MIP Group Assignment HRM

MIP Group Assignment

1. Introduction

Having collated and synthesized the groups 5 different perspectives from the last two assignments, this report represents the final segment of the sum of our work. The team's research has drawn similar conclusions in discovering internal and external weaknesses and risks respectively, namely in the form of a lack of HRM processes, impending reforms in BREXIT and the looming presence of the COVID19 pandemic. 

Therefore, in pursuit of the end goal of proposing recommendations for TONIC15 to adopt in order to overcome their management challenge, this report will first restate a common research question supported with appropriate management frameworks, identify and propose said recommendations, develop a cohesive and feasible implementation plan for TONIC15, conduct risk assessment utilizing the Safe framework and finally evaluate the proposals performance through risk assessment and Balanced Scorecard.

2. Management Challenge and research question 

A thorough analysis of the groups collated prior assignments drew similar conclusions to the challenges affecting TONIC15, indicating that the company is hampered by issues relating to an uncertain external environment, changing demographics and a lack of human resource management (HRM) practices. The trend of digitalization also presented itself as an opportunity for TONIC15 to take advantage of. These issues are thus summarized and described below. 

Uncertainty in TONIC15’s external environment is derived from the twin factors of COVID19 and BREXIT occurring within the present and immediate time frame. COVID19 has resulted in significant changes in buyer preferences beneficial to TONIC15, with the normalization of E-commerce and  the short-term surge in popularity of self care and beauty products (Gerstell, et.al 2020), however it also presents a threat in future supply chain disruptions, as seen by the major drop in exports from TONIC15s main supply base in South Korea during the lockdowns (CNA 2020). Meanwhile BREXIT presents itself as a looming threat to the sustainability of TONIC15’s continued business operations due to impending changes in tariffs and changes in legislation within the beauty industry (Morris 2020). 

Besides the individual factors presented by COVID19 and BREXIT, uncertainty itself is noted as a major threat, requiring effective assessment and appropriate response by TONIC15 in order to assess the turbulence of its external environment and match its capabilities, aggressiveness and response(Galbraith 2013; Ansolf 1987).

Changing socio-cultural factors in the UK and Europe add on to the uncertainty in the environment whilst presenting their own challenges. Demographically, with the UK in the midst of transitioning into an ageing, multi-ethnic population (Lomax et.al 2019;Populationpyramid.net 2020), we posit an ever  shrinking customer base for TONIC15 in the long term, considering their current core demographic of women aged 25-45 (TONIC15 2020). This in turn demands that TONIC15 begin to look for new demographic avenues and shape their marketing strategies towards them. Two demographics appear as opportunities, with the UK’s minority population representing a viable avenue due to their younger population demographic (CPA 2013) and the  rise in popularity of male interest in grooming and skin care as showcased by the booming global market (Elsner 2012).Culturally the niche popularity of TONIC15s product line of “K-Beauty” is seen as a challenge, with the Europe and UK having a historically smaller but growing interest in Korean culture than markets in America and Asia (Eun Jee, 2017;Joo-ri and Jihae, 2019) 

Internal analysis of TONIC15 in contrast to literature uncovered potential issues resulting from its small firm size and lack of HRM processes. Research found highlighted how the poor staff management resulting from the lack of said HRM could hamper essential functions thus lowering overall firm productivity and efficiency (Hudson, Cristina, & Shen 2015) The lack of HRM processes within TONIC15 also calls into question performance management within the company, namely how deserving employees would be identified and benefits administered considering future growth of the firm, with current processes to encourage motivation among the small team such as vouchers or small gifts being informal and inefficient. (TONIC15 2020) This lack of in-place HRM systems is noted as a cause of concern to the group, especially in light of research indicating how proper HRM systems minimize overhead costs in business operations and encourage growth (Kianto et.al. 2017) 

Increasing digitalization as a trend, while not a management challenge per se, represents major opportunities for TONIC15 that should not be understated. Digitalization in the context of this report refers to the rapid pace of firms transitioning from traditional work environments to that of a digital workplace, with 70% of firms having made the transition due to factors brought about by COVID19 (Wachsman 2020). This is represented in the wider context of society itself becoming increasingly digitized, with reliance on the internet as the main medium of communication (Wearesocial.com 2019). Thus we see the opportunity of firms transplanting their HRM processes into a digitized format, making use of e-recruitment and e-compensation as tools that are better suited for their individual needs. Research as well reinforces this concept, noting that E-compensation as a facet of a greater E-HRM programme results in higher employee satisfaction, motivation and retention (Behera 2017) 

2.1 Research Question

Understanding the numerous challenges stated above and the threats and opportunities they represent to TONIC15’s continuing business interests, we thus construct a revised research question. Viewed under the lens of strategy as defined by Mckinseys 7s framework, and once again utilizing the principles of Ratan, Anand and Ratan, 2019 and Collis and Hussey, 2014, this research questions purpose will be to aid our construction of the recommendation by providing deeper insight, meaning and discovery of approaches to the problem at hand. Hence the research question is as such; “In the pursuit of their goal of 10% market share, what strategies can TONIC15 utilize when faced with the prospect of changing demographics and uncertain environment, and how can they develop a viable HRM programme to ensure continued growth and organizational success.

3. Proposed Solution (DSER Programme)

Having gained understanding of the management challenge through creation of the research question, a thorough analysis and compilation of SWOT factors was utilized in the creation of a TOWS matrix to explore different pathways and strategic options TONIC15 can take in pursuit of their goal (Johnson, Scholes and Whittington 2008). 

A comparison of the Opportunities and Threats affecting the firm to the Strengths and Weaknesses it currently possess reveals a need for expansion into new product markets, development of existing target markets in building relationships with suppliers and customers, collaboration and co-opetition to augment TONIC15’s weaknesses with competitors strengths and implementation of E-HRM to support this growth. These strategic options represent a combined approach under Ansoff’s Matrix, utilizing market penetration, market development and diversification (Ansoff 1965).

Blue Ocean Strategy proves complementary to Ansoffs matrix in reinforcing the need for market development, as described by Kim and Mauborgne 2015, the current market in the EU and the UK would be described as a red ocean, a “zero sum game” with high competition over the existing market base and declining profit margins. A shift to blue ocean strategy and market development into America, which as evidenced by research and numerous articles has at present, a larger and growing interest in K-beauty and korean culture thus becomes a viable strategy for TONIC15 to adopt ((Eun Jee, 2017;Joo-ri and Jihae, 2019; Euromonitor 2018; Culliney 2020; Wischhover 2019)

With prior research from assignment 2 indicating the viability of reactive collaboration/cooperation as the most successful and common strategy pursued during times of uncertainty (Sniazhko 2019;Sharma et.al 2020) we find suitable the usage of “co-opetition” and the utilization of Brandenburger and Nalebuff’s (1998) value net framework in creating value for TONIC15 for the purpose of enhancing market development in the UK/EU. Under the value net framework, we identify that TONIC15s strengths such as its exclusive access to korean suppliers and relationships with brick and mortar establishments can be leveraged as bargaining chips to entice competitors in sharing access to their own social networks and thus supplementing TONIC15’s present weaknesses in marketing, as well as cooperating with them in buying similar products in bulk so as to gain discounts from suppliers.

Diversification via targeting new markets of male skin-care and minority demographics is believed to be the most prudent measure in light of the aforementioned changing demographics of the UK/EU. As this would utilize the same distribution products, similar marketing and similar product type, concentric diversification thus presents itself as the most suitable strategy in pursuit of this option, not only based on “fit” to the needs of TONIC15 but also because it has proven to be the most effective in increasing organizational competitiveness (Wilfred, Bernard and George 2014;Anil and Yigit 2011). 

Upon reaching out to these as yet untapped markets, IDIC model can then be utilized so as to develop entrenched relationships with these customers. The IDIC model would assist TONIC15 in identifying, differentiating and interacting with customers, so as to customize the company's behavior to better suit them(Peppers and Rogers 2004). This is a necessary step due to research highlighting the importance of building and maintaining personalized customer relationships through times of uncertainty (Pantano et.al 2020;Didonet et.al 2012) 

Lastly, understanding from the management challenge of the drawbacks a lack of HRM processes brings to the company and tapping into the trend of digitalization, E-HRM appears as a suitable option to not only solve this lack but also support growth of TONIC15 in pursuit of the aforementioned strategic options.

As such, the team proposes the DSER programme, further described in the proceeding section for TONIC15. This programme seeks to synthesize and combine the above strategic options into a suitable growth plan over the next 5 years which will allow TONIC15 to take advantage of the current opportunities available to it in the market, augment its weaknesses with competitor strengths and develop itself in new markets, all for the goal of reaching the 10% market share set out by its founder.

3.1 DSER Programme

 

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3.2 Development of E-HRM to support future growth (WJ)

Regarding size, research found that an increase in firm size is likely to persuade managers to leverage learning fully from their experiences and promote international success (Filatotchev et al. 2009; Villena Manzanares 2019).

 

3.3 Seeking and collaboration with outside firms

The theoretical background of this recommendation subsection draws heavily upon Brandenburger and Nalebuff’s (1998) value net framework and their belief that there can be multiple winners among competitors in a market and firms could gain more through cooperation as compared to operating alone. Hence, we recommend TONIC15 seek collaboration opportunities with two main groups, competitors and complementors. 

As noted in our TOWS matrix, TONIC15 suffers from a lack of marketing capability as compared to its competitors on social media platforms. Partially stemming from the trend of digitalization highlighted in the management challenge, social media plays an ever increasing role in attracting, advertising and conveying information to customers, as well as indicating brand health (Ahmad, Musa and Harun 2015). An analysis of a competitor operating under similar circumstances as TONIC15; Pureseoul, presents an equitable solution and therefore our recommendation in overcoming this challenge. Pureseoul, as compared to TONIC15 has a vastly higher number of likes and follows on their Facebook and instagram pages, while actively updating their platforms. However, unlike TONIC15, pureseoul does not have access to brick and mortar networks to market their products, nor does it have the “authenticity” of being korean run. 

Therefore we recommend that TONIC15 collaborate with Pureseoul, offering access to their network in exchange for marketing access on their social media platforms, in particular for more obscure brands Pureseoul does not have access to that TONIC15 does. This exchange and focus on TONIC15’s exclusive access to these more obscure brands moves Pureseoul from being a “competitor” into a “complementor” and facilitates the building of trust, an important critical success factor, between the two firms for future collaborative ventures such as mutual cooperation in securing better deals from suppliers for common brands both firms market (Kostis and Nasholm 2019). On that topic, future ventures between TONIC15 and their partner can take advantage of Collaborative Planning, Forecasting and Replenishment (CPFR) programmes, which are geared towards shared information and stock taking so as to achieve efficient supply chain management, such as the example by of Sears and Michelin, competitors who utilized CPFR to achieve 25% reduction in inventory for both firms (Steerman 2003). 

Lastly, regarding collaboration with complementors, a suitable suggestion is found in lookfantastic. Complementors are firms who market products which complement the products of TONIC15 and add value to mutual customers (Brandenburger and Nalebuff 1998). Perusing TONIC15’s stock showcases a lack of makeup brushes, a speciality of lookfantastic as noted by fashion magazine “Cosmopolitan” TONIC15 can package these makeup brushes into their tailormade “pamper packages” as they have done in the past to great fanfare (Glamour.co.za 2019.). 

3.4 Exploitation of new target markets

Blue Ocean Strategy proves complementary to Ansoffs matrix in reinforcing the need for market development, as described by Kim and Mauborgne 2015, the current market in the EU and the UK would be described as a red ocean, a “zero sum game” with high competition over the existing market base and declining profit margins. A shift to blue ocean strategy and market development into America, which as evidenced by research and numerous articles has at present, a larger and growing interest in K-beauty and korean culture thus becomes a viable strategy for TONIC15 to adopt ((Eun Jee, 2017;Joo-ri and Jihae, 2019; Euromonitor 2018; Culliney 2020; Wischhover 2019)

Diversification via targeting new markets of male skin-care and minority demographics is believed to be the most prudent measure in light of the aforementioned changing demographics of the UK/EU. As this would utilize the same distribution products, similar marketing and similar product type, concentric diversification thus presents itself as the most suitable strategy in pursuit of this option, not only based on “fit” to the needs of TONIC15 but also because it has proven to be the most effective in increasing organizational competitiveness (Wilfred, Bernard and George 2014;Anil and Yigit 2011). 

Upon reaching out to these as yet untapped markets, IDIC model can then be utilized so as to develop entrenched relationships with these customers. The IDIC model would assist TONIC15 in identifying, differentiating and interacting with customers, so as to customize the company's behavior to better suit them(Peppers and Rogers 2004). This is a necessary step due to research highlighting the importance of building and maintaining personalized customer relationships through times of uncertainty (Pantano et.al 2020;Didonet et.al 2012) 

Go into detail of how many men are interested in skincare / popularity of Korean culture in america, lucrative

Market development and market penetration

 

3.5 Relationship building with customer base

Our last recommendation under the DSER programme intends to focus on creating personalized relationships with both TONIC15’s existing customer base and the new customer bases that are captured under section (3.4). In order to achieve this, we recommend utilization of the IDIC model and adoption of customer relationship management systems (CRM).

The IDIC model serves to present to TONIC15 relevant information that is linked to individual customers that can be used to develop long term beneficial relationships between both parties by individually satisfying customer needs and preferences. In essence, it serves as a tool for further customer segmentation, grouping customers on the basis of their estimated value and importance, with greater interaction focused on the higher the level of value the customer provides to the company so as to tailor specific and personalized offers to each customer (Ahmadi, Osmani and Ibrahim 2012; Peppers and Rogers 2004).

Recognizing this, we thus present the following suggestion in utilizing the IDIC model.

1)         Identifying stage: Men and Women of all ethnicities in the 25-45 age group with an annual income above GBP30k who lead active lifestyles in the EU/UK and America.

2)         Differentiation stage: Through data analytics of CRM system, customers can be divided into individual segments, from highest to lowest value, these are “High spenders” who spend large amounts at a time, “Loyal/Registered Customers”, who are subscribed to the page and while not purchasing in as large amounts as “High spenders”, regularly make purchases and “Convenience shoppers”, whom purchase when discounts are available and are generally one-time customers (Teneva 2017;Ballestar, Grau-Charles and Sainz 2017)

3)         Interacting stage: TONIC15 can reach out to higher value customer segments in the form of email correspondence and surveys to discover which products they would like to see being stocked or put on discount in turn increasing customer loyalty. 

4)         Customizing stage: Having interacted with the individual customer segments, they can then market to them tailor made packages in the form of their already established “pamper packages” and use one time discounts to increase sales.

As seen above, TONIC15s implementation of the IDIC model relies partially on CRM systems. This thus encompasses our 2nd recommendation under this sub-section. CRM systems allow for more personalized service via providing information on customer interaction with the store, they significantly improve customer-business interaction and can help TONIC15 capture, recall and utilize customer data, not only for the purposes of segmentation under IDIC, but also to improve effectiveness of their customer service by identifying their problems and needs. This in turn increases customer satisfaction and loyalty to the company, and therefore possibly move customers into the “convenience shopper” segment into the “Loyal/Registered” customer segment (Chang and Graham 2012). One popular CRM tool which we suggest TONIC15 adopt is hubspot, a free and easy to use CRM system TONIC15 can utilize in order to better understand their customer base.

4. Proposed implementation plan
5. Force Field analysis(WJ)
6. Safe framework (Kami)
7. Risk assessment (Probability Impact Matrix). ( YING- This is my part)
8. Balanced scorecard (Kami)
9. Conclusion (Group)
   10. References
   11. Appendix

11.1 Reflection ( This is also my part)

Appendix: As a group, write a 500-word response to the feedback you received in your first two assignments and what you did in reaction to that feedback to develop your group assignment (this does not count towards your total word count).