10 4 17 Mba211Compilationsof Reflections DevIssues

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Human climate in the organization
Culture is a hot topic. It was the Merriam-Webster “word of the year” for 2014. Leaders and
experts across the world are talking about how to develop an agile culture, implement a lean
culture, overcome the culture clash in acquisitions, and many other areas of culture change.
Unfortunately, the reality is that most of these leaders and experts are actually focusing their
efforts on climate and not dealing with the deeper, more powerful subject of culture. I didn’t
understand the difference until the past few years.
Organizational climate is the shared perceptions and attitudes about the organization. The
most visible area of a focus on culture that is actually climate is all the effort to measure and
improve employee engagement. This focus on engagement did yield results for some
organizations. Unfortunately, according to Gallup’s Employee Engagement Study, the number
of employees engaged at work has barely moved over the course of the last 15 years.
Reflection: We know the drill. Employees are asked, for example, whether they know what’s
expected of them, whether their opinions seem to count, and if their manager is paying
attention to them. Organizations compile the results and “action plans” are developed. It’s not
just engagement surveys where people think they are getting to culture. The vast majority of so-
called “culture” surveys and “great workplace” surveys primarily measure climate. Employees
might be asked if the mission is clear, benefits are good, management shows appreciation,
teamwork is encouraged, or whether the organization is effective at managing change.
Organizational culture is the shared beliefs and assumptions about the organization’s
expectations and values. These “unwritten rules” and perceived expectations drive our
behavior in organizations. Edgar Schein once said “90% of our behavior in organizations is
driven by cultural rules.” When faced with problems, challenges, or goals it often helps to
understand the aspects of culture that either inhibit or support effectiveness. To surface these
aspects of culture, employees should be asked, for example, if they are expected or implicitly
required to:
• check decisions with superiors
• work to achieve self-set goals
• point out flaws
• take on challenging tasks
• never make a mistake
• not “rock the boat”
• make a “good impression”
• know the business
These examples are from the Human Synergistic Organizational Culture Inventory, the most
widely used and heavily researched culture assessment in the world. We all have experienced
the positive and negative impact of these perceived expectations. In some cases they help to
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MBA2118 DEVELOPMENT OF ISSUES AND PROBLEMS IN BUSINESS 60
propel our thinking forward to “act on what we know” and accomplish great things with
constructive behaviour. In other cases, they lead to passive or aggressive behaviour that
undermines our effectiveness. Some organizations may actually be paralyzed by fear and
plagued with inaction when they need the exact opposite.
Why focusing on climate can be a problem

Edgar Schein, arguably the #1 culture expert in the world, wrote in the The Handbook of
Organizational Culture and Climate : “A climate can be locally created by what leaders do, what
circumstances apply, and what environments afford. A culture can evolve only out of mutual
experience and shared learning.”
Reflection: There is value in understanding how both climate and culture are influencing our
work to effectively manage problems, challenges, or goals. The results of a focus on changing
climate may lead to some quick wins, like managers temporarily engaging employees more
effectively, but the improvements may be short-lived unless a culture shift occurs. I’ll share a
clear example. A culture change cut short after climate success. Point in case, I was appointed
president of a manufacturing organization. It was clearly a command and control culture. I
vividly recall a top leader yelling at me: “You are from the new school that’s all about hugs and
kisses, I am from the old school that’s about performance and giving people a swift kick in the
ass when they need it.” You can imagine what the culture was like as this aggressive behavior at
the top led to extremely passive and conventional behaviour on the front lines since most
employees only did what they were told.
We embarked on a journey to quickly transform the organization. We managed three phases of

improvement over a two year period to support shared-learning and results:
Stabilize: We had a massive company-wide focus on improving quality as we managed a

roadmap of improvements related to clarifying the vision, team behaviors we should expect
from each other, strategies, goals, measures, management systems, communication systems
and motivation (reward & recognition). We focused on roadmap of organization-level
improvements to create a “common core” in this phase while reinforcing new expectations to
plan ahead, make and meet commitments, and cooperate with others.
Grow: We learned from the first phase of improvement together as a team and applied those
insights to a company-wide focus on sales growth. We continued all the habits we started in the
first phase and refined the approach as we included new strategies, goals, and measures
targeted at growth. We implemented regional cross-functional teams so we could learn from
our organization-level focus in the stabilize phase and apply it to a sub-team approach in this
phase.
The expected behaviors defined in the first phase were now applied in this new team structure.
Innovate: We launched a cross-functional innovation team that met weekly and launched
industry-leading innovations in a short period of time. We were ready for an innovation focus
after building the “common core” and improving collaboration across sub-groups / teams. We
also implemented a dramatically improved individual employee development system.
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Our business results improved substantially over the two years in nearly every area. The board
member I reported to said “I can’t believe the change.” We conducted a “culture” survey at the
beginning of this journey but it was one that primarily measured areas of climate. We moved
from the lowest possible score in eight of twelve categories to the top 20th percentile in most
areas as the climate was transformed. I was happy about the improved results, but was the
culture completely transformed in two years as the survey results would have led many to
believe? No way. I knew that while these climate results had clearly skyrocketed the culture
journey was just underway.
I ended up leaving the organization to accept a role in a part of the country that was a better fit
for my family. An acquisition was finalized soon after I left and I was replaced by someone with
a dramatically different leadership style. The operating model we built began to fall apart and
results deteriorated very fast. The Board decided to sell the assets to its largest competitor and
the story was over. Climate success was short-lived and overshadowed by the fragile state of
our developing culture.
It’s critical to understand both climate and culture.
Understand what you are measuring. Don’t be fooled by engagement or other climate
measures and think you are measuring the behavioral norms and underlying assumptions (we
have all experienced the power of these “unwritten rules”).
Don’t get stuck on the climate treadmill since your results will change as leaders, workload,
policies, and other areas change. Climate is extremely important but don’t lose sight of culture.
Top culture expert Edgar Schein gives us great advice about not being fooled by the illusion that
when you change behavior you are changing the underlying culture.
If you are interested in sustainability, it’s critical to understand how culture is both helping and
holding back your progress as you deal with problems, challenges, and goals.
Use a phased approach to constructive culture change so you build on shared learning and
experience as you manage work on top performance priorities. This basic culture roadmap and
free webinar may help.
It’s your culture that endures as people come and go from your organization and, ideally, allows
you to effectively deal with new problems, challenges, and goals.
Have you heard of the difference between culture and climate? How have you moved to the
deeper side of culture to shift shared beliefs and assumptions about an organization’s
expectations and values?
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Product Innovations and Research
Reflection: Product innovation is not just about being new or being different. It’s about creating
new products that customers will love, taking a different path consumers will want to follow.
That’s where our expertise in product innovation comes into its own. We seek out new flavours,
formulas, fragrances, packaging, ingredients and ideas. And we track how consumers respond,
identifying what works and what doesn’t. And explaining exactly why. That gives our clients an
edge. It tunes them in to emerging trends, giving them a base of knowledge on which their own
new ideas can flourish. It’s why we work with 90% of the world’s leading FMCG businesses. It’s
why we can work for yours.
You work in product development, product innovation, research and development or product
design. You’re challenged to improve the speed, quality and success of product development
projects. You need evidence and insights to develop and validate concepts, build business
cases, develop the products and take them successfully to market. Our product innovation
insights can inspire your ideas and our data can support them. At Mintel, we know about
product innovation – we’ve analysed over 2.5 million new FMCG products and counting.
INTELLIGENCE: You need data to support your thinking and innovation strategies. We spot the
trends and spell out their implications so you can concentrate on what you do best – innovating
for your business.
INSPIRATION: Our global view can expand your creative horizons and give you a new
perspective. Our experience puts innovation in context, so you can see its potential on your
own patch.
IMPACT: We’re focused on results, on exploring objectively the reasons for the success and
failure of new product launches. We can show you best practice and help you avoid the same
mistakes so you’re one step ahead of the competition.
1. Research and Development, Innovation, Product Design
1.1 Research and development

Research and development, innovation, new product development and product design are
often used interchangeably, but they each have quite distinct meanings.
Research and Development (R&D) is the process of creating new knowledge about products or
processes. R&D is defined in the Frascati Manual written for the OECD as (OECD, 1981 cited in
Walsh et. al, 1992: 20)
"Research and experimental development, (R&D) comprise creative work undertaken on a

systematic basis in order to increase the stock of knowledge... and the use of this stock of
knowledge to devise...new materials, products, or devices...new processes systems and
services, or ...improving substantially those already produced or installed"
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1.2 Innovation
Technical or industrial innovation is used to describe a new breakthrough in a process or
production technique or a novel product and it is used widely by economists. Innovation is
defined by Walsh et. al. (1992: 16) as:
"The whole activity from invention (the discovery of a new device, product, process or system)
to the point of first commercial or social use.."
Innovation, therefore can involve the exploitation of a new market opportunity, or on the other
hand, the development and marketing of a technical invention; however it usually involves a
combination of both since many inventions have no market demand and so do not constitute
an innovation.
1.3 New product development

New product development is a term often used by the management and marketing department
of firms. It describes the process of changing the form, components, materials, marketing or
packaging of a product, and it differs from innovation in that it does not usually involve
invention. It is defined by Walsh et. al (1992: 16) as:
"the process that transforms technical ideas or market needs and opportunities into a new
product launched on to the market"
1.4 Design
A broad definition of design is given by Caldecote (1979) cited in Walsh et. al (1992: 18) as:
"The process of converting an idea into information from which a new product can be made"
The OECD (1982) cited in Walsh et. al. (1992: 18) defines design more precisely as:
"Design is the very core of innovation, the moment when a new object is imagined, devised and
shaped in prototype form."
Different cultures perceive and see various roles for design. For instance the UK is seen as
having a more analytical and marketing approach to design, whereas in Japan, design is more
concerned with what 'could be'; therefore in Japan design is seen as being more of a creative
process (Evans, 1986).
Design covers a broad spectrum of activities: architecture, fashion design, craft work, product
design, graphics and typography.
1.5 Product design

Product design is often misunderstood as a concept. It is commonly seen, even by managers of
companies, as the process of making products look aesthetically pleasing or stylish. Most
product designers understand product design to mean much more than this. Product design is a
multi-disciplinary process which usually involves market and technological research, concept
design, prototype development, final product development and testing as well as post
production refinement. Product Design is defined by Walsh et al (1992: 18) as:
……………………..
"The activity in which ideas and needs are given physical form, initially as solution concepts and
then as a specific configuration or arrangement of elements, materials and components"
Product design does not usually imply the utilisation of new technologies to create novel
products. Typically, it entails the refinement or upgrading of existing designs, to improve
functionality, performance or appeal. Another goal is to lower the cost of manufacture for
competitive advantage. New technologies may be used in existing/established products, for
example in using microprocessors to control and improve energy efficiency and water use in
washing machines. Product Design can also involve adapting products for particular markets or
environments.
Product design can be sub-divided into different types; mechanical component design,
electronic design, aesthetic design, industrial design, engineering design and graphic design.
While product design is carried out in almost all industries, it is not necessarily done in a
systematic fashion by professional designers. In many instances design is carried out by a
draughts person, production manager or toolperson. This would be typical of companies in
developing countries and smaller companies in industrialised countries. This is what Gorb and
Dumas term "Silent Design" (Gorb and Dumas, 1987). These silent designers may have no
training in design. Design activity may consist of copying and adapting existing products or
"Sketching on the back of a cigarette packet". (Walsh et. al. 1992: 22) Christopher Freeman
identifies four kinds of design activity (Freeman, 1983: cited in Walsh et. al: 1992: 22):
1. Experimental design: the design of prototypes and pilot plant leading to the preparation
of production drawings for the commercial introduction of a new product or process
2. Routine design engineering: the adaptation of existing technology to specific

applications (typical of the design work done by many engineering firms when installing new
plant or equipment)
3. Fashion design: aesthetic and stylistic design of items ranging from textiles and shoes to
chairs, car bodies and buildings (this kind of design may result in novel forms, shapes or
decorations, but often involves no technical change at all)
4. Design management: the planning and co-ordinating activity necessary to create, make
or launch a new product on the market.
Reflection: To summarise, there is considerable overlap between R&D, innovation, new product
development and product design, however product design is much more widespread in industry
than R&D (Walsh et al 1992:19). Pure research is usually carried in universities or for example, in
agricultural research centres. Further R&D is carried out by some companies, typically in
industries such as chemicals, pharmaceuticals, and aerospace. Innovation involves a new
invention being matched with a market need. New product development is the term given to the
process of bringing new or updated products to the market. Product design describes the
creative process in researching markets, innovations and needs, then transforming ideas into
products for particular markets.
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2. Product Design, Innovation and Competitiveness
2.1 Microeconomic factors and design (the commercial role of design)

Product Design is one of the most important non-price factors which determines the success of
a product. The role of product design changes throughout the life-cycle of a product. In the
initial product development stage, the role of design is to create a marketable product from an
innovation. The product may create a need where none existed before, (for example when the
Sony Walkman was introduced) or quite different products may be competing with others in
the same market (for example trams, cars and buses compete for urban transport). As the
product life cycle matures, more competitors enter the market and the chief role of design is in
product differentiation; through quality, appearance, performance, ease of use, reliability,
reparability and so on (Walsh et. al. 1992: 32,82).
The importance of design as a non-price factor and the role of design in determining the
production and running costs of a product lies in the theory that:
• A purchaser will chose a better designed, higher quality product when given the choice
of two products of similar price.
• A purchaser will chose the cheaper of two products of similar design and quality.
In reality, purchaser choice will also be influenced by various other non-price factors such as
availability, advertising, company image, and ideology (for example, nationally produced or
environmentally friendly products) (Walsh et. Al, 1992: 65). In addition, price is often regarded
as an indication of quality (Uganwa and Baker, 1989). Finally, purchasers can also chose
between a product or a service (for example a washing machine or a laundry).
A number of studies (Pavit, 1980; Patel and Pavit, 1987; NEDO, 1979) have shown that
innovativeness and technical sophistication are the non-price factors which most determine
competitive success in international markets.
While product design is generally considered to be a non-price factor it also important to

consider the influence of design upon product price. Product design effects the cost of
production through the choice and use of materials and how the product is assembled (known
as Design for Manufacture). Design also influences after-sales maintenance and running costs
(which is more important for some types of products such as heating systems). Running costs
are often calculated as being integral to the price of a product in purchasers decisions.
Therefore it is simplistic to view design as purely a non-price factor (Walsh et al: 80-82).
In the UK, studies of the return of investment in design have been carried out by the Design
Innovation Group of Open University and Manchester Institute of Science and Technology. One
study showed that 'Design Conscious Firms' had a three per cent higher return on capital, one
per cent higher profit margin, 28 per cent higher Turnover growth and a seven per cent higher
capital growth than a representative sample. (Walsh et al: 1992, 79).
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2.2 Macroeconomic factors and design
In industrialised countries, the link between design of products and industrial competitiveness
has increasingly been acknowledged by economists and policy makers as well as by designers
themselves.
In the UK, two important reports stimulated debate into the important role of design in
competitiveness: the Corfield Report on Product Design (NEDO, 1979) and the Finniston Report,
'Engineering our Future' (Finniston, 1980). The reports suggested that Britain was declining
industrially through loss of market share to other countries, especially Germany and Japan,
both of which were renowned for the high quality and design of their products. The reports
pointed to a cause being the UK's relative lack of investment in Research and Development and
Product Design. Walsh et. al. (1992: 4) summarises the main findings of these reports:
Since the Second World War, and particularly since the late 1950s, the creation and
manufacture of well-designed products, across the whole spectrum of innovation, have become
essential to the success both of individual companies and national economies...our research has
shown that those firms that invest resources and professional expertise in product and
industrial design in both traditional and new industries have been commercially more
successful than firms that pay less attention to these aspects of design.
Such has been the concern in the UK with the country's decline in the share of the world's
manufactured products, that during the 1980s, the Conservative government significantly
departed from their policy of reducing public spending when they funded a new initiative to
directly subsidise product design within firms (the Support for Design Scheme). Margaret
Thatcher (1992) cited in Walsh et. al. (1992: 69) wrote of the importance of product design:
There are many ingredients for success in the market-place. But I am convinced that British
industry will never compete if it forgets the importance of good design. By 'design' I do not just
mean 'appearance'. I mean all the engineering and industrial design that goes into a product
from the idea stage to the production stage, and which is so important in ensuring that it
works, that it is reliable, that it is good value and that it looks good. In short it is good design
which makes people buy products and which gives products a good name. It is essential to the
future of our industry.
These reports and government initiatives have been reflected in other reports relating to design
in Japan, Germany, France, UK, Scandinavia.
According to Braunerhjelm and Fors, comparative advantage can be regarded from two
perspectives, static or dynamic. In this analysis, static comparative advantage includes the fixed
factors of production such as physical capital, labour, human capital, labour skill, land and
natural resources. Dynamic comparative advantage is the ability to upgrade skills, adopt new
technologies, introduce innovative products and production techniques and the transfer of
these technologies between companies in a country. Therefore, goods competing on price,
compete on a static comparative advantage whereas goods which are of higher value added,
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more technically sophisticated and differentiated, require that dynamic comparative advantage
be present (Braunerhjelm and Fors, 1994: 7). Thus product design, as a process, is a factor of
dynamic comparative advantage. Braunerhjelm makes two important points regarding dynamic
comparative advantage; firstly, with dynamic comparative advantage it is more difficult to
predict which firms will succeed, since success depends on individual companies internal
capacity to innovate and adapt. Secondly, in an open international economy, it will be more
difficult to predict winners (Braunerhjelm and Fors, 1994: 6-7).
3. Design, Competitiveness and Developing Countries
While in industrialised countries, product design has being seen as increasingly (but often only
recently) important to international competitiveness, in developing countries the same has not
been true (Vijoen, 1997: 4-5). It is only recently that the design of products has been seen as an
important factor in competitiveness. There are a number of reasons why design was not seen
as being important in the past:
As outlined in section 2 above, product design was often perceived as an exercise in aesthetics
or fashion, as opposed to being a complex synthesis of market needs, creativity, technology,
cultural and environmental appropriateness, ergonomics, and manufacturing. Therefore,
product design was seen as being irrelevant to developing countries
Since people in developing countries have lower per capita incomes, it is assumed that they are
not able to afford "well designed" products. This assumption ignores the fact that product
design can reduce the cost of products or make products more durable and of better quality.
Therefore products would be 'well designed' if they were appropriate to their market
• Up until the 1970s most developing countries had a policy of Import Substitution
Industrialisation. This had the effect of closing off markets to better designed imported
products. Along this, there has always been a high degree of state involvement in
manufacturing in developing countries. This has been attributed to the lack of a middle class
capable of leading industrial development (Chandra, 1992: 62). State run enterprises have a
tendency to be more production focused than marketing oriented. Monopoly enterprises do
not have as much of an incentive to innovate.
Product Design is now seen as being relevant to developing countries since:

• World Bank and developing country policy has favoured the opening up of markets
through tariff reduction. This has exposed local producers to cheaper and better desiged
products, so firms are being challenged on both domestic and export markets
• Particularly in industrialised countries, product characteristics such as design, frequency

of new product introduction and quality are becoming increasingly important. Price
competitiveness (while still important) is diminishing in priority (Kaplinsky, 1994: 13) Industrial
country markets are the main source of export expansion for DCs
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• The newly industrialised countries of South East Asia have successfully used product
design to produce competitive products for world markets
• There are opportunities for developing countries to design products which are
appropriate to their own markets. Domestic producers have the advantage of knowledge of
their local market and environment, as well as proximity to customers.
Van Dijk (1990: 214) has written about the increasing importance of non-price factors in the
context of developing countries:
"Theories concerning industrialisation usually assume that industrial products can be absorbed
by the world market if prices are low enough. This view is too simple. Marketing Channels,
quantities produced, sensitivity to changes in consumer taste, etc. have become so important
that small countries cannot easily export industrial products, not even if they have a
comparative advantage."
While, product design has had marginal importance in the industrial policies of developing
countries in the past, new moves are being made to promote its use as a development tool:
• The European Union has funded research into the use of product design in various
countries. Internationally, conferences have been organised to promote product design,
notably: in 1997 the International Council for the Societies of Industrial Design (ICSID) held a
conference in Pretoria to address the subject of "Industrial Design Education for Developing
Countries".
• The World Bank (1993: 1) has begun stressing the need to focus on the competitive
capacity of individual firms in the overall development of the industrial sector:
Research by Bank consultants Martin Bell and Keith Pavitt shows that private firms, sometimes
with public support, make a far greater contribution to the pace of change than public
institutions. 1 As individual firms increase their efforts to initiate and manage change, they
need to invest in research and development laboratories, design offices, and production
engineering studies. Policy makers seeking quicker technological change need to take the needs
of private firms into account.
In a case study of Mauritus, the world bank has highlighted another important role of design. In
Mauritius, there has been downward pressure on wages since companies profit margins have
been reduced by international competition after markets were liberalised. The bank suggests
that investment in product design will upgrade products, increase workforce productivity
thereby maintain or increase both profit margins and wage rates (WB, 1994: 1).
The experience of Asian NIEs shows that developing local design capabilities can play an
important role in helping firms increase value-added and sustain competitiveness despite high
labor costs.
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Japan, is cited by Freeman (1987: 67) cited in Walsh et. al. (1992) as being a country where
product design has played a crucial role:
Japan in fact recognised in its post-war reconstruction programme the need for advanced
industries capable of supplying products of high quality and good design, incorporating the
latest technology and materials. In post-war Japan, there was actually an explicit struggle
between the traditional economists who argued that Japan should concentrate on sectors like
textiles, where it had a comparative advantage (cheap labour), and the majority of economists
in the Ministry of International Trade and Industry who argued for the identification of key
'leading edge' technologies and strategies for Japan to achieve in them an international
competitive position in the medium term'
This quote also touches on the important notion that comparative advantage is not
unchangeable. The role of product design in the Newly Industrialised Countries of South East
Asia has had an effect on policy thinking in developing countries. Singapore, for instance, has
invested heavily in the product design with the establishment of the Singapore Design Centre to
promote design in Singaporean industry.
In developing industrial strategies, the role of product design must be seen as an important
element for success. Developing countries need to invest in improving the quality and design of
their products in order to remain internationally competitive. There exists the opportunity to
create new employment and provide products which meet the needs of people in developing
countries through product design. Therefore capacity needs to be developed in order to
educate a body of designers who understand the role and process of design in the development
of individual companies' products for both domestic and export markets.
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Public Relations in Business
Public relations (PR) is the practice of managing the spread of information between an
individual or an organization (such as a business, government agency, or a non-profit
organization) and the public.1 Public relations may include an organization or individual gaining
exposure to their audiences using topics of public interest and news items that do not require
direct payment.
This differentiates it from advertising as a form of marketing communications. Public relations

are the idea of creating coverage for clients for free, rather than marketing or advertising. An
example of good public relations would be generating an article featuring a client, rather than
paying for the client to be advertised next to the article. The aim of public relations is to inform
the public, prospective customers, investors, partners, employees, and other stakeholders and
ultimately persuade them to maintain a certain view about the organization, its leadership,
products, or political decisions. Public relations professionals typically work for PR and
marketing firms, businesses and companies, government, and public officials as PIOs and
nongovernmental organizations, and non-profit organizations. Jobs central to public relations
include account coordinator, account executive, account supervisor, and media relations
manager. Public relation is an action of convincing people. The PR person talks with others that
make them think about the things the person wants them to think, and the people regard the
person as their believes. Public relation helps people to build up the connection to media and
society that they can talk steadily.
Public relations specialists establish and maintain relationships with an organization's target
audience, the media, and other opinion leaders. Common responsibilities include designing
communications campaigns, writing news releases and other content for news, working with
the press, arranging interviews for company spokespeople, writing speeches for company
leaders, acting as an organization's spokesperson, preparing clients for press conferences,
media interviews and speeches, writing website and social media content, managing company
reputation (crisis management), managing internal communications, and marketing activities
like brand awareness and event management.
Reflection: Success in the field of public relations requires a deep understanding of the interests
and concerns of each of the company's many stakeholders. The public relations professional
must know how to effectively address those concerns using the most powerful tool of the public
relations trade, which is publicity.
Public relations and journalism have similarities in the work they do, yet these two fields don't
necessarily have the greatest relationship, being described as "adversaries" at times.
PR is able to divide to many types, for example the product public relations, financial public
relations, corporate public relations, employee public relations and government public
relations. Product PR is managing the release of new products into the market. Financial PR is
to build up a relation to shareholders and customers. Corporate PR helps communicate the
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core conception of the companies for customers. Employee PR focus on the employments and
HR. Government PR is to help set up a correct attitude towards the political perspectives.
Ivy Lee, the man who turned around the Rockefeller name and image, and his friend, Edward
Louis Bernays, established the first definition of public relations in the early 1900s as follows: "a
management function, which tabulates public attitudes, defines the policies, procedures and
interests of an organization... followed by executing a program of action to earn public
understanding and acceptance." However, when Lee was later asked about his role in a hearing
with the United Transit Commission, he said "I have never been able to find a satisfactory
phrase to describe what I do." In 1948, historian Eric Goldman noted that the definition of
public relations in Webster's would be "disputed by both practitioners and critics in the field."
According to Bernays, the public relations counsel is the agent working with both modern
media of communications and group formations of society in order to provide ideas to the
public’s consciousness. Furthermore, he is also concerned with ideologies and courses of
actions as well as material goods and services and public utilities and industrial associations and
large trade groups for which it secures popular support.
In August 1978, the World Assembly of Public Relations Associations defined the field as
"the art and social science of analyzing trends, predicting their consequences, counselling
organizational leaders and implementing planned programs of action, which will serve both the
organization and the public interest."
Public Relations Society of America, a professional trade association,defined public relations in
1982 as: "Public relations help an organization and its publics adapt mutually to each other."
In 2011 and 2012, the PRSA solicited crowd supplied definitions for the term and allowed the
public to vote on one of three finalists. The winning definition stated that:
"Public relations are a strategic communication process that builds mutually beneficial
relationships between organizations and their publics."
Public relations can also be defined as the practice of managing communication between an
organization and its publics.
Public relation is to speak out its advocacy in public, and it builds up a talking platform to
achieve its goals and protect the interests of people.
Public relations are not a phenomenon of the twentieth century, but rather has historical roots.
Most textbooks consider the establishment of the Publicity Bureau in 1900 to be the founding
of the public relations profession. However, academics have found early forms of public
influence and communications management in ancient civilizations, during the settling of the
New World and during the movement to abolish slavery in England. Basil Clark is considered the
founder of public relations in the United Kingdom for his establishment of Editorial Services in
1924.
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Propaganda was used by the United States, the United Kingdom, Germany, and others to rally
for domestic support and demonize enemies during the World Wars, which led to more
sophisticated commercial publicity efforts as public relations talent entered the private sector.
Most historians believe public relations became established first in the US by Ivy Lee or Edward
Bernays, then spread internationally. Many American companies with PR departments spread
the practice to Europe when they created European subsidiaries as a result of the Marshall
plan.
The second half of the 1900s is considered the professional development building era of public
relations. Trade associations, PR news magazines, international PR agencies, and academic
principles for the profession were established. In the early 2000s, press release services began
offering social media press releases. The Cluetrain Manifesto, which predicted the effect of
social media in 1999, was controversial in its time, but by 2006, the effect of social media and
new internet technologies became broadly accepted.
There is a study by the Institute of Public Relations said that here were more than 48,000
people took part in public relations in Britain, and 155,000 people blended into public relations
in the United States.
The U.S Bureau of Labor Statistics reported that in 2014, the median annual salary for public
relations practitioners was $55,680. The top ten percent in the field made around $105,720 and
the bottom ten percent made around $31,190.
For public relations managers, however, the median annual wage in 2011 was $93,310.
Workers in the 90th percentile earned around $176,400, and workers in the 10th percentile
earned $50,360, according to the U.S. Department of Labor.
The U.S. Bureau of Labor Statistics also projects an employment growth of 12 percent between
2012 and 2022 for the profession, where an additional 27,400 jobs will need to be filled. The
public relations profession has claimed the No. 75 spot on the 2014 U.S. News & World Report
list of Best Jobs because of its promising direction.
In the United States, public relations professionals earn an average annual salary of $49,800
which compares with £40,000 ($68,880) for a practitioner with a similar job in the UK.when?
Top earners make around $89,220 annually, while entry-level public relations specialists earn
around $28,080. Corporate, or in-house communications is generally more profitable, and
communications executives can earn salaries in the mid six-figures, though this only applies to a
fraction need quotation to verify of the sector's workforce.
According to the 2015 PRWeek/Bloom, Gross & Associates Salary Survey, the median salary at
PR firms was $90,000, a 5.9% increase from $85,000 in the 2014 survey.
Reflection: The role of public relations professionals is changing because of the shift from
traditional to online media. Many PR professionals are finding it necessary to learn new skills
and to understand how social media can affect a brand's reputation.
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Public relations professionals present the face of an organization or individual, usually to
articulate its objectives and official views on issues of relevance, primarily to the media. Public
relations contribute to the way an organization is perceived by influencing the media and
maintaining relationships with stakeholders. According to Dr. Jacquie L’Etang from Queen
Margaret University, public relations professionals can be viewed as "discourse workers
specializing in communication and the presentation of argument and employing rhetorical
strategies to achieve managerial aims."
Specific public relations disciplines include:

• Financial public relations – communicating financial results and business strategy
• Consumer/lifestyle public relations – gaining publicity for a particular product or service
• Crisis communication – responding in a crisis
• Internal communications – communicating within the company itself
• Government relations – engaging government departments to influence public policy
• Media relations – a public relations function that involves building and maintaining close
relationships with the news media so that they can sell and promote a business.
• Celebrity public relations− promotion of a celebrity to various media publications and
outlets
• Food-centric relations – communicating specific information centered on foods,
beverages and wine.
Building and managing relationships with those who influence an organization or individual’s
audiences has a central role in doing public relations.
After a public relations practitioner has been working in the field, they accumulate a list of
relationships that become an asset, especially for those in media relations.
Within each discipline, typical activities include publicity events, speaking opportunities, press
releases, newsletters, blogs, social media, press kits, and outbound communication to members
of the press. Video and audio news releases (VNRs and ANRs) are often produced and
distributed to TV outlets in hopes they will be used as regular program content.
A fundamental technique used in public relations is to identify the target audience and to tailor
messages to be relevant to each audience.32 Sometimes the interests of differing audiences
and stakeholders common to a public relations effort necessitate the creation of several distinct
but complementary messages. These messages however should be relevant to each other, thus
creating a consistency to the overall message and theme. Audience targeting tactics are
important for public relations practitioners because they face all kinds of problems: low
visibility, lack of public understanding, opposition from critics, and insufficient support from
funding sources.
On the other hand, stakeholder theory identifies people who have a stake in a given institution
or issue. All audiences are stakeholders (or presumptive stakeholders), but not all stakeholders
are audiences. For example, if a charity commissions a public relations agency to create an
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advertising campaign to raise money to find a cure for a disease, the charity and the people
with the disease are stakeholders, but the audience is anyone who is likely to donate money.
Public relations experts possess deep skills in media relations, market positioning, and
branding. They are powerful agents that help clients deliver clear, unambiguous information to
a target audience that matters to them.
Messaging is the process of creating a consistent story around: a product, person, company, or
service. Messaging aims to avoid having readers receive contradictory or confusing information
that will in still doubt in their purchasing choices, or other decisions that affect the company.
Brands aim to have the same problem statement, industry viewpoint, or brand perception
shared across sources and media.
Litigation public relations is the management of the communication process during the course
of any legal dispute or adjudicatory processing so as to affect the outcome or its effect on the
client’s overall reputation (Haggerty, 2003).
Public relations professionals both serve the public's interest and private interests of
businesses, associations, non-profit organizations, and governments. This dual obligation gave
rise to heated debates among scholars of the discipline and practitioners over its fundamental
values. This conflict represents the main ethical predicament of public relations. In 2000, the
Public Relations Society of America (PRSA) responded to the controversy by acknowledging in
its new code of ethics "advocacy" – for the first time – as a core value of the discipline.
The field of public relations is generally highly un-regulated, but many professionals voluntarily
adhere to the code of conduct of one or more professional bodies to avoid exposure for ethical
violations. The Chartered Institute of Public Relations, the Public Relations Society of America,
and The Institute of Public Relations are a few organizations that publish an ethical code. Still,
Edelman's 2003 semi-annual trust survey found that only 20 percent of survey respondents
from the public believed paid communicators within a company were credible. Public relations
people are growing increasingly concerned with their company’s marketing practices,
questioning whether they agree with the company’s social responsibility. They seek more
influence over marketing and more of a counselling and policy-making role. On the other hand,
marketing people are increasingly interested in incorporating publicity as a tool within the
realm marketing.
According to Scott Cutlip, the social justification for public relations is the right for an
organization to have a fair hearing of their point of view in the public forum, but to obtain such
a hearing for their ideas requires a skilled advocate.
Spinedit
Spin (public relations)

Spin has been interpreted historically to mean overt deceit that is meant to manipulate the
public, but since the 1990s has shifted to describing a "polishing of the truth." Today, spin
refers to providing a certain interpretation of information meant to sway public opinion.45
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Companies may use spin to create the appearance of the company or other events are going in
a slightly different direction than they actually are. Within the field of public relations, spin is
seen as a derogatory term, interpreted by professionals as meaning blatant deceit and
manipulation. Skilled practitioners of spin are sometimes called "spin doctors."
In Stuart Ewen’s PR! A Social History of Spin, he argues that public relations can be a real
menace to democracy as it renders the public discourse powerless. Corporations are able to
hire public relations professionals and transmit their messages through the media channels and
exercise a huge amount of influence upon the individual who is defenseless against such a
powerful force. He claims that public relations is a weapon for capitalist deception and the best
way to resist is to become media literate and use critical thinking when interpreting the various
mediated messages.
The techniques of spin include selectively presenting facts and quotes that support ideal
positions (cherry picking), the so-called "non-denial denial," phrasing that in a way presumes
unproven truths, euphemisms for drawing attention away from items considered distasteful,
and ambiguity in public statements. Another spin technique involves careful choice of timing in
the release of certain news so it can take advantage of prominent events in the news.
Negative public relations, also called dark public relations (DPR) and in some earlier writing
"Black PR", is a process of destroying the target's reputation and/or corporate identity. The
objective in DPR is to discredit someone else, who may pose a threat to the client's business or
be a political rival. DPR may rely on IT security, industrial espionage, social engineering, and
competitive intelligence. Common techniques include using dirty secrets from the target,
producing misleading facts to fool a competitor.In politics, a decision to use negative PR is also
known as negative campaigning. Public relations are frequently just recycled information used
by a plethora of sources, thus giving way to minimal perspectives regarding events.
In Propaganda (1928), Bernays argued that the manipulation of public opinion was a necessary
part of democracy.54 In public relations, lobby groups are created to influence government
policy, corporate policy or public opinion, typically in a way that benefits the sponsoring
organization.
In fact, Bernays stresses that we are in fact dominated in almost every aspect of our lives, by a
relatively small number of persons who have mastered the ‘mental processes and social
patterns of the masses,’ which include our behaviour, political and economic spheres or our
morals. In theory, each individual chooses his own opinion on behaviour and public issues.
However, in practice, it is impossible for one to study all variables and approaches of a
particular question and come to a conclusion without any external influence. This is the reason
why the society has agreed upon an ‘invisible government’ to interpret on our behalf
information and narrow the choice field to a more practical scale.
When a lobby group hides its true purpose and support base, it is known as a front group.Front
groups are a form of astroturfing, because they intend to sway the public or the government
without disclosing their financial connection to corporate or political interests. They create a
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fake grass-roots movement by giving the appearance of a trusted organization that serves the
public, when they actually serve their sponsors.
Politicians also employ public relations professionals to help project their views, policies, and
even personalities to their best advantages.
Reflection: Most business executives dub PR as 'free advertising.' This could not be farther from
the truth. It neither is advertising, nor is free. As a matter of fact, it may be costly, VERY costly,
depending upon how it is used, because it's a time consuming and labor intensive process. Still
while it almost is cliche; today, PR may make the claim that it'll give your business the best
return for its marketing budget.
Public relations can work through intermediaries. Due to it being compared with advertising, PR
is maybe the least understood of all marketing tools. The basis of PR includes using
intermediaries to communicate with your audience and influence them. Those intermediaries
may be industry spokespersons, stock analysts, investors, trend setters, industry analysts,
customers, employees, and even the electronic and print media. Typically your business has
very little control over those influencers, or intermediaries, which will make public relations so
difficult.
Advertising, on the other hand, provides you that control. You won't just get to create your
organization's messages, match them with a supporting graphic, and then place them where
you desire your audience to read them and as you desire them to read them. Plus, you'll pay for
that control. In order to get individuals to hear you, you must persuade many important
influencers that your business, its services or products are worth their time to consider. You
must have your act together. They do not have time to spend on incomplete ideas. Getting your
act together for a key influencer will mean that you:
• Know competition well
• Know industry well
• Know context that your service or product is utilized in
• Know customers
• Know customer's interests
• Understand why what you need to say is crucial to them
Public relations is personal

You might have demographics for your audience in advertising. You might even have performed
focus groups and market research to pin down their necessities. However, as individuals the
audience remains mainly anonymous to you. You'll communicate to them more as a circle that
shares common interests, instead of as individuals. Advertising, by its nature, includes a mass
communication.
Public relations build up credibility
Public relations boost an organization's credibility, because it'll operate through numerous
trusted intermediaries. Plus, these intermediaries communicate to a certain audience which
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looks to them to filter out all nonsense. If messages are chosen to be communicated, they'll
gain credibility due to the intermediaries' credibility.
Public relations is precise
With advertising, it's possible to calculate the responses and audience impact which you have.
It is similar to a controlled experiment which is being done repeatedly. Public relations is less
predictable due to you having to get the intermediary to comprehend your important message
points and reiterate them in his/her messages. It means cautiously aligning them with an
intermediary's messages. It'll mean knowing his needs and your audience's needs and where
your business and its messages fit within that environment.
Public relations is based on relationships
Great public relations mean setting up on-going relationships with many important influencers
(and therefore their audiences) and knowing how your business may become an excellent data
source for the influential. However, this relationship is based on your organization's capability
of providing these things:
• Thorough knowledge of the influencer's need
• Timely response to an influencer's requests
• Unique accessibility to important executives in your organization
• Truthfully stating your case
Your public relations communications with influencers do not always need to be about your
business. Offering accessibility to your consumers in order for the influencer to see how they're
solving issues using your organization's services and products is a vital method of offering more
data. Absolutely the influencer understands that you are not going to give him a consumer who
is unhappy, yet without your assistance, he isn't likely to gain access. Plus, he'll have the chance
to speak with your customer about your competitors and see what they're doing more broadly
than only your business.
It is a time consuming and labor intensive effort. It'll mean opportunistically thinking and
evaluating 'what is news worthy' concerning your business with a keen eye. If your business is
able to do this, PR may help it look more influential, bigger, and more important than it may
otherwise be.
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Free trade Agreements with other countries
Trade agreements are when two or more nations agree on the terms of trade between them.
For this reason, when most people say trade agreements, they mean international trade
agreements. Trade agreements determine the tariffs (taxes and duties) that countries impose
on imports and exports.
Imports are goods and services produced in a foreign country and bought by U.S. residents. It
includes all goods that are shipped into the U.S., even if produced by an American company.
If the consumer is a U.S. resident, and the provider is a foreign resident, then it is an import.
Exports are any good or service that passes through customs from the United States to be sold
overseas. It includes merchandise shipped from a U.S. based company to its foreign affiliate or
branch.
Type of Agreements
There are many different types of trade agreements. Unilateral trade agreements are when one
country either imposes trade restrictions, or loosens them, and no other country reciprocates.
The United States and other developed countries often do this as a type of foreign aid to help
emerging markets strengthens certain industries.
Bilateral agreements are between two countries. Both countries agree to loosen or remove
trade restrictions to expand business opportunities. They typically involve lowering tariffs and
conferring preferred trade status with each other. The sticking point usually centers around key
protected or subsidized domestic industries, such as automotive, oil or food production.
The United States has 16 bilateral agreements. It's negotiating the world's largest agreement
with the European Union -- the TTIP.
The most difficult to negotiate are multi-lateral trade agreements. These are among three
countries or more. However, once negotiated, they are very powerful. That's because they
cover a larger geographic area, conferring a better competitive advantage on the signatories.
Also, all countries in a multi-lateral agreement give each other most favored nation status. That
means they treat each other equally.
The most well-known, and controversial, multi-lateral trade agreement is the North American
Free Trade Agreement. It would have been replaced by the Trans-Pacific Partnership, but the
United States pulled out of it. Most of the other U.S. regional trade agreements are also multi-
lateral.
The Role of the WTO in Trade Agreements
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Once agreements move beyond the regional level, they usually need help. That's where the
World Trade Organization steps in. It is an international body helps negotiate global trade
agreements. Once in place, the WTO enforces the agreement and responds to complaints.
The WTO currently enforces the General Agreement on Tariffs and Trade. The world almost
received greater free trade from the next round, known as the Doha Round Trade Agreement. If
successful, Doha would have reduced tariffs across the board for all WTO members.
Unfortunately, the two most powerful economies refused to budge on a key sticking point.
Both the U.S. and the EU resisted lowering farm subsidies. These subsidies made their food
export prices lower than those in many emerging market countries.
These low food prices would have put many local farmers out of business, sending them to look
for jobs in over-crowded urban areas. That doomed the Doha round, and possibly all future
world multi-lateral trade agreements.
The failure of Doha allowed China to gain a global trade foothold. It has signed bilateral trade
agreements with dozens of countries in Africa, Asia, and Latin America. In return for loans and
technical or business support, Chinese companies receive rights to develop the country's oil and
other commodities.
Philippines - Trade Agreements
Describes bilateral and multilateral trade agreements that this country is party to, including
with the United States. Includes websites and other resources where U.S. companies can get
more information on how to take advantage of these agreements.
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E-commerce
E-commerce is a transaction of buying or selling online. Electronic commerce draws on

technologies such as mobile commerce, electronic funds transfer, supply chain management,
Internet marketing, online transaction processing, electronic data interchange (EDI), inventory
management systems, and automated data collection systems. Modern electronic commerce
typically uses the World Wide Web for at least one part of the transaction's life cycle although it
may also use other technologies such as e-mail.
E-commerce businesses may employ some or all of the following:

Online shopping web sites for retail sales direct to consumers
Providing or participating in online marketplaces, which process third-party
business-to-consumer or consumer-to-consumer sales
Business-to-business buying and selling
Gathering and using demographic data through web contacts and social media
Business-to-business (B2B) electronic data interchange
Marketing to prospective and established customers by e-mail or fax (for example,
with newsletters)
Engaging in pretail for launching new products and services
Online financial exchanges for currency exchanges or trading purposes
Timeline
A timeline for the development of e-commerce:
1971 or 1972: The ARPANET is used to arrange a cannabis sale between students at the
Stanford Artificial Intelligence Laboratory and the Massachusetts Institute of Technology,
later described as "the seminal act of e-commerce" in John Markoff's book What the
Dormouse Said.1
1979: Michael Aldrich demonstrates the first online shopping system.2
1981: Thomson Holidays UK is the first business-to-business online shopping system to be
installed.3
1982: Minitel was introduced nationwide in France by France Télécom and used for online
ordering.
1983: California State Assembly holds first hearing on "electronic commerce" in Volcano,
California.4 Testifying are CPUC, MCI Mail, Prodigy, CompuServe, Volcano Telephone, and
Pacific Telesis. (Not permitted to testify is Quantum Technology, later to become AOL.)
1984: Gateshead SIS/Tesco is first B2C online shopping system5 and Mrs Snowball, 72, is the
first online home shopper6
1984: In April 1984, CompuServe launches the Electronic Mall in the USA and Canada. It is the
first comprehensive electronic commerce service.7
1989: In May 1989, Sequoia Data Corp. Introduced Compumarket The first internet based
system for e-commerce. Sellers and buyers could post items for sale and buyers could search
the database and make purchases with a credit card.
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1990: Tim Berners-Lee writes the first web browser, WorldWideWeb, using a NeXT
computer.8
1992: Book Stacks Unlimited in Cleveland opens a commercial sales website
(www.books.com) selling books online with credit card processing.
1993: Paget Press releases edition No. 39 of the firstcitation needed app store, The Electronic
AppWrapper10
1994: Netscape releases the Navigator browser in October under the code name Mozilla.
Netscape 1.0 is introduced in late 1994 with SSL encryption that made transactions secure.
1994: Ipswitch IMail Server becomes the first software available online for sale and
immediate download via a partnership between Ipswitch, Inc. and OpenMarket.
1994: "Ten Summoner's Tales" by Sting becomes the first secure online purchase through
NetMarket.11
1995: The US National Science Foundation lifts its former strict prohibition of commercial
enterprise on the Internet.12
1995: Thursday 27 April 1995, the purchase of a book by Paul Stanfield, Product Manager for
CompuServe UK, from W H Smith's shop within CompuServe's UK Shopping Centre is the UK's
first national online shopping service secure transaction. The shopping service at launch
featured W H Smith, Tesco, Virgin Megastores/Our Price, Great Universal Stores (GUS),
Interflora, Dixons Retail, Past Times, PC World (retailer) and Innovations.
1995: Jeff Bezos launches Amazon.com and the first commercial-free 24-hour, internet-only
radio stations, Radio HK and NetRadio start broadcasting. eBay is founded by computer
programmer Pierre Omidyar as AuctionWeb.
1996: IndiaMART B2B marketplace established in India.
1996: ECPlaza B2B marketplace established in Korea.
1996: The use of Excalibur BBS with replicated "Storefronts" was an early implementation of
electronic commerce started by a group of SysOps in Australia and replicated to global
partner sites.
1998: Electronic postal stamps can be purchased and downloaded for printing from the
Web.13
1999: Alibaba Group is established in China. Business.com sold for US $7.5 million to e-
Companies, which was purchased in 1997 for US $149,000. The peer-to-peer filesharing
software Napster launches. ATG Stores launches to sell decorative items for the home online.
2000: Complete Idiot's Guide to e-commerce released on Amazon
2000: The dot-com bust.
2001: Alibaba.com achieved profitability in December 2001.
2002: eBay acquires PayPal for $1.5 billion.14 Niche retail companies Wayfair and NetShops
are founded with the concept of selling products through several targeted domains, rather
than a central portal.
2003: Amazon.com posts first yearly profit.
2003: Bossgoo B2B marketplace established in China.
2004: DHgate.com, China's first online b2b transaction platform, is established, forcing other
b2b sites to move away from the "yellow pages" model.15
2007: Business.com acquired by R.H. Donnelley for $345 million.16
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2009: Zappos.com acquired by Amazon.com for $928 million.17 Retail Convergence, operator
of private sale website RueLaLa.com, acquired by GSI Commerce for $180 million, plus up to
$170 million in earn-out payments based on performance through 2012.18
2010: Groupon reportedly rejects a $6 billion offer from Google. Instead, the group buying
websites went ahead with an IPO on 4 November 2011. It was the largest IPO since
Google.1920
2012: Zalora Group was founded and started operations around Asia.
2014: Overstock.com processes over $1 million in Bitcoin sales.21 India's e-commerce
industry is estimated to have grown more than 30% from 2012 to $12.6 billion in 2013.22 US
e-commerce and Online Retail sales projected to reach $294 billion, an increase of 12 percent
over 2013 and 9% of all retail sales.23 Alibaba Group has the largest Initial public offering
ever, worth $25 billion.
2015: Amazon.com accounts for more than half of all e-commerce growth,24 selling almost
500 Million SKU's in the US.25
An example of an automated online assistant is a merchandising website.

Some common applications related to electronic commerce are:
Document automation in supply chain and logistics
Domestic and international payment systems
Enterprise content management
Group buying
Print on demand
Automated online assistant
Newsgroups
Online shopping and order tracking
Online banking
Online office suites
Shopping cart software
Teleconferencing
Electronic tickets
Social networking
Instant messaging
Pretail
Digital Wallet
Certain electronic commerce activities are regulated by the Federal Trade Commission (FTC).
These activities include but not limit to the use of commercial e-mails, online advertising and
consumer privacy. The CAN-SPAM Act of 2003 establishes national standards for direct
marketing over e-mail. The Federal Trade Commission Act regulates all forms of advertising,
including online advertising, and states that advertising must be truthful and non-deceptive.
Using its authority under Section 5 of the FTC Act, which prohibits unfair or deceptive practices,
the FTC has brought a number of cases to enforce the promises in corporate privacy
statements, including promises about the security of consumers' personal information. As a
result, any corporate privacy policy related to e-commerce activity may be subject to
enforcement by the FTC.
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The Ryan Haight Online Pharmacy Consumer Protection Act of 2008, which came into law in
2008, amends the Controlled Substances Act to address online pharmacies.
Conflict of laws in cyberspace is a major hurdle for harmonization of legal framework for e-
commerce around the world. In order to give a uniformity to e-commerce law around the
world, many countries adopted the UNCITRAL Model Law on Electronic Commerce (1996).
Internationally there is the International Consumer Protection and Enforcement Network
(ICPEN), which was formed in 1991 from an informal network of government customer fair
trade organisations. The purpose was stated as being to find ways of co-operating on tackling
consumer problems connected with cross-border transactions in both goods and services, and
to help ensure exchanges of information among the participants for mutual benefit and
understanding. From this came Econsumer.gov, an ICPEN initiative since April 2001. It is a portal
to report complaints about online and related transactions with foreign companies.
There is also Asia Pacific Economic Cooperation (APEC) was established in 1989 with the vision
of achieving stability, security and prosperity for the region through free and open trade and
investment. APEC has an Electronic Commerce Steering Group as well as working on common
privacy regulations throughout the APEC region.
In Australia, Trade is covered under Australian Treasury Guidelines for electronic commerce,
and the Australian Competition and Consumer Commission regulates and offers advice on how
to deal with businesses online, and offers specific advice on what happens if things go wrong.
In the United Kingdom, The Financial Services Authority (FSA) was formerly the regulating
authority for most aspects of the EU's Payment Services Directive (PSD), until its replacement in
2013 by the Prudential Regulation Authority and the Financial Conduct Authority. The UK
implemented the PSD through the Payment Services Regulations 2009 (PSRs), which came into
effect on 1 November 2009. The PSR affects firms providing payment services and their
customers. These firms include banks, non-bank credit card issuers and non-bank merchant
acquirers, e-money issuers, etc. The PSRs created a new class of regulated firms known as
payment institutions (PIs), who are subject to prudential requirements. Article 87 of the PSD
requires the European Commission to report on the implementation and impact of the PSD by 1
November 2012.
In India, the Information Technology Act 2000 governs the basic applicability of e-commerce.
In China, the Telecommunications Regulations of the People's Republic of China (promulgated
on 25 September 2000), stipulated the Ministry of Industry and Information Technology (MIIT)
as the government department regulating all telecommunications related activities, including
electronic commerce. On the same day, The Administrative Measures on Internet Information
Services released, is the first administrative regulation to address profit-generating activities
conducted through the Internet, and lay the foundation for future regulations governing e-
commerce in China. On 28 August 2004, the eleventh session of the tenth NPC Standing
Committee adopted The Electronic Signature Law, which regulates data message, electronic
signature authentication and legal liability issues. It is considered the first law in China's e-
commerce legislation. It was a milestone in the course of improving China's electronic
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commerce legislation, and also marks the entering of China's rapid development stage for
electronic commerce legislation.
Contemporary electronic commerce can be classified into categories. The first category is
business based on types of goods sold (involves everything from ordering "digital" content for
immediate online consumption, to ordering conventional goods and services, to "meta"
services to facilitate other types of electronic commerce). The second category is based on the
nature of the participant (B2B, B2C,C2B and C2C);40
On the institutional level, big corporations and financial institutions use the internet to
exchange financial data to facilitate domestic and international business. Data integrity and
security are pressing issues for electronic commerce.
Aside from traditional e-commerce, the terms m-Commerce (mobile commerce) as well
(around 2013) t-Commerce41 have also been used.
In 2010, the United Kingdom had the highest per capita e-commerce spending in the world. As
of 2013, the Czech Republic was the European country where e-commerce delivers the biggest
contribution to the enterprises´ total revenue. Almost a quarter (24%) of the country's total
turnover is generated via the online channel.
Among emerging economies, China's e-commerce presence continues to expand every year.
With 668 million Internet users, China's online shopping sales reached $253 billion in the first
half of 2015, accounting for 10% of total Chinese consumer retail sales in that period. The
Chinese retailers have been able to help consumers feel more comfortable shopping online. e-
commerce transactions between China and other countries increased 32% to 2.3 trillion yuan
($375.8 billion) in 2012 and accounted for 9.6% of China's total international trade.46 In 2013,
Alibaba had an e-commerce market share of 80% in China.47 In 2014, there were 600 million
Internet users in China (twice as many as in the US), making it the world's biggest online
market.48 China is also the largest e-commerce market in the world by value of sales, with an
estimated US$899 billion in 2016.
In 2013, Brazil's e-commerce was growing quickly with retail e-commerce sales expected to
grow at a double-digit pace through 2014. By 2016, eMarketer expected retail e-commerce
sales in Brazil to reach $17.3 billion. India has an Internet user base of about 243.2 million as of
January 2014.citation needed Despite being third largest user base in world, the penetration of
Internet is low compared to markets like the United States, United Kingdom or France but is
growing at a much faster rate, adding around 6 million new entrants every month.
In India, cash on delivery is the most preferred payment method, accumulating 75% of the e-
retail activities. The India retail market is expected to rise from 2.5% in 2016 to 5% in 2020.
The rate of growth of the number of internet users in the Arab countries has been rapid –
13.1% in 2015. A significant portion of the ecommerce market in the Middle East comprises
people in the 30-34 year age group. Egypt has the largest number of internet users in the
region, followed by Saudi Arabia and Morocco; these constitute 3/4th of the region’s share. Yet,
internet penetration is low: 35% in Egypt and 65% in Saudi Arabia.
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E-commerce has become an important tool for small and large businesses worldwide, not only
to sell to customers, but also to engage them.
In 2012, e-commerce sales topped $1 trillion for the first time in history.
Mobile devices are playing an increasing role in the mix of e-commerce, this is also commonly
called mobile commerce, or m-commerce. In 2014, one estimate saw purchases made on
mobile devices making up 25% of the market by 2017.
For traditional businesses, one research stated that information technology and cross-border e-
commerce is a good opportunity for the rapid development and growth of enterprises. Many
companies have invested enormous volume of investment in mobile applications. The DeLone
and McLean Model stated that three perspectives contribute to a successful e-business:
information system quality, service quality and users' satisfaction. There is no limit of time and
space, there are more opportunities to reach out to customers around the world, and to cut
down unnecessary intermediate links, thereby reducing the cost price, and can benefit from
one on one large customer data analysis, to achieve a high degree of personal customization
strategic plan, in order to fully enhance the core competitiveness of the products in company.
Economists have theorized that e-commerce ought to lead to intensified price competition, as it
increases consumers' ability to gather information about products and prices. Research by four
economists at the University of Chicago has found that the growth of online shopping has also
affected industry structure in two areas that have seen significant growth in e-commerce,
bookshops and travel agencies. Generally, larger firms are able to use economies of scale and
offer lower prices. The lone exception to this pattern has been the very smallest category of
bookseller, shops with between one and four employees, which appear to have withstood the
trend. Depending on the category, e-commerce may shift the switching costs—procedural,
relational, and financial—experienced by customers.
Individual or business involved in e-commerce whether buyers or sellers rely on Internet-based

technology in order to accomplish their transactions. e-commerce is recognized for its ability to
allow business to communicate and to form transaction anytime and anyplace. Whether an
individual is in the US or overseas, business can be conducted through the internet. The power
of e-commerce allows geophysical barriers to disappear, making all consumers and businesses
on earth potential customers and suppliers. Thus, switching barriers and switching costs may
shift. eBay is a good example of e-commerce business individuals and businesses are able to
post their items and sell them around the Globe.
In e-commerce activities, supply chain and logistics are two most crucial factors need to be
considered. Typically, cross-border logistics need about few weeks time round clarification
needed. Based on this low efficiency of the supply chain service, customer satisfaction will be
greatly reduced.63 Some researcher stated that combining e-commerce competence and IT
setup could well enhance company's overall business worth.64 Other researcher stated that e-
commerce need to consider the establishment of warehouse centres in foreign countries, to
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create high efficiency of the logistics system, not only improve customers' satisfaction, but also
can improve customers' loyalty weasel words.
For a long time, companies had been troubled by the gap between the benefits which supply
chain technology has and the solutions to deliver those benefits. However, the emergence of e-
commerce has provided a more practical and effective way of delivering the benefits of the
new supply chain technologies.
E-commerce has the capability to integrate all inter-company and intra-company functions,
meaning that the three flows (physical flow, financial flow and information flow) of the supply
chain could be also affected by e-commerce. The affections on physical flows improved the way
of product and inventory movement level for companies. For the information flows, e-
commerce optimised the capacity of information processing than companies used to have, and
for the financial flows, e-commerce allows companies to have more efficient payment and
settlement solutions.
In addition, e-commerce has a more sophisticated level of impact on supply chains: Firstly, the
performance gap will be eliminated since companies can identify gaps between different levels
of supply chains by electronic means of solutions; Secondly, as a result of e-commerce
emergence, new capabilities such implementing ERP systems, like SAP ERP, Xero, or
Megaventory, have helped companies to manage operations with customers and suppliers. Yet
these new capabilities are still not fully exploited. Thirdly, technology companies would keep
investing on new e-commerce software solutions as they are expecting investment return.
Fourthly, e-commerce would help to solve many aspects of issues that companies may feel
difficult to cope with, such as political barriers or cross-country changes. Finally, e-commerce
provides companies a more efficient and effective way to collaborate with each other within
the supply chain.
E-commerce helps create new job opportunities due to information related services, software
app and digital products. At same time, it also causes job losses as it replaces traditional
shopping and do not need amount of in-store staff. Accompanied with the e-commerce
development, it requires broader range of skills in digit, technology and information base. The
employees should be capable at dealing with large number of customers’ demands and order
process. Therefore, it increases the demand of employees with high skills and specialized
expertises as well as increases the wages for this group of people. In contrast, people who with
poor technical skills cannot enjoy the wages welfare. On the other hand, because e-commerce
requires sufficient stocks that could be delivered to customers in time, the warehouse become
an important element. Warehouse needs more staff to manage, supervise and organize, thus
the condition of warehouse environment will be concerned by employees.
With the existence of e-commerce, it brings convenience for customers as they do not have to
leave home and only need to browse website online, especially for buying the products which
are not sold in nearby shops. It could help customers buy wider range of products and save
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customers’ time. Then, the online shopping often provides sales promotion or discounts code,
thus it is more price effective for customers. Moreover, e-commerce provides products’
detailed information; even the in-store staff cannot offer such detailed explanation. Customers
can also review and track the order history online. However, e-commerce is lack of human
interaction for customers, especially who prefer face-to-face consumption. When the customer
regrets to purchase the product, it involves returning goods and refunding process. This process
is inconvenient as customers need to pack and post the goods. If the products are expensive,
large or fragile, it refers to safety issues.
Along with the e-commerce and its unique charm that has appeared gradually, virtual
enterprise, virtual bank, network marketing, online shopping, payment and advertising, such
this new vocabulary which is unheard-of and now has become as familiar to people. This
reflects that the e-commerce has huge impact on the economy and society from the other
side.68 For instance, B2B is a rapidly growing business in the world that leads to lower cost and
then improves the economic efficiency and also bring along the growth of employment.
To understand how the e-commerce has affected the society and economy, this article will
mention six issues below:
1. e-commerce has changed the relative importance of time, but as the pillars of indicator
of the country's economic state that the importance of time should not be ignored.
2. e-commerce offers the consumer or enterprise various information they need, making
information into total transparency, and enterprises are no longer is able to use the mode of
space or advertisement to raise their competitive edge.70 Moreover, in theory, perfect
competition between the consumer sovereignty and industry will maximize social welfare.
3. In fact, during the economic activity in the past, large enterprises frequently had the
advantage of information resources at the expense of consumers. Nowadays, the transparent
and real-time information protects the rights of consumers, because the consumers can use the
internet to pick out the portfolio to their own benefit. The competitiveness of enterprises will
be much more obvious than before; consequently, social welfare would be improved by the
development of e-commerce.
4. The new economy led by e-commerce changes humanistic spirit as well, but above all,
employee loyalty. Due to the market with competition, the employee's level of professionalism
becomes crucial for enterprise in the niche market. The enterprises must pay attention to how
to build up the enterprises inner culture and a set of interactive mechanisms and it is the prime
problem for them. Furthermore, though the mode of e-commerce decreases the information
cost and transaction cost, its development also makes human beings overly computer literate.
Emphasizing a more humanistic attitude to work is another project for enterprise to
development. Life is the root of all and technology is merely an assistive tool to support quality
of life.
5. Online merchants gather purchase activity and interests of their customers. This
information is being used by the online marketers to promote relevant products and services.
This creates an extra convenience for online shoppers.
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6. Online merchandise is searchable, which makes it more accessible to shoppers. Many
online retailers offer a review mechanism, which helps shoppers decide on the product to
purchase. This is another convenience and a satisfaction improvement factor.
e-commerce is not a new industry, technically speaking, but it is creating a new economic
model. Most people agree that e-commerce will positively impact economic society in the
future, but in its early stages its impacts are difficult to gauge. Some have noted that e-
commerce is a sort of incorporeal revolution. e-commerce has numerous social benefits: one,
the cost of running an e-commerce business is very low when compared with running a physical
store; two, there is no rent to pay on expensive premises; and three, business processes are
simplified and less man-hours are required to run a typical business smoothly. In the area of
law, education, culture and also policy, e-commerce will continue to rise in impact. e-commerce
will truly take human beings into the information society.
E-commerce has grown in importance as companies have adopted pure-click and brick-and-
click channel systems. We can distinguish pure-click and brick-and-click channel system
adopted by companies.
• Pure-click or pure-play companies are those that have launched a website without any
previous existence as a firm.
• Bricks-and-clicks companies are those existing companies that have added an online site
for e-commerce.
• Click-to-brick online retailers that later open physical locations to supplement their
online efforts.
According to eMarketer research company, "by 2017, 65.8 per cent of Britons will use
smartphones".
New mobile apps such as LINE, WeChat have grown tremendously into ecosystems where
hundred of millions of users and businesses can transact with one another.
The contemporary e-commerce trend recommends companies to shift the traditional business
model where focus on “standardized products, homogeneous market and long product life
cycle” to the new business model where focus on “varied and customized products”. E-
commerce requires the company to have the ability to satisfy multiple needs of different
customers and provide them with wider range of products. With more choices of products, the
information of products for customers to select and meet their needs become crucial. In order
to address the mass customization principle to the company, the use of recommender system is
suggested. This system helps recommend the proper products to the customers and helps
customers make the decision during the purchasing process. The recommender system could
be operated through the top sellers on the website, the demographics of customers or the
consumers’ buying behaviour.
However, there are 3 main ways of recommendations: recommending products to customers

directly, providing detailed products’ information and showing other buyers’ opinions or
critiques. It is benefit for consumer experience without physical shopping. In general,
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recommender system is used to contact customers online and assist finding the right products
they want effectively and directly.
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Corporate Responsibility to the Environment
Corporate social responsibility (CSR) promotes a vision of business accountability to a wide

range of stakeholders, besides shareholders and investors. Key areas of concern are
environmental protection and the wellbeing of employees, the community and civil society in
general, both now and in the future.
The concept of CSR is underpinned by the idea that corporations can no longer act as isolated
economic entities operating in detachment from broader society. Traditional views about
competitiveness, survival and profitability are being swept away.
Some of the drivers pushing business towards CSR include:
1. The shrinking role of government

In the past, governments have relied on legislation and regulation to deliver social and
environmental objectives in the business sector. Shrinking government resources, coupled with
a distrust of regulations, has led to the exploration of voluntary and non-regulatory initiatives
instead.
2. Demands for greater disclosure

There is a growing demand for corporate disclosure from stakeholders, including customers,
suppliers, employees, communities, investors, and activist organizations.
3. Increased customer interest

There is evidence that the ethical conduct of companies exerts a growing influence on the
purchasing decisions of customers. In a recent survey by Environics International, more than
one in five consumers reported having either rewarded or punished companies based on their
perceived social performance.
4. Growing investor pressure

Investors are changing the way they assess companies' performance, and are making decisions
based on criteria that include ethical concerns. The Social Investment Forum reports that in the
US in 1999, there was more than $2 trillion worth of assets invested in portfolios that used
screens linked to the environment and social responsibility. A separate survey by Environics
International revealed that more than a quarter of share-owning Americans took into account
ethical considerations when buying and selling stocks. (More on socially responsible investment
can be found in the 'Banking and investment' section of the site.)
5. Competitive labour markets

Employees are increasingly looking beyond paychecks and benefits, and seeking out employers
whose philosophies and operating practices match their own principles. In order to hire and
retain skilled employees, companies are being forced to improve working conditions.
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6. Supplier relations
As stakeholders are becoming increasingly interested in business affairs, many companies are
taking steps to ensure that their partners conduct themselves in a socially responsible manner.
Some are introducing codes of conduct for their suppliers, to ensure that other companies'
policies or practices do not tarnish their reputation.
Some of the positive outcomes that can arise when businesses adopt a policy of social
responsibility include:
Company benefits:
1. Improved financial performance;
Lower operating costs;
Enhanced brand image and reputation;
Increased sales and customer loyalty;
Greater productivity and quality;
More ability to attract and retain employees;
Reduced regulatory oversight;
Access to capital;
Workforce diversity;
Product safety and decreased liability.
2. Benefits to the community and the general public:
Charitable contributions;
Employee volunteer programmes;
Corporate involvement in community education, employment and homelessness
programmes;
Product safety and quality.
3. Environmental benefits:
Greater material recyclability;
Better product durability and functionality;
Greater use of renewable resources;
Integration of environmental management tools into business plans, including life-cycle
assessment and costing, environmental management standards, and eco-labelling.
Nevertheless, many companies continue to overlook CSR in the supply chain - for example by
importing and retailing timber that has been illegally harvested. While governments can impose
embargos and penalties on offending companies, the organizations themselves can make a
commitment to sustainability by being more discerning in their choice of suppliers.
The concept of corporate social responsibility is now firmly rooted on the global business
agenda. But in order to move from theory to concrete action, many obstacles need to be
overcome.
A key challenge facing business is the need for more reliable indicators of progress in the field
of CSR, along with the dissemination of CSR strategies. Transparency and dialogue can help to
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make a business appear more trustworthy, and push up the standards of other organizations at
the same time.
The Global Reporting Initiative is an international, multi-stakeholder effort to create a common

framework for voluntary reporting of the economic, environmental, and social impact of
organization-level activity. Its mission is to improve the comparability and credibility of
sustainability reporting worldwide.
There is increasing recognition of the importance of public-private partnerships in CSR. Private

enterprise is beginning to reach out to other members of civil society such as non-
governmental organizations, the United Nations, and national and regional governments.
An example of such a partnership is the 'Global Compact'. Launched in 1999 by the United
Nations, the Global Compact is a coalition of large businesses, trade unions and environmental
and human rights groups, brought together to share a dialogue on corporate social
responsibility.
The 'Working with NGOs' section offers some insights into the way businesses and lobby groups
are working together to mutual benefit.
Management training plays an important role in implementation of CSR strategies, and there is
a growing number of conferences and courses available on the subject. Organizations that
provide such training include Global Responsibility, Business for Social Responsibility and the
Corporate Social Responsibility Forum.
Corporate social responsibility (CSR) is a broad business concept. It is usually described as a

company's commitment to carrying out their business in an ethical way.
This means managing their business processes while taking account of their social, economic
and environmental impact, and considering human rights.
Examples of corporate social responsibility

Corporate responsibility can cut across almost everything your business does. It can involve a
range of CSR activities, such as:
1. environmental management, eg waste reduction and sustainability
2. responsible sourcing, eg using only fair trade ingredients
3. improvement of working standards and conditions
4. contributing to educational and social programmes
5. volunteering
6. socially responsible investment
7. development of employee and community relations
Different CSR strategies can encourage a business to make a positive impact on all of its
stakeholders, including:
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Consumers - eg through fair and open business practices and good customer relations. See
how to manage your customer service.
Suppliers - eg by choosing your suppliers carefully, looking at their labour, health, safety,
and environmental practices. See more on ethical trading.
Communities - there are many ways to create positive change in the community, eg
sponsoring local events, taking part in charity initiatives, volunteering, etc. See corporate
social responsibility: local community.
Employees - responsible business practices will often aim to do more than simply comply
with the law. See staff motivation and performance.
Reducing your environmental impact through different CSR initiatives, such as waste and
resource management, can also greatly benefit your business. Read more on corporate social
responsibility: environmental impact.
Importance of corporate social responsibility
CSR can help you improve your business performance, increase competitive advantage and
build trust with customers and employees. It can also help you achieve operational cost savings,
by avoiding costs of wasted energy or unnecessary fees.
Perhaps most importantly, CSR gives your company and your brand a positive image of a
reputable ethical business. See more on business benefits of corporate social responsibility.
Business benefits of corporate social responsibility

Corporate social responsibility (CSR) has many advantages that can apply to any business,
regardless of its size or sector.
Advantages of corporate social responsibility
The potential benefits from CSR include:
1. better brand recognition
2. positive business reputation
3. increased sales and customer loyalty
4. operational costs savings
5. better financial performance
6. greater ability to attract talent and retain staff
7. organisational growth
8. easier access to capital
Responsible business reputation

Building a reputation as a responsible business can lead to competitive advantage. Companies
often favour suppliers who have responsible policies, since this can reflect on how their
customers see them. Some customers don't just prefer to deal with responsible companies -
they insist on it.
Costs savings
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By reducing resource use, waste and emissions, you can help the environment and save money
too. With a few simple steps, you may be able to lower your utility bills and achieve savings for
your business. See how to reduce your business waste to save money.
Finding and keeping talented staff

Being a responsible, sustainable business may make it easier to recruit new employees or retain
existing ones. Employees may be motivated to stay longer, thus reducing the costs and
disruption of recruitment and retraining.
Other important benefits of CSR to your business

By acting in a sustainable, responsible way, you may also find it easier to:
1. access finance - investors are more likely to back a reputable business
2. attract positive media attention - eg when taking part in community activities
3. reduce regulatory burden - good relationships with local authorities can often make doing
business easier
4. identify new business opportunities - eg for development of new products or services
Business case for corporate social responsibility
Business in the Community (BITC) offers more information on the benefits of being a
responsible business. Download BITC's business case for CSR (PDF, 1.98MB)(link is external).
Corporate social responsibility: environmental impact
Corporate social responsibility (CSR) can refer to a wide range of actions that businesses may
make - from donating to charity to ethical trading. One primary focus of CSR is the
environment.
Environmental CSR aims to reduce any damaging effects on the environment from your
business' processes. Activities may focus on:
1. energy use
2. water use
3. waste management
4. recycling
5. emissions
6. eco-friendly office and business travel policies
Some of these are significant from both environmental and financial point of view.
Advantages of environmental CSR
Green CSR can reduce business risk, improve reputation and provide opportunities for cost
savings. Even the simplest energy efficiency measures can generate savings and make a
difference to your business. For example:
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1. switching off lights and equipment when not in use
2. reducing the use of water
3. reducing the amount of paper you waste
Caring about the environment can increase revenue too. Many customers prefer to buy from
responsible companies.
For more information, find out how to improve your environmental performance.
How to reduce your environmental impact
You can reduce your business' environmental impact in many ways. For example, you can:
1. create products that can be recycled
2. optimise your product life cycle
3. source responsibly (eg using recycled materials and sustainable timber)
4. reduce packaging
5. buy locally to save fuel costs
6. create an efficient (and fuel-efficient) distribution network
7. work with environmentally-conscious suppliers and distributors
If you'd like to assess your environmental impact, find out how to carry out an environmental
review of your business
Corporate social responsibility: ethical trading

Ethical trading focuses on protecting workers' rights throughout the supply chain. By treating
your employees, your suppliers and their workers fairly and ethically, you can demonstrate
corporate social responsibility (CSR).
What is ethical trade?

Ethical trade is about the purchasing practices of your business - and the steps you take to
ensure that you and your supplier companies respect workers' rights.
The term ethical trading is often used to imply socially responsible sourcing, which addresses
the ethical aspects of organisations including:
1. worker welfare
2. agricultural practice
3. natural resource conservation
4. sustainability
Ethical trade and suppliers
Choosing your suppliers carefully can be an important part of your approach to CSR. For
example, you might try to use local suppliers as much as possible. This helps you to support
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your local community and reduces the environmental impact of your sourcing, logistics and
distribution practices.
When choosing suppliers, you should also examine their:

1. employment practices
2. health and safety procedures
3. environmental policies
Customers are increasingly concerned about the wider impact of supply chains, for example on
local work forces and environments. You can damage your reputation by being associated with
businesses that abuse the rights of their own workers or their local environment.
Larger organisations often audit their suppliers to ensure that they follow responsible working
practices. You could do something similar - simply asking them about their attitudes to CSR
might be revealing.
You should also treat your suppliers fairly, particularly smaller businesses that rely on you. For
example, on-time payments can make a big difference to them.
Ethical trade and customers
Your customers will want to know that you don't exploit the people who make and sell your
products. Some actions you can take when dealing with your customers are:
1. Make sure your brochures are in plain English, truthful and clear about any 'small print'
limitations.
2. Be open and honest about your products and services. Tell customers what they want to know,
including what steps you take to be socially responsible.
3. If something goes wrong, you should acknowledge the problem and deal with it.
In return, you can expect customers to reward you with their loyalty. Listening to your
consumers can also help you improve the products and services you offer them.
Find out more about ethical trading
Working with your local community can bring a wide range of benefits. For example, for many
businesses, local customers are an important source of sales.
Demonstrating commitment to your community can also improve your business reputation,
and in turn, make it easier for you to recruit or retain employees.
A good relationship with local authorities can also help. For instance, some local authorities
prefer to award contracts to businesses with a record of community involvement.
Getting involved with the local community
There are many ways to get involved. Some businesses choose to:
……………………..
1. support a local charity
2. sponsor a local event
3. organise clean-up events
4. volunteer in local schools or community projects
It makes commercial sense to get involved in an activityrelated to your product or service. This
lets you use your expertise, and show the human face of your business at the same time. For
example, some restaurants provide food to local homeless groups, while some builders give
free labour and materials to community projects.
Look for opportunities that will directly benefit you - eg by generating publicity, or improving
the neighbourhood around your premises.
Employee involvement
Many businesses include their employees in decisions about CSR activities. You can, for
example:
1. support charities chosen by your staff
2. encourage staff to volunteer for community activities
3. give staff paid time off for volunteering
4. help employees to make tax-free donations to charity through ‘payroll giving’
As well as improving your community relations, involving your staff can help motivate them and
build their interpersonal and team participation skills.
Importance of PR in corporate social responsibility
Make the most of your corporate social responsibility (CSR) activities by publicising them.
Ensure that customers, suppliers and the local community know what you are doing. CSR lends
itself to good news stories and is source positive public relations (PR).
Role of PR in promoting your CSR

Publicity can be a key part of using CSR to win contracts. People want to buy from businesses
they respect. CSR can be particularly effective for targeting ethical companies, the public sector
and not-for-profit organisations.
At the same time, you should see CSR as part of a continuing process of building long-term
value. Everything you do should help improve your reputation and encourage customers and
other stakeholders to stay involved with you. A business that buys recycled paper - but exploits
its customers and ignores the community - has missed the point.
Business awards
Your business could also look at entering business awards that recognise and promote
businesses that excel with corporate social responsibility projects. Potential awards your
business could enter include:
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1. International CSR Excellence Awards(link is external)
2. National CSR Awards(link is external)
3. Business in the Community’s Responsible Business Awards(link is external)
4. Guardian Sustainable Business Awards(link is external)
5. Ethical Corporation Responsible Business Awards(link is external)
Quality standards
You could consider working towards a management standard which you can then use to
promote your ethical, environmental or social responsibility. For example, many businesses
have already achieved the environmental management standard ISO 14001(link is external).
Socially responsible businesses act in an ethical and transparent way that contributes to the
health and welfare of society. ISO 26000(link is external) provides guidance on how businesses
can operate in a socially responsible way.
Effective CSR like this can give your business a competitive edge. Even with dozens of
competitors, a real commitment to CSR lets your business stand out.
Find out more about public relations in PR: the basics.
Corporate social responsibility (CSR)

Implementing a successful CSR strategy - Henry Group (video)
Henry Group is a leading privately owned construction and manufacturing organisation
primarily involved in building, civil engineering and facilities management. The Group employs
more than 500 people with operations across the UK, Europe, the Middle East, Asia and Africa.
Ian Henry, corporate responsibility director, and Jennifer Cruickshank from the corporate
responsibility team explain how they have successfully implemented a corporate social
responsibility strategy for their business.
Here, Ian and Jennifer explain how they engage with employees on corporate responsibility
projects and how these initiatives benefit the local community and their business as a whole.
Developing corporate social responsibility policies - The Venus Company

The Venus Company is an award-winning beach shop and cafe operator with several outlets
based in Cornwall and Devon. Established in 1995 by Michael Smith, the firm has strong
environmental and ethical principles, and sells food that has been sourced using local suppliers.
Here Michael explains how developing corporate social responsibility (CSR) policies have helped
the business.
What I did
Help the environment and support our local community
"Our mission is to be the greenest beach shop and cafe operator in the UK, and our attitude to
almost every business decision flows from this. For us, CSR covers a number of elements. We
support local producers, having spent more than £300,000 on local food and drink from the
……………………..
immediate area around our cafes, and use local businesses for other goods and services. Over
80 per cent of our food and drink comes from Devon and Cornwall.
"We also work hard to minimise our impact on the environment, from using solar panels to
recycling, carrying out regular litter collection and buying non-toxic cleaning products. We've
also focused on things like packaging to make sure it's as biodegradable as possible.
"One scheme we're really proud of is the Venus Beach Wildlife Fund, which raises money to
educate local schoolchildren about their environment, and we also go into schools to do talks.
Any business can engage in the local education system, and it's very rewarding."
Build a customer base and attract staff
"Building a positive image of a company that gives back to the community has undoubtedly
created a number of business benefits. Over the past couple of years, we have been able to
open two of our beach cafes year-round, rather than just through the summer months, as we
have built up a loyal, local customer base and trade isn't simply seasonal.
"Recruitment is another area in which the business has benefited. Many of our staff are young,
and they are really keen to work with a company that has a responsible and ethical approach,
so attracting people to come and work for us has become easier."
Generate PR
"Developing our CSR policies has also boosted our profile. We've won quite a few awards,
which have been good for us in PR terms, and we've also been able to use the award logos on
our website and van. These have become part of our visual identity that people hopefully
recognise. Entering awards can be a time commitment, but they can also be a fantastic way to
audit and benchmark your business against others."
What I'd do differently

Raise awareness about environmental protection earlier
"I'd have got involved with the education side of things earlier. I think we've achieved a lot
when it comes to teaching local kids how they can look after the environment, but if we'd
started ten years ago, we'd be much further down the line by now."

Practising corporate social responsibility - Bailey Partnership (video)
Bailey Partnership, established in 1971, is a progressive multi-disciplinary property and
construction consultancy with five offices covering the South of England. Through their
practices as a business, and role within community, they aim to support local causes,
foundations, charities, schools, initiatives and people less fortunate than themselves.
Here, Chartered Architectural Technologist Paul Chapple talks about how partaking in corporate
social responsibility (CSR) work has benefited Bailey Partnership.
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Maintaining Competitive Advantage
The clear winners in business, no matter what their size, are those that find new definition
around innovation, and use new ways of communicating the value of this innovation to their
key customer segments, and those who spend more time LISTENING.
What else can you do to stand out from the crowd?
1. Collaborate
Whether we like it or not customers are in the box seat. They choose to visit your website, view
your ad or open your email and they can click delete, navigate to another page or change the
channel in a nano second! As a small business, you are uniquely placed to collaborate with your
customers. You can do this using social media tools like Facebook, and forums, blogs and
Tweets. Innovations are best when they come from the customers because they are telling you
(in many cases) a better way to do something! Invite customers to be a part of your planning.
Creating a collaborative culture in your small business with your employees contributing freely
can really help too!
2. Offer Understanding and Insight

Communicating with your customers could be as simple as a phone call or online survey. If done
with sensitivity to their needs and not in an annoying five-page survey it can be something that
provides great insight for your small business to change something that was losing you business
or create something that will give you a competitive edge.
3. Share your story

Stand for something and make it count! So many companies still just don't get it. People buy
from those they know, like and trust. How can they get to know you if all you have on your
website is the same old company spiel? Your potential customers are making decisions about
whether to contact you every day. Give them the whole story so they can make a decision
based on what and who you really are. Freshbooks is a good example of this. Remember, you
don't have to try and make your story inspiring; it just has to be real! Read Tell to Win by Peter
Guber which tells the importance of storytelling in business.
4. Make Work Fun and Easy

How likable are you anyway? The journey, the process and the prospect of working together
has to be enjoyable for you and the client. Marketing is not a one-off activity, but an integral
part of the business model. Inject some whiteboards, smarties and have a sense of humour! All
services have an opportunity to create a customer experience that is enjoyable.
5. Be Customer Centric
Step into your customer’s shoes every day. One of the most fundamental changes you can
make is to step through the customer touch points in your business and consciously think about
them. This awareness of how they feel at each stage in your process makes you change how
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you do things. Small businesses are best placed to be customer centric but it does take a mind
shift. Look at your website, shopfront, business card, flyers, staff and services from your
customer’s view point. Now should you change something? The answer is always yes.
6. Fail quickly but create an idea-based culture

No one will ever get fired for trying something new. If you can create a culture where you and
your team are prepared to try ideas and experiment you are likely to hit a few jackpots!
7. Love your Employees

Would you want to work for you? Employees are the soul of your small business; this is because
your customers can feel instantly if they have walked into a positive or negative environment. If
your employees are happy you are half way to creating a great brand. Something as simple as
bean bags in the coffee room, a punching bag, and some nice flowers planted in the garden
outside your office, can make a world of difference. You have to take responsibility for setting
the tone and then allow your employees to add their own flavour to it.
These seven principles are simple yet very effective and can set you apart from other
businesses. How can you take these strategies and improve your competitive advantage today?
The Challenges of Maintaining a Competitive Advantage
Have you been competing for work that you are more than qualified to perform, only to be
underbid by your competition? Or maybe you have been the one underbidding, which leaves
you no room for growth or prosperity.
If you want to stop competing on price alone, it may be time to develop a stronger
differentiation strategy.
Your differentiation strategy is the way in which you make your firm stand out from otherwise
similar competitors in the marketplace. Usually, it involves highlighting a meaningful difference
between you and your competitors. And that difference must be valued by your potential
clients.
A strong differentiator will provide a competitive advantage for your firm.

Michael Porter, the famous strategist, maintains that there are only two ways to gain a
sustainable advantage over your competition. One way is to compete on price, highlighting the
similarities you share with your chief competition:
“We’re just as good as our competition, but we cost less.”
Unfortunately, unless you have a sustainable cost advantage, you can’t keep up this strategy for
long. All it takes is someone willing to undercut your lowest price. The lowest-cost strategy also
exposes you to commoditization and a much wider range of competitors, including do-it-
yourself options, off-shoring and automation.
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Porter’s other way — and a better way — is to stand apart. Be different. Separate yourself from
competitors in a way that is both important and relevant to potential clients.
According to our definition above, this is a differentiation strategy.
Now, a point of differentiation may be broad-based and set you apart from the rest of the
industry or more narrow, appealing to a niche market. This latter approach is often referred to
as a focused strategy.
Here’s an example of a broad differentiator: adopt a very different business model. Let’s say
that hourly billing is widespread in your industry. Offering a pay-for-results billing model,
instead, would separate you from competitors.
Of course, developing a broad-based differentiation strategy, in which your firm is substantially

different from your industry as a whole, is hard to achieve. And even if you were able to pull it
off, what’s to keep a competitor from emulating your approach?
This is why many firms choose to compete with a focused strategy. In a focused strategy you
narrow your appeal to a niche audience.
For example, an accounting firm that works exclusively with chain restaurants has a very
compelling differentiator to that niche market segment. However, a different audience
segment, such as automobile dealers, would find no value in working with the restaurant
specialists.
Whether your strategy is broad or very focused it must always start by identifying your firm’s
differentiators.
Differentiator Defined
A differentiator is something that makes your business meaningfully different from your
competitors and more valuable in the eyes of your target audience. Differentiators are the
building blocks of a differentiation strategy.
But simply calling something a differentiator doesn’t make it so.
First it must pass three tests.
Three Tests for a Successful Differentiator
How do you know you have a good differentiator? We recommend you put each one to the
test. If it can pass these three critical checks, it is worth developing into a broader
differentiation strategy:
1. Is it true?
Differentiators can’t be fabricated. Apart from the moral hazard of making stuff up, it is simply
too easy for people to see through exaggerated claims. Whatever you put forth s a
differentiator, your firm has to live it each day. And remember, you’ll need to deliver on your
promises. For example, many firms say they have superior client service, but they do nothing
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special to make it a reality. No special policies. No special training. Nothing to ensure it actually
happens. The bottom line is they are no different than a slew of competitors that make the
same claims.
2. Is it relevant?
If your point of distinction doesn’t matter to your prospects, it won’t bring you more business.
In the end, what is most important is what plays into your target prospects’ selection criteria
and decision-making process. Any irrelevant differentiators are wasted effort.
We once had a lobbying client that believed their strongest differentiator was their firm’s lack
of conflicts of interest. Their competitors certainly could not make the same claim. But, when
we dug a bit deeper, we discovered that their clients and prospects didn’t value impartiality
much at all. So much for a strong brand differentiator.
In our research of professional services firms, we found another reason to reject client service
as a differentiator — buyers don’t even consider it as a selection criterion. A lack of customer
service may be a reason why you lose a client, but it rarely plays into the initial selection
process. It’s just not relevant yet.
3. Is it provable?
This is the often the hardest test of a differentiator. You may have identified a true and relevant
point of distinction, but it is useless without proof. Even if a differentiating statement is true, if
you can’t substantiate it with evidence it buyers won’t believe it. They have become inured to
— and learned to ignore — empty claims.
Here’s a popular differentiator candidate that many of our clients are fond of: “We have great
people.” It is a trap! Why? Well, have you ever heard a firm claim they have average people?
Didn’t think so.
But there are exceptions. One of our clients provides specialized software development services
— and they hire only PhD-level programmers. They actually can support a “great people”
differentiator with evidence.
The Challenges of Maintaining a Competitive Advantage
You are well on your way to a solid differentiation strategy once you know what sets you apart
from your competitors. Especially if you can explain — and prove — it in a way that is relevant
to your target audience. But you are not done yet.
The marketplace doesn’t stand still. Shrewd competitors will look at your success and attempt
to copy it. Over time, what was once a distinctive characteristic may be neutralized. Your
competitive advantage will be lost.
To build a sustainable differentiation strategy you need to build your reputation around those
distinctive characteristics and make your expertise exceptionally visible to your target audience.
This “Visible Expertise” will become the foundation of your professional services brand.
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Why Visible Expertise Matters to Professional Services Firms
This brings us to the topic of expertise and why it is so critical to professional services.
In the professional services, expertise is what you sell.
Clients aren’t buying your services because they like them. They are buying your services to
solve a business problem or seize an opportunity. For example they may need help complying
with a regulatory requirement or solving a critical strategic challenge.
Our research into professional services buyers describes what criteria companies use to select
one service provider over another. The most common selection criterion is expertise, and it is
the factor that most often tips the scale in favor of the contract-winning firm.
But what about the argument that professional services are “a relationship business”? Well,
that assumption is partially true. Good business relationships are certainly helpful. As we
outline in Inside the Buyer’s Brain, both buyers and sellers of professional services understand
the importance of an existing relationship, but sellers consistently underestimate the role their
reputation plays in the final selection.
Also, a strong reputation for expertise is the one factor that can overcome an existing
relationship. If a company does not believe their current provider can solve a problem, they will
look for a firm that can.
Not long ago, a prospective client came to us for our marketing expertise. Previously, he had
hired a life-long friend to help with his marketing. Despite their close relationship, he had fired
his friend (and hired Hinge) because his friend could not solve his marketing challenge. Our
strong reputation for solving the specific marketing challenges faced by professional services
firms was more important than their personal relationship.
According to our most recent study of referral marketing, visible expertise plays the single most
significant role in driving referrals. Relationships — both social and professional — are still
important, but only when there is an awareness of your expertise.
Overcoming the Problem of Invisibility
Developing expertise as a differentiation strategy sounds like a great idea, but there is a catch.
Clients are notoriously uninformed when it comes to judging actual expertise. Consequently,
your firm’s expertise is often unseen by the marketplace.
And if your firm’s expertise is not visible, for all practical purposes it doesn’t exist.
Fortunately, it is possible to make intangible expertise visible and real.
We conducted extensive research on highly visible experts and the professional services buyers
who hire them. As we outline in The Visible Expert, there are certain strategies and techniques
that can elevate the visibility of your expertise in the marketplace.
Public speaking, writing blog posts and articles, and publishing books are all effective ways to
demonstrate your expertise. And there are many others. The value of these different
techniques, when put together as part of a differentiation strategy, has been proven time and
again by clients that go through our Visible Firm® or Visible Expert® programs.
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But the only proven to make your expertise visible and turn it into a credible differentiator is to
have a clear strategy.
Building Your Differentiation Strategy
Developing and implementing a differentiation strategy is a five-step process.

1. Start with an understanding of exactly what you want to be known for.
What are you expert in? Your area of expertise or other differentiator should be broad enough
to be enduring and relevant to your clients. But that breadth must be balanced. The narrower
and more specialized your expertise, the easier it is to make it visible and defend against
potential competitors.
2. The next step is research.
Research will help you align your firm’s offerings with the desires and preferences of potential
clients. It will also inform your selection of issues to write about to make your expertise more
visible to your target audience. We have found that firms that research their target client group
tend to grow faster. In fact, the fastest growing firms (those that grow at least 20% year over
year) are twice as likely to conduct research than their no-growth peers.
3. Develop your differentiators and focus.
What sets you apart from competitors and delivers exceptional value to a segment of the
market? Build a list of potential differentiators and put them to the three-step test. If you end
up with three to five differentiators, that’s great. One strong one can even be plenty.
However many differentiators you have, you’ll need a focus. That focus, along with the
supporting differentiators, will inform your positioning statement. Your positioning statement is
a short statement that describes what your firm does, who it does it for and why a prospect
should choose you. Think of it as the DNA of your differentiation strategy.
4. Build your story.
Next you’ll need to tell your story to your target audience. Most prospective clients check you
out on your website, so that’s a great place to start. First impressions matter. Help visitors
answer the question, is this firm for me?
But your website is only the beginning. You need to make that all-important expertise visible to
the outside world. How? Publications, webinars, workshops, speaking engagements. How about
video? The list goes on.
The point is you need a plan to turn the strategy into a reality. Then you need to build the tools
to make that plan happen.
5. Tell the world.
Now it’s time to tell the world, or more specifically your target audiences, the story of your
firm. Implement the plan. Track your efforts and their impact. Monitor the new business
pipeline. Then test and adjust. The message gets better and the brand gets stronger each time
you make results-driven adjustments.
Evaluating Your Differentiation Strategy
The research on evaluating a differentiation strategy is still evolving. However, we’ve learned
some important things already. For example, we know that highly visible experts accelerate the
growth of a firm by 1) attracting new leads and 2) making it easier to close them as clients. We
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also know the fastest growing, most profitable firms use strategies and marketing techniques
that raise the visibility of their expertise.
A well-thought-out differentiation strategy and a commitment to implementing your plan will

accelerate your firm’s visibility and perceived expertise. A verage increase in visibility, perceived
expertise and new business leads experienced by firms that went through Hinge’s Visible Firm
program, which is based on the principles we’ve outlined in this article. These data will give you
a feel for what is possible when a comprehensive differentiation strategy is fully implemented.
These are certainly impressive results and they speak to the pivotal role that a differentiation
strategy can play in the growth of a professional services firm.
Three Parts: Examining Your Business Creating a Competitive Advantage Maintaining a

Every business, large or small, needs a competitive advantage to distinguish itself from the
competition. In the aggressive business world, especially in today’s economy, every advantage
counts to establish your business in the top of your industry. Gaining a competitive advantage
takes strategic planning, extensive research and an investment in marketing.
Part1: Examining Your Business
Learn what "competitive advantage" means. A competitive advantage is simply a factor that
distinguishes your business from others and makes customers more likely to choose your
product over the competition. Without a competitive advantage, your business has no unique
method of drawing in customers.
A competitive advantage is a way in which you can create value for your customers that your
competitors cannot. This may be lower cost, faster service, better customer service, more
convenient location, higher quality, or other factors.
For example, a restaurant offering the best food in town (best-tasting, highest-rated, most well-
known chef, or some other measure of quality) would have an advantage other its competitors
by offering a higher-quality product.
Alternately, a business could focus on reducing overhead and production costs to offer a
market-quality product at a below-market price. Being able to offer this product at the price
that they do would then be their competitive advantage.
Creating a competitive advantage involves analyzing your business's strengths and those of
your competitors, and then learning how to take advantage of these factors.
Work to understand your customers. Identify the demographic qualities of your customer base.
If you serve businesses, what type of businesses do you typically sell to? If you serve individuals,
are they typically young or old, male or female, married or single? Do they live within a 1⁄4 mile
(0.4 km) of the business or 50 miles? What is their typical income? Are they different from your
competitor's customers? If you do not understand your customers, you cannot determine why
they patronize your business.
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Take this one step further by seeking to understand your customers on a personal level. What
are their hobbies? What do they care about? What aspects of your business or your product
resonate with them?
Demographic information can be discovered through customer interaction, surveys, or
analyzing customer information.
Examine your business's unique strengths. Examining the strengths of your business can let you
know which areas you can build on to create a competitive advantage. Ask yourself, "Why do
customers buy from me?" The answer to this question will help you understand what value you
offer them.
For example, if you own a Chinese food restaurant, the quality of food, the location, or perhaps
the speed of the delivery service may all contribute to a customer choosing you over your
competition.
Don't be afraid to ask your customers directly. You can make a survey for them to fill out, or
just approach them, but your key objective is to discover why it is they choose you.
If many customers list location, for example, you can work on other aspects of your business to
create an even greater advantage.
Look at your competitors. A competitive advantage means you need to offer some things your
competitors don't. Therefore, you need to know what it is your competitors do well, and do not
do well. Think about your competitors' products, services, prices, location, and marketing.
Then, compile a list of all the reasons you feel a customer would choose your competitors'
business.
Compare this to your list of advantages. What strengths do you have that your competition
does not have? Which strengths does your competition have that you do not? The areas of
strength that you have are the areas you should focus on expanding.
Remember not to be a "me too" competitor as much as possible. For example, if your
competition has one recipe that many customers come to that restaurant for, simply imitating
their recipe will not add to your competitive advantage. Instead of trying to copy your
competitor's advantages, strengthen your own to create a unique set of strengths that cannot
be replicated.
Remember that your competitors can include more than lookalike businesses. For example, a
Chinese restaurant competes with other Chinese restaurants, but also with other dining
choices.
Hire a company that specializes in providing business information. For example, Cortera 2 will
research, construct and analyze a competitive landscape of your target market. They and
similar companies will have extensive databases to quickly access the information you will
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need. The more information you have, the easier it is to make decisions on what is working and
what is not.
Detailed customer knowledge is equally important as competitor knowledge. Gaining in-depth
insights about your customer portfolio will allow you to maximize revenue potential, increase
customer retention, and boost prospective customers.
You can use a mix of many tools and methods to measure consumer insight and both your
position in the market and the positions of your competitors. Along with traditional company
information resources, consider social media analysis tools that allow consumer insight mining
on a large scale.
Part2: Creating a Competitive Advantage
Review your core strengths. Once you have identified your core strength areas, you can add to
those using several market strategies to build a competitive advantage, or to create new areas
of advantage.
For example, you may have a major strength in terms of product quality. You can further add to
this strength by focusing even more heavily on fantastic quality, but also trying to deliver your
product faster, and at a lower cost.
Reduce costs. Cost reduction is one strategy that businesses can pursue to gain a competitive
advantage, or to add to their advantage. Most markets have price-sensitive consumers, and
being able to offer your product or service at a lower price is a certain way to create value for
your customers. Walmart, for example, has a competitive advantage due to its ability to provide
low prices.
Examine your entire production process. This includes everything from purchasing supplies, to
how your workers produce your products, to how your product is sold.
Consider investing in technology that can reduce costs. If you own a restaurant, for example,
purchasing energy-efficient equipment can reduce your operating costs. If your business has an
excellent credit rating compared to your peers, you can finance these purchases at a lower cost.
Examine how your workers are producing as well to make sure they are not wasting resources
and that they are producing as much as possible.
Focus on service. In your particular market, service may be a key factor that differentiates
competitors. If your business already has a strength in service, consider doing more to focus in
this area.
Hiring better staff, improving training standards, managing staff closer, offering rewards and
incentives for strong service, and offering more convenient hours of operation can all help
generate an advantage. It is important to create a culture of excellent service. If your service
advantage is based on a few simple factors (like longer hours), your competition can easily
replicate it.
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Focus on product or service quality. If you cannot compete with your peers on location or on
price, for example, you can always compete on quality. This is even more true if high quality is
one of your strengths. Customers will often pay more or go to greater lengths for an
exceptional product.
You'll need to first determine exactly what quality means in a particular market. For example,
do customers want maintenance-free products, better design, or longer life? What does quality
mean to your customers?
Look at best-selling products in your market. What aspects of these products make them
desirable?
Focus on taking your unique talents and background and using these. For example, if you are in
the restaurant business, and you spent three years overseas studying cuisine, you can use your
experiences and contacts there to establish truly unique recipes.
Focusing on hiring the right people, and using higher quality supplies can dramatically enhance
the overall quality of your product or service.
Differentiate your products and services. Look for one or more marketable attributes that you
have that can set you apart from your competitors. Then find the segment of the market that
finds those attributes important and market to them. For example, do you have the longest
battery life? Frequent travellers need this. The lowest price? That's important to lower income
customers. Free shipping? If you are the only one offering this it could attract new customers.
This process can also work in the other direction by conducting research to determine which
things consumers find most important and then developing a niche market for those products
or characteristics. For example, people with arthritis have trouble opening cans and jars. You
could design a gadget that makes it easier for them and then advertise in medical publications.
Form an alliance with another company. Forming a partnership or alliance with another
company can be an excellent way to gain a competitive edge. For example, assume you are a
local equipment supply company. You could approach a local transportation company and offer
to provide them with a discount on products in exchange for quicker or more preferential local
transportation. In doing so, you can offer your customers their products in a shorter time frame
than your peers, providing you with a competitive advantage.
Part3: Maintaining a Competitive Advantage
Create an “economic moat.” Take advantage of barriers to enter into the market, using them to
dissuade competitors from challenging your market share. In some cases, an established
company’s ability to manipulate hurdles to enter and compete in its market becomes an
effective tool against new competition, further entrenching the business and preserving its
profit potential for the foreseeable future.
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For example, you may own an Asian-themed restaurant located in a mall. This would provide an
economic moat, since it is unlikely the mall would want to open multiple Asian-themed
restaurants in the same area. This prevents new business from competing with you.
To create the moat, you may be able to negotiate a site monopoly on your type of business if
you are located on a multi-business site like a mall or strip shopping center.
Stay on the cutting edge. Once you’ve gained a competitive advantage, your work is far from
complete. To be successful, you will need to continuously maintain your competitive
advantage, through pricing, product features, and marketing. For example, if you are in the
technology space, you need to be continually designing new products that are faster, less
expensive and have more functionality. After all, your competitors are not going to sit back and
allow you to steal their market share.
Sometimes you may need to take chances to keep ahead of the pack and differentiate your
business, but with big risk often comes big reward. Just remember to do your research before
diving head-first into new ideas.
Predict future trends in your industry. A good way to do this is to join a local professional
association that offers speakers with expertise in your field and an annual conference. You will
be able to get new ideas and see what others in your industry are doing.
Research and monitor your competitors constantly. Look for updates on their websites, get on
their mailing lists, and watch for new product announcements as well as changes in pricing.
Adapt to your customers' wants and needs. Ask for your customers' opinions frequently with
online surveys and customer advisory boards. Your sales force should be updating you with
feedback they hear from current and potential customers while on sales calls.
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Issues on Genetically Modified Organisms
Genetically Modified Organisms (GMOs) are being made by inserting a gene from an external
source such as viruses, bacteria, animals or plants into usually unrelated species. Biotechnology
has granted us the ability to overcome insurmountable physiological barriers and to exchange
genetic materials among all living organisms.
The use of recombinant DNA technology has the potential to allow the creation of an organism
which is desired and designed by human. Genetically Modified Food (GMF) means any food
containing or derived from a genetically engineered organism. Describing biotechnology
methods is beyond the scope of this paper however, it is informative to only name some of the
vastly used techniques in creating GM crops: Agrobacterium has been used as an intermediate
organism for transferring a desirable gene into plants. This has been a successful method for
modification of trees and cereal crops. Biolistic transformation is a physical method by which
the genes of interest are bombarded into the plant cells and DNA-coated beads are usually
used as carriers.
Another technique which facilitates the in-corporation of genes into the host genome is called
Electroporation. This is a suitable method for plant tissues without cell walls. DNA enters the
plant cells through minute pores which are temporarily caused by electric pulses. These holes
can be also created by microscopic crystals. Another recent method consists of Microinjection
which is direct introduction of DNA into genome. Antisense technology is also a useful method
for deactivation of specific genes such as those responsible for softening of fruits and fighting
against plant viral infections.
With currently available techniques the favorite DNA are inserted to only a few numbers of the
treated cells. Therefore, in order to detect whether the incorporation of the gene to the cell has
taken place, the desired DNA are generally attached to marker gene before their transfer.
These marker genes allow researchers to verify whether transfer of the desired DNA has
properly occurred. However, after the successful gene transfer, important factors that have
triggered debates over the safety of GM crops are the genotypic and phenotypic stability and
permanence inheritance.
The majority of the Biotech-crops available on the global market have been genetically
manipulated to express one of these basic traits: resistance to insects or viruses, tolerance to
certain herbicides and nutritionally enhanced quality. At present, more than 148 million
hectares of farmland are under cultivation for biotech crops throughout the world. There has
been a 60-fold rise in the application of Agri-biotechnology since 1996, when the first biotech-
crop was commercially produced. Major producers of GM crops include USA, Argentina,
Canada, and China. In the US, about 80% of maize, cotton and soya are biotech varieties. In
Canada Genetically Engineered (GE) ingredients are used in more than 70% of the processed
food products. The current rate of biotech crop adoption is remarkably higher in developing
versus industrialized countries (21% vs. 9%). Developing countries are rapidly accepting the
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technology with the hope of alleviating hunger and poverty. These countries account for 40% of
the global farmlands used for GM crop cultivation. It is predicted that, by 2015, more than 200
million hectares of lands will be planted by biotech crops in about 40 countries.
The emergence of agricultural biotechnology has created social and ethical contradictions. The
widespread debate exists as to how biotechnology can be used for planting high quality high
yield crops while protecting eco-system and human health.
While it is claimed that food biotechnology, by improvement of the plant productivity and
developing nutrient-fortified staple food, is the promising solution to malnutrition and food
shortage, the accumulating evidence over 20 years of GMF introduction to the market does not
fully support these claims. The consumers are mainly concerned about the long term human
health effects of the bio-tech crops such as antibiotic resistance, aller-genicity, unnatural
nutritional changes and toxicity. Furthermore, Agri-biotech companies and their affiliated
scientists present GM food as an environmentally friendly crop.
It is excessively stated over the media and through their dependent scientific publications that
GM crops containing genes expressing herbicide tolerance and pest resistance lead to reduction
of broad spectrum pesticides and herbicide use. Also, they profess that GM crops help
diminishing greenhouse global emissions by reducing needs for plowing (replacement of
energy-intensive by low-till agriculture). On the other hand, environmentalists believe that
engineering of the genetic materials could deeply transform the global ecosystem from all
possible aspects.
They are concerned about the long term consequences of GM agriculture on biodiversity as it
may create superweeds and superpests which can potentially disturb the balance of nature and
cause serious hazards for beneficial insects. In this article, different views on agricultural
biotechnology which has given rise to debates between advocated and opponents of GM crop
are provided.
The information presented in this review was collected through extensive web searches of
databases such as Regulatory Framework on Food Biosafety implemented by UNEP-GEF;
guidelines of European Parliament's committee on the Environment, Public Health and Food
Safety; Food and Agriculture Organization of the United Nations, biosafety guidelines for crop
production and food labelling and also scientific data presented by independent scientists of
non-profit international organizations and many others.
Much of the current debates on agricultural biotechnology have focused on the potential risks
of GM crops for human health. Some of the health risks pertinent to unapproved GMFs include
antibiotic resistance, aller-genicity, nutritional changes and the formation of toxins (14). To
address the possible drawbacks of biotechnology application in engineered foods, we point out
some of the problems stemming out from genetic modification techniques.
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GE techniques have been used to transfer single gene traits such as herbicide tolerance from
soil microbes into plant cells. However, recent studies in higher eukaryotic cells have shown
that genes do not function independently from each other. For example, it has been discovered
that human genome is not a simple collection of independent genes. Genes, instead of being
constant and static, are dynamic and operate in an interactive system and intertwined with one
another. Furthermore, proteins do not function separately; rather they behave in interactive
network systems. Gene traits work in the cell by inter-communication and reciprocity (15).
Hence, one gene might not determine one trait, be it herbicide tolerance, or resistance to pest.
Therefore, the genetic engineering techniques seem to be imprecise and must include gene
optimization steps to minimize this concern. The new understanding of genome function has
changed the genetic concept which launched biotech industry a couple of decades ago (16).
To make a GM crop, the gene of interest is inserted into the crop's genome using a vector. This
vector might contain several other elements, including viral promoters, transcription
terminators, antibiotic resistance and marker genes. The genes incorporated into a genome,
could reside anywhere, cause mutation in the host genome, and move or rear-range after
insertion or in the next generations. Transgenic DNA might break up and reintegrate into the
genome again (recombination) leading to chromosomal rearrangement in successive
generations and could potentially change the transgenic crops in a way to produce proteins
that are allergic or cause other health problems.
As DNA does not always fully defragment in the digestive system, human gut microflora and
pathogens can take up GM materials including antibiotic resistance genes (19). This may cause
the reduction of the effectiveness of antibiotics and therefore increasing the risk of antibiotic-
resistant diseases. Some scientific advices have proposed that such markers should be replaced
by non-antibiotic marker system in GMF production (20). In this regard, the Food Safety Unit of
WHO has been assessing the safety of antibiotic resistance marker genes (21). However, the
proponent of commercial production of GMF believe that DNA are abundant in all the foods we
eat, but there has not been any evidence of the gene transfer from the food source to gut
bacteria.
However, there is a concern that the existence of viral promoters in the vectors carrying the
foreign genes might expose the consumer to the viral infection. For example: the Cauli-flower
Mosaic Virus (CaMV) promoter is exploited to induce the expression of transgenes in almost all
GM crops commercially released- in Round Up ready soy of Monsanto, Bt-maize of Novaris, and
GM cotton and canola. It is of concern that this promoter could potentially becomes activated
in human and animal cells.
Seed companies argue that viruses have been engineered to be dormant in plant cells and
therefore they are safe. Contrary to these claims, studies have shown that viruses, lacking the
gene needed for movement, can easily gain it from neighboring genes.
Many scientific data indicate that animals fed by GM crops have been harmed or even died.
Rats exposed to transgenic potatoes or soya had abnormal young sperm; cows, goats, buffalo,
……………………..
pigs and other livestock grazing on Bt-maize, GM cottonseed and certain biotech corn showed
complications including early deliveries, abortions, infertility and also many died (26–30).
However, this is a controversial subject as studies conducted by company producing the biotech
crops did not show any negative effects of GM crops on mice (31). Although Agri-biotech
companies do not accept the direct link between the GMFs consumption and human health
problems, there are some examples given by the opponents. For example: The foodborne
diseases such as soya allergies have increased over the past 10 years in USA and UK (32) and an
epidemic of Morgellons disease in the US. There are also reports on hundreds of villagers and
cotton handlers who developed skin allergy in India. Recent studies have revealed that Bacillus
thuringiensis corn expresses an allergenic protein which alters overall immunological reactions
in the body.
The aforementioned reports performed by independent GM researchers have lead to a concern

about the risks of GMFs and the inherent risks associated with the genetic technology. It is
therefore essential that the safety and long-term effects of GM crops should be examined
before their release into the food chain by all organizations responsible to produce GMFs.
In order to give the public the option of making informed decision about the consumption of
GMF, enough information on the safety tests of such product is required. Unfortunately, such
data are scarce due to a number of factors. For example it is hard to compare the nutritional
contents of GM crops with their conventional counterparts because the composition of crops
grown in different areas might vary depending on the growth and agronomic conditions. At the
present there is no peer-reviewed publication on clinical studies of GMF effects on human
health.
Current testing methods being used in bio-tech companies appear to be inadequate. For
instance, only chemical analysis of some nutrients are reported and generally consider the GM
crops equal to its conventional crops when no major differences are detected between the
compound compositions in both products. Such approach is argued to guarantee that the GM
crop is safe enough to be patented and commercially produced. It is strongly believed that
animal trials should be used to evaluate the probable toxic effects of genetically modified
foods. Herbicide and glyphosphate resistant soybeans as well as GM cotton resistant to insects
are claimed to be substantially equal to conventional soybeans or cotton. However, in these
studies other than the use of inappropriate statistics, instead of comparing GM crops with the
control grown at same locations, samples from different areas were measured, while it is
known that environmental conditions could have major effects on the components levels.
Another example are from the results of toxicological studies conducted on a variety of animals
fed with glyphosate-resistant soybean (GTS) which were shown to be similar for GTS fed and
control group. However, these experiments were not scientifically sound since high dietary
protein concentration and very low level of GTS have hidden any real effects of GM and
basically these experiments were more a commercial and not scientific studies. Also, there are
some false claims on the improvement of the protein content of GM crops expressing the
desired protein from an inserted gene. For example, studies on GM potato and containing
soybean glycine gene did not show considerable increase in the protein content or even amino
……………………..
acid profile and as for GM rice the rise in protein content was due to the decline in moisture
rather than the increase in protein content.
Also, there are some difficulties with assessing the allergenicity of GM crops. When the gene
causing allergenicity is known, such as the gene for the alpha-amylase trypsin inhibitors, or cod
proteins, it is easier to recognize whether the GMF is allergenic by using in vitro tests. Of course
to test the stability of GMF products in the digestive systems, human/animal trials are required
and data bank studies are effective. Since insertion of a non-allergenic gene might cause over
expression of already existing minor allergen, it is difficult to specifically identify whether a new
GM crop with a gene transferred from a source with unknown allergenicity is allergenic before
its introduction to the food chain.
In order to verify whether people have been harmed over the years by consuming GMF,
specifically in countries like the US where people's dietary are mainly composed of such
products, the law for mandatory labelling is highly required. However, the labeling is not just
about health issue rather, it is about consumer rights to make an informed choice on GMF.
Although a consensual system on GMF labeling is crucial, it seems unlikely that an
internationally agreed labeling system can be set up in proximate future. Nevertheless,
different GMF labeling schemes have been established in different countries, ranging from
stringent to extremely lenient or even non existent legislations. While the EU has established
strict GMF labeling regulations, in the US, Canada and Argentina, three big producers of GM
food, such laws have been put forward but not enacted by these governments.
A proper labeling represents the “GM” word, along with additional information on changed
characteristics and the external source of the inserted gene (i.e. GM soya bean with gene from
X source). Negative labeling such as “GM free” is not suggested, because it might give the
wrong impression to the consumers. The law for compulsory labeling of genetically modified
food products has been established in more than 40 countries. Surveys commissioned by
different organizations have shown that people across the world are seeking for transparency
and consumer choice and believe that compulsory labeling scheme on GM ingredients is highly
required: 88% Canadians, 92% Americans and 93% French. However, the opponents of GMF
labeling believe that such a tag resembles a skull and cross bones on a food which makes
consumers reluctant in using any bio-engineered products. On the other hand they are
concerned that obligatory labeling holds back the progress of Agri-biotechnology and also it
would lead to extra costs and logistical difficulties.
The genetic modification of crops has been a controversial issue since the first commercial
production of GMF. The proponents of such technologies claim that bio-engineering of food is
absolutely safe and it is similar to what has been happening through traditional agriculture for
thousands of years. However, in selective breeding when two parental plants are crossed to
obtain a desirable trait, it is likely that other unpleasant characteristics are transferred as well.
Therefore, taking out the undesirable traits is a slow process and requires trial and errors
through several generations of plants breeding. In this context, modern biotechnology has
allowed us to go beyond natural physiological reproductive barriers in a manner that gene
transfer among evolutionarily divergent organisms is now possible and therefore, individual
……………………..
genes expressing certain traits in animals or microorganisms can be precisely incorporated to
the plant genome.
GM advocates believe that conventional breeding can achieve similar results using transferred
gene but only within related species and in a lengthy and imprecise process. However, GMF
opponents explain that genetic engineering bears no resemblance to natural breeding as it
forcibly combines genes from unrelated species together; species that were perfectly separated
over billions of years of evolution. They believe that the genetic engineering is not an
alternative to traditional breeding as natural crossing of plants contributes thousands of genes
to the offspring through the elegant dance of life.
Agri-biotech companies claim that recombinant DNA techniques can bring advantages for
consumers such as nutritional enhancement as well as improving the quality and yield of food
and non-food plants such as cotton and pharmaceuticals. Most of the claims about the benefits
of GMF have been proposed by the seed industry. However, independent scientists warn that
the publications on the success of the GM in offering more nutritious and safe food is not based
on expected scientific standards.
Drug studies funded by pharmaceutical companies are more likely to report positive result in
favor of the sponsor than independently funded studies. The biased results might be achieved
by the type of experiment design, selection of data and briefing the actual findings to what is
expected. The same might be happening with researches conducted by the seed industry. The
majority of research experiments on transgenic plants are being performed by the private
sector and those carried out in universities are funded by the industry. Therefore, independent
scientists should urgently follow strict precautionary approach in designing experiments on
GMF. GM plants have to meet the criteria of the guidelines in order to get approval for entering
the market. However, the regulatory and scientific capacities to implement such guidelines
need to be built up worldwide specifically in developing countries.
Intellectual Property Rights (IPR) are one of the important factors in the current debate on
GMF. The GM crops are patented by Agri-business companies leading to monopolization of the
global agricultural food and controlling distribution of the world food supply. Social activists
believe that the hidden reason why biotech companies are eager to produce GM crops is
because they can be privatized, unlike ordinary crops which are the natural property of all
humanity. It is argued for example that to achieve this monopoly, the large Agri-biotech
company, Monsanto, has taken over small seed companies in the past 10 years and has become
the biggest Agri-biotech Corporation in the world. The patent right for vegetable forms of life
also affect the livelihoods of family farmers as they are required to sign a contract preventing
them from saving and re-planting the seeds, thus they have to pay for seeds each year.
Reflection: Taking everything into consideration, GM crops are alive; they can migrate and
spread worldwide. In this regard, clear signals should be sent to biotech companies to proceed
with caution and avoid causing unintended harm to human health and the environment. It is
widely believed that it is the right of consumers to demand mandatory labeling of GM food
products, independent testing for safety and environmental impacts, and liability for any
……………………..
damage associated with GM crops. We are aware that many regulatory laws already exist for
risk assessments which are performed on three levels of impacts on Agriculture (gene flow,
reducing biodiversity), Food and Food safety (allergenicity, toxicity), and Environment (including
non target organism); And at the same time, in recent years Cartagena protocol has created
laws and guidelines and has obliged countries and companies to obey them for production,
handling and consumption of GM materials. In this article, we have not reviewed the regulatory
issues involved in GMFs production. However, we are certain that the interested readers will
follow the debates on GMFs and the related regulatory issues in the years to come.
……………………..

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Dr. Esperanza P. Libunao

Why focusing on climate can be a problem

We embarked on a journey to quickly transform the organization. We managed three phases of

Stabilize: We had a massive company-wide focus on improving quality as we managed a

It’s critical to understand both climate and culture.

1. Research and Development, Innovation, Product Design

1.1 Research and development

"Research and experimental development, (R&D) comprise creative work undertaken on a

1.3 New product development

1.5 Product design

2. Routine design engineering: the adaptation of existing technology to specific

2.1 Microeconomic factors and design (the commercial role of design)

While product design is generally considered to be a non-price factor it also important to

3. Design, Competitiveness and Developing Countries

Product Design is now seen as being relevant to developing countries since:

• Particularly in industrialised countries, product characteristics such as design, frequency

This differentiates it from advertising as a form of marketing communications. Public relations

Specific public relations disciplines include:

Spin (public relations)

Public relations is personal

Public relations build up credibility

The Role of the WTO in Trade Agreements

Philippines - Trade Agreements

E-commerce is a transaction of buying or selling online. Electronic commerce draws on

E-commerce businesses may employ some or all of the following:

An example of an automated online assistant is a merchandising website.

Individual or business involved in e-commerce whether buyers or sellers rely on Internet-based

However, there are 3 main ways of recommendations: recommending products to customers

Corporate social responsibility (CSR) promotes a vision of business accountability to a wide

Some of the drivers pushing business towards CSR include:

1. The shrinking role of government

2. Demands for greater disclosure

3. Increased customer interest

4. Growing investor pressure

5. Competitive labour markets

The Global Reporting Initiative is an international, multi-stakeholder effort to create a common

There is increasing recognition of the importance of public-private partnerships in CSR. Private

Corporate social responsibility (CSR) is a broad business concept. It is usually described as a

Examples of corporate social responsibility

Business benefits of corporate social responsibility

Responsible business reputation

Finding and keeping talented staff

Other important benefits of CSR to your business

Business case for corporate social responsibility

Corporate social responsibility: environmental impact

Corporate social responsibility: ethical trading

What is ethical trade?

Ethical trade and suppliers

When choosing suppliers, you should also examine their:

Role of PR in promoting your CSR

Corporate social responsibility (CSR)

Developing corporate social responsibility policies - The Venus Company

What I'd do differently

Corporate social responsibility (CSR)

What else can you do to stand out from the crowd?

2. Offer Understanding and Insight

3. Share your story

4. Make Work Fun and Easy

6. Fail quickly but create an idea-based culture

7. Love your Employees

The Challenges of Maintaining a Competitive Advantage

A strong differentiator will provide a competitive advantage for your firm.

Of course, developing a broad-based differentiation strategy, in which your firm is substantially