Coca Cola: PEST Analysis and Strategy Plans

Coca Cola: PEST Analysis and Strategy Plans Introduction The battle of the chief soft drink manufacturer has been intense and the coca cola company with its headquarters in Atlanta, Georgia has had the largest market share globally. The company has withstood the test of domination globally from its greatest competitor Pepsi Company. Coca Cola has had a large share of the market capitalization but at times the rival company has emerged strong beating it in market share in other financial periods. Its brands have however remained renowned throughout the world and for them to continue dominating they must focus on the customer needs and preference that is the reason they are in business (Milliken, 2007). The company boasts of key success factors in its operations which include; capacity to introduce competitive prices, global extensive distribution, effective customer awareness, a wide range of product choices for customers, effective and timely distribution channels and bottlers, and a global system of operation. The Coca Cola Company has been forced to operate under tight competition in the US domestic markets from Pepsi, Cadbury Schweppes, Cott, and AmBev, but in other markets especially in the developing countries it has established zones of duopoly where it remains the dominant company. Its efforts to penetrate the Middle East and China have been risky since the Pepsi Company continues to dominate the markets there (Milliken, 2007). PEST Analysis of Coca Cola Politics and legal environment In many developing countries there has been ease of entry but the countries face a lot of political unrests e.g. coups and violence which may affect the penetration of market or losses for the already established companies. Other companies have legal barriers that must be addressed before the company establishes itself. The legal showdown of Pepsi and coca cola in India gives a clear view of this fact and especially in the Middle East and Asian markets where Coca Cola seeks new markets. Economic The Company sells consumer products which are sensitive to buyer disposable revenue. The consumers have viewed the drinks as inexpensive and hence its unlikely to forego. Also the disposable income continues to raise hence more purchase to such things as soft drinks. The world currently is going through many financial crises such as the global financial crunch and increasing inflation and companies especially Coca Cola has continued to put in measures such as price adjustments to be able to impact the markets. The strategy of adjusting prices helps Coca Cola to counter the effects of raising costs and hence thus generate enough cash flow that ensures the company productive capability is maintained (Fredrix Skidmore, 2009). Social/demographic Soft drink consumption is inversely related to the age of the consumer i.e. most people take more drinks when they are young as opposed to when they mature. In the current generation average age increases and most of the population is made up of the young this gives an advantage of the increase in the market base of the company. This means that the company has a more potential market to sell the products to and thus a strategic plan should be worked to own the markets. Technological The world is turning to a global village and the age of effective communication gives the perfect atmosphere for business. The world today is easy and convenient to travel, secure and different tastes and preference have emerged (Hannagan, 2002). The powerful brand name of the company becomes a selling point in the franchise of other companies that need to be affiliated to the prestigious brand. Effective communication has also ensured that advertisements and promotions by the company are known world over hence better growth. Rivalry The major rival domestically is Pepsi in the United States. The soft drinks industry has continued to be very competitive and major competitors turn to rivals. The promotion of the brands such as Sprite, Coke, and Fanta in many countries has grown at the expense of the many beverages in the markets (Mark, 2000). The company must implement an effective strategy that ensures advertising, sales, innovations, increased efficiency, brands development, promotional program trade mark development are done efficiently to outsmart the rivals. Suppliers The Company will always need supplies of raw materials such as fructose corn syrup, and sucrose. The availability of this major raw material at numerous sources has made the company dominate the suppliers, however aspartame has not been available in numerous sites and this can lead to problems if production ceases (May, 1998). Buyers The main buyers are individuals who consume the product. The company however deals with local franchised bottlers who deal with the local markets. After effective bottling of the products the consumer/buyer must get the products through chain supermarkets, vending, and fountain sales. The buyers must have the knowledge of the product and be enticed to consume so that he/she can make the purchase (Mark, 2000). Threats of substitutes Many products have emerge to substitute soft drinks e.g. fruit juices and beverages. The company must have attractive offers to ensure that the substitutes introduced in the market dont interfere with the market share of the company. Threats of entrants New companies keep on coming up to compete for a share of the market. The soft drink markets have been mainly dominated by Coca Cola and Pepsi and new entrants find it very hard to penetrate the markets. Internal Environment Operations Coca cola has continued to globally dominate the market and the regional operational strategy that is centralized production system ensure reduced costs. Sales and marketing The area of supermarkets and brand loyalty has played an essential part in the growth of Coca Cola this has ensured profitability and large market share. Distribution The efficient distribution channels i.e. bottling companies has ensured that customers get the product at the right time and conveniently. Automated channel of distribution like the Coca Cola Enterprise that has sales agents and merchandisers in major outlets complement other distribution strategies. Procurement For efficient operations the company has a strategy to own the bottlers operations so that they do it more efficiently to be able to distribute the product properly. The procurement of acquiring a franchise chain is done procedurally to ensure qualified people own the process. Human resources Many people have been employed by the company and they have remained loyal. The company has given attractive remunerations and compensations in order to make them perform effectively and efficiently. Core Resources and competence The factors that favor the companys growth and development plans include; markets, costs, governments, and competition. In the markets they are characterized by homogenous customer needs, global channels and global customer needs, transferable and easy to manipulate market approaches. Cost are favored by learning and experience, large scale and scope economies, high resource and development costs, conducive logistics, and efficiencies in sourcing (Mark, 2000). On the side of the government they are responsible for putting in place inductive trade policies, technology standards that are common and manufacture and marketing regulations that are common and do not favor any party but put a level competing ground for all players. In terms of competition globalization has been favored through presence of interdependent countries that allow competition, and the liberalization of trade in many countries. With the markets giving many incentives to the company to grow then good management policies is all needed to grow and became successful and coca cola has done just that (Kottler, Amstrong, 2006). It has endeavored in its mission to refresh a thirsty world and creating value to shareholders. The company brands have continued to be advertised and image enhanced, where the company has also acquired more franchise networks globally. The systems of the company that are based on organizational structure and timely decisions have continued to make the company succeed. The objectives of the company include; customer satisfaction and creation of a loyal system of customers, community development, effective partnership, and valuable shareholding in the company. The long term goals include increasing cash flow through increased sales, optimizing of profit margins, and global investments expansion in hot spots (Kottler, Amstrong, 2006). The guiding principle is to have an established production, distribution, and marketing system that can support long term growth of cash flow and shareowner value of Coca Cola. The Strategic Choices Available for Coca Cola Product Filling Strategy Ohmae (1990) states that the product line of a firm is lengthened by the addition of more products within the current range; The implications behind this line filling includes; the reach for profit incremental, satisfying the complaining dealers on sales due to the absence of some items in the line, utilizing the capacity that is excess, to try to be the full time company that is leading the market and lastly, to try to plug the holes hence keeping out the competitors. Kogut (1985) starts by explaining that, Coca Cola uses this form of strategy of filling the line of production from time to time; during different seasons as it launches its new products. For example to Zerocoke was launched by Coca Cola at the time James Bond released the movie Quantum of Solace forms part of product filling marketing. The product is presented as if it new. Distribution strategy Coca Cola is globally famous for its distribution channels. In India the Coca Cola distribution channel is a bout 6.5lakh outlets by the year 2000 as compared to its competitor Peps Cos which was 6lakh. The firm has a development of different strategies of distribution strategies for the rural and the urban sectors. The channel of distribution in the Urban adopts the model similar to the direct store distribution, warehouse distribution brokers and vending food services programs according to Ohmae (1990). This methods ensures savings of margins and encourages quick availability of the item to the retailer While in the rural, the Hub and Spoke model distribution channel is applied. Where there is a division of different distributors categories depending on the area they are covering. This model is utilized by to reach the rural market as the program allows the bigger loads to travel long distances while the smaller ones shorter distances as a result the costs are cut down, as stated by Bate and Johnston (2003). Khan (2005) explain the point that through there use of modern technology in the present times Coca Cola is able to improve its distribution and management operations logistics reasonably. There are the options of Chilled DSD System that deals relatively with the methods of distributions that are small. Particularly, it deals with juicy fruits products that can easily go bad. The second option is the Hybrid System, where there is collaboration between the firm and the firm of complimentary good so that its channels of distribution can be used for the selling of the product. In this, the example is collaboration Coca Cola and McDonald. This system is actually benefited by the creation of the synergy by the two collaborating firms. The Social corporate strategy This is where the firm provides the volunteer services in the community. This strategy with the social work assists in position the firms brand name in the minds of the users for the longer time as the brand that is both ethical and social, hence providing the opportunity for the period of growth that is long term. The recent example is the case of Coca Cola social work in India where it has been awarded a golden peacock a ward. Coca Cola has concentrated on water conservation, clean drinking water access and water conservation awareness and other related issues as the firms strategy on the stewardship of water. The Coca Cola Corporate strategy The achievements made by Coca Cola in China are a very strong indicator that patience pays. The firms strategy and management planned vigorously for the success. The market leadership that it enjoys is rooted on strong capability of reacting in time and accurately to the changing market dynamics. Heller Bono, (2006) argued that the firm dominates the market not because it came early in the market but because of brilliant short time moves like the concentration on fanta and sprite. Also success comes because of joint ventures. Early on when the investment in beverage industry was restricted it formed partnership with government bodies but no equal share. Latter, it joined with other ventures with equal control hence gained majority equity. The strategic partnership that the Coca Cola firm was being involved was the strategy of positioning itself for the future. The Coca Cola partner serves the number of firm critical goal. They do share the investment risks in the plant of bottling and it can leverage the political effects its partners to acquire government approvals for the new plants of bottling. The most significant of these new partners allows the Coca Cola management control via the major equal ownership of joint ventures. Pricing Strategy This drastically affects sales in a number of ways. The case from Kogut (1985) of Pepsi provides an example of how pricing strategy can affect the market and sales. The firm gained popularity in 1936 by introducing 12-ounce bottle. The earlier price of 10 cents resulted to slow sales. After slashing the price to 5 cents there was a substantial increase in sales. This was due to the Pepsi ability to encourage the price-watching users to switch the Coca Cola 6-ounces standard bottle for the price of 5cents instead of 12-ounces. Pepsi sold at a similar price. The sales in 1939 a lone was 5 million bottles as the profit doubled as the consumption went higher. The Communication Strategy Dana and Oldfield (1999) say that after looking at the environment that is changing, Coca Cola calibrated its communication strategy in a way that is very innovative. The works of imagery for the carbonated soft drinks, while the work of functionality for the rest of the categories. The example that entrenches imagery is the brand for refreshing; the firm introduces the issue of comfort ability. Brand Development Strategy The strategy that I believe Coca Cola Company should peruse is the brand development strategy. According to Dana and Oldfield (1999) this strategy has far reached and managed to remain in the limelight ever since it started to be good with these that do not take alcohol. The loyalty of the brand is a significant factor to maintain the number one position. Collins (1991) states that Coca Cola Company enjoys the status of being of the biggest non alcoholic beverage firm worldwide its distribution system is unique from other non alcoholic companies. Over years the company has passed many brand enhancement tests and a point is made for the products under the banner of Coca Cola as it invades the minds of the users continually. Hamel and Prhalad (1985)explains that the brand development strategy of Coca Cola should involve the redesigning of its brand development policies and the techniques of keeping up with the set minds of its users that is ever changing. In the beginning this brand believed in affordability, being available and being acceptable. However this Coca Colas brand development should be changed to include the value of price, preference and pervasive penetration. Boutzikas (2000) explains that the issue of building brand of the firm is based on the fact that it wants its users accessibility, which is to be within the reach of desire of the arm. In the efforts of building the brand identity of the firm, many brand attributes for example 20 are to be tested in every month which may involve as much as 4000 users. The strategy of brand development of Coca Cola is very effective as it has been having the capability of constructing, managing as well as maintaining its brand image since many years ago. Another reason as to why this strategy should be used is that the brand has unanimously gained the acceptance all round the world because of the fact that it has shown the capability of relating very well with its users. This signifies the brand loyalty. The loyalty of the brand has been very vital in maintaining the brand picture of Coca Cola. It has believed in shelling out the best as a result the users by default are retained as explained by Boutzikas (2000). The enhancement of the frequency of purchase is one of the techniques of building brand. The firm has also made investments in many campaigns of advertisements always involving the services of theses who are the celebrities around the world. On top of the users, there is another category of users, who usually increases the user foundation and they comprises of the brand collectors. They most of the time indulges in the collection of the old and the logos that are upcoming of the Coca Cola bottles and they literary matter. Collins (1991) says regarding to the development of the brand of Coca Cola zero the firm came out with an advertisement that was some what different from the most common ones. In the concern of this the no calorie beverage, it has given raise to three forms of products that include; the Coca Cola Classic, the Diet Coke, and the Coca Cola Zero. Boutzikas (2000) continues that there are a number of experts who have a believe that these times when Coca Cola the tag of line that states, the real thing, it was really meaning that, however, with the invention of different kinds of categories of coke, the statement the real thing got changed to the statement that reads many things, and the flavor that was there originally is at most times lost. As the result, the building of the brand strategy has to be in such a manner that it will not lead to the peoples confusion and have the capability of retaining users despite the fact that many new manufactures of non alcoholic beverage being on the anvil. Theories And Practice Of Leadership: Nissan Theories And Practice Of Leadership: Nissan When making major changes in a business, efficiency, adaption and human relations need to be considered and the trade-offs between these that might be affected. Efficiency was improved by closing 5 of the factories in Japan and eliminating 21,000 jobs to maximize production and reduce wastage. To simplify the production process Ghosn reduced the number of car platforms by 50% and the number of power trains by 33%. Human relations is always a trade-off when job cuts are made, this was counter acted by Ghosn. He used natural attrition whilst selling subsidiaries or offering early retirement or part-time work at other company facilities all of which would help the morale of the employees that left and the ones that remained so they did not feel so guilty and suffer from survivor syndrome (Daniels, 2006). Reducing purchasing costs by 20% was another way that Nissan improved efficiency; this was achieved by reducing the number of suppliers and making bigger orders. A negative trade off from this was the reduced relationship status with suppliers which is a highly regarded aspect of business in Japan. Engineers were also to blame for making overly specific orders which increased costs unnecessarily as they produced cars to solely improve performance, the trade off was that cars began to be made with customer needs in mind, not performance improvement. Weak distribution was also to blame for the downfall of Nissan; Ghosn reduced dealerships by 10%. Brand loyalty is high in Japan and determined by good customer relations which was a trade off for the reduction in dealerships; this was handled by improving the management in the remaining dealerships so that they become more entrepreneurial than social roles in the business. Design was instigated by engineers and not by the designers; this is why only 4 of the 43 cars in production were profitable. Twelve new cars were to be produced by the designers, to meet customer needs. A trade off of this was poor self-esteem for the engineers but equally designers were given freedom to be innovative and feel more valued by the company. Adaption was improved by correctly identifying the major changes, whilst not dictating them to employees. These plans were all released at once with the explanations behind their needs as to stave of criticism and prejudgments. The trade off for this was in the use of cross functional teams to improve human relations via interaction across departments for them to identify the major changes themselves, therefore then not feeling like they are being dictated to by senior executives. Human relations were improved (for the company, not the employee) by not giving lifetime job guarantees and not adhering to the seniority system that was in place for pay and promotions which lead to the replacing of weak middle management with competent replacements. The trade offs for implementing this was for poor employee relations to occur but this was managed by a merit pay plan, for performance related pay increases and promotions, with employees capable of earning up to an additional 33% of their wage based on performance and gaining stock options. To conclude Ghosn tried to weigh up and counter act the trade offs between efficiency, adaption and human relations well with the use of merit plans, extra innovation and better management. However there was not any strong counter action in relation to reducing purchasing costs, this was evident for the engineers in particular, where as it was obvious how the designers benefited from the changes made. Effective change is essential to the success and survival of a business as 62% of new businesses fail within 5 years and only 2% survive over 50 years (Nystrom Starbuck, 1984). With this in mind effective change management is critical to Nissan and Ghosns success. Ghosn used planned change which has both driving forces and restraining forces that affect the organisations state of equilibrium during implementation (Thomas, 2010). Features of planned change include; Assumption of a stable/predictable environment which Nissan do have. Required change must be identifiable, Ghosn meet this by introducing cross functional teams to identify the problems and changes needed. To move from one fixed change to another, this was done with the permanent closing of 5 factories and the loss of 21,000 jobs. Organisational members must be willing to change; Ghosn increased the willingness to change by creating a vision for the company, empowering employees such as the designers and cross functional team to identify the changes needed which meant they would then be more willing to follow the changes through than have them dictated to them. To have the appropriate tools and techniques available, Ghosn had all the tools available, in most instances it was a case o f reducing them in terms of factories, workers and suppliers. Where he did not have the correct tools he brought them in such as designer Shiro Nakamura. Restraining forces of planned change include (Katz Kahn, 1978) structural inertia, work group inertia, politics and previously unsuccessful efforts. Ghosn changed structural inertia by implementing the cross functional teams to identify and suggest changes for the problems and allowing them to be more adaptive and innovative than ever before. Work group inertia was changed from the design being engineer led to being designer led and customer focused and not performance focused. Politics was addressed by giving more power to the employees via cross functional teams and via the merit pay system were people earned their promotions and pay rises/bonuses. Ghosn managed to implement these changes using Lewins (Lewin, 1947) three step model of change (see appendix 1). In the unfreezing stage of the model, Ghosn had to make sure that employees were ready for change and understood the need for it. This was achieved by using cross functional teams, as the employees would identify the issues and solutions of the company which would lead to higher acceptance for change as the changes were realized and not dictated. Ghosn also offered to step down from his post if the targets were not meet which installs confidence, commitment and belief in the employees that the changes are necessary, realistic and achievable. The change stage of the cycle was used to implement the required changes that Ghosn and the cross functional teams had identified such as the reduction in suppliers, better distribution channels and management, customer focused designs and reduction in production costs. The refreezing stage of the cycle is Ghosns weakest part in terms of delivery. Nothing had been outlined specifically to make sure those attitudes, processes and cultures do not return to how they were before or that similar patterns do not appear again. The incorporation of a vision and plan for the firm can be seen as a retention strategy for changes made, however this area is significantly weaker than previous two stages. In my opinion Ghosn was right not refreeze the changes, the opening statement points to the need for constant change and transformation for a company to keep up with the changing environments that they work within. This therefore would count as criticism of the theory; as Lewin talks about the tactics for change but does not recognize that change should be constant and never ending, which is not the impression you get in his theory with the refreezing of culture which would represent an end to the change. Ghosn was very focused on the planned changes that he had in mind for Nissan, which could be seen as reasonable due to the short term nature of the plan. However with every planned change, the external environment can not be predicted with complete assurances. All companies have to deal with strategic drift (Johnson G, Scholes K Whittington R, 2005) which is when strategies fail to address the strategic position of the organisation, relative to the changing environment. Ghosn had not considered this at all in his plans and therefore had failed to acknowledge the potential importance of emergent change. This could have been critical had there been severe and critical changes to the external environment. For example if the banking crisis that has hit us now had happened ten years ago during implementation, did Ghosn have an alternative plan. Ghosn managed to implement effective change management techniques through the use of planned change and used Lewins three step model of change to rectify problems encountered by the restraining forces. Ghosn managed to minimize the resistance to change through the use of cross functional teams, the merit pay system, empowering employees, offering alternatives types of work for some of the people unfortunate enough to lose their jobs and showing his commitment to the challenge by stating he would resign if the goals were not achieved on time. A trait refers (Yukl, 2002) to a variety of individual attributes, including personality, temperament, needs, motives and values. Skills refer to (Yukl, 2002) the ability to do things in an effective manner and are determined by learning and heredity. The use of good traits and skills will have been used by Ghosn to successfully lead Nissan out of its crisis to meet the goals that he set for the company. Strategic leadership requires a managerial ability to (Thomas, 2010), anticipate and envision change whilst maintaining flexibility and empowering others to manage strategic change if necessary. Effective strategic leaders (Thomas, 2010) tend to be able to manage operations effectively, sustain a high performance, make better decisions than their competitors, and make courageous and pragmatic decisions. They must also understand how their decisions affect the internal systems and respect the feedback from peers and employees about their decisions and visions. The three factor taxonomy of skills shows (Yukl, 1994) that it can be broken down into these sections: Technical Skills, Interpersonal Skills and Conceptual skills. Ghosn shows his technical skills in reducing the amount of power train combinations and car platforms due to his knowledge of the processes required. This shows his strategic leadership in managing operations effectively and sustaining higher performance Interpersonal skills were shown when dedicating cross functional teams to identifying and eradicating the problems in the business. Changing to the merit pay system from the seniority system also showed his good interpersonal skills as by taking one away but replacing the lose with something better and more productive. This was a courageous decision as these strategies have never been contemplated before in Japanese businesses prior to Ghosns arrival. His conceptual skills were proved in his ability to reduce the production costs by as much as 20%, by cutting down on factories, employees, suppliers and dealers and managing to keep a positive spin on these cost cutting initiatives. This showed his ability to make better decisions than his Japanese competitors and therefore be a successful strategic leader. Ghosns personality proved to be charismatic as he holds traits of charisma (Conger Kanungo, 1988) such as being self confident and enthusiastic and willing to take personal risks, such as putting his job and reputation on the line. He challenged the status quo with things such as reducing dealerships and suppliers and introducing cross-functional teams. Ghosn was also innovative and unconventional in relation to how the Japanese operate normally, by instructing designers to produce 12 new cars for construction and changing the whole pay and promotion system in the company. Ghosn has shown a range of skills and traits that are needed to be a successful strategic leader, such as the interpersonal skills to convince people of a new vision and get them committed to the goals through his own strong beliefs and dedication to them. Empowering people was used to enable them to become more innovative and creative and to be able to identify and solve problems themselves. Ghosn managed to improve production efficiency with his conceptualization skills whilst showing the charisma to be able to challenge the status quos in a culture that has a naturally high level of uncertainty avoidance. A transformational leader is (Bass, 1985) someone who identifies the needed change, creates a vision to guide the change through inspiration, and executes the change with the commitment of the followers. An empowering leader is (McLagan, Patricia Nel, Christo, 1995) someone who gives a clear vision, strategy and enabling tool kit. A change-orientated leader is (Tichy Devanna, 1990) someone who recognizes the need for change, creates a new vision and then institutionalizes the change. Ghosn was a transformational leader as he incorporated all of the 4 Is (see appendix 2) into his leadership style (Northouse, 2001). Ghosn managed to gain idealized influence through making a huge commitment to the goals that he set by putting his job on the line. This is a charismatic and confident thing to do that would have firmly set the belief that he was superiorly knowledgeable and capable. Inspirational motivation was clearly set out by Ghosn as he made his targets clear and bold as he released them all at once, whilst managing to avoid leakage to minimize criticism without understanding. The merit pay scheme would have also been motivational to employees as they would now know they could get recognition and promotion for other reasons than besides seniority. Ghosn managed to install intellectual stimulation to his employees through the use of cross functional teams that allowed them to be creative and innovative in their approach compared to their previous roles. He equally gave designers the same freedom to become innovative. Ghosn did also challenge organisation processes with the reduction in suppliers, distributors and the use of power trains and car platforms. Individualized consideration was also covered by the use of the merit pay system and each employee now has the potential to earn an additional 33% of their salary through bonuses. They can also now gain promotion when it was maybe not possible before under the old system. However he could have done more for the engineers as they gained criticism for overly detailed specifications on orders and having too much influence on designers, nothing was outlined on how they would be picked up after these knockdowns. A mentoring or coaching scheme could have been incorporated to help employees reach their personal goals more effectively to improve on this point this further. Ghosn was also a change-orientated leader as he did identify and implement changes but it was already obvious that change was needed, which is why Ghosn was brought to Nissan in the first place. Ghosn was equally an empowering leader as he gave his employees responsibility and roles they had not experienced before but he done so much more for Nissan than just empower employees as he made radical changes himself. These two leadership styles in my opinion are present for Ghosn but are only small parts of his repertoire and the overall picture, which is that they are aspects which feed into being a good transformational leader. Ghosn incorporates all three of the leadership styles but uses change and empowering leadership as tools to direct his transformational leadership style more effectively and to help achieve intellectual stimulation and individualized consideration. With Ghosn making so many changes to Nissan, it was inevitable that some of these changes would affect the culture of the company and the issues that are aligned with them. One of the big cross cultural issues that had to be addressed by Nissan first was the action of reducing the number of suppliers to the company, which was seen as unprecedented in the past. This was because supplier relationships were deemed sacrosanct. Part of the problem was that Nissan was at the time part of the Keiretsu culture in Japan, this is where a large group of companies work with each other to the perceived benefit of one enough. It was seen as a safety net upon which they all owned shares in each other and kept each other safe. If Nissan were to get out of their current crisis bold moves had to be made in comparison to competitors, so moving away from this culture was essential. An equally important cross cultural issue that was changed at Nissan was the belief of having a job for life and promotion and pay based on seniority. When the merit pay system was brought in, this was to motivate employees to push for their promotions instead of simply waiting for them to happen. With the new procedures of accountability measured against the goals of the company introduced this showed the weak middle/upper management that needed replacing. This would have been a shock to the Japanese as their culture has always been to respect your elders; this was no longer the case with the new system in place. In Japanese culture there is a high level of uncertainty avoidance, this is when (Yukl, 2002) people fear ambiguous situations and seek security and stability. Ghosn challenged this culture by immediately putting people into cross functional teams to identify the problems with Nissan. Employees will have felt uncomfortable with this new style that had not been experienced before but will have quickly learned the benefits of working with other department managers and understanding the problems they face on a daily basis. This can be a attributed reason as to why the engineers were aloud to dominate the decision making on supply specifications and design for so long, as confrontation was not part of their culture and therefore no would have questioned their workings. Another cross cultural issue faced is the performance orientation (Yukl, 2002). Prior to Ghosn and his introduction of performance that could be measured against specific goals, the Japanese were very focused on maintaining relationships as they believed it was brand loyalty that would ensure repeat purchase. This can be linked to the sacrosanct relationships which they had with suppliers and distributors as well as their involvement in the Keiretsu culture that created this behaviour. Ghosn changed this philosophy of relying on brand loyalty and brought in the need to meet customer requirements which has made them incredibly more goal focused. The important cultural issues that needed to be changed at Nissan, was the movement away from the reliance of other companies and the relationships built with them to ensure the maximum working efficiency and productivity for themselves. It was equally as vital that employees realized they would not have an easy ride with a guaranteed job and promotion but that they had to work for these things and prove themselves worthy of such rewards; this will have improved efficiency and motivation for the workforce. It was also important for Nissan to move away for a high level of uncertainty avoidance and towards performance orientation, to allow the team to work more effectively and understand each others needs to make a more successful and dynamic team. References: Daniels, K. (2006) Employee Relations In An Organisational context. London. Chartered Institute of Personnel and Development. Bass, B. M. (1985). Leadership and performance beyond expectation. New York: Free Press. Conger, J.A., Kanungo, R. (1988), Charismatic Leadership: The Elusive in Organizational Settings, Jossey-Bass, San Francisco, CA Johnson G, Scholes K Whittington R (2005), Exploring Corporate Strategy 8th Edition, Harlow: Prentice Hall. 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(2002), A hierarchical taxonomy of leadership behavior: integrating a half century of behavior research, Journal of Leadership and Organizational Studies, Vol. 9 pp.15-32 Yukl, G. (1994). Leadership in Organisations. 7th Ed. New Jersey. Pearsons. Are Security Threats Real or Imagined? Are Security Threats Real or Imagined? Giulia Valeri Introduction As far as the discipline of International Relations is concerned, security and threat are highly-contested concepts (Baldwin 1997: 10). Far more often than not, their inner nature has been deeply influenced by the historical context in which the two notions were first moulded. Security threats, whether they be real and objective or imagined and subjective, is still a matter to be put into trial by the academics. In turn, if the issue was to be analysed from a non-scholastic point of view, people would refer to those feelings of insecurity that perturb them and influence their daily action. The spread of the belief that todays world is a dangerous universe, where it is best to play safe and to take all the precautions necessary to avoid the risk of being exposed to threatening situations, is rising consistently. But are there any real threats that can eventually put individuals in a position of danger or is this feeling of self-doubt a mere product of policy-makers cunning moves to ac hieve goals, such as gaining wealth and accumulating their power, while letting the individuals sink in growing uncertainties? In other words, are security threats real and objectively calculated, or are they socially constructed and subjectively perceived? The latter interrogative leads us in another direction. One could, in fact, argue that an answer to this controversial issue can only be formulated in the light of the analytical fragmentation and the subsequent interpretation of two dominant approaches in the field of IR, Realism and Social Constructivism. Being aware of such opposing approaches is not only plausible and reasonable from a logical point of view, but it is fundamental in order to solidly ground our understanding of the issue. In this essay, I will first attempt to give a clear explanation of what is meant by security according to the so-called traditional and critical views. Secondly, I will make a distinction between what counts as a referent object for realist a nd constructivists security policies. Thirdly, I will examine the process that an issue has to undergo in order to be prioritized over the others and to become an existential threat worthy of security measures. I will conclude by using a significant case study to analyse and explain why, in the international system, threats to security cannot be tied to a single approach, traditional or modern, but instead need to be reconsidered as a compromise made up of multiple layers. The ontological conceptualisation of security and the shift in the focus of inquiry. Throughout the centuries, the attempt to define security has been a task of major importance for several IR scholars. However clashing theoretical approaches might be, they all shared a common need, i.e. the conceptualisation of security as an ontological basis for any further argumentation. Notwithstanding this premise, not much attention has been devoted to clarifying this notion, therefore there is a persisting disagreement on what security means exactly and on whether it is desirable to give a definition in the first place. The reason why such disagreement has arisen has proved to be related to the various historical periods in which different approaches have developed. More specifically the Cold War, besides being materialised in terms of an Iron Curtain that demarcated the European boundaries between Capitalism and Communism, also acted as an ideological turning point between Realism and Constructivism. Realists point out that security is about safeguarding acquired values. Arnold Wolfers rephrased Walter Lippmans definition, arguing that security is the absence of threats to acquired values (Wolfers 1952: 485). David Baldwin later portrayed security as the low probability of damage to acquired values (Baldwin 1997: 13), arguing that there is way too much optimism in Wolfers absence of threat (Wolfers 1952: 485). These acquired values are nothing more than national independence and territorial integrity (Wolfers 1952: 489), and thus they objectively correspond to the nation-states selfish interests. In turn, constructivists emphasize that the notion of security is a social construct and, as such, should not be bound to a specific referent object. In his People, States Fear Barry Buzan asserts that the search for a referent object of security has to proceed hand-in-hand with that for its necessary conditions (Buzan 1991: 26). As the reader might have noticed, Security is usually discussed in terms of enumeration of new threats and the identification of capabilities needed to counter them, but there is little examination of the meaning of security as such (Wibben, Human Security: Toward an Opening: ) The clashing tension between the realist theorization and the constructivist approach comes to blows when trying to establish what the referent object of security studies should be. Should it always be the state or should it rather be relative to the questioned sector? This problematic derives from the significant shift in focus that has taken place, alongside a massive change in the balance of history as a result of the end of the Cold War. A realistic perspective: security threats are real and objectively analysed. A traditional approach to security threats has to be considered in the light of an objective assessment of the world out there or as it is. Realists act as an elite of scientists with very fixed conceptions of the surrounding environment. As such, they feel the need to adopt a scientific approach to knowledge (Browning, 2013: 13), meaning that they look at reality in an objective way and they hold a static state-centric vision. Instead of bolstering substantial changes, they pessimistically dictate how to best cope with the world as it is (Browning, 2013: 13). Therefore, it comes as no surprise that the referent object of security studies is the state, and threats to security are all those directly posed to the state, all those menacing the survival of its core values. The nation-state is presented as the guarantor of security and, as such, it has the duty to act in a way that assures the safety of its boundaries. This entails every action to be inextricably tied to the states assump tions. Realists are convinced that the term security is the equivalent of national security interest (Wolfers, 1952: 481). As the US Secretary of State Henry Kissinger put it, how realistically we perceive our national interests is a core security concern (Kissinger, 1976: 182). Exempli gratia, in the international system -which is anarchic- where egoistic and self-interested individuals proliferate, absolute security is irredeemable, and thus states believe that the only way to secure themselves from external military threats is to increase their military forces. Yet by doing so, other states might be led to think that policies of armament are objective synonyms of imminent attacks and, consequently, of real and tangible menaces. In the field of International Relations, this ironic cycle of unintended provocations (Kanji, 2003: 2) is often referred to as the security dilemma, i.e. the belief that increasing ones security means rising insecurity for others as each interprets its own measures as defensive and measures of others as potentially threatening (Herz, 1951: 7). At this point, one could legitimately ask: If everybody claims to perceive real threats, how is one supposed to identify real menaces, if present, with objectivity? Put in another way: Are all military affairs to be considered as real threats or are they real threats only in conditions of international anarchy? As the constructivist Wendt argued anarchy is what states make of it (Wendt 1992: 395), claiming that what is presented as a real threat in international anarchy is not necessarily a real threat in this world. Therefore, can one assume that threats are objectively the same regardless of their political allocation? The constructivist approach: security threats are socially constructed. How the community moulds the concept of securitization. In Wendtianian terms, a security threat is what actors make of it and, thus, by no means can they be objectively assessed. Unlike realists, constructivists act as analysts in charge of presenting how the general public and their leaders mutually construct dangers (Dannreuther 2007: 42), thereby framing our experience of the world. In their Security: a new framework of analysis Buzan, Weaver and De Wilde -prominent members of the Copenhagen School[1] argue that Security is when an issue is presented as posing an existential threat to a designed referent object. The special nature of security threats justifies the use of extraordinary measures to handle them. (Buzan, Waever, De Wilde 1998: 21) Before discussing how an issue, being prioritized over other issues, is presented as an existential threat, it is of essential importance to define what we mean by existential threat in the first place. An existential threat is whatever threatens the safety of somebody or something. As opposed to realists, who unceasingly commit themselves to a scientific state-centric vision, constructivists point out the need for each and every threat to be analysed in relation to the referent object of the sector in question, while sectors have been categorised as military, political, economic, societal and environmental. As for the military sector, the state is the entity that can possibly be in danger. For this reason, however much traditional security studies would try to pass off peacekeeping and humanitarian interventions as menacing in their nature, both might not be regarded as an existential threat to the nation-state. In the political sector, it is sovereignty that is the principle that c an be existentially threatened, so that Brexit, for instance, is the most prominent deterrent to the European Union. In the economic sector, the referent objects are firms, and the threat of bankruptcy may act as an ultimatum for their existence, while collective identities and individual species are respectively referent objects of the societal and environmental sector. One might rightly wonder: What, who and how is an issue transformed into a matter of security or shown to be existentially threatened? Buzan et al. asserts that the answer lies in a key-term, i.e. securitization. Securitization is the process by which a general issue is recognised as an existential threat. Yet this process is built up through consequential steps in which two actors play a key-role, the securitizing actor and the audience. The securitizing actor, alias a political leader, is someone who performs the securitizing move, rhetorically identified as the speech act[2]. The task consists in declaring a state of emergency by recurring to apocalyptic statements, such as If we do not tackle this problem, everything else will be irrelevant (because we will not be here or will not be free to deal with it in our own way). (Buzan, Waever, De Wilde 1998: 21) If and only if the securitizing move raises consensus and it is generally accepted by the audience, the issue is successfully securitized and it becomes an existential threat. Donald Trumps securitizing move, i.e. the Muslim ban, cannot be considered as being successfully securitized because the general public hasnt legitimated the speech act. Contrariwise, war is an empirical example of a successful securitization that, being so recurrent, ends up being institutionalized. Once an issue is securitized, it moves out of the realm of normal politics into the realm of emergency politics, where it can be dealt with swiftly and without the normal (democratic) rules and regulations of policy-making (Taureck 2006: 54; Buzan et al. 1998: 24). The securitizing actor and the audience democratically negotiate and establish what existential threats are under which circumstances. As Buzan et al. underline, security is a self-referential practice, because it is in this practice that the issue becom es a security issue -not because a real threat exists (Buzan et al. 1998: 24). From a constructivist point of view, the realists presumption of assessing threats objectively goes beyond humans means. Threats are in fact inter-subjectively constructed rather than being natural or inevitable (Newmann 2001: 247) since what constitutes a threat for one is not necessarily the referent object for the other (Buzan et al. 1998: 30). How social constructivism has challenged the traditional realistic view. Case study: nuclear weapons are real or imagined threats? almost anything can be a threat CATASTROPHIC, TOO pessimistic and deterministic (timeless and irrevocable)nature of the threats, analysis of the world in itself! assumption: It is out of humans domain to establish which threats are really threatening survival, they are inevitable and there is nothing to do except for facing the crude reality. It is not possible to consider a nuclear weapon in every case a threat. What if the missil tank is a peacekeeping force? At the same time, it is illogical to affirm that a nuvlear bomb of a powerful state is threating whereas a bomb of allies doesnt pose any threat. SELFISH construction of threats: with the excuse of needing to shiftthe focus of enwuiry of the individuals, impact of ideas and values (newmnn, 247). eventually defyning the concept of human security, they ended up prioritizing issues according to the selfish interests of the securitizing actor. For constructivists try to push the notion of human security forward, they somehow end up shadowing the selfish construction of security threats. Both bigo and wibben when experts push for particular forms in which security of humans ought to be prioritized. Bigo showed how the securitizing actor together with the general public has securitized immigration. Issues are prioritized according to selfish interest.   Wibben makes an important point that our conceptions of security come from specific political visions, underpinned by certain ontological and epistemological assumptions. For instance, when experts call for elevating human security as a security concern, they are pushing for particular forms in which the security of humans ought to be prioritised. I Politicians have used the policy of securitization to satisfy their own interests, being legitimated to do whatever through the speech act. Murray Edelman has explained how the social construct of the politicalspectacle works.He has demonstrated how the construction of situations as problems is useful for politicians: the politicians can manage them in order to justify their own authority. It enablesthem, for example, to negate other problems or to transform struc-tural difficulties into easy targets. (Bigo 2002: 68-69) the presupposition that it is possible to control the flow of individuals at the borders of thestate (bigo 1992:69) Murray Edelman, Pià ¨ces et rà ¨gles du jeu politique (Paris: Seuil, 1991),a translation of his Constructing the Political Spectacle (Chicago: University of Chicago Press, 1988), with a specific and important foreword7 Chandler (Security Dialogue, 2008): human security has reinforced rather than challenged existing policy frameworks and is too easily co-opted by political elites. Security is a social construct with the meaning ofsoceurity depending of what is done with it. taureck THESIS Threats are real in the sense that there is sth threating the survival of the individuals, yet this cannot be objectively assessed and it is not deterministically given They are imagined in the minds of the politicians andthen presented as threatening, yet it would be irrational to claim that the speech act has no correspondence to the external reality. . they are mediated by the meaning we ourselves give to nuclear weapons rather than to reality e.g. Constructivist assumption: a nuclear weapon doesnt pose a threat by itself (ARGUABLY YES) Why the US view North Koreas nuclear weapons as a threat and not Britains? UK Prime Minister Tony Blairs securitisation of Saddam Husseins WMD programme for the British public in the lead up to the 2003 invasion is a useful case study here. Depending on our reading of the Copenhagen School, the securitisation of Saddam and his WMD programme may have occurred exclusively through public representations depicting the regime and its WMD programme as imminently threatening, through the vote in Parliament legitimising http://wrap.warwick.ac.uk/1232/1/WRAP_McDonald_0671572-pais-270709-mcdonald_securitisation_and_construction_of_security_ejir_forthcoming_2008.pdf 23 Blairs deployment of troops, or even at the point of invasion itself. While the latter might seem the least likely reading, The system is not deterministically given Brhaviors are socially constructed and can therefore change. (newmann, 247). Threats are socially constructed rather than being natural or inevitable: identity and interest derive from the social processes of interaction leading to expectations of costs and benefits attached with different types of behaviour within a system (newmann, 248) Constructivists: Finally, three important constituents of a speech act are: its internal features (the security form, grammar of security, enunciation of an existential threat and so on); social conditions regarding the position of authority of the securitizing actor (how easily would the audience accept the claims of the securitizing actor); and features of the alleged threat (a tank is more threat-like than a comb, for instance; or to use our example above, a North Korea bomb is more threat-like than a British bomb for America because of the institutionalisation of the North Korean threat). Realists: whoever the nuclear weapon belongs to, it is a threat. A foreign tank crossing the border. Conclusion? Threats to security are real and tangible. One cannot deny that whoever is the owner of a nuclear weapon the presence of a nuclear weapon is menacing the international security commission. However, saying that threats are real is misleading and too generic. what each state perceives as a threat is a variable. allocation Rather, it is a blurred misrepresentation of the world out there. This is to highlight the fact that what is regarded as a real threat in anarchy, being what states make of it, is not an objective reflection of the real threats. It is simply a reflection of the dangers out there. , provided that actions are unavoidably bounded to mere states assumptions Is not insecurity of any kind an evil from which any rational policy maker would want to rescue his country? (Wolfers, National Security: 494) The world is not a universe of all against all From a real basis, security threats are developed and constructed according to the will and mis)perceptions of policy-makers. This is to say that some security threats are prioritized over some others and consequently they might be seen as a matter of national security worth of becoming part of the security agenda. A security threat is what is presented as a security threat A security threat is always the other state Bibliography BALDWIN, D. (1997) The concept of security. Review of International Studies 23: 5-26. BROWNING, C. (2013) International Security: a very short introduction. Oxford: Oxford University Press. BUZAN, B. (1991) People, States and Fear: An Agenda for International Security Studies in the Post-Cold War Era. London: Hemel Hempstead. BUZAN, B., WAEVER, O. AND J. DE WILDE (1998) Security: A New Framework for Analysis. London: Lynne Rienner, Chapter 2. DANNREUTHER, R. (2007) International Security: The Contemporary Agenda. Cambridge: Polity Press, Chapter 3. HERZ, JOHN H. (1951) Political Realism and Political Idealism. Cambridge University Press. KISSINGER, H. 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[1] The Copenhagen School is a school of security studies, which was established in 1983 by Barry Buzan with his first publication of People, States Fear. [2] The term speech act is rooted in the linguistic philosophy of J. L. Austin and John Saerle and it emblematically represents the rhetorical structure of securitization.