Tesco PESTEL Framework

Tesco PESTEL Framework Introduction Tesco is the largest organization in the UK and one of the biggest supermarket chains in the world. Tesco is one of the top three supermarkets in the world, Tesco operating over 3700 stores globally and employing over 440,000 people. The company operates in 13 countries outside the UK. There are many factors which contribute directly to the success of this leading super market chain. Business Strategy plays a pivotal role in the success of Tesco. Tescos History Tesco was founded in 1920s by Sir Jack Cohen, to setup high street grocery stores in and around London. Tesco name used for the first time in Edgeware London in 1929. The name was drawn from the initials of the companys tea supplier (T.E Stockwell), and Cohens own name. In 1930s when Mr. Cohen built a headquarters and warehouse in North London, its brand continually rises. In 1932 Tesco formally established as a private limited company. In 1947 Tesco stores (holdings) ltd floated on the stock exchange with a share price of 25p. In 1990s the company introduce a slogan Every Little Help, they also introduce Club card scheme in 1995. Tesco personal Finance was introduced in 1997, in order to provide its customers with a wide array of financial services, including visa card, and Tesco saving account in stores bank branches. Today it reported that group sales were  £51.8bn in the year to February 23 2008. Pre-tax profit rose to  £2.8bn. Company Analysis: PESTEL Framework Political Factors Tesco is operating in different countries, so due to its globalised operation its performance is highly affected by the Political and legislative conditions of these countries. According to Balchin, 1994 the Govt encourages the retailers to provide mix job from flexible and locally based jobs to highly skilled, higher-paid and centrally located jobs. (Balchin, 1994) Economical Factors Tesco is also affected by economical factors, such as costs, demand, prices and profits. Unemployment is the most important influential factor which decreases the effective demand for many goods. Basically Tesco is affected indirectly by the economic factor, but their affect on performance and the marketing mix can be learned. Social/Cultural Factors Due to the rapid change in trends, the company expand the amount of non food items available for sale. The UK customers have moved towards one stop and huge shopping, due to the variety of social changes. It also affected by Demographic changes such as population, female worker are increased, so the company will have to focusing added- value products and services. Technological Factors Technology factors are affected the development of many of the Tesco products. Both customers and company are capitalized from the Technology, because customer satisfaction mount for goods readily available, services becomes more quick and shopping more convenient. The lunch of the efficient Consumer Response initiative provided the shift that is now apparent in management of food supply chains. (Data monitor Report, 2003) The company uses the following technologies: Wireless Devices Intelligent scale Electronic shelf labelling Self check-out machine Radio Frequency identification (RFID) Companys Analysis: Porters Five Forces Threat of New Entrants The UK grocery market is primary henpecked by few competitors, including four major brands of Tesco, Asda, Sainsburys and Morisons that process a market share of 70% and small chain of Somerfield, Waitrose, and lidle with further 10%. However, due to the large operation they built their power to operating efficiency, one-stop shopping and major marketing mix expenditure. Hence, nowadays it possesses a strong barrier for new companies who crave to enter the grocery market. To become a market leader Tesco invest huge money in large chain, advance technology for checkout and stock control system that impact the new entrants and existing ones. Bargaining Power of Customers According to Michael Porter, the more products that become standardised or undifferentiated, the lower the switching cost, and hence more power is yielded to buyers. Porters M. (1980). Tescos famous loyalty card Club card keep the most successful customer holding strategy that tremendously increases the profitability of Tescos business. To fulfil customers needs, custom-make service, ensure low prices, better choices, constant flow of in store promotions enables brands like Tesco to control and hold their customer base. Bargaining Power of Supplier Tesco has negotiating better promotional prices from supplier that small individual chains are unable to match. And this is company policy and company main approach to have unparallel relationships with suppliers. Threat of Substitutes According to the Porters theory, General substitution is able to reduce demand for a particular product, as there is a threat of consumers switching to the alternatives (Porter M1980). However in the grocery market this can be seen in the form of product for product, new trends such as the way of small and convenient stores are emerging in the market. Bargaining Power of Competitors Tesco is operating in mature market, where growth is difficult, and consumer are extend demanding and advanced, large chains as company take place large amounts of consumer information that can be used to communicate with consumer. Therefore the preponderant market leaders have responded refocusing on price and value, whilst reinforcing the added value elements of their service. Analysis of Resources, Competence and Culture For the company, customer is first priorities, by the time of recession, a research shows that price are ranked as the most important margins not seen in twodecades. Therefore the company believe that their job is to help the customer with less spending. So the company launched value line, the famous blue stripes, the company would be able to provide the cheapest grocery shop in the country discounter included. The company maintain its position through a clear focus, well targeted product offer and excellent record both in product and format design. Core Competence Core competence is the processes that critically underpin the companys competitive advantage. Tesco primary target is to recognise that competition between businesses is as much a race for competence as it is for market position and market power. Hence, the Company have to focus the attending on competencies that really influence competitive advantage. Core competence is basically the process to develop the key area of a business in which the company expert, which bring a distinctive advantage over the competitors, and also critically connected with company long term growth. However, it will be important for Tesco to look at the generic level. Therefore in this case, Tescos expertise are most likely to mature central area of business where the most value added to its services and its devilries. For example, trust on Tesco brand prevarication at the heart of these services In addition, Core competencies of a Tesco have rather rigid, but a research shows that core competencies have to elastic, and it should be change in response to change in companys environment over the time. Therefore the company need to accommodate and create new idea and also new opportunity in the market. For example, Tesco launched its loyalty card and went into banking. Tesco able to enter into retailing of food and non food products was a clear distinctive brand proposition that had a focus on a properly define market section. The company also provide a strong and efficient customer service, based on a good customer relationship. Tesco Strategic Options: Generic Strategies Introduction: According to Porter (1985), competitive advantage arises from selection of the generic strategy that best fits the organisations competitive environment and then organizing activities to support the chosen strategy. These strategies are characterised by the company in response to their structure and environment of the organization. However to obtain a competitive advantage Tesco should follow one of the three strategies, which is developed by Porter. Cost Leadership Tesco accommodate the first strategy of cost leadership in which can endeavour the lowest costs in the market and offer its products and services to broad market at the lowest prices. The company are more focusing on the effective saving programme call Step-Change. By this programme the company delivered  £540 million of productivity and other saving in the year, which mostly reinvested in improving the shopping trip for customers. To reducing the amount of energy the company introduce better ways of working to improve the efficiency by making things better for customers, simpler for stop and cheaper for company. For example, according to a report, in the last year the company saved 52,000 deliveries to companys stores by using larger-fill-double-decked vehicles, which in turn have also 12 million road miles. Some other example of these projects which delivered substantial savings in the year includes: Saving in the Supply Chain-the company using more shelf-ready packaging and reconfiguring the depot network to increased vehicle utilisation and more productive work methods in depots and stores. For example the distribution cost more held in cash terms and reduced in percentage of sales terms. By this method the company achieved despite higher fuel costs. Installed Energy Saving-the company significantly invest in energy-saving projects across the business- such as new refrigeration, store lobbies and lighting, its helping the company to absorb utility costs. From the energy consumption the company fell by 8% last year despite business growth. Low wage employees- the company have around 31000 employees working in India as Global Support Centre, which provides IT and administrative support to UK and International operationsfrom software development to management accounting and payroll. If the company use another strategy of differentiation, the company then tries to offer a good services and product with unequal features that customers value. With the differentiation strategy the company created a brand loyalty for their offering, and price inelasticity on the parts of buyers. For example to achieve a better and more efficient service provide by the company to checkouts, many more customers didnt have to queue last year and customer continue to rank the company for speed of services at the checkout. Another example of this approach, the company have different brand product according to their feature, speciality, and reliability. Such as Tesco value, Finest, Organic etc Value Chain Primary Activities Inbound logistics According to Alex Laffey, we choose G-Logs logistics and transportation technology because their solution will support and enhance our low-cost, high quality approach to growth in the retail market. Major factors in our decision to select G-Log were the close and demonstrable fit of their software to our requirements, and their ability to rapidly deploy the solution in phases to meet our aggressive project time frame. G-log is providing visibility, optimization, and execution will enable the company to integrate their supplier, partners and logistics service providers, delivering real-time visibility of in transit orders, whilst optimising the transportation resources by both consolidating loads and selecting the most cost effective carrier. The G-log continues to shows to deliver significant result, and to provide value to its customers, in terms of improved customer services, reduced costs and enhanced competitive advantage. Outbound Logistics Outbound logistics is concerned with the delivering the product to the customer. The company adds value to its home delivery services. Tesco also trying to improve other tangible that have to be improved, such as parking facilities, trolley collectors, staff on self service checkout, and also to saying to customer hello hey and thank you with smiling face. The company making small improvements in everything with Every Little Help is about the company work together on the little things, its amount to a great deal. It keeps the focused on what matters most to customers. The company do not sacrifice all the other things that are so important to customers, such as not having to queue and being able to get everything that they want. Support Activities Company Infrastructure The company introduce software Real Time Integrator (RTI) which provides retailer with faster access to critical business information, through the provision and use of accurate, detailed, point-of-sale (POS) information. Sale data from individual store database will be routed to head office in XML to Microsoft server and Microsoft SQL. The solution handles 1500 sales transactions a second at peak times, which each have an average of between 50 and 100 items. To reduce the number not the on file items the first application for RTI will pilot for 120 stores, which improve the customer experience. Human Resources Management Tesco introduce a high commitment model which offers training and development to all employees. In addition the company extend their logo through their culture to prove their commitment to employees as well as to customers. The company continue to invest in customer services where training is also directly linked to pay, therefore the staff is motivated to learn and encourage their approach to customers and services and the provision of qualities. Conclusion With the research carried out, the company shows how the branding and effective service delivery can come in moving beyond splashing ones logo on billboard. The company made their market leader due to their successful and dynamic strategies. The company also made a powerful brand and powerful identities making their retailing concept into various and spending it out into the culture via a variety of channels. Such culture sponsorship, political controversy, consumer experience and brand extensions. The company change their culture and business environment very rapidly due to the high competitors pressure. The company also have to diversify the product and expand their strategies in order to sustain in its leading market position. This is already established by the company. Tesco need to make sure, to have the combination of good customer services, competitive pricing and efficiency when they launching a new product. Tesco has definitely has the potential and can compete with other store if the company get the above combination right. REFERENCES http://www.guardian.co.uk/business/2007/nov/09/supermarkets.tesco1 Tesco history from. http://www.telegraph.co.uk http://www.cn.tesco.com/en/aboutus/aboutus_history.htm http://www.independent.co.uk/news/business/analysis-and-features/tesco-thinks-small-to-be-big-in-america-394385.html Datamonitor Report (2003) Food retail industry profile: United Kingdom, January; Datamonitor Report (2003) SWOT Analysis Tesco PLC, July; Datamonitor Report (2003) Company Profile: Tesco PLC Analysis, October; Tesco Annual Report and Financial Statement 2009, To find out more go towww.tesco.com/annualreport09 De Toni A. and Tonchia S. (2003) Strategic planning and firms competencies: Traditional approaches and new perspectives, International Journal of Operations Production Management, Vol. 23 Issue 9, pp.947-976; http://findarticles.com/p/articles/mi_m0FNP/is_4_44/ai_n13248624/ http://www.tesco.com/talkingtesco/oldDefault.asp Drejer A. (2000) Organisational learning and competence development, The Learning Organization: An International Journal, Vol. 7 Issue 4, pp.206-220; Finch P. (2004) Supply chain risk management, Supply Chain Management: An International Journal, Vol. 9 Issue 2, pp.183-196; Graiser A. and Scott T. (2004) Understanding the Dynamics of the Supermarket Sector, The Secured Lender, Vol. 60 Issue 6, November/December, pp.10-14; Johnson G. and Scholes K. (2003) Exploring Corporate Strategy, 6th ed.,Prentice Hill: London; Lindgreen A. and Hingley M. (2003) The impact of food safety and animal welfare policies on supply chain management: The case of the Tesco meat supply chain, British Food Journal, Vol. 105 Issue 6, pp.328-349; MarketWatch (2004) Company Spotlight: Tesco, Datamonitor, September; Mintel Report (2004) Food Retailing -UK, Retail Intelligence, Nobember; Myers H. (2004) Trends in the food retail sector across Europe, European Retail Digest, Spring, Issue 41, pp.1-3; Palmer M. (2004) International retail restructuring and divestment: the experience of Tesco, Journal of Marketing Management, November, Vol. 20 Issue 9/10, pp.1075-1101; Porter M. (1980) How Competitive Forces Shape Strategy, The McKinsey Quartely, Spring 1980, pp.34-50; Ritz (2005) Store wars, Business Review, Vol. 11, April, pp.22-23; Veliyath R. and Fitzgerald E. (2000) Firm Capabilities, Business Strategies, Customer Preferences, and Hypercompetitive Arenas: The Sustainability of Competitive Advantages with Implications for Firm Competitiveness, Competitiveness Review, Vol. 10 Issue 1, pp.56-82; Bibliography Anon (2004) Case Study IV: Tesco implements the business engine network to gain full control of it IT Project Portfolio, Journal of Database Marketing Customer Strategy Management Vol.12. Tesco business strategy, 2008 available at http://www.bized.co.uk/ Tesco business strategy 2008 available at www.tescocorporate.com/images/TescocsrReview02_0.pdf Datamonitor Report (2003) Company Profile: Tesco PLc Analysis, http://university-essays.tripod.com/porters_generic_strategies.html Palmer, M. (2005), Retail multinational learning: a case study of Tesco, International Journal of Retail Distribution Management, Vol. 33 No. 1

Communication Skills :: Communication, Effective Communication

Communication can be defined as the transmission of a message from a sender to a receiver in an understandable manner (Sanchez, N, 2009). An example of communication in healthcare is between clinical professionals and staff, patients and their relatives or carers, professionals doctors, occupational therapists, social workers, midwives, physiotherapists and administration staff (Darley, 2002). For their communication to be effective, each of them needs to put the responsibility for clear communication on himself (Healthcare Benchmarks & Quality Improvement 2009) which means that each of them should endeavour to send clear messages and to receive messages with as little distortion as possible (Mind Tools Ltd, 2009). The NHS believes that effective communication is essential for high quality service and care, and to avoid communication breakdown complaints and problems (Hamilton Mercer, 2009) such as ill informed patients, worried relatives and bad publicity Darley (2002). To avoid communication breakdown, the HPC requires radiographers to be able to use appropriate verbal and non-verbal communication and to use an appropriate interpreter if necessary when communicating with service users and others (Health Professions Council’s (HPC) Standards of Proficiency - Radiographers, 2008). Minardi and Riley (1997) state that it is very important to recognise the communication skills that may improve effectiveness. Verbal and non-verbal communication are the main forms of communication (Cant and Aroni, 2008). Verbal communication is subdivided into the vocal category which includes spoken language, and the non-vocal category which includes written communication and communication conveyed through sign language or Braille (Communication and Language). The HPC requires Radiographers to be able to communicate information, advice, instruction and professional opinion in English (HPC’s Standards of Proficiency - Radiographers, 2008) since it is the main language in the United Kingdom (Mandy Barrow, 2009). For example, when performing an examination, they need to give clear instructions by explaining what they are doing and why they are doing it (Bach and Grant, 2009). If the receiver does not understand English, a good interpreter is needed to avoid misunderstanding. The receiver may also not understand the examiner’s professional language and as Minardi and Riley (1997) point out, the professional should explain technical terms in order to be understood. Written communication is the ability to write effectively in a range of circumstances and for different audiences and purposes, in good English (The University of Sydney, 2009) using memorandums, reports, bulletins, job descriptions, employee manuals, electronic mail (e-mail) letters, telegrams, faxes, contracts, advertisements, brochures or news releases (Reference for business, 2010).

Wind Power Cluster in Denmark

Microeconomics of Competitiveness Final Report The Danish Wind Energy Cluster Warsaw School of Economics – 13th January 2010 1. IntroductionPage 2 PART I: DENMARK 2. Country BackgroundPage 2 3. Performance of the Danish EconomyPage 3 2. 1 Trade 2. 2 Budget and Fiscal Policy 2. 3 Gross Domestic Product and Productivity Growth 4. Cluster composition in DenmarkPage 5 3. 1 History of Cluster Policy in Denmark 3. 2 Today’s Context 5. The Business Environment in Denmark – National DiamondPage 8 5. 1 Factor Conditions 5. 2 Demand Conditions 5. Related and Supporting Industries 5. 4 Context for Firm Strategy, Structure and Rivalry 5. 5 Government – the Influence of Macroeconomic Policies 5. 6 Institutions for Collaboration PART II: THE DANISH WIND ENERGY CLUSTER 6. Historical Development of the ClusterPage 13 6. 1 Wind Energy in Denmark before the 1970s 6. 2 The Danish Wind Energy Cluster in the 1970s – The First Hesitant Beginnings 6. 3 The Danish Wind Ene rgy Cluster in the 1980s 6. 4 The Energy Policy of the Danish Government since the 1980s/1990s 6. 5 The Cluster of Modern Wind Turbines since 1990 7. Description of the Wind Energy ClusterPage 20 7. 1 Vestas: World’s no. 1 Turbine Manufacturer 8. Wind Energy Cluster – Cluster DiamondPage 22 8. 1 Factor Conditions 8. 2 Demand Conditions 8. 3 Context for Firm Strategy, Structure and Rivalry 8. 4 Related and Supporting Industries 9. Strategic Issues Facing Denmark and the Wind Energy ClusterPage 28 10. Policy recommendations for the appropriate constituenciesPage 30 11. ConclusionPage 31 Bibliography Required Disclosures 1. Introduction This paper gives an insight into the Danish economy and business environment. Furthermore, it describes the cluster composition in Denmark and how the policies towards clusters have changed in recent years. The core of the paper is the comprehensive analysis of the wind energy cluster in Denmark where the cluster is analysed with the use of Porter’s diamond model. Lastly, identification of strategic issues facing Denmark and the wind energy cluster will be presented and policy recommendations given. PART I: DENMARK 2. Country Background Denmark is located in Northern Europe between the Baltic Sea and the North Sea and has Copenhagen as its capital. Its population consists of approx. 5. 5 million inhabitants whereof 9. 1% is immigrants and their descendants. The official language is Danish, but the level of English proficiency is very high. The Danish constitution was codified in 1848 and today the country is governed by a parliament consisting of 179 members. The election period is four years but the prime minister can call an election at any time. Furthermore, Denmark has a constitutional monarchy with Queen Margrethe II as the head. The Queen is apolitical and only functions a representative for Denmark. Denmark joined the EU in 1973 and has always seen it as a good place for economic cooperation, but Danes have been more reluctant towards the political integration resulting in Denmark staying out of the Euro. Denmark is known for its Scandinavian welfare model, which ensures a high level of re-distribution through taxes. The model includes among other things the â€Å"flexicurity† system, which will be elaborated later (Ministry of Foreign Affairs of Denmark). 3. Performance of the Danish Economy Danish economy can surely be described as a modern one, oriented primarily at services. In terms of its resources, the economy depends to the greatest extent on human capital, which translates into a more labor-related approach towards business. With over 5. 5 million citizens, Denmark maintains a record low level of unemployment, roughly 2. 1%. All those indicators contribute to a pretty high standard of living. For this reason Denmark was ranked 16th globally in the Human Development Index, which reflects several aspects, such as live expectancy, knowledge and education standards measured by literacy rate and standard of living. . 1 Trade Denmark has a high social support for free trade. Over 76% of the population perceives globalisation as a positive phenomenon (Time). Danish basic trading partners are the countries from European Union (70%), followed by the United States. Denmark’s high involvement in global trade is reflected in the ranking of trade per capita, placing the country on the 9th place globally, with the result of $17. 5 thousand of trade per cap ita (World Fact Book). Danish major export markets are illustrated in the table below. Table 1: Danish major export markets in 2008 (Million DKK) |Germany |Sweden |UK |US |Norway |Netherlands |France |Italy |Finland |Spain | |103. 4 |85. 2 |48. 5 |35. 2 |32. 3 |26. 0 |26. 0 |18. 0 |15. 7 |15. 0 | Source: Danish Exporters As far as exported goods are concerned, the principal products are food, industrial instruments and machinery. Furthermore, Denmark exports chemical products, furniture and pharmaceuticals. In terms of imports, raw materials and semi-manufacturers, as well as consumer goods prevail. 3. 2 Budget and Fiscal Policy Over several previous years Denmark has been recording budgetary surpluses. However, at the same time the country is facing a debt at the level of 43 billion DKK. Because of extremely low unemployment rate, the government has to be very cautious in increasing their spending, as it may translate into dramatic overheating of the whole Danish economy (due to salaries’ increases). Under such conditions, the debt is expected to fall by 2015. Budgetary expenditures are financed primarily through high tax burdens. Denmark is by many described and perceived as a welfare state, which ensures many various social aids for its citizens. One of the most famous elements of the welfare safety net is tax-funded healthcare and unemployment insurance. In addition to this, Denmark has a well developed pension system, embracing all citizens from the age 65. In order to finance expenditures, the fiscal system assumes almost a 50% tax rate, which is by far the highest one in the world (OECD Tax Database). 3. 3 Gross Domestic Product and Productivity Growth Denmark has a high level of GDP PPP per capita, which places the country on the 16th place globally. Moreover, according to IMF data, the country holds a strong 5th position in the world in terms of its nominal GDP per capita (World Economic Outlook Database). The difference can be easily explained by a relatively high level of prices in comparison with other benchmarking countries. Denmark has been facing a gradual GDP growth for several years, which was disturbed by the global economic crisis. The crisis caused mainly an increase in the unemployment rate and drop of private consumption. In addition to this, Denmark suffered under a significant decrease in exports, which naturally translated into problems with trade balance. Although it is clear that such conditions affected GDP growth, economists claim that Denmark has already embarked upon the recovery path. Table 2: Summary of Danish GDP per capita PPP in USD Year |2002 |2003 |2004 |2005 |2006 |2007 |2008 |2009 | |GDP ($) |29637 |30305 |31766 |33528 |35672 |37163 |37304 |36725 | |% change |1. 73 % |2. 26 % |4. 82 % |5. 55 % |6. 39 % |4. 18 % |0. 38 % |-1. 55 % | Sources: Index Mundi report on Danish Economy (2009) In spite of sound economic growth in the preceding years, the country is perceived to have a strong underlying problem with its future development. It is projected that Denmark will have fourth-lowest productivity growth among OECD countries in the following years (Index Mundi, 2009). As well as this, heavy governmental transfer payments create an unhealthy situation for other parts of the economy. Therefore, they might also translate into an impediment in future growth. 4. Cluster Composition in Denmark Denmark is by far one of the most interesting countries from the perspective of clusters. It was among the first ones to introduce certain clustering policies and since that time it has been quickly developing in terms of the final composition. The country – due to its success – was also included in Porter’s Ten-Nation study about the connection between international competitiveness and the existence and strength of clusters (Yettin, et al, 1992). 4. 1 History of Cluster Policy in Denmark The history begins in the early 1990s, when the Danish government decided to implement first steps aimed at development of the cluster concept. The analysis, which was carried out at the beginning of the process, indicated several areas for further cluster development. These were: food products, IT, bio-health and construction. They were firstly defined as so-called Mega Clusters and then narrowed down in the late 1990s. At that time ‘real’ clusters were defined, e. g. industrial design, aluminium processing or biotech. Despite these efforts, the government was still choosing to proceed with an industrial policy, rather than a cluster-oriented one. The situation changed in the 2000s with the introduction of regional initiatives. That assumed strategic decisions being undertaken on the regional level, rather than on the central one. Thus, Denmark nowadays lacks a vivid clustering policy on the national level. However, at the same time there are numerous regional initiatives that contribute to the process. All in all, the shift from governmental planning to the decentralized system proved to be worth the effort, as it significantly supported the development of a sound clustering structure in the country. 4. 2 Today’s Context Clusters in Denmark emerge exclusively on the regional level. The country is divided into 5 administrative regions and 98 municipalities. Local authorities are the trigger for respective cluster policies. Their ideas can be implemented independently or be supported by special agencies, namely the National Agency For Enterprise and Construction, The Danish Forest and Nature Agency, the Danish Agency for Science Technology and Innovation and the Danish Council for Technology and Innovation (Cluster Observatory). Apart from that, the policies involve also third parties in the emergence process, which are companies, research- and educational institutions and distributors of technological knowledge. Their cooperation is expected to result in a long-lasting relationship, as well as knowledge creation. As far as certain clusters are concerned, the 17 regional growth environments were established in 2001. Depending on the geographical location of the region, the main clusters were assigned to specific places. They are illustrated in the table and figure on the next page. Table 3: Summary of Main Danish Clusters |Growth environments commenced in 2001 |Growth environments commenced in 2002 | |Furniture & Wood |Fishing | Wind energy |Foods | |Technology & IT |Sub-suppliers | |Biotechnology |Stainless steel | |Manufacturing |Offshore | |Horticulture |Transportation | |- |Aluminium | |- |Robot technology | |- |Event economy | |- |Finance | |- |Seed-growing | Source: Nordic Innovation Figure 1: Denmark Exports Portfolio by Cluster [pic] As far as challenges ahead are concerned, Denmark still has certain areas for improvement. First of all, the country has to put a strong emphasis on knowledge creation and development of competence environments. As most initiatives are planned and carried out on the regional level, such environments could serve as knowledge centers enabling cooperation of various players and clusters as a whole. Thus, it creates a huge responsibility for respective authorities to move a step ahead towards building a sound network and cooperation on the higher level. 5. The Business Environment in Denmark – National Diamond Analysis By using Porter’s â€Å"Diamond Model† as a framework the competitive strengths and weaknesses of the Danish business environment will be analysed. First it is nalysed how Denmark is performing on the four factors: Factor conditions, demand conditions, related & supporting industries and context for firm strategy, structure and rivalry. Then it will be analysed how the Danish government influences the different factors through macroeconomic policies and institutions. Lastly, it will be described how institutions support collaboration between the business environment, universities and the public sector. 5. 1 Factor Conditions Denmark is ranked no. 6 on infrastructure in the IMD World Competitiveness Yearbook. Especially the basic and technological infrastructure is high whereas the scientific infrastructure in Denmark only reaches a place as no. 15. With regards to education Denmark is ranked as no. 1. University and management education meet the needs of a competitive economy and the business community. Moreover, training of employees is a priority for companies which ensure that labour become more specialised and stay up to date on innovation and developments within their area. Even though, it looks like there is no finger to put on education in Denmark there are several future challenges. In the future Denmark must raise the contribution of human capital to productivity growth (OECD, 2009). With regards to the labour market there has been a slowdown in labour productivity and a strong growth in wages, which makes Danish labour relatively more expensive. The growth in wages has been reinforced by effective exchange rate appreciation. While the demand for labour is weak during the crisis there is still a need to raise labour supply in the future. A need that the Danes probably cannot fulfil and it may therefore be necessary to attract foreign highly-skilled labour. The current crisis has made it harder to lend money and the credit conditions in Denmark are tight at the moment (OECD, 2009). 5. 2 Demand Conditions An example of how the character of the home demand has helped build competitive advantage is the environmental awareness of Danish consumers. This has led Denmark to be competitive within for example water pollution control equipment, but also many other products related to the environment (Dess, et al. , 2004). The Danish consumers tend to be relatively demanding and quality-conscious. Furthermore, they like to boycott products if they somehow get bad news about the products (Agri-food Trade Service). This can pressure companies to meet high standards and prod them to innovate and upgrade (Porter, 2008). The challenges for demand conditions at the moment are the diminished household wealth and the rising employment, which decreases the Danes’ purchasing power. It is hard to say whether the demand conditions in Denmark create a good environment for businesses. It will be highly dependent on the specific business area. 5. 3 Related and Supporting Industries As mentioned, cluster focus on a regional level has increased and several local initiatives have been established (Nordic Innovation, Cluster Observatory). The continuous focus means that cluster development have good conditions and this could also be an indicator for a high level of related and supporting industries. Though, it is hard to give a general picture about related and supporting industries in Denmark. The fact that Denmark geographically is a small country could lead to the thought that the small scale market is not big enough to get suppliers to locate in Denmark. 5. 4 Context for Firm Strategy, Structure and Rivalry One of the main advantages for companies located in Denmark is the co-operative labour-employer relations and the so-called â€Å"flexicurity model†. When rights and forms of governance are developed on the Danish labour market both trade unions and employers’ associations are important players. Trade union density is about 74% and the density of employers’ associations is about 52%. The trade unions and the employers’ association agree that the â€Å"flexicurity† model is an advantage for the Danish labour market and the business environment. â€Å"Flexicurity† refers to the flexible Danish labour market and the high level of social security. The policy was first introduced in Demark in the 1990s as a response to high unemployment rate. First steps of implementation were undertaken in 1994 and concerned in-depth reforms of labor market, aimed primarily at reduction of structural unemployment, as well as introduction of solid welfare schemes. Companies can easier adjust to up and down turns in the economy because of easy hiring and firing as well as work time and wage flexibility. Trade unions accept this flexibility because its members are protected by the state, which provides them with high unemployment benefits and access to health services, education, etc. (Jensen, 2008). Owing to the â€Å"flexicurity† model, Danish economy cherishes now a low level of unemployment, as well as low social exclusion rates. However, the policy requires a trade-off of high fiscal burdens for citizens. Economic slack, weak exports and reduced investment in R&D means that local rivalry could be on a standstill (OECD, 2009). 5. 5 Government – the Influence of Macroeconomic Policies Government through its policies must ensure an environment where businesses can gain competitive advantage. In order to ensure a functioning capital market during the crisis the government has given guarantees to banks and its customers as well as capital injections. This has improved the capital market and given better access to capital for businesses. Because of the slow growth the Danish government has launched a â€Å"Growth Forum†, which will address the issue of productivity growth and how it can be improved. Another policy which helps creating good factor conditions for the Danish business environment is the strong labour market policies, which offer activation and training for unemployed as well as supplementary training for employees. In this way unemployed stay in touch with the labour market and it is ensured that their skills are up-to-date when businesses need them. Furthermore, labour market policies try to support international recruitment and to keep people on the job market longer before they retire to boost labour supply, which will be in high demand after the crisis. Fiscal policy has boosted disposable income and demand by a major tax reform, which means tax cuts for households. Moreover, the government has released the funds from a special compulsory pension saving programme, which give households further liquidity (OECD, 2009). Furthermore, the interest rate is now the lowest ever at 1. 15 %, which are good news for the households with a mortgage loan (Guardian, 2010). In 2006, the Danish government introduced a globalisation strategy for Denmark, which established a lot of new initiatives within education, research and development, entrepreneurship and an innovate society. One of the aims of the strategy is to make Denmark more ready and open for global business (Globalisering, 2006). Furthermore, in 2009 the Danish government has launched several measures to encourage a â€Å"green growth† recovery from the financial crisis. The initiatives include among others â€Å"green transport†, improved environmental performance of the agricultural sector and a home repair and renovation incentive to save energy (OECD, 2009). These strategies, policies and initiatives create a better environment for companies to compete in. Figure 2 pic]Source: Team analysis 5. 6 Institutions for Collaboration There are several institutions supporting and working together with Danish businesses. Universities like the IT University of Denmark, Technical Univer sity of Denmark and Copenhagen Business School work actively with companies, trades and industries (ITU, DTU, CBS). Furthermore, the Confederation of Danish Industries as a representative for many industries also has close ties to different business schools and universities (DI). â€Å"Invest in Denmark†, a part of the Danish Ministry for Foreign Affairs, helps foreign companies to locate in Denmark and create joint ventures with Danish companies (Investindk). Moreover, several knowledge centers like â€Å"Innovation Center Copenhagen†, â€Å"Mind Lab† and â€Å"Innovation Lab† work together with companies to innovate and upgrade technology and business in Denmark (Innovation Lab). PART II: THE DANISH WIND ENERGY CLUSTER 6. Historical Development of the Cluster 6. 1 Wind Energy in Denmark before the 1970s Due to the Denmark’s large coastline, the climate is characterised by consistent and relatively strong winds. The absence of other natural sources than wind influenced Denmark to take a pioneer’s role in starting an effort to implement wind technology as basis for electrification and to experiment with it (Vestergaard et. al, 2004). The first windmill in Denmark was mentioned 1259 in Flong. The modern wind energy utilization has a tradition that covers more than 100 years of research in meteorology and wind turbine manufacturing. In 1891 Poul La Cour, a Danish professor in natural science at the Askov Folk High School, and a team of scientist built the first wind turbine funded by the Danish government. La Cour was drawing on the results of two contemporary Danish engineers and scientists. H. C. Vogt and J. Irminger participated together with the American P. S. Langley in formulating modern theory on aerodynamics and lift drag with the purpose to experiment with wind power to product electricity (Vestergaard, et al. , 2004). In 1918 a fourth of all Danish rural stations (120) used wind turbines to generate power. After the World War I the Danish interest in wind Energy waned, because of the sufficient supply of fossil fuel. The machines were rapidly outdated – in 1920 only 75 turbines were left (Andersen, 1999). By the 1930s Denmark was ahead of many other countries in the wind turbine industry and turbines became traditional in the Danish countryside. La Cour gave courses at the Askov Folk High School so that it became possible to study wind energy for Danish „wind electriciansâ€Å". Soon La Cour and one of his students became the most prominent manufacturers in Denmark. However at that time there was still no real international competition. One of the students in wind energy was Johannes Juul who attended La Cour? s courses in 1904 and later worked as chief engineer for a power company, SEAS. Juul started an R&D programme in wind energy utilization. This R&D effort formed the basis for his design of a modern electricity wind turbine built in 1957, which is today well known as the 200kW Gedser machine. The Gedser machine was installed in 1959 and was in operation until 1967 (DWIA, 2008). 6. 2 The Danish Wind Energy Cluster in the 1970s – The First Hesitant Beginning In the 1970 there was an awakening green movement in the Western countries. This was encouraged by the first and second oil crisis in 1973 and 1979. Denmark which was enormously dependent on imported oil pursued an active policy of energy savings, increasing self sufficiency, and diversification of energy sources until the mid 1980s. Since then, energy policy has increasingly promoted the use of renewable energy to ensure environmentally sustainable economic development (Krohn, 2002). This increasing political focus on environmental protection and sustainable development provided the framework for the development of the Danish wind energy sector. The practical and technical development in the 1970s was first carried out by few entrepreneurs, tradesmen and people with high ideals about renewable energy. Christian Riisager was a carpenter from west Jutland. In the mid 1970s, he was one of the first who successfully designed a turbine to be marketed and connected to the grid. The turbine was a 15kW turbine which generated more electricity than the household could consume, the excess electricity went into the grid. The Riisager turbine was the basis for modern wind turbines with high towers and three blades. Riisager produced more than 70 turbines and later he established the firm Wind-Matic (DWIA, 2008). Karl Erik Jorgensen also started to make wind turbines in the mid 70s. In 1978, he teamed up with Henrik Stiesdal, a young student and worked on a three-blade turbine. In 1978 they developed a 30 kW turbine with an enhanced safety system. Vestas, which manufactured agricultural machines at that time, bought the turbine on a license and started in-house production and development of wind turbines (DWIA, 2008). While these innovative designs of small machines appeared politicians began to take interest in the new development. Partly because of the energy supply crisis, partly as a reaction to the popular opposition to nuclear power in Denmark. An incentives programme in the form of capital grants for installation of wind turbines (30% of installation costs) was established in the end of the 1970s and was dropped in 1989. In 1977 the Risoe National Laboratory which was originally established to research in nuclear power formed its entrance to wind turbine R&D. A measurement programme co-funded by the US department of energy was carried out by the Risoe National Laboratory (Andersen, 1999). Risoe also draw on a tradition on boundary layer meteorology and wind climate studies. The Technical University of Denmark continued the studies of aerodynamics and wind tunnel experiments, so that their research on wind climate, model laws, terrain roughness, and shelter effects formed the scientific platform for Risoe? s work on the Danish and European Wind Atlas which was initiated in the late 1970s. Risoe National Laboratory also occupied the approval job for different types of wind turbines (Andersen, 1999). In order to ensure that the government supported turbines also had a certain quality and safety, legislation on type approval for wind turbines was established. Today more than 100 scientists and engineers are working for the institution which has an important department in wind energy with considerable interactions with the wind energy community worldwide. Risoe? s work on turbine safety has been important in ensuring the reliability of modern wind turbines (Krohn, 2002). On May 4th 1978 the Association of Wind Turbine Owners was formed, and the first Wind turbine guild or cooperative was established in 1980. 6. 3 The Wind Energy Cluster in the 1980s The Gedser wind turbine itself was built and financed by the power company SEAS. In the early 1980s Danish power companies took early interest in wind energy and in large wind turbines and built two experimental machines, one pitch regulated and one stall regulated, of 630 kW each. But the cost of energy from the large turbines was so high that series manufacturing was not even envisaged (Krohn, 2002). Riisager's and other manufacturer’s success motivated some manufacturers of agricultural machinery to enter in the growing turbine manufacturing sector which provided promising commercial possibilities. Among these companies were Vestas, Nordtank, Bonus (now Siemens Wind Power), Nordex, and later Micon (Krohn, 2002). The Danish Wind Industry Association, a non profit association, whose purpose is to promote wind energy at home and abroad, was founded in 1981. Manufacturers soon became members of the association so today there are more than 220 members across Denmark. The condition of receiving the 30% construction subsidy from the government was that the turbine had been approved by the new test station for small turbines set up by the Risoe National Laboratory. The Role of Risoe National Laboratory so changed from being that of a controlling entity to a more technology-mediating unit. In 1982 the test station issued the first combined load paradigm, which established that all wind turbine components had to be dimensioned for twice the load compared to the traditional norm. The result of this policy was that the Danish wind turbines gained the reputation for being reliable and robust (DWIA, 2008). The Wind Energy Department of Risoe National Laboratory became worldwide known for its expertise with tight connections to the Technical University of Denmark and also increasingly connections with Aalborg University (electricity aspects). Gains of productivity thanks to the European Wind Atlas in the years 1980 – 1985 could be realised by better sitting of wind turbines. The Danish type approval certification scheme has been a very dynamic tool to foster better design procedures in wind turbine manufacturing companies. It has also been important in winning the confidence of professional investors worldwide (Krohn, 2002). In the early 1980s the State of California began a programme of supporting wind energy development. Danish manufacturers having the longest track record had already developed several generations of successively larger machines in small series. The California market expanded dramatically, allowing an enormous volume of production of wind turbines. The Danish manufacturers supplied thousands of turbines to the USA from 1982. Bonus, Vestas and Nordtank all participated in the wind boom launched in California until the market came to an abrupt halt in 1986. The problem was that manufacturers had become dependent on a single market. When the California wind programme ended in 1985-1986, a large number of the 20-odd manufacturers went bankrupt because they had few alternative markets for their products (Krohn, 2002). The economic collapse in the industry caused an elimination race in the following years. All the small manufacturers disappeared or were taken over by Vestas, Bonus, Nordtank, Micon and Nordex. Thus began a long haul for the remaining manufacturers, who then tried to broaden their market base to include several countries (DWIA, 2008). 6. 4 The Energy Policy of the Danish Government since the 1980s/1990s In 1985 the Danish government decided that nuclear power should not be an element of future energy supply. Beside the 30% subsidy of the construction costs for wind turbines which endured until 1989 the government began, since the mid 1980s, to push an active agenda with the aim to implement renewable and diverse energy sources (Meyer, 2007). In a 15 year plan for large scale implementation of wind-generated electricity countrywide the government pronounced the country’s goal of meeting 10 per cent of Danish electricity consumption by wind in the year 2005, implying an installed base of 1,500 MW of installed wind capacity (Sharman, 2005). Danish government had very wide ranging powers for regulation of utilities. These regulations took many forms, including energy efficiency and demand-side management measures. Integrated Resource Planning was an integral part of the procedure through which the power companies obtained permission to install new generating capacity. Other measures included price and accountancy controls. The government had ordered the utilities to install 400 MW of wind power on land to date. The first two orders of 100 MW each were already issued in 1985 and 1990. The latest onshore order for 200 MW to be completed before the year 2000 was issued in 1996. In 1998 a new order was issued for 750 MW of offshore wind power. The Danish energy plan â€Å"Energy21† from 1996 set up a target of even 4000 MW of offshore wind power in 2030 (Krohn1, 2002). To avoid disagreements between utilities and wind power producers over conditions for grid connections and tariffs, the Danish government introduced in 1992 regulations about the feed-in tariff, which was fixed at 85% of the utility production and distribution costs (Meyer, 2007). 6. 5 The Cluster of Modern Wind Turbines since 1990 In the early 1990s Vestas, Bonus (now Siemens), Nordtank, Micon and Nordex represented the wind turbine manufacturers in the Danish cluster. Most of them had a track record of more than 10 years. The size of the wind turbines grew enormously in a perpetual race to develop renewable energy which was capable to compete with the conventional technologies in terms of electricity output and price. At the beginning of the 90s, the average wind turbine had a capacity of 200-300 kW, which had grown to 1-2 MW in the late 90s. Successful domestic turbine manufacturers became world leaders in the wind turbine production (DWIA, 2008). A service sector to maintain and repair installed equipment developed. The industry left, after further consolidation, two large manufacturers in Denmark, Siemens Wind Power A/S (owned by German Siemens AG) and Vestas Wind Systems A/S and several businesses which are involved in the industry and organised in the Danish Wind Industry Association. In 1991 the Vindeby offshore wind park opened and in 1995 the wind farm at Tunoe Knob, equipped by Bonus and Vestas. The offshore market played a more and more important role for the cluster and 95% of the offshore installed turbines are of Danish origin (DWIA, 2008). In 2001 Danish wind turbine companies had a market share of 50% of the world market (Krohn, 2002). The percentage of electricity provided by wind power rose from less then 5% in 1995 to almost 20% in 2003. The total installed base of wind power was some 1,100 MW at the end of 1997. This made Denmark to the third largest wind power country in the world. All turbines were produced domestically. In 1997 there were 10,000 people employed in the wind power sector, a number that grew up to 23,500 in 2007. In 2006 the Danish Wind Industry Association created the Talent Factory to improve the career opportunities among engineering students (DWIA, 2008). More than 80% of the 6,300 wind turbines in Denmark were owned by energy co-operatives, or individual farmers. 150,000 Danish families owned wind turbines or shares in wind co-operatives in 2002 (Krohn, 2002). 7. Description of the Wind Energy Cluster Today Denmark hosts some of the world’s largest wind turbine manufacturers. Vestas Wind Systems, a truly Danish company is situated in Denmark (Vestas). Furthermore, German Siemens Wind Power and Indian Suzlon have established their global head quarters in the country (Siemens, Invest in DK1). Also German Nordex (formerly Danish) and Spanish Gamesa have established respectively offices and R centres in Denmark (Nordex, Gamesa). These are big global players; In 2008 Vestas counted for 19% of the world market, Gamesa for 11% and Nordex and Siemens 7% respectively (EcoSeed). Other smaller manufacturers are Norwin A/S, Wincon A/S and Gaia Wind Energy A/S. There is a strong branch of associations connected with wind energy and among them are the Danish Wind Industry Association (www. windpower. org), Danish Energy Industries Association and Danish Wind Turbine Owners’ Association. In 2007, wind energy in Denmark produced about 7,173 GWh. This corresponded to 19. 7% of domestic energy supply or to the consumption of about 2. 03 million Danish households, compared to 16. 9% in 2006 and only 1. 9% in 1990. In 2007, wind power capacity accounted for 3,124 MW (i. . 24. 1% the total electricity capacity), 424 MW being offshore wind turbines. In 1990 wind power capacity was 343 MW (Energy Statistics, 2007). Projections by the Danish Wind Industry Association estimate an increase of the yearly instalment of new c apacity of about 17% by 2011, reaching more than 200,000 MW. As far as offshore turbines are concerned, 7,600 MW are expected to be installed by the same year (EREC). Wind turbine manufacturing, maintenance, installation and consultancy services account for some 16,000 jobs in Denmark, while component supplies and installation of these Danish turbines currently create another 8,000 jobs worldwide. The global job creation of Danish wind turbine companies are substantially larger than these figures indicate: only about 9 billion DKK (1. 2 billion EUR) is due to turbines manufactured in Denmark. The rest are manufactured in Germany, Spain, India, Italy, and the U. S. , i. e. in countries where there is a substantial home market (Krohn, 2002). 7. 1 VESTAS: World’s no. 1 Turbine Manufacturer As Vestas is the world leader on the global market for wind energy and one of the key drivers of the Danish wind energy cluster a short description of the company will be given. Vestas was founded in 1898 by H. S. Hansen, a blacksmith, in Denmark. He and his son manufactured steel windows for industrial buildings. In 1945, his son established the company VEstjysk-STalteknik A/S, whose name was shortened to Vestas. In 1979, Vestas delivered the first wind turbines. Vestas have installed over 39,000 wind turbines in 63 countries on 5 continents. In 2008, Vestas installed a new turbine every three hours worldwide, generating more than 60 million MWh a year. Vestas has developed from a pioneer in the industry with a staff of around 60 people in 1987 to a global, hi-tech and market-leading company employing more than 20,000 people. Vestas reached revenues of EUR 6,035 million with operational margin of 11. 1% in 2008 and they got global market share of 19% (5,581 MW). Vestas’ core business comprises the development, manufacture, sale and maintenance of wind turbines. Their expertise in modern energy covers more than just wind turbines. They specialise in planning, installation, operation and maintenance. Their competencies cover everything from site studies to service and maintenance. Vestas is distinguished by a high degree of vertical integration. At the same time, production and sourcing are carried out as close to the market as possible. In 2008, Vestas opened the world’s largest research and development centre for wind energy in Aarhus (Denmark) which will house more than 900 employees (Vestas). 8. Wind Energy Cluster – Cluster Diamond Now Porter’s Diamond model will be used to analyse the competitive strengths and weaknesses of the Danish wind energy cluster. 8. 1 Factor Conditions Factor conditions important to the wind energy cluster are the natural resource in form of wind conditions and the scientific base as well as human capital within the field of wind energy. Denmark has relatively modest to good average wind. Onshore wind resources are highest in the Western part of the country, and on the Eastern islands with coastlines facing South or West. The country has very large offshore wind resources and large areas of sea territory with a shallow water depth of 5 to 15 m, where sitting is most feasible. These sites offer higher wind speeds (Krohn1, 2002). The relatively good wind conditions have been an advantage in the past when the wind energy cluster was growing and still operated primarily in the home market. As the operations have gone global the Danish wind conditions are not so important anymore. In stark contrast to Germany, Sweden, the USA, Canada, and the UK, publicly financed R projects played a relatively minor role in initiating the early development of the Danish wind turbine industry. The early stimulus came in the form of investment grants, supporting market development for small scale privately owned turbines. Later, the Danish Government and the EU have financed a significant number of basic research projects, and given some support to development projects (Krohn, 2002). One of the reasons for Suzlon to establish its global headquarters in Denmark was exactly the specialised knowledge the country possesses. The chairman of Suzlon declared: â€Å"Denmark is global leader in know-how for wind-energy. That is why our global head quarter will be here. † (Invest in DK1). On the educational front, the universities offer specialized wind engineer educations and the research centres offer various training courses targeted especially at the wind energy industry, for instance the Technical University of Denmark (DTU) – Wind Master Education; Aalborg University – Wind Master. Engineering College of Aarhus (IHA) has developed a specialisation in wind turbine construction with the main focus on mechanical components (DWIA, 2008). Risoe Wind Energy Department, University of Aalborg and University of Aarhus have jointly established a knowledge centre – Danish University Wind Energy Training (DUWET) which offers a research based supplementary education for employees in the wind industry. DUWET collects wind energy knowledge and research and offers courses and specialist training for anyone in the industry. A consortium consisting of the research centres Risoe National Laboratory, Danish Hydraulic Institute (DHI), The Technical University of Denmark (DTU), and Aalborg University form a national power centre within wind energy research and thus a vital part of the wind energy cluster. Therefore, the scientific base for the wind energy cluster is highly developed and provides the cluster with highly skilled labour. 8. 2 Demand Conditions Denmark is somewhat unique among wind turbine markets, since the market really grew out of a popular interest in alternative generating technologies, partly in opposition to the use of nuclear power, partly as a result of the energy supply crisis in the late 1970s, when oil prices skyrocketed due to OPEC action and political and military unrest in the Middle East. The well-organised Danish wind turbine owners have been a very important driving force for debugging and improving Danish wind technology in its earlier years (Krohn, 2002). Private individuals, either as members of wind energy co-operatives, or as owners of a wind turbine (farmers) account for more than 80% of the 5024 wind turbines in Denmark (DWIA, 2009). This number shows the strong interest of Danes in wind energy and their support for building new wind farms. The Danish home market is what created the modern Danish wind industry originally, and gave it the testing ground to sort out both wind technology and manufacturing technology. The openness and interest of the Danish consumers have definitely supported the demand in the early years of the cluster and pushed its development. Today few wind turbines are set up in Denmark compared to the world market and the local demand has lost some of its importance. 8. 3 Context for Firm Strategy, Structure and Rivalry Danish energy policy has indirectly played an important role in fostering the commercial success of the Danish wind industry. The Danish energy policy for renewable energy has been a model for many markets in the world. In countries as close as Germany, France or Spain and as remote as China or Argentina Danish support schemes for renewable energy have been copied and/or adapted to local circumstances. Danish long-term energy planning such as â€Å"Energy 21† has been widely quoted throughout the world. One of the basic reasons why wind energy has such a prominent place in Danish energy planning is the need to reduce greenhouse gas emissions. According to the Kyoto Protocol Denmark has to reduce emissions of greenhouse gases by 21% in relation to 1990. The targets apply from 2008 to 2012 (COP15). More than one third of that target is being met using wind energy to replace coal-fired power generation (Krohn3, 2002). Thus, the Danish policies give good conditions for renewable energy companies. Denmark has introduced feed-in tariffs for renewable energy plants connected prior to 21 April 2004. Renewable energy plants receive the spot market price plus a subsidy to provide a guaranteed price of 8. 1 eurocents/kWh, applicable for 20 years from date of connection. Renewable energy facilities connected after 21 April 2004 are getting production incentives. Wind plants receive the spot market price plus a 1. 3 eurocents/kWh production incentive which will be applicable for 20 years from the date of connection. Moreover, additional subsidies of 1. 6 eurocents/kWh are provided for new facilities that replace decommissioned wind turbines 450 kW and smaller (Porter, 2006). The Energy Agreement of 21 February 2008 contains an objective of increasing the percentage of renewable energy to 20% of the gross energy consumption by 2011. In the projection, the renewable energy share in 2011 is 20. 5% (Energy Statistics 2007). Improvement of incentives to encourage the installation of wind turbines is among the initiatives which will follow up the political accord of 21 February 2008. The new act comprises the framework for overall local government planning for wind turbines and a guarantee fund of DKK 10 million to subsidise the funding of local wind turbine guild preliminary investigations etc. and a model for local co-ownership. In connection with onshore wind turbine planning, the government will enter into an agreement with the National Association of Local Authorities in Denmark on municipal planning for 75 MW each in 2010 and in 2011. In addition, work is being done on establishing a payment scheme which will cover neighbours to onshore wind turbines for losses in property values as a result of wind turbine installations. The continued expansion of offshore wind turbine facilities will make an important contribution to achieving renewable energy targets. The work of offering two offshore wind turbine farms of 200 MW each or possibly one farm of 400 MW started in 2008 with a view to commissioning in 2012. In addition, work started on the updating of the offshore wind turbine action plan, which examines the location of new farms, the possible adjustment of the tender model, considerations of previous building maturity and open doors with payment as onshore turbines. Subsidies for new wind turbines will be increased to 25 oere/kWh for 22,000 peak load hours and 2. 3 oere/kWh in balancing costs and 0. 4 oere/kWh for the â€Å"green fund† (Energy Policy Statement, 2008). Rivalry can hardly be explained on a local level anymore as the wind turbine manufacturers have gone global and are operating all over the world today. In the earlier stage of the cluster, rivalry on the Danish market was tense – resulting in many take-overs and mergers and ending with one single true Danish company, Vestas. 8. 4 Related and Supporting Industries The background of the Danish turbine manufacturers was different from wind power companies in the U. S. , Sweden, or Germany. Names like Boeing, Lockheed, Westinghouse, MBB, and Siemens indicate a strong background in aircraft and generator manufacturing. Interestingly, however, practically all of today's remaining larger wind turbine manufacturers have a machinery manufacturing background rather than an aircraft background. Although modern wind turbine technology resembles helicopter technology, the operating requirements are very different (Krohn, 2002). A number of industrial enterprises have developed important businesses as suppliers of major components for wind turbines. LM Glasfiber A/S is the world's largest producer of fibre glass rotor blades for wind turbines, with an employment of more than 1,000 people. Danish manufacturers of electronic wind turbine controllers likewise have a very large market share worldwide. DanControl Engineering A/S, Mita Teknik A/S and DWC A/S produce controller and communication systems. Svendborg Brakes A/S is a leading vendor of mechanical braking systems. Also Danish subsidiaries of large international industries such as Siemens, ABB, SKF, FAG, etc. have developed businesses in the wind power industry (Danish Energy Authority, 2002). Other industrial service enterprises have created important businesses in servicing the wind power industry. For example companies are specialised in providing cranes for installations of wind turbines; providing transport of turbines, towers and blades domestically and for export. Service and maintenance of the more than 6000 wind turbines in Denmark is carried out by the manufacturers’ own service departments. But also a handful of independent service companies have been established for instance DWP Molleservice A/S and DanService A/S. Moreover, there are also specialised service providers like banks (Ringkoebing Bank has specialized in financing wind power projects), insurance companies, engineering and management consultancies (Andersen, 2003). The major Danish consultancies in wind energy utilisation are BTM Consult Aps, E Data, Tech-wise A/S, SEAS Wind Energy Centre, WEA ApS and Tripod ApS (Danish Energy Authority, 2002). Figure 3: Cluster Diamond [pic] Source: Team Analysis 9. Strategic Issues Facing Denmark and the Wind Energy Cluster Denmark is at the moment the leading centre within the field of wind power. However during the recent years a significant change in technology and markets has taken place. Denmark is faced with the challenge to maintain its leading position in spite of growing competition from firms operating in lower cost countries, especially China. The wind energy cluster and the political system must assume a proactive position towards this change to ensure that Denmark will strengthen its position as unique value creator. Denmark must provide the most effective wind power that ensures its best integration in the accumulated energy system, so that Denmark in the future can still provide wind power technology to energy systems with a large proportion of wind power. The industrial environment is built on a foundation which consists of a significant effort in research and education as well as innovative development focused on environmentally sustainability. This field of wind power is influenced by cooperation and knowledge-sharing to find technological development tracks. Nevertheless this foundation has been weakened regarding the cooperation within the industry, new technological tracks within the industry and education and recruitment. The Danish research-environment has a leading position within a number of areas, but great challenges in step with the rapid development of international markets put a lot of pressure of the Danish knowledge centre to hold on the talented researchers and students. In order to maintain the unique Danish position, an extraordinary effort must be put in. The strategic issues are focusing on both, development of the wind power industry by improving wind turbines and effectiveness of wind power, and the improvement of the knowledge centre regarding research and education. As innovation and demonstration focusing on the testing of windmills has previously been one-dimensional there are strategic issues to mentioned, that recommend an accumulated strategy for esting and demonstration of components and turbine parts, wind turbines and wind farms and wind power plants in the energy system, so that the facilities cover the whole value chain. Creating one strategy for the whole value chain with sub-strategies for each of the three dimensions would strengthen the integration and the competitiveness of the wind power industry. Another important issue regards the research effort. The long-term university research and education should be strengthened by prioritisation of fundamental or generic technologies that are part of the development of wind turbines and power plants. This also considers the whole value chain, so from turbine part until integration of the wind power into the electricity supply system (e. g. urbine design, blades, wind loads and sitting, integration into electricity supply system and offshore technology). Including a roadmap and measurable criteria for every area, this strategy could be developed by using the existing research environment as a basis and build on the efforts from previous research. Especially offshore technology research should be strengthened and framework conditions for cooperation between research institutions and industry. This could b e provided through common guidelines for the frames of cooperation. Following these recommendations, Denmark will be prepared to face the current challenges. 10. Policy recommendations for the appropriate constituencies National and regional authorities As Denmark faces now serious challenges in terms of the development of their cluster structure, it is essential that respective authorities undertake significant steps in order to prepare the environment for sustainable growth. First of all, it is worth mentioning that authorities have to actively participate in funding of regional growth environments. As well as this, they should encourage and support the emergence of appropriate initiatives, especially in those regions, where other constituencies have already been mobilized. Clusters in Denmark have proven to be a sufficient and effective tool in innovation policy and therefore it is necessary to sustain and improve their presence. Next, authorities have to focus on building sound economic framework, in order to create investment-friendly environment. As inflow of capital is inextricably connected with Denmark clustering strategy, it is necessary to maintain an incentive-oriented structure of attracting new investors. That step is also crucial in case the authorities are unable to further finance certain projects. Therefore, respective responsibilities have to be shifted to private sector. Companies and trade associations With the emergence of clusters, companies are starting to play increasingly more important role. They should – along with trade associations – be able to clearly formulate their needs and be able to influence the authorities to implement them. As well as this, it becomes their responsibility to focus more on investments in innovation. That is why it is necessary for respective companies and supporting associations to work together in creation of competence and knowledge centers. Universities As far as academic involvement is concerned, universities specializing in certain arts should play a supportive role in development of clusters. It has proven to work in the past, as Copenhagen Business School provided companies with field research and required theoretical frameworks. Therefore, the ties between academic and business world have to be tightened, so as to achieve a 360-degree cooperation of all the constituencies involved in projects. 11. Conclusion In this paper I analysed Denmark and its wind energy cluster. Denmark has a very stable and solid economy, but also faces some serious challenges in increasing productivity growth and educating and attracting human capital. Denmark’s heavy tax burden might be a hindrance. The wind energy cluster is by the end of its growth stage in its life cycle and now needs to innovate to keep growing. As focus in the cluster has moved from manufacturing to R the cluster face the challenge of ensuring the best conditions for the scientific base to keep the wind companies in the country. A strategic and coordinated effort is needed. Bibliography Agri-food Trade Service: www. sea. agr. gc. ca/eur/4586-eng. htm (07. 12. 09) †¢ Andersen, P. D. (1999) Ph. D. Review of Historical and Modern Utilization of Wind Power, Department Publication, Risoe Wind Energy Department †¢ Andersen, P. D. (2003) Sources of experience in wind energy technology, Ph. 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S. (2008) Employment Relations in Denmark – Explaining Flexicurity, paper presented at the 103rd American Sociological Association Congress in Boston †¢ Krohn, S. (2002) Danish Wind Turbines: An Industrial Success Story, Danish Wind Industry Association http://guidedtour. windpower. org/media(483,1033)/Danish_Wind_Turbine_Industry,_an_industrial_su cces_story. pdf (12. 01. 10) †¢ Krohn1, S. (2002) The Wind Turbine Market in Denmark, Danish Wind Industry Association †¢ Krohn2, S. (2002) Wind Energy Policy in Denmark: 25 Years of Success – What Now? Danish Wind Industry Association †¢ Krohn3, S. 2002) Wind Energy Policy in Denmark Status 2002, Danish Wind Industry Association †¢ Meyer, N. I. 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History of the Pneumatic Tubes

Pneumatic devices are various tools and instruments that generate and utilize compressed air. Pneumatics are everywhere in important inventions, however, they are relatively unknown to the general public. History of the First Pneumatic Tools The hand bellows used by early smelters and blacksmiths for working iron and metals was a simple type of air compressor and the first pneumatic tool. Pneumatic Air Pumps and Compressors During the 17th century, German physicist and engineer Otto von Guericke experimented with and improved air compressors. In 1650, Guericke invented the first air pump. It could produce a partial vacuum and Guericke used it to study the phenomenon of vacuum and the role of air in combustion and respiration. In 1829, the first stage or compound air compressor was patented. A compound air compressor compresses air in successive cylinders. By 1872, compressor efficiency was improved by having the cylinders cooled by water jets, which led to the invention of water-jacketed cylinders. Pneumatic Tubes The best-known pneumatic device is, of course, the pneumatic tube. A pneumatic tube is a method of transporting objects using compressed air. In the past, pneumatic tube s  were often used in large office buildings to transport messages and objects from office to office. The first documented genuine pneumatic tube in the United States is officially listed in a 1940 patent issued to Samuel Clegg and Jacob Selvan. This was a vehicle with wheels, on a track, positioned within a tube. Alfred Beach built a pneumatic train subway in New York City (a giant pneumatic tube) based on his 1865 patent. The subway ran briefly in 1870 for one block west of City Hall. It was Americas first subway. The cash carrier invention sent money in little tubes traveling by air compression from location to location in a department store so that change could be made. The first mechanical carriers used for store service was patented (#165,473) by D. Brown on July 13, 1875. However, it was not until 1882 when an inventor called Martin patented improvements in the system that the invention became widespread. Martins patents were numbered 255,525 issued March 28, 1882, 276,441 issued April 24, 1883, and 284,456 issued on September 4, 1883. The Chicago postal pneumatic tube service began between the post office and the Winslow railroad station on August 24, 1904. The service used miles of tube rented from the Chicago Pneumatic Tube Company. Pneumatic Hammer and Drill Samuel Ingersoll invented the pneumatic drill in 1871. Charles Brady King of Detroit invented the pneumatic hammer (a hammer which is driven by compressed air) in 1890, and patented on January 28, 1894. Charles King exhibited two of his inventions at the 1893 Worlds Columbia Exposition; a pneumatic hammer for riveting and caulking and a steel brake beam for railroad road cars. Modern Pneumatic Devices During the 20th century, compressed air and of compressed-air devices increased. Jet engines use centrifugal and axial-flow compressors. Automatic machinery, labor-saving devices, and automatic control systems all use pneumatics. In the late 1960s, digital-logic pneumatic control components appeared.

What is Strain in Geology

Strain is a word widely used in geology, and its an important concept. In everyday language, strain seems to signify tightness and tension, or effort expended against unyielding resistance. This is easy to confuse with stress, and indeed the dictionary definitions of the two words overlap. Physicists and geologists try to use the two terms more carefully. Stress is a force that affects an object, and strain is how the object responds to it.​ Various common forces that operate on Earth impose stress on geologic materials. Gravity does, and currents of water or air do, and the tectonic movements of the lithospheric plates do. The stress of gravity is called pressure. The stress of currents is called traction. Fortunately, tectonic stress is not called by another name. Stress is simple to express in calculations. Deformation from Stress Strain is not a force, but a deformation. Everything in the world—everything in the universe—deforms when subjected to stress, from the vaguest cloud of gas to the most rigid diamond. This is easy to appreciate with soft substances, where its change in shape is obvious. But even solid rock changes its shape when stressed; we just have to measure carefully to detect the strain. Elastic strain Strain comes in two varieties. Elastic strain is the strain that we sense in our own bodies—it is stretching that bounces back when the stress is reduced. Elastic strain is easy to appreciate in rubber  or metal springs. Elastic strain is what makes balls bounce and the strings of musical instruments vibrate. Objects that undergo elastic strain are not harmed by it. In geology, elastic strain is responsible for the behavior of seismic waves in rock. Materials that are subjected to enough stress may deform beyond their elastic capacity, in which case they may rupture, or they may stretch which is the other kind of strain: plastic strain. Plastic Strain Plastic strain is deformation that is permanent. Bodies do not recover from plastic strain. This is the kind of strain we associate with substances like modeling clay, or bent metal. In geology, plastic strain is what results in landslides in sediment, particularly slumps and earth flows. Plastic strain is what makes metamorphic rocks so interesting. The alignment of recrystallized minerals—the metamorphic fabric of schist, for instance—is a plastic response to the stresses imposed by burial and tectonic activity.

Analysis Of Cass Sunstein s `` Simpler `` And A Proposed...

This memo is an application of some of the policy ideas Cass Sunstein has described in his book â€Å"Simpler,† to a proposed â€Å"soda tax† in Oakland California. The introduction of the tax, contained in â€Å"Measure HH† (as it appears on the ballot) has been met with stiff opposition by some members of the Oakland area while others have embraced the idea. Three ideas from â€Å"Simpler† will be tested in this California case. First of is a â€Å"nudge.† What is a nudge? According to Sunstein, nudges are â€Å"approaches that influence decisions while preserving freedom of choice† (Sunstein 2013, p.38). In other words, they are things that make one act or behave in a certain way, but your resolve to choose still lies within your power. It could be taxes or fines, according to Sunstein. This Oakland case satisfies the two main parts of nudges: â€Å"approaches† (one-cent-per-ounce excise tax) and â€Å"freedom of choice† (shoppers still have the freedom to choose between sweetened and sugar-free sodas). So, the city council, in order to get people to consume less sugar, would want to impose â€Å"soda tax† on the manufacturers (because they have the tendency of feeling the real effect in terms of cost) and not the consumers. Consequently, if the council members vote in favor of it, the authorities would have indirectly gotten its citizen to change behavior with respect to sugar intake, without directly telling them to reduce sugar intake because it has health consequences. They (the citizens) have been nudged

Strategic Management for Restructuring Strategy of Etihad Airlines

Question: Discuss about the case study Strategic Management Project for Restructuring Strategy of Etihad Airlines. Answer: Introduction: Etihad airways started its operation in 2003. It comes second, in the largest airlines in the United Arab Emirates. It is also the third largest in the Middle East. In the history of commercial aviation, it is one of the fastest growing airlines. The Etihad was formerly known as Gulf Air. Khalifa city is the head office of Etihad. It operates more than thousand flights a week. Peter Baumgartner is the CEO of the company. More than 25000 employee works for Etihad.On 2014, Etihad took 49% stake of Alitalia, the Italian flag carrier for over 500 million. Etihad is the former sponsor of the rugby union football team (Abu Dhabi) and the Abu Dhabi international marine sports club. The company has won more than thirty awards in a span of thirteen years. It belongs to the very few carriers that serve to all the six inhabited continents (Etihad Global 2016). Organization structure: Figure 1: Organizational Structure (Source: Al-Ali and Ahmad 2014 ) The organizational structure of Etihad airlines consists of a board of chairman, a board of vice chairman,executive vice president for different departments and senior vice president. Etihad Airways is led by HH SeikhHamed Bin Zayad Al Nahyan, who is the board of director and also the Vice chairman of the company. James Hogan, the former CEO of Gulf air is the president of the company. The board also has a group of seven independent (non executive) members and a couple of sub comittes.The notable member of the board includes Ahmed Ali Al sayegh, Khalifa Sultan Al Suwadi, Mubarak Hamad Al Muhairi, George Cheaib (Etihad Global 2016). Business case for restructuring: Being an executive Vice President of the Human Resource department, there are some important responsibilities to cater, such as planning and development, evaluation and maintenance, utilizing and retention of employees. The Human resource department focuses on the management of the airline, it also finds out the reason of restructuring and how the plans can be executed. The board of directors want to investigate about various factors, such as current situation of the airline, its main issue and concerns faced by customers. (Al-Ali and Ahmad 2014). Most of the customers are dissatisfied as per the reviews. The director is searching for a particular reason and wants to come up with a proper solution, which will help the customers in their journey. Porters five forces: Figure 2: Porters five forces (Source: Dobbs 2014) Porters five forces can be explained as an identification tool which classify and investigates about the competition in the industry, possibility of the new entrants, power of customer and supplier, and treat of substitute. This simple tool allows one to judge both strengths and weaknesses of the position of the company and provides enough understanding for further steps to be taken (Dobbs 2014). The following paragraphs give an understanding of the various elements of Porters Five Forces. Supplier power (LOW) Suppliers hold an important place in any business situation. If the products provided by the suppliers are unique and there are not many suppliers available, they have much power to control the prices. Thus, they become very powerful. Airline companies does not change suppliers easily. Generally, most of them have a long-term contract with the suppliers. Etihad airways have implemented the cloud-based solution in procurement and supply management department. It has plans to introduce the supplier performance management solutions for more productivity and fulfilment. Bargaining power of the suppliers also has a low treat. Buyer power (HIGH) Buyer power refers to the pressure consumers can create on business to get high quality products, better customer service and lower prices. If a company deals with very powerful yet small number of buyers, these buyers have the capacity to change terms to suit them. Airline industry has two kinds of buyers. One of them are individual buyers. They can buy the flight tickets for a number of reason. It can be for the personal or business use. Another group of buyers buy the tickets from the agents or agencies. Here, the ticket buyer works as a middleman between the flight and the flyers. Flights have very low switching cost as customers choose it according to the time and cost. Each customer prefer different things when it comes to flight. Overall the industry has a low threat to the bargaining power of buyers. Competitive rivalry (HIGH) This stage discusses about the rivalry among existing players. The industry is very stagnant and the fixed costs are high. Different firms has different brand identity, which lessen the competition in the industry. Competitions among the existing firms are the strongest forces in the industry. The biggest rival of Etihad Airways is the Emirates Airways. Apart from Emirates, Qatar Airways also gives a tough competition to Etihad. The Turkish airlines plans to invest more than three billion on the new airlines (Gazzar 2016) Threat of substitution (MEDIUM) Due to global recession, most of the customers are choosing low cost airlines. Sometimes the customers prefer such airlines, which do not have any major benefits. There are some flights, which offer the same benefits as Etihad but on a lower cost. Customers tend to prefer these flights rather than investing too much on Etihad. Threat of new entry (LOW) United Arab Emirates is developing rapidly in the aviation industry. The region is expecting more growth in the airlines as more commercial airlines planned to operate from the international airport of Abu Dhabi. This may threat Etihad airways with the customers opt to fly with low cost airlines of the country. Newer competitors will try to take advantage of any industry that is yielding great revenue. A company already established in such a market should be well protected and keep improving to retain their position and hold over the market. Dafts structural dimension: Figure 3: Dafts structural dimension (Source: Anwar 2015 ) Goals and strategy It defines the principle and the reasonable techniques that can be different among organizations. The Etihad airline focuses more on hospitality, which is the primary goal of the organization. It is continuously working on the enhancement of the hospitality between east and west (Al-Ali and Ahmad 2014). Organizational technology The organizational technology refers to the tools and techniques, which are used for transforming the structure of the organization. All the flights have instant Wi-Fi connectivity and entertainment for the customers ( Al-Ali and Ahmad 2014). Organizational structure This discussed about the internal characteristic of the organization. The structure can be based on capacity, frequency, air fares, application of traffics. Organizational culture The culture discusses the beliefs and key values; it also tries to understand the norms and conditions shared by the employee. Problems: Etihad is one of the latest flights to join the airlines industry. The airlines company choose to adopt a different strategy, which included acquiring stakes and code-sharing partnerships. This meant they had tie-ups with several companies to sell seats to each other which lead to dramatic growth of the network. They have invested over $1 billion in several airlines like the Virgin Australia, Air Siberia, Jet Airways India and Air Seychelles ( Al-Ali and Ahmad 2014).Eventually after the very successful few years, Etihad started seeing signs of trouble. The airlines they have invested in required larger cash inflows and further management time.Etihad faced a lot of problem as their deal with Airberlin gradually grew into a legal battle. The German transport ministry were not happy with their agreement of code sharing. They acquired growth with numbers but it ultimately lead to much complexity and required great management. They even faced loss with the Italian carrier. They had invest ed to buy 49% of carriers stakes ( Al-Ali and Ahmad 2014). Other than this, the company has received several complaints and discouraging reviews about the airline. The main problems faced by the passengers include faulty entertainment systems, rude behaviour from the cabin crew. The first and foremost problem the passengers are reporting is the problem with booking and cancelling their tickets. They customer care personnel have not been able to completely help the customers to go through the process and this is mainly because of their complex booking and code-sharing methods with other flights. Their airbuses are not at the best state. The seats are falling apart and not well maintained. The other flights clean their toilets after short intervals while one of major complaints of customers has been about unclean toilets. The economy class is neglected and the food provided is not up to the standards. They face several operational challenges because of the already explained methods of complex sharing amongst the other airlines. This often lead s to delays which range from 30 minutes to even two hours. It becomes extremely problematic for the passengers who are travelling at night. The Abu Dhabi airport receives an astronomical amount of traffic because it acts as a connection between several parts of the world. These passengers who travel at night often have to face the delay which leads to problems with coordinating with the next connecting flight. The lounge lacks the necessary facilities ( Al-Ali and Ahmad 2014). In the past year, a lot of tension has been generated between Etihad and their counterparts in the US and Europe and it is gradually growing. They have faced a lot of anti-completive reaction from the bigger and already established carriers. This is simply because they are only protecting their share in the market and improving their position. The problems are easily identified with the Porters Five Factor (Dobbs 2014). The fluctuating and highly unstable fuel prices are responsible for the suppliers to gain much power over the airline companies. The availability of better services at the Emirates Airlines and others at almost similar prices is driving the crowd of customers towards the other companies. These airlines do not have much complicated booking or cancelling procedures. The quality of food is better when compared with Etihads. Thus, the other airlines are racing far ahead of the Etihad in competitive rivalry and thus, being easily replaced. There is always a threat of newer business spawning up to make the competition even tougher for them. Literature review Organisational restructuring strategies can be of three modes, financial restructuring, portfolio and organisational restructuring. Organisational restructuring mainly discusses the changes in the policies of human resource. The human resource policies must be changed. Many symptoms indicate that the organisation needs a restructure. Such symptoms can be staff problems inefficient communication and Innovation in technologies, which have created changes in the workflow and in the process of production. For the new operational requirements, innovative skills and capabilities are required. Financial distress can be another major issue for any organization. The restructuring procedure always looks forward to identifying a variety of investment opportunities that will result in a higher return. The financial restructuring can be accomplished with the motive of lowering the cost of capital, avoiding loss of control, enhancing liquidity and improving shareholder value. For significant regar ding improvement in productivity, the company can break itself into smaller independent business unit. Outsourcing helps the company to reduce work force. Other than outsourcing the company can be merged with other companies for better result. Mergers can be of three types. Horizontal mergers, when two companies compete in the same market together. Vertical mergers, when two companies produce different goods for one specified finished goods and conglomerate mergers corporate to achieve three objectives, extension of the product, entrance into the new geographical market, entry into different business ( Al-Ali and Ahmad 2014). Industry analysis: The paper surveys about the issues in airlines performance across all the regions. It also focuses on the problems faced by the Etihad airlines. Customer satisfaction has been the major issue for the airlines. Lots of research has been done in the airline industry for efficiency and productivity. Figure 4: Organizational design model (Source: Rice 2013 ) The organizational design model is also known as a star model. The design policies can be divided into five categories. Strategy, system, structure, process and leadership. Strategy: Strategy is the winning formula of the company. It specifies the objectives and goals to be achieved. It also discusses about the missions that are to be pursued and helps the company to find out the correct direction. The strategy mainly focuses on the product or services of the company. It also focuses on a specific target segment. Structure: The placement of the power and authority in an organization is distributed by its structure (Goetsch and Davis 2014). Every organisation has a specific structure. Structure policies basically define four areas namely specialization, shape, distribution and departments Specialization is the different kind of job specialities that can be used to perform a work. Shape is the number of people divided by the department. Large number of people helps the organization to divide the organisation into departments. Centralization and decentralization refers to the distribution. The department usually deals with the issues critical to the organisations mission. To from the departments departmentalization is necessary. Departments are usually formed on the products, markets, functions, customers and geographies. Processes: The information and other processes belong to the structure of the organization. Management processes can be both vertical and horizontal (Goetsch and Davis 2014). Vertical processes are usually the planning of business and budgeting. Different departments are selected accordingly to the budgets and the priorities are set. Horizontal is a lateral process, which deals with the new business with fulfilling the customers. Leadership: Leadership qualities are very important for any organization. The goal of the leader is the goal of the organization. A leader needs to lead from the front every time the organization requires. A leader also needs to be transparent, confident and inspirable (Tremaine 2016). The reward system align the goals of the employee with the organization. The organizational reward system defines the policies, salaries and promotions. System: System refers to the people in the organizational model (Rice 2013), which governs the policies of human resource, such as recruitment, selection, training and development. System produces the talents required by the organization (Goetsch and Davis 2014). In other words, System explains the exact strategy of the organisation. System focuses on generating require skills and policy choices of the other areas. It deals with the execution of the strategic directions. Organisations require flexible people. Who can manage people without confliction and influence without any authorities (Flamholtz 2012). Analysis and restructuring The Etihad functions in an extremely complicated manner and thus requires a larger number of manpower to function smoothly. Unstable and high fuel costs, shortage of staff along with a lot of airbuses being out of business has led to exorbitant prices of the tickets. This has resulted in a decrease of passengers. (Squalli 2014). The main aim of Etihad must be improving their efficiency. They must be able to banish any sort of airline delays that includes both crowd sourcing and security checks. People do not like to be overburdened with time-consuming paperwork concerning security. Airports are always at high-security situations. The management faces an exhausting struggle to keep the revenues in positive, manage the security needs, and tackle extreme competition and adverse weather conditions. An effective way to deal with the present situation is to simplify the process of ticket booking they follow. It will save time and the passengers will not be frustrated with the process. They require more managerial effort for such change to happen. The whole system must have technological upgrade to make it a faster process. To achieve all these, the company needs higher revenue returns and that can be achieved by potential cost-cutting methods which will attract more customers. They can attract more business class travellers by providing more flight time options to bring up the revenue. It will not only generate greater revenue but also lead to efficient services and better hold over the competitive industry. Security is a great concern in all airports. It is important that the airport as well as the passengers remain safe throughout the process. Installing various body scanners and intricate methods of searching has been a source of controversy for a long time. Certain airports refuse to let their passenger fly if they refuse to go through scanners. They must come up with a balance between viability and security at an acceptable level to shorten the delay incurred in security checks and delays in flights (Gillen and Morrison 2015). The ground staff must be able to help the passengers understand the need of such checks and hasten the process. The airbuses of Etihad somewhat lack the necessary modern technological connectivity advantages. All flights have instant Wi-Fi connectivity and entertainment for the customers. This is what a modern consumer demands. The economy classes generally suffer from crippled entertainment devices. Until new airbuses are being used, these minor things may be fixed for higher customer satisfaction. Safety in air is important. For the last fifty years travelling by air has been the safest way of travel, but recently there has been terrible crashes and planes lost due to unpredictable weather conditions. These may be lessened in number by using high-end technology to monitor and predict weather conditions (Maille and Chaudron 2014). Channelling money here than keeping excess superior heads in the company will lead to higher profits. The customers will be reassured about their safety when they come to know about the advance technology is being used to safeguard their lives they will not be hesitant to shell out some more money. Airlines need to have great amount money assigned for the fuel charges. With the recent rise in the fuel prices, the airlines are facing great challenges to keep up to their schedules of multiple flights daily. This problem can be partially sorted by use of biofuels. They might be extremely financially sound but they are getting better at reducing the cost.Cutting off weight in aircrafts will be profitable too. The company needs to reduce the number of senior vice presidents. One person could be assigned to look after minimum of three departments. This will reduce the cost of the company a lot. The HR department should be assigned to deal with better recruitment of the group as well as the in-flight cabin crew. Proper pilots must be chosen adhering to the new rules and regulation of aviation. Ground staff should be reduced in number and in place of manpower technology must be employed to hasten the security checks. As Etihad has a complicated process of operations, more manpower should be concentrated in the basic managerial posts. The HR department should choose creative and technologically sound people to suit the needs of the company (Ulrich 2013). Thus, the changed hierarchy should be the Board of chairman would be there, who has the highest authority to take the major decisions in the organization. One Vice president would do there instead of four. Every group should have a group leade r, who can report to the Vice President. Minimum number of people in the management will help the organisation to structure properly. The reframed structure of the Etihad Airways will help them to cope with the losses have incurred in the past because of the legal conflicts and other partner airlines not performing up to the mark. The needed manpower in the managerial sector will look after the problems faced by the customers. The lesser number of senior heads will reduce the cost of functioning of the company. This amount of money can be allocated towards improving the customer experience by providing the necessary benefits. This will slowly bring in the lost customers and the company will gain back the lost position in the market. Communication is very important in restricting any company. Any sort change in the prevalent structure will upset the working system. Most of the employees will be bewildered and perplexed by the changes that appear to them as sudden. The managers must be able to clear out the all the ambiguity and help to curb the fear of uncertainty amongst the employees. There must be regular announcements to keep the employees informed about all the changes that are taking place even if they are negligible. It will allow them to settle into the newer system faster and get adjusted to it. Every restructuring will see loss of jobs and this will yield negative impact among the remaining employees. Talking to them about the changes, the needs for the changes that are taking place and results they are yielding will help the company gain back the confidence of the employees. Restructuring requires great amount of planning and re-planning to achieve the most viable plan to achieve the changes and goals in hand. It requires looking at every aspect and how it affects the company, group and revenue returns. It is also important to see how the customer will be affected with the following changes that are to be implemented. Etihad requires both changes in the structure of the hierarchy of the company and the financial sector. It needs reallocation of funds to services and customer satisfaction that will generate higher revenues. To prepare such a structural change a lot of other factors have been kept in mind. The main has been how the rivals or competitors have framed their companies and analysing their profit returns. This provided the backbone of the research of the whole planning. It is necessary to have everything properly planned and mapped out. To smoothly implement the changes there must be adequate amount of communication between the employer and the employees. There will be reallocation of several teams and the team leaders as well. The new management heads should talk to the groups on a personal level to ease out the process of reallocation. They will have to adjust to the newer working structure than the managerial heads high up in the hierarchy. Feedback must flow in specific intervals to analyse how the restructuring is affecting the internal atmosphere of the company. Their ideas and solutions also come in handy. The proposed vision to achieve the goals combined with their ideas may lead to even greater results. They know their sector of work in intricate details and can identify any problem much easily than others. Etihad is mainly lacking in proper management of the operations and thus requires more attention. There must be emphasis on the ground staff and the cabin crew as well. This is source of the major problems that company faces. Thus, the focus should be on these two sectors. The benefits of restructuring using this plan for the company are varied. Some of them are purely financial. This plan will bring back the loss of the money the company has been facing in the past few years, increase the value of the company and revive the declining state. With such revival, the company will gain competitive advantage. There will be steady growth with the elimination of the problem areas. This plan is aimed at better survival strategies and success. Conclusion: Restructuring any organization or company will face challenges and hardships. There is no specified equation to success. It has to be achieved by careful market analysis and trial and error method because each and every company is unique. Etihad Airways is one of the three gulf carriers and growing rapidly. It has great tie-ups with eight other airways. The basic change the company will face is change in the hierarchy and more focus will be on the operations along with the cabin crew. With slow but steady improvements as projected before, the Etihad Airways will gain a well-recognised place in the aviation industry. The managers along with their staff will achieve the goals paving the path for glorious future. Thus, this plan will be a success and encourage the growing together, working together, giving together and greener together. Introduction Professional experience Being an Executive Vice President of the Human Resource department, the main responsibilities in respective of improving the business processes of the airline company are catering to planning and development, evaluating and maintaining, utilizing and retaining the employees. The responsibilities of Human resource department are the proper management of the business processes, finding out the reasons of restructuring and to execute the plans properly. The other responsibilities include the allocation of the tasks to the employees such that to get the optimal performance from them (Trullen et al. 2016). The responsibilities also include the provision of carrier services to the customers of the airlines company with the dedication of meeting the expectations of the customers. Learning outcomes Etihad Airways is one of the three carriers providing services to the gulf countries, which has been growing rapidly on a global market. In the last few years, the customers of the airline company have been facing problems with the customer services. The company has also received several complaints and discouraging reviews about the airline. Moreover, the availability of better services from the competitor airlines at almost similar prices is affecting the loyalty of the customers towards Etihad Airways. Thus, the management of the airline company is urgently required to plan and implement appropriate strategies in order to help the organization revive in the market and to enhance its sustainability in future (Jones and Saundry 2012). When keeping records, the managers are required to be very careful about documentation. They are also required to figure out specific goals, time lines, and expected outcomes for the airlines company. The managers should be taking pride in developing wa ys to overcome a barrier to a solution. Company facing problems with the customer services. Complaints and discouraging reviews from customers. Affecting the loyalty of the customers towards Etihad Airways. Strategy Management topics to be considered Etihad requires both changes in the structure of the hierarchy of the company and the financial sector. It needs reallocation of funds to services and customer satisfaction that will generate higher revenues. In order to implicate such a structural change, the company needs to implement appropriate strategies. Thus, the first topic would be to plan effective business strategies, which could be implemented within the business processes of Etihad Airways. This would provide the backbone of the research of the whole planning. It is necessary to have everything properly planned and mapped out (Kooij et al. 2013). In order to smoothly implement the changes, there must be adequate amount of communication between the employer and the employees. Thus, proper communication among the employees should also be facilitated that could help in enhancing their knowledge and would help in improving their performances as well. This implementation of the proper communication would be the second topic. Application of learning An effective way to deal with the present situation is to implicatemore managerial effort for such change to happen (Coleman 2015). The entire business processes are required to be automated in order to make them faster. In order to achieve its goals, the company needs higher revenue returns and that can be achieved by implementing potential cost-cutting methods. Etihad Airways has chosen to adopt a different strategy for acquiring stakes and code-sharing partnerships. The company can attract more business class travellers by providing standard customer service. It will not only generate greater revenue for the company but also lead to efficient services and better hold over the competitive industry (Al-Aliand Ahmad 2014). Critical reflection Reflection on organizational design Etihad requires both changes in the structure of the hierarchy of the company and the financial sector. To prepare such a structural change many other factors have been kept in mind. The main has been how the rivals or competitors have framed their companies and analysing their profit returns. From the critical reflection on the organizational design, I have to understand and recognize all the understandings of Etihad Airlines. From the critical reflection about the strategy management of the airlines company, I found three learning outcomes. First, the customers of the airline company have been facing problems with the customer services. Second, the company has received several complaints and discouraging reviews about the airline. Third, the availability of better services from the competitor airlines at almost similar prices is affecting the loyalty of the customers towards Etihad Airways. Thus, the airline company is urgently required to plan and implement appropriate strategies in order to revive its position in the market and to enhance its sustainability in the future. In order to achieve the learning outcomes, I am, required to develop criteria, and critically evaluate the strategies that could help in choosing the most likely strategies to prove successful for the company. I need to keep records and be very careful about documentation of the same as relevant to the company. I also need to figure out specific goals, time lines, and expected outcomes for the airlines company. The execution of my learning plan will enable the company to overcome a barrier to a solution. Self-Reflection Strategy and performance strength As a potential manager, the main responsibility would be to formulate the strategy and find out how to handle the challenges and issues as faced by the airline company. According to Wetzel (2012), the manager is required to ensure that the strategies should be open to the wide range of ideas and assumptions. Based on the scoring (refer to Appendix 1), I have a stronger will in supporting and assisting my organization. My skills would be helpful for Etihad Airlines for achieving the excellence and operational efficiencies. My professional background as a Human Resource manager would be contributing in enhancing the performance of the business processes of the company by exploiting on the creativity and abilities of the employees working in the company. Technology for control and social business My score (refer to Appendix 1) suggest that I have a positive personality who is capable of setting goals for the company. My skills suggest that I am better prepared for the managerial role in the organization. These skills would enable me to set up the targets for the company and manage the business processes in aneffective way such that to remain competitive and sustainable in the global market. Making important decisions As a potential manager, the main responsibility would be to make important decisions for the company, which could be able to handle the challenges and issues as faced by the airline company. According to Longeneckerand Fink(2013), the manager is required to ensure that the decisions benign made for the long-term benefits of the organization. Based on the scoring (refer to Appendix 1), I am more of a linear decision maker. I use logical rationality in order to make my decision that could be beneficial for the company. I make decisions based on the facts and information as available related to the company. Relation with the experience In order to achieve the operational outcome, I used to prefer specific goals to develop the strategies for the organizations. I also helped my resources to define their own goals in choosing the most likely to prove successful for the company. I kept records about documentation as relevant to the company. I also figured out specific goals, time lines, and expected outcomes for the airlines company. The execution of my efficient learning plan enabled the company to overcome a barrier to a solution. These skills enabled me to set up the targets for the company and managed the business processes in and effective way (Kaufman 2015). I also used logical rationality in order to make my decision that could be beneficial for the company in the future. Application to the future professional development and achieving the goals My Strategy and performance strength skills would be helpful for Etihad Airlines for achieving the excellence and operational efficiencies (Wetzel 2012). My professional background as a Human Resource manager would be contributing in enhancing the performance of the business processes of the company by exploiting on the creativity and abilities of the employees working in the company. My social skills as evident from the score (refer to Appendix 1) suggest that I am better prepared for the managerial role in the organization. These skills would enable me to set up the targets for the company and manage the business processes in an effective way such that to remain competitive and sustainable in the global market use logical rationality in order to make my decision that could be beneficial for the company in the future. I make decisions based on the facts and information as available related to the company. Personal action plan Identification of three goals Short-term goals (3-6 months) The short-term goals for Etihad Airlines would be to implement strategies for achieving its goals. Firstly, it should be implementing appropriate strategies for influencing the customers to choose the flyer across the globe. Secondly, it should be raising the standards of the customer service, which is the main requirement of the airlines industry (Al-Aliand Ahmad2014). Medium term goals (6 months) It should also monitor the progress of its business processes such that to identify any issues and correct the same. The Etihad Airlines need to look for improving its business processes including maximizing its cargo profitability, improving the customer service, reducing administration, minimizing transit times, and maximizing load factors as well (Kaufman 2015) Long-term goals (18- 36 months) The mission of the airline company is to be the 21st century global airline. The company also needs to reflect on the best hospitality in the world. However, the company is known for its high priced tickets as compared to other airlines, which the majority of population cannot afford. Thus, the long-term goal of the company would be to reduce down its operations costs by automating the services. The vision of the company is to remain competitive and sustainable in the global market (Lewis 2013). Action table for the goals Proposed action Challenges Approach Key Performance Indicator Start Date Duration Short term goals Enhancing customer care service Rise in competition from Lufthansa and other competition airlines Openness to a wide range of assumptions and feedback from the customers and solving out the issues if any Increase in customer base 3rd July 2016 2nd Oct- 2nd Nov 2016 Influencing customers to select the flyer High priced tickets Reducing down the ticket prices and providing offers to the customers Increase in travelling frequency of the customers 3rd July 2016 2nd Oct- 2nd Nov 2016 Achieving goals Managing adhocs Implementing the business processes that could provide optimal yield Analysing the documents in the annual report 3rd July 2016 2nd Oct- 2nd Nov 2016 Medium term goals Monitoring the progress of business processes Long term skill development Setting the goals by phases Analysing the documents in the annual report 3rd July 2016 2nd Jan 2017 Reducing administration Difficulty of handling manual labour Implementing automation in the business processes like ticket booking counters, baggage counters and others Savings from reduced labour costs 3rd July 2016 2nd Jan 2017 Long term goals Maximizing the profitability Huge investment involved in enhancing its business expansion Penetrating the pricing strategy and reducing down on the operation costs Income statement in the financial report 3rd July 2016 2nd March 2018 Remain competitive and sustainable in the global market Rise in competition from Lufthansa and other competition airlines Discuss with manager and objectify the goals and mission statement by implementing appropriate strategies Annual report data 3rd July 2016 2nd March 2018 Infusing loyalty in the customers Retention of older employees Enhancing the customer service standard and building healthier relationship with them by providing with offers and discounts Increase in travelling frequency of the customers 3rd July 2016 2nd June 2018 Table 1: Action table for Etihad Airlines Source: Created by author References Al-Ali, H.A. and Ahmad, S.Z., 2014. 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Competitive rivalry (HIGH)