Tuesday, December 16, 2008

স্বাধীনতা তুমি

স্বাধীনতা তুমি
রবিঠাকুরের অজর কবিতা, অবিনাশী গান।
স্বাধীনতা তুমি
কাজী নজরুল, ঝাঁকড়া চুলের বাবরি দোলানো
মহান পুরুষ, সৃষ্টিসুখের উল্লাসে কাঁপা
স্বাধীনতা তুমি
শহীদ মিনারে অমর একুশে ফেব্রুয়ারির উজ্জ্বল সভা
স্বাধীনতা তুমি
পতাকাশোভিত শ্লোগান-মুখর ঝাঁঝালো মিছিল।
স্বাধীনতা তুমি
ফসলের মাঠে কৃষকের হাসি।
স্বাধীনতা তুমি
রোদেলা দুপুরে মধ্যপুকুরে গ্রাম্য মেয়ের অবাধ সাঁতার।
স্বাধীনতা তুমি
মজুর যুবার রোদে ঝলসিত বাহুর গ্রন্থিল পেশী।
স্বাধীনতা তুমি
অন্ধকারে খাঁ খাঁ সীমান্তে মুক্তিসেনার চোখের ঝিলিক।
স্বাধীনতা তুমি
বটের ছায়ায় তরুণ মেধাবী শিক্ষার্থীর
শাণিত কথার ঝলসানিলাগা সতেজ ভাষণ।
স্বাধীনতা তুমি
চাখানায় আর মাঠে ময়দানে ঝোড়ো সংলাপ।
স্বাধীনতা তুমি
কাল বোশেখীর দিগন্তজোড়া মত্ত ঝাপটা।
স্বাধীনতা তুমি
শ্রাবণে অকূল মেঘনার বুক
স্বাধীনতা তুমি পিতার কোমল জায়নামাজের উদার জমিন।
স্বাধীনতা তুমি
উঠানে ছড়ানো মায়ের শুভ্র শাড়ির কাঁপন।
স্বাধীনতা তুমি
বোনের হাতে নম্র পাতায় মেহেদীর রঙ।
স্বাধীনতা তুমি
বন্ধুর হাতে তারার মতন জ্বলজ্বলে এক রাঙা পোস্টার।
স্বাধীনতা তুমি
গৃহিণীর ঘন খোলা কালো চুল,
হাওয়ায় হাওয়ায় বুনো উদ্দাম।
স্বাধীনতা তুমি
খোকার গায়ের রঙিন কোর্তা,
খুকীর অমন তুলতুলে গালে
রৌদ্রে খেলা।
স্বাধীনতা তুমি
বাগানের ঘর, কোকিলের গান,
বয়েসী বটের ঝিলিমিলি পাতা,
যেমন ইচ্ছে লেখার আমার কবিতার খাতা।

(শামসুর রাহমান)

Monday, November 17, 2008

Recalcitrant Indian Border Security Force (BSF)

Indian Border Security Force (BSF) who are also termed as 'Border Smugglers Force' by the locals on both side of the border of Bangladesh and India for their involvement of smuggling goods to and from India have caused chaos inside the Bangladesh territory again.

According to the Bangladeshi 'Daily Star', BSF yesterday regretted and apologised for killing three people and wounding another in Maynaguri village in Tetulia upazila of Panchagarh Sunday night, according to Bangladesh Rifles (BDR) officials.

The BSF at a flag meeting with the BDR also assured that such incidents will not recur in future.

The meeting, held at zero line near Majhipara border in Tetulia, decided that a BSF member caught by the villagers would be handed over to BSF after treatment, said BDR officials in Panchagarh.

The BDR team at the flag meeting was led by Col Aftabul Islam of Rangpur sector and the BSF team by R Chandra Mohan from Kishanganj camp in India.

Meanwhile, BDR officials of Panchagarh 25 Battalion said at least 8 to 10 drunken BSF personnel from Nayabari camp in India entered Maynaguri village near Majhipara border, at least 500 metres inside Bangladesh, after 10:00pm Sunday and ransacked several houses.

When the villagers protested this, the intruders entered the house of one Shahidul Islam and fired indiscriminately leaving three people killed and one injured.

The deceased were identified as Mazeda Begum, 25, her one- year-old son Mamun, and Golam Mostafa, 45, a neighbour.

Mazeda's husband Shahidul Islam, who was bullet-hit, and the BSF member held by villagers, were rushed to Rangpur Medical College Hospital. Shahidul's condition was stated to be critical.

Following the flag meeting, people of Maynaguri village who had fled their houses in panic, started returning.

What I don't understand here is the policy of Bangladesh government. If a drunken BSF member has been caught within the Bangladesh territory after killing 3 people and wounding another, why should the government send that person back after the treatment? Why don't they put him under trial according to Bangladeshi law? What kind of spineless policy is this? What message are you sending to the BSF personnel through this extradition? Aren't you sending a message to them that BSF personnel are welcome to come and kill Bangladeshi people whenever they feel like?

I'm really frustrated at the development of this incident because, this is not the first time BSF members have done this. Every two weeks we get news of BSF intrusion in Bangladesh, and if the Bangladesh government doesn't take a strong action this time, this will continue to happen.

For More Information please click here.

Saturday, November 15, 2008

Garment trade grow stronger in Bangladesh despite recession

Bangladesh’s largest contributor to its GDP is getting stronger despite the recession in the developed world. Japanese clothing giant Fast Retailing Co, mostly known by its brand name Uniqlo, has recently started outsourcing low-end products from Bangladesh to boost its sales worldwide. It has opened its local office in Dhaka in September this year.

The company plans to treble its overseas sales within the next two years through selling cheap garments amid global financial recession.

The company's new business plan to brace for low-cost management, and the shortest and cheapest manufacturing and marketing strategy has led it to Bangladesh, a high official of Fast Retailing said.

According to the Daily Star, the company will also start outsourcing home furnishings and fashion accessories from Bangladesh soon, said Koji Yamamoto, an official of Fast Retailing Co in Dhaka.

Besides Uniqlo, such global retail giants as GAP, Zara, Wal-Mart, Tesco, JCPenney, H&M and Next are already operating in the country.

A high official of Fast Retailing said Bangladesh would be the Uniqlo's outsourcing partner to supply clothes both to its Japanese retail shops and other overseas outlets in India and Russia.
The IMF said Bangladesh has lost some grounds in garment trade to Vietnam and Cambodia in its key markets in North America and Europe in 2007 and early 2008, but in the short term it sees no major change in its export outlook.

"Although competition is becoming more intense, Bangladesh's strong market position does not look likely to diminish in the short term," the IMF said in a research paper on Bangladesh's export diversification and external competitiveness.

"Despite the recent mixed performance, Bangladesh retained second position after China in global garment trade," the paper co-authored by IMF's Bangladesh chief Jonathan Dunn said.

Bangladesh exports grew more than 16% to US$14.11 billion in the 2007-8 fiscal year on the back of impressive performance by the ready-made garments, particularly knitwear.

The shipment, however, was negative in the first quarter, but it came back strongly in the remaining three quarters when garment exports grew more than 20 percent to finish the year with a record $10.7 billion income.

The IMF says cheap labour remains the key driver of Bangladesh's garment trade, as a worker in Bangladesh earns only $56 dollar, which is nearly half of what his colleague earns in Vietnam and Cambodia and a third than China.

It also said Bangladesh has diversified its export base in the recent years but still it needed a lot of catch-up work to compete with Vietnam or Cambodia.

The country expanded its number of export products well by South Asian standards, but less than East Asian competitors, it said, adding since 1990 the country increased its number of products from 366 to 673.

"This was a faster rate of increase than Pakistan and Sri Lanka, but slower than Nepal and considerably slower than Cambodia, which quadrupled its number of products."
Another encouraging factor in the garment industries in Bangladesh is the start of backward integration of the garment industries. Local textile companies and accessory factories have started operating further driving down the cost of producing the end products.

Thursday, November 13, 2008

Things you never knew your mobile phone could do!

For all the folks with mobile phones- there are a few things that can be done in times of grave emergencies.

Your mobile phone can actually be a life saver or an emergency tool for survival. Check out the things that you can do with it:

Locked your keys in the car?

Does your car have remote keyless entry? This may come in handy someday. If you lock your keys in the car and the spare keys are at home, call someone at home on their mobile phone from your mobile phone. Hold your mobile phone about a foot from your car door and have the person at your home press the unlock button, holding it near the mobile phone on their end. Your car will unlock. Saves someone from having to drive your keys to you! Distance is no object. You could be hundreds of miles away, and if you can reach someone who has the other 'remote' for your car, you can unlock the doors (or the trunk).


Low Battery:

If your mobile battery is very low you can get access to reserve power by just pressing buttons! To activate, press the keys *3370# and your mobile phone will restart with this reserve and the instrument will show a 50% increase in battery. This reserve will get charged when you charge your mobile phone next time.


Stolen Phone:

To check your Mobile phone's serial number, key in the following Digits on your phone: *#06#. A 15-digit code will appear on the screen. This number is unique to your handset. Write it down and keep it somewhere safe.

When your phone gets stolen, you can phone your service provider and give them this code. They will then be able to block your handset so even if the thief changes the SIM card, your phone will be totally useless... You probably won't get your phone back, but at least you know that whoever stole it can't use/sell it either. If everybody does this, there would be no point in people stealing mobile phones.

Emergency Number:

The Emergency Number worldwide for Mobile is 112. If you find yourself out of the coverage area of your mobile network and there is an emergency, dial 112 and the mobile will search any existing network to establish the emergency number for you, and interestingly, this number 112 can be dialled even if the keypad is locked.

Saturday, October 11, 2008

Should HRM practices in MNCs should be adapted to the local environment to be most effective?

Observation:

The world is becoming an increasingly smaller place to live in. There has been rapid progression in the arenas of transportation, faster communication channels and financial flows, all owing to advancements in technology. As companies spread their wings in the global scenario, there has been a tremendous boom in international trade and commerce. Markets that were once considered impregnable and safe are facing fierce competition and have become battle grounds where firms fight for market share against both local and foreign companies. Not surprisingly, nowadays a fairly good proportion of workforce in firms, regardless of their nationality, is located in foreign countries. As more companies go global, a new branch of human resource management called International HR management has emerged.

Edith Penrose (1959) shows the firm as an administrative organisation and a collection of productive resources. According to her, HR of a firm is a unique resource and cannot be replicated thereby gives firms a competitive advantage if used well.

With globalisation, Human Resource management has developed over the years from a mere welfare tradition in the past to a more strategic concept. This was introduced by the Harvard model of Human Resource Management developed by Beer et al. (1984), (Wall & Rees, 2001). By locating HR policy choices in a wider social and institutional perspective, it claimed that there existed more stake holders in an organisation other than the management (such as government, employee groups, community etc.), and that business strategy and management were only a part of the other situational factors such as the work force, labour market conditions, laws and societal values.

The evolution of MNC’s characterised by multiculturism and geographic dispersion, has embraced this view of placing organisational resources at the forefront of its global strategy. Bartlett and Ghoshal (2000) mention the change in definitions given by United Nations. In 1973, it defined such an enterprise as “one which controls assets, factories, mines, sales offices and the like in two or more countries.” By 1984, it defined them “As an enterprise in which the entities are so linked, by ownership or otherwise that one or more of them may be able to exercise a significant influence over the activities of the others, and, in particular, to share knowledge, resources, and responsibilities with others”.

In essence, the changing definition highlights the importance of strategic and organisational integration and, thereby, management integration of Human Resource practices located in different countries as the key differentiating characteristic of an MNC. (Bartlett & Ghoshal, 2000). It also alludes to the process of transfer of organisational practices across geographies as a key strategic item in MNC’s quest for global excellence.

Influences on transfer of Human Resource practices

Harzing & Ruysseveldt (2005) discuss the four influences which affect the nature and form of transfer of practices across borders. These are:

Country – of – origin effect: The country in which the multinational originates creates a distinctive national effect on the management style and on the nature of employment practices in general. “MNCs of different national origins behave in significantly different ways.” (Ferner, 1997 in Harzing & Ruysseveldt, 2005)

Dominance effect: Its has been argued by a number of authors that economic dominance of a country also influences the practices in other developing countries in that they try to follow the processes and practices adapted by the developed or dominant countries. According to Harzing & Ruysseveldt (2005), in terms of the dominance effect the transfer of practices could be two way, meaning from the developed home country to the MNC subsidiaries or from foreign origin to the MNC in the developing home country. Thus in the latter case it challenges the country of origin effect.

International integration: The third element of the framework is concerned with the extent to which MNCs are internationally integrated, defined as the generation of inter-unit linkages across borders (Harzing & Ruysseveldt, 2005). Globalisation has no doubt brought the world closer and it’s easier for companies to expand geographically. In order to reach economies of scale and compete, the MNCs tend to segment their operations based on countries or regions through global processes and operations in which they operate. This leads to strengthening of ties and operations between the international segments.

Host country effect: This relates to the difference in cultures and laws that exist in the host countries in which the MNCs operate. What is legal and ethical in one country may not be so in another. Various laws like employment laws regarding child labour, termination laws etc and cultural differences in work environments and social behaviour differ from region to region.

Elaine Farndale & Jaap Paauwe (2007) outline Boxall and Purcell’s, (2003) three primary goals of HR strategy. The first two defined as labour productivity and organisational flexibility represent the goals related to the competitive environment, while the third goal of social legitimacy addresses the institutional and cultural pressures. According to them, the competitive forces create cross-border equity and comparability, and alignment of systems internationally to facilitate an internal labour market. However, this standardisation can lead to conflict between company practices and local prevailing conditions in terms of national cultural phenomena and institutions Boxall and Purcell, 2003 in Elaine Farndale & Jaap Paauwe, 2007). (Farndale & Paauwe, 2007)

While most studies have conceived transfer of practices as implementation, typically examining the extent to which practices in foreign subsidiaries resemble those of MNC headquarters (Rosenzweig and Nohria, 1994; in Bjorkman & Lervik, 2007), Bjorkman in his paper proposed a three dimensional model for assessing whether transfer is accomplished: by assessing to what degree practices are (1) implemented, (2) internalised and (3) integrated in the recipient unit (Björkman & Lervik, 2007).

He explains, while a subsidiary with little autonomy may be forced into implementing headquarters HR practices, its recipients cannot be pressured to internalise the practice. On the contrary, such a standardized strategy may be counterproductive when it comes to internalisation of the practices because organisational members may view the implementation of the practices as having been forced upon the unit (Kostova and Roth, 2002 in Bjorkman & Lervik, 2007). The extent of adaptation of HR practices required is thus largely related to the extent of difference that exists between the parent and host country in terms of national regulations, institutions and culture, as well as corporate strategic choice (Taylor et al., 1996 in Farndale & Jaap Paauwe, 2007). It is evident from the above that, since external factors such as culture, legislation and socio-political environment which affect an organisation internationally differ from region to region the management practices cannot be standardized.

Challenges for Multinational Human Resource policy integration

One of the key challenges to attain social legitimacy is balancing national cultures of different regions with the organisational culture and strategy. Until recently, the dominance of American management theory led to the belief that "one size fits all," that a good manager in the U.S. will also be a good manager in other countries, and that effective U.S. management practices will be effective anywhere. This view is now being supplemented with the knowledge that managerial attitudes, values, behaviours, and efficacy differ across national cultures (Newman & Nollen, 1996).

National culture is defined as the values, beliefs and assumptions learned in early childhood that distinguish one group of people from another (Beck and Moore 1985, Hofstede 1991 in, Newman, Karen L., Nollen, Stanley D., 1996). We use Hofstede's (1993) cultural variables to investigate the relationship between national culture and various structural aspects of HR strategy (Newman & Nollen, 1996). The latter mainly includes compensation practices, selection, staffing, knowledge transfer and performance management. He constructs indices of four cultural dimensions that capture the essence of the differences between national cultures and have been widely accepted as a basis for comparison of cultural groups.

Hofstede's four cultural dimensions (Hofstede 1980, 1991)

Power Distance: Low Power Distance is associated with social egalitarianism and as Power Distance increases, status inequality and distance in social relationships also increase.

Uncertainty Avoidance: Low Uncertainty Avoidance is associated with tolerance of ambiguity and minimized structuring of relationships; high Uncertainity Avoidance leads to elaboration of rules and structures.

Masculinity-Femininity: The Masculine polar type stresses results and the importance of material things, while its counterpart type stresses the importance of feelings and relationships.

Individualism-Collectivism: Individualism stresses and tolerates individual uniqueness, while collectivism defines individuals through their social, group characteristics.

Many authors have researched and found that these values and beliefs which form the national culture get embedded in the systems and practices of a society and economy and consequently affects the HR practices followed by organisations in these regions.

Compensation practices: Boyd (2001) in his paper finds national culture to be associated with the centralization, degree of collective bargaining, and most dimensions of the pay structure (Black, 2001). For example, Gomez and Sanchez propose that providing rewards, which are often symbolic but communicate respect and appreciation, will be particularly helpful in building social capital in largely collectivist cultures found in Latin America. They argue that this communicates a sense of the employee being part of the in-group, which is very important in such cultures. While the higher individualism in the USA, coupled with high materialism, leads most US firms to focus on material individual rewards such as bonuses, stock options and merit raises (Taylor, 2007)

External factors like labour costs, labour demand and supply, competitors’ strategies also influence MNCs’ international compensation strategy. In that the MNC will provide competitive compensation as not to lose valuable employees or talent to competitors (Harzing & Ruysseveldt, 2005). Some companies become international in order to utilise the low labour costs in a particular country. In doing this, the pay structures between the host country and home country would differ even if the work profile of an individual remains the same. This promotes unrest and dissatisfaction between employees, consequently leading to employee turnover.

Other internal factors which influence international compensation practices are the skill sets of employees, employee eligibility such as age, qualifications etc. Thus, though a large number of factors influence compensation structures internationally, an effective compensation strategy is one which is in line with the organisational strategy as well as helps in retaining current talent. However it remains a challenge due to the complex nature of an MNC to have a compensation strategy that will maintain equity amongst all its networks and yet, be within its economic capacity.

Knowledge transfer: As Kogut and Zander (1993) argue, the ability to access the knowledge existing throughout the MNC’s global network is what gives an international firm a competitive advantage over local firms. Creation and transfer of such knowledge largely depend on the ability and willingness of employees to undertake the complex organisational tasks of coordination and communication necessary to use knowledge for competitive advantage (Kogut and Zander, 1992; Nahapiet and Ghoshal, 1998; Storey and Quintas, 2001 in Sully Taylor, 2007). (Gomez & Sanchez, 2005) While companies have traditionally used formal mechanisms of coordination and control such as centralization, standardization, planning, formalized behavioral and output controls, many companies are increasingly resorting to informal mechanisms of control such as participation in committees and teams as well as decision making, and more broadly, control that emanates from an organisational culture of shared norms and values and the socialization of its employees to these values (Jaeger, 1983 & Martinez and Jarillo, 1991 in Gomez & Sanchez, 2005).

For MNCs who need to integrate its intellectual capital, knowledge transfer across its international boundaries is particularly important. This may be challenge due to the differences in social capital and the nature of knowledge – tacit or explicit, that exists in the different firms. When the international counterparts come together, it may be difficult for them to understand and learn from one another due to difference in work cultures, habits etc. Language is a major barrier in this regard. Hence an MNC may have to resort to different training programs or social channels to enable transfer of knowledge between its subsidiaries internationally.

Performance Management: One of the challenges in performance management as part of the MNCs international HRM portfolio is to balance the simultaneous needs for global consistency and for fit with local preferences (Harzing & Ruysseveldt, 2005). The cultural imperative is important because of its impact on acceptable, legitimate, and feasible practices and behaviors (Adler, 1991; Schuler et al., in press). All three components of the cultural imperative are important for MNCs to consider in decisions about: (a) what behaviors to address, (b) which performance measurement and management tools to use, and(c) which tools can be used within the local units (Schuler, Fulkerson, & Dowling, 1991).

US MNCs often use the same appraisal form for subsidiaries as on their domestic employees without translation from English. The use of English forms may neither be readily understood by local employees nor do they easily apply to all jobs in all situations. Even when the forms are translated, they still may not be readily understood by the domestic staff. Schuler, Fulkerson, Dowling (1991) provide an example of study conducted in 1985 at Pepsi-Cola International, where there was no shared value system or vocabulary for describing individual performance. Through the study, Pepsi developed a multinational vocabulary that was used to unite people from many different cultures and countries. For example, "Handling Business Complexity" might translate differently in China than it does in France. Though different in meaning, the outcome is the same: generating sales in the local environment. (Schuler, Fulkerson, & Dowling, 1991).

Performance appraisal in different countries can be interpreted as a signal of distrust or even an insult. (Adsit, London, Crom, & Jones, 1997) Discrimination analysis has shown implications for multinational corporations interpreting the meaning of employee-attitude survey results and managers analysing upward feedback results. He found Thailand, a country high in feminism, was high on items that reflect feminism (e.g., support for training and career development). Brazil was lowest on the set of items dealing with low power distance, low uncertainty avoidance and femininity, confirming Hofstede's findings.

Selection and staffing: Perlmutter (1969) described the three aspects of international orientation as Ethnocentric which is home oriented, Polycentric which is host country oriented, and Geocentric which is world oriented. As per this theory, in an Ethnocentric environment, the company would prefer to select its management from the home country, a polycentric focussed company would give preference of management to host country nationals believing that they would know the practices best in those regions and the geocentric based companies would include in their management anyone fitting the role irrespective of the nationality and could thus be a national not belonging to either the home country nor the host country (Harzing & Ruysseveldt, 2005).

A common practice in this regard within MNCs is expatriation which refers to transferring of managers across national borders for various reasons such as knowledge transfer, expertise or simply job requirements. Another such practice is inpatriation whereby managers from foreign counterparts are called to the centre in the home country. The choice between recruiting from host country, home country or a third country is dependent on the requirement and industry. For eg.: In a travel industry, the company would prefer to hire from host countries where local preferences are known while say in an industry where high management control is required like in the financial sector, the company would prefer home country nationals for it’s management. Applying the cultural dimensions proposed by Hofstede (1980, 2001) Harzing et al, 2005 discuss how it can affect the choice of parent country nationals or host country nationals. According to them MNCs from a national culture that scores high on uncertainty avoidance have a higher tendency to employ parent country nationals for managing their subsidiaries since in these cultures the preference is of being in control. Similarly direct control of subsidiary operations will be high if level of power distance is high since managers in head quarters may feel superior to the foreign subsidiaries. (Harzing & Ruysseveldt, 2005).

A major challenge here is resistance from employees to shift their base due to fear of uncertainty of adjustments, career growth and opportunities. Many factors that can be expected or taken for granted in one's home country simply may not exist in the host country. It is also likely that expatriate managers and their families will have some difficulty adjusting to a new culture, which, in turn, may impact on the managers’ work performance. This difficulty in cultural adjustment should be taken into account when assessing the speed with which an expatriate masters a new job (Davidson, Mendenhall, 1984 & Oddou 1988 in Schuler, et al., 1991).

Concluding remarks:

With the theories discussed above we have tried to understand the structures of MNCs, why and how Human Resource Management is critical to their operations in the global world. What affects its transfer of practices from the home country to its international counterparts, the challenges they face in doing so. With globalisation it is necessary for firms not only to achieve a competitive advantage but also sustain it. It is widely believed that though competitors can copy processes, products and practices, what remains unique to an organisation is its human capital. This cannot be replicated and is a major contributor to sustaining a competitive advantage if managed well. Though globalisation has brought the world closer together but the social, economic and political cultures will always differ and cannot be standardised, Human resource Management plays a critical role in trying to maintain equilibrium through different practices across national borders. There has been a lot of research and it’s evident that HRM needs to adapt to diversity in order to cater to the human element that exists and differs across borders. However to what extent it can justify in doing so is relative to every industry and needs to be researched into much further.

References:

1. Adsit, D. J., London, M., Crom, S., & Jones, D. (1997). Cross-cultural differences in upward ratings in a multinational company. The International Journal of Human Resource Management , 385-401.

2. Barlett, Ghoshal, & Birkinshaw. (2003). Transnational management: Text, Cases and Readings in cross border management. Singapore: McGraw - Hill.

3. Bartlett, C. A., & Ghoshal, S. (2000). Transnational Management (Third ed.). Singapore: The McGraw-hill Companies , Inc.

4. Björkman, I., & Lervik, J. E. (2007). Transferring HR practices within multinational corporations. Human Resource Management Journal , 17 (4), 320-335.

5. Black, B. (2001). National culture and industrial relations and pay structures. LABOUR: Review of Labour Economics & Industrial Relations , 15 (2), 257-277.

6. Farndale, E., & Paauwe, J. (2007). Uncovering competitive and institutional drivers of HRM practices in multinational corporations. HUMAN RESOURCE MANAGEMENT JOURNAL , 17 (4), 355-375.

7. Gomez, C., & Sanchez, J. I. (2005). Human resource control in MNCs: a study of the factors influencing the use of formal and informal control mechanisms. International Journal of Human Resource Management , 18847-1861.

8. Harzing, A. -W., & Ruysseveldt, J. V. (2005). International Human Resource Management (Second ed.). London: Sage Publications Ltd.

9. Newman, K. L., & Nollen, S. D. (1996). Culture and Congruence: The fit between management practices and national cutlure. Journal of Internationl Business Studies , 27 (4), 753-779.

10. Schuler, R. S., Fulkerson, J. R., & Dowling, P. J. (1991). Strategic Performance Measurement and Management in multinationa corporations. Human Resource Management , 30 (3), 365-392.

11. Taylor, S. (2007). Creating social capital in MNCs: the international human resource management challenge. Human Resource Management Journal , 17 (4), 336-354.

12. Wall, S., & Rees, B. (2001). Introduction to International Business (First ed.). Great Britain: Pearson Education Limited.

Thursday, August 14, 2008

কে বাঁশি বাজায় রে

আমার একজন পাঠক অগ্নির মন্তব্য পেয়ে আজ অনেকদিন পর লিখতে বসলাম। আমি নিজেও ঠিক জানি না এতদিন ধরে কেন ব্লগ লিখি নি। ১২ তারিখ ঢাকা থেকে ফিরলাম প্রায় ৭ সপ্তাহ পর। ১৯ জুনে ঢাকায় গিয়েছিলাম। ঢাকায় গিয়েছিলাম হঠাৎ করেই একদিনের নোটিসে। এখানে হাঁপিয়ে উঠেছিলাম। দেশে গিয়ে এবার বেশ কয়েক যায়গায় বেড়াতে যাই। এর মধ্যে উল্লেখযোগ্য হচ্ছে সিলেট।সিলেটে অনেক ঘুরাঘুরি করেছি, আর সিলেটের প্রাকৃতিক সৌন্দর্য্য দেখে বারবার মুগ্ধ হয়েছি।

দেশের ভেতর হুমায়ূন আহমেদের নুহাশ পল্লীতে গিয়েছিলাম, ভাওয়াল ন্যাশনাল পার্কে গিয়েছিলাম এবং ঢাকার আশেপাশের আরো অনেক জায়গায় বেড়িয়েছি। কিন্তু এবার বেশিরভাগ সময় কাটিয়েছি ঘরেই।

Thursday, June 19, 2008

Firefox 3

Just downloaded Mozilla Firefox 3. I can read the Bangla scripts well now. I can finally get rid of Internet Explorer.

Saturday, June 07, 2008

Airline Industry: An Analysis

Introduction:

In the following report we would like to present an economic analysis of the airline industry in United Kingdom. Airline industry is going through a period of profound transformation in the UK. A fundamental reshaping due to three remarkable developments, shrinkage of high-end demand for air travel that began in late 2000; the emergence of low-cost carriers and the increased transparency of alternative airline offerings and less expensive routes. Today, it’s one of the most competitive industries with all players trying to introduce new ways of fighting competition through services and lowers costs which are difficult due to the high costs of operations and capital investments. In this report, we aim to understand the dynamics of the airline industry in UK in terms of its competition.

Competition and its changing trends:

Competition in an airline industry is that of an oligopolistic nature where pricing and production strategies of individual firms in a market influence the industry price.The collapse of high-end demand was not simply a change, but an important structural change driven by a powerful combination of economics and technology. Leisure travellers chose airline based on price and the business travellers more price sensitive cutting travel budgets which increased the scope for low-cost carriers. The inspiration behind low cost carriers comes from the case of South West (Calder, 2002).

The competition in the airline industry can be fitted in to the pricing rivalry model of Bertrand. When companies like EasyJet with low initial budget and relatively smaller infrastructure need to fight off big competitors like British Airways, they need to fight using the anomalies between the big airlines and target the customer segments who are not concerned about the quality of the service. For example, the lack of harmony and the limited transferability in the frequent flier programme between the traditionally big airlines could make the frequent flier programme of the big airlines’ less attractive to the customers. This may result in making the low cost airlines more attractive to them as they are already cheaper. Moreover, due to a cost cutting effort in response to the low cost airlines, the cost of the traditionally high cost airlines become affordable for more people, therefore, gets sold out quickly. This increase in demand creates spillover. Low cost airlines enjoy the share of customer ‘spillovers’ from the traditionally high cost airlines. (Besanko, 2000)

New Generation of Europe’s low cost carriers like Ryan Air, EasyJet & Virgin Express:

The success of the low-fare model is dependent on the maintenance of a low cost base and which will eventually take a large part of the overall market, forcing substantial reduction in the number of traditional carriers. EasyJet maintains high margins despite reducing yields through cost management. Low costs are the only competitive advantage in the short-haul economy sector since air travel is effectively a commodity product. EasyJet bluntly fought its way into the market with an aggressive pricing strategy.

One of the competitive strategies by most of the low cost airline in recent time is no-frill service. Especially after the liberalization of air-line industry this strategy is becoming more and more popular for flights over short distances. A particular example is Southwest Airline which has eliminated the need of such things like frills, various classes, in-flight films, design chairs and hub-and-spoke systems etc. In addition, it uses less congested airports, turnaround time less than 20 minutes and last but not least its fleet consists of only one type of planes. This simple strategy provided the flexibility to company to offer prices 60% less than the traditional high-cast airlines. The Southwest Airline is quite profitable in the highly competitive US aviation industry. According to Nalebuff and Bradenburger (1996) “they have chosen to stimulate demand rather than taking shares from major carriers, no market penetration but market development”.

As compared to USA the concept of low-carriers was introduced quite late in Europe. The reason behind this is that smaller regional Airlines didn’t have the budget and infrastructure to fight off their traditional counterparts. In the UK there were three major players in the aviation industry KLM, British Airways and British Midland for quite a number of years. British Midlands less bureaucratic structure enabled it offer lower prices and it has also made one thing clear in the industry that flag carriers will have to concentrate on long routes while no-frills smaller players have to focus on shorter routes. British Midland was the first in the industry that have started the price war and Ryanair, Easyjet and Virgin Express were followers. (Jagersma, 2001)

EasyJet's no frills strategy does not only mean a cut in Cabin crew, but also allows for a faster pre-flight preparation, thereby reducing the time grounded as well maintaining low fare.

The last factor underlying the structural changes in the industry is the internet, not as a substitute for travel but as a perfect purveyor of information about travel. Low-cost carriers have online ticket sales as a means of reducing distribution costs and in a better position to take the greatest advantage of internet distribution. Travelers now have the means to compare price and service offerings of all airlines quickly and efficiently.

In Europe flights offered by the low-cost airlines increased by 48 percent from August 2001-2003 (Baseler 2004). By 2004 there were 60 low-cost airlines carrying 80 million passengers (up from 47 million in 2003). This involved 20% of the European market, a figure projected to rise to 40% by 2010 (Economist, January 27, 2005).

There are numerous implications that follow from such a dramatic growth of the low-cost carriers in Europe. The most obvious effect was on employment relations. In the UK British Airways, has cut its pay roll by 25 percent in the past five years, but it is seeking to cut it by a further œ300 million by March 2007. It is also facing a œ1.4 billion pension deficit and has experienced unofficial strike action in the last three summers (Sunday Times, October 2 and 9, 2005).

What makes the winners and losers in the airlines industry?

The interactions between the airlines are taking place in wide range of activities and services within the airlines industry. Some of them are described below.

Price:

This is the front line of the interaction between airline companies. The airlines compete on the price level for most of the time. Customers are given a choice of choosing the level of service they expect. It ranges from low cost airline flight to business class travelling. Initially, the low cost airlines. They only tried to create a demand which didn’t exist at that time: market development instead of market penetration. (Jagersma, 2001)It also depends on the choices of airports. Low cost airlines usually use the quieter airports in the major cities or airports within the vicinity of the major cities where the parking charges are relatively lower. Whereas the commercial airlines and the flag carriers tend to use high profile airports of the major cities. For example, low cost airlines like Easy jet, jet2.com and Ryan Air use small airports like Luton, Liverpool and Stansted, whereas traditional airlines use airports like Heathrow and Manchester in the UK.

Check-In Services:

Check-in services are another service that is being provided by different airlines. Most of the airlines provide online check-in services now-a-days. The passengers are also allowed to choose their own sit through online check in services. The front desk check-in is also available for all the airlines. Big airlines’ provide priority check in for their premium customers.

Airline Lounges:

Traditional high cost airlines provide airport lounges with different lounges depending on the air fare class of the passengers. Passengers who paid high premium enjoy refreshments and priority boarding in the airport lounges.

Arrivals / Transfer:

Upon arrival the traditional big airlines provide chauffer service to their premium customers. The low cost airlines avoid such services in order to lower costs.

Cabin seating:

The traditional big airlines allocate prior seating arrangement for the customers whereas the low cost airlines usually go for the first come first service options.

Onboard Catering:

Again the traditional airlines provide their passengers with 3-5 course meals with choices of drinks. The customers who travel on business class receive even better choices of meals. The low cost airlines like Easy jet on the other hand, provide no meals on board.

In-flight Entertainment:

The in-flight entertainment is a source of differentiation with traditional high cost airlines. Airlines like Emirates and Qatar airways that fly frequently to and from British and other European airports provide in-flight very rich collections of multilingual in-flight entertainments to attract a range of customers.

Cabin Staff Service:

The traditional airlines have high cabin crew-passenger ratio than the low cost airlines. Low cost airlines thus reduce the cost of overhead. Traditional airlines often provide personal cabin staff for executive passengers.

Environmental issue:

The airlines now-a-days are becoming environment friendly and are competing on low carbon emission technology. The airlines are trying to promote flying a fully booked flight thus reducing number of the flights and reduce emissions. Aircrafts manufacturers are also trying to produce low emission aircrafts. Once the flagship aircraft of Britain and France, Concorde’s reputation was marred due to high carbon emission.

Travel Agents/Direct selling:

The usage of middlemen in booking the flights of traditional airlines is a common selling procedure. The low cost airlines tend to avoid the middlemen by direct selling utilizing their customer service centres and website. Easy jet has its customer service centre easyland in Luton. From Luton, Easyjet operates most of its European selling operation. Traditional airlines use both direct selling and travel agents.

“The winners”:

Customers

Customers are getting more choices. They are availing low cost air travels due to the rivalry between the airlines.

Aircraft manufacturing companies

The ultimate winners of the widespread and affordable air travelling are the air craft manufacturing companies. The two main aircraft manufacturing companies Boeing and Airbus have a stranglehold on the aircraft manufacturing agency. They are also planning their R&D using a cooperating rivalry. We have recently seen that the Airbus had released its Airbus 380 for long haul flights whereas the Boeing had been developing the Boeing 787 Dreamliner which is a smaller aircraft and mainly targeted towards the short haul market.

Losing out…

Traditional Airlines:

Traditional airlines are the biggest victim of the intense competition caused by the low cost airlines. To catch the market share of the low cost airlines, British Airways (British Airways Go), BMI and KLM (KLM Buzz) had started their own low cost short haul services. But apart from BMI baby, both miserably failed and were thrown out of market. Thus were forced to concentrate more on the long range flights and on differentiation rather than the cost expect of the competitive advantage.

Value Creation:

In the UK airline industry, airline companies can be simply divided two groups by their different business strategy. In the first group the airline companies support a higher quality service, have more flexible choice on the flight timetable, and offer higher price. Moreover, these companies mainly focus on long-haul and medium-haul routes market segmentation. The second group of these airline companies supports basic quality service, has inflexible choice on the flight timetable, and offers lower price. These companies focus on the short-haul and medium-haul routes market segmentation. (See table1)


Main Features

Companies

1st group

Higher price,

higher quality service,

more flexible timetable for flight

long-haul, medium-haul route

use the main airports in each route (i.e. Heathrow)

British Airways

2nd group

Lower price

Basic service (i.e. no free food service in the flight)

Inflexible timetable for flight

Short-haul, medium-haul rout

Use the airports which are low labor cost and airport fee (i.e. Luton)

Easy Jet, Jet2.com

Table 1

It seems that these two groups create value in two different ways. The value created by the first group through using its competitive advantages by it exit advantages in capabilities and resource such as reputation, trademark, network of airline in all over the world, and large assets and capital, high-skills talent (especially pilots), large marketing expense and customers database. Simply, the value which created by the first group is through higher consumer surplus and higher profit.

The value created by the second group through using its competitive advantages by its cost advantages. It uses the lower buyer perceived benefits but much lower cost. For example, the second group only offers a basic service and inflexible timetable for flight which both reduces the BPB but control its cost from lower airport fee, no free food service, online ticket booking system and less employee.

From the table 2 we can see clearly that Easy Jet and British Airways which are good examples of the 1st and 2nd group respectively how to appropriate the value. As the big brother of the UK airline industry BA has the most aircraft, employees, market capitalization. Therefore UK can support the customers higher BPB through higher quality service such as unique in-flight food and entertainment and independent check-in service. Moreover, because BA’s Position in industry it also has differentiation advantage which means it can achieve higher value from different service such as , more legroom in the economy class seats, unique first class seats in airplane and the modern and expensive aircraft. As the new entrant in the UK airline industry Easy Jet has very good performance on profit margin, ROA (return on assets) and load factor. It seems that it appropriate the value through focused cost leadership in porter’s generic strategies. Whatever “non-frills travel”, on-line ticket book system and higher utilization of flight, the only strategy for Easy Jet is to control the cost while supporting basic airline service as one of the transportation.

Furthermore, the two different groups appropriate the value through target different market segmentation. The first group targets the business man who prefers good service, flexible timetable flight and reputation rather than the price. Meanwhile, these business men travel by airplane more frequently. The second group targets people who not travel by airplane frequently and young people who prefer lower price to the good service.


Easy Jet

British Airways

Revenue

123 US$ million

14,264 US million

Operating expenses

121 US$ million

13557 US$ million

Net profit

4 US$ million

330 US$ million

Market Capitalization

1,940 US$ million

6,504 US$ million

Pre-tax profit margin

3.0 US$ million

2.5 US$ million

Return on assets

32.3

1.6

Load factor

75%

71%

Employees

394

63,799

Number of aircraft

8

278

Table 2 (source: Rogers, 2002 no page given)

Drivers of change:

Flying has become the most popular form of public transportation. Now air transportation is as much a part of life as telephone or computer. Speed, efficiency, comfort and safety – these are the symbols of both modern civilization and modern air transportation. If you want to get there in a hurry, and most businesses do, because time means money, then fly. Following are three main drivers of change to the airline industry including UK airlines namely:

1. Globalization:

Globalization has influenced many industries including airline, the industry has progressed along the way towards globalization. It has done this through the establishment of alliances and partnerships between airlines, linking their networks to expand access to their customers. Hundreds of airlines have entered into alliances, ranging from marketing agreements and code-shares to franchises and equity transfers.

The UK's largest international scheduled airline, British Airways operates flights to more than 550 destinations worldwide and is a member of the one world alliance, along with prestigious airlines such as American Airlines and Cathay Pacific, which allows it to provide passengers with even more great flights and airfares to more than 600 destinations. The airline also has a range of alliances and code share agreements with various partner airlines, providing an extensive worldwide route network for flights and a range of customer benefits. Global alliances have a great stabilizing effect in our present times of economic uncertainty.

2. Liberalization:

Liberalization can create the freedom for airlines to operate on a fully commercial basis. This will allow them to allocate capital more efficiently, to respond better to changes in demand in the markets and to improve productivity. It provides a platform for the airline industry to expand capacity and ownership in accordance with customer needs. It can also improve the return on capital invested that is earned by the airline industry as a whole. In a fully liberalized market, the key for firms is to recognize where its competitive advantage lies and to focus on it. Liberalization provides opportunities for expanding into new markets as well as threats to existing markets.

For example: Airlines of both the United States and the United Kingdom obtained unlimited access between any set of airports. These steps caused a steady expansion of air services and traffic. Since 1995, traffic between Chicago and London has more than doubled.

Air service liberalization, which replaces a set of strict rules, has repeatedly proven a decisive influence in expanding the industry, and making its benefits available to more people. Many airports, airlines, academic institutions, governments and private organizations have documented the relationship between liberalization and economic growth.

3. Information technology



The information revolution has dramatically reshaped global society and is pushing the world every more towards the information based economy. The emergence of the Internet in the mid 1990s as well as the development of Intranets and Extranets forced airlines to refocus their strategy on technological innovations in order to enhance their competitiveness. Airlines identified the Internet as a major opportunity to tackle distribution costs and to reengineer the structure of the industry. Airlines will have to continue development such as on-line distribution, ticketless travel, self-service ticketing and smart cards. There is a great opportunity for the integration of airport and airline systems, along with new applications for biometric security, electronic passports, wireless bag tracing and much more.

Conclusion:

The British airline industry has undergone a period of rapid transformation led by globalization and rapid advancements in Information technology. The lower investment and working capital requirement for the low cost entrants has reduced barriers to entry and has created intense rivalry among the players. The new industry that has emerged has players carefully carving out niches for themselves driven by micro segmentation. While the big traditional players are involved creating value on long hauls flights through service differentiation, the new low cost airlines use price cutting on shorter routes through their “no frills” policy to gain a competitive advantage. With this new structure the traditional players have recognized that focus needs to shift on customer retention through enhanced value creation features such as a robust frequent flier program, check in services and in-flight entertainment. While, traditional players have lost market share in this process the ultimate winner is the consumer with easy access to price and service comparison through the internet providing options for all situated preferences. What has emerged is an industry that is more efficient with the removal of the traditional one size fits all approach to travel and with players making more effective capacity allocation decisions.

References:

  1. Besanko, D., Dranove, D., & Shanley, M. (2000) Economics of Strategy. 2nd ed. Wiley: Chichester.
  2. Noakes, G. Noakes & Coulter, A. (2002) BA says more changes are on their way, Travel Trade Gazette. pp 14-16
  3. http://www.press.uillinois.edu/journals/lera/proceedings2006/beaumont.html
  4. http://www.mindbranch.com/European-Low-Fair-R471-0001/
  5. http://www.johnkay.com/regulation/245
  6. Jagersma, P. K. (2001) Competition in the airline industry. [available at http://www.nijenrode.nl/download/nic/competitionairlineindustry.pdf accessed on 20/01/2008]
  7. Jeffrey N. S. (2004) Report from Under Secretary for Policy. US Department of Trasportation. August 6, 2004
  8. http://www.intervistas.com/4/reports/2006-06-Economic Impact Of Air Service Liberalization Final Report
  9. Nalebuff, B. and Bradenburger, A. (1996) Co-option. New York: Doubleday.
  10. Rogers, B. 2002. Easy Jet: the web’s favorite airline. International institute for management development
  11. Uoum, T. H., Park, L.H. & Zhiang, A. M. (2000) Globalization and strategy alliances in the airline industry 3rd New York: Pergamon.