Assignment Question 2
Consider 2 organizations: one must be a manufacturer and the other must be a service provider. From your answer to Part A(1) above, choose one example of ‘change’ for each organization and examine:
How this change has affected demand for the existing product / service.
How the organisation has reacted to this change in demand (for example, adapting its marketing mix for existing products / services, developing new product / service offerings, moving into new markets, etc.)
Assignment Answer 2
Change: World economic crisis and trend of the Russian companies and consumers to cut costs, reducing buying the unnecessary services and goods or looking for the lower price substitutions.
Service provider: Training company Liona (http://www.liona.spb.ru/). One of the largest training and educational providers in Saint Petersburg, main area is corporate training for personnel efficiency improvement, sales, time management, motivation.
Normally what we can suggest about trends in the training service when we have financial crisis? First of all companies will think about keeping the existing business, not looking for the change and growth, so we can predict the falling demand. But the crisis in Russia affected not all types of the companies, for example food retailing sector was practically not affected. Also in the crisis companies will think about maximizing effectiveness from the lower amount of employees and in that case special trainings can be effective. So theoretically the training sector should be affected, but main professional service providers may stay nearly the same sales values. But what really happened? What we can see on the market, it practically crashed (Baksht 2009). There are several reasons why it happened. First, the professional training companies (among that I place Liona) main business was from the large companies, mainly representatives of global foreign companies. These companies were affected not by Russian, but by global recession and mainly not cut, but completely zeroed the training budgets for the foreign branches (Kovalenko 2010). The second reason is that trainings were widely used as the motivational activities, having trainings as a reward for the best workers. When job market turned that there are more people looking for the job than vacancies, this sort of motivation stopped being necessary, people worked just because they wanted to keep the job. Also during the previous years when demand for the training service was great, training companies did not form the good sales structures, they did not have looking for the client, clients called by themselves (Baksht 2009). In the crisis starting this activity was not easy, but to survive companies had to do this.
To stay on the market, Liona reviewed the possible trends and modified its marketing mix to target the actual tendencies. First, when companies stop training the line level personnel, they still need to have effective top and middle management resistant to the crisis and emotional stress caused by it. To reach this target auditory Liona started the coaching program, giving the personal assistance and support for the top management of the companies that earlier were their customers and were happy with the level of Liona’s work. This was new market for the company and this could happen only because its SEO was already interested and trained to be a coach and had good relationships with potential clients.
Also during several years Liona has the 2year program “Master of the Group Training”, the educational program for the people who want to become trainers. In the crisis companies tend to take trainers inside the company, so if person wants to start working in that position, it is very good time. But 2 year program in the crisis was too long and Liona created the new product “Corporative business trainer” specially designed to prepare current employees to start working as internal trainer in 3 months. The program was a success, and interest was mainly not from the companies, but people paid by themselves to have this opportunity.
The third successful activity was creating the anti-crisis or related trainings. For example in the period of layoffs Liona started the short program training HR managers how to fire properly by law and making less psychological damage for fired people and for themselves.
Liona actively participated in the government educational programs (like in Presidential program for young managers) and in conferences that kept the company name actual and known.
In 2010 the market of training service started growing again and those who did not have budgets for training now start educational programs again, selecting between those main companies who survived in 2008-2009 and Liona is among them keeping good positions on Saint-Petersburg market.
I can’t say that 2008-2010 were very easy for Liona, they also had to fire non key personnel, cut costs and change the office, but flexibility and initially professional reputation and attitude allowed the company to survive. Mainly this is because of its SEO’s attitude, personal and professional qualities. For example Olga was awarded as Best Russian Young Manager 2004 and I believe she is really one of the best.
Manufacturer: Company EcoService () producing kits for clinical biochemical analysis for the hospitals.
EcoService is a small manufacturing company based in Saint-Petersburg, Russia. Its production line is based in Saint Petersburg State University and key research and development is done by university scientists, mainly in chemistry and biochemistry fields. Having these researchers company initially was able to create set of low-cost kits used for analyzing blood and other basic biochemical analysis for the hospitals. This market is very tough, as a lot of manufacturers produce such kits and competitive advantages are mainly in the field of packaging, how easy and quick is to use these kits. EcoService did not have production line for good packaging and they targeted in regional hospitals that had small budgets and had not so great volume of analysis as in main cities.
The crisis affected EcoService in 2 ways. First, practically all chemicals necessary for kit creation nearly doubled in price because of the dollar/euro price increase in 1.5 times in 2008. So the company has to increase price for the kits, and thus start concurrent war with the companies already operating in that niche. To avoid this company used its unique position as part of the State University and was able to buy chemicals together with other laboratories, exploiting the large volume for better prices.
Keeping the prices relatively low, EcoServise started being attractive for the large hospitals. Initially hospitals worked with foreign manufacturers and had enough money to buy more expensive ones, but now they became also 1.5-2 times more expensive. The company reviewed the main demand and was able quickly create the new products that substituted the expensive ones. This was possible because of the very strong RnD department that was able to create new products and propose the quick production line for them. But not only the new products were attractive, analysis kits are usually used together with the equipment and hospital personnel is trained to use this equipment quickly and effectively. Not proper substitutes can ruin the hospital analysis performance in urgent causes. EcoService understood this and developed “adaptations for analysis equipment”, that is its main products packaged in the way they are suitable for 9 main hospital equipment systems. Having this adaptations hospital got the full substitution of their initial system but for the much better price. Amount of customers increased and now main customers are located in Saint-Petersburg additionally having good transportation and quick response from the local company.
Assignment Question 3
Examine the activities (formal and informal; internal and external) that your chosen organization undertakes to scan / monitor its marketing environment.
Assignment Answer 3
Exigen Services is software outsourcing company with headquarters in US, San Francisco, sales offices in US and Western Europe and development centers in Russia, Ukraine, Latvia and China.
There 2 main marketing targets, one is the development market, from that the customers see the company and second is the workforce market that describes how attractive the company is for the prospective employees.
Exigen services scans industry/market environment from several positions, as this is the most significant environment for the company. The most formal one is the creation of “Outsourcing digest” where marketing department reviews the publications on the trends and interviews of the market players, looking for signals and strategic stories. This digest is publishes once in 2 weeks and sent to the company management. This can be considered as Readerly Environment scanning (Brownlie 1994) as there is no reaction after collecting and no indication that this digest affected any decisions.
Another significant effort for market environment scanning is done through participation in the main Russian software development association – nonprofit organization that unites the most influencing software companies (). This scanning is done mainly in informal way by sharing ideas and knowledge what is happening, but this also can be considered as Whiterly Scanning because decisions that are made inside this association may significantly influence the local market (Brownlie 1994).
Customer environment scanning is done by the special department, named “Business Development”, in fact this is real marketing force in the company as they have power not only to collect information from public sources and participating in the conferences, but have the decision making power. Based on the market, technology, regulatory and economical scanning activities these top managers, reporting directly to the CEO articulate the actual mission and company development trend. For example when economic environment was tending to pay more for the quick and secure service in software development, company proposed the Flex-Agility packaging, that mixed up the Agile development methodology with the Fixed Price contractual model. That model is significantly more expensive for the customers but offers several pleasant improvements to the process. But having the environment changed because of the economic crisis, the strategy has shifted following the market trend – be cheap and safe. For that purpose the focus in marketing communication moved to the risk sharing, focus on four safe verticals of expertise and close customer collaboration. So the activities followed the vital role of the scanning: “respond in ways that will ensure the organization's survival and success” (Albright 2004).
Scanning of the workforce environment is done and externally and internally. Internally employees are constantly questioned by HR department what type of bonuses people consider effective, what social packages are most important for them and after these surveys the actual changes happen. Externally the trends in job market are reviewed through communication with the largest Russia job portal HeadHunter () and the local ones that provide reports, and participating in the informal developer’s forums, looking for the feedback about the company and for the participants preferences.
The last but not least for the technological company is the Technology environmental scanning. It is formally organized in the so-called Centers of Excellence. These centers are created in all major technological areas like Java, SOA, Agile, UXD and so on. Each center has the group of experts whose responsibility is to keep themselves constantly at the edge in this field and provide guidance and reports for the people that use these materials. These centers have the power to give technological decisions and change the company process as well as work together with the Business Development department, providing expertise in terms “can we physically handle the business opportunity that Business Development found or company does not have expertise or there is huge technological risk of doing this”.
Assignment Question 4
Using relevant examples, evaluate how successful the organisation’s environmental scanning strategy is. Suggest how this environmental scanning strategy can be improved.
Assignment Answer 4 – 600 words
I would suggest that environmental scanning in the company is not that successful as it should be to keep company at the market position it wanted to be. Exigen services positioned itself as “Lamborghini in Software outsourcing” and “Outsourcing 2.0”, but the positioning was not very successful because it came very late in terms of changing economical and market environments.
For example, Flex Agility was announced in 2008 when taking into account the already happening economic crisis it should be postponed. Exactly at that time companies that are the target market ( i.e companies looking for large business transition) cut the IT and supporting activities practically down to 0. And when company started positioning itself as “expensive but effective” it just lost the potential customers who started looking for the cheaper options.
Also the first department that was removed in the layoffs that happened in the company in late 2008 was the Business Development department. So now the company has only marketing Communications, that is only scanning the environment and signaling outside about what is happening in the company, but have no decision making power. Currently the mission and strategy of the company is defined by 1-2 top managers without any known formal environment scanning.
That even has negative influences the internal atmosphere in the offices because people see that decisions made are not aligned with the local traditions and job market that can be easily fixed if any social scanning was done and taken into account. Company has the new CEO whose previous background was working in India companies. He proposed as the new idea of the workforce management the crowd-sourcing model. It means that there will be no permanent positions, but only the pool of people who will be temporary employed for the exact project and project managers will just have like a pool of potential resources to work on the project. This approach may possibly work in India or China before, when there was more workers than jobs in IT, but this never happened in Russia, where IT job market is driven by the employees, not the employers. Having this failure in the scanning the CEO presented his ideas on the company meeting that immediately causes a lot of employees just quitting the company.
The good thing is that on local level (in local development centers like Russia, Ukraine, Latvia) the market, social and economic scanning is constantly performed. Centers of excellence are still doing the effective technological scanning that helps winning the new contracts.
I would suggest that in order to improve the effect on the scanning activities the company should improve its internal communication approach. Even when different parts of the company have some relevant information and ideas there is lack of description based on what information this decision was made. Having this communication in place I suppose that informal scanning activities will emerge giving important insights what should be done to really do the “Outsourcing 2.0”.
List of References:
Albright K. (2004). ENVIRONMENTAL SCANNING: RADAR FOR SUCCESS Information Management Journal. Lenexa: May/Jun 2004. Vol. 38, Iss. 3; pg. 38, 7 pgs
Baksht K. (2009) Dead and survived between training and consulting companies: how the most fallen companies work. Professionsl sales Systems journal. #70 02.12.2009, Available from: [assessed Oct 2010]
Semenenko I.S. (2004). Globalization and socio-cultural dynamics: personality, society, culture. Polis, Political Research, #1, 2004. Available from: [assessed Oct 2010]
Beck D. and Cowan C. (1999). Summary of Spriral Dynamics, The national Values Center, Inc. 1999, Available from : [accessed Oct 2010]
Bogetich J. Shmits K. and Ulatov S. (2009) The influence of the world economic crisis on the Russian economy, Market development journal, № 1 (71) 2009
Brownlie D (1994). Organizing for Environmental scanning: Orthodoxies and reformations. Journal of Marketing management, 1994, 10, 703-723.
Kovalenko A. (2010) Fit the turn. Expert Ural Journal, #39(437) Oct 4 2010, Available from [assessed Oct 2010]
Mktrchan N. Florinskaya U. Kachaturina L. Zaionchkovskaya J. Turukanova E. Migration and demographic crisis in Russia. Moscow: MAKC press, 2010, 112p.
Solkina P.A. (2010). The Problem of the Moral Heritage, Journal of Siberian Federal University. Humanities & Social Sciences 2 (2010 3) 233-240
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