Talent Management System: Meaning, Key Elements

A talent management system (TMS) is an integrated software suite that addresses the “four pillars” of talent management: recruitment; performance management; learning and development; and compensation management.

A talent management system, or TMS, is an integrated software platform that supports core talent management processes, including recruitment, employee onboarding, performance management, learning and professional development, compensation management, and succession planning. These processes, and the technical capabilities that support them, are typically delivered via software modules. So, businesses can start with what they need and add additional functionality as they grow.

Most importantly, with a TMS, an organization can link human resource planning to its business strategy. This ensures proactive measures are in place to provide the necessary talent that will support the current and future goals of the business.

Purpose

Whereas traditional HRMS and enterprise resource planning (ERP) systems focus primarily on transaction processing and the administration of basic human resources processes such as personnel administration, payroll, time management, etc., talent management systems focus on providing strategic assistance to organizations in the accomplishment of long-term enterprise goals with respect to talent, or human capital. Talent management systems may also be referred to as or paired with an applicant tracking system (ATS) in either standalone application or as a suite of products. According to Bersin, talent management may be defined as the implementation of integrated strategies or systems designed to improve processes for recruiting, developing, and retaining people with the required skills and aptitude to meet current and future organizational needs.

The key elements of a talent management system.

  • Ensure talent strategies align with the needs of the business. Work with leadership teams to understand business objectives, then ensure the talent strategy supports these outcomes.
  • Recruit candidates. Source talent globally, nurture candidates throughout the recruitment process, and leverage the efficiencies of a comprehensive applicant management and tracking system.
  • Onboard employees. Optimize new hire engagement with a dedicated onboarding portal. Ramp employees quickly with paperless new hire processes. Automate workflows for on-, off-, and cross-boarding.
  • Manage employee performance. Help employees manage their goals. Use guided action planning for continuous performance management.
  • Plan and design compensation models. Reward and recognize strong performers.
  • Develop and retain employees. Provide modern and engaging learner experiences. Schedule and carry out compliance training. Develop proactive succession plans and actively develop leaders.

Functional modules and their market worth

TMS solutions typically offer one or many disparate or integrated modules which provide business functionality in areas of human capital management / human resources typically referred to as “strategic”.

  • Performance management
  • Goal management
  • Compensation management
  • Talent acquisition / recruiting
  • Learning management systems
  • Career development
  • Succession planning

The role of talent acquisition and performance management has increased many folds compared to learning management systems in the talent management market. Many companies which were earlier working on only one of these domains have moved to developing integrated talent management systems.

Delivery methods

Many organizations struggle with HR data silos, disconnected technologies, and manual processes, the future of talent management is embodied in solutions designed from the ground up to provide business-centric functionality on a unified talent management platform. Talent management system recently have been at the forefront of growth in the software as a service (SaaS) delivery market following earlier iterations in the standard HR systems space via application service provider (ASP) delivery models. Traditional delivery via on-premises license sales still exist, but are much less prevalent in the competitive space.

Enterprise systems integration

Vendors of TMS software typically claim varying degrees of integration with other enterprise software vendors, and in particular with leading vendors of HRMS systems. The accuracy of these claims is often a question of interpretation, as the degree to which each vendor integrates with 3rd party systems varies considerably depending on circumstances and both the vendor and the third-party solution. In some cases, third party vendors offer certification for such scenarios, in order to offer some basis of comparison.

Competitive market

The so-called war for talent has driven a marked increase of attention and investment in the talent management space as new vendors continue to enter to support an ever-growing demand for strategic human resources applications. Many of these competitors have entered via the software as a service (SaaS) delivery model, affording small and medium businesses (SMB) new less-costly options. The Gartner Magic Quadrants for Talent Management Suites compares the major players of this market each year; in 2018 ranking products included Cornerstone OnDemand, SAP’s SuccessFactors, and Skillsoft’s SumTotal systems.

Benefits of Talent Management Solutions:

  • Recruitment strategies that align with the objectives of the business.
  • An integrated and centralized data model for all talent management activities.
  • Improved employee onboarding, retention, and development.
  • Better engagement between managers and employees, including processes for compensation, reviews, and rewards.

Evolution of talent management systems

In the 1980s and early 1990s, talent management focused predominantly on developing internal talent, leading to an excess of middle-management roles. Through the economic downturn, businesses restructured, and more emphasis was placed on attracting external talent. However, by the late 1990s, organizations found they were hiring and losing experienced people at about the same rate. This led to a new focus on retaining and nurturing existing personnel.

HR processes were incorporated, but without a centralized model, each track was siloed and information was often out-of-date. HR and recruiters had to deal with paper-based and time-consuming workflows with little time to focus on strategic initiatives.

Comprehensive talent management systems were created to integrate all HR talent modules within a single platform. Workflows became automated and digital, creating efficiencies across the organization.

Today, talent management systems are used by companies around the world and across all industries. Here are some examples:

A global construction company, Mota-Engil, implemented a TMS to transform its HR practices and prepare its workforce for a future of growth and innovation.

Terex, a leading manufacturer, uses a TMS to support workforce diversification while simplifying and streamlining HR-related activities for increased engagement.

A TMS also helps organizations with unique and modern challenges relative to talent management in the 21st century. For example:

  • Diversity and inclusion: Implement diversity sourcing and candidate development plans. Provide proactive and continued development to regain and grow a diverse workforce.
  • Skilling, upskilling, and reskilling: Identify skills gaps. Establish training and reskilling pathways to transition people to new or evolved roles.
  • Remote workforces: Shift employee support mechanisms to accommodate remote workers. Provide new interaction models to ensure manager and employee engagement is optimized.

Benefits and Limitations of Talent Management

Talent management can be a discipline as big as the HR function itself or a small bunch of initiatives aimed at people and organization development. Different organizations utilize talent management for their benefits. This is as per the size of the organization and their belief in the practice.

It could just include a simple interview of all employees conducted yearly, discussing their strengths and developmental needs. This could be utilized for mapping people against the future initiatives of the company and for succession planning. There are more benefits that are wide ranged than the ones discussed above.

Benefits:

Retaining the top talent: Despite changes in the global economy, attrition remains a major concern of organizations. Retaining top talent is important to leadership and growth in the marketplace. Organisations that fail to retain their top talent are at the risk of losing out to competitors. The focus is now on charting employee retention programs and strategies to recruit, develop, retain and engage quality people. Employee growth in a career has to be taken care of, while succession planning is being performed those who are on the radar need to be kept in loop so that they know their performance is being rewarded.

Right Person in the right Job: Through a proper ascertainment of people skills and strengths, people decisions gain a strategic agenda. The skill or competency mapping allows you to take stock of skill inventories lying with the organization. This is especially important both from the perspective of the organization as well as the employee because the right person is deployed in the right position and employee productivity is increased. Also since there is a better alignment between an individual’s interests and his job profile the job satisfaction is increased.

Better Hiring: The quality of an organization is the quality of workforce it possesses. The best way to have talent at the top is have talent at the bottom. No wonder then talent management programs and trainings, hiring assessments have become an integral aspect of HR processes nowadays.

Better professional development decisions: When an organization gets to know who its high potential is, it becomes easier to invest in their professional development. Since development calls for investment decisions towards learning, training and development of the individual either for growth, succession planning, performance management etc, an organization remains bothered where to make this investment and talent management just make this easier for them.

Understanding Employees Better: Employee assessments give deep insights to the management about their employees. Their development needs, career aspirations, strengths and weaknesses, abilities, likes and dislikes. It is easier therefore to determine what motivates whom and this helps a lot Job enrichment process.

Limitations:

Costs

The time, resources and financial costs to operate a talent management program can be high. This is a burden for small business that don’t necessarily have the resources to implement such a system.

Many companies have one or more HR professionals spending much of their time to develop and implement talent management, but a business with few employees may find those labour hours best spent in other ways. Talent management programs also involve the use of software solutions to map out talent needs at all levels or departments, which can be expensive.

Worker Conflicts

Several workplace realities impede the impact of talent management. Many small businesses rely on part-time and temporary workers. Keeping them motivated while trying to focus on the long-term tenure of full-time, permanent employees is difficult. If your business relies on workers who you don’t need or expect to be around for long, it may not be worth the effort to install a formal talent management program.

Multi-generational workplaces also present challenges. Companies of all sizes struggle to come up with effective recruiting strategies that don’t discriminate by age, and offering rewards for workers at varying ages that may have different motivations can be difficult.

Leadership Limitations

A June 2008 “Bloomberg Businessweek” article pointed out that the leadership pipeline is often not full enough to carry out talent management. HR professionals often map out the leadership needs for the business and the skills required at each level. Small businesses may struggle to bring in and develop enough effective store managers or business unit leaders to complete with other small companies as well as larger competitors. To recruit more aggressively, including in other geographic areas, only adds to the costs of talent management.

HR and Management Conflicts

A core drawback of talent management for small companies is that the programs are often developed and coordinated by human resources professionals. Smaller companies may not have full HR staffs. Instead, managers often hire, train, motivate and fire their own workers while also performing critical business duties. This means managers don’t have the time in many cases to implement talent management. Even companies that do have HR professionals often get frustrated at the difficulty of getting managers to concentrate on talent management needs instead of focusing entirely on other business concerns.

Principle of Talent Management

Principle 1: Reduce the Risk of Being Wrong

In manpower anticipations for future an organization can ill afford to be wrong. It’s hard to forecast talent demands for future business needs because of the uncertainty involved. It is therefore very important to attune the career plans with the business plans. A 5 year career plan looks ridiculous along with a 2 year business plan.

Further, long term development and succession plans may end up as a futile exercise if the organization lacks a firm retention strategy.

Principle 2: Avoid Mismatch Costs

In planning for future manpower requirements, most of the HR professionals prepare a deep bench of candidates or manpower inventory. Many of the people who remain in this bracket start searching for other options and move when they are not raised to a certain position and profile. In such a scenario it is better to keep the bench strength low and hire from outside from time to time to fill gaps. This in no way means only to hire from outside, which leads to a skill deficit and affects the organizational culture.

Such decisions can be taken by thinking about the ‘Make or Buy’ decision. Perhaps questions like – How accurate is the demand forecast? How long is the talent required? Can we afford to develop? Answers to these questions can better help the talent management to decide on whether to develop or buy talent.

Principle 3: Recoup Talent Investments

Developing talent internally pays in the longer run. The best way to recover investments made in talent management is to reduce upfront costs by finding alternative and cheaper talent delivery options. Organizations also require a rethink on their talent retention strategy to improve employee retention.

Another way that has emerged of late in many organizations is sharing development costs with the employees. Many of TATA companies for example sponsor their employees’ children education. Similarly lots of organizations use ‘promote then develop’ programs for their employees where the cost of training and development is shared between the two. One important way to recoup talent investments is spotting the talent early, this reduces the risk. More importantly this identified lot of people needs to be given opportunities before they get it elsewhere.

Principle 4: Balancing Employee Interests

How much authority should the employees’ haves over their own development? There are different models that have been adopted by various corporations globally. There is ‘the chess master model’, but the flipside in this is that talented employees search for options. Organizations can also make use of the internal mobility programs which are a regular feature of almost all the top organizations.

Principle 5: Alignment with Strategy

Corporate strategy is the natural starting point for thinking about talent management. Given the company’s strategy, what kind of talent do we need?

Principle 6: Internal Consistency

There also needs to be internal consistency when it comes to talent management. The talent department cannot run on its own without taking into account the other areas of a company. For example, there has to be a basis for competitive and fair compensation in the company. The talent department cannot just hire people for the same position at all different rates of pay. It also has to focus on retaining employees. If there is no consistency, then it will be difficult to retain high-performing employees.

Principle 7: Integrating Culture

The third principle is to integrate the culture into the talent management process. It is important to keep the culture in mind when hiring and retaining employees. Every company has a culture that is embedded into its workforce. For example, Google has a unique company culture; it has been known to look for ‘Goodliness’ during the hiring process. This ensures that the new candidates will be a good fit into the company culture.

Role of HR in Talent Management

Talent acquisition and management has emerged as a key strategic process in an organization. Though there is a better availability of workforce in the market than ever before, yet the challenge to acquire the right talent still persists for any organization, worldwide. This is essential to achieve the strategic objectives and ensure long term success of an organization. Thus, enhanced corporate competitiveness and globalization has transformed the regular process of human resource recruitment into talent acquisition.

Moreover, the work of an organization these days does not end with hiring of the right talent into the organization. There is a wide spectrum of activities like career management, leadership development, talent planning, etc. which are constantly buzzing in the HR departments of organizations. Such activities fall into the realm of talent management.

Talent management is all the more essential to keep up with the future needs of the organization. Otherwise, if the organization does not focus on talent management within itself then it will have to resort to the process of recruitment every time the need for appropriate talent arises. Hence, we can say that talent management is all about nurturing and guiding the talent in your organization in alignment to the strategic and long run goals of the organization. It is the succeeding step to talent acquisition.

An organization generally avails the services of an HR Consulting Firm to provide with a cost-effective and quick, yet high quality, talent acquisition and management process. An HR Consulting Firm efficiently and effectively contributes towards recruiting the best and the most appropriate person for the organization with the allocation of minimal resources and within a short period of time. Also, HR Consulting Firm provides the right analysis, strategies, and plans for the management of talent in an organization.

As far as talent acquisition is concerned, an HR Consulting Firm maintains a highly effective research team which keeps a detailed track of the requirements of both the organization as well as the candidate. It may be possible that an HR firm may specialize in certain industries or sectors as far as acquisition of talent is involved. This helps the HR Firm in maintaining high standards of success in meeting the talent demands in particular industries by employing in depth knowledge and research in those industries.

The Firm conducts behavioral interviews with the prospective candidate to obtain a comprehensive analysis of the leadership, team-building, decision-making and problem solving skills of the candidate. Also, the candidate is thoroughly assessed for his attitude towards working in a team, response to change management and reaction towards the cultural climate of the prospective organization. Such analysis helps the organization in not only recruiting a candidate with right educational and professional experience, but also one with the required attitude and flexibility to be a part of the organization.

The HR Consulting Firm undertakes following steps for talent acquisition process in an organization:

  • Comprehend the business strategy of the organization.
  • Assess the talent availability within the organization.
  • Discuss the talent requirements of the organization with the management.
  • Analyze the gap areas between availability and requirement.
  • Build strategies and plans to meet these gap areas.
  • Measure the success of the implemented plans.

Talent management basically works in creating a pool of talent within the organization which helps in achieving the strategic objectives of the organization in the long run. This requires the HR Firm to work on the present set of employees of the organization and polish them so as to align their talent with the strategic objectives of the organization. Talent management process also requires an HR Firm to:

  • Analyze the talent strategy and succession planning of organization.
  • Develop a talent plan as required for strategic long run success of organization.
  • Review talent in the organization.
  • Plan various tools and techniques to develop talent within the organization.

Talent management process:

  • Carry out performance management
  • Develop career management plans
  • Benchmarking talent activities
  • Leadership development programs
  • Team building exercises
  • Action learning programs
  • Interactive workshops
  • Individual development guidance and coaching
  • 360 degree feedback

Recruiting

The foundation of talent management is hiring the right people. The best recruiting processes support those efforts by carefully defining job descriptions, using an applicant tracking system to help manage the workflow of the interview process, and carefully interviewing applicants to select the strongest candidates.

Career Management

Managing your employees’ career paths can help increase satisfaction while reducing costly turnover. Building on the information collected during annual reviews, companies can learn more about employees’ Strengths and interests. With that in mind, it’s possible to work with employees on long-term career development plans. Whether you’re dealing with someone on the management track or someone interested in being a highly skilled individual contributor, career management is a critical component of talent management and employee satisfaction.

Performance Management

Once employees have been hired, it’s essential to have the right processes in place to successfully manage them. HR technology and service solutions in areas such as time and attendance can help track productivity and performance. Regular review processes help keep lines of communications open between management and staff, allowing workers to get feedback on what’s going well and where they need to improve their performance.

Organizational Strategy

Talent management activities rarely happen in isolation. Instead, strategic recruiting and support of workforce development begins with a company-level commitment. Your HR team may play a leading role in making this happen, from identifying talent management as a strategic priority to determining how and where that focus will be applied.

Focusing on talent management is a critical component of your broader workforce management strategy, because recruiting, training, retaining, and promoting the right people are essential steps in reaching your staffing goals. While human capital management initiatives encompass talent management and much more, understanding and executing the day-to-day activities of recruiting, leadership development, strategy creation, and career management are essential for successful HCM.

Leadership Development

Have you identified the next generation of leaders within your organization? That’s a vital part of the talent management process. Once these high-performance, high-potential individuals have been located, businesses need to consider the best way to retain them over the long-term. Often, this process requires a focus on training, stretch assignments, and mentoring.

Role of Talent Management in building Sustainable Competitive advantage to an organization

Organizations work towards the achievement of their mission and strategic objectives. This requires a thorough understanding of the resources required for achieving the same. Resources here imply financial and non-financial both and they are equally important and interdependent.

Technically these resources have been divided into two, non-contingent and differentiating capabilities. Whereas non contingent capabilities are basics that enable an organization to compete and exist in the marketplace, differentiating capabilities are those that differentiate an organization from that of the other and offer competitive advantage. Effective marketing management, for example can be one of non-contingent capabilities. Similarly, many HR processes aspire to develop non contingent capabilities but they often fail to align with the strategy and offer competitive advantage. Most of these processes end up developing people in similar areas and similar capacities as their rival firms but this fails to provide any competitive advantage.

For organizations to develop competitive advantage through HR processes it is very important to define strategic differentiating capabilities and then develop a process for identifying and developing the same. This empowers the HR people to create an impact on the organizational strategy and also provides a link between talent management and strategy.

For HR to prove that talent management can be of strategic importance to organizations, the critical relationship between the two must be proven. Talent management specially needs to be projected as a differentiating strategic capability that can offer real and substantial competitive advantage.

According to research conducted by various bodies it was found out that creation of differentiating strategic capabilities signifies the relationship between business strategy and human resources. Human resources, it was deduced are the primary sources of strategic advantage. The research study was primarily based on Resource based view (RBV) of an organization. This view has gained significant ground among HR practitioners as basis of models for formation and structure of resources.

Unlike other non-contingent capabilities that can be developed easily and cannot contribute to a large extent towards the development of a sustainable competitive advantage, differentiating strategic capability such as strategic HR through talent management can. However, for human resources to qualify as potential sources of competitive advantage they should fulfil the following criteria:

  • Strategic Value: The resource has to contribute substantially and add value in his/her area of expertise.
  • Rare: Unique in terms of skills, knowledge and abilities in order to qualify as rare.
  • Appropriable: The extent to which the resource is owned by the firm.
  • Inimitable: Such that the resource cannot be replaced even after the competitors having spotted the same.
  • Cannot be Substituted: This means that the resource cannot be substituted by the rival firms and that there is no match for the talent.

There are not many things in the business environment that can fulfill all the above criteria and offer unique competitive advantage except human resources and that is under the jurisdiction of talent management. There is also a need to understand the strategic intent of the organization before defining strategic capabilities.

Strategies:

  1. Adopt a growth mindset. A scalable and expanding customer and values-driven mindset is a living, breathing thing. It begins with the existing leadership of the organization and permeates throughout the organization, its functions, and its stakeholders. It is not only led but managed and habitually normal; it is culture. This mindset connects the organization to the people who matter.
  2. Have organizational character. Reference and align the corporate vision, values and mission. Know and understand the current/future state of the organization and industry. Integrate strategy and aspirations for any innovation, disruption and digital strategies. Be prepared and flexible as the progression of transformation takes place and begins to thrive.
  3. Have ethics. Good business practices create good business value.
  4. Embrace technology. Digital, automation and self-service technologies are creating change in talent management services.
  5. Rethink the HR lifecycle. Address the future of automation and technology, analytics, service models, governance, etc. to ensure it is affording the organization value now and in the future. The future of talent management strategies are flexible, people-oriented and reliable.
  6. Champion the strategy. Existing leadership teams should collaborate to prioritize, support and lead the success of the organization’s talent management strategy.
  7. Assess and redesign talent management programs to support all levels of leadership in the organization. Keep them people-centric through experiential learning to ensure they are ready to lead. These programs should support and measure cultural diversity, creativity and legacy, leadership and team excellence, brand equity, employee engagement and productivity, and revenue prosperity.
  8. Conduct assessments. Align talent to future value. Develop individual career frameworks and leadership plans for effective insight, growth and success.
  9. Develop your workforce. With scarcity in talent and the ever-growing desire for job security, it is critical organizations provide professional development programs to up-skill and reskill their workforce. Enabling the workforce to thrive ensures positive and lasting employee experience and engagement, resulting in positive productivity and profitability.
  10. Create a brain trust. Develop an internal and external data source that attracts social interaction from employees, stakeholders and suppliers. Utilize the data to analyze, validate and identify innovation, disruption and key business information to support leadership decisions and corporate strategy.
  11. Redefine metrics. Redefine traditional performance management to a coaching culture. Align metrics to mirror the organization’s mission, vision, strategic initiatives, transformational goals and milestones, all while streamlining incentives and rewards accordingly.

Impact of Reorganization: Gain or Loss to Stakeholders, Implementation of Objectives, Integration of Businesses and Operations, Post Merger Success and Valuation and Impact on Human and Cultural Aspects

Gain or Loss to Stakeholders

In mergers and acquisitions it largely depends upon the terms and conditions of the merger and the track record of the transferee or acquirer company. Based on the cardinal principle, every buyer, in other words transferee or acquirer has to pay more than the book value of the transferor or target company. However, the terms and conditions of the transaction depend upon their present operations and past historical records.

Implementation of Objectives

We have so far discussed various objectives, motives, reasons and purposes which are to be achieved and accomplished by implementing them after completion of merger, amalgamation or acquisition. Much of the senior management’s attention must be focused on developing a ‘post-transaction’ strategy and integration plan that will generate the revenue enhancements and cost savings that initially prompted the merger or acquisition. After merger or acquisition, the resources of two or more companies should be put together for producing better results through savings in operating costs because of combined management of production, marketing, purchasing, resources etc. These economies are known as synergistic operative economies. Synergy is also possible in the areas of Research and Development function of the combined company for optimum utilization of technological development, which could not be taken up by the separate companies for want of resources.

A key challenge in mergers and acquisitions is their effective implementation as there are chances that mergers and acquisitions may fail because of slow integration. The key is to formulate in advance integration plans that can effectively accomplish the goals of the M&A processes. Since time is money and competitors do not stand still, integration must not only be done well but also done expeditiously.

To implement the objectives of mergers or acquisitions, there are various factors, which are required to be reorganized in the post merged or acquired company. Such factors can be grouped in the followed heads:

(i) Legal Requirements

Fulfilment of legal requirements in post-merger reorganisation of any amalgamating company becomes essential for an effective and successful venture. The quantum of such obligations will depend upon the size of company, debt structure and profile of its creditors, compliances under the corporate laws, controlling Integration of Businesses and Operations regulations, distribution channels and dealers network, suppliers relations, labour etc.

(ii) Combination of operations

The amalgamating company has to consolidate the operations of the transferor company’s operations with its own. This covers not only the production process, adoption of new technology and engineering requirements in the production process but also covers the entire technical aspects like technical know-how, project engineering, plant layout, schedule of implementation, product designs, plant and equipment, manpower requirements, work schedule, pollution control measures, etc. in the process leading to the final product.

Integrating two different technological systems for complex business entities while continuing to run the business can be a massive challenge. It requires proper planning for phased transitions, extensive preparation and intensive testing. It is necessary to define workable implementation plans as to what needs to be integrated, when it should happen and how it can be done successfully.

(iii) Top Management Changes

The takeover or merger of one company with another affects the senior managerial personnel. A cohesive team is required both at the board level as well as at senior executive level. The reorganisation would involve induction of the directors of the transferor company on the Board of the amalgamating company, or induction of reputed and influential persons from outside who have expertise in directing and policy planning to broad base the Board for public image as well as smooth functioning of the company. Selection of directors, finalising their term of holding the office as directors, managerial compensation and other payments or reimbursements of expenses etc. are issues to be sorted out.

At the senior executive level also, changes are required particularly in respect of compensation depending upon the terms and conditions of merger, amalgamation or takeover and to adjust in suitable positions the top executives of the amalgamated company to create a congenial environment and cohesive group leadership within the organisation. Understanding different cultures and where and how to integrate them properly is vital to the success of an acquisition or a merger. Important factors to be taken note of would include the mechanism of corporate control particularly encompassing delegation of power and power of control, responsibility towards accounting, management information system, to and fro communication channels, interdivisional and intra-divisional harmony and achieving optimum results through changes and motivation.

(iv) Management of financial resources

Takeover, merger, amalgamation or demergers facilitate the attainment of the main objectives of achieving growth of the company’s operations. Growth is dependent upon the expansion, modernization or renovation or restructuring. Generally, the management plans in advance about the financial resources which would be available to the company to finance its post-merger plans. Such preplanning is based on certain assumptions which might change post-merger depending upon the volatility of a variety of factors involved.

(v) Financial Restructuring

Financial restructuring becomes essential in post merger reorganisation. Financial restructuring is characterised by liquidity crisis, ‘abnormal’ balance sheets and negative equity. The ‘clean-up’ must happen fast. Replacement of costlier fundings by cheaper borrowings on a long and short term basis as per requirement is one of the several ways and means of financial restructuring for a company. This being an important aspect concerns most of the top management, creditors, bankers, shareholders, regulatory bodies like stock exchange, SEBI as well as the government where provisions of corporate laws are attracted and their permissions or approvals for planned changes are required. Generally, financial restructuring is done as per the scheme of arrangement, merger or amalgamation approved by the shareholders and creditors but in those cases where takeover or acquisition of an undertaking is made by one company of the other through acquiring financial stake by way of acquisition of shares, e.g. IPCL by RIL, reorganisation of financial structure would be a post-merger event which might compel the company to change its capital base, revalue its assets and reallocate reserves.

Post Merger Success and Valuation and Impact on Human and Cultural Aspects

Every merger is not successful. The factors which are required to measure the success of any merger:

  1. The earning performance of the merged company can be measured by return on total assets and return on net worth. It has been found that the probability of success or failure in economic benefits was very high among concentric mergers. Simple vertical and horizontal mergers were found successful whereas the performance of concentric mergers was in between these two extremes i.e. failure and success.
  2. Whether the merged company yields larger net profit than before, or a higher return on total funds employed or the merged company is able to sustain the increase in earnings.
  3. The capitalisation of the merged company determines its success or failure. Similarly, dividend rate and payouts also determines its success or failure.
  4. Whether merged company is creating a larger business organisation which survives and provides a basis for growth.
  5. Comparison of the performance of the merged company with the performance of similar sized company in the same business in respect of (I) Sales, (ii) assets, (iii) net profit, (iv) earning per share and (v) market price of share.

In general, growth in profit, dividend payouts, company’s history, increase in size provides base for future growth and are also the factors which help in determining the success or failure of a merged company

  1. Fair market value is one of the valuation criteria for measuring the success of post merger company. Fair market value is understood as the value in the hands between a willing buyer and willing seller, each having reasonable knowledge of all pertinent facts and neither being under pressure or compulsion to buy or sell. Such valuation is generally made in pre merger cases.
  2. In valuing the whole enterprise, one must seek financial data of comparable companies in order to determine ratios that can be used to give an indication of the company position.
  3. Gains to shareholders have so far been measured in terms of increase or decrease in share prices of the merged company. However, share prices are influenced by many factors other than the performance results of a company. Hence, this cannot be taken in isolation as a single factor to measure the success or failure of a merged company.
  4. In some mergers there is not only increase in the size of the merged or amalgamated company in regard to capital base and market segments but also in its sources and resources which enable it to optimize its end earnings.
  5. In addition to the above factors, a more specific consideration is required to be given to factors like improved debtors realisation, reduction in non-performing assets, improvement due to economies of large scale production and application of superior management in sources and resources available relating to finance, labour and materials.

Human and Cultural Aspects

The merger is a period of great uncertainty for the employees of the merging organizations. The uncertainty relates to job security and status within the company leading to fear and hence low morale among the employees. It is natural for employees to fear the loss of their revenue or change in their status within the company after a merger since many of these employees literally invest their whole lives in their jobs. Hence the possibility of a change in their position is likely to be viewed with fear and resentment. The possibility of a change in compensation and benefits also creates a feeling of insecurity and unease. The influx of new employees into the organisation can create a sense of invasion at times and ultimately leads to resentment. Further, the general chaos which follows any merger results in disorientation amongst employees due to ill defined role and responsibilities. This further leads to frustrations resulting into poor performance and low productivity since strategic and financial advantage is generally a motive for any merger. Top executives very often fail to give attention to the human aspects of mergers by neglecting to manage the partnership in human terms. By failing to give attention to the problems faced by their employees, they fail to fully develop their companies’ collaborative advantage.

The successful merger demands that strategic planners are sensitive to the human issues of the organizations. For the purpose, following checks have to be made constantly to ensure that:

sensitive areas of the company are pinpointed and personnel in these sections carefully monitored;

  • Serious efforts are made to retain key people;
  • A replacement policy is ready to cope with inevitable personnel loss;
  • Records are kept of everyone who leaves, when, why and to where;
  • Employees are informed of what is going on, even bad news is systematically delivered. Uncertainty is more dangerous than the clear, logical presentation of unpleasant facts;
  • Training department is fully geared to provide short, medium and long term training strategy for both production and managerial staff;
  • Likely union reaction be assessed in advance;
  • Estimate cost of redundancy payments, early pensions and the like assets;
  • Comprehensive policies and procedures be maintained up for employee related issues such as office procedures, new reporting, compensation, recruitment and selection, performance, termination, disciplinary action etc.;
  • New policies to be clearly communicated to the employees specially employees at the level of managers, supervisors and line manager to be briefed about the new responsibilities of those reporting to them;
  • Family gatherings and picnics be organized for the employees and their families of merging companies during the transition period to allow them to get off their inhibitions and breed familiarity.

HRM Perspectives in Training and Development Meaning, Advantages

Training means imparting the knowledge, skills and aptitudes necessary to undertake the required jobs efficiently with a view to developing the worker to his fullest potential. As an organised activity, training is designed to create a change in the thinking and behaviour of people. Training is a two-way and continuous process because there is no end to learning and secondly, a person gets to learn new technology, new patterns etc., continuously.

The training acquaints the employee with the requisite skill, real life situations at the work place and helps him in the faultless accomplishment of the work. Training, thus, involves the development of the manual and mental skills that are necessary for performing a specific work, through instruction, drill and discipline.

“Training is a process by which the attitudes, skills and abilities of employees to perform specific jobs are increased.” Micheal J. Jucious

“Training is the act of increasing the knowledge and skill of an employee for doing a particular job.” Edwin B. Flippo

“Training is the organised procedure by which people learn knowledge and/or skill for a definite purpose.” E. F. L. Breach

Character

  • Training helps to perform the role of different sections of em­ployees, the managerial responsibility and the importance of communication and participation.
  • Training must be help to create an attitudinal change by creating awareness of the overall process.
  • It must enhance skills in organizational and managerial areas
  • Proper orientation and training should be given to the new en­trants.
  • It must make orient new entrants in the organization to the dis­cipline and culture requirement of the organization.
  • An effective training programme should process the following characteristics.
  • Training programmes should be chalked out after identifying needs or goals.
  • An effective training programme should be flexible.
  • It should have relevance to the job requirements.
  • It should make due allowance for the differences among the in­dividuals in regard to ability, aptitude, learning capacity, emo­tional make-up, etc.
  • Training programmes should be conducted by well qualified and experienced trainers.
  • An effective training programme should have the support from top management.
  • A good training performance should prepare the trainee mentally before they are imparted any job knowledge or skills.
  • Top management can gently influence the quality of training in the organization by the policies it adopts and the extent to which it supports training programmes.
  • An effective training programme should be supported by critical appraisal of the outcome of the training efforts.

Purposes:

  • Training is necessary to prepare existing employees for higher level jobs (promotion).
  • Newly recruited employees require training so as to perform their tasks effectively and efficiently. Instructions, guidance, coaching help them to handle jobs competently without any wastage.
  • Existing employees require refresher training so as to keep abreast of the latest developments in the job operations. In the phase of rapid technological changes, this is an absolute necessity.
  • Better performing workers are less likely to make operational mistakes. Quality increases may be in relationship to a company product or services or in reference to the intangible organisational employment atmosphere.
  • Instruction can help employees increase their level of performance on their present assignment. Increased human performance often directly leads to increased operational productivity and increased company profit.
  • Training is necessary when a person moves from one job to another (transfer). After training, the employee can change jobs quickly, improve his performance levels and achieve career goals comfortably.
  • Training is necessary to make employees mobile and versatile. They can be placed on various jobs depending on organizational needs.
  • Training is needed to bridge the gap between what the employees have and what the job demands. Training is needed to make employees more productive and useful in the long run.
  • Organisations that have a good internal educational programme will have to make less drastic manpower changes and adjustments in the event of sudden personnel alterations. When the need arises, organizational vacancies can be more easily staffed from internal sources, if a company initiates and maintains an adequate instructional programme for both its non- supervisory and managerial employees. So, it will help company to fulfil its future personnel needs.
  • An endless chain of positive reactions results from a well-planned training programme. Production and product quality may improve, financial incentives may then be increased, there is a boost for internal promotions, less supervisory pressure and base pay rate increases result. Increased morale may be due to many factors but one of them is current state of an organization’s educational endeavour. Thus, it will improve overall organizational climate.
  • Training and development programmes foster the initiative and creativity of employees and help to prevent manpower obsolescence, which may be due to age or temperament or motivation or the inability of a person to adapt him to technological changes.
  • On a personal basis employees gain individually from their exposure to educational experiences. Again management development programmes seem to give participants a wider awareness, an enlarged skill and enlightened altruistic (kindness) philosophy and enhance personal growth.
  • Proper training can help to prevent industrial accidents. A safer work environment leads to more stable mental attitudes on the part of employees. Managerial mental state would also improve if supervisors know that they can better themselves through company designed development programmes. So it improves health and safety.
  • Training is needed for employees to gain acceptance from peers, (learning a job quickly and being able to pull their own weight is one of the best ways for them to gain acceptance).

Objectives

To Remain Competitive in the Market:

To tackle the immensely growing competition in the target market, it is important for an employer to increase the productivity of its workers while reducing the cost of production of the products. Training, therefore, aims to bring about efficiency and effectiveness in an organization to enable it to remain competitive in a highly competitive market situation and for the achievement of organizational goals.

To Increase Productivity of Employees:

Training helps in developing the capacities and capabilities of the employees-both new and old, by upgrading their skills and knowledge so that the organization could gainfully avail their services for higher grade professional, technical, sales or production positions from within the organization. In case of new employees, training aims to provide them with basic knowledge and skill they need for an intelligent performance of their specific tasks.

To Change Attitude of the Workers:

Training not only provides new knowledge and job skills to employees, but also brings about a change in their attitude towards fellow workers, supervisor and the organization. It increases job satisfaction among employees and keeps them motivated. It gives them security at the workplace and as a result, labour turnover and absenteeism rates are reduced. It also develops in them self-consciousness and a greater awareness to recognize their responsibilities and contribute their very best to the organization.

To Mitigate the Risk of Accidents:

Trained workers can handle the machines safely. They also know the use of various safety devices in the factory. Thus, they are less prone to industrial accidents.

To Reduce Wastage of Time and Resources:

Training aims at making employees efficient in handling materials, machines and equipment and thus to avoid wastage of time and resources. It also helps in imparting new skills among the workers systematically so that they may learn quickly. If the workers learn through trial and error, they will take a longer time and even then, may not be able to learn right methods of doing work.

To Enable Workers to Adapt Quickly to Changes:

Technology is changing at a fast pace. Technological changes like automation and development of highly mechanized and computer-oriented systems, threaten the survival of dynamic companies by creating new problems, new methods, new procedures, new equipment’s, new jobs, new skills and knowledge, new product and services etc.

In such a situation, the employees may find themselves helpless to adapt to the changes and may feel frustrated and compelled to leave their jobs. Thus, training acts as a continuous process to update the employees in the new methods and procedures and make them efficient in handling advanced technology.

To Provide Growth Opportunities to Existing Employees:

Sometimes, it may not be possible for the management to fill in higher work positions from outside. Under such conditions, the apprenticeship programmes aiming at improving the skills of the present employees come to the aid of the company by make available their requirements of the personnel from within the organization. This reduces the need for recruiting people from outside and also improves the morale of the existing employees.

To Make the Management Effective:

One of the primary objectives of training and development process is to give rise to a new and improved management which is capable of handling the planning and control without any serious problem. Knowledge and experience gathered through training enables them to handle the tough situations and confusing realities, thus opening the way for bigger and better opportunities for business. It can also be used for strengthening values, building teams, improving inter- group’s relations and quality of work life.

Levels of training of the employees:

  1. Training to Unskilled Workers:

Unskilled workers require training to acquaint themselves with improved methods of handling their work to reduce the cost of production and do the job in the most economical and efficient way. Such employees are given training on the job itself and the training is imparted either by their immediate superior officers, or foremen.

  1. Training to Semi-Skilled Workers:

This category of employees requires training to cope with the requirements of the industry arising out of the adoption of mechanisation and rationalisation. These employees are given training either in the section or department itself, or in segregated training shops, where machines and other facilities are easily available. The training is usually imparted by more proficient workers and it lasts for a few hours or weeks, depending upon the number of operations and speed and accuracy required.

  1. Training to Skilled Workers:

Skilled workers are given training through the system of apprenticeship, varying in length up to a period of 5 years. Crafts training is imparted through training centres and the industry itself.

  1. Training to Senior and Supervisory Staff:

Since the supervisors form a very important link in the chain of administration, therefore, they need advanced up-to-date training at frequent intervals. The training programmes for the supervisory staff must be specific and tailor-made to fit the need of the undertaking.

They are generally given training in:

(a) Organisation and control of production, maintenance and materials handling at the departmental levels.

(b) Planning, allocation and control of work and personnel.

(c) Planning their own work and allocation of time to their various responsibilities.

(d) Effect of industrial legislation at the departmental level.

(e) Cost factors and costs control.

(f) Accident prevention.

(g) Training of subordinates.

(h) Communication, effective instructing, report-writing.

(i) Handling and settling human/Labour problems.

(j) Leadership for effective working of the undertaking.

  1. Training to Other Staff:

5esides the above categories of unskilled, semi-skilled and skilled workers, other employees are also required to be trained; they are computer operators, typists, stenographers, accounts clerks, etc. They need training in their field but such training is usually not provided. Salesmen are also given training about the nature of the products; routine involved in putting through the deal and art of salesmanship, along with the latest knowledge of the products being developed in the organisation.

Advantage

Lesser Supervision:

Well-trained employees have the knowledge about their jobs and equipment’s and can do their work efficiently. Thus, the training reduces the need of supervision to bare minimum.

Improvement in Production and Productivity:

Training helps to improve the efficiency and productivity of employees. Well-trained employees make better use of materials and machinery. Wastage is reduced and as a result quality and quantity of production becomes higher.

Maximum Utilisation of Materials and Machines:

Training teaches the employees the method of doing their job in the best possible manner. They have knowledge of operating machines and equipment’s and handles them properly and methodically. As a result of it, they make the best possible utilisation of materials and machines.

High Morale:

Effective training improves the self-confidence and job satisfaction of employees. Well-trained employees take greater interest in their job and derive a sense of security. By boosting the morale of employees, training helps to reduce absenteeism and improve labour turnover.

Better Chances of Promotion:

As the trained employees have the requisite qualifi­cation and training, they can be promoted to higher grades and position more easily than untrained workers.

Better Safety:

Human error or negligence is the major cause of accidents in the industry. Due to the operational efficiency of the trained workers and the complete knowledge about the working of the plants and machines, chances of accidents are reduced.

Stability and Flexibility in the Organisation:

An enterprise, where trained personnel are available, can expand and grow easily. Its survival is not threatened when a few key personnel are lost because proper replacements are available. Well- trained employees can be transferred from one job to another in order to meet the requirements of other departments. Thus, training also lends flexibility to the organisation.

Planning International Promotional Campaigns

Steps:

Determine the Target Audience

You need to thoroughly analyze any country that you think should show great potential for your product or service. And, bear in mind that even the big global players, like McDonald’s, have sometimes found it necessary to close down or decrease their presence in some countries. Sometimes companies find there is not sufficient market demand for their offerings or it’s too arduous to comply with burdensome local legislation. So, deciding to jump feet first into a foreign marketplace without proper research is, to put it mildly, highly unadvisable. Big international players such as McDonald’s can absorb the cost of localization blunders, but will you be able to?

People: Understanding Customer Behavior in a Different World

The people you are marketing to and the product that you are marketing go hand in hand. However, we’re leading off with the people because if you don’t first and foremost understand who you are marketing to, you may end up trying to sell them a product they don’t want and probably will never buy.

For example, Best Buy has not found much international success, especially in Europe. While their products were something that their target market wanted overseas, the way in which it was distributed was not well executed based on the way consumers shop in Europe.

Instead of tailoring their stores to fit the preferred mold of Europeans which is smaller shops as opposed to large box stores Best Buy opened up brick and mortars that were much bigger than what Europeans were used to. We’ll get more into how important the ‘place’ is in which you sell your product internationally in a bit.

Product: Altering to Fit the Needs of Your New Market

If you notice that the current offering of your product now won’t play in the new market you want to enter then you can do one of two things:

A) Decide not to sell in that market

B) Change your offering to meet the local demand

Prices: Choosing a Premium or Economy Pricing Strategy

For the most part, if you already have a product or service that is successful in one area of the world, the price point you use won’t vary much in comparison to the competition in that area.  If you have a premium product, it’s likely premium elsewhere. If you have a more affordable, economically-friendly product, it’ll be the same in your new market.

This is for the sake of consistency. It’s difficult to pull off being associated as a more expensive, premium product in one country, and the complete opposite in another. You may even risk bringing down your brand image as a result.

Promotion: Choosing Strategies That Work in This New Environment

Figuring out the most effective methods for marketing your product or service abroad is not that much different than doing it domestically.

Even if you live where you’re promoting your product, you still have to do some additional research to find out where your target audience is and which mediums they frequent.

Positioning: Determining Which Messages Will Resonate with The Market

Positioning is absolutely critical when entering a new market. If your initial positioning fails, an attempt to reposition your product can be costly and is not guaranteed to be successful. This is why it’s important to get it right the first time. A significant part of your positioning will be evident in the messages you relay in marketing campaigns. The messaging should be derived from your unique value proposition (UVP), which should be made up of the following:

Relevancy: How your product solves customers’ problems or improve their lives.

Value: What are the specific benefits.

Differentiation: Why your ideal customers should choose your product over the competition.

Determine Specific Campaigns

Focus on regions where your best audiences are found

Narrow down your focus to specific regions where your business is generating consumer interest and has the best chance of performing well. A great way to do this is by analyzing your website traffic and seeing which countries or cities get the most traffic. This is easily done with Google Analytics. You can also examine your social media following and activity to see which regions have high engagement. Create a shortlist of promising locations and begin by homing in your efforts on these.

Research competitors in each locale

Before launching in any new market, whether it be around the world or around the corner, it is essential to scout out the competition’s products, operations, and marketing efforts. By researching competitors, you may discover that a regional market is saturated, and probably not worth your global marketing investment. You don’t necessarily need to launch all your offerings in every market; rather, competitor research can reveal which products or offerings are missing in a particular region and this can help you decide what to launch and where.

Develop region-based distribution strategies and partnerships 

If you are offering physical products in international markets, you will need to create distribution and shipping operations for each region. This requires researching delivery service providers, estimated shipping costs, and other issues, such as customs and regional tax implications for customers. For companies launching digital or online services or products, like an app, you don’t need to worry about this step. Rather, focus on making sure your online infrastructure can support expected increases in traffic and use.

Localize your branding and campaigns

Once your product or service is ready to be launched, it’s time to focus on adapting your branding and marketing strategy for each region. This will entail the translation and localization of ads, user guides, product descriptions, and more. It may also mean localizing images to better appeal to customers in a specific region. Remember, localization is not just word-for-word translation. It’s capturing the sensibilities and norms of your target audience.  

Be constantly aware of cultural and language differences

This is a touchy subject for any business looking to run global marketing campaigns. It is critical to avoid the pitfalls of advertising mistakes in foreign countries that can lead to bad publicity and a poor brand image. This means keeping up to date with current affairs and cultural events in different regions of the world where your business is active.

For example, running an upbeat ad campaign in a particular country on national Memorial Day is a very bad idea. For business owners who are on top of their global markets, the local cultures can actually provide a wealth of inspiration for clever, catchy ad campaigns. But you do need to stay on top of it constantly to make the most of the different global marketing opportunities.

Global Marketing Campaign Examples

Brands that have an international identity and infrastructure are ripe with amazing global marketing campaign examples. However, that doesn’t mean that small and medium businesses need massive marketing budgets to get their own results in global markets. Use examples like those below as inspiration for the different ways you can create a global marketing campaign to your advantage.

Standardization V/S Adaptation of International Promotional Strategies

Standardization means an undifferentiated use of the same Marketing Mix (4-7Ps) in all countries. In this case, the firm simply replicates, without any changes, the same strategy in the different markets in which it operates. In general, firms that adopt the standardization strategy are those that are exporting for the first time, or those that focus on cost savings through economies of scale and for whom an adaptation process could result very costly. You can find below some factors that favour standardization:

  • Economies of scale: Mass production allows the firm to lower unit production costs by increasing volumes through economies of scale.
  • Globalization of the market (consumers/customers): Companies that offer a product whose market is “Global” can offer the same product in multiple countries, catering to a wide range of consumers.
  • Transferable competitive advantages: Offering a standard product can provide several competitive advantages. The cost reduction provided by economies of scale allows the firm to introduce competitive pricing. In addition, a standard product ensures quick response times to the market, provides a global standardized image and better control over marketing strategies.

Adaptation means that each country/market has its Marketing Mix. The adaptation strategy is geared towards meeting the needs of the market, planning all business activities with the aim of efficiently meeting the specific needs and respecting the values of local consumers. We can take as an example beer companies. When entering a new market we can see that one country can prefer non-alcoholic beer. The company then has to adapt to the situation and, for instance, decide to produce more beer which results preferable for the chosen country/market. As in the case of the standardization, the adaptation strategy is better suited in the presence of the following factors:

  • Differences in local competitive conditions
  • Differences between customers/consumers
  • Differences in local legal conditions
  • High degree of service in the company’s offering

Standardization vs. Adaptation

The first view is the standardization standpoint. According to these authors, supporters of standardization believe that there is a union of cultures with similar environmental and customer demand around the globe. They argue that trade barriers are getting lower and that technological advances and firms are displaying a global orientation in their strategy. As they believe, creating one strategy for the global market and standardizing the marketing mix elements can achieve consistency with customers as well as lower costs. Levitt argues that companies that are managed well have moved away from customizing items to offering globally standardized products that are advanced, functional, reliable and low priced. According to him, companies can achieve long-term success by concentrating on what everyone wants rather than worrying about the particulars of what everyone thinks they might like. 

On the contrary, supporters of the international adaptation approach, emphasize the importance of customization. The fundamental basis of the adaptation school of thought, is that when entering a foreign market one must consider all environmental factors and constraints such as language, climate, race, occupations, education, taste, different laws, cultures, and societies. However, researchers have identified important source of constraints that are difficult to measure such as cultural differences rooted in history, education, religion, values and attitudes, manners and customs, aesthetics as well as differences in taste, needs and wants, economics and legal systems. According to Vrontis and Thrassou supporters of this approach believe that “multinational companies should have to find out how they must adjust an entire marketing strategy and, including how they sell, distribute it, in order to fit new market demands”. It is important to alter the marketing mixed and marketing strategy to suit local tastes, meet special market needs and consumers non-identical requirements.

Advantages and Disadvantages of Standardization

Standardization and international uniformity has many advantages. For one, people can expect the same level of quality of any specific brand anywhere around the world. Standardization also supports positive consumer perceptions of a product. If a company enjoys strong brand identity and a strong reputation, choosing a standardized approach might work to its benefit. Positive word-of-mouth can mean an increase in sales around the globe. Another advantage includes cost reduction that gives economies of scale. Selling large quantities of the same, non-adapted product and buying components in bulk can reduce the cost-per-unit. Other advantages related to economies of scale include improved research and development, marketing operational costs, and lower costs of investment. In addition, standardization is a reasonable strategy at a time where trade barriers are coming down. Finally, following a standardized approach helps companies aim focus on a uniformed marketing mix specifically focusing on one single product, leaving enough room for quality improvement. By emphasizing on one uniformed product, staff can be trained to enhance the quality of the product attracting manufacturers to invest in technology and equipment that can “safeguard the quality of the standardized product offering”.

Standardization, however, poses a number of disadvantages. As mentioned previously, different markets mean different preferences. Selling one unified product lacks uniqueness. This allows competition to gain market share through tailoring their products to meet the need of a specific market/segment. Since different markets have different needs and tastes, by using the standardized approach, companies can become vulnerable. One example is Walmart’s failure in entering global markets. The retail giant faced many challenges when entering foreign markets such as Germany, Brazil, South Korea and Japan as it discovered that its formula for success in the USA (low prices, inventory control and a large collection of merchandise) did not translate to markets with their own discount chains and shoppers with different habits. The biggest problem was that Walmart, a uniquely powerful American enterprise, tried to impose its values around the world. In particular, Walmart’s experience in Germany, where it lost hundreds of millions of dollars since 1998, “has become a sort of template for how not to expand into a country”.

Another disadvantage is that it depends largely upon economies of scale.  Naturally, businesses that are global manufacture in many counties. This can pose a problem since a number of countries implement trade barriers such as the USA and the European Union (Products and International Marketing, n.a). In this case, adaptation is predestined.

International Promotional Tools/Elements

Sales promotions have the specific purpose of driving short-term sales of products or services. Because they are highly effective in triggering short-term sales, they play a vital role in most marketing managers’ arsenal of tools to drive demand. As companies expand into international markets, marketers’ usual relies on the same tools that serve them well in the domestic market. However, some sales promotions may not work in foreign markets because of host country differences.

Trade Fair Participation:

Participation in foreign trade fairs is one of the oldest forms of promotion of exports. Success in exports business involves long term approach to marketing. This approach rests on the basic premise of developing long term business relations with the foreign buyers.

Trade fairs provide an opportunity to the exporters to display their products to large number of buyers or their representatives who visit the fair. The participation in the foreign fair can, thus, be a very efficient tool to communicate with the market. It offers tremendous facilities to bring across the message to a large number of buyers than perhaps any other trade promotional tool.

The objectives of trade fair participation are as follows:

  • To introduce the concept of the product, i.e., the basic theme of the products.
  • To introduce the export firm in the foreign market.
  • To introduce the brand of the product or increase the popularity of the existing brand.
  • To conduct consumer research on the new product and test it in the market.
  • To ensure customer loyalty.
  • To look for prospective buyers.

It is generally believed that one can achieve very positive results by participating in a trade fair. But it has been observed that achieving successful results at the trade fair is not guaranteed, it requires lot of planning and handwork. To ensure successful participation is a trade fair, certain conditions need to be satisfied by the exporter. That is to say, he/she should:

  • Ensure that the products selected for display are competitive and have been developed keeping in view the requirements of the buyers in that market.
  • Define clearly the objectives for participation.
  • Select the right fair.
  • Prepare the plan for participation in advance including the financial budget.
  • Take all possible steps to invite as many visitors to the fair as possible.
  • Ensure effective people to handle the visitors at the stand.
  • Follow up on the points/queries generated during the fair.
  • Plan for repeated participation at the fair, not just once.

Point-of-Purchase Promotion (POP):

The point-of-purchase display is the silent salesman that calls the attention of customer to the product in the hope of initiating buying action. This medium is known by several names such as dealer hopes, dealer aids, dealer displays, merchandising and point-of-sale materials.

The point-of-purchase material may be classed as exterior items or interior items. Exterior items such as signs, banners, pendants, and display are utilized by the retail business like service stations.

On the other hand, interior items are found in store windows, on counters and shelves, and hanging from the ceiling or the walls and on the floor. Most of the point-of-purchase materials are temporary counter cards, dummy packages, cut outs, shelf strips and streamers. But exterior items are permanent store identification signs, clocks, thermometers, floor cabinets, calender’s and racks. The materials of which these are made may be cardboard, metal, plastic, wood, cloths, glass, etc.

The most popular point-of-purchase items are magazines and advertisement, reprints window, banners and streamers decals on windows, doors and mirrors wall posters, racks of wire metal and wood, plaques, merchandise display on counters and floors, display shopping cartons and exhibition displays.

This medium exerts a great influence in the direction of impulse purchase and replacement purchases. Buying stimulus, arises from the nearness of the customer to the actual product. Observe little field and Kirkpatrick. No other medium enjoys such a combination of time, place and atmosphere, at no other time are merchandise, money and mood, so co-operative and harmonious.

To be successful this medium must possess two characteristics. First, the effectiveness and excellence of the item itself, second it must be directed toward the individual shopper. This medium is of great use to the manufacturers, retailers and consumers. Manufacturers use this medium to help persuade retailers to stock new products, to help increase the size of retail orders, to help introduce special offers and help the retailer to trade up some of his customers.

Retailers use this medium to get the attention of the prospects and then to urge them to buy promptly then and there. Exterior items and window display attempt to influence, even to control, sidewalk traffic by converting part of it into floor traffic by keeping passerby from passing by. Interior display tries for a sale be appealing to the impulse of the buyers. Consumers get useful information about problems, solution and satisfaction.

Publicity and Public Relations:

Public relations include a variety of programs designed to improve, maintain or project a company or product image. It encompassed wide variety of communication efforts to contribute a generally favourable attitude towards the organization and its products.

Publicity is not paid for. The tool includes press conferences, speeches, annual reports, events, publications, donations for public cause and sponsorships. Sponsorship is covered here to include that part which is not paid for. For example, Pepsi paid for the sponsorship of the Independence Cup, 1997. But it generated news items in Newspaper, Radio, Television, Sports Magazines, etc.

First part is advertising and the second part is publicity. Not all trade publications. accept product publicity stories but new product editorial coverage may be an excellent way to supplement other promotional programs.

Sales Literature:

Sales literature constitutes non-personal contact to solicit a trial or purchase. The tool includes catalogue, booklets, circular letters, calender’s, leaflets, etc. For this purpose, the advertiser has to identify the customers to whom sales literature would be mailed or given personally. The materials have to be tailored to the characteristics of the target country.

In sales literature it is admissible to include technical information, such as weight, dimension, qualities, etc. Sales literature have to be modified to suit the environment of the foreign market particularly the languages and understood by the residents of the market segment.

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