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Organization and Behavior

Task 1
a) Select two organizations of your choice and compare and contrast the
structure of those two organizations.
There are 9 organizational structures that can be identified.
1.
2.
3.
4.
5.
6.
7.
8.
9.

Hierarchical
Flat
Tall
Functional
Product based
Geographically based
Matrix
Centralisation
Decentralisation

Kentucky Fried Chicken KFC


1. Kfc comes under geographically basedstructure.
Usually large organizations like Kfc have many branches in different
countries. Kfc is functioning there works in 115 different countries in Africa,
Asia, Ceribbean& South America, Europe and middle east.
Area based (geographical) definition
Firm organized into geographical units (regional, national, international) that
report to a central headquarter which administers the core functions such as
planning and marketing.
Business Dictionary.com, (n.y.).Geographic Organization. [Online] (n.d.)
Available

at:

http://www.businessdictionary.com/definition/geographic-

organization.html
[Accessed 23rd January 2013].
Virgin group
this comes under the matrix structure.
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Organization and Behavior


Many assume the Virgin Group to be a multinational, but such is not the

case. Each of the 300 odd companies of the Virgin Group operates separately
and Branson serves as shareholder, chairman, and public relations supremo.
Most of them are operating companies that own assets, employ people, and
offer goods and services. These operating companies are owned and
controlled by about 20 holding companies. The Virgin Group has a very
complex structure. It has been termed both as a brand franchising operation
as well as a keiretsu. (Grant, 2008) However, based on its structure, the
Virgin Group can be safely termed as an organization with a keiretsu
structure. A keiretsu is a group of organizations, each of which owns shares
in the other organizations in the group, and all of which work together to
further the groups interests. (Jones, Mills, Weatherbee, & Mills, 2006)
Furthermore, such a large organization with a complex structure needs to be
organic in order to be able to adapt to changes in its environment. An
organic structure promotes flexibility, so people initiate change and can
adapt quickly to changing conditions. ( Jones et al., 2006)
Considering each of the individual companies as a department providing a
unique

product

or

service,

it

is

evident

that

they

exhibit

product

departmentalization. Product departmentalization is the division of the


departments of an organization based on the type of product or service
offered. (Jones et al., 2006) For example, Virgin Mobile offers cellular services
while Virgin Records is a music label. However, the structure of the Virgin
Group is so complex that it is necessary for it to not just have one type of
departmentalization. For instance, Virgin Mobile has operations in many
different countries like the UK, India and Australia. As such, the type of
service varies in each of these countries. This shows that Virgin Mobile also
exhibits geographic departmentalization. Geographic departmentalization is
the division of an organization based on the geographic location. (Jones et
al., 2006) In addition, type of service and products also varies depending on
the customer base hence exhibiting customer departmentalization. Customer
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departmentalization is the division of an organization based on the kind of
customers it serves. (Jones et al., 2006) Since the Virgin Group of companies
exhibit so many types of departmentalisations, the organization as a whole is
said to have a hybrid structure, which is a mixture of two or more kinds of
departmentalisations. This multi-divisional approach helps the Virgin Group
to easily adapt to the cultural, technological and other forces in the region it
expands to."

UK Essays. November 2013. The Virgin Group An Insight Into Organizational


Structure And Culture Business Essay. [online].
Available from: http://www.ukessays.com/essays/business/the-virgin-groupan-insight-into-organizational-structure-and-culture-business-essay.php?
cref=1
[Accessed 17 December 2014].
Matrix structure
an organizational structure that overlays two structures in order to influence
the benefit of both.
The companies like virgin use this structure because there are many sub
companies comes under the head company.
Ex:airline services, civilian space shuttles, virgin cola, virgin railway, etc.
The matrix structure usually makes very good use of resources and
expertise, and making it ideal for project based organizations with variable
workloads.
The CEO of virgin group, Richard Branson uses this structure because this is,
flexible, interdisciplinary, motivates and challenges develop managerial
skills, creativity encouraged and it encourages decentralization.

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Organization and Behavior

b)Compare and contrastthe culture of the selected organizations.


According to Deal and Kennedys cultural models, there are four main types
of culture.

Work hard, play hard culture


Tough guy macho culture
Process culture
Bet the company culture

Kfc comes under the work hard, play hard culture.

Risk
Low

High

Feedba
ck

and

Work-

reward Rapi hard,


d

play-hard
culture

Slo
w

Tough-guy
macho
culture

Bet-theProcess
culture

company
culture
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Organization and Behavior

Work Hard, Play Hard Culture.

This culture is the world of sales (among others). Employees themselves take
few risks; however, the feedback on how well they are performing is almost
immediate. Employees in this culture have to maintain high levels of energy
and stay upbeat. Heroes in such cultures are high volume salespeople.
Interestingly, this culture recognizes that one person alone cannot make the
company. They know it is a team effort and everyone is driven to excel.
Contests among employees are common here, as they drive everyone to
reach new heights.

Mind Tools, (n.y.).Deal and Kennedy's Cultural Model Understanding Rites and
Rituals in Corporate Culture.[Online] (n.d.)
Available at: http://www.mindtools.com/pages/article/newSTR_86.htm
[Accessed 23rd January 2013].
Virgin group has lot of companies which serve the consumer in different
decisive factors. We cannot put the whole virgin group to a particular culture
because different companies work out in different way.

E.g. virgin music - Tough-guy macho culture


virgin Atlantic - Bet-the- company culture
virgin cola Work-hard, play-hard culture

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Organization and Behavior

c) Examine the relationship between the organizations structure and culture,


and the effects on business performances in the selected organizations.
KFC china
When Kfc arrive to china they had lots of problem with their culture. Chinese
government officials had no idea of what franchising meant, intellectual
property and franchising laws were weak. There were no known foreign
brand names, Kfc did not want to franchisees to buy the brand and then be
able to sell whatever they wanted with no legal recourse. Foreign
multidivisional organizations learned quickly that they couldnt do business
in china without government involvement. As a result Kfc has 50 registered
companies in china. Another problem is developing a marketing program
that will attract Chinese to Kfc instead of other fast food restaurant. The
management of Chinese kfc knew that kids dont come alone but bring with
them their friends. To attract kids they added a new menu and provided
entertainment.
E.g. combo meals.
Combo meals not only attacked but also simplify communication and choice.
At Kfc kids have a corner received for them. The corner is staffed with a
professional hostess whose job is to talk with the kids. To ensure that they
are having a good time, the hostess were singing and dancing with them.
The average that Kfc hosts more than 430 birthday parties annually.

To compete in the fast food industry they had to differentiate Kfc from
millions of mom and pop restaurants. Therefore they needed to pay
considerable attention to Chinese value. When a restaurant opens, it is
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Organization and Behavior


celebrated with a traditional Lion dance to bring good luck and attend by
local politicians, even though traditional Chinese fast food restaurants have a
lot of choice on their and are cheap, controlling the standard of their cooking
is difficult. Kfc prided themselves on the consistency of their offerings.
Employees are trained to prepare food consistently by following rules and
procedures spelled out in the operating manual. The menu at Kfc provides an
important intangible social freedom. In Chinese restaurants, what you order
has social and implications. The wrong order can cause the person to lose
face with friends. A standard and restricted menu with a limited price range
frees the dinner from the concern. China has a strong desire to catch up with
the rest of the world. Dining at an American restaurant enables Chinese
people to feel connected to the rest of the world. The younger Beijing people
who have higher incomes and wish to be connected more closely to the
outside world, eating at mc Donalds or Kfc or pizza hut is an integral part of
their new lifestyles.
There is a shortage of management challenge throughout china. Through its
use of standardized recipes, cooking methods and other practices, Kfc is
looked upon by the Chinese people as a company that practices scientific
management.

This

acknowledgement

attacks

consumer

anxious

to

participate in the modern world. The cleanliness of the bathrooms, the no


smoking policy, the kids corner (no parents allowed), good service, and lack
of noise are all attractions that distinguish Kfc from other fast food
restaurants.
Virgin group
At Virgin our people come first because they are the core of our culture and
the force behind our success. Their insatiable curiosity about how to keep our
brand and our customers number one priorities ensure that Virgin always
provides heartfelt service.
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Organization and Behavior


Virgin, 2012.Our story, your story, her story, history. [Online] ( n.d. )
Available at: http://www.virgin.com/people-and-planet/our-story-your-storyher-story-history
[Accessed: 23/01/2013]

d) Examine the factors which influence individual behavior at work with


reference to the above two organizations.
There are 5 main factors that influence individual behavior at work.

Personality
Perception
Attitude
Ability
Stress and change

The individual behavior of virgin group employees


Virgins assumption is that it is fun to make customer happy. Satisfied
employees are a precondition for satisfying customers, which in turn is a
precondition for making profits. Managers dont have to bribe employees to
do this, but that do need to sustain the morale and enthusiasm. Itall comes
down to people, the CEO of the virgin group, Richard Branson remarked in
an interview with David Sheff to Forbes. Nothing else even comes close. By
making employee happy first, customers will be happy, he reasons.

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Branson says his philosophy of look for the best and you will get the best
helped him build an empire recognized young, fun culture. Its much more
fun looking for the best in people, he says. People dont need to be told
where theyve slipped up. He thinks that they can figure that out for
themselves. Branson feels strongly that if an employee is not excelling in one
area of the company, he or she should be given the opportunity to do well in
a different virgin group job. Firing is seldom an option. As Branson puts it in
his autobiography, I get the best people. I asked questions, and then I say,
lets have some fun. It is not possible for employees to enjoy themselves if
their job or career under threat, he believes. Staff should come first, he
says.
Motivation strategies extend to innovative ideas. Branson believes that
employees are entrepreneurs in their own right. The key to encouraging
innovation within the virgin ranks, according to Branson, is to listen to any
and all ideas and to offer feedback. Employees often leave companies, he
believes, because they are frustrated that their ideas are not heard.
Interaction between managers and employees are fundamental. For the
companies in which he serves as both chief executive and chairman,
Branson writes his staff informal letters in his paper notebook to tell
everything that is going on, and he encourages them to write him with any
idea or suggestions. They do. I really do listen to what people say, even
when we are out in a club at 3 a.m. and someones passing on an idea in a
drunken slur. Good ideas come from people everywhere, not in the
boardroom. Branson also gives them his home address and phone number.
He responds with a letter personally. Branson believes the most important
quality a good leader can have is the ability to care about others. You cant
be a good leader unless you generally like people. That is how you bring out
the best in them, he says.
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Organization and Behavior

Branson learned early on to develop his delegation skills. : as much as you


need a strong personality to build a business from scratch, you also must
understand the art of delegation, he says. I have to be good at helping
people run the individual businesses, and I have to be willing to step back.
The company must be set up so it can continue without me. Branson has
developed a level of trust with his top managers by setting the direction and
then stepping back to let them navigate. He comes up with the original idea,
spends the first three months immersed in the business, and then gives chief
executives a stake in the company and asks them to run it as if its their own.
Trust in managers and employees are particularly important as Branson looks
to build virgin.
Branson also believes in giving people a second chance, as he did with his
best friend, Nick Powell. Givepeoples a second chance if they screw up.
Even people who have stolen from us have become, when given a second
chance, incredibly loyal and valued employees. I dont know where Id be if I
had not been given second chances.
Branson believes in a share the wealth philosophy. When the jury awarded
500,000 and virgin Atlantic 110,000 as the result of the libel action
against British airways, it was the highest in the history of uncontested libel
settlement in the United Kingdom. Branson gave it all to his employees. As a
result of his treatment, his staff is incredibly loyal and protective of him.
Drexler, K., 2010. Business Leaders Who changed the World. 1ST ed. Mumbai:
Jaico publishing house.

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Task 2
a) Describe and evaluate the different management approaches used by the
selected organizations.

Founded in 1970 as Virgin Records, the company has expanded to a


humongous organization comprising of more than 200 companies in 2007. Its
business portfolio ranges from air travel, fitness centers, and mobile
telephony. Since its inception, the culture and image of Virgin Group has
been directly attributed to the personality and efforts of its owner and
founder, the high-ranking executive and entrepreneur Sir Richard Branson. It
makes no sense to delink Virgin Group from Sir Branson. In fact, the name
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Branson is almost becoming synonymous with Virgin Group. This essay aims
to provide several aspects of Virgin group. These include the critical analysis
of its organizational model, the leadership of Sir Richard Branson and
eventually organizations communication.

Discussion
Virgin Group is made up of more than 200 companies, which employ nearly
50,000 people all over the world. The business has witnessed continual
growth since it was started. The revenues reached a record mark of 10 billion
sterling pounds in the year 2006. This reveals the magnitude and level of
business in which Virgin Group is operating. The nature of leadership in
existence in Virgin Group draws many features from the personality of Sir
Richard Branson. The business philosophy postulated by Sir Richard Branson
believes that the ultimate results of customer satisfaction and shareholders
gain is the responsibility of every individual. He believes that if the staffs are
kept happy then the customers are going to be happy meaning that the
shareholders will be happy too. Consequently, the management of Virgin
Group does not fall in to any particular model. It has a unique management
structure whose characteristics do not fit those of the existing models. The
amalgamation of concepts makes it distinctive. A critical review reveals that
the success witnessed by Virgin Group can be attributed to the uniqueness of
its management styles.

Management Theorists like F Taylor first created the concept of scientific


management. This scientific concept postulates that there are six main
features of management, namely; experiment, observation, selection,
standardization, and training. Scientific philosophy of management expects
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that rewards and employee compensation should be pecked on performance
and co-operation. Although some facets of this theory are outdated, some of
its features are still applicable in the business structure of modern times. As
a good illustration, Virgin group may be having what appears as a relaxed
working environment but some features of scientific management are in
application. Such aspects of scientific management used in Virgin Group
include training, selection, and payment pecked on results. Some employees
are compensated because of their outstanding entrepreneurial ambition and
innovative thinking. Outstanding performance in Virgin Group is not only
measure by the amount of financial input an employee has brought but also
creativity and ability to think outside the box. Another model of management
is bureaucracy, which sees the organization of business as one unit. The
pioneers of this school of thought believed that family practices could not be
delinked from the organization. Therefore, there a need to merge family
goals with those of the entire organization.
Organizational goals of Virgin Group cannot be dissociated with those of Sir
Richard Branson. This is enough reason to conclude that the management
style in the organization has some elements of bureaucracy in leadership.
Max Weber first formulated this kind of management approach. The impact
of entire society is given considerable attention by the management. In this
model, the organization is considered as an integral part of an amorphous
society. Despite having some draw backs, this model has found its way in to
the Virgin Groups management style. In a bid to meet the needs of the
society it is serving, virgin management give priority to the impact, its
strategies will have on the society. This is the reason as to why Virgin
Atlantic, an airline company under Virgin Group, has been on the frontline on
the crusade for environmentally friendly jet fuel.

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Furthermore,

there

is

an

element

of

administrative

theory

in

the

management of Virgin Group. Propounded by Henry Fayol, administrative


theory view management as a chronological process comprising of planning,
organization, training, and coordination of functions. This model represents
the transitional theory between the traditional and modern models. It is
characterized by rigid and mechanistic tenets. Virgin Group has a little bit of
these management principles. It has deviated from it by allowing liberalized
management at departmental level. However, at the departmental levels,
there is need to advance the principles of management. The thoughts of
employees should remain to be customized to suit these principles.

The management of Virgin group with a heavy weight is contingency


approach. The decision-making and plans executions are done with close
reference to the problem at hand. This has seen the group attain notable
milestones in streamlining its management, which eventually translates in to
revenues.

In

environments

this
is

management

appreciated.

It

model,

the

recognizes

dynamics
the

fact

of

business

that

different

environments require different management approaches.


Concisely, it is true to argue that Virgin Groups success story of many years
is a factor of many things including it optimal management model. The group
has been able to amalgamate the presets of every model to suit its present
needs. What is emerging vividly from this global organization is the fact that
the efficacy of management is determined by its ability to move away from
conventional and rigid requirements. Moving with the trends in the market
has been proven beneficial in optimization of profits.

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From the descriptions given above, it is evident that Virgin Group leadership
is a transformational. In transformational leadership the management looks
beyond the compensation to the employees. The model, which is in use at
Virgin Group, explores the inner factors, which enhance performance of
employees through motivation. On contrary to transactional model, which
look at compensation alone, transformational leadership looks at way of
achieving high-level loyalty and commitment from the followers.
The brand in the name of Virgin was founded in 1968. Since then it has
grown beyond borders and become a worldwide product. Its venture into
many different industries is a true reflection of success. Sir Richard Branson
is the present chairperson of the group. He is well known for his stylish but
competitive leadership skills. Many analysts and scholars attribute the
success of Virgin Group to the creative leadership skills of Branson. In the
process of expansion, he took over several risky ventures in a more to
diversify and improve his business. In most of his business plans, he focused
on minute segment of a specific market and provided quality products or
services. This approach allows for creation of small monopolistic markets
with high profit margins. One major contributor to Bransons success story is
his ability to lead people in exploring innovative and profitable ventures.
Therefore, the leadership style depicted by Branson is a topic to be
investigated in the following discussions. The kind of leadership philosophy
advocated by Branson has been infiltrate into the entire company.

Sir

Richard

Bransons

leadership

style

falls

in

the

category

of

transformational. He has an
Outstanding ability of bringing out the best out of humanity. Interpersonal
and relational skills possessed by Branson are impeccable. He has close
touch with the day to day activities of various companies within his group.
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The most common feature that has made him achieve great milestones in
business development is the ability to motivate and rally fellow partners in
pursuit of a business opening. If the recent acquisitions are taken as an
illustration, he managed to convince fellow stakeholders in adoption of new
strategy.

In his ventures, he looks for people who are outgoing and willing to start new
businesses. His capacity building nature has made him an admirable leader
of modern business. His focus spans beyond the orthodox perspective of
employees where the management expects the workers to perform to
deserve compensation. The interest of Branson surrounds asking the
question as to whether a partner or employee is optimizing his or her
capacity. He is interested also with people who are willing to take risks and
the best in their tasks. For a long time, he has succeeded in bringing out the
best out of his staff, a core character of transformational leader. There is no
doubt about the fact that Bransons success since 1970s is directly attribute
to his attitude towards management of a team. In his approach, the barrier
existing between the employees and management is broken.

In fact, many people working with him approaches business issues with a
philosophy of achieving through innovative thinking and not adhering to the
preset rules. Because of the ideologies propagated by Branson, all
participants in the organization share similar values. He formulated his own
style of leadership, priding himself on integrating the employees in to his
style and seeking their thoughts on ways of improving value to customers.
Employees are expected to internalize these values and respond in
accordance to them. Integration of corporate values in leadership strategies
means that there is little interference by external forces. Nevertheless, Sir
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Bransons approach does not mean that the employees are entirely
dependent on the chairmans thoughts. They are equally accountable of their
actions like fellow employees under transactional leadership. In order to
motivate his employees, Branson and his management team, especially
human resources management department have systems of enhancing
commitment of employees through bonuses, stock options and profit
sharing, and internal promotion wherever possible.

Apart from Sir Bransons input in the success of virgin Group, there is a
contribution of organizational culture in the company. Organizational culture
existing in Virgin Group in fairly complex. The Group serves more than 100
companies operating separately in the industries which are not entirely
related. The common feature within ever company in the group is the
glamorous Virgin Brand. The brand remains unchanged in all companies
operating in different businesses. This is a similarity, which puts a heavy
responsibility on each department or division to positively represent the
brand. The image reveals an overall image of quality and innovation inherent
in the group. Through the creation of an exclusive brand, the company has
been able to consolidate and maintain desirable loyalty levels among the
customers.

The diverse business portfolio evident in Virgin Group businesses is helpful in


building and maintaining loyalty in various industries. This is the main reason
as to why the company has witnessed high levels of success. The managers
in the company employ the concept of creativity to encourage employees to
enhance their contribution to the group in whatever level of hierarchy. They
discourage the scenario where employees sit back to execute instructions.
Employees have the capacity of producing cutting-edge products, which the
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whole company will be able to deliver to the market. They can also formulate
ways of improving efficiency in the company. This is an outstanding feature
of Virgin Group. Every individual has a say when it comes to products
development. The management style in application at Virgin Group
encourages members of staff to be competitive. This will eventually build a
desire in the hearts of employees to see the company succeed so that they
can be recognized as contributors to new and innovative business model.

There is no clear cut between management and leadership within Virgin


Group. Transformational leadership emanates from executives and top
managers in the company. There are harmonized goals set by Sir Richard
Branson and fellow company executives. Various companies within the group
will work towards achieving those goals. These ambitious goals range from
utilization of new technology, expansion in international markets, joint
venture with other existing companies and loyalty among customers. Goals
formulated at this level of management are communicated to every
employee in the company. This is a beneficial strategy, which gives every
employee a task to accomplish in fostering the groups mission. The senior
management implores the employees to output their skills in such a way that
they are going to complement the company. The notion behind this effort is
to advance the philosophy that the entire benefits of the group will
eventually

lead

to individual

gains

for

every

person involved.

The

contribution in the group will ultimately result in rewards for managers,


employees, shareholders, executives, and customers alike.

One desirable feature of Virgin Group is its organizational structure. Through


its structure the company has succeeded in overcoming the challenges
related to expansion. An expansive organization like Virgin Group must
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explore ways of handling the massive information within the company.
Through its flat organizational chart, Virgin Group Limited has been able to
handle it expansive business portfolio with much ease. The reduction of
horizontal chain of command means that interdepartmental communication
is enhanced.

As the level of hierarchy moves down, the lower levels of management tend
to concentrate more keenly on the management of the company. Although
leadership is always encouraged among the managers, it requires some
levels of strict management to make sure that the task has been
accomplished.

Different

divisions

within

the

company

have

different

management function. At Virgin Group, managers have several goals of wide


scope. Because of the fact that different divisions of the company are
specialized in their operations, well-trained and qualified mangers are
required to manage it effectively. In most cases, managers employed by the
company have a firm background in their sector of specialization. They must
also prove that they are capable by showing a successful record of
accomplishment. It is the sole responsibility of managers within Virgin Group
to ensure that day-to-day operations needed to keep the division running are
executed effectively.

Organization is a vital ingredient in the success of Virgin companies. Since


the group in an amorphous company comprising of several companies,
organization is very critical in putting together the processes. To start with,
the company has many goals to be achieved like expanding the global
presence and building of customer loyalty. The top executives are
responsible for determining these goals and making them available to the
entire company. The same executive must ensure that these goals are
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achievable for them to be received well by employees. However, caution
should be exercised to ensure that the employees are not underutilized.
Challenging goals are important for the employees to feel that they are
engaged in meaningful tasks. Organization of these goals within the division
will ensure that specific targets are made. Every division has separate and
specialized goals aimed at increasing market share and improvement of
product and services.

As the hierarchy advances to the junior staffs, goals become more precise
and short lived. The targets set at implementation levels are easily
achievable because they are very specific. These specific goals are
formulated by division managers with close reference to those of the entire
group. This system of information transfer enables the company to remain on
track on the journey to meeting the targets set by executives. Virgin is a
living evidence for the fact that this kind of organization is a major
prerequisite for business success. Breaking down of general goals in to
actionable points is a desirable feature revealed in Virgins organization.

A healthy and workable organizational structure witnessed in Virgin Groups


businesses is attained with many varying strategies. Transformational
leadership is one of these strategies that have seen the company attain
great

heights

of

success.

This

strategy

enables

people

of

diverse

backgrounds and ability to share a common goal. Through working together,


a team can combine its members efforts and work towards achieving
common goal. Transformational leadership gives everyone an equal chance
to output his or her ability without reservations. A critical review of Virgin
Group business reveals that its versatile and innovative workforce is due to
the transformational leadership in place. This is in contrast with transactional
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leadership in which employees are compensated according to performance.
The draw back with this kind of leadership is that it breeds greedy employees
whose goal will be to amass rewards as much as possible.

In conclusion, there are many things to be learned from leadership and


management of Virgin Group Limited. The company has cut itself a niche in
various industries. It has also proven that all things are possible with
dedication and commitment. Through the able leadership of its Chairman, Sir
Richard Branson, the management team has come up with a unique formula
of managing large scale businesses like Virgin Group. To a large extend, the
success of Virgin Group is directly attributable to the input of Sir Branson. He
has succeeded in opening a new chapter of management, which deviates
from conventional methods. His liberal and all accommodating approach is
desirable. There is a formidable blend between management and leadership.
A critical review of these two elements reveals that there is no clears cut
between the two: a feature that has worked well for the company.

UK Essays, November 2003. Case Study of The Virgin Group and Its
Leadership [Online] Available at:
http://www.ukessays.com/essays/business/case-study-of-the-virgin-groupand-its-leadership-business-essay.php [Accessed 23rd Jan 2013].
b) Explain how organization theory underpins the practice of management
within the selected organizations.
Virgin was founded in 1970 as a mail order record business and developed as
a private company in music publishing and retailing. In 1986 the company
was floated on the stock exchange with a turnover of 250m (A362.5m).
However, Branson became tired of the public listing obligations: he resented
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making presentations in the City to people whom, he believed did not
understand the business. The pressure to create short-term profit, especially
as the share price began to fall, was the final straw: Branson decided to take
the business back into private ownership and the shares were bought back at
the original offer price. The name Virgin was chosen to represent the idea of
the company being a virgin in every business it entered.
Branson has said that: The brand is the single most important asset that we
have; our ultimate objective is to establish it as a major global name. This
does not mean that Virgin underestimates the importance of understanding
the businesses that it is branding. Referring to his intent to set up a green
energy

company

producing

ethanol

and

cellulosic

ethanol

fuels

in

competition with the oil industry, he said, Were a slightly unusual company
in that we go into industries we know nothing about and immerse ourselves.
Virgins expansion had often been through joint ventures whereby Virgin
provided the brand and its partner provided the majority of capital. For
example, the Virgin Groups move into clothing and cosmetics required an
initial outlay of only 1,000, whilst its partner, Victory Corporation, invested
20m. With Virgin Mobile, Virgin built a business by forming partnerships
with existing wireless operators to sell services under the Virgin brand name.
The carriers competences lay in network management. Virgin set out to
differentiate itself by offering innovative services. Although it did not operate
its own network Virgin won an award for the best wireless operator in the UK.
Virgin Fuels appears to be somewhat different in that Virgin is putting up the
capital and using the Virgin brand to attract attention to the issues and
possibilities that the technology offers. In 2005 Virgin announced the
establishment of a quadruple play media company providing television
broadband, fixed-line and mobile communications through the merger of
Bransons UK mobile interest with the UKs two cable companies. This Virgin
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Company would have 9 million direct customers, 1.5 million more than
BSkyB, and so have the financial capacity to compete with BSkyB for
premium content such as sports and movies. Virgin tried to expand this
business further by making an offer for ITV. This was rejected as
undervaluing the company and then undermined further with the purchase of
an 18 per cent share of ITV by BSkyB. This prompted Branson to call on
regulators to force BSkyB to reduce or dispose of its stake citing concerns
that BSkyB would have material influence over the free-to-air broadcaster.
Virgin has been described as a keiretsu organisation a structure of loosely
linked, autonomous units run by self-managed teams that use a common
brand name. Branson argued that, as he expanded, he would rather sacrifice
short-term profits for long-term growth of the various businesses. Some
commentators have argued that Virgin had become an endorsement brand
that could not always offer real expertise to the businesses with which it was
associated. However, Will Whitehorn, Director of Corporate Affairs for Virgin,
stated, At Virgin we know what the brand means and when we put our brand
name on something we are making a promise. Branson saw Virgin adding
value in three main ways, aside from the brand. These were their public
relations and marketing skills; its experience with Greenfield start-ups; and
Virgins understanding of the opportunities presented by institutionalized
markets. Virgin saw an institutionalized market as one dominated by few
competitors, not giving good value to customers because they had become
either inefficient or preoccupied with each other. Virgin believed it did well
when it identified such complacency and offered more for less. The entry into
fuel and media industries certainly conforms to the model of trying to shake
up institutionalized markets.
Johnson,

G.

Scholes,

K.

Whittington,

R.

2008.

Exploring

Corporate

Strategy.8th Edition. England: Pearson Education Limited.

23 | P a g e

Organization and Behavior

To analyse the impact of information management within KFC, it is necessary


to understand and apply various theories. This essay will begin by applying
the five force models established by to KFCs competitive position in the
relevant market. This will assist in determining KFCs influence and strategy
in the market place, whilst acknowledging the limitations to the theory. Next
the value chain model theorized by will assess how KFCs organizational
structure assists in adding value to its various activities. Hence, these
models determine the input of computer management that is required to
satisfy KFCs requirements, in order to compete against its rivals over a long
period of time. Finally the use of ICT within KFCs management will be
discussed to determine the competitive advantage that is achieved and
defended using the Strategic thrust model that has been advanced by Whilst
discussing the current uses of information technology within KFC, the essay
will conclude by suggesting improvements to information management
practices,

which

could

add

to

the

organizations

efficiency

and

competitiveness.
2. Five Forces Model
is an important tool in analyzing an organization, such as KFC. This tool
assists in assessing the profitability of its current and future products. Hence,
in part, it helps to determine strategic processes especially in a competitive
industry. The Five Forces can be summarised as follows.
five_forces_1.gif
Competitive rivalries within the market place
Bargaining powers of customers
24 | P a g e

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Bargaining powers of suppliers
Threat of substitution
Threat of new competitors entering the industry
KFC
KFC is a multinational organization that provides fast food to 12 million
customers in 109 countries. Kentucky Fried Chicken was originally founded in
1930 and changed its name in 1952. Globally, KFC is ranked amongst the top
10 fast food restaurants in the world and has a worldwide annual turnover of
$11 billion. Although KFC has performed extraordinarily well over a sustained
period of time, the franchise ranks behind McDonalds and Chicken Cottage,
Burger King, which illustrates that the industry is competitive.
The Fast Food industry is in a competitive market especially in the UK. KFC
has numerous branches within the UK and the branch located in Southall will
be analyzed. Southall is located in West London and is a vibrant industrial
area. KFC provide a diverse range of products ranging from chicken, to
salads, which increases their scope in the market place.
Competitive Rivalry:
KFC have a wide range of fierce competitors within this industry with the
market share being shared. KFCs direct rivals in Southall are McDonalds,
Chicken Cottage, Burger King and The Fried and Grill. Innovation and
competitive prices become the focal point for KFC in their strategy. However,
any competition based solely on price can be dangerous in an Oligopoly
market, as responses from competitors are likely to be swift and can trigger a
price war. There is an understanding within the industry to not compete on
price.

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The indirect rivals to KFC are Subway and Pizza hut. These fast food
branches result in the requirement for KFC to innovate and diversify their
product range, in order to negate the effect that their indirect rivals have on
them.
KFCs innovations such as the bargain bucket have ensured that customers
are provided with diverse products to differentiate them from their main
rivals. Also, the use of information management systems to communicate
secret recipes (old or new) and intellectual property rights to the Southall
branch from headquarters ensures efficiency and profitability.
Bargaining powers of Customers:
The bargaining power of customers is determined by a range of factors and
also depends on the product range.
KFCs customers are likely to be consumers i.e. families or individuals.
Customers are likely to change preferences over increase of price. Also, since
there is fierce competition, this provides customers with choices and gives
the impression of strong bargaining power.
However, KFC is globally recognizable and face to face interaction with
customers increases brand loyalty. KFCs slogan finger licking chicken sums
up their identity and uniqueness. Also the diverse range of products means
that there is a decreased scope for substitutability, which weakens
bargaining power.
Bargaining Position of Suppliers:
KFCs use of economies of scale to purchase their raw materials increases
dependency of the suppliers on them. Hence, suppliers receive a good
proportion of their business from KFC and are required to remain loyal and to

26 | P a g e

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offer the best possible deal to retain the fast food restaurant as their
customers. This reduces the bargaining power of customers.
However, the competition in South all is fierce with limited range of suppliers
in the area. KFC is able to cover the delivery costs from other parts of the UK,
which enables it to weaken the bargaining position of its suppliers in the local
area. Plus, the franchise would require quality raw materials to maintain the
standard and reputation of its brand.
Threats of new entrants:
KFC have a large market share in South all, which is achieved through
efficient information management of their accounts, products, suppliers and
marketing. This enables them to streamline their operations and to maximize
their profitability.
Also, brand image and marketing enables KFC to increase brand loyalty
amongst customers, which creates difficultly for new companies to enter the
market place. KFCs logo is protected by intellectual property rights and this
prevents other companies copying or keeping a similar name or slogan.
Already the market for fast food is saturated, which diminishes the
opportunities to enter the market.
All these factors minimize the risk of new entrants entering the market place.
Despite this, there are smaller companies that can enter the market and
offer lower prices.
Threats of Substitutes:
The substitutability from KFC products to other products is determined
through market research, which is conducted each year by the organization.

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KFC have diversified their product range, which enables them to control the
transition from one product to another. This is clearly evident from the
transition from fast food to more healthy food i.e. the introduction of salads
and reduction in salt in their food.
Current trends suggest that customers within the UK are becoming more
health conscious and KFC have responded accordingly by expanding their
product range.
Despite this, there remains a risk that customers will change from one
product to another i.e. from chicken to pizza; however the costs for this to
occur remain high. Instead the threat of substituting similar products remains
the biggest danger, due to the high level of competition.
3. Value Chain Model
The Value Chain Model was introduced by and is a conceptual tool used to
improve

profitability

through

strategic

planning.

Porter

states

that

competition of an organization is not solely dependent on improving sub


functions.
Value chain analyses the stages of a competitive strategy. This enables an
organization to understand its activities and to build each stage of the value
chain in the most effective way. The value chain assists in understanding
behavior of costs and sources of differentiation.
KFC market Analyze by Location
For KFC to successfully develop in the fast food market, they must add value
to their activities. This is achieved through improving products, training staff,
looking after customers and bargaining with suppliers. KFC creates value
through processes, which are divided into interrelated economic activities
and these add value to the organization. Also, KFC conducts other related
28 | P a g e

Organization and Behavior


activities like production, marketing and selling, which creates a value chain.
These activities assist in managing the organization, thus creating a chain.
A competitive strategy is imperative for the continued existence and
development of KFC, especially within South all, where competition is fierce.
South all is busy industrial area located in West London. This area is
populated by 90% of Asians and majority is Muslim. Recently KFC introduced
new products and services into geographic and demographic areas. The
product introduced by KFC indiscriminately targets all age groups. KFC have
a recognizable brand image and the cost of their products is reasonable.

The organization divides into two dissimilar value activities process.


Primary activities.
Support activities.
Primary activities are concerned with production
Inbound logistics
Outbound logistics
Operations
Marketing and sales
Service
The Support activities are the internal activities of the company, which
includes:

29 | P a g e

Organization and Behavior


Firm Infrastructure
Human Resource Management
Technology Development
Procurement
Both activities work together and add value that passes on the cost of adding
the product to the customers, hence resulting in a profit.
Primary Activities
Inbound Logistics: The headquarters or the branch in South all use
economies of scale and its reputation to receive discounts for raw materials
saving costs. Also the location of the branch in South all enables easy access
saving travel costs for the supplier, who is likely to be located locally, subject
to quality assurance. There is a direct link between various products i.e.
chicken and chicken burgers, which means that the same raw material is
used.
Outbound Logistics: KFCs finished product is kept in a freezer, so that it can
be cooked and served by staff using the equipment within the branch. The
information to cook the products is provided by headquarters in return for
royalty payments. This links with staff training and uniform infrastructure
layout of each branch, which in turn justifies the prices that are charged to
customers.
Operations: The raw materials used by KFC are combined together to make
the finished product, which increases its value i.e. spicy chicken or
combination meals. This links with differentiation and innovation to provide
KFC with a competitive advantage.

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Organization and Behavior


Marketing and Sales: KFC have a variety of methods for recording customer
preferences. The organization has an internal procedure, where they analyze
their sales figures for each product over a period of time to establish a trend.
Also, there is an external procedure where market research is carried out
each year. This allows KFC to target specific innovative products to specific
consumer segments through Television marketing.
Service: KFC provide efficient customer service to add value to the
organization. This requires thorough staff training, development and
providing the right equipment for the branch in South all. Also, the branch
provides a unique facility for free delivery in the area. The infrastructure and
control from headquarters has to be adhered to rigorously. This enables KFC
more flexibility on price, based on brand loyalty, despite competition.
Cost advantage:
KFC aim to decrease costs for their products by implementing the value
chain. This begins with the primary activity of ordering raw materials i.e.
ingredients from headquarters or from local sources at the best price
possible. Since over 40% of customers/consumers are Muslims, it is essential
to obtain supplies from the right source. The secondary activity is procuring
the order in advance from headquarters or for Halal meat supplier ensuring
that it complies with the Halal Food Authority requirements. Also, KFC uses
technological

developments

to

add

value

i.e.

using

streamlined

manufacturing processes to increase profit margins.


Infrastructure of KFC: (By interviewed)
KFC vision for high quality products.
Highly impressive and uniform design structure.
All services under one roof.
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Trained & qualified staff.
KFCs market strategy and development plan. The Infrastructure of KFC is
fascinating and charming all over the world. Ideal colour schemes,
pleasurable lighting outlets, comfortable sitting arrangement, trained staff
and their proper division of work, art interior beautiful, speedy cooking
process, special block for kids, etc. by survey
Customer
Place Order
KFC Franchise primary activity Process: by survey Raw Material
Assemble Work in Progress
Cook
Deliver
Restaurant Manager KFC Franchise staff Infrastructure:
Kitchen Staff
Shift in Charge
Counter staff
Assistant Manager
Delivery man
Area Managers are sourced internally, so you will need to earn this position
in the Company through promotion.

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Support Activities
Human Resource Management:
KFCs vision is to maintain a world class organization, which is attained
through building people quality, creating commitment and motivating
organization effectiveness. The role of HR is to recruit and hire operational
staff. They also provide training for management and operational team by
head office. KFC recruiting procedure is easy and they have online systems,
where they have all available vacancies by post, location or area. (Accessed
date 26-11-10)
Technological Development:
Many companies use technology all over the world to save cost and for
process management. KFC use information system to their advantage and
they have incorporated two types of systems. One is an electronic cash
register system, which they use for sales operations and to maintain daily
sales report. The other is an Inventory Control System, which is very
beneficial and helps the franchise to formulate their strategy. The Inventory
Control

System

is

directly

integrated

with

KFC

headquarters.

KFC

headquarters received sales reports on a daily basis via the system .The
system is called ARMS System. Also, the system has important features
installed, such as storing information in relation to recipes, cost of products,
purchasing management est. KFC have a website, where information in
relation to all products and their nutrition value is provided in line with a
health conscious society.
Procurement:
KFC headquarters have a uniform policy for all their franchises. The branch
located in South all is required to purchase all its raw material, cooking
33 | P a g e

Organization and Behavior


ingredients and equipment from KFC approved suppliers. KFC buy products in
bulk to control purchasing costs and supply line from suppliers. KFC regularly
review delivery, quality and cost from their suppliers to increase efficiency
and streamline the process of procurement. KFC is directly linked with their
franchise and receives orders for supply of raw material. The franchise in
South all can place orders through Information system or by phone.
4. KFC Information System
KFC have over recent years adopted and changed their information system
structure

through

streamlining

their

processes

and

implementing

amendments in line with evolving requirements. KFC, as an organization


have utilized their information system for different operational processes.
This assists in reducing the cost of raw material and recruiting less working
staff. All the necessary information, such as supply chain management,
franchises or new promotion stores is part of the system. Also, KFC have a
comprehensive

online

website,

which

assists

in

increasing

business

advantage. On the website there is information in relation to updating prices,


latest activities, promotions, advertisements and customer feedback.
Recently, the South all franchise has upgraded their information system
software to include credit card payment facilities. This increases payment
method for customers and enables the organization to collect customers
information. This innovation that KFC has adopted to remain competitive in
the market.
Also, Information system can be used to organize time management.
Technology

evolves

each

year

and

new

technology

involves

many

communication system channels, which can be electronic or by actions.


5. Competitive Advantage

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Differentiation:
KFC have differentiated their manufacturing process to ensure that they
retain a competitive advantage by using information system and have
created their own unique requirements, which is different from their main
rivals. Primary activity involves creating products that are unique. The strong
distribution channels enable them to procure or produce within a short space
of time and for discounted rates, in accordance with quality assurance. KFC
have integrated with some aspects of its supply chain i.e. owning farms
within the UK, which allows the organization to control quality. This unifies
produce across all the branches including South all, thus justifying its prices
and perceived consumer benefits. Innovation in new products requires
maximizing the use of technological developments.
Innovation:
KFC new products innovation is Popcorn Variety Bucket Chicken, ITWIST with
two flavors and All Stars Box Meal, which creates an identity that can be
differentiated from their main rivals.
Growth:
KFC is the largest worldwide fast food organization and runs a globally
successful business. The international growth of KFC is recognized through
the location of restaurants across 100 countries. KFC have 700 restaurants in
UK alone.
Cost:
KFC restaurants are well renowned for offering products at affordable prices,
which links in with efficiency and streamlining information management.
Particularly, KFC are able to offer special deals, which provide value for
money and enable the organization to compete with its rivals.
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Organization and Behavior


6. How can improve the IMS
By analyzing KFCs information management systems in the context of the
current market, it is clear that there is room for improvement. The marketing
strategy i.e. advertising, planning and direction is currently inadequate to
compete with the likes of McDonalds and Pizza Hut. KFC should introduce
more promotional materials i.e. reward cards for customers, which has been
adopted by other fast food restaurants. Alternatively, KFC can introduce
coupons or souvenirs, which consists of all customers related information.
7. Conclusion
Overall it is clear that the five forces model, value chain and strategic thrust
have been used by KFC to attain a competitive advantage over its rivals. The
theories assist in establishing the information management requirements for
the organization to operate efficiently and effectively i.e. the use of the ARMs
system. The five forces model enables KFC to analyze its competitive
position within the fast food market and to formulate a competitive strategy
to increase its influence in the market. It can be seen that for example KFC
has strengthened its bargaining position with suppliers by integrating with
some aspects of its supply chain. The value chain enables KFC to add value
to its activities to justify the prices it charges customers and the perceived
benefits. The primary and secondary activities link with each other to provide
insight into how to increase efficiency within the value chain. The strategic
thrust provides an insight into how KFC is able to differentiate itself and its
processes from its rivals to gain a competitive advantage. Reducing costs
and providing unique products are the focal point for distinguishing KFC in
the

fast

food

management

market
systems

by

utilizing

such

as

its

brand

effective

reputation.

Information

communication

between

headquarters and the franchise in South all enable analysis of marketing


strategy. Also the use of new technology, such as chip and pin systems have
36 | P a g e

Organization and Behavior


benefited the branch in the area of South all, as more payment methods are
covered. However, it is evident that there is still room for improvement
through using coupons and/or souvenirs to attract customers.

UK

Essays,

November

2013.

Analyzing

the

Impact

of

Information

Management in KFC. [Online]


Available at: http://www.ukessays.com/essays/business/analysing-the-impactof-information-management-in-kfc-business-essay.php
[Accessed 23rd Jan 2013].

c) Compare the effectiveness of the different leadership styles that are used
in the selected organizations.

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Organization and Behavior

Task 3
a) Discuss the impact leadership theories have had on the motivation of the
selected organizations in periods of change.
Richard Branson, the CEO of the virgin group is known as a very good
example for a leader that proves the qualities of a good leader.
Hellriegel, D. Slocum, W.J., 2004. Organizational Behavior.10 th edition. South
Western: Thomson learning states that, Many chief executives focus on
creating shareholder value and devote their attention primarily to customers.
Branson believes that the correct pecking order is employees first, customers
next, and then shareholders. His logic is this: if your employees are happy,
38 | P a g e

Organization and Behavior


they will do a better job. If they do a better job, the customers will be happy,
and thus business will be good and the shareholders will be rewarded.
Branson regularly takes entire flight crews out to dinner and practice when
he arrives on a virgin Atlantic flight. He even says that at the crews hotel
rather than in expensive hotels downtown away from the crew. He gives
every virgin employee a virgin card, which provides big discounts on the
airline as well as at virgin megastores and other virgin businesses.
He is frequently on the road to visit virgin businesses, talking with employees
and customers. He is known for his ever present notebook and pen, which
he pulls out whenever he chats with employees and customers. Branson
insists that talking and writing things down is a crucial element in his role as
chairman. His writings create lists of items for intermediate action. He reads
mail from employees every morning before he does anything else. This habit,
which he started in virgins early days, influences company employee
dynamics. Employees dont hesitate to air their grievances directly with him.
Branson has proved with his actions that he actively listens. Virgin has more
than 35000 employees around the world, and he gets some 50 email
messages or letters each day from non - managerial employees. They vary
from small ideas to frustrations with middle management to significant
proposals. He addressed each concern by answering personally or by
initiating some action.
While vacationing on his private Caribbean island, called Necker, he bought
20 employees from various virgin companies to the island. These were not
senior executives but the rank and file_ a housekeeper, a switchboard
operator, a reservation clerk, a pilot. They were invited because of
excellence performance.

39 | P a g e

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b) Explain the different motivational theories that are used in the selected
organizations in different circumstances.
KFC
The fast food industry has not, historically, been seen as the most attractive
place to build a career, particularly for those starting at the bottom of the
ladder. But the sector is working hard to overcome this perception, with one
of its major players, Kentucky Fried Chicken (KFC), at the forefront of the
battle.
When it comes to remunerating staff, however, the company does not have a
vast pot of money to play with. Misty Reich, vice-president HR at KFC UK and
Ireland, says: It is very difficult to compete on cash-based compensation,
particularly for our hourly employees because of the cost basis. We have
nearly 24,000 employees in our UK business. Small moves in base rates of
pay have significant multiplier impacts from a cost standpoint, so we are
looking at being creative about where can [we] differentiate and where
should [we] differentiate that will make a difference.
For all the talk of fast-service restaurants being a transient career option, the
average length of service for a typical employee, such as a restaurant staff
member, is two years.
Reich believes the companys culture of recognition sets it apart from its
competitors. It is not something you can really fabricate, says Reich. It
comes off as being very inauthentic if it is not in the DNA of a business and it
is very much in our DNA.
Positive effect on retention
This has a direct, positive effect on staff retention, she says. People really
become attached to the culture and they find it quite difficult to replicate
outside of our company, so employees tend to stay.

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KFC also puts a significant focus on making employees feel valued. This is
manifested in the way employees treat each another, and is also achieved
through the companys reward package.
For example, all employees are eligible for a bonus through a range of
schemes. The companys quarterly plans give all staff the chance to earn a
bonus on top of their income, whether they are paid on an hourly rate or
receive an annual salary.
Employees are judged against two performance measures - customer
satisfaction and operational basics, such as how clean the restaurant is which act as hurdles they have to clear before they can begin to receive
bonuses. Beyond this, bonuses are based on sales made as a restaurant.
Bonuses paid in vouchers
The bonuses are paid in the form of retail vouchers up to the value of 200
per employee each quarter. Reich explains using vouchers rather than cash
is intended to create a sense of fun for staff.
There is a lot of complexity that comes with cash, but there is also fun that
comes with the retail vouchers, she says. This is not necessarily intended
to be an income supplement. It is meant to create energy, engagement with
the goals of the restaurant and, for a team member, it is fun.
Meanwhile, managers and senior staff can earn cash bonuses depending on
how they fare on a balanced scorecard, which takes into account various
metrics, including sales and customer satisfaction.
Reich says the aim is to use the bonuses to create an ownership mentality
among KFC employees. Career progression is also considered to depend on
this. The company tracks the promotability of its restaurant staff by carrying
out an in-depth review of their performance twice a year, with the aim of
deciding which of them has the ability to move forward in the organisation.

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KFCs efforts to change the outside perception of its restaurant staff, allied to
the effects of the recession, which has attracted both staff and customers,
means the brand is enjoying a boom time. In February last year, it
announced plans to create 9,000 new jobs across the UK in the following
three to five years.
Benefits offering improved
The company has also been working to improve its benefits offering. Last
year, for example, it worked with Jelf Employee Benefits to select a new
healthcare provider and look into the possibility of introducing total reward
statements.
But there is still a way to go before Reich will be completely happy with the
package. KFC currently offers a voluntary benefits scheme for all employees,
which it introduced with provider Perkz in 2009, but up to now it has not
offered a flexible benefits scheme. This is something Reich is looking into and
she expects to spend the next 12 months investigating all the options around
flex, potentially rolling it out in about two years, if it suits the business.
What I do not want to do is take the opinion of consultants, or my own
opinion and crank out some whizzy flexible benefits offering that really does
not meet the [firms] needs, she says.
Although Reich is proud of the company she works for, she believes one area
it could improve is communication. Using the language of KFCs main
business

of

frying

chicken,

she

describes

its

present

standard

of

communication as unsizzly, but pledges that it will improve.


Total reward statements
To achieve this, an intranet is in the pipeline, along with total reward
statements. Reich hopes the statements, which will come into operation for
the first time next month, will create more of a dialogue between employees
and KFCs hierarchy.
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Organization and Behavior


I would like to stimulate, through total reward statements, the amping up of
the level of discussion from staff giving us feedback and input into their
benefits, says Reich.
Companies she believes manage employee communications well include O2,
Starbucks and, perhaps surprisingly, McDonalds. I would be remiss if I did
not confess that I think McDonalds has done some good things, she says
I think it is interesting how it has taken an almost consumer approach to
how it talks about its jobs and its benefits.
That is impressive. I have communication envy, but that is OK because we
are going to become stunning at communication.
Feedback from franchisees
A further challenge for KFC is that a number of its restaurants are franchises,
which it has to be taken into consideration when putting benefits in place.
Although each individual franchisee decides who administers core benefits
such as pensions, KFC looks to its franchisees for feedback on other benefits.
Many of its non-cash benefits are available to franchisees, should they
choose to offer them to their staff, and its voluntary discount package was
negotiated to include franchise participation.
So Reich and her team have a number of challenges to face over the next
few years, not least the 2012 pensions reforms, which she describes as
daunting.
But there are strong signs that the fast food industrys image as an employer
is changing for the better, and an evolving benefits package at one of the
industrys leading players looks set to make that change go from strength to
strength.

KFC at a glance
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Kentucky Fried Chicken (KFC) was founded in 1952, although Colonel Harland
Sanders, the driving force behind the business, started serving his original
recipe fried chicken in 1930 at a petrol station he owned.
After a motorway was built that bypassed his town, Colonel Sanders was
forced to go on the road to sell his chicken. This led to the first Kentucky
Fried Chicken outlet being opened in South Salt Lake, Utah, in 1952.
By the 1960s, Kentucky Fried Chicken was sold in more than 600 franchised
outlets in the US and Canada, and the first UK restaurant opened in Preston,
Lancashire in 1965. Today, there are more than 700 outlets in Britain, both
franchised and company-owned.
In 1986, KFC was bought by PepsiCo, having been bought three times before
by different companies. In 1997, it was spun off into an independent
company, Yum! Brands.
Yum! Brands have its global headquarters in Louisville, Kentucky and its UK
base in Woking, Surrey. The company also owns Mexican food chain Taco
Bell, fish-and-chips business Long John Silvers, A&W Restaurants, Pizza Hut
and Wing Street.

Career history: Misty Reich


Texan Misty Reich says she fell into HR by accident after taking an internship
with US telecoms company AT&T in 1994.
She stayed with the firm for more than 10 years, rising to become vicepresident of HR for two divisions, before joining Yum! Brands in 2005 as chief
people officer of its A&W Restaurants and Long John Silvers businesses.
She moved up to become vice-president of global talent management at
Yum! Brands at the beginning of 2006. Since August 2007, she has been
vice-president, HR for KFC UK and Ireland.

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Reich was not daunted by her career path involving a move overseas. I
joined Yum! Brands, our parent company, explicitly because I wanted to
move abroad, she says. I wanted opportunity, I wanted to stretch myself
and this opportunity came up and they offered it to me and I was extremely
fortunate to be able to come over here.
Reich is proud of the fact that people seek her out for advice. There are
individuals I have hired or individuals I have had the opportunity to develop
and as I look back, that is what I am most proud of, she says. Particularly
the people who still stay in touch and especially people that still seek me for
out for coaching and advice and they are progressing and still driving their
careers. I get a real buzz out of that.

Bonuses add spice to KFC benefits menu


Petra Bool, restaurant general manager at KFCs Bra knell restaurant, has
worked for the company for 20 years.
Bool has private medical insurance for her family and is a member of the
companys pension scheme, but she most values KFCs quarterly bonus plan.
There are very set guidelines on what we have to achieve to get a certain
amount of money value as a bonus, so, four weeks before you get paid, you
can work it out - how much you are going to get, what you can afford and
what you are going to do with all your money, she says.
It is enjoyable because you are getting rewarded for the hard work you are
putting in and for the achievements you make.
But financial rewards are not the only reason Bool has stayed with KFC for 20
years. It is probably the people I work with, she says. I get great joy out of
taking some people on, training them, and making them into team leaders,
assistant managers, in building the next manager and giving them some

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learning on their way. I think that is very enjoyable to do, to see people
grow.

KFCs benefits offering


Pension

Stakeholder pension scheme open to all salaried employees with more


than three months service, with no company matching contributions.

Defined benefit scheme, which was closed to new members in 2006,


has an employee contribution of 7% and employer contribution of 14%.

defined

contribution

scheme

is

available

to

all

employees.

Contributions vary depending on grade to a maximum of 6% employee


and 9% employer.
Health and wellbeing

Eyecare vouchers for office-based employees and business-needs


drivers.

Income protection for all salaried staff.

Private medical insurance (PMI) for salaried employees.

Employee assistance programme.

Family-friendly perks

Ad-hoc flexible working arrangements.

Enhanced maternity and paternity pay for salaried employees.

Childcare vouchers.

Holidays

20 days for staff at all levels, up to 30 days after 10 years service.

Other benefits

Voluntary benefits programme.

Performance-based bonus and recognition schemes.


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Employee of the quarter scheme.

Champs Club for top 50 restaurant managers and Champions Club for
top 15 restaurant managers.

Free meal for all staff when on shift (subject to shift length, according
to employees contract).

Tasting kitchen at company HQ, allowing staff to try potential new


products.

Company car for business-needs drivers and senior staff.

Free fruit for head office employees.

Employee Benefits, (2010).KFC keeps staff recognition and bonuses on the


menu. [Online] (1st June 2010).
Available athttp://www.employeebenefits.co.uk/resource-centre/analysis/kfckeeps-staff-recognition-and-bonuses-on-the-menu/10692.article
(Accessed 28th January 2013)
VIRGIN GROUP
Employee motivation can be divided into two groups: intrinsic and extrinsic.
Intrinsic motivation is the work motivation in the absence of such external
factors as pay, promotion, and co-workers (Aamodt, 2012, p.326). Extrinsic
motivation, on the other hand, arises from a range of compensational factors
such as financial rewards, career opportunities, co-workers etc.
Moreover, motivation in organizations can be divided into three different
perspectives: need-based, process-based and learning-based. Need-based
perspective on motivation is central to the idea that humans are primarily
motivated by deficiencies in one or more important needs or need
categories (Griffin and Moorhead, 2011, p.93).

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Abraham Maslows Hierarchy of Needs is the most basic and the most
popular theoretical frameworks related to need-based perspective on
motivation. According to the theory human needs can be classified into
several layers and an individuals most immediate needs have to be satisfied
in order to upper layer needs to be used as motivational factors (Maslow,
1943).
Theoretical framework of Hierarchy of Needs is effectively utilised by Virgin
Atlantic in order to motivate its workforce at all levels depending on the
nature of their immediate needs. Specifically, while motivational tools for
junior level employees, mainly include financial incentives, emphasize is
given to the perspectives of personal and professional growth when
motivating medium level managers.
However, it is important to note that financial incentives remain to be one of
the most effective motivational tools for employees at all levels and this fact
is fully acknowledged by Virgin Atlantic management. Martins (2010)
confirms this viewpoint by informing that the compensation won by Virgin
Atlantic from British Airways for libel suit has been shared with all employees
of Virgin Atlantic.
Two Factor theory of Frederick Hertzberg represents an alternative important
theoretical framework related to the topic of employee motivation. This
need-based theory distinguishes two factors motivation factors and
hygiene factors that play significant role on the level of employee
motivation.

According

to

the

theory,

motivation

factors

such

as

responsibility, achievement, and recognition are perceived as primary causes


of employee motivation.
Hygiene

factors,

on

the

other

hand,

such

as

working

conditions,

remuneration, company policies etc. do not necessarily motivate employees;

48 | P a g e

Organization and Behavior


however, if they are inadequate, they prove to be sources of dissatisfaction
and de-motivation for employees.
An analysis of implementation of this theory in practice by Virgin Atlantic
indicates that both, hygiene, as well as, motivational factors are effectively
addressed by airline management in order to increase the levels of employee
satisfaction and motivation.
For instance, Virgin Atlantic has contracted with Capital Capture consultancy
firm to reduce data processing time by eighty per cent, and as a result Virgin
Atlantic has achieved the capacity of offering personal training and
development to employees based on their performance levels (Resource
Centre, 2010, online).
Additional employee motivation tools exercised by Virgin Atlantic include
offering various charitable perks. For example, 60 members of the company
employees have climbed Mount Kenya in order to raise 35,000 for a village
in Kenya (Peterson, 2010).
Moreover, communication and employee involvement is another powerful
motivational tools exercised in Virgin Atlantics. Namely, Richard Branson,
founder of the brand is engaged in writing his staff what he describes as
chatty letters and emails to let them know what is going on, and
encouraging them to write back with comments and ideas (Grout and
Fisher, 2011, p.45).

Research Methodology - Necessary knowledge to conduct a business


research, (2010).Virgin Atlantic Airlines: employee motivation, leadership and
organizational culture. [Online]
Available

at:

http://research-methodology.net/virgin-atlantic-airlines-

employee-motivation-leadership-and-organisational-culture/

49 | P a g e

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(Accessed 28 January 2013)

Task 4
a)

Describe the nature of groups and groups behavior of the selected

organizations.
Teamwork is very important to KFC staff because for a quick and reliable
service they need to communicate, help and get support from each other in
working at registry, preparing and serving food and in drive through.

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KFC is an organization which employed staff from different ages, cultures,


regions and religious backgrounds. These employees should manage their
life styles according to their workplace. They should understand the working
ability, strengths, weaknesses and how to respect each members culture.
Virgin group is a group of companies which include more than 400
organizations. The CEO of the company Mr. Richard Branson is a person who
loved to work s a team.
Richard Branson: Teamwork wins in a crisis
Growing up in the south of England, we didnt see a lot of snow, but after a
big storm my father would always say, Theres nothing like a good snowfall
to get the neighbors talking to each other.
He was right. Our neighbors, who usually kept to themselves, would be
galvanized into helping each other to dig out their cars. I heard similar tales
from my grandmother about how everyone pulled together during World War
II.
A more recent example of the power of teamwork is how James Mwangi,
2012 winner of Ernst & Youngs World Entrepreneur of the Year award, pulled
Kenyas Equity Bank back from collapse by smartly handling a crisis
situation.
When Mwangi first took the reins as finance director in 1993, Equity was a
small, insolvent building society about to close. Determined to save it,
Mwangi asked the staff to join forces with him to turn things around. He
asked them to use their personal networks to encourage people to join the
society.

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Mwangi told the magazine Kenya Yetu that soon afterward, he was able to
issue a raise to employees. He also persuaded them to use 25percent of
their salaries to buy shares in the company.
Now they were involved. It was as much their company as anybody elses,
he said. They knew that if they succeeded, they had a lot to gain.
Their new role as shareholders would further inspire employees to work
together and build the value of their equity stake, pay cheque by pay
cheque.
Mwangis strategy worked: The bank began to expand. In 2006, it was listed
on the Nairobi stock exchange, and shareholder value rose rapidly. These
days, Ernst & Young says, Equity Bank is the biggest bank in the region by
customer base, with more than 7million customers in Kenya alone. Mwangi
has been CEO since 2004.
If your company is faced with a financial crisis, make your team part of the
solution. Dont shut yourself in your office get out and tell staff whats
going on. As you consider strategy, remember indiscriminate lay-offs, pay
cuts and benefit reductions will probably make a bad situation worse.
Instead, enlist your employees support; reward them for commitment. Your
ability to foster a sense of teamwork can mean the difference between
success and failure. When management fails to listen and respond to staff
concerns, they may turn to unions. While unions are set up to give
employees more clout with management, they frequently become an even
greater roadblock between the two groups as relationships grow distant. If
you are leading a company where unions are established, its important to
set up great communications with union leaders, especially in tough times.

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Unlike so many of its competitors, constantly at odds with their unions,
Southwest Airlines has avoided bouncing from one crisis to another partly
because of the strength of labour-management relationships. Herb Kelleher,
legendary leader of Southwest, and his successor Gary Kelly have led the
company to decades of profitability and it is one of the most heavily
unionized airlines.
Of course, crises come in all sizes, and your employees have to be ready to
work with each other on defusing small emergencies as well. A few years
ago, when I was waiting at Heathrow for a Virgin flight to Los Angeles to take
off, a small crisis emerged in the form of a long weather delay. There is
nothing an airline can do about such events, but not every passenger sees it
that way. I watched as one of our agents tried to placate an agitated male
customer.
When she was done, I commented, Tough day, eh? She said, Not really. I
enjoy days like this because we all really pull together as a team in keeping
the passengers informed and comfortable, so you go home feeling youve
put in a good days work. Days when everything works like clockwork arent
nearly as rewarding for us, at least! (I was glad she added the last few
words.)
Such connections between your people are built over time. This agent
learned to rely on her team through her everyday work with friendly
colleagues, by her managers listening to her suggestions and following up
on them, and by managements encouraging her supervisors to hold events
that allow the agent and her colleagues to get to know each other outside
the office. These small touches can add up to a team.
I never mentioned it to my father, but I noticed as soon as the snow melted,
the neighbors would disappear behind their hedgerows again. Dont make

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the same mistake at the office: Once the crisis is averted, dont slip back into
old ways. Keep that wartime spirit of working together alive and well.

Richard Branson: Teamwork wins in a crisis [Online]


Available at:
http://www.brw.com.au/p/sections/fyi/richard_branson_teamwork_wins_in_W
mU7De91kDXs80z1qYLeaI
(Accessed 28 January 2013)

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Organization and Behavior

b) Discuss the factors that had promoted and inhibited the development of
effective teamwork within the selected organizations.
Diversity, communication, leadership and team building exercises are some
of the main factors that promote the teamwork in an organization.

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