Managing Innovations

1. Discuss the difference between Delphi and Scenario methods, and identify in which circumstances you might use each.

1.1. Introduction: 

When it comes to business and business operations, forecasting is one of the pivotal elements. This is because the growth and sustainability of a specific business is profoundly depended on how that business would adapt to changes, technological as well as consumer trend, in the future. As per Granger (2014) forecasting is a tool to understand future events, in his work ‘Forecasting in business and economics’, he defines the forecasting as a process of predicting or estimating a possible future event. When it comes to prediction or the process of predicting an event, it mainly emphasizes an imminent change that is approaching towards a business sector or an industry. The word change can be synonymous of the external or internal environment factors, which includes political, social, technological, legal, economical or even sometimes environmental. 

The essay aims to learn, understand and establish the difference between the Delphi method and the Scenario method. In order to acquire that it is also important to understand the approach of qualitative forecasting and quantitative forecasting; since both the methods, Delphi and scenario comes under two of these fundamental approaches respectively. This was affirmed by Baker (2016) in his work, by asserting the importance of understanding both approaches fundamentally before learning and implementing any of the methods under those.

1.2. Qualitative Forecasting and the Quantitative Forecasting:

The business communities and the scholarly world are asserting on two fundamental types of forecasting or prediction method, and they are qualitative method and quantitative method. Gilliland (2011) asserts that both the approach has its own advantages and disadvantages, and is used in scenarios suitably more than its weightage as effective method; since various researches conducted on the both the approaches have bought forth different degree of accuracy while forecasting. 

When it comes to qualitative approach, it is said the method is subjective, mainly due to its nature of forming the decision. According to Baker (2016), qualitative forecasting is done mainly on the basis of judgment and opinions exerted by the consumers or a expert of an area, and it is most effective when there is a lack or sometimes even absence of past records or data. It is also important to understand that qualitative forecasting is typically used as an application to long-range decision. One of the best examples of qualitative forecasting is the Delphi method. 

Quantitative forecasting on the other side is used to predict the future events or scenarios by using past data. As Evans and Basu (2011) defined the quantitative forecasting process as a ‘prediction method derived from the past data’. Evan and Basu (2011) also points out that the quantitative forecasting is most effective and above appropriate where there are adequate numerical data available for the formation of decision. Forecasting an event or a scenario requires an affirmation of a pattern and these numerical data can be used to form that, as Frechtling (2012) asserted “With similar pattern emerging at a periodic juncture, a future forecasting can me made or formulated. At the same time Frechtling (2012) also highlights on the unpredictability of certain events too, by positing that all events cannot be predicted solely through numerical data. Quantitative forecasting is typically is typically used as an application of short or in other words intermediate range. One of the best examples of quantitative forecasting is the scenario method.

1.3. Delphi Method vs. Scenario Method:

As discussed earlier, each method has its usage and advantages and above all the degree or the level of accuracies varies with each techniques. 

According to Hyndman and Athanasopoulos (2014), the method of scenario is basically a ‘narrative prediction’ which explains the course of events that is potential to happen. They also assert that it has a similarity towards the cross-impact matrix method, which aid in recognizing the interrelationship of components within a system. For this reason the scenario method has the ability to elaborate or explain the affect of an event over the components and then on the system as a whole. This is the main reason Coates (2016) in his work defines ‘scenario method’ as a ‘script’ that has the capability of clarifying details of an events that are uncertain. In order to bring that clarity in the prediction or in the process of forecasting, the scenario integrates factors such as technology, preferences of the customers and sometimes even the shifts among the population (Hyndman and Athanasopoulos , 2014). For this reason, scenario method is able to table long term forecasting of the future events. Ogilvy (2015), says that the scenario method are usually presented with one positive along with a negative scenario, hence this would enable the decision makers to weigh each of the scenarios presented at them, and synthesize appropriate decisions. For example, a company might use scenario method to determine the future purchases, by analyzing past data and trends on sales. 

Delphi method on the other side keenly relies on the expert advice and notions. As Cuhls (2017) asserted, the method is used to formulate and conceptualize a future event through key assumptions from a group of individuals, which belongs to a specific area or an expertise in a specific sector. The method was introduced by Norman Dalkey and Olaf Helmer in order to bring forth a solution towards a problem in the early American Military. The main focus of the Delphi method is to build a collective views and predictions from a group of experts through a systemic and mathematical manner. Cuhls (2017) terms the entire process as ‘iterative’ due to the effort that goes on to develop the prediction or the forecasting, and the entire procedure requires a facilitator for the collection and formulation of the qualitative data. In the most cases, Delphi method is used for the forecasting of science and technology trends, however, today the same method is used to evaluate and implement the stakeholder approaches for the development of participative policy making, especially in the developed countries.

1.4. Conclusion:

Delphi method and the scenario method come under qualitative forecasting approach and the quantitative forecasting approach respectively. Each of these methods is used in different scenarios, and offers different levels of accuracy. Delphi is mainly used in the formulation predictions that are long-range in nature, while the scenario is mainly used in the construction predictions that are short-range in nature.

2. Explain five factors that influence the adoption and diffusion of innovations

2.1. Introduction: 

Drucker (2014) in his book ‘Innovation and Entrepreneurship’ have defined entrepreneurship as an idea, object or even sometimes a practice that is accepted as new and revolutionary. At the same time Drucker (2014) also says that the revolutionary aspect is relative, since many of the innovative initiations are sometimes not perceived as revolutionary. A same perception was shared by Hedström and Wennberg (2017) who supports the notion put forth by Drucker (2014) on the aspect of revolution. 

When it comes to adoption of an innovation, the attribute and also the way in which it is perceived by the people within a society, carries a significant important and role. As Nguyen et al (2016, p. 2476) asserted in their business journal, “The characteristics as well as the way an innovation is looked upon determines the rate of adoption. And this is the main reason in some cases the diffusion of an innovation takes time than it was relatively thought, and this was affirmed by Nguyen et al (2016, p, 2477) as he states, “innovation in some cases diffuse slowly and on other it diffuses rapidly.” 

According to Lissoni (2016) the process of diffusion is when the communication of an innovation occurs through certain channels, in the course of time. It is through the individuals within the society or a social system that the entire communication process would happen. Lissoni (2016) also posits that the entire communication is considered as peculiar in nature that is concerned with the wide spreading of the messages that is looked upon as ideas that are new, which then is mostly acquired with certain level of uncertainty. When it comes to diffusion of ideas there are mainly four elements that constitutes its, and they are, the innovation itself; the channels where the communication flows; timeframe and finally the social system or the society. 

The essay focuses to understand the diffusion and adoption of innovation in a greater detail, and for this it is important to comprehend the characteristics or the factors that determine the rate of adaption when it comes to innovation. Among various factors or the characteristics, five are chosen to evaluate comprehensively, and they are the compatibility, triability, observability, complexity, and its relative advantage.

2.2. Five factors that influence the adoption and diffusion of the innovation:

Compatibility holds a profound importance in the adaptability and diffusion of an innovation. In fact, it is significant for the innovation to be perceived as stable and above all consistent. As Storey et al (2016) asserted; the compatibility aid in forming the perception of being consistent with the persisting values, potential utility and the experiences from the past, for an innovation. For this reason, a concept or an idea that is found incompatible with the persisting values, potential utility and the past experience would most probably fail to get adopted. As supported by Johannessen and Dolva (1994, p. 2011), “it is extremely difficult for an incompatible idea to be adoptable, in comparison to an adaptable idea; and at the same time it is also important to understand that the adoptability rate varies a highly in both the cases.” Therefore an idea that is incompatible to get adopted, it is necessary to adapt to a whole new value system. Johannessen and Dolva (1994) say that even adapting to a new value system would take time, which in turn contribute to the difficulty. For example, when a new incompatible software get launched in the market, which is not compatible with the general operating system such as Windows; it would take tremendous time to adopt and diffuse operating system that is compatible with that software. Hence compatibility always plays a significant role in an innovation. 

Another important factor that influences the adoption and diffusion of an innovation is the trialability. Putzer and Park (2010) define traibility as the level to which the idea can be tested, mainly on a limited basis. As the term itself suggests, an innovation find its success when there is a possibility that it can be experimented within the conditions given. Putzer and Park (2010) states that the ideas that can be tested in an installment basis would usually have the higher adoptability rate than that of the ideas or an innovation that cannot be divided. Through the factor of triability, the idea projects lower uncertainty towards the people who are potential users. 

Visibility or the observability is another important factor that influences the adoption and diffusion of an innovation. Johannessen and Dolva (1994) say observability determines the level to which the outcome of an innovation is able to be measured or in some case visible. It is important for a potential user or the individual to see the outcome of a specific innovation and is able to measure it, Johannessen and Dolva (1994) asserts that the visibility of the innovation determines the potential users’ adaptability. Hence more visible or observable the innovation becomes higher its chance to get adoptive. It is this observability then becomes the discussion matter among the potential individuals, who will be using the innovation later. 

When an innovation possess difficulty in understanding it, as well as using it, the rate of adoption and diffusion becomes slower than that of the innovation that possesses simple attributes. Therefore complexity plays a greater role in adoption and diffusion process. Putzer and Park (2010) states that, innovations that are simple in nature will be adopted faster in the society, than the innovation that are complex in nature. The main reason Putzer and Park (2010) assert on this is the time requires for the people to adapt to the complex nature of the innovation, as they stated “adaptability rate would be slower due to its complex attribute.” 

Relative advantage is another pivotal factor that influences the adoption and the diffusion of an innovation. As the name itself suggests, it is a notion among the users or the individuals within the society that a particular innovation has a better attribute and functioning than the other similar ideas or innovation in the market. According to Bayarçelik et al (2014) the relative advantage has many dimensions and can be measured in various aspects including economic term, social term, satisfactory term and convenience term. Due to these reasons, the objective advantage of an innovation gets overshadowed by the relative advantage. For example, a customer could buy a smart-phone with similar features of an I-phone with lower price from another brand, here the relative advantage through economic term is highlighted and taken into consideration by the individual.

2.3. Conclusion:

Compatibility, triability, observability, complexity, and relative advantage has a profound influence on the adoption and diffusion of an innovation.

References:

Baker, W. 2016. Qualitative and Quantitative Analysis. In The Creative Enterprise of Mathematics Teaching Research (pp. 171-178). SensePublishers.

Bayarçelik, E.B., Taşel, F. and Apak, S., 2014. A research on determining innovation factors for SMEs. Procedia-Social and Behavioral Sciences, 150, pp.202-211.

Coates, J. F. 2016. Scenario planning. Technological forecasting and social change, 113, 99-102.

Cuhls, K. 2017. Delphi method. 2000. Fraunhofer Institute for Systems and Innovation Research, 174-186.

Drucker, P. 2014. Innovation and entrepreneurship. Routledge.

Evans, J. R., & Basu, A. 2010. Statistics, data analysis, and decision modeling. Pearson.

Frechtling, D. 2012. Forecasting tourism demand. Routledge.

Gilliland, M. 2011. Business forecasting effectiveness. Analytics Magazine, 16, 21-25.

Granger, C. W. J. 2014. Forecasting in business and economics. Academic Press.

Hedström, P., & Wennberg, K. 2017. Causal mechanisms in organization and innovation studies. Innovation, 19(1), 91-102.

Hyndman, R. J., & Athanasopoulos, G. 2014. Forecasting: principles and practice. OTexts.

Johannessen, J.A. and Dolva, J.O., 1994. Competence and innovation: Identifying critical innovation factors. Entrepreneurship, Innovation, and Change, 3(3), pp.209-222.

Lissoni, F., 2016. Migration and Innovation Diffusion: An Eclectic Survey (No. 2016-11). Groupe de Recherche en Economie Théorique et Appliquée.

Nguyen, B., Yu, X., Melewar, T.C. and Gupta, S., 2016. Critical brand innovation factors (CBIF): Understanding innovation and market performance in the Chinese high-tech service industry. Journal of Business Research, 69(7), pp.2471-2479.

Ogilvy, J. 2015. Scenario Planning and Strategic Forecasting. Stratfor, January, 7.

Putzer, G.J. and Park, Y., 2010. The effects of innovation factors on smartphone adoption among nurses in community hospitals. Perspectives in Health Information Management/AHIMA, American Health Information Management Association, 7(Winter).

Storey, C., Cankurtaran, P., Papastathopoulou, P. and Hultink, E.J., 2016. Success factors for service innovation: a meta‐analysis. Journal of Product Innovation Management, 33(5), pp.527-548.

Essay on Information Technology

''Information Technology is increasingly being used by firms in order to achieve and sustain a competitive advantage when engaging with stakeholders.''

Introduction:

The technological change that the world is undergoing is complex and above all at a rapid rate. It is also important to comprehend the fact that technology is one sector that is constantly changing. As Waser (2012, p.41) posited, “the only that is changing the world at a constant rate is the technology.” With the emergence of more and more people coming into the global business filed, the sector of information technology, especially its usage and developments is occurring with the occasion. 

Oliveira and Martins (2011) defines the information technology as the study as well as the use of any computers, networking or any other devices related to it, also the processes as well as the infrastructure for processing, creation, storage, exchange and security of data in the electronic form. While Mel and Grance defines it as the skills specially utilized in analyzing, comprehension development, creation, allocation and operation of computer software and hardware, or any other structures related to computers for the control and the management of electronic data. Or in other words, information technology is the usage of all the update technology that world has currently, and uses those technologies to gather information through effective communication, even though some of the aspect requires strong assessment to avoid any errors. 

According to Walker and Madsen (2016), almost all the companies use information technology one way or the other. In a recent study conducted in 150 multinational companies in Europe and Australia, it has been affirmed that 98.9% of the companies adapts to various kinds of services from the modern information technology. The study also profoundly points that 99.2% of all the start-ups that are emerging today in Europe and Australia uses information technology as a base for the growth, sustenance and also competitive advantage of their businesses. 

Although there are many definitions posited various authors from different field, the concept of information technology is vast. As Schwalbe (2015, p.91) posited, “It is important to understand that the concept of information technology cannot be defined or in other words conceptualized towards a single idea, and this is mainly because with the course of time the technological aspect integrated to concepts are numerous, hence it becomes difficult to cover all that perspective in a single definition.” 

Today the time of information technology is changing the entire world, especially the corporate sector. This notion was supported Holtshouse (2013) in his work, and according to him the time of information technology is profoundly changing the way people are approaching the corporate world. This is evident in many of the business activities and operations such as monetary transaction and the communication with various stakeholders. On the other side development and the immense progress that various multimedia as well as programming is achieving is also catapulting the growth and the success of the corporate, and companies like Intel, Apple and Microsoft are few of the best examples. 

With the emergence of social media in the late 2000, the entire model of information technology existed those time became more complex and even enhanced in a significant way. Social media pages such as Facebook and Twitter opened new opportunities for the business and the corporate world. As Miller (2012, p. 159) posted in his work ‘Social networking sites’, “When social networking entered into the global business sector, this has opened new ways of innovations and opportunity that they never thought before.” Apart from the social networking sites that offered numerous opportunities for the business world, many other sites and web pages emerged in support of the business sector by offering various kinds of promotion, and some of the examples include search engine optimization, web development and traffic optimization. 

Therefore as discussed before, the current context of information technology is not only a limited activity of sharing information or data, since it encompasses a larger perspective. As per Schwalbe (2015), it is not only communication that the information technology is mainly utilized for, rather to comprehend the people’s requirement as well as their necessity. 

The sector of information technology is going to make immense difference in the current as well as in the future, since it is all about innovation and progress that integrates human needs and requirements as discussed. It is also becoming a significant platform for the corporate and business world in terms of communication and storage. When it comes to communication, the current information technology has put the business-customer, customer-business and business-business interaction into a whole new level. As Bloom et al (2014) posited, the organization are now using information technology in order to acquire market and business advantage, and they are successful in achieving it in a significant manner. It is indeed a fact that this is mainly due to the much developed level of stakeholder interaction that these organizations could sustain due to the current services and solution that the information technology have offered. 

The essay aims to assess and determine the role of information technology as a tool used by the organizations today, for the acquisition and sustainment of competitive advantage within the chosen market, through interacting or in other words engaging with the stakeholders.

Information Technology and Competitive Advantage:

The revolution of information technology is changing the global economy. As Porter and Miller (1985) stated earlier in their work, “Soon the information revolution would sweep our economy, and no organization would be able to escape from its impact.” It is evident now, on how this change is really taking over, the effect that is bought forth, especially by bringing down the cost of processing, transmitting and obtaining of the information, which in turn is dramatically changing the business sector. 

Jones and George (2015) defines competitive advantage as an ‘advantage’ that an organization gains through offering a service or a product that a customer values; or in other a condition that allow an organization to manufacture specific goods or serves at prices that are lower or in a more desirable way a customer needs. Through these scenarios the companies would be able to generate more sales and profit, hence by acquiring the advantage over its rival. Understanding this aspect, it is important to comprehend the very fact that it the role of information technology not as a direct contributor to the competitive advantage, rather indirect. As Jones and George (2015) pointed out that it is the effective use of information technology that creates the competitive advantage or the difference. Therefore it is important for the company to utilize the tool of information technology in a creative and effective manner to gain competitive advantage. 

Innovation plays a crucial role in devising the information technology suitably for the advantage of a particular business, since innovation demand to do things in the creative and above all simplest way. As Breznik (2012) stated in his ‘economic and business review’, using the information technology in the most traditional way to do business would not solve the issue or would help the organization to achieve competitive advantage. He also asserts that is significant for an organization to create, develop and implement unique ways to use information technology in order to acquire competitive advantage over their rivals in the industry, and one of the ways is to improve the interaction between different stakeholders. 

Bilgihan et al (2011) affirms that the existence as well as the evolution of the global information network is changing the commerce and this especially for the consumers as well as for the business. Through the term ‘change’ the authors are asserting more on the vanishing gap between the two entities; that is the customers and the company. As Bilgihan et al (2011) added to his notion that customers are not limited with the remoteness today and the difficulty on communicating the company directly is possible in the current scenario. With ease and speed the customers can communicate their issues, requirement, necessity and even desires to the organization using the information technology.

Information Technology to Develop Competitive Strategies:

In another perspective, the competitive advantage gained by the companies through information technology can be analyzed through the ‘Five Force’ framework of Michael Porter. According to Michael Porter, and industry can be analyzed through five competitive forces that moulds it (Baltzan and Phillips, 2010), and they are; Power of the competitor, threat to new entrants, threat of the new substitutes, customers bargaining power and the suppliers bargaining power. 

As Porter exerted on the five forces, it is important to any organization to synthesize and implement strategies that could effectively and efficiently counter the five competitive forces. According to O’Brien and Marakas (2011), companies could adapt to any of the five competitive strategies, which are directly related to the three of the Porter’s strategies of broad differentiation, focused strategy and the broad cost leadership. 

When it comes to cost leadership the companies could use the information technology to basically shift the costs of operating the business says Booth et al (2011), or in other words, to decrease the costs incurred by the business, then there by decreasing the costs towards the customers and the suppliers. For, example the companies could utilize online services such as business to consumer, or business tto business systems to reduce the costs in the operation. 

When it comes to differentiation strategy, the business organizations could use the information technology in order to synthesize differentiation attribute towards their products or services or by reducing the differentiation advantage of the rivals as per Booth et al (2011). For example, a company could utilize online chat-services as well as various social networking sites such as Facebook and Twitter to comprehend the consumer necessity and requirements, and in turn serve them better. Also information technology can be created to develop inform-diaries, and there by offering value-added services to the customers, and maintain their retention towards the company; and to apply advanced tools to measure various online and offline activities (Booth et al, 2011). 

As discussed before innovation has always been a major part of the competitive advantage that the company could acquire through information technology. For the identification as well as the creation of new products or services, information technology can be used, and at the same time it can also be used in the creation of the market. As Chui and Flemming (2011, p. 8) posited, “For the development of niche or a new marker or to radically bring change to business operations through automation information technology is an effective tool.” The same can be used in the development new initiatives for the establishment of any kind of online operations or businesses, since the telecommunication and internet services is capable of providing better and smarter opportunities for innovation. According to Robert and Grover (2012), open innovation and combinational innovation are two of the most effective examples. It is also important to understand that many of the infrastructural requirements of a business organization has been replaced by new components that links to information technology, and made the overall operations and activities much efficient and effective. Robert and Grover (2012), affirms this by pointing out that today the companies could combine and recombine various components or the parts to develop innovation linking to information technology. Meanwhile, the companies have numerous opportunities to co-create with its various stakeholders that are linked through various means of technology such as laptops, smart-phones and other mobile devices connected to the internet. 

Information technology can also be used to integrate with growth strategies. As Rigby (2011) stated that the companies could utilize the information technology to enhance their domestic or the international activities and also used in the integration and diversification with other services and products. As an example, Rigby (2011) points out the establishment of worldwide intranet and operation base that many of the multinational companies have, and also through the establishment of omni-channel strategy to benefit growth and sustainability. On the other side, the companies could also use the technology to develop and encompass their relations with their business partners through specially catered applications, such as creating inter-organizational information system and virtual organization.

Information Technology and Stakeholder Engagement (Internal and External):

There is a common notion on the very concept of stakeholder engagement, mainly as a concept or a term used for the corporate social responsibility of an organization. However, in the relative business context, the term has various meanings or aspect to it. For some scholars and the business communities it is an idea that hovers within the cavity of CSR, while for the others it is a concept that generalize interaction between the companies and its stakeholders. 

According to Noland and Philips (2010), stakeholder engagement is the process utilized by the companies to interact with the significant stakeholders in order to acquire the organizational objectives. While Ayuso et al (2011) defines it as a very important element of corporate social responsibility or CSR, and achievement of it is very important for the organizations. For Ayuso et al (2011) the stakeholder engagement is mainly for the purpose of discussing matters that are concerning society and the environment, mainly the businesses’ role in contributing to the betterment towards these two factors. 

Although CSR has been exalted as an accountability element of an organization towards the society and environment more than a strategic operation, in the current context most of the companies are using CSR as a strategic tool for gaining competitive advantage. As Russo Spena and De Chiara (2012) stated, “the CSR has now evolved into a whole new paradigm, and has been used a integral part of competitive advantage for growth and sustainability in the industry.” 

It is an evident factor that the current information technology would allow the top management of a company to access various financial data and information from any part of the globe. This would ensure to a certain level the care and diligence from the companies part, and also assure the active involvement of all internal stakeholders without any reason or cause. This indeed would help the company to create certain value towards its stakeholders by binding strong ethics with it. As line Louche and Idowu (2010) pointed out, the directors or the top-management within a company are positioned in such a way that it would assure a certain level of solvency, which in turn would guard the company against any kind of wrongful trade. 

It is a common practice within an organization to gather effective advices from the experts by a director or by a company manager, especially a range of designation from financial advisors to accountants to auditors. In order for the better engagement and indulgence for these advices and guidance, the directors or the company top management always relies on the information technology. And through this there would be greater harmony in the operations as well as the intelligent utilization of the labor. Line Louche and Idowu (2010, p. 71) supports this by stating, “The internal stakeholder interaction and engagement is extremely valuable for the organization’s growth and sustainability; therefore through this, all the necessity and requirements of the internal stakeholders are met and in turn it would empower them in the contribution towards the organizations growth and sustainability.” 

When it comes to corporate governance, growth and competitive advantage within the industry, the role and significance of investors are very high. Since they have certain amount of investment or shares they possess of the company, they have the rights over the governance of the company. According to Noland and Phillips (2010), the ownership over the shares provides the investors with certain power over the company, and also they have the right to analyze the performance of the top management and even replace them with the system of voting.” Investors also plays a significant role in the embedding the company with a strong and good corporate governance and practices. In order to enable this in its entirety and efficiency, information technology becomes the pivotal component. “The information technology becomes the primary platform for the investor interaction,, especially allowing the investors to monitor the company activities” says Noland and Philips (2010).

Conclusion: 

The role and significance of information technology have increased for the past a two decades. Today information technology is not only looked upon as a tool for corporate or the business communication, but also as a tool that aid in the governance of the corporate and business sector as well. Today a business enterprise gains its competitive advantage through various means, and information technology is one of the pivotal ways it is achieved. It is also important that all the major strategies or the strategic framework that exists today in the business field can be integrated with the information technology for its effective result. On the other side, it has also taken the stakeholder engagement to a whole new level. For these reasons, it can be affirmed that the Information Technology is increasingly being used by firms in order to achieve and sustain a competitive advantage when engaging with stakeholders.

References:

Ayuso, S., Ángel Rodríguez, M., García-Castro, R. and Ángel Ariño, M., 2011. Does stakeholder engagement promote sustainable innovation orientation?. Industrial Management & Data Systems, 111(9), pp.1399-1417.

Baltzan, p. & Phillips, A. 2010, Business Driven Technology, 4th edn, McGraw-Hill Irwin, Boston, USA.

Bilgihan, A., Okumus, F., “Khal” Nusair, K., & Joon-Wuk Kwun, D. (2011). Information technology applications and competitive advantage in hotel companies. Journal of Hospitality and Tourism Technology, 2(2), 139-153.

Bloom, N., Garicano, L., Sadun, R., & Van Reenen, J. 2014. The distinct effects of information technology and communication technology on firm organization. Management Science, 60(12), 2859-2885.

Booth, A., Roberts, R. & Sikes, J. 2011, ‘How strong is your IT strategy?’, McKinsey on Business Technology, Number 23, Summer 2011, pp. 2–7.

Breznik, L. 2012. Can information technology be a source of competitive advantage?. Economic and Business Review for Central and South-Eastern Europe, 14(3), 251.

Chui, M. & Fleming, T. 2011, ‘Inside P & G’s digital revolution’, McKinsey Quarterly, November 2011, pp. 1–11.

Holtshouse, D. K. 2013. Information technology for knowledge management. Springer Science & Business Media.

Jones, G., & George, J. 2015. Contemporary management. McGraw-Hill Higher Education.

line Louche, C. and Idowu, S. eds., 2010. Innovative CSR: From risk management to value creation. Greenleaf Publishing.

Mell, P., & Grance, T. 2011. The NIST definition of cloud computing.

Miller, D. 2012. Social networking sites. Digital anthropology, 156-161.

Noland, J. and Phillips, R., 2010. Stakeholder engagement, discourse ethics and strategic management. International Journal of Management Reviews, 12(1), pp.39-49.

O’Brien, J. A. & Marakas, G. M.2011, Management Information Systems, 10th Edition, McGrawHill, New York, USA

Oliveira, T. and Martins, M.F., 2011. Literature review of information technology adoption models at firm level. The electronic journal information systems evaluation, 14(1), pp.110-121.

Porter, M. E., & Millar, V. E. 1985. How information gives you competitive advantage.

Rigby, D. 2011, ‘The Future of Shopping”, Harvard Business Review, December 2011, pp. 65–76

Roberts, N., & Grover, V. (2012). Leveraging information technology infrastructure to facilitate a firm's customer agility and competitive activity: An empirical investigation. Journal of Management Information Systems, 28(4), 231-270.

Russo Spena, T. and De Chiara, A., 2012. CSR, innovation strategy and supply chain management: toward an integrated perspective. International Journal of Technology Management, 58(1/2), pp.83-108.

Schwalbe, K. 2015. Information technology project management. Cengage Learning.

Walker, G. and Madsen, T.L., 2016. Modern competitive strategy. McGraw-Hill Education.

Waser, R. (Ed.). 2012. Nanoelectronics and information technology. John Wiley & Sons.

Video Assignment on Canada's CN Tower

Customer Satisfaction and Engagement

Executive Summary:

In order to comprehend the customer retention and loyalty in the retail sector, it is important to evaluate the difference between both the customer satisfaction and customer engagement as a tool. Customer engagement tool encompasses on various elements required for the retail sector to focus and also provide the ability to forecast the future set of events. 

Also from the data set provided, it has been found that, today’s the customers are greatly influenced by the two factors, and they are the price and social media. Since these two factors are considered to be the stronger contributors towards customer loyalty and retention in the current business perspective.

Introduction:

When it comes any business enterprises, one of the main elements of success and growth is the customer or the consumer engagement and satisfaction. Both the elements are pivotal in bringing the understanding about the customer segment of an organization and later aid in the development of strategies. 

Hollebeek (2011) defines customer engagement as an emotional linkage that a customer has with a brand. Hollebeek (2011) also asserts that both customer engagement and purchasing rate are directly proportional, because if the customer engagement goes higher, the purchasing rate also increases with it. When the customer engagement rises, it is not only the purchasing rate that goes higher says Bijmolt et al (2010) in their research journal, but also loyalty and the promotion (mainly word to mouth) of the brand through the customers as well. For this reason, it becomes significant for every business organization to offer the higher quality customer experience, since it is one of the most significant tools in the strategy of customer engagement. 

On the other side customer satisfaction, is a term used in the marketing sector for the measurement of customer expectation with a specific product or service. Bergman and Klefsjö (2010) defines it as a tool that a company measure in order to determine whether their product or service have surpassed the customer or the consumer expectation. They also assert it as a pivotal metric that can be utilized for improving business operations and growth through suitable development of strategies that would enhance the customer satisfaction rate. 

The report aims to understand the idea of customer satisfaction and customer engagement. The study also intent to learn and determine the factors or the variables that influence the customer satisfaction rate, through a thorough assessment of data sheet of a ‘consumer shopping survey’ provided.

Customer Satisfaction vs. Customer Engagement:

“Measuring customer satisfaction and their engagement with the brand and the product is always significant for the business, especially for the future strategic development and sustainability,” says Deng et al (2010, p. 291). The importance of measurement is always a significant part in science as well as in the business field, as Deng et al (2010) evidently established the pivotal role of it; since it is not only a growth strategy but also a survival tactic as well for the business organizations. 

One of the main dilemmas within the business and scholarly community was on the most effective and efficient measurement tool. Van Doorn et al (2010) stated this notion in their work ‘Customer engagement behavior’, and according to them adapting to a measurement tool is indeed tricky, since an effective tool should be able to analyze, forecast and even improve the customer loyalty. Customer satisfaction was in the sector since 1980, and has been popularized by both the business and the scholarly communities as one of the best measurement tool for the improvement of customer retention. Although customer satisfaction persisted as one of the most utilized tool in the business sector, there has been a dire concern over it by many various scholarly and business communities. As Anderson and Swaminathan (2011) posited, many experts from the business and the intellectual fields have questioned the significance of the customer satisfaction, and the main concern they raised was the weak impact over the loyalty factor. 

Currently many business enterprises are indulging in recording customer engagement instead of retention. Anderson and Swaminathan (2011) says this came as a result from the realization that customer engagement metric system have a greater stability and accuracy in determining and improving the retention as well as the customer loyalty. Therefore they term it as the “best measurement tool” in business today (Anderson and Swaminathan, 2011). One of the main issue with the customer satisfaction tool was its unpredictable nature says Anderson and Swaminathan (2011), since the metric mostly uses the past customer behavior to predict the future. The same argument was asserted by Tripathy (2014) in his work, and supporting the notion of Anderson and Swaminathan (2011), and according to him the entire approach of customer satisfaction sometimes fails to forecast the customer behavior. 

Tripathy (2014) also says that the customer satisfaction tool has been a popular tool among the business communities for a prolonged time. He also affirms that the customer satisfaction could successfully assess and determine the gap between the customer perception and customer expectation, especially in determining whether or not the customer expectations are met. It is an evident factor that customers who are satisfied from a product or a service are the one who met or even exceeded their expectations. 

According to So et al (2016), it was during the late 1990s that the business communities had a realization, especially on the goals they set on customer retention. The studies posited that customers, who are considered as satisfied, are just on the borderline of satisfaction (So et al, 2016). This is the fundamental case that many of the scholars and business communities started terming the customer satisfaction tool as ‘defective, says So et al (2016). 

According to Verhoef et al (2010) the emergence of customer engagement occurred when the element of emotion was added as a significant component that drives customer experience. As a basic functional measuring tool, customer satisfaction was assessing the review on tangible and above all rational results such as pricing. In this case when a less costly or priced service or product comes into the market, the probability of customers switching towards became extremely high. With many following researches and studies regarding this, the scholars as well as the business communities started verifying the significant difference between the customer satisfaction and the customer engagement, and as a result the realization came that more the customer engagement higher will be the loyalty (Verhoef et al, 2010). Therefore comparing customer engagement with the customer satisfaction tool, it become affirmed that customer engagement tool is far more effective and efficient, for the improving the retention rate. 

Assessing the Consumer Data:

In order to assess and interpret the data, a descriptive method has been adapted and utilized. From the entire data set ‘mode’ was synthesized in order to determine the most chosen option from the consumers. Sullivan (2015) states by calculating the mode, the researcher would be able to synthesize the most frequent numbers or the options chosen during the survey. 

According to the data, consumers spent once per week in comparing the product they wanted to buy. This indicates one of the most fundamental ‘consumers purchasing behavior processes i.e. the evaluation of the alternatives. Ellis (2015) asserts understanding this aspect is important in development of consumer strategy. The high tendency in this also projects that an average customers are not primarily inclined towards any brand or having a loyalty them. 

It has also been highlighted in the data set that the majority of the consumers are indulging in online purchasing, and according to the data they purchase products online at least once per week. This affirms the growth of online purchases and growth of the ecommerce sector. As the Ecommerce Europe’ (2014) recent report asserts more and more companies are now developing their ecommerce business sites as a part of customer retention strategy. The survey also shows that an average online purchase of a customer has increased to $500-$1000, which is more than the average indicated in the Ecommerce Europe’s report. 

In order to understand the most preferred factor while purchasing, the consumers where given the choice of Price, Reputable Brand, Reputable Retailer, and Informative Product Reviews; where majority of the consumers preferred price as their choice. This indicates the strength of price when it comes to consumer attraction as well as the retention factor. As Keiningham et al (2014) asserted, there is a high correlation between the price and the customer satisfaction factor. Even as a first and the second choice, the consumers chose price as the most determining factor while purchasing. 

Another important finding is of the growing influence of social media over the customer purchasing behavior and developing loyalty towards a specific brand. As Agnihotri et al (2016, p. 177) posited, “Today, social networking sites carries a significant role in the business; various businesses are engaging with their customers successfully through this medium, and as a result they aid these enterprises in achieving a certain percentage of retention rate as well.” From the given data itself it become evident that majority of the customers are getting influenced through social media sites to purchase a particular product or a service.

Recommendations:

Through evaluating various factors acquired through the secondary resources, it has been affirmed that various factors or variables influence and contribute customer satisfaction, retention and loyalty factors. Although the customer perception on the brand loyalty is changing due to various factors and as per the data evaluated, it can be acquired to a certain degree by maintain and implementing certain strategic business decisions. 

• It has been found that price as a major factor that the customers value while purchasing a product, especially in the retail sector. Therefore it is important for the organizations to develop various pricing strategy plan and implement them, this includes discounting and loyalty cards. 
• Another important factor that the business organization has to take into consideration is of the social media. Since the data affirms that social media plays a significant role in the influencing the customer purchasing behavior as well as in customer retention, it is important for the business organization to effectively utilize social media for customer engagement.

Conclusion:

With the emergence of customer engagement tool over the customer satisfaction, scholars as well as the business communities are able to link customer loyalty towards the business strategy and in turn able to improve the business activities and customer retention. In the current times, there are many factors that influence and contribute to customer satisfaction and retention, and among them price and the customer engagement through social media has been established as prominent and the most effective.

References: 

Agnihotri, R., Dingus, R., Hu, M. Y., & Krush, M. T. (2016). Social media: Influencing customer satisfaction in B2B sales. Industrial Marketing Management, 53, 172-180.

Anderson, R. E., & Swaminathan, S. (2011). Customer satisfaction and loyalty in e-markets: A PLS path modeling approach. Journal of Marketing Theory and Practice, 19(2), 221-234.

Bergman, B., & Klefsjö, B. (2010). Quality from customer needs to customer satisfaction. Studentlitteratur AB.

Bijmolt, T. H., Leeflang, P. S., Block, F., Eisenbeiss, M., Hardie, B. G., Lemmens, A., & Saffert, P. (2010). Analytics for customer engagement. Journal of Service Research, 13(3), 341-356.

Deng, Z., Lu, Y., Wei, K. K., & Zhang, J. (2010). Understanding customer satisfaction and loyalty: An empirical study of mobile instant messages in China. International journal of information management, 30(4), 289-300.

Ecommerce Europe . (2014). European B2C E-Commerce Report 2014. retrieved June 22nd.

Ellis, D. (2015). Consumer knowledge and its implications for aspects of consumer purchasing behavior in the case of information-intensive products(Doctoral dissertation, Doctoral thesis. KTH Royal Institute of Technology Division of Industrial Marketing, INDEK Stockholm, Sweden).

Hollebeek, L. (2011). Exploring customer brand engagement: definition and themes. Journal of strategic Marketing, 19(7), 555-573.

Keiningham, T., Gupta, S., Aksoy, L., & Buoye, A. (2014). The high price of customer satisfaction. MIT Sloan Management Review, 55(3), 37.

So, K. K. F., King, C., Sparks, B. A., & Wang, Y. (2016). The role of customer engagement in building consumer loyalty to tourism brands. Journal of Travel Research, 55(1), 64-78.

Sullivan III, M. (2015). Fundamentals of statistics. Pearson.

Tripathi, M. N. (2014). Customer Satisfaction and Engagement-Customer Retention strategies for brand manager. Vilakshan: The XIMB Journal of Management, 11(1).

Van Doorn, J., Lemon, K. N., Mittal, V., Nass, S., Pick, D., Pirner, P., & Verhoef, P. C. (2010). Customer engagement behavior: Theoretical foundations and research directions. Journal of service research, 13(3), 253-266.

Verhoef, P. C., Reinartz, W. J., & Krafft, M. (2010). Customer engagement as a new perspective in customer management. Journal of Service Research, 13(3), 247-252.

Newspaper Analysis: Report (Monopolies, Duopoly, and Oligopolies in Australia)

News Article: Monopoly power driving up prices: SA PM (Sky-News) http://www.skynews.com.au/news/politics/state/2017/08/07/monopoly-power-driving-up-prices--sa-pm.html

Introduction:

It is important to understand the nature of business for various reasons, and one of the main tools in comprehending is through its market structure. Baldwin and Scott (2013), defines the market structure as the organizational and specific attributes possessed by a market. The main focus would be on the pricing says the scholars, however, it is also important to assess the market share of each businesses operating under specific industry in order to determine the kind of market structure they holds says Johari et al (2010). At the same time Carraro et al (2013), asserts that it is not significant to focus too much on the market share of the existing organization within an industry, and their argument is mainly due to the emphasize on pricing they give. Amidst of these arguments and views, assessing a marketing structure requires various variables, hence market share and pricing is two of the equally significant variables. Zhu et al (2009) asserts that there are seven characteristics that aid in identification and determining the market structure, and they are the total number of firms; the percentage of market share held by the biggest firms; the cost divisions; the degree of vertical integration; product differentiation; structure of the customers; and the turn of the buyers.

Figure 1: Source: Zhu et al, 2009

Electricity providers of Australia, especially state enterprise like Energy Australia, are having a monopolistic market structure in the supply of electricity. Energy Australia has the monopoly of energy distribution in the areas including Sydney, Newcastle, Central Coast and some areas of NSW (Council of Clean Energy, 2014). Recently with the unprecedented hike in the energy tariff, the people as well as the various government officials are raising concern over this and demanding an immediate solution over the situation. South Australian Premier Jay Wetherill has affirmed that this price hike is due to monopolistic power held by these companies (Skynews, 2017).

Pure Monopoly and Pricing Power:

For the past five years the energy bills in Australia is skyrocketing. As the sources says that electricity bills around the country is going up significantly without any prior cause (Slezak, 2017). The recent news reports also asserts that the hike was up to 20% in few states, comparing to the time period of 2014-15; making the entire amount in between $300 and $400 (Slezak, 2017). And considering the overall percentage of hike while taking past two decades, it would um up to 60% to even sometimes at 99.9% (Slezak, 2017). With this staggering price hike, and the rate in which it is increasing, it would take a large proportion of an average house-hold budget. According to the Skynews (2017), the main reason that is causing the price hike is due to the increasing network cost that the electricity network companies are incurring. And according to Slezak (2017), these electricity network companies has a obvious monopoly in these areas and regions, where they are the only companies that offers wires and poles for the deliverance of electricity in these areas. For this reason only the electricity companies have come under intense criticism from the politicians as well as from the consumers, by stating they are exploiting the monopolistic power they have through over-investing and putting those burden onto the consumers.

Figure 2: Graph showing price hike since 2011. Source: Slezak, 2017

One of the main aspects that need to be identified through this issue is the market power of monopolistic companies. Hawley (2015), have defined the market power as an organization’s or a firm’s ability to control and manipulate the price of a product or a service within the market, and this mainly done though the manipulation of the level of demand as well as supply. It has been affirmed that the Electrical Networking or the Electrical Companies of Australia are enjoying a monopolistic position in the energy distribution industry; hence as Hawley (2015) defined the market power of a monopolistic organizations, these electrical companies have enormous market power and the capability in manipulating the market-price and thereby increase the profit margin. Merhav (2017) term these companies as the “price makers”, since they have the power to decide and fluctuates the market price of a product or a service without decreasing their percentage of market share. Merhav (2017) also states that the market power is inversely proportional to the number of firms within an industry .i.e. the higher the number of firms lesser will be the market share, and lesser the number of firms created high market power for those firms. As the figure 3 (below) illustrates the number of firms has a greater influence on creating and diffusing the market power. The same can be identified with the Australian Electricity Companies, since the number of firms is less in this industry, which in turn creating a higher market power, manifesting pure monopoly.

Source: Mehrav, 2017

Recommendations:

Understanding the situation it is important to control and bring down the ongoing exploitation of Australian people by the Australian Electricity Companies. According to Child (2013), monopolistic exploitation occurs when an organization take advantage over its customers, and this happens when that organization become the only provider of a product or service towards their consumer segment. The following recommendations are synthesized in order to bring down this situation in future, and provide the Australian electricity consumers with a fairer tariff that they could afford.

• It is important for the government to develop a strong policy to bring the down the rising electricity tariff, in order to prevent the consumers from further exploitation. 
• Enhance the existing unfair contract terms of Australia, and also develop a separate act that would control and bringing down monopolistic exploitation in the nation.

Conclusion:

It becomes evident that market structure, especially monopolistic organizations, has a direct power to control the prices or in other words has an extensive market power. At the same time, it is also important for the respective government of a nation to assure that these organizations are not exploiting their consumers by implementing strong regulations and policies.

References:

Baldwin, W., & Scott, J. (2013). Market structure and technological change (Vol. 18). Taylor & Francis.

Carraro, C., Katsoulacos, Y., & Xepapadeas, A. (Eds.). (2013). Environmental policy and market structure (Vol. 4). Springer Science & Business Media.

Child, N. A. (2013). The theory and practice of exchange control in Germany: A study of monopolistic exploitation in international markets (Vol. 10). Springer Science & Business Media.

Council of Clean Energy (2015). Clean energy Australia report 2014.

Hawley, E. W. (2015). The New Deal and the problem of monopoly. Princeton University Press.

Johari, R., Weintraub, G. Y., & Van Roy, B. (2010). Investment and market structure in industries with congestion. Operations Research, 58(5), 1303-1317.

Merhav, M. (2017). Technological dependence, monopoly, and growth. Elsevier.

Skynews (2017). Monopoly power driving up prices: SA PM. [online] Skynews.com.au. Available at: http://www.skynews.com.au/news/politics/state/2017/08/07/monopoly-power-driving-up-prices--sa-pm.html [Accessed 13 Aug. 2017].

Slezak, M. (2017). Your electricity bill: what are you paying for and why is it skyrocketing?. [online] the Guardian. Available at: https://www.theguardian.com/australia-news/2017/aug/10/your-electricity-bill-what-are-you-paying-for-and-why-is-it-skyrocketing [Accessed 13 Aug. 2017].

Zhu, T., Singh, V., & Manuszak, M. D. (2009). Market structure and competition in the retail discount industry. Journal of Marketing Research, 46(4), 453-466.