Factors Affecting Labour Turnover Commerce Essay

Factors Affecting Labour Turnover Commerce Essay This proposal is on the factors that affect labour turnover of Life insurance Agents in Old Mutual Life Assurance Company Kenya. A Life insurance company relies on a stable Agency force to sell and service its Life insurance products to enable it make profit from the Life policy. The exit of an Agent affects the servicing of the policies sold with negative impact on Companys profitability and investable fund for the nations economic development. Therefore, the objective of this study is to identify the factors, find out how and to what extent they affect labour turnover of Agents in Old Mutual Life Assurance Company Kenya. It will also seek to find solution to the problem and make recommendations. This study will benefit the management and Agency Managers of the company, other Life Insurance companies, current and potential investors in Life insurance companies as well as government and its Agencies. The study will make use of descriptive research design which will involve field survey of targeted respondents of Old Mutual Life Assurance Company Kenya. The target population will be the regional managers, sales managers and the Agents at its branches in Nairobi numbering about 200. A sample of 15% will be taken using simple random sampling technique. The data will be collected by the use of questionnaire and analyzed using descriptive statistics which will include tables, charts, diagrams and frequency distribution measurements such as mean, mode and median. OPERATIONAL DEFINITION OF TERMS Life Insurance Life Assurance is an aspect of Financial Planning which provides for the payment of a capital sum to the dependants of a policy owner on his death or to the policy owner on survival to policy expiration, in consideration of the payment of a smaller, often regular, amount to the Life office Life Insurance Sales Agent Life insurance agents specialize in selling policies that pay beneficiaries when a policyholder dies. They also sell other varieties of Life insurance products such as annuities that promise a retirement income, Health insurance and short-term and long-term-disability insurance policies. Agents may specialize in any one of these products, or function as generalists, providing multiple products to a single customer. They earn commission and other benefits for their effort. TABLE OF CONTENTS LIST OF TABLES LIST OF FIGURES ABBREVIATIONS AND ACRONYMS LIMRA Life Insurance Marketing and Research Association AKI Association of Kenya Insurers IIAA- Independent insurance Agents of America COP Certificate of Proficiency OMLAC Old Mutual Life Assurance Company CHAPTER ONE: INTRODUCTION This chapter will focus on background of the study, statement of the problem, objectives of the study, the hypothesis or research questions, significance, scope and limitation of the study. 1.1 Background to the study Life Insurance is an aspect of Personal Financial Planning which enables somebody to provide for his future financial needs at old age and that of his or her dependants in the event of unforeseen circumstances. Such unforeseen circumstances are premature death, Total Permanent disability resulting from Accident or Critical illnesses which may reduce or terminate a persons income earning capacity. The risk of premature death is one of the major personal risks faced by most individuals. The financial consequences resulting from the death of a breadwinner before adequate resources have been established for dependents can be severe. Life insurance is a major source of financial protection against premature death. There are three main sources of life insurance protection which are individually purchased, Employer-sponsored and Government sponsored life insurance coverage. The dependable source is the individually purchased Life insurance protection because the other two may not be available to an individual. Life Assurance is a service premised on a promise to pay a certain amount of money in future in the event of the occurrence of a stated contingency which usually depends on the duration of human Life. Hence, the best form of selling this service is one on one personal selling through a Sales Person traditionally called an Agent. One major problem facing Life insurance Companies in selling their products and hence, profitability is the high rate of labour turnover of their Agents. A Life insurance company relies on a stable Agency force to sell its Life insurance products. These products are usually long tern going for a minimum of five years in duration. The profitability of a policy to the Life insurance Company depends on the consistent servicing of that policy by the Agent. When an Agent leaves an insurance Company when the policies he sold are still in their early years, such policies will no longer be serviced. Hence, the Company will lose in terms of future in-flow of investible funds, lost of commission that has been paid in advance to the Agent and payment of surrender values arising from lapsed policies. This situation threatens the survival of Life insurance companies and it has attracted the attention of some writers and researchers. According to Leverett et al (1977), the death of the independent Agency system as it exists today has been predicted for several years. Increased competition from newer sources, such as the entrance of Life insurance companies into the property-liability field, as well as traditional competition from the direct writers of insurance, tends to reinforce the foundation for such a prophesy. The attraction and retention of new agents into the independent agency system is vital to the continued successful existence of that system. A number of studies have indicated that the retention rate for agents recruited into the Life insurance industry is very low. According to one study, the two year and five year retention rates for 13 large life insurers in the United States were 39 and 13 percent respectively. Furthermore, the retention rate for smaller life insurers was found to be even less than for their larger counterparts. These figures are not totally unexpected given the lack or inadequacy of training and educational programs offered to new life insurance recruits. LIMRA (2009) points out that, it has been of great concern to many managers, the fact that only 5% of sales representatives who join the industry remain in the industry and become successful sales representatives. Out of the 5% only 2% become high achievers in the industry. Despite the fact that those on commissions earn more than majority of the salaried people, it has remained a very challenging field especially for the young people from college and university who would wish to earn good money easily and fast. Burand (2010) notes that over time, agents retention in the life insurance industry remains a perennial challenge for companies operating within the traditional career agency system. According to LIMRA (2010), 68% of agents leave companies within their first two years. Many managers presuppose that retention rates correspond with a companys effectiveness in building its sales and Organization in general. Company bottom lines would benefit substantially from increased retention rates. 1.1.1 Background to the Scope of Study Old Mutual Life Assurance Kenya belongs to an International long-term savings, protection and investment Group. The Group provides life assurance, asset management, banking and general insurance in 33 countries (Africa, Europe, the Americas and Asia). It has over 15 million customers and approximately 55 000 employees. The vision of the group is to be their customers most trusted partner passionate about helping them achieve their lifetime financial goals. The group was founded in 1845 and has expanded from their origins in South Africa in the last decade through organic growth and strategic acquisitions. It is listed in the UK, South Africa and three other African exchanges. Old Mutual Kenya (OMK) started doing business in Kenya in the late 1920s. The vision of the company is the same as its parent company but limited to East Africa. The mission statement of the company is as follows through understanding and meeting our customers needs, we will profitably expand our market for wealth accumulation and protection in Kenya. 1.1.2 Background to the Population Area and organizational Chart Old Mutual has 16 retail marketing outlets throughout Kenya including 4 in Nairobi. The retail marketing arm is under the jurisdiction of the Head of Sales who is at the head office. The head of sales is part of the executive management who reports on the activities of the sales force. The head of sales is assisted by head of channels who oversees the activities of the Branch managers in different locations. Under the Branch Manger are Sales managers who manage the Agents. 1.2 Problem Statement The Insurance industry has suffered astronomical losses resulting from high rate of labour turnover among Agents especially the new agents. The new agents are the sales representatives who have been with the company for less than four years. Annual report published by LIMRA international in 2004 pointed out that four year agents retention has not been able to move above 13 percents. This translates to 87 percent of the new agents in the insurance industry leaving their respective companies within the first four years of signing the contract. An agent in the insurance industry especially life insurance starts becoming profitable only after the third year of their contract in the company. This is because the initial years are characterized by huge training cost, initial allowances which are not tied to production and forward-earning commission system. This results in high expenses for the firm in the early years of recruiting an Agent with the hope of recouping the cost gradually from the future earnings of the Agent. This implies that most of the insurance companies have been incurring huge losses because of consistently poor retention rate of the new agents. Insurance agents retention has become a matter of concern as the Association of Kenya Insurers (AKI) highlighted in the 2011 report concerning developments of the tied agents in the insurance industry in Kenya. AKI report (2010) observed that lack of personal development of many Agents who join insurance industry is an issue that requires attention by the industry if the industry is to remain relevant in the country. Lack of personal development among the agents has been cited as an important factor that affects agents retention in the industry. A Life insurance company relies on a stable Agency force to sell its Life insurance products. These products are usually long tern going for a minimum of five years in duration. Agents are paid commission for any policy sold. The commission is structured in such a way that a substantial percentage up to 50% of the premium is paid in the first year and between 10% to 40% is paid in subsequent years up to the fifth year or sometimes end of the policy term. The profitability of a policy to the Life insurance Company depends on the consistent servicing of that policy by the Agent. If an Agent leaves an insurance Company when the policies he sold are still in their early years, such policies will no longer be serviced. Hence, the Company will lose in terms of future in-flow of investable funds, loss of commission paid in advance for future services of the Agent and an early lapse of such orphan policies. The economy also suffers because it will be starved of investable funds which aid the economic development of the nation. Old Mutual Life Assurance Kenya has experienced a drop in its number of Agents in the past years. While it had 500 Agents in 2010, they currently have about 200. This has also reflected in the revenue of the company from the individual life Insurance segment of the company. The premium income generated by the Agents for the past four years is represented in the following table. Table 1. Premium Income of Agents in Old Mutual Life Ass. Co. Kenya (2008 2011) Year Premium Income (Kshs 000) Difference Percentage Difference 2008 386,367 2009 378,056 (8,311) (2%) 2010 376,496 (1,560) (0.41%) 2011 349,429 (27,067) (7.18%) Source: OMLAC (2012) The graphical representation of the above situation is shown below. Figure 1. Premium Income of Agents in Old Mutual Life Ass. Co. Kenya (2008 2011) Source: OMLAC (2012) Life insurance premium from the sales Agent should increase in geometrical progression with positive cumulative effect on the revenue of the company. If the premium from new policies sold is added to the premium of existing policy holders, it should lead to increase in premium income from year to year. However, the reverse is the case in Old Mutual where premium income from Life insurance Agents has declined from Kshs 386 million in 2008 to Kshs 349 million in 2011. This represents a drop of 9.56% in premium income in 2011 compared to 2008. It is against this premises that this study will focus on factors affecting labour turnover of Life Insurance Agents in Old mutual Life Assurance Company Kenya. 1.3 Objectives of the study The objective of the study will include the following: 1.3.1 General Objective To investigate the factors that affect labour turnover of Life insurance Agents in the Life insurance industry in Kenya. 1.3.2 Specific Objectives To find out how remuneration affects the turnover of Life Insurance Agents of Old Mutual Life Assurance Company Kenya. To determine the effects of training on the turnover of Life Insurance Agents of Old Mutual Life Assurance Company Kenya. To investigate how physical work environment affect labour turnover of Life Insurance Agents of Old Mutual Life Assurance Company Kenya. To establish to what extent job satisfaction affects labour turnover of Life Insurance Agents of Old Mutual Life Assurance Company Kenya. To determine to what extent level of education affects labour turnover of Life Insurance Agents of Old Mutual Life Assurance Company Kenya. 1.4 The Research Questions The study will seek information to answer the following research questions: To what extend does remuneration affect turnover of Agents in Old Mutual Life Assurance Company Limited? To what extent does training affect turnover of Agents in Old Mutual Life Assurance Company Limited? How does physical work environment affect labour turnover of Agents in Old Mutual Life Assurance Company Limited? How does job satisfaction affect turnover of Agents in Old Mutual Life Assurance Company Limited? To what extent does level of education affect labour turnover of Agents in Old Mutual Life Assurance Company Limited? The Significance of the Study The findings from this study will benefit the organization and its stakeholders, the life insurance industry, government and other researchers in this field. The top management of Old Mutual Life Assurance Company Limited consisting of the Managing Director, the head of sales and head of channels who are likely to use the findings to understand the reasons behind labour turnover of Agents in the company. It will also help the Regional and Sales managers of Old Mutual Life Assurance Kenya to improve on their management techniques towards reducing labour turnover of Agents in their region and sales unit. The Sales Agents will also benefit from the study by using the recommendations to improve on their sales performance and create the personal willingness to stay with the company The findings of the study will also be of immense benefit to the government, especially the ministry of finance, and the commissioner of insurance who will use it to formulate policies that will improve retention of Agents in the Insurance industry. The stakeholders of Old Mutual Life Assurance Limited which include customers, investors and the public will also benefit from the study by understanding the factors that affect labour turnover of Agents in the company. Lastly, it will also benefit other researchers in this field who may use this report for further studies. 1.6 Scope of the Research Study The scope of this study will be found in the Life Insurance industry of Kenya. However, due to time and limited resources, the focus will be on Old Mutual Life Assurance Company Kenya. Since this study is on factors affecting labour turnover of Agents, the research will concentrate on the Agency force of the company which has about 200 Agents nationwide. For the same reasons above, the study will concentrate on the Agency force in Nairobi which is about 100 in number. The researcher will take sample from the research population. The period of study will be up to 30th September 2012. CHAPTER TWO: LITERATURE REVIEW 2.1 Introduction This chapter will critically analyze literature related to the study. This will include the issue of labor turnover in general and its effect, special attributes of Agents engage in selling services and Agent turnover in Life insurance industry. 2.2 Labor Turnover Labor turnover is the ratio of the number of employees that leave a company through attrition, dismissal, or resignation during a period to the number of employees on payroll during the same period. One of the 14 principles developed by Henri Fayol is stable labor turnover. He postulated that there should be stability of tenure of personnel in an organization. This is because a high labor turnover is harmful to the organization. Employee turnover refers to the rate at which employees leave jobs in a company and are replaced by new hires. A high employee turnover rate implies that a companys employees leave their jobs at a relatively high rate. Employee turnover rates can increase for a variety of reasons, and turnover includes both employees who quit their jobs and those who are asked to leave. Average employee turnover rates differ among industries; for example, in 2006, average turnover rates in the United States varied between around 15 percent annually for durable goods manufactu ring employees to as high as 56 percent for the restaurant and hospitality industry, according to Nobscot Corporation. According to a freelance writer, Shelley Frost, Employee turnover is a natural part of business in any industry. Excessive labour turnover decreases the overall efficiency of the company and comes with a high price tag. Understanding the effects of losing a high number of employees serves as a motivator to work toward reducing the labour turnover rate for higher profits and a more appealing work environment. The writer identified some cost associated with labour turnover as follows. Each employee who resigns costs the company money. All of the money invested into that employee through training, education and licensing walks out the door with the employee. When you hire a replacement, the company spends money on those same areas to prepare the new hire for the position. The company also pays to advertise the vacancy and may incur costs for drug testing, physicals and moving expenses. The company could pay 1/3 of the yearly salary of the new employee in costs. Labour turnover rates cost the company time in addition to money. Managers or human resources staffs spend time conducting exit interviews, advertising the job, recruiting candidates and interviewing. Supervisors and colleagues are often left to cover until a new employee is hired and begin working. The new employee may take several months to fully learn the job and achieve competency in the position. When the staff changes frequently, the employees who stay have a difficult time building a positive team dynamic. A group of employees learns to work well together, only to have one or more members leave. This leaves the staff in limbo until a new employee starts. The personality and work ethic of the new employee may vary significantly from the previous employee. Labour turnover can hurt overall morale of employees. The overall productivity of the workplace tends to decrease with high turnover. Since a new employee has a period of adjustment, he wont complete tasks as quickly as the person he replaces. Group projects that rely on the new team member may slow down, which affects experienced employees productivity levels. The loss of momentum when an employee resigns may also affect morale. A high turnover rate affects the continuity of service to clients and other employees. This is particularly difficult in an industry that relies heavily on relationships with clients. For example, a client who purchases products from a company on a regular basis may grow tired of getting a new salesperson or customer service contact every few months. Consistent relationships with clients help build a stronger loyalty to the company. The company is also better able to provide consistent, high-quality service with well-trained staff that doesnt change often. 2.2.3 Life Insurance Agent According to Independent insurance Agents of America (IIAA) (2009) an agent is a person who performs services for another person or an organization under an express or implied agreement and who is subject to the others control or right to control the manner and means of performing the services. The other person is called a principal. Rosenberg (2004) expresses the same opinion in different words by saying that, Insurance agents are sometimes referred to as insurance sales agents whose main obligation is to help clients choose insurance policies that suite their needs. There are two types of agents as classified by LIMRA (2007), some agents are captive or tied agents who mainly work for an insurance company and only sell that companies products, the other category of agents called independent or free lance Agents, are those who work for various insurance companies and sell insurance products of many insurance companies. The independent or free lance Agents are usually registered and licensed companies popularly referred to as brokers. 2.2.4 Qualification for becoming an Insurance agent Frankas (2010) says that, for Insurance sales agents job, most companies and independent agencies prefer to hire college graduates-especially those who have majored in business or economics, high school graduates are occasionally hired if they have proven sales ability or have been successful in other type of work. In fact, many entrants to insurance sales agent jobs transfer from other occupations. According to LIMRA (2007), College training may help agents grasp the technical aspects of insurance policies and fundamentals and procedures of selling insurance. As per the recommendation of AKI (Association of Kenya Insurers) regulations, every insurance agent must have done C.O.P (Certificate of proficiency in insurance) which is a proficiency certificate to transact insurance business in Kenya. Various employers are also placing greater emphasis on continuing professional education as the diversity of financial products sold by insurance agents increases. (Holt, 2010). An Insurance sales agent who shows ability and leadership may become a sales manager in a local office. As noted by U.S Bureau of Labor statistics (2010) a few advance to agency manager. However, many agents who have built up good clientele prefer to remain a sales agent. Some particularly in the property and casually field-establish their own independent agencies or brokerage firms. 2.2.5 Resourcing strategies George (1990) has pointed out that before selecting an agent there has to be a great process than just interview. He asserts that pre-hire assessment like testing and call center simulations have become essential tool in the industry. Tett (2000) of employment Technologies Corporation says that, for the insurance industry to succeed in improving agents retention there has to be simulation centers where the applicants would be given the opportunity to experience what they expect to find in the field and how sales are like. According to Ashly (2000) it is good to control; the flow of less-interested candidates before they reach the interview stage. Sometimes the applicant knows better than the hiring specialist that he or she is not the right sampling the job. Tom (2009), and Peter (1999) agree that accepting agents without checking their interests in the initial selection stage leads to poor retention of the agents. Nevertheless Srivivas (2003) warns against relying too heavily on the simulation. He says that simulation can be very effective for providing people with some exposure to what the job is likely to be. On the same note Banks (2010) disputes the other authors by pointing out that simulation are too artificial such that good candidates get left behind because they do poor simulations Wright (1992) asserts that simulation is only good to give a job presentation. 2.2.6 Agents Remuneration According Armstrong, (2006) Remuneration is the compensation an employee receives in return for his or her contribution to the organization. Luthans (1992) asserts that Remuneration occupies an important place in the life of an employee, his or her standard of living and status in society. Groholdt (2001) points out that, Motivation, loyalty, and productivity depend upon the remuneration he or she receives. For the employer too, employee remuneration is significant because of its contribution to the cost of production, besides, many battles (in the form of strikes and lock outs) are fought between the employer and the employees on issues relating to wages or bonus. Life insurance sales professionals typically earn all or most of their income through commission, which means that they get a certain percentage of every sale they make as well as residual income when clients continue to make payments. For this reason, an agent has the potential to earn much more than he would at an average hourly job. As with any other commission-based job, if an agent fails to perform, he will not be able to earn anything. Even if he does sell a substantial amount of insurance one month, he may not be able to sustain these sales numbers from month to month, and this may result in an unstable level of income. Cravens, Ingram, Loforge and Youngs, (1993), explored the relationships between compensation/control systems and performance and retention. Their results indicate that the type of control system, that is management control versus commission control, is correlated to several measures of success and agents retentions. They found out that sales performed and agents retention was more affected by commission control than by management control. 2.2.7 Agent Training Employee development is something that most people imagine as intrusive all-day group training sessions. Unfortunately, this dreaded approach to employee development is just the opposite of how employee development should occur and feel to employees. Employee development can manifest itself in many forms of training, evaluations, educational programs, and even feedback. If executed correctly, the effects of training on agent performance can often encourage growth within the worker and the organization itself. One of the larger aspects of developing Agents skills and abilities is the actual organizational focus on the Agent to become better, either as a person or as a contributor to the organization. According to Organizational Behavior by Robert Kreitner and Angelo Kiniki, (2009) its been shown that employees that receive regular, scheduled feedback, including training, along with an increase in expectations, actually have a higher level of worker output. Kreitner and Kiniki refer to this as the Pygmalion Effect. The hope is that agents who receive training in line with their individual or organizational goals will become more efficient in what they do. Organizations should look at the positive effects of training on agent performance, and consider agent development as a targeted investment into making the front line worker stronger. More importantly, development plans that include train-the-trainer (training that trains agents to become trainers of a skill) can provide exponential benefits to the organization. This training can be anything from how agents can do their own jobs better to these agents being groomed to replace their supervisor. In addition, agents who are invested as a trainer might be further inclined to stay with the organization, and possibly reduce agent turnover. Along with supporting the organization, agents might recognize that most types of agent development provide them benefits. Agent development programs that range from certifications to education reimbursement, to even basic sales skills training, have a certain cost to the organization that can easily be considered a benefit to the agent. Such awareness on the part of the agent can also lead to greater loyalty to the organization as well as enhanced job satisfaction. Training and education that can be added to the agents resume are big ticket items in terms of compensation plans, and should be treated as such. Beyond agent training and certification courses, evaluations and counseling sessions are another form of agent development. They provide performance feedback and allow agents to be aware of changes to both their work goals and the overall objectives of the organization. Agents who do not receive feedback on a regular basis usually end up feeling as though they might be forgotten by their supervisor, and this pattern may even lead to feelings of dissent among the Agency force. Going back to the Pygmalion Effect, agents who have consistent knowledge of their levels of performance, and who feel that their supervisors are placing expectations on them, generally perform better on an individual basis. Agents are required to attend meetings, seminars and programs to learn about new products and services, learn new selling skills and receive technical assistance in developing new accounts. Churchill, Ford, Hartley, and Walker, (1998) explored role variable, skill, motivation, personal factors, aptitude, and organizational/environmental factors in the retention of agents. The study found that, on average, single predictors or sales performance accounted for less than 4% of the variation in salesperson performance. Aptitude accounted for less than 2% skill levels slightly more than 7%, motivation accounted for 6.6% role perceptions was by far the best predictor, accounting for as much as 14% of the variation in performance. Personal variables (age, height, and sex, completion, and dressing) accounted for 2.6% while organization and environmental factors accounted for about 1%. They concluded that personal characteristics, while important, are not as important as the influencing factor s such as, training, company policies, skill levels, and motivation. 2.2.8 Physical Work Environment The physical work environment can be identified as a place or location where somebody works. Performance experts agree that the physical work environment has a significant impact upon employee performance and productivity. By physical work environment we mean the building structures, office layout, tools, furniture, space, noise level and surrounding of

Fiber Optics Essay -- Fiber Optics Technology Electronics Essays

Fiber Optics What are Fiber Optics? Fiber optics are thin transparent fibers of glass or plastic enclosed by a material of a lower index of refraction and that transmit light throughout their length by internal reflections. Real fiber optic cables are made out of very pure glass, glass so pure that if it were miles thick, light would still be able to pass through. The fiber optic strand, although thin in diameter, is stretched to miles in length. Therefore only the purest of glass would be efficient and useful for sending light signals. The glass of these fiber optic cables is drawn into a very thin strand (as thin as human hair), then it is coated in two layers of plastic. By coating the glass in plastic (this is called the cladding), a "mirror" is created around the glass. This creates a total internal reflection. In other words, when light is passed through the cable, the light will reflect off the interior surface of the cable, and continue to bounce off the reflective surface until it reaches the opening at the ot her end. Light travels through the fiber optic cable and bounces off at shallow angles, and stays completely within the glass fiber. How Fiber Optic Communications Work Fiber optics, in the world of technology, is used to carry voice, data, and video inside these strands of glass. Optical fiber for telecommunications consists of three components: core, cladding and coating. The core is the central region of an optical fiber through which light is transmitted. The core and cladding are manufactured together as a single piece of glass and cannot be separated from one another. The third section is the outer protective coating. This coating is typically an ultraviolet (UV) light-cured acrylic applied during t... ...mitless. Fiber optic technology has opened the door to many more communication opportunities for the world today. It provides higher fidelity long distance telephone conversations, as well as secure communication systems. Today, more than 90% of the United States long-distance traffic is already carried over optical fiber; more than 15 million miles have been installed, virtually all of it using the original design. The concept of fiber optics is simple, yet it provides so many potentialities in the world of technology. Presently the world relies on fiber optical technology for its data and communications systems. The consumer can converse on the telephone and hear voices with clarity, as well as send and receive information on the Internet with ease. However, there still lay a sea of possibilities in this area of technology that has not yet been discovered.

Letter of Recommendation Essay

A.Current Performance Last year, Google had strong financial metrics. According to Google’s operational highlights, the company reported worldwide revenue growth and cash flow for the four quarters of 2013, making Google one of the most successful companies within its industry. Overall, Google’s last year’s return on investment, market share, and profitability were positive (2013 Financial Tables n.d.). B.Strategic Position Google’s main focus is on the customer. Furthermore, the company’s mission statement is â€Å"to organize the world’s information and make it universally accessible and useful.† 1.Google has been able to reflect its mission statement by making its customers a priority, always delivering excellence with its products to worldwide customers. 2.Google has been in the technology industry since 1998. Although the company was incorporated on September 4, 1998, Google’s founders, Larry Page and Sergey Brin had already built a search engine (initially called BackRub) by 1996. 3.Google’s main objective was to â€Å"create the perfect search engine,† an engine that would â€Å"understand exactly what you mean and give you back exactly what you want.† Nowadays, Google has not only been successful at creating this perfect search engine, but has been able to make it smarter and faster. 4.One thing Google focuses on the most is that its business operations are aligned with its strategy. The Business Operations and Strategy team at Google is in charge of identifying and clarifying Google’s â€Å"strategic priorities, addressing operational challenges, and facilitating innovation.† 5.In order to maintain a positive experience for its users, Google considers its policies to play an important role in the structure of the company. Google’s policies are against â€Å"illegal activities, malicious products, hate speech, the distribution of personal and confidential information, the access of another user’s account without their permission, child exploitation or child abuse, spam, ranking manipulation or relevancy, sexually explicit material, harassment and  bullying, violence, impersonation or deceptive behavior; and the run of contests, sweepstakes, and promotions on Google+.† 6.Google has proven to be an effective company while under the scrutiny of local and international regulations. Although Google has no control over foreign rules , the company attempts to provide accurate and genuine information within the enforced parameters. Furthermore, Google’s main priority is to abide by national and international rules and regulations as much as possible (Company Overview, n.d.). II.Corporate Governance A.Board of Directors Eleven members constitute the Board of Directors for Google Inc. The company’s board of directors is comprised of a multicultural team that supports the company with their knowledge, skills, and connections. Every member, as a reward for their contribution of knowledge, skills, or connections to the company, is entitled to receive Class B shares of stock. Google is a publicly traded company. On August 18, 2004, 19,605,052 shares of Class A common stock went out for public offering on Wall Street. Google’s internal members are: 1.Larry Page, CEO. Larry was the founder of the company and has been the chief executive officer since 1998. He is responsible for the day-to-day-operations, as well as leading the company’s product development and technology strategy. His engineering skills are such a great contribution to the company. 2.Sergey Brin, Co-Founder. Along with Larry, Sergey Brin co-founded Google Inc. in 1998. Sergey is responsible for directing the special tasks of the company. He also served as President of Technology from 2001 to 2011. His knowledge in computer science is of a great value to the success of the company. 3.Eric E. Schmidt, Executive Chairman. Eric joined the company in 2001 and helped Google to become the great company it is now. Eric is responsible for building partnerships and expanding business relationships, and for advising the CEO on industry and policy issues. Representing the external members of the company are: 4.L. John Doerr has been a member of Google’s board of directors since May 1999. John’s areas of expertise are social networks, greentech innovation, and education and economy development. 5.Diane B. Greene has acted as a member of Google’s board of directors since January 2012. Diane’s background is in computer science and mechanical engineering. 6.John L. Hennessy has been a member of the company’s board of directors since April 2004. John has also been Google’s Lead Independent Director since April 2007. John’s areas of expertise are computer science and electrical engineering. 7.Ann Mather has served as a member of the company’s board of directors since November 2005. Furthermore, from 2004 to 2009, Ann was the director of a company in charge of developing and operating national commercial television channels and stations in Central and Eastern Europe. Ann holds a Master of Arts degree from Cambridge University in England. 8.Alan R. Mulally holds a Bachelor of Science and Master of Science degrees in aeronautical and astronautical engineering, and a Master’s degree in Management. Alan has been a member of Google’s boards of directors since July 2014. He has also been a member of the U.S. National Academy of Engineering and a fellow of England’s Royal Academy of Engineering. 9.Paul S. Otellini has served as a member of the company’s board of directors since April 2004. Paul holds a Master’s degree of Business Administration and a Bachelor of Arts degree in economics. 10.K. Ram Shriram has acted as a member of Google’s board of directors since September 1998. Ram’s areas of expertise range from advice on how to raise venture capital, how to manage the hiring process in a corporation, how to make the right product choices and how to define and adapt the business model to changing market conditions. Ram has a Bachelor of Science degree in mathematics from the University of Madras, India. 11.The last member of Google’s board of directors is Shirley M. Tilghman; she has served to the company’s board of directors since October 2005. Shirley holds a Doctoral degree in biochemistry from Temple University, and a Bachelor of Science degree with honors in chemistry from Queen’s University (Corporate Governance, n.d.). B.Top Management Google’s top management is not only composed of some of the most experienced technology professionals in the industry, but of a team knowledgeable in  conducting business worldwide. In fact, Google’s top management team is responsible not only for the day-to-day operations, but for the company’s performance during the past few years. The following six members are part of Google’s Top Management team: 1.Larry Page, CEO and Co-Founder. 2.Sergey Brin, Co-Founder. 3.Eric E. Schmidt, Executive Chairman. 4.Nikesh Arora, Senior Vice President and Chief Business Officer. 5.David C. Drummond, Senior Vice President, Corporate Development and Chief Legal Officer. 6.Patrick Pichette, Senior Vice-President and Chief Financial Officer. Most of Google’s top management team is hired internally, although they have held management positions with other companies prior to joining Google’s management team. As stated in Google’s Corporate Governance Guidelines, the duty of the board of directors is to supervise management’s functioning to ensure that the company is operating in an effective, efficient, and ethical manner in order to attract and encourage future investors, and to generate value for current Google’s stockholders. Moreover, the Board is in charge of evaluating Google’s overall strategy and monitoring Google’s performance to compare it to its operating plan and the performance of its peers (Management team, n.d.). III. External Environment: Opportunities and Threats (SWOT) A. Natural Physical Environment: Sustainability Issues No natural physical environmental forces threat Google or the industry in which it competes. Google is an internet search engine where users have the ability to gain access to mass amount of information quickly and easily. The ability for users to utilize the search engine is not physically impacted in other regions of the world. B. Societal Environment Although physical environments do not affect Google, social environmental factors do. 1.Economic: Google can face economic downtime due to market recession. Making Harder for Google to gain advertisers and therefore decreasing current revenue of 97%, this comes from advertising.   2.Technological: Internet Security Issues is a concern to the massive pool of information and one of Google’s major problems is identity theft, which affects its users. Users that use Google and are threat by the possibility of identity theft may cease from usage of the search engine. 3.Political-Legal: As Google grows, putting the competition to shame, it could gain monopoly power. If so regulatory issues pertaining to monopoly power can rise and/or other legal issues. Google can face liability issues with the Digital Millennium Copyright that limits the linking to a third-party site. 4.Social-cultural: Due to different government and other country views, Google is force to censor web content in different locations. Countries like Germany, France, Poland and China have forced these censors. The above social environmental forces vary in other countries due to geographical regulations, languages, and cultural beliefs. C. Task Environment Google innovation is transparent. The company continues to strive by gaining users, providers and bringing to light new tools. These achievements do not seem to stop the competition and competitors will remain the same from country to country. A.Threat of new entrants: medium B.Bargaining power of buyers: high C.Threat of substitute products or services: high D.Bargaining power of suppliers: low E.Rivalry among competing firms: medium F.Relative power of unions, governments, special interest groups, etc.: high Google faces competition from all internet base companies that intent to communicate information to users. One of Google’s possible strongest competitors is Bing. Current threats involve vertical search engines and e-commerce sites, providers of online products. Social Network, such as Facebook and twitter, are driving users in for advertising and other referrals, which causes current and future threats. Other than possible increased on competition, which may drive users and advertising ads elsewhere, Google also faces possible liability issues, Information Technology issues and security issues. With each threat, the company may seek an opportunity. For example, developing operating systems for mobile  devices and others, this drives users to continue the use of Google. D. Summary of External Factors The integration of European Community, Eastern Europe, with economic development of Asia are all external opportunities factors that may contribute to Google’s growth. Increasing governmental regulations and new product advances are factors that represent the most threat. The company’s opportunity lie on the electronics industry and the driverless cars patent represented. IV.Internal Environment: Strengths and Weaknesses (SWOT) A. Corporate Structure Google is known to be one of the top employers. Google’s management executives are not the main decision makers, although executives do have the last say on decision to assure it meet Google’s innovative strategic. Employees involvement is highly encourage at Google. At Google, the atmosphere is pleasant, family oriented. Google’s approach is for top managements develop strategies and effective implementation while serving as an inspiration to the employees collaborates and brings ideas to life. B. Corporate Culture In a successful company, the employers are the main drivers. At Google, employees are the â€Å"Googlers.† One of Google firm belief is that happy employees make a company. Google hire talented, strong-minded individuals who strive for better, greater results. Many companies use this approach where they encourage employees to take lead and executives/managers simply assure projects are met and within the organizational goals. Google is a transparent company where they make sure employees keep inform by using technology and standard process for communication. Their developments and announcements are discussed in forums. Google has adapted well over 12 languages, reflecting the global audience that they serve. C. Corporate Resources Marketing: Google’s marketing objective is clearly stated, the company doesn’t shy away. Company’s mission is to provide accessibility to information to users. Google’s User Interface is everywhere and can be access from any device. The corporation performs well and has sustained growth. Google continuous growth come from innovation. Google has created new products in the past years, such as, Google Maps, Google Video, PageRank, Google Docs, Gmail, among others, providing users free accessibility to several products within the brand. Finance: Advertisement drove the revenue gain of 97% for Google and in 2008 it amounted to 51% gain. The company was not affected by the economy downtime. Although like many companies, seasonality affects Google’s growth, but not significantly. After 2008, Google financial position remains stable. Revenues are constant, around $13-14 million per quarter, and operating/net income do not fluctuate a lot. Google’s growth comes from the development of new products. Research and Development (R&D) / Operation and logistics: Google hires innovative and talented employees so their creativity is used for developments of new product and processes. Google objective and strategies have been consistent with the company’s mission. One of the strategies Google is to obtain knowledge about the market’s need to create programs funding, company acquisition, and product development. Google products do not require storage, delivery; it is not a tangible service. Google’s products are at no cost to users. Google’s operation mirrors their mission, provide relevant and useful search results for users, advertising, and always strive to improve users’ experience in their search engine. Human Resource Management (HRM): At Google, the Human Resource Management seeks talented individual to come aboard. Employees at Google are awarded for high performance. In 2009, Google had around 19,835 employees. In 2010, all employees received a one thousand dollar cash bonus and a 10% pay raise. Google provided such incentive to retain skilled employees. Google’s rapid growth and innovations are due to its talented employees that bring their experience and technology wisdom. Google works hard to retain those employees by providing a family  oriented workplace and striving for employee satisfaction. Information Technology (IT): Information Technology is a concern for Google. Because hackers and spammers can harm Google’s credibility, Google IT system must avoid injuries from hackers, spammers and even natural disasters. IT must work towards providing an utmost internet security. Google is well aware of these issues and it uses appropriate technology to help maintain its integrity and services. D. Summary of internal factors Internal Factors are brand, user experience, marketing, advertising, employee retention, and information technology issues. Google stands out and dominates the market. Bing, Yahoo and even AOL are Google’s current competitions, yet Google excels with their continuous products creations and services. Google mission statement is clear and through the services it provides it is recognized how it holds true to its mission. Working at Google it is known to be pleasant, everyone would like to work happily at such employee driven company. In summary, Google has strong brand recognition, utmost service quality, and a creative cultural atmosphere. Google’s success comes from its retention of skilled employees, resources in technology and innovation, and advertising. V. Analysis of Strategic Factors A.Strengths Google is a global technology company, whose main focus is to improve the ways in which people connect and transfer information via the web. With that in mind, Google’s capability as a company has positioned it as one of the most important entities in the market. The main source of revenue for Google comes from the placement of online advertisements. However, because Google itself already has an established name within the public eye, the company does not need to need to place much emphasis on their own company advertisement – being rated the number one search engine. Google’s operation cost is very low. The way that Google extracts its information for searches is through the use of low cost Unix web servers, which index web  pages across the Internet. Moreover, with the use of Pagerank, Google is able to rank web pages and give users amplification to the most important sites first. Google is not only a search engine, but also a sort of portal to information of various categories across the web. Its product line includes: Images, Groups, Directory, and News among others. It is apparent that Google envisioned this as on its home page it keeps tabs so that the simplicity of the site can give users easy and accessible navigation. Through the use of AdWords, an advertising platform that incorporates relevant ads to the right of Google’s search results, buyers and sellers are instantly connected. Users have the decisive choice to pick how much will be paid per click and the number of times the ad is to be displayed. As for advertisers, they do not have to pay by the number of clicks on the advertisement, the can choose to pay for the number of sales. Google is a company that is continuously evolving and under development. Because the market of this company has unlimited possibilities, the source of revenue is endless. Google’s growth has lead to the purchasing of other large emerging companies such as Postini, YouTube and DoubleClick, which have ultimately continued to enlarge the growth of the overall company. With expansion and strengthening of the company, Google has also been able to develop solutions for personalized toolbars as well as wireless handled devices and tablets. As of the current moment, Google’s momentum and development (through low operation cost) have lead it to be considered within the top 10 brands in the U.S., surpassing Microsoft’s market cap with 221.19B. B. Weaknesses Like every company out there, though very potent, Google also has its drawbacks. On a scale, only 50-65 percent of web search queries are answered within precision. Regulatory scrutiny was made to be increased by Google, which in turn negatively impacted the business. This particular situation gave way for increased risk with continued growth and corporate expansion. Spammers, who have created dummy sites with links of pages they want Google to rank highly, have manipulated Google’s search ranking technology. Google has also been faced with problems with censorship, as Government pressure has lead the company to block certain information in  several locations. For example, in Germany, France and Poland, it was illegal to post material that denied the Holocaust. As a result, Google was forced to filter out this information. With the increasing amount of data and applications available on the web, and the rising privacy issues, Google’s concern for identity theft has increased as well. Cost per click advertising is confusing for customers and makes it hard for marketers to predict the cost and positioning of their ads. The presence of Google on social networks is not very big, and therefore their advertisement presence is not as big as other companies though it heavily relies on it. Nonetheless, the cost of data centers rise per year, which also means that Google’s expenditures increase substantially yearly as well. C. Opportunities Through the use of portalization, Google can increase its income. Another opportunity on the plate is also for Google to merge with other already existing portals in order to enter the social media loop market and become a strong competitor with companies such as Facebook and Twitter. Being a developer of wireless handheld devices, Google could increase into telecommunication products such as tablets in order to enter a market that goes beyond the systematic World Wide Web. Capitalizing on the use of e-books and buying consumer sales based sites as Groupon and Gilt City could also signify a great opportunity for Google. D. Threats Google’s biggest threat is losing its name value. Google runs the risk of its name being used by the public as a simple search engine. Although Yahoo! Was the first search engine to gain widespread acceptance and top the charts, it quickly lost its top notch title to Google when it introduced its state of the line search engine technology. Google fears that the same can happen to its company, the biggest threat being Bing, who owned by Microsoft, could become a serious competitor due to the great marketing power of Microsoft. Other threats include social networks (Facebook, Twitter, Yelp) as users are beginning to rely heavily on product/service referrals rather than having to take the time to search for information themselves through the search engines. Mobile applications are another  threat that Google encounters. Other forms of advertisement such as billboards, magazines, newspapers, radio, television and yellow pages are also parties that Google competes against for ad dollars. Being a portal of creation and connectivity, Google provides services such as Gmail and Google Docs which compete directly with other companies who offer the same services embedded into their medium. E. Review of Current Mission and Objectives Google’s overall mission was to be able to organize information and make it readily available to people around the world. Management of the company believed that in order to achieve the purpose in the most effective and fruitful way would be to put the needs of the users first. Committed to maintaining this, the mission of the company has been carried out in accordance and has provided heightened results. VI. Strategic Alternatives and Recommended Strategy Strategic alternatives and recommended strategies for Google include taking advantage of new emerging technologies and embedding them into the new creation of products and services. An example of such use can be portrayed through the artificial intelligence being incorporated into the software of cars, in order to have them drive themselves and have memory of recurring routes. Having a op of the line management team that will lead the company to the top is always a factor that should be kept in line – a highly driven and talented workforce. The culture of Google should always be kept as a strategy: emphasizing teamwork, innovation, flexibility and transparency. Moreover, Google needs to place a large focus on the development of ideas in the mobile computing market due to the fact that mobile devices are quickly growing in use and soon the use of desktops and laptops will be replaced and outdated by the use of smart phones. VII. Implementation A. Programs to be developed to implement the recommended strategy Reconstructing Google is not a feasible nor needed option. Having the market  strength that they possess allows them to go the route of instituting TQM. Total quality management will allow them to continuously improve. In order in order for the implementation of TQM, a program should be developed, to keep improving both the product and the process quality. Top management should take the role of developing these programs. In the TQM program there has to be a process where employees that work directly with the product and services are highly involved to make sure that everything is running smoothly and evaluate the situation to see where improvements can be made. B. Financial feasibility of the programs and appropriateness of timetables and priorities Fortunately for Google, they are very financially stable and able to take on new projects and programs. A program like the suggested TQM program will not have a significant impact on their financials but it will have a great reward when it comes to their long-term success. This long-term success will come from the heightened attention to quality that will be seen by consumers in the product that are made. This will make consumers trust the brand even more and give Google a completive advantage. C. Need for new SOP Development As of now it seems clear that Google has very effective standards of operating procedures, as with anything, nothing is static and change is inevitable. In the future as demand changes and new technology is introduced, Google will have a need for a new SOP in order to stay efficient and above in the market. VIII. Evaluation and Control A. Current information system This case does not mention the current information system used by Google, but in researching the top business intelligence systems that are available, Google no doubt has custom software that does everything and even more than the ones available in the market. Some examples of BI solutions are SAS and IBM’s Cronos. Both of these solutions offer reporting, analytical processing, data mining, event processing, business performance management and many more useful tools. With the programs containing historical and  present data, it can help business plan for their needs and see where they are able to get a competitive advantage by forecasting and creating what if scenarios. B. Control Measures to ensure conformance with the recommended strategic plan In reading over the case it was not clear what control measures were used by Google, form researching, Google sends out â€Å"Tech Talks† blogs and weekly â€Å"TGIF† meetings to pass information and communicate with employees. Rewarding good performance is something that is at the top of the list for Google. In today’s competitive job market, competitors are always looking for new talent. Talent management comes into play, where Google’s HRM has to constantly monitor top talent and retain them. Google has a history of maintaining a corporate culture of innovation and performance aligning the needs of the corporation with that of their employees. Google paid $1,000 cash bonus and a 10% raise to all of their employees in 2010, this here shows how valuable it is to Google to maintain their employees. Work Cited Company ÃÆ' ¢Ãƒâ€šÃ¢â€š ¬Ãƒâ€šÃ¢â‚¬Å" Google. (n.d.). Company ÃÆ' ¢Ãƒâ€šÃ¢â€š ¬Ãƒâ€šÃ¢â‚¬Å" Google. Retrieved July 18, 2014, from https://www.google.com/about/company/ Wheelen, Thomas L., and J. David Hunger. Strategic Management and Business Policy: Toward Global Sustainability. 13th ed. Upper Saddle River, NJ: Pearson Prentice Hall, 2011. Print.

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