably supported when

contrasted against only children who did not share this measurable intelligence

advantage over the population as a whole. The theories for the eldest advantage

typically attribute it to the intellectual development gained from tutoring

younger siblings early in life (Ernst, 1983).

Eldest most often pursue goal oriented

accomplishment to demonstrate superiority in competitions of social ideals to

win affection from parents. Over 70 percent of entrepreneurs, 90 percent of

astronauts, 80 percent of Nobel Prize winners and 65% of American presidents

were eldest children, and these statistics climb dramatically as we adjust for

second born who are the oldest male in a family. They are consistently found in

leadership occupations, have the highest rate of military service, and are

dramatically overrepresented in political, law enforcement and corporate

leadership; they also dominate precision sciences such as law, medicine and

engineering. They exhibit a higher then average resistance to change, and are

most likely to demonstrate aggression when met with resistance from

subordinates (Sulloway 2001).  They are

found in measurably low concentrations in fields that offer limited structure

and instead reward creativity such as sales, advertising, art and music.

Middle Child Traits

Typical middle child traits are measured to be

cooperative, flexible diplomatic mediators of social conflict. Middle children

also self report the highest scores of suspicion, mistrust and cynicism of

intentions of their superiors; however they have the highest loyalty rating to

their subordinates of any birth rank (Sulloway, 2001).

Middle children never enjoyed the unique period of home life

as an only child like the eldest and youngest enjoy at some point. To

compensate for this hardship, middle children focus on developing a supportive

social circle outside of the home, investing their energy cultivating

friendships and alliances with their peers.

Middle children become more financially and emotionally

independent and typically live the furthest distance from the parents later in

life. They are also the least likely to return home for family gatherings or to

ask their parents for financial assistance (Sulloway 2001). Of the trait of

generosity, middles offer their subordinates the highest rates compensation in

the workplace and are more likely to offer acts of reciprocal altruism in

effort to build a team approach to tasks. Middle children have been measured to

rate their childhood as unloving and unsupportive on self-assessment

questionnaires (Ernst, 1983).

Middle children are most likely to enter professions that

require diplomacy, innovation, reward risk, as well as fields which allow creative

latitude in establishing their duties and the pace which the tasks must be

accomplished. Middle children are overrepresented in the fields of fine art,

advertising, sales, mediation, education, psychology and personnel management.

Middle born children have been found to be measurably underrepresented in

military service and strictly structured corporate cultures (Sulloway,

2001).

Youngest Child Traits

Youngest children are observed to be the most empathetic,

creative, carefree, liberal, and rebellious. Behavioral testing indicates them

to be risk takers, idealists, witty, secretive and emotionally immature for

their age. They more then any other birth order excel at artistic pursuits

especially the performing arts of acting, dancing and music. They are playful

even as adults and develop a tactful non-confrontational approach to social

interactions often relying on humor and flattery to persuade others to their

point of view (Sulloway, 2001). They have been measured to have some emotional

underdevelopment which may be from lacking the experience of watching a

biological duplicate of themselves at varying stages of maturity as any older

sibling can witness, this unique perspective may be key to a keen emotional

self-awareness.

A  study uncovered

an unusually high incidence of homosexuality in youngest sons, Edward Miller

further studied that data on the phenomena in his book Homosexuality,

Birth Order

and Evolution which indicated that the more older brothers a male has, the

higher probability he will be homosexual. This birth order sexual preference

however has not found a measurable correlation to females in either the number

of older sisters the male has or any measurable influence of female

homosexuality (Miller, 2009).

Only Children

Only children have been measured to mature

faster, have higher verbal test scores, and are perceived as responsible,

self-centered, perfectionists. Only children especially only males demonstrate,

high levels of work ethic and career oriented achievement and are observed to

demonstrate the longest enduring commitment to goals.  While society seems to universally stereotype

only children as spoiled and selfish, a study of over 5000 Chinese families

with only children were compared to peers with siblings, that research failed

to uncover any statistical disadvantage to the long term success of only

children. (Sulloway, 2001)

Conclusions

A study published in the 1980s showed no correlation

between birth order and the big five personality traits of randomly selected

population in military entrance assessments (Ernst 1983). However Sulloway has

found that when studying each individual within a family the influence of birth

order is remarkably defined, however when comparing personality traits across

all members of society that birth order has a very weak influence on

personality traits. Paulhus believes this can be explained by accepting the

fact the birth order is a weaker influence then heredity of behavioral

genetics. This theory could explain why the 2nd born from 100

different families can measure much differently on personality assessments

however still exhibit 2nd born traits when compared with their

siblings within their family (Sulloway, 2001).

Further support of birth order impact on personality was

found in  a 2009 study documented that

first, middle and last born adults subconsciously self segregated themselves

into workgroups when assigned a group project. This natural selection of group

project partners suggests that we have a subconscious awareness in our own

behavioral traits and can unknowingly perceive them in those around us to allow

us to partner up with peers that share our priorities (Miller, 2009).

References

Adler, Alfred.

1928. “Characteristics of the First, Second, and Third Child”,

Children, 3, 14-52.

Ernst, Cécile

& Angst, Jules. 1983. Birth Order: Its Influence on Personality.

Berlin and New York

:

Springer-Verlag.

Paulhus, D.L., Trapnell, P.D., & Chen, D. (1998).

Birth order effects on personality and

achievement

within families. Psychological Science, 10, 482-488.

Miller, Edward. Homosexuality,

Birth Order and Evolution. (February 2000) Archives of Sexual

Behavior No. 29 . 1-34

Sulloway, F.J. (2001). Birth Order, Sibling Competition,

and Human Behavior.

Continued Consumer Resistance to Fuel Efficency Technologies

12/09/2012 EPA policies that affect the economy become front page news in an election year and the hot topic for 2012 is the Corporate Average Fuel Economy (CAFE) revisions, which automakers to improve average automobile fuel economy from 29 mpg to 54.5 mpg over the next 13 years. Agreements to these revised fuel efficiency standards were concessions made by automakers during the industry bailouts of 2009. In the backlash of that federal bailout, critics have been quick to fault American manufacturers for their lack of long term planning. However, in defense of management strategy, the automakers have for decades, simply been doing what profitable businesses do best, responding to consumer demand (Vlasic).

The press often suggests that domestic auto sales recovery will depend on the fuel economy of the products that manufacturers can provide. These critics assume that consumers make purchase decisions using primarily math and logic, those of us in the auto industry experience first hand purchase motives that are much more closely akin to the process of purchasing fashions or artwork. To most Americans, their car is a part of their self-image, not just a tool that converts dollars into miles traveled. Journalists such as News-Herald’s John Lasko write articles that with opening lines such as, “With gas prices hovering near $4 a gallon, many are opting to trade in their gas-guzzlers for more fuel-efficient vehicles.” With news headlines like those, it is easy for the public to conclude that the US automakers lack of sales was due to its heavy reliance on gas guzzling models. However, those assumptions are based on popular ideas that the domestic manufacturers previously lacked the capability to produce fuel efficient vehicles. In their defense, the simple reality remains, the automakers must make their first priority to produce those vehicles that sell well in the domestic market.

The critics overlook the 3 million Chevrolet Chevettes that were produced between 1976 and 1987 or its domestic counterparts, the Plymouth Horizon and the Ford Fiesta that provided fuel efficiency equal to most economy cars on the market today. For example, the Chevrolet Chevette was for nearly a decade, the American flagship economy car, selling millions by providing a real world fuel economy of 25 city/ 30 hwy, or with a popular diesel engine option reaching 33 city/41 hwy. The Chevette was sold with a base price, that inflation adjusts to about $11,000 in today’s dollars and consistently surpassed the fuel economy ratings of it’s main Japanese competitor, the Toyota Corolla by nearly 2 mpg for nearly a decade.

Compare those cost and fuel efficiency ratings to today’s most economical products available in the US, the Korean made 2013 Hyundai Accent with an MSRP of $10,665 that is rated at 29 city/39 hwy. The comparison of these cars in the context of the 25 years of technology that evolved between them should dispel assumptions that Asian economy cars have enjoyed decades of superiority in fuel economy (fueleconomy.gov). However, in the American car market, every one of those fuel sipping economy cars was discontinued in the late 1980’s when sales dried up as the pendulum of automobile fashion swung toward a return of larger and more powerful transportation, with the introduction Sport Utility vehicles and the return of V8 powered high performance sedans.

By 1990, it became increasingly uncool to be seen in fuel efficient cars, American auto fashion began to enter the age of the 1993 Jeep Grand Cherokee, offering a taller ride height for a better visibility in traffic and providing the owner with a sense of safety and rugged capability. The Grand Cherokee became the benchmark to measure style popularity, marketed with an image of recreational outdoor travel and adventure rather than previous trend for  economical commuter transport. These mid-sized all terrain Sport Utilities grew especially popular with female buyers in northern states, at the same time four door 4×4 pickups became increasingly popular with young male buyers seeking that “Eddie Bauer” outdoorsy image.

Critics often ignore the strategic decisions that allocated research and development funding away from fuel economy and directed budgets to safety, performance and durability to meet the consumer demand curves. Over the past 15 years the average vehicle age alone has grown by a third to 10.8 years old with advancements in vehicle durability (USA Today).  Additional progress that was made during that period to improve braking distances and implement crash avoidance technology reduced accident frequency and cut the percentage of crash fatalities in half.  In an effort to appeal to consumer demands for more powerful accelerator pedals, 0-60 acceleration times have improved by over 40%. And to counter the reliability critics of the domestic cars from the 1980’s, the inflation adjusted annual maintenance costs have dropped by more than 80% (NADA.COM).

Today even after the industry collapse, American manufacturers once again dominate automobile industry technology development, General Motors again was ranked the 2011 No. 1 innovator in automotive patents by US patent board (Tuttle). However, consumer demand trends in automobiles are similar to those in fashion, with opposing trends recurring in 10 year cycles, such as style trends toward skinny jeans from bell bottoms and short carefully styled hair to today’s bushy headed natural hairstyles. Sociologists attribute 10 year style cycles to be dependent on the needs for generational self-image, as each generation makes fashion and identity statements to differentiate them from the previous generation.

Business Times writer Brad Tuttle suggests that the fuel economy trend that began in 08 will continue to gain momentum:

“A new True Car post traces the average miles-per-gallon rise among new cars sold

in the US… all of the top seven automakers posted dramatic year over year

increases in average miles per gallon. In 2011 the average new Ford got just 17.3

mpg compared with 22 mpg in February of 2012 … the rise comes primarily as a

result of Ford doubling sales of small cars such as the Fusion and Focus”

However, despite increases in economy cars sales, auto sales as a whole have risen, the demand is also increasing on 5 year old full size SUV’s. According to industry writer Nick Bunkley,

“Retail prices for five-year-old full size S.U.V.’s are 23 percent higher than a year ago

according to Edmunds.com, an automotive information Web Site. That is more than

double the average price increase of 11 percent for all five-year-old vehicles.”

One thing is constant in the automobile industry, vehicle selection is an emotional decision more than it is an economic one. Customer buying motives first and foremost are influenced by how the vehicle makes them feel, a vehicle becomes one with the driver, it can allow them to feel bigger, more secure or more powerful.  I recently encountered a perfect case that really defined the influence of self-identity on vehicle selection.

Carolyn, a 60 year old widow and retired guidance counselor arrived at our Buick-GMC showroom in a well maintained, three year-old, luxury four wheel drive truck. Carolyn had gotten a letter from our used car department that high demand for trade-ins like her truck had currently driven trade-in values up thousands over the previous year. The letter encouraged her to consider upgrading soon, to take advantage of current trade in values for used 4×4’s.

The timing of the letter was perfect for Carolyn, since she had recently moved to Florida from the Midwest and no longer had the need for wintertime four wheel drive; to further complicate matter the garage of her new condo also couldn’t accommodate the truck. She explained when she arrived, that she really wanted to reduce her fuel budget and downsize into one the new hybrid Buick Regal sedans she had been reading about in the newspapers, rated for twice the fuel economy of her truck.

Over the following week Carolyn test drove over a dozen of fuel efficient sedans from ours and different dealerships including the Hybrid Regal that she initially planned to purchase. Despite our best efforts to persuade her to choose our last remaining hybrid, she instead opted to buy the high performance Regal T Type, performance sedan, that ironically provides a only a slight fuel economy advantage of 15% over the truck she was trading in and was priced thousands higher than the $28,000 hybrid version.

Carol admitted that when driving the cars rated highly for fuel efficiency she felt as if she had sacrificed the power that she was accustomed to and those low powered cars made her feel old and slow behind the wheel, she insisted that she “wasn’t ready to feel like an old lady toodling down the right lane, holding up traffic”. Carol’s time behind the wheel of the Regal Turbo made her feel young and put a smile on her face every time she pushed down on the accelerator pedal. For the sake of “feeling young” she was perfectly content to pay an extra $90 in monthly car payment for the high performance engine and luxury options and also disregard the $65 month in fuel savings that the hybrid version offered.

Think of the vehicle choices by comparing it to an airplane selection; imagine choosing between airplanes, where you could select a 2 seat Cessna that might make you feel like buzzing mosquito, or for another $150 a month you could pilot the F-16 fighter jet or a Boeing 747 to work, ….to you which of those options excites you?. The difference it capability seems huge and the difference in increased fuel costs may only be an additional $100 a month. The thrill of becoming something larger and more powerful and the status that comes with that ownership has an attraction beyond what can be measured in simple terms of transportation costs per mile. American buyers have consistently demonstrated that they are willing to sacrifice a larger part of their income to enjoy vehicles that provide them with excitement.

Current sedan trends are being influenced by the fuel efficient designs from Asian manufacturers that were designed to handle the high taxes on Japanese gas and the shortage of open roads on the islands of Japan. Understanding the American tastes requires us to understand the differences in our driving habits, many countries do not have the smooth open roads that American can enjoy, foreign drivers are often limted in their ability to appreciate American tastes for size and horsepower. However in Australia, which has road systems similar to the US, they have a huge market for large SUV’s, trucks and big engined cars. During the 1990’s many Japanese automakers began to design vehicles to cater to the American market, large gas guzzlers like the Nissan Armada, Toyota Sequoia and Honda Ridgeline ensured import survival during the SUV years, and most notably those Japanese trucks and SUV’s suffer from slightly lower fuel economy ratings than the American SUV competitors.

It has been easy for the press to fault American automakers for their lack of vision in developing economy vehicles, and to blame management for not remaining competitive in fuel efficiency technology. However, despite almost a total lack of advertising dollars for large engine SUV’s, compounded by the handicaps of stale aged out designs and a decrease of discounts offered on the large SUVs, the demand for large SUV’s is climbing back to nearly 2008 levels despite continued fuel cost nearing $4.

Over the past 30 years, American consumers have voted with their wallets, which indicated that fuel economy has been considerably less important than size, safety, reliability and performance. The challenges that lie ahead are not building smaller, less powerful cars as much as directing energy saving technology development at the powerful SUV’s, light trucks and spirited sedans that American consumers demand.

Because for many Americans the automobile is more than simple transportation, it is as much an entertainment and fashion decision as a financial decision, and many of those Americans have proven for decades that they are perfectly willing to pay a premium to enjoy a few more smiles-per-gallon.

Work Cited

Bunkley, Nick. “As Car Owners Downsize, the Market Is Strong for Their Used S.U.V.’s.” New

                        York Times. 07 2012: n. page. Web. 7 Nov. 2012.

“Side By Side Economy Comparison.” fueleconomy.gov. US Environmental Protection Agency,

07 2012. Web. 7 Nov 2012.

Lasko, John. “Gas Prices Have Car Makers, Sellers, Buyers Looking at Fuel Efficiency.” The News

                       Herald. 30 2012: n. page. Web. 7 Nov. 2012.

. “Guidelines.” nada.com. National Automobile Dealers Association, 07 2012. Web. 7 Nov 2012.

Tuttle, Brad. “Even with $4 Gas, Few Drivers Choose Electric Cars – Or Even Hybrids.” Business

                          Time. 12 2012: n. page. Web. 7 Nov. 2012.

Vlasic, Bill. “U.S. Sets Higher Fuel Efficiency Standards.” New York Times. 28 2012: n. page. Web.

7 Nov. 2012.

“Our Cars are Getting Older, too: Average Age now 10.8 years.” USA Today. 01 2012: n. page.

Web. 7 Nov. 2012..

Consumer Resistance to Fuel Efficency Technologies by Todd Benschneider

EPA policies that affect the economy become front page news in an election year and the hot topic for 2012 is the Corporate Average Fuel Economy (CAFE) revisions, which automakers to improve average automobile fuel economy from 29 mpg to 54.5 mpg over the next 13 years. Agreements to these revised fuel efficiency standards were concessions made by automakers during the industry bailouts of 2009. In the backlash of that federal bailout, critics have been quick to fault American manufacturers for their lack of long term planning. However, in defense of management strategy, the automakers have for decades, simply been doing what profitable businesses do best, responding to consumer demand (Vlasic).

The press often suggests that domestic auto sales recovery will depend on the fuel economy of the products that manufacturers can provide. These critics assume that consumers make purchase decisions using primarily math and logic, those of us in the auto industry experience first hand purchase motives that are much more closely akin to the process of purchasing fashions or artwork. To most Americans, their car is a part of their self-image, not just a tool that converts dollars into miles traveled. Journalists such as News-Herald’s John Lasko write articles that with opening lines such as, “With gas prices hovering near $4 a gallon, many are opting to trade in their gas-guzzlers for more fuel-efficient vehicles.” With news headlines like those, it is easy for the public to conclude that the US automakers lack of sales was due to its heavy reliance on gas guzzling models. However, those assumptions are based on popular ideas that the domestic manufacturers previously lacked the capability to produce fuel efficient vehicles. In their defense, the simple reality remains, the automakers must make their first priority to produce those vehicles that sell well in the domestic market.

The critics overlook the 3 million Chevrolet Chevettes that were produced between 1976 and 1987 or its domestic counterparts, the Plymouth Horizon and the Ford Fiesta that provided fuel efficiency equal to most economy cars on the market today. For example, the Chevrolet Chevette was for nearly a decade, the American flagship economy car, selling millions by providing a real world fuel economy of 25 city/ 30 hwy, or with a popular diesel engine option reaching 33 city/41 hwy. The Chevette was sold with a base price, that inflation adjusts to about $11,000 in today’s dollars and consistently surpassed the fuel economy ratings of it’s main Japanese competitor, the Toyota Corolla by nearly 2 mpg for nearly a decade.

Compare those cost and fuel efficiency ratings to today’s most economical products available in the US, the Korean made 2013 Hyundai Accent with an MSRP of $10,665 that is rated at 29 city/39 hwy. The comparison of these cars in the context of the 25 years of technology that evolved between them should dispel assumptions that Asian economy cars have enjoyed decades of superiority in fuel economy (fueleconomy.gov). However, in the American car market, every one of those fuel sipping economy cars was discontinued in the late 1980’s when sales dried up as the pendulum of automobile fashion swung toward a return of larger and more powerful transportation, with the introduction Sport Utility vehicles and the return of V8 powered high performance sedans.

By 1990, it became increasingly uncool to be seen in fuel efficient cars, American auto fashion began to enter the age of the 1993 Jeep Grand Cherokee, offering a taller ride height for a better visibility in traffic and providing the owner with a sense of safety and rugged capability. The Grand Cherokee became the benchmark to measure style popularity, marketed with an image of recreational outdoor travel and adventure rather than previous trend for economical commuter transport. These mid-sized all terrain Sport Utilities grew especially popular with female buyers in northern states, at the same time four door 4×4 pickups became increasingly popular with young male buyers seeking that “Eddie Bauer” outdoorsy image.

Critics often ignore the strategic decisions that allocated research and development funding away from fuel economy and directed budgets to safety, performance and durability to meet the consumer demand curves. Over the past 15 years the average vehicle age alone has grown by a third to 10.8 years old with advancements in vehicle durability (USA Today). Additional progress that was made during that period to improve braking distances and implement crash avoidance technology reduced accident frequency and cut the percentage of crash fatalities in half. In an effort to appeal to consumer demands for more powerful accelerator pedals, 0-60 acceleration times have improved by over 40%. And to counter the reliability critics of the domestic cars from the 1980’s, the inflation adjusted annual maintenance costs have dropped by more than 80% (NADA.COM).

Today even after the industry collapse, American manufacturers once again dominate automobile industry technology development, General Motors again was ranked the 2011 No. 1 innovator in automotive patents by US patent board (Tuttle). However, consumer demand trends in automobiles are similar to those in fashion, with opposing trends recurring in 10 year cycles, such as style trends toward skinny jeans from bell bottoms and short carefully styled hair to today’s bushy headed natural hairstyles. Sociologists attribute 10 year style cycles to be dependent on the needs for generational self-image, as each generation makes fashion and identity statements to differentiate them from the previous generation.

Business Times writer Brad Tuttle suggests that the fuel economy trend that began in 08 will continue to gain momentum:

“A new True Car post traces the average miles-per-gallon rise among new cars sold

in the US… all of the top seven automakers posted dramatic year over year

increases in average miles per gallon. In 2011 the average new Ford got just 17.3

mpg compared with 22 mpg in February of 2012 … the rise comes primarily as a

result of Ford doubling sales of small cars such as the Fusion and Focus”

However, despite increases in economy cars sales, auto sales as a whole have risen, the demand is also increasing on 5 year old full size SUV’s. According to industry writer Nick Bunkley,

“Retail prices for five-year-old full size S.U.V.’s are 23 percent higher than a year ago

according to Edmunds.com, an automotive information Web Site. That is more than

double the average price increase of 11 percent for all five-year-old vehicles.”

One thing is constant in the automobile industry, vehicle selection is an emotional decision more than it is an economic one. Customer buying motives first and foremost are influenced by how the vehicle makes them feel, a vehicle becomes one with the driver, it can allow them to feel bigger, more secure or more powerful. I recently encountered a perfect case that really defined the influence of self-identity on vehicle selection.

Carolyn, a 60 year old widow and retired guidance counselor arrived at our Buick-GMC showroom in a well maintained, three year-old, luxury four wheel drive truck. Carolyn had gotten a letter from our used car department that high demand for trade-ins like her truck had currently driven trade-in values up thousands over the previous year. The letter encouraged her to consider upgrading soon, to take advantage of current trade in values for used 4×4’s.

The timing of the letter was perfect for Carolyn, since she had recently moved to Florida from the Midwest and no longer had the need for wintertime four wheel drive; to further complicate matter the garage of her new condo also couldn’t accommodate the truck. She explained when she arrived, that she really wanted to reduce her fuel budget and downsize into one the new hybrid Buick Regal sedans she had been reading about in the newspapers, rated for twice the fuel economy of her truck.

Over the following week Carolyn test drove over a dozen of fuel efficient sedans from ours and different dealerships including the Hybrid Regal that she initially planned to purchase. Despite our best efforts to persuade her to choose our last remaining hybrid, she instead opted to buy the high performance Regal T Type, performance sedan, that ironically provides a only a slight fuel economy advantage of 15% over the truck she was trading in and was priced thousands higher than the $28,000 hybrid version.

Carol admitted that when driving the cars rated highly for fuel efficiency she felt as if she had sacrificed the power that she was accustomed to and those low powered cars made her feel old and slow behind the wheel, she insisted that she “wasn’t ready to feel like an old lady toodling down the right lane, holding up traffic”. Carol’s time behind the wheel of the Regal Turbo made her feel young and put a smile on her face every time she pushed down on the accelerator pedal. For the sake of “feeling young” she was perfectly content to pay an extra $90 in monthly car payment for the high performance engine and luxury options and also disregard the $65 month in fuel savings that the hybrid version offered.

Think of the vehicle choices by comparing it to an airplane selection; imagine choosing between airplanes, where you could select a 2 seat Cessna that might make you feel like buzzing mosquito, or for another $150 a month you could pilot the F-16 fighter jet or a Boeing 747 to work, ….to you which of those options excites you?. The difference it capability seems huge and the difference in increased fuel costs may only be an additional $100 a month. The thrill of becoming something larger and more powerful and the status that comes with that ownership has an attraction beyond what can be measured in simple terms of transportation costs per mile. American buyers have consistently demonstrated that they are willing to sacrifice a larger part of their income to enjoy vehicles that provide them with excitement.

Current sedan trends are being influenced by the fuel efficient designs from Asian manufacturers that were designed to handle the high taxes on Japanese gas and the shortage of open roads on the islands of Japan. Understanding the American tastes requires us to understand the differences in our driving habits, many countries do not have the smooth open roads that American can enjoy, foreign drivers are often limted in their ability to appreciate American tastes for size and horsepower. However in Australia, which has road systems similar to the US, they have a huge market for large SUV’s, trucks and big engined cars. During the 1990’s many Japanese automakers began to design vehicles to cater to the American market, large gas guzzlers like the Nissan Armada, Toyota Sequoia and Honda Ridgeline ensured import survival during the SUV years, and most notably those Japanese trucks and SUV’s suffer from slightly lower fuel economy ratings than the American SUV competitors.

It has been easy for the press to fault American automakers for their lack of vision in developing economy vehicles, and to blame management for not remaining competitive in fuel efficiency technology. However, despite almost a total lack of advertising dollars for large engine SUV’s, compounded by the handicaps of stale aged out designs and a decrease of discounts offered on the large SUVs, the demand for large SUV’s is climbing back to nearly 2008 levels despite continued fuel cost nearing $4.

Over the past 30 years American consumers have voted with their wallets, fuel economy was considerably less important to them than size, safety, reliability and performance. The challenge that lies ahead is not to build smaller, less powerful cars as much as the need to direct energy saving technology development at the powerful SUV’s and spirited sedans that consumers demand (nada.org). Because for many American the automobile more than transportation, it is as much an entertainment and fashion decision as a financial decision, and many of those Americans have proven for decades that are perfectly willing to pay a premium to enjoy a few more smiles-per-gallon.

Work Cited

Bunkley, Nick. “As Car Owners Downsize, the Market Is Strong for Their Used S.U.V.’s.” New

York Times. 07 2012: n. page. Web. 7 Nov. 2012.

“Side By Side Economy Comparison.” fueleconomy.gov. US Environmental Protection Agency,

07 2012. Web. 7 Nov 2012.

Lasko, John. “Gas Prices Have Car Makers, Sellers, Buyers Looking at Fuel Efficiency.” The News

Herald. 30 2012: n. page. Web. 7 Nov. 2012.

. “Guidelines.” nada.com. National Automobile Dealers Association, 07 2012. Web. 7 Nov 2012.

Tuttle, Brad. “Even with $4 Gas, Few Drivers Choose Electric Cars – Or Even Hybrids.” Business

Time. 12 2012: n. page. Web. 7 Nov. 2012.

Vlasic, Bill. “U.S. Sets Higher Fuel Efficiency Standards.” New York Times. 28 2012: n. page. Web.

7 Nov. 2012.

“Our Cars are Getting Older, too: Average Age now 10.8 years.” USA Today. 01 2012: n. page.

Web. 7 Nov. 2012.