Executive Summary

The acquisition is a form of asset purchase and stocks of a company acquired. The methods employed in these two kinds are different in practices and solely based on shareholders’ positions.It is essential to determine that the growth rate should be for the transformation of the company and its corporate identity. Therefore, the targeted company identifies a new direction and adds some new capabilities.The management approaches define motives to work under mergers and acquisitions. This hypothesis is workable in many instances when a manager seeks to hire companies for their own interest and not for sole economic gain.

The increased competition in all financial sector develops motivation for customers to stay with that particular company.If a commercially viable strategy is not implemented, all the synergies of companies become worthless. In some cases, the cost of delivering a marketing strategy is better for the public. It is worthy to say that public institutions need to bring growth and harmony and manage high-risk assets. This report presents effective understanding of mergers and acquisitions, along with motives for success and failure from real life examples.

Table of Contents


The union of two or more companies that forms an entity or describes a pool of interest is a merger. It is not a consolidation, which is a combination of different companies/product lines or functional areas. The mergers correspond to no new entity, while in some particular cases, an entity is created. An accounting method that is used in merges as a part of the investment is known as purchase acquisition (Bick, Crook, Lynch & Walkup, 2017). The accounting method in which pooling of interest for the merger is combined when without considering the impact of the tax. Mergers and acquisitions are a vital tool to facilitate corporate expansion with the control of assets and shares. It also offers corporate power on the market through joint strategic opportunities.

Capital budgeting analysis is used to ensure the expected return rate, which will undertake specific considerations of financial issues and tax accounting. There is usually a significant hype about the impact of mergers and acquisitions, which is not favorable. They destroy the acquirer’s acquirer’s business value. The process of mergers and acquisitions incorporates the company’s valuation with the price that takes over its assets. This process highlights that price paid is higher than the actual price (Clarasys, 2020). The common failure of mergers and acquisitions is the difficulty of cultural integration. In common practice, the merger is an entity combined with two or more firms. It reflects different leadership styles, corporate cultures, and expectations of employees. The scope of functional differences is broad and based on employee’s expectations.

The corporate law defines a merger as the combination of different corporations and continues to exist when there is asset transfer. The mergers learn shareholders that exchange shares with shares for new firms. The acquisition highlights the target company as an entity that is involved in the business, and its shares are linked to shareholders for debt or cash (GERBAUD & YORK, 2007). The acquisition is based on buying all the assets or a part of the stock. Mergers and acquisitions are the different entities described under various researches. Research indicates that an alliance can be a formation of a holding company.

Corporate managers face increasing pressure to grow company size, mainly when there is a low demand for the product. The process involves managers looking to jump-start growth, and they have to make sure that this growth can provide returns for the shareholders (Ismail, Dbouk&Azouri, 2014). The concept of the merger is different from the acquisition is the sense of resource size. This field has grabbed extensive attention in recent times. Mergers highlight an interdisciplinary framework that enables companies to grow faster and also ensures that how weak companies are acquired. This pace is kicked up from 2001 to 2004 when at a global level, 30,000 acquisitions were completed. It is observed that an increased number of assets is attributable to certain key factors such as deregulation, low inflation, and a rising stock market. Disney and Pixar/Marvel is a successful example of mergers and acquisitions in the resource-based category. The increase in this activity is witnessed in industries like information technology, healthcare, infrastructure, and the development of software.

In South Africa, the Johannesburg Stock Exchange under the control of American corporations involved in market capitalization (Ghosal&Sokol, 2013). In 1984, the political transformation was established due to democracy. Big conglomerates faced unbundling, so their level of the stake was marginalized. Another example was the Emerging Economic Empowerment companies when they participated in the stock market that involved the unbundling of large consortiums. This acquisition by Anglo American Group, like Johnnic investment, led to the emerging business of blacks and companies acquired access to the public capital. This string of emerging acquisitions in previous years illustrates the control of market capitalization despite the widening of economic empowerment. America Online and Time Warner is an example of a merger and acquisition that managed acceptable returns. In some instances, management can experience acceptable returns determined by the size of the company. In some cases, the company has to contribute to the appropriate level of returns, so it selects aggressive growth by involving in mergers and acquisitions.

Part one

Mergers and motivations work on the basis of motivations. These are particularly to increase the financial return and get national interest. The key motives in the expansion of mergers and acquisitions are to create wealth and to expand the market base. Acquisitions are the small role players that can significantly add to the benefits. Proper post-acquisition strategies are not prevalent normally. South Africans large banks acquired smaller banks only to acquire the opportunity of community arrival and reinvestment bill. The bill was managed by the government and help for the smaller banks to get housing finance.

In past South African firms understood the calculated financial risk through understanding the secured liabilities. In case, if some post-acquisition strategies lack focusing on proper management skills or on external environmental factors, the business confronts failures. Some examples from financial sector companies present a high level of competition when there is an increase in customer loyalty and a good brand image (JOHNSON & SIMON, 2009). A bank can face a high threat if no minimum liquidity threshold achieved. Banks focus on risk-free investment and deposits to cover all the extra costs as well as to maintain their capacity level. The research presents that companies have to merge to manage operations and to cut costs efficiently.

Improve Financial Performance

The improvement in financial performance is attributable to the increase in revenue or reduction in costs. Under a synergic strategy, this is accomplished to get operational motivation.

Motivation smoothen profits

The financial improvement process undertakes firm features that explain income smoothing practices. It is based on general motivations that help managers to engage in the financial improvement process. Internal expansion by Hymer has faced by product diversification, vertical integration, and mergers & acquisitions. The motive for a firm’s expansion and profit generation is the pursuit of management (Ogada, Njuguna&Achoki, 2016). This context is well explained under proactive and defensive factors that operate effectively. Under geographic diversification, these factors ensure control due to power and competition in the markets. The market power perspective is defined under proactive factors that appear attractive to the industries. They are rendered more attractive due to the use of anti-competitive conventions such as mergers and acquisitions, barriers to entry, and collusion. Cross-selling success as pros for McKinsey & Company are in the form of efficient delivery of products to realize revenue synergies. Merging firms usually underestimate this potential, but the company has achieved its targeted cross-selling goals (Penrose &Pitelis, 2009).

The cons of cross-selling for the CitiCorp Group are difficulty with challenges related to revenue synergies. They involve multiple groups that are tough to estimate and measure their financial impact. Another con is the gap between end result and goal of targeted selling, i.e., estimated at 20% when measured for 3-5 years synergies.

Increase revenue or market share

The increase in market share of revenue is related to the cost rationalization under operational motivation. The economy of scale also plays a part in managing revenue. Cost rationalization is tax loss, staff, and plant matters. In this framework, market extension and product extension are categorized under horizontal form/ competitors. The market extension links to horizontal form and overseas, so the conglomerate M&A is involved. These mergers occur between two companies that deal with similar products, yet different markets. The market extension merger ensures that companies acquire success in a big market when they work on a large client base. The example of a market extension merger is the acquisition of Eagle Bancshares Inc. by RBC Centura (Renneboog&Vansteenkiste, 2019). The pros of this acquisition were a high growth rate in the North American Market and increased operations as being successful. Some little cons exist for Dow Chemical merger and acquisition in the form of intense competition that they are facing in the financial market. This needs diversification and operations in leading US markets.

The product extension merger occurs in two organizations in similar products and similar markets. This merger allows companies to access larger sets of consumers and group together, so they earn good profits. An example is Mobilink Telecom Inc. and its acquisition by Broadcom under the category of product extension merger. The pros of this type are certification and participation in the competition, as seen in the company’s success. The cons exist for Pfizer and Warner-Lambert for this form due to easily imitated business models and a variety of products in different markets.

Manager’s hubris

An unrealistic belief about managers is managerial hubris that relates to bidding firms when assets are managed for a targeted firm. The conglomerate merger occurs when unrelated business activities located in diverse geographical areas unite and form a company. Its example is Walt Disney’s unification with the American Broadcasting Company. Its successes are pros like value creation, acquisition of assets, and diversification. The cons can be illustrated better for H. J. Heinz and Kraft Foods as tax implementation and financial vulnerability based on circumstances.

Resource acquisition

The mergers and acquisition-related to the human resource are key business tools that show a corporate entity acquires other. This acquisition relates to the professionals when they involve in identifying solutions and recognizing problems in management (WATCH, 2010). The example of resource acquisition is Exxon and Mobile, the success factors in resource acquisition are retentions of employees; good employee benefits program, and development of new policies. The cons are appropriate to discuss for AT&T/Bell South regarding uncertainty in employee performance, low participation, resistance, and high turnover because it can lead to failures.

Vertical integration

The vertical integration as a merger and acquisition illustrates the concept of manufacturing plants and store brands. The functional areas are creation, selling, and distribution of products that eliminate the need for external entities such as transportation and manufacturers. An example of vertical integration is the acquisition of Google of Motorola6 Ikea’s 2015. Its cons are the flow of the supply chain and increased relations with the partners (Renneboog&Vansteenkiste, 2019). The cons for vertical integration can be seen from Facebook and Instagram M&A face downstream on occasions and intense competition in technology.

All of these types discuss that some types of mergers and acquisitions are more likely to get success over others, considering the factors involved.

National interests

The exclusive motivation for mergers and acquisitions is used for national interests. This mainly includes natural resources and strategic resources.

Natural resources

In Africa, the natural resources mergers are made by developed world organizations, such as Europe and North America. Merger action in basic industries, like, petroleum, agriculture, mining, quarrying, hunting, forestry, and fishing, had continued pretty flat during 1988 and 2004, at times when mergers in manufacturing and services had increased and decreased many times by the percentages in hundreds. If something, natural resources mergers bear an inverse relationship with commodities prices.

In different aspects the national interests, these are really difficult to understand. As per researchers, the National interest of Australia is something that can only be described by the Australian people or Government of Australia. It is not stationary and cannot be described mechanically. The law does not offer mechanical guidelines or definitions for the national interest measurement. Due to the significance of natural resources, mergers are oriented on specific principles to get benefits. The accusations of firms under political expediency needs openness. Mergers, as national interests, show greater flexibility (Penrose &Pitelis, 2009).

Due to the large scale of production, products appear in a combined form that must avoid anti-trust issues. It is necessary to increase production to maintain the scale in the industry, so firms invest more in new products, and natural resources such as oil and gas are used to enhance benefits for the economy. In some cases, raw materials are acquired at low cost; for instance, Walmart is the main example that works on corporate expansion and has not faced shrinkage from entering into new markets or reducing prices.

Strategic resources

Strategic resources are the leading format that works on mergers and acquisitions to expand know-how and enter into a competitive environment. The structural scope of the environment is linked to the enhanced mechanism of corporate governance. In the realm of the firm’s acquisition and resources, strategic initiatives play a crucial role. The corporate information security is an integral component to consider while working under acquisitions in the public interest. It helps organizations acquire a key advantage when organizations are facing threats to work. The role of corporate activity undertakes security concepts because it controls the organizational environment. It can be easy to overlook the security matters, but it may enter an insecure connection when the proper framework is installed. The diligence process is linked to the information of an organization where the cybersecurity aspect is recognized as fundamental terms.

The technology under strategic resources is updated with the need of time. Research indicates that 41% of companies focus on mobility and technology to work as a part of their growth strategies. Accenture strategy research states that with the pace of fast-changing communication, high tech industries develop. Established players focus on innovation and stay ahead. In mergers, mostly agile startups are implemented, but they appear complex to handle. The playing field of mergers and acquisitions has opened the door of a new transformation. Due to the implementation of technology, forward-thinking communication offers new paradigms (Ismail, Dbouk&Azouri, 2014). Mergers and acquisitions redefine the boundaries of the industry and generate improved performance.

Global mergers and acquisitions in Japan are experiencing rapid growth due to optimistic nature regarding globalization. The government of Japan has developed policies for mergers and acquisitions that support research activity. At the global level, the scope of transactions in firms remains robust due to prevailed harmony and technology. The activities of mergers and acquisitions in Japan in 2018 is estimated at $358.2 billion. The economic and demographic shifts are to cater to new opportunities. If a portfolio of companies is clarifying their acquisitions, it is likely that they aim for a sharp growth rate. Surge development costs in mergers and acquisitions are attributable to research and development expenses as well as new technologies.

Companies in Japan are focusing on capital market advantages because they are pursuing cross border transactions. In 2008, the financial crisis left these companies in solid shape in financial matters, yet they were characterized by the balance sheet cash (Ghosal&Sokol, 2013). Japan market and central banks faced a rise in interest rates, but they continue to maintain a zero level rate of interest, thus giving corporate operations access to the finance deals.


Several factors are responsible for the success and failure of mergers and acquisitions. The success factors are economies of scale, synergies, cost-saving, and rationalization of channel distribution. It explains different ways that companies adopt to focus on potential capital returns. The common reasons for buying acquisition are also discussed under it.

Strategic plan

The critical factors that impede conditions to influence the outcome of the project are the key terms that are viewed by stakeholders. Researchers view some critical factors as the measurements that are assessed by project success. These issues are project management, project success criteria, and cultural differences. The criteria of project research are fulfilled by budget and quality, according to some authors. These criteria do not necessarily measure project outcomes. To that end, project management is only considered for its operational value, not strategic (Alhenawi& Stilwell, 2017). Project success development is based on internal aspects, while external aspects can be complicated. This measurement is important for success estimation. Researchers also focused on the complex criteria of project management factors that contribute to the success of the project during the handover phase.

Assessing project success is attributable to the stakeholder community benefits, satisfaction, purpose achievement, and organizational benefit (Canback, 2004). In merger and acquisitions, the project management team focus on different perspectives required to get success within the estimated timescale(Warf, 2003). Cultural differences are key factors that may contribute or hinder in project development(Worthington, 2001). The strategic fit can be complimentary when two companies interact with different plans or identify merger strategy (Gupta, Kumar &Upadhyayula, 2012).


Mergers and acquisitions face intuitive target when the acquired firm become more successful(Vestal, 2007). The knowledge of the industry, along with the learning curve, describes the chances of success (Cowin& Moore, 1996). The strategic failure for mergers can be poor strategic rationales, poor integration, difficulty in leading, and communication of the organization. The poor execution and increased costs provide clear evidence of failure and important issues to consider. Slow post-integration of mergers, lack of risk management strategies, and cultural clashes are some key concerns that occur during implementation, for instance, in Altria/Philip Morris(Souply-Pierard and Robert, 2017). The strategic planning policy is important to implement because it is crucial to focus on an effective alignment tool that can follow the due diligence process.

Due diligence is about the assessment of the targets under M&A, where all parties learn how to eradicate misunderstanding(Roengpitya, 2011). The process is critical because of it and comprehensive analysis of the merger, such as their financial stability and cash flow (De Noble, Gustafson &Hergert, 1988). It is found out that the complexity of mergers and acquisitions is increased, i.e., Anheuser-Busch InBev and SABMiller. This endeavor offers an experience to focus on new opportunities. Firms, in this way, face losses and stimulate experience to boost their performance(Peltier, 2004). Firms face success when it learns from past experiences. Some mergers experience consistent purchasing that contributes to the chances of success(Papadakis, 2005). The acquisition experience is not a superior factor, but quick succession allows learning of new experiences for management. The management capabilities of the team effectively implement operational excellence. McKinsey & Company have shown a good implementation of strategy fit to contribute to the merger future.

Timing (Market Cycle)

Mergers and acquisitions are the main sources of organizational growth that achieve diversity, profitability, and growth rate(Friberg, Norback and Persson, 2012). These activities are inclined to attain corporate objectives such as market share and get diversified operations(Greco, 1996). Eagle Bancshares Inc. by RBC Centura, has focused on the market cycle by visualizing the growth pattern and competition. Analysts focus on the successful mergers and acquisitions that their success factors are based on marketing and targeting the right opportunities (Okafor, 2019). For instance, Glaxo/smith Kline is a successful merger and acquisition and has experience in guiding organizations to implement strategic direction. From the marketing perspective, the scope of functioning is based on certain strategies to target the right demographics and to acquire functional planning as well as execution. Due to the structural significance of M& A, the role of the market cycle is to focus on the time frame necessary to implement strategy fit that, in turn, gain advantages(Chibuzor, 2016).

Its role in breaking monopolies and raking control of industries is linked to a marketing perspective that undertakes predatory tendencies of business to seek diversification. This framework is built on the new market entry decisions, establishing market players, and to smooth the cash flows(Boen et al., 2006). Mergers and acquisitions are playing a strong role in increasing the capital flow, leverage buyers, and to create opportunities(Majumdar, Moussawi and Yaylacicegi, 2013). This method is significant for corporate restructuring since it makes companies focus on their operational excellence (Suniram& J, 2019). Asian and European firms seek healthy investment opportunities and time frames through M & A. Timing ensures discipline and productive capacity(Boen, Vanbeselaere and Millet, 2005).


The role of mergers and acquisitions in an industry is significant to enhance opportunities in the market and develop organizational benefits. Better operations and increased production capacity are significant to generate investment opportunities. When Mobilink Telecom Inc. and its acquisition by Broadcom was executed, the plan undertook functional expertise and managerial implications (Okafor, 2019). Mergers and acquisition projects are crucial for companies to grow rapidly and execute their corporate strategies, i.e., Mylan acquisition of Meda (drug maker). This is witnessed in well-developed studies as 50-70% acquisitions increase costs or revenue and can destroy the shareholder value. Some mergers fail and confront challenges to integrate. The example of Exxon and Mobile highlights the involvement of shareholders and the execution of plans by focusing on the client’s success(ABEDIN and DAVIES, 2007). The outdated strategic plan is linked to inadequate execution and planning. In some instances, if executive leadership is not experienced, the mismatch in integration planning occurs.

M&A projects identify significant execution factors that can contribute to success and failures. Planning and execution are key steps for mergers to take over a crucial development stage and maximize their potential for success (Souply-Pierard& Robert, 2017). Researchers have found out that through mergers and acquisitions, capabilities are improved, and a smoother integration is acquired. These success factors for firms are significant to classify in two stages, first is the front end, and the second is integration. Execution, in this way, gives rise to corporate leadership, planning and facilitates stakeholder team through learning mechanisms.


Mergers and acquisitions significantly impact organizations and bring changes in ideology and ownership. Strategic activities and cultural cohesion play a significant role in bringing harmony in the organization. The forward-thinking approach in M&A captures core competencies, organizational skills, and knowledge base. The strategic assets enhance collaborative leadership and talent retention for the organization. Cultural values and traits are important to analyze in different workplaces. The cultural traits are easy to identify due to social group diversity. The depth of cultural influences defines discipline, beliefs, and innovation. Cultural cohesion acts as the strategic asset for M& A that provides the internal weight of the organizational structure. This process develops cultural traits. These processes are linked to maintaining the integrity of the organization, so managers are required to be equipped to meet all organizational needs.

Mergers and acquisitions can be financial or strategic. The former allows expanding finance and bringing in the planning of the financial organization as well as product diversification. The expansion into new facilities defines new horizons and product development perspectives. Through offering credibility to the organization, it appears with the power balance in the market. This report about mergers and acquisitions discussed the extensive scope of their benefits, success, and motives for profit.

The report described key successes and failures of mergers and acquisitions with the appropriate motivations. Companies are engaged in M&A under a broader scope of activities that acquire success possibility. With the discussion of profit-based motives, the acquisitions work on the basis of different objectives. Motivations are illustrated in this paper that provides success criteria for the firms under two main objectives. This aspect is explained in this paper by improvement in financial performance and the maintenance of national interest. This report has examined market revenue, operational motivation, the economy of scale, and rationalization of cost. The diversification, resource acquisition, and vertical integration are discussed under extensive real-life examples. In light of significant evidence, it is discussed that motivation is not only significant to determine the success and failure of M&A. This report has discussed the strategic plan, its implementation, timing & execution under certain dimensions such as vertical/horizontal, relatedness, and APP pricing. The extensive review of different literary studies provided that M&A works more significantly under significant managerial experience with due diligence. The discussion of M&A has also yielded a broader scope of success factors such as strategy, expertise, and diligence. Cost and revenue synergies are focused on M&A strategies to improve functionality. In the realm of advanced technology, successful strategic rationales are considered appropriate to generate good ideas.

The current discussion in this paper has fulfilled the objective of this research, and it is inferred that reducing costs, improving organizational structure, and acquiring expertise for any organization is important to understand. Today, the growth of mergers and acquisitions is also associated with negative consequences. Companies invest a huge amount in acquiring expertise, and understanding of key factors play a stronger role in the success of mergers.


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Trade is one of the oldest forms of business in the human world and has taken place worldwide, not only between neighbouring countries but also across the globe. Many pathways have been specially curated to ease the trade of goods and services between many nations and countries. One of the major routes is the Suez Canal, constructed by the British and the French in 1869. However, the question to assess Trade comes to mind as many environmentalists point out the hazards of Trade and the negative effect it might have on the environment. On the other hand, many also claim that Trade is actually more beneficial for the environment than otherwise. In effect, it can be said that Trade has both negative and positive effects on the environment.

Positive Impact of Trade on the Environment

The relationship between the Trade and the environment is a strong one that goes together hand-in-hand. The environmental impact of “trade liberalization” has been divided into many types, including the scale, technique, and composition affect—the liberation of trade results in the expansion of economic activity and growth.

The Scale Effect

The scale effect suggests that it must be recognized that the balance between maintaining economic welfare and keeping pollution levels low is a hard one to maintain.  In simple words, “if the scale effect dominates technology and composition effects and if externalities are not internalized, economic growth will always be harmful to the environment” (Stoessel).

Trade and national incomes are also very closely linked; as trade increases, national incomes also see a rise. This, in

turn leads to improvement in environmental aspects and quality of the surroundings (Grossman & Krueger, 1993; Copeland and Taylor, 2004).

The complex nature of the number of positives and negatives of Trade reminds us that Trade does not entirely lead to causing harm to the environment (Copeland and Taylor, 2004).

Keeping in mind the nuanced nature of the debate, it is very difficult and perhaps unfair to come up with a conclusively decisive answer.

The Environmental Kuznets Curve (EKC) helps explain the phenomenon that “raising incomes per capita are not linearly correlated with environmental deterioration. Rather, pollution increases in its early development stages until it reaches a turning point, and then declines since concern with environmental quality increases and long-term issues start to prevail” (Stoessel, 2001Copeland, 2005Copland and Gulati, 2006).

The Technique Effect

Many academics and researchers agree that 75% of technological advancements have been due to Trade. This model suggests, “New technology is thought to benefit the environment if pollution per output is reduced. Furthermore, if the scale of the economy and the mix of goods produced are held constant, a reduction in the emission intensity results in a decline in pollution. Hence, the technique effect is thought to have a positive impact on the environment.” (Stoessel, 2001Mathys, 2002).

The Composition Effect

This model propagates that “Trade based on comparative advantage results in countries specializing in the production and trade of those goods that the country is relatively efficient at producing. If comparative advantage lies in lax environmental regulations, developing countries will benefit, and environmental damage might result. If instead, factor endowments (e.g., labor or capital) are the source of comparative advantage, the effects on the environment are not straightforward. Therefore, the impact of the composition effect of Trade on the environment is ambiguous.” (Mathys, 2002Stoessel, 2001).

Economic Growth

Trade with other countries can lead to growth on two levels, one for the trading partners, and the second for the indirect stakeholder countries that will be affected in the long term. Moreover, Trade, by pushing forward economic growth, has the capacity to lead to societal progress. This may be because development will be taken place as a result of an economic boom that will contribute to increasing the environmental capacity for efficiency. Further, the economic boom may also lead to advancement in research and development that will directly impact local and international production operatives and may discourage the use of dangerous substances in the field of production.

Environmental policies

Another positive aspect of trade and commerce is that the process can result in the development of the objective of manufacturing and adopting pragmatic environmental policies and legal standings. This is so because the introduction of a country in international Trade exposes its trading sector to the other country’s trading sector and the involved checks and balances included in the exchange of Trade make the countries involved to better their trading policies and to integrate acceptable environmental policies that may contribute to the positive image building of the country in the international community. Hence the changes introduced in the supply chains and the associated trading sector enhances the importance given to the environment and makes Trade beneficial for it. This is essentially what Rose and Rankel (2005) suggest in their “Gains from Trade” Hypothesis that was a built upon the ideals and teachings of Adam Smith and David Ricardo whereby as per Smith, “the gains from trade arise from the advantages of division of labor and specialization—both at the national and international level.” Also, according to Ricardo, trade contributes “to increase the mass of commodities, and therefore, the sum of enjoyments…”.

Many people who are supportive of trade purport that trade boycotts and restrictions are in actuality, not helping to the improvement of the environment. Many international bodies and communities have recognized this argument and have united to improve Trade in an efficient manner. For instance, the formation of World Trade Organization (WTO) in 1995 has tried to bridge the gulf between these two discrepancies. WTO constantly works to propagate green economy and sustainable development; it has also introduced many policies to protect the environment. It is mentioned on the WTO website that “In the WTO, the Committee on Trade and Environment started its work on environmental reviews in 1996 under Item 2 Environmental protection and the trading system of its work program.

In 2001, the importance of environmental reviews in WTO trade negotiations was confirmed in paragraph 6 of the Doha Declaration. This reads We take note of the efforts by Members to conduct national environmental assessments of trade policies on a voluntary basis.

In Paragraph 33 of the Doha Ministerial Declaration Ministers “encourage that expertise and experience be shared with Members wishing to perform environmental reviews at the national level.” The continued work in the committee is based on this.

The importance of reviews was also confirmed in the Johannesburg World Summit on Sustainable Development’s Plan of Implementation of 2002.”

The Doha Declaration is testament to the fact that WTO is determined to ensure that Trade does not cause environmental destruction but rather propels the development of the environment with the help of Trade.


Negative Impact of Trade on the Environment

However, trading with other nations also posits many potential dangers.

Growth may lead to Pollution

One of the major negatives of Trade may be the resulting pollution due to the excessive degrading of resources used as power to make Trade possible. There is also a direct impact on climate change that results from Trade. The process of trading with countries far away from the home country may lead to intense weather changes and the severe changes in the content of the sea. Maritime transport is particularly harmful in some cases. It accounts for about 80% of the total international Trade and the chance of oil spills increased because of this high number.


Reports from International Tanker Owners Pollution Federation Ltd (ITOPF) suggest that

“between 1970 and 2016 approximately 5.73 million tonnes of oil were lost as a result of tanker incidents As single large incidents can be responsible for a huge share of all the oil spilled in a given year, it is advisable to look at trends or decade averages. Over these 43 years, the annual quantity of oil spilled decreased hugely. In the 21st century the quantity of spilled oil was smaller than in several single years in earlier decades. 2012 saw the lowest oil spillage on record so far: 1000 tonnes were spilled. The development can be seen in the following visualization.

Since reports on small (<7 tonnes) oil spills are less reliable only medium-sized and large oil spills are included in these estimates. These are the oil spills presented in the chart before (above).”

Oil spills have been known to cause extremely harmful environmental problems such as damaging the ecosystems and natural habitat found in beaches, ocean and seas that may affect birds, marine mammals, fish, and many more. Long term impacts of the oil spills are flabbergasting and intense. For instance, the short term impact on the sea turtles includes their difficulty in reaching the seashore, but the long term impact may include their eggs failing to develop properly in the oily field or platform and leading to a substantial decrease in the quality and quantity of the species.

Oil spills may also have deadly consequences for a larger marine community. Oil spills are known to repeatedly kill marine life including dolphins, whales, sea otters and many more. The oil property of blocking breathing regions of sea life is a significant factor in leading to the death of these mammals. Oil can completely or partially disrupt can the blowholes of the larger mammals that might hinder their breathing. Other than that, oil coats on animals can also lead to several harmful internal and external diseases such as hypothermia.

An example of the far-reaching impact of the oil spills is the Exxon Valdez oil spill that lead to the death of about more than 2500 sea otters, about 300 harbor seals, and approximately 22 killer whales. That is just the momentary and visible cost of the oil spill. An extensive team of scientists later carried out a longitudinal study of the affected region and found that the effects of the spill could be felt even years after the spill. These consequences included the increased death rate and extremely stunted growth. It is after thirty-five years of the disaster that the team found that the Prince William Sound ecosystem finally smelled of being on the path of recovery and other apparent effects on many animals such as the sea otters seemed to have disappeared as well.

It is also important to note that related carbon emissions are also closely linked with Trade as according to a survey in 2015, the transportation sector combined which is the largest contributor of providing Trade and making it a possibility in the first place, amounts to about 18% of the total carbon emissions.

Those who oppose the concept of globalization point out that Trade is harmful to the environment on a global scale. These people usually believe that “in open economies a race to the bottom in environmental standards will result from governments’ fears that enhanced environmental regulation will hurt their international competitiveness, the result is a race to the bottom in environmental standards.”

Jeffery Frankel and Andrew Rose Study – A Fall to the Top

The Research Associates at NBER, Jeffrey Frankel and Andrew Rose, studied the consequences of the prevalence of Trade in 1995 in a positivist analysis. Their findings included that “the impact of Trade on at least three kinds of air pollution appears to be, if anything, beneficial, not adverse, for a given level of income. Openness, measured as the ratio of Trade to income, appears to reduce air pollution. The level of statistical significance is high for Sulfur Dioxide (SO2), and moderate for Particulate Matter and Nitrogen Oxides (NOx)”.

However, it must be kept in mind that correlation does not equal causation. The apparent linkage of the two, between pollution and Trade, could have arisen from someplace else. There is a high chance that the places or countries that have more implementation of democracy might be more inclined towards Trade and may be more concerned with improving environmental facilities and policies. Moreover, there is also another postulation that higher levels of national income might be liked with Trade and environment in more than one way.

This study tested the causality between the concept of Trade and how the environment is linked with it. It does so by keeping the income level constant and under control while testing the outcome of free Trade on the environment. Later the researchers focus on exogenous factors such as distance, other geographical aspects, scales of growth, investment, education, and population.

These researchers also make use of the “Environmental Kuznets Curve” to measure the three aspects of air pollution. This concept, as explained in their study, suggests that “growth harms the environment at low levels of income, but helps at high levels. At higher levels of income per capita, growth stimulates the public’s demand for improving environmental quality, which in democratic societies is brought about through environmental regulation.” The researchers postulated that “SO2 pollution, for example, peaks at income levels of about $5,770 per capita, and thereafter starts to decline.” This analysis is in-line with many economic teachings that put forward that growth leads to many different types of pollution, such as air and water, especially when the region is going through industrialization. However, this gradually and ultimately leads to a reduction in pollution since with the passage of time, countries involved gain a stronger economic standing and become self-sufficient to clean up the pollution they create. It can be said that where the technology involved in Trade leads to pollution, it also leads to an increase in the income levels that ultimately aids in leading to an increased demand in environmental quality that places a force on the supply side to make positive changes in the environment.

The study of Frankel and Rose conclude that it is after a fall in environmental conditions that a change is observed in the environmental patterns and the environment starts to see an improvement. This entails that in the short run, Trade may deteriorate the environment to an extent, but in the long run, it actually benefits the environment by improving the conditions.

Conclusively, it can be seen that the impact trade has on the environment is multifaceted. There are many positive outcomes and many negative consequences of Trade on the environment. Some positive results include the models of the scale effect, the technique effect and the composition effect; moreover, the economic growth and the improvement in environmental policies. Trade also has some seriously dangerous consequences that include the overbearing cost of pollution. Pollution of different types is caused by many surrounding aspects of Trade. For instance the transport burden leads to the emission of harmful carbon emissions. A major threat is posed to marine life because much of the Trade is carried out using ships and cruises via seas and ocean routes and there are serious cases of oil spills whose consequences may last for decades. Lastly, the study by Jeffrey Frankel and Andrew Rose serves as a bridge between these two opposing beliefs. Their findings postulate that Trade initially will result in environmental harm but, in the long run, can actually improve the environment. 


World Trade Organization,

Nicolas Korves, Inmaculada M. Zarzoso, Anca M. Voicu, (2011) “Is Free Trade Good or Bad For the Environment? New Empirical Evidence,”, September 9th, 2011

Shruti, “The Gains from Trade (An Overview),”

“Is Trade Good or Bad for the Environment?”,, May 28th, 2020

Larry West, (2020) “5 Environmental Consequences of Oil Spills”,, February 4th, 2020





It is important to understand the role of value underperformance differentials and inter-firm competition. Value creation in relation to technology and product functionality gives an understanding of technological capabilities. Research has contributed to increasing knowledge about value creation under performance improvement. This mechanism highlights the cultural significance of the strategy to differentiate products (Tohidi, 2012). Research demonstrates wide principles regarding multiple disciplines such as cultural sociology, anthropology, technical performance, and cultural terms (Thai & Anh, 2016).

The strategy scholars highlight the meaning of the product and its relation to the differentiation source. Strategy research also identifies religious values under wide-reaching social institutes. The scope of culture and society is expanded with the expansion of sociology research (Ives & Kidwell, 2019). The social influence of religion is clear from society because it aligns and modifies social values. The current study is about investigating the role of culture/religion in influencing value. It will elaborate on literary studies with the relation of societal values and religious influence.

Literature Review

One of the possible determinants is a culture that is widely acknowledged to show decision making power. This activity demonstrates the cultural background of companies under specific motivation, attributes, and entrepreneurial orientation (Mã­guez). It is discussed in studies that people from different cultures capture different opportunities under particular tactics. Cultural differences work to shape ventures as a value creation process. The disruptive markets show a process of complete markets where some resources established businesses (Gupta, 2019). Digital disruptors in specific industries allow for improvements in products and services. Literature about entrepreneurship discusses the influence of culture on business motivation. Studies have revealed that cultural factors are important to highlight key differences in the organizational framework (Ives & Kidwell, 2019).

Culture is an influential factor because it works significantly for organizations and modifies the structure. Multiple approaches work inherently for the creation of a business environment because it is the role of culture that describes structural implementation (Tohidi, 2012). Some business models at the conceptual level illustrate the organizational background and corporate culture as they are influenced by societal values. A significant influence of religion is also seen in wide social institutes that appear through different societies and cultural spheres. The scope of culture and its relation to societal settings escribe clear evidence of the influential perspectives. The ubiquity of social influence is clear from the regional diversification.

Religion is primarily based on diverse values, beliefs, and practices that are helpful to modify the transnational movement. The research studies describe religion as a set of values that show peculiar decision making and establish a belief in culture (Gupta, 2019).

With the diverse array of structure and cultural significance, it is seen that institutionalized teaching has played a powerful role in the elaborate significance of religious systems. For some cultural practices, an embedded approach is discussed to express values and their meaningful approaches. Through various literary aspects, it is clear that religion plays a crucial role in shaping societal values so to create value. The concept of social values is related to the sustainability of society. It is all linked to the cultural understanding of future based aspects that work inherently to shift the traditional practices (BENTONVILLE, 2017). Research studies have focused on many perspectives of social and religious values that show transition when applied to society. This transition elaborates on the fundamental shift in growth centered society, where it appears important to discuss for human-based society.

If the cultural significance is focused on products, it is important to focus on the central insights of cultural anthropology—the collective understanding of the functionality of the product and its recognition of different descriptive kinds of consumer cultural beliefs. The cultural perspective is different when viewed in terms of sociologists’ perception because these scholars have related multiple theories to culture. The discussion of social value and the concept of value creation is linked to multiple business opportunities (Thai & Anh, 2016). In this way, it is crucial to highlight the required resources, expertise, and enterprise role. The enterprise’s creation is also valued significantly when it comes to discussing organizations.

The scope of entrepreneur creation is to assemble interdependent activities and create a logical sequence that develops some outcomes (Gupta, 2019). With the help of the value creation process, case-specific identity is made that works in multiple stages, for instance, when it comes to evaluating multiple business ideas that are feasible (Kang, 2019). In this regard, opportunity recognition plays a crucial role since it is linked to start a new project. The prospective entrepreneurs define the structural significance of the product and its linkage with value. The business opportunities are identified when there is a sophisticated need to work on values, either religious or societal (Ghazali et al., 2016). In successful organizations, the role of culture is rational, and value cannot be attained without culture. Value creation is attributable to employees, customers, and investors because these groups are linked inextricably.

Problem Statement

Culture works most significantly in terms of organizational structural alignment and creating value. In some instances, where it is difficult to know about value creation about social values and religious values, it is important to identify the structure of the workplace and prevailing factors that are contributing to value or outcomes (Ghazali et al., 2016). This paper discusses some significant roles of culture and religious values in creating value. Corporate culture creates value for the organization’s development. It works to produce better goals of management and improves the financial performance of the firm. The scope of religious and cultural values is extensive because it prevails in many perspectives.

Research Question and Objectives

The research question of this study is how culture/ religions play a major role in creating value?

The study is important to identify how influential culture is:

  • To prove a successful work environment, and
  • To identify the process of value creation.

Case Study and Methods

The study involves a qualitative analysis of Walmart as a retail Distribution Company to understand the components of value creation. When a company engages with fast and rapid production methods, it tends to generate value. The process of value creation is not simple because it involves key integral cultural factors that play a crucial role in determining the success ratio. In this way, the scope of the workplace, employee participation, and, most importantly, the culture of the company plays an inherent role (Thai & Anh, 2016). The value of culture and religion is significant, yet needs examples to understand. The case study selected for this paper is Walmart Retail Company. Walmart is the corporate leader in managing culture and creating value.

The role of retailor in encompassing social and environmental system is based on transparency and trust. Through the positive mechanism of the workplace, enhanced productivity, and improved collaboration of employees have shown a key contribution in value creation (BENTONVILLE, 2017). The value-maximizing strategy employed by Walmart has shared its value with society, business, and its customers. The scope of work under aspirational goals is defined through the vision and approach of the company, and this aspect is evolving continuously. The sustainability, the opportunity is inherent in the community because they have shown a clear direction for the shared value, so involved true integration (Ghazali et al., 2016).

Retail supply chains are working on intense competition lines while Walmart has used increasing economic opportunity framework to support the community. It has addressed challenges that were impeding the career advancement of its employees (Asaael, 2019). The scope of Walmart’s profit in 2017 is based on investment because of huge investment in education; training has generated higher wages, so contributed to the value creation. This structural significance of Walmart Retail strategy is key to consider the role of social values and its influence on the value creation (BENTONVILLE, 2017).

Social values also played a major role in accelerating frontline mobility of jobs beyond the company. Due to sector-wide efforts, the company has made it easy to strengthen the skills transferability in the US (Thai & Anh, 2016). Research has indicated that Walmart has invested greater than $59 million to train its employees, educate them, and build educational institutions (Gupta, 2019). Walmart has invested in American jobs and supported many small, local, and diverse businesses thus highlighted the role of value creation.

Research Findings

Walmart Retail Company has multiple ventures, and its scope of operations is large. This extensive framework is not limited to the prevailing culture but also societal values as well as innovation. Many research studies have indicated that how value creation is carried out within regional diversity. The framework of value creation under Walmart has enhanced operations sustainability as well as the significance of the value chain. The concept of corporate culture is important to understand in large organizations because they work internally and transform the structure of organizations.

Walmart’s case study has highlighted that employee commitment is a strong component that contributes to value creation. Through the concept of value creation, it is recognized that better performance can be attained by improving the culture and structure of the organization. It not only contributes to the financial gain but also engages employees in the longer term. Culture is not a single entity that works to change the existing pattern, but it depends on the continuity and existence of core values. The success of the company is attributable to the right culture and the prevalence of strong values. It is a form of glue that keeps the organizational part together and guides all the decisions. The culture contributes to value, and in a society, it declares positive power for decision-making aspects.

There is a significant contribution of employees in Walmart because improving corporate culture brings innovation. This innovation is likely to enhance productivity and fulfills the mission of the organization (Gupta, 2019). This core way starts with trust and integrity. Corporate culture in Walmart has been proved a powerful factor for the long term success of a company. The significant part of strategy making is also positively related to the culture (Asaael, 2019). Value creation is a process that undertakes a set of values to modify the overall behavior of the organization. Walmart has contributed to the sustainable value chains, so it has set goals for the sustainability index. The case study highlights that retail brand is working under leadership to get a defined direction for long term profitability. In other words, this is a positive sign to contribute to value creation. Social qualities additionally assumed a significant job in quickening cutting edge versatility of occupations past the organization. Because of area wide endeavors, the organization has made it simple to reinforce the abilities transferability and to acknowledge the key framework that attributes value creation.

Conclusion and Future Research

The research study has explored the complex impact of values, i.e., social on value creation. The study has indicated the role of social values in the context of value creation and discussed the role of contributory studies. It is safe to say that consistent trends change the dimensions of value creation. It is also important to discuss that social and political aspects work differently to understand value creation. There are different ways to discuss the concept of value creation, yet for the case study of Walmart, it is inferred that corporate culture plays an inherent role in creating values. In societal matters, value is created when relevant factors are considered. The literary studies have answered the research question of this study because values are recognized in societal norms, and social practices play a considerable role in understanding shared value. The creation of value is linked to marketing and customer satisfaction in some perspectives.

Limitations of the study exist because of its limited scope to discuss social/religious influence to create values. The business philosophy is extensive, but there is the future scope for this research because it only explains limited variables, and their context is limited.


Thai, M.T.T. & Anh, N.H., 2016. The impact of culture on the creation of enterprises. J. for International Business and Entrepreneurship Development, 9(1), p.1.

Ghazali, N., Bakar, N. & Din, N., 2016. The relationship between servicescape towards consumers’ perceptions on food truck concept. Heritage, Culture and Society, pp.203–206.

Kang, S., Leadership, organizational culture, knowledge productivity and value creation in four scuccessful Korean companies.

Asaael, M., 2019. Without Team Identification, Diversity Fails.

Gupta, N., 2019. Influence of demographic variables on synchronisation between customer satisfaction and retail banking channels for customers’ of public sector banks of India. International Journal of Electronic Banking, 1(3), p.206.

Tohidi, H., 2012. Assessing the impact of organizational learning capability on firm innovation. African Journal of Business Management, 6(12).

Ives, C.D. & Kidwell, J., 2019. Religion and social values for sustainability. Sustainability Science, 14(5), pp.1355–1362.

Mã­guez, N.S.O., The Theological Value of Social Class Analysis and Other Social Distinctions. Religion, Theology, and Class.

BENTONVILLE, W., 2017. Walmart Highlights Progress in Creating Shared Value. Available at:




Portfolio Section 1: Article Review

Due to expansion into global markets, businesses tend to focus more on understanding different cultures now than ever before. The Hofstede model, which focuses on the cultural dimensions for understanding cultures, can be used for strategizing the best advertising campaign for specific cultures (Hofstede, 2010). The article “The Hofstede model” seeks to analyze the Hofstede dimensional model of national culture and applies the concepts of image, identity, personality, and self to branding strategy across cultures. Furthermore, cultural dimensions related to advertising have also been used for understanding the manifestations of values across cultures (Hofstede, 2010). The literature on cultural models reveals that these models tend to have fundamental value differences with respect to countries, level of analysis, number of dimensions, and subjects. The Hofstede model, on the other hand, distinguishes the different cultures according to five specific dimensions that are consistent with all the cultures. These dimensions include power distance, masculinity/femininity individualism/ collectivism, uncertainty avoidance, and collectivism/ individualism. This model provides each dimension for 76 countries (Hofstede, 2010).

Hofstede states that when it comes to branding and advertising across cultures, the impact of culture should be used as the basis of analysis for measuring the stance of individual respondents (Hofstede, 2010). This means that applying the Hofstede model, which originally was constructed to answer the work-related value differences, to advertising and branding can be done by incorporating and contextually interpreting the manifestations of the cultural values in five dimensions (Hofstede, 2010). For example, according to Hofstede’s cultural dimensions’ theory, the cultural dimensions can be used to understand the power distance in the management in Saudi businesses. Saudi Arabia has a high score of 95 in the dimension of power distance, which is the extent to which the subordinates accept the hierarchy and power of their superiors, which might be distributed unequally.

The dimension of power distance that describes the relationship between subordinates and bosses can be interpreted in the context of advertising as well. The luxury brand, Anoosh, is a status symbol in Saudi Arabia, which is a high power distance culture (Hofstede, 2010). This creates a power dynamic in which those at the top of the hierarchy are targeted by the brand with the product offering of the custom made chocolate products having finest ingredients such as hazelnut, cashews, Almonds, Fruits, Dates, etc. which are imported from Belgium, Lebanon, and Switzerland. The points mentioned within this article happen to be useful for my portfolio analysis of Anoosh company because Hofstede Model is related to the dimensions that I will be incorporating while analyzing the advertising and business practices of the company. While analyzing the content of Anoosh’s advertising campaign, it can be noted that it is a reflection of collectivism. Thus the point mentioned within the article regarding contextually interpreting the manifestations of the values of the five dimensions will be used for the analysis of Anoosh’s advertising campaign for National Cookie Day in Saudi Arabia.

Portfolio Selection 2: Report on Anoosh

1.      Introduction

The company selected for this report is the luxury chocolate brand, Anoosh, which is a distributor of premium chocolates, famous for its finest ingredients such as hazelnut, cashews, Almonds, Fruits, Dates, etc. which are imported from Belgium, Lebanon and Switzerland. This chain of gourmet chocolate shops initiated its brand in Saudi Arabia in 2003. Currently, the company has over thirty-five shops in seven different cities in the country.

The particular features of the business which will be assessed in this report in terms of intercultural awareness include the company’s advertising strategy and management practices. The cross-cultural theories that will be used for these contexts include Hofstede’s cultural dimensions theory and Hall’s theory of High/ Low Context. The cultural dimension framework provided by the celebrated cultural theorist, Hofstede, can be used for understanding the differences across countries in terms of culture. Halls’s theory of High/ Low context points out how individuals in different cultures communicate according to theory own cultural background.

2.    Observations

In their campaign on National Cookie Day, Anoosh used indirect communication to target their competitor, “Golden Brown,” a cookie and pastries bakery in Saudi Arabia. Anoosh targeted the weak point of the marketing strategies of its competitor in such a way that the meaning of the advertisement cannot be understood without knowledge of background or context and relies on implicit communication. This is because Saudi Arabia is a High Context Culture where the purpose of communication is to forge relationships.

In a high context culture, communication relies heavily on different communicative cues without using direct words (Halverson, 1993). According to Hall’s theory, communication in a high-context culture is done through nonverbal and indirect communication, which has a significant meaning. For example, Anoosh uses the verbal message in its campaigns in an indirect way, which talks around the point of targeting or focusing on the weakness of its competitor rather than focusing on it directly.

In the case of the campaign by Anoosh, the company targets the competitor’s marketing strategy of using social media influences for promoting their brand. For example, in the advertisement on National Cookie Day, a pink-haired influencer can be seen eating a cookie by Anoosh along with a statement, “There’s a cookie you promote, and a cookie you eat!” which is an indirect way of telling the masses that influences promote the brand of the competitors but are inclined to eat the delicious cookies by Anoosh.

Figure 1Anoosh’s Campaign on National Cookie Day


While analyzing the content of Anoosh’s advertising campaign, it can be noted that the campaign is a reflection of collectivism. The campaign video for Anoosh on the National Cookie Day depicts families enjoying cookies and rejoicing in the rich taste of the custom made cookies. According to Hofstede’s dimensions, Saudi Arabia’s score for individualism is only 25 which means that the society is collectivistic. This shows that members of the society manifest values relating to long-term commitments.

Hofstede’s cultural dimensions can be used to understand the power distance in the management in Saudi businesses. Saudi Arabia has a high score of 95 in the dimension of power distance, which is the extent to which the subordinates accept the hierarchy and power of their superiors which might be distributed unequally. The employees in Saudi Arabia are mostly migrant workers from countries such as India or Asia and tend to accept the inherent inequalities that come with working in a centralized environment where subordinates expect to be told what must be done by their superiors (Cassell, 2012).

3.    Intercultural Awareness.

3.1 Low-context and High-context

It can be observed that some individuals convey their messages through direct written or verbal communication while some cultures use indirect method of communication in which nonverbal means are used (Nam, 2015). Nam states that in countries like the Middle East, Asia, Latin America and Africa are high context cultures. High context culture uses nonverbal and indirect method is used for communication as the communication relies more on context. Thus in a high context culture, it is the responsibility of the listener to interpret the message hidden beneath the lines.

In case of Anoosh, the advertising campaign is the best example of indirect communication for a high context culture. Anoosh uses the verbal message in its campaigns in an indirect way which talks around the point of targeting or focusing on the weakness of its competitor rather than focusing on it directly. According to Hall, the low context cultures express their message through explicit and to the point method whether written or oral. Norway, Sweden, the United States, Canada and Germany are some of the countries that use business practices that follow the norms of low context culture in which communication is direct.

3.2 The Hofstede model

The Hofstede model, on the other hand, distinguishes the different cultures according to five specific dimensions that are consistent with all the cultures. These dimensions include power distance, masculinity/femininity individualism/ collectivism, uncertainty avoidance, and collectivism/ individualism (Hofstede, 2010). The luxury brand, Anoosh, is a status symbol in Saudi Arabia, a high power distance culture (Hofstede, 2010). This creates a power dynamic in which those at the top of the hierarchy are targeted by the brand.

My own cultural values have influenced my analysis in such a way that I easily understood the indirect message or nonverbal communication used within the advertising campaign. It would have been difficult to interpret by someone of different cultures. Furthermore, there is a lack of cultural awareness in Saudi Arabia regarding other cultures. For example, a special menu is introduced on Eid as well as in Ramadan, which is the Islamic events; however, no such items are added in non-Islamic holidays such as Easter or Christmas. Similarly, there are holidays observed at Anoosh for Eid; however, there are no holidays observed for Christmas or Easter.

4.    Conclusion and Recommendation

Anoosh is based in Saudi Arabia and has not expanded internationally, which explains why it lacks intercultural awareness. There are no holidays for non-Muslim minorities working at the company, and no new food items are introduced on these holidays as well. Anoosh can expand its cultural focus and target other nationalities by recognizing their religious events and celebrations, providing special food items, initiating social media campaigns, and targeting masses through social media influencers of different cultural backgrounds.


Cassell, M. A. (2012). Analysis Of Hofstede’s 5-D Model: The Implications Of Conducting Business In Saudi Arabia. International Journal of Management & Information Systems , 151-200.

Halverson, C. (1993). ‘Cultural-context Inventory: The Effects of Culture on Behavior and Work Style. In 1993 Annual: Developing Human Resources. Pfeiffer and Company.

Hofstede, G. (2010). The Hofstede model. International Journal of Advertising, 85-110.

Nam, K.-A. (2015). High-context and low-context communication. In The SAGE Encyclopedia of Intercultural Competence. Sage Publication.




The Case Study Highlights

‘In the Shadow of the City’ published in 1991 by Harvard Business School
highlight issues faced by leaders of social change and resolutions of it is dealt with in the project by a coordinator and the donors. The community development project involves many domains for considerations such as the culture and norms of the community. Similarly, the development requires a new perspective in living a life and participating “change” the city must adapt. The case brings forward the study of the development of three slum neighborhoods located on the fringes of Addis’s primary market. There are few highlighted summaries we must look into to bring up the critical study of the case.

Firstly, collecting donations for a large project that involves physical and mental activity by massive people require vast funding. Now the people who donate may not necessarily isolate themselves from the project. The organizations involved in the Integrated Holistic Approach Urban Development Project (IHAUDP) in Addis’s Ababa a capital city of Ethiopia, British government’s Overseas Development Administration (ODA), the UK based charities such a water Aid and Help the Aged, Bob Geldof’s Band-Aid and Reed Charity.

Secondly, we must refer to the political tension in the region, Ethiopia has been under the rule of aristocrat for many years, and new government offices are introduced. It means the decentralization of the political decisions may lead to the development of the weak areas of the country. The social-economical pressure, such as massive corruption among senior officials, increasing the prices of essential commodities, and it leads us to understand the fundamental economic problem of scarcity of resources. That means, even though there is labour resource available, other resources such as raw material which must be costly because of famine during the last years. Production is lower because of poverty, and people are becoming weaker because there are no jobs available in the factories. This is rather a vicious cycle of small production and poverty in the country. The economic problem is connected with social issues such as hygiene. When we talk about the community as a whole, we have to understand their norms as well. The social security system was invisible from the region. It lacked a basic understanding of health, housing, and community. The community gives little to no value to vaccination to children to prevent them from catching viruses. They live in unsanitary, condemned houses and their mothers are uneducated, alone, and cannot earn enough for family. Again, the vicious cycle is ongoing.

One may point out the norm, such as having latrine besides kitchen lack the primary health education. The community seems to be in dire need of awareness of basic living standards. In the story of Tesfaye in the case, an example might help us highlight the intensity of the issue.

Finally, we have to understand how the previous projects have been in the city, and were they successful? One successful project was in Kebele 41. Jember Teferra was a project officer. The approach was basically to develop the community through a bottom-top approach. It means they are going to address the issues of the city, and development would be considering their problems. It involved the community in specifying their needs and planning how the funds would be used in the project.

In short, the new project is being planned, and Alec Reed is donating significant funding of the project along with other donors. Jember has prepared documentation and submitted a 1000000-pound proposal for a project to develop three kebeles over two years. The plan includes replacing housing and developing communities through various projects.

Discussion and Identify problems

There are few problems in organizing, planning, and funding the project. The case underlines the major donor Alec Reed, and He is an excellent businessman in the UK having 200 agencies. He describes himself demanding at work. Jember Teferra having done graduation in community development. To work on her master’s thesis, she reached out to Alec Reed to work on the project. The working relationship raised many questions on both sides. Here are a few identifiable problems from the case. The probable solution based on concepts will be given later after identifying the issues.

Firstly, communication errors between working partners. In the first meeting, Jember said that she wants to raise enough money for the poor. The answer to it by Alec was that he does not believe in Jember to pull off five time’s bigger projects. In these two dialogues, it can be observed the communication error between parties.

Secondly, the problem of expectation of the process of the project. Alec sees it as a project which one can carry out very quickly in a given period. It neglects the probable problems such as political issues and social norms prevention community development. He sees it as a business project which must be done in a said time using the defined budget. In the first meeting, Alec said that this is a business project and must be carried out efficiently.

Thirdly, another problem is to identify who is leading the project. Alec has funded it and needs the weekly account of the progress of the project. The problem is project need focus and if it is regulated strictly based on development such as several houses made or community projects carried out. It misses the point where building houses will be burdensome at the time due to socio-economic problems.  In case Jember is leading a project, she has to be accountable to all the stakeholders of the project. After having spent 500000 pounds to date, she must deliver at least some parts of expectations.

Finally, the approach to solving a problem seems one-sided. Jember wants the Bottom-top approach, whereas Alec appears to have a Top-Bottom approach, which is common in Business projects. The problem with the current strategy is, Jember is too focused on the issues of the community, including small matters. Jember’s perception of the disagreement underlines her focus that is, the purpose of the population want, being involved in the planning, which is the core of the holistic approach. Similarly, Alec’s perception of disagreement was that he had not seen any development in the area where 500000 pounds is spent. We can purpose a few possible solutions based on the three concepts.

1. Leading social change organizations

The people who have the vision of changing the society and bringing change in the area, they are social change leader to have thought of doing so. However, they become a leader when they implement and execute what they have thought of. To bring the change in the society, they have to understand the area, their history, and social norms and limitedness of their awareness of the dire need of replacement. Some studies highlight the areas which social change leaders must work on to get the most from the collaborative work.There are five areas in which Jember has to work on. Firstly, advancing a relational leadership perspective to explore connectedness. There are two ways of approaching the role of relationships; the first one is known as ‘the entity approach to leadership. It examines the relationship-oriented behavioral styles such as consideration, and relationship-oriented leadership behaviors based on high-quality, trusting work relationships’. The theories focus on relationship-based leadership, which can be strengthened among different stakeholders. The second is ‘the constructionist approach’ which perceives leadership as the outcome of human social constructions emerging from the rich connections and the interdependencies of organizations and their members.

The study of 40 organizations in the US shows the five leadership practices which bring diverse stakeholder together in a collaborative work environment. The five methods are ‘prompting cognitive shifts; naming and shaping identity; engaging dialogue about difference; creating equitable governance mechanisms, and weaving multiple worlds together through interpersonal relationships’. It is also important to minimize power inequalities and recognition of the strategic value of ‘difference’. Alec Reed and Jember would have to name and shape identity to shift the cognitive network of how they see it as a project. It includes how particular issues are understood among these two major stakeholders. It also involves having an excellent conversation between stakeholders to make communication clear.

The cognitive shift means changing the mental model. It means to change the audience’s view of the process of the organizational work. The method of building bridges includes listening to other parties and improving interpersonal relations. Alec Reed may need to understand the concept of ‘from another problem to our problem’. As we have identified in the problems section, he sees it as a business to solve the problem. It means that their challenge of how they are living, one can provide them with housing, and thinking that work is done then it is a problem. The building approach of any leader of social change is first to understand that their problem is our problem. It is then that one knows the struggles they are going through.

Similarly, the concept of naming and shaping identity is a significant process of social change. Identity is a core element to bring stakeholders such as gender or race. In the case study, Alec Reed and Jember will have to understand the need for creating a similar identity. Such as they both somehow relate to the culture of Ethiopia, which means they can increase interpersonal relations. Celebrating identity may foster the community to connect to donors and the project managers. It includes activities, including festivals and sports that may help them relate to community development as a whole.

It is essential to bring forward a similar solution where different perspectives are taken seriously. The problem with the holistic approach seems that only two people are involved. The dialogue misses the needs and interest of community which need development. In the meetings, there was no person of society in the meeting present. If the person would have been and was given a chance to speak of interests and needs required, the donors would have understood the struggles Jember is facing. The heated conversation would have instead been an interactive session of progress.

The problem of different perspectives lies at ensuring different voices in the circle. It means no single person can alone represent various members of the ethnicity and community. Other members must come forward to showcase their issues to stakeholders, and relevant measures can be taken. It also includes recognizing the hard work of people involved in social change, including technicians to garbage pickers. Alec cannot see the job done in the area worth 500000 pounds. Whatever the work is done. He must address and recognize the value of it. It only improves and encourages the people who spent days and nights working on the projects. (Ospina & Foldy, 2010.) If I was to ask and mediate between Jember and Alec. I would suggest bringing forward the community member who is poor and old. He/she is going to tell the socio-economic problems, including political. It will change the perspective of Alec. And through dialogue, Jember would understand that she must speed up the work despite the struggles. It will endure development in the community as well.

  1. Multiple stakeholders and collaboration.

The second concept of multiple stakeholders led to an understanding of the recognition of different people directly or indirectly involved in the project. The research article penned down the term ‘Intergroup leadership’ to highlight the importance of the varying race, ethnicity, age, political party, and sexual orientation in today’s increasingly pluralistic, multicultural world. The intergroup leader confronts the challenges f diversity and brings various groups together in a positive relation. The social change leader must be an intergroup leader because the community development requires people from different backgrounds to come together and work on a singular mission of growth.

The different groups involved in the community development project such as different donors, construction workers, the people who would acquire the houses, and the managers must be encouraged to contact each other. This approach improves intergroup relations and improve positive regard for outgroups and decrease prejudice and stereotyping. It brings equal-status groups, common goals, intergroup cooperation, and recognizing the leader of the project. There are economic, legal, and ethical responsibilities in the community development each have their weight. If I have to put the priority list of the problems one must consider in solving the issues, It would be ethnical responsibilities. It means it will be ethical to bring forward the community members in the meetings and have a different perspective of change and development. (Pittinsky, Simon, 2007).


  1. The construct of leadership identity – from traits to trust. 

It focuses on defining the leadership identity, simply put it means to bring up the sense of themselves as to how they see themselves. The individual has to work under personal brands that transcend their organization. The leader is not outside of the whole process of the development but a part of the core team. The leader has to be authentic and engaged in every process of the project.

In the case of the project of Integrated Holistic approach, Jember seems to be an active person in charge of the project. She knows the smallest to most significant problems faced by different groups. However, she has not developed a personal brand to gain the trust of the donors. Which means she has to work on her identity that the world must see her. She works on the project, if she had done it under her name donors such as Alec Reed would have trusted her work.

The Trust as a trait vs Trust as an emergent state.

Traits are defined as a characteristic that is not influenced by the external environment and remains stable over time. It shows that this trait in an individual is static and not changing. However, another concept indicates that it is a new state which means that trust develops over time depending on contextual factors including cognitive, motivation, and affective states.

On the other side is another concept that is trusted as a process. This concept is different from others as it does emerge, but through the series of operations. For example, Alec may not trust Jember on the work done. It shows that he is hesitant over the job or the accountability of the money spent. It wants an immediate result. After the second meeting, Alec seems to trust Jember and continued to listen to her complaints and highlighted his own needs.

Conclusion and Recommendation

In conclusion, the case study has problems considering leadership, communication, and perception of others. The agenda of the stakeholders was different. The solution revolved around connection as the base of the leadership quality. Alec Reed and Jember would have to have a dialogue of differences with understanding and include the community members in the meeting to have a holistic understanding of the context of the project’s development. Learning from the case study, we may consider two recommendations that would help Jember and Alec to have communication without any hindrance.
Firstly, I would recommend to both the major stakeholders of the project to organize a meeting with community members. The reason for that is, as we have discussed above in identifying the problem of perception, to understand each other’s perspective they would have to
include the members of the community. Alec would be able to understand the struggles of the people such as a community member may mention that they have sewerage problems in their area. For that, the housing may not be the immediate solution. They would have to dig in the basements and setup the pipelines for sewerage to work properly. Alec would be able to understand problems atthe micro-level. For Jember, she may need to understand that being extremely involved in every other individual’s problem would not help everyone at the macro level. Rather than paying attention to each problem, she may perceive that working at a given deadline would help the community to build a sense of work at the organizational level.
Secondly, the accounts show that the proposal of budget and actual expenditure needed for physical upgrading. There seems to be a ‘huge’ difference between the proposals and actual needed of expenses. Jember would need to hire expert accountants to calculate the budget accurately. The reason for that is, the proposal suggested expected expenses on physical upgrading 2,766,408 Pounds whereas the actual expenses were 14,076,203 Pounds. The proposal would have pressurized the stakeholders at large to collect enough donations, whereas it shouldn’t be the case considering actual expenses. Therefore, it is recommended to hire experts.


Ospina, S., & Foldy, E., 2010. Building bridges from the margins: The work of leadership in social change organizations.
The Leadership Quarterly, 21(2): 292–307.

Pittinsky, T. L., &amp; Simon, S. 2007. “Intergroup Leadership.” The Leadership Quarterly, 18(6): 586–605

Burke, C. S., Sims, D. E., Lazzara, E. H., &amp; Salas, E. (2007). Trust in leadership: A multi-level review and integration. The leadership

quarterly,18(6), 606-632.

Sinclair, A. (2011). Being leaders: Identities and identity work in leadership. The Sage

Handbook ofLeadership. London: Sage, 508-517.



Executive Summary

This report aims to study the business model of Netflix and Blockbuster. We analyze why Blockbuster failed even though it has become a vast multinational business and the role Netflix played in the downfall of Blockbuster. Moreover, we also discuss the business model and strategy adopted by Netflix, which are responsible for the continued success it has earned over the years. Through our findings, we were able to conclude that the main reason for the decline of Blockbuster was it’s of lack innovation along with changes in culture and technology. Conversely, Netflix was successful because it has been innovative and disruptive from the start.


As technology progresses, business models that previously held value face complete downfall if they fail to upgrade their business strategy according to the demands of the consumers. Even future expectations need to be kept under close consideration while planning and executing the business strategy. Failure to do so has led some of the most prominent and well-established companies to the ground while others replaced them quite successfully. One such example is of Blockbuster, which was a CD/video rental service provider. During the 1980s and 1990s, it was all extremely in demand and hence, one of the top business models. But approaching, the mid-2000s, when Netflix was founded, Blockbuster got replaced effortlessly, and today it is no more than a historical entity in the world of business and movie lovers. Certain strategic failures led to the demise of Blockbuster and similarly, some strategic success which allowed Netflix to replace it and reach the top in the entertainment business. In this report, we will discuss the strategic model and paths taken by both Netflix and Blockbuster and analyse their differences which led to one’s success and the other’s fall.


Historical and cultural analysis of Blockbuster and Netflix and their path dependencies

Video rentals became common in the early 1980s. Soon in 1985, David Cooks opened the first blockbuster store. At the time, there was a lot of potential in this business venture. It was expected to spread rapidly like fire across America. Which is why investor Wayne Huizenga, who precepted the business to be nothing short of a sort of McDonald’s, decided to invest in and became the CEO. Blockbuster’s lifespan was almost the same as the lifespan of the industry of video renting. Down the lane, the company had other financial and competitive issues as well apart from Netflix. By 1993, Blockbuster had 3,600 stores across America, and by 1994, Huizenga sold the company to Viacom. Blockbuster was facing serious competition by 1995 by Hollywood video which wanted to make an even larger physical footprint than Blockbuster. This may be seen as the first hit Blockbuster took as the next year in 1996, the company issued its positive net income which was to be the last in the coming decade. Soon in 1998, Netflix launched its subscription service, but it hadn’t yet become the company’s serious competition as opposed to Walmart, Target and Best Buy, which had high DVD sales in 2003. By 2005 Blockbuster fails to overcome Hollywood Video and sales decline even though the company launched the online business a year before. Still, there was also late fee which was despised by most customers. After some other failures and hits, Blockbuster finally files for Chapter 11 Bankruptcy with hopes to reorganize and continue. Dish Network buys the company out of bankruptcy in 2011 but is forced to close down all of the company-owned stores in 2013 (Green, 2015). Other franchised stores close down as well with a single Blockbuster store left open in Bend, Oregon in 2019.

Netflix started in 1999. Their pricing model was entirely different. Instead of charging rent per movie, Netflix was offering monthly subscriptions where customers could pay a monthly fee and then rent as many movies as they wanted. Another perk unlike Blockbuster was that there was no prescribed return date for the movies, and hence, there was no issue of late fee nor was it used to generate revenue. However, to rent more movies, one had to return the previously held ones. Blockbuster did not cut back on late fee immediately, which cost it a lot of loyal customers and market share which Netflix took over (Halal, 2015).


Strategic position analysis

Blockbuster realized its mistakes too late. It decided to launch its online business in 2004, but it was still a lot behind Netflix. Moreover, it also decided to finish late fee, but that again caused a huge dent in the revenue for the company. At the same time, Viacom took its leave from Blockbuster further weakening, and to properly establish the online business, the company needed around 200 million dollars. With all this and Netflix on the rise, Blockbuster lost 75 per cent of its market value from 2003 to 2005. Soon after, it went bankrupt with all the stores closing let alone one in Bend, Oregon(Olito, 2020).

Blockbuster also tried to make the following changes. Blockbuster adopted a by-mail service which allowed customers to get CDs delivered to their homes. The company’s website also allowed customers to download and watch movies on their computers. Moreover, Blockbuster partnered software developers to make apps that customers could download on their mobiles. They also got into a joint venture with IBM to develop a unique distribution channel which would replace inventory with digital files (ACM, 1993).Moreover, they implemented a short-range scheduling model which eased shipping operations and made them efficient, and also reduced labour and transportation costs (Chung, Dawande, et al, 2011).Despite of all this, the company wasn’t able to withstand competition. The chief restructurer officer at Blockbuster gave five main reasons for the revenue decline of the company. “Increased competition in the media entertainment industry; technological advances that changed the landscape of the industry; changing consumer preferences; the rapid growth of disruptive new competitors; and the general economic environment” (David, Higgins, 2013).

Blockbuster was also drowning in debt which further led to bankruptcy. The competitors were using channels that were more attractive to consumer demands, and hence, they earned greater market shares and market value as well as replacing Blockbuster. There was also economic recession during 2009-2010 which further worsened the situation for Blockbuster. Unemployment was on the rise; thus, consumer spending had considerably decreased, which faired negatively for the business. As a result, the company had to reduce a lot of its administrative expenses and shut down a lot of underperforming stores. It was fighting a lot of financial problems in the meanwhile, Netflix expanded and loomed all over the business(David, Higgins, 2013).

Strategic choices

Ever since the beginning of Netflix in 1999, it has taken the right business moves, which have helped Netflix reach the place it has today. Started with DVD leasing services, then it moved on to streaming and finally became a global TV network. Netflix was able to recognise that streaming services are the “new beasts” (Fagerjord, Kueng, 2019).The business model continued to skyrocket and be constructive. The company’s organizational structure was such that it did not become stagnant and continued to change through time and hence, was also effectively able to face competitors. As of 2017, Netflix amassed 11.7 billion dollars in revenue with 175 million subscribers. Today, Netflix produces its content as well, which is not only limited to Hollywood but amasses other countries’ cinemas as well. It has won awards for various contents (Teece, 2010).

The current business model of Netflix allows subscribers to a huge variety of things, including movies, tv shows, documentaries et cetera on various internet-connected gadgets. Customers have to buy membership subscription and pay monthly for it. They can subscribe to different packages according to their need and price preferences. The key partners for Netflix are content creating studios from whom Netflix buys content from to stream to its subscribers. The business also makes use of aggressive marketing strategies to increase the number of subscribers. Money earned from subscriptions is used primarily to purchase more content and also to produce its own, which comes under key activities for the business. Netflix also makes a profit through strategic product placement which is another smart business move. This implies that many products are highlighted in the shows as a way of advertisement. The Netflix business model makes effective use of its resources (Teece, 2010).

Even though Netflix also started as a DVD distribution service, it did not stop there like Blockbuster. The company rightly believed in the power of data analytics and used it to its advantage profusely. It was able to build a recommendation engine using the best possible data science algorithms. So, the system could now predict DVD requests more efficiently. This made them even better than Blockbuster and other video rentals. Netflix always believed in disruption via innovation as a business strategy, and it was successful in implementing that (Osur, 2016).

Strategy in action

Netflix also targets consumers very smartly. The main target audience includes young adults to middle-aged males and females. That is a huge segment of people. It also implies that instead of focusing on demographics, Netflix focuses on psychographics to lure people in. Hence, Netflix targets individuals who are too busy or broke to go and buy movies, and they want easy, cheap fix for entertainment. Thus, the value proposition is extremely important in the business model for Netflix. The company has been able to earn so many subscriptions because it is affordable for the majority. Secondly, the services can be availed on any range of internet-connected devices, making it convenient to use. Thirdly, there’s a huge variety of genres and shows that an individual can choose from. Every user gets personalized recommendations of shows and movies, which essentially makes most people hooked to Netflix for hours on a stretch. This is because of the algorithms they use. Binge-watching has become increasingly common on Netflix as entire seasons are released at a time instead of single episodes. Moreover, the absence of ads is a huge attraction for the majority as they can stream without any interruptions. Since Netflix is investing a lot of money in making original content, this allows them competitive advantage (Osur, 2016).

Any company’s financial conditions are the most important in predicting the future success of the company. Looking at Netflix’s financial conditions for three years between 2013 to 2015, it can be concluded that the business is doing well in terms of liquidity, profitability, and its assets. The company has up to a billion dollars in cash and equivalents, which can be immediately used for investments. An organizations ability to handle short term assets to pay off obligations is determined by liquidity and it has increased for Netflix in this time interval.However, it is dependent more on inventory rather than liquid assets. Debt to equity ratio shouldn’t be too high ideally, and Netflix has a small number of 1.07. Profitability ratios show the firms capacity to make a profit in terms of revenue and assets. Data shows that Netflix is very stable and balanced in this area. This can be attributed to the company’s international expansion and the creation of original content. Shareholders’ equity has also only increased in the case of Netflix since 2013. The company has been able to control costs effectively as well. “High working net operating profit implies that the organization has a great cost control and that sales are increasing faster than costs, which delineates a profitable solution for a company.” This is not in favour of Netflix, however. The company’s costs are expanding at a faster rate than its income. Revenue and net profit also decreased in 2015 in comparison to the previous two years as Netflix had a lot of expenses due to upgrades in content quality. Efficiency calculates the generation of sales revenue in a company using its assets. A high ratio shows that the company is effectively using its assets to generate revenue. In the case of Netflix, asset turnover has been decreasing even though there is an increase in total revenues from assets. This is because Netflix is spending a lot on expanding and on creating content, thus incurring huge costs (Mazzolini, Bozzolan, 2016).

However, overall, the company is doing very well and has been able to maintain continuous development and a good level of profit. The challenge for Netflix is to maintain an increase in rates of return. If profits grow smaller, it will become harder for Netflix to fight against competitors who have a more capital and financial backup. As of now, Netflix seems to be on the right track with its international expansion and newer content coming in. Netflix has to hold more content as well so that companies such as HBO and Amazon can’t outsource it for content. Failure to do this would lead to significant losses in subscriptions and ultimately, revenues which are why their original content apart from what is coming from their clients is a great help (Mazzolini, Bozzolan, 2016).


Blockbuster was a huge hit in the limited, give or take, twenty-year period. Firstly, because at that time there was no other way to enjoy movies unless one bought the VHS tapes, so rental stores were naturally a huge hit. Then the investors that pooled in money into the business in its early years took Blockbuster to the top in a short period and the business had a total of 6000 stores worldwide in 1944. It was dealing with billions of dollars. But all this did not last long. The late fee had aggravated a lot of people. In fact, Blockbuster earned 16 per cent of its revenue which makes for 800 million dollars just by the late fee. Netflix founder Reed Hastings is reported to have said that he founded Netflix because he was frustrated by the late fees at Blockbuster. So, in its early days, Netflix would deliver DVDs right at homes for monthly subscriptions and no late fees. This was, of course, a much welcome change to entertainment consumers, so they replaced Blockbuster. Another faulty move by Blockbuster was that the company never acted on its decision of buying Netflix when it was new. They were to buy it for 50 million dollars but never did so. The company seriously underestimated its competition because it was doing well at the time with 9000 stores globally and 60,000 employees and earned 5.9 billion dollars in revenue in 2004 (Olito, 2020).

The Netflix founder, Reed Hastings, went to the CEO of Blockbuster, John Antioco, in 2000 to propose a partnership but he was laughed out. At the time, Netflix was new. Fast forward to the future, Blockbuster failed miserably, and Netflix became a 28 billion dollars company, many times more worthy than Blockbuster ever was. The biggest fault of the company, however, seems to be the late fee. It is what truly drove customers away. Penalizing its customers for profit, was a faulty move in the business model for Blockbuster. Netflix’s popularity grew by word of mouth. More and more people fell in love with the services it provided. It became trendy. This behaviour is called threshold model of collective behaviour. Plus, it helped Netflix in the coming years that online networking became easier and popular through sites such as Facebook and Twitter. Both of these were not available to Blockbuster or were ignored by the company. The organization had a very tight internal network only and this also adversely affected it (Satell, 2014).

Discussion (Strategy Choices)

Netflix has promising plans for the future as well. There are two main projects that the company is expected to pursue which catch the eye. Firstly, Netflix television and secondly, the High Dynamic Range (HDR). Netflix television would emerge via partnerships with cable TV companies such as RCN, Grand Communication and Atlantic Broadband. The advantage of this business project would be that a new market segment could be tapped. There are a lot of people who aren’t avid internet or gadget users so, they would be able to avail Netflix services via television. However, there are also complications related to contracts, licenses and permits. So, for this project to be applicable and successful, Netflix would have to acquire rights from various cable TV studios. On the other hand, Netflix is trying to develop the feature of HDR, which is a new standard for image quality. It has invested quite a lot of capital in making this feature. This essentially provides an even better watching experience than HD. If this were to be successful competitors would face a blow (Mazzolini, Bozzolan, 2016).

In order to be successful in the future as well there are some strategic choices that Netflix can make. First of all, they always need to be aware of the changing trends in consumer decision making. Hence, Netflix should look into consumer technology such as IoT systems so that they can compete with companies such as Amazon. Secondly, Netflix needs to create something that is unique to their brand and adds to consumer experience like Alexa or Siri. Many companies such as Disney are collaborating with others to create something entirely different. This is so that Netflix sticks in the life of the consumers. Hence, Netflix needs to build up a strong collaborative strategy.They can partner with these companies to set up boxes or gaming consoles (Winter, 2011).Netflix should continue keeping its subscription price low and streaming quality high so there are minimum barriers to entry and more and more people continue to join. This way they can fight off competition (Fagerjord, Kueng, 2019).The company also needs to acquire more content on the basis of what consumer demand. For example, a lot of famous movies and tv shows are still not on Netflix and other companies such as Disney and Warner Bros are coming up with their own streaming channels which could cause Netflix to lose viewership with increased competition (Snyman, Gilliard, 2019).


Netflix has a platform business model. It has four main components which are producers, consumers, providers and owners. Advantage of this model is that it is not heavily dependent on physical assets, unlike the Blockbuster business model. The focus is on digital assets instead. Digital assets comprise of data by users. Access to this data has allowed Netflix to “build a state-of-the-art customer-centric business” which is another perk in this business model. This also aids in the reduction of costs such as store maintenance and other related costs. Thus, the efficiency of the company increases. They were easily able to innovate too, unlike Blockbuster, which had zero “innovative disruption” and hence, was driven out of the market (Brunetta, Turner, Ciccone, 2017). A platform business model does not acquire other businesses or fixed assets but instead makes links with more and more user networks(Fagerjord, Kueng, 2019).Lack of innovation leads to Blockbuster’s failure (Grshon, 2013). All this and the analysis done above shows how Netflix will be able to dominate in the industry of content streaming thanks to its malleable business model.


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Apple incorporated is a multinational company that is jointly owned by Vanguard Group and BlackRock, both being institutional investors. It has become the largest technological giants of today (World Economic Forum). It was founded in 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne. It’s an American-based company whose current CEO is Tim Cook since 2011. Apple products include Apple Watch, Apple TV, Apple iPad, and, the most famous, iPhone. Apple earned a total revenue of $260 Billion in 2019. Its subsidiaries include Beats Electronics, Apple Store, NextVR, FileMaker and many more. As of 2019, the company had more than 500 retail stores globally. The SWOT analysis of the company is significant in revealing where the company stands today and how it will go about in the coming years of the future.


By identifying the strengths of the company, one can tell the company’s strong areas and how it has a monopoly over them and takes advantage of these to overcome its weaknesses. The company has internal as well as external advantages and strengths.

Apple’s Brand Image

One of its major strengths includes the fact that it has a sturdy brand image. The brand has been in the market for very long and has become a luxury good. Thus, many people with increased incomes prefer to buy Apple products, especially iPhones, because of the image it entails and displays wealth.

Self-sufficiency in Developing Parts

Another one of its strengths is that the company is self-sufficient in developing its own hardware, software, services and all other applications. Apple has designed its own ecosystem, and since it lacks Apple’s biggest competitor, Samsung, this is a really strong strength of Apple Inc.

Advanced Advertising and Marketing Expertise

Moreover, another important strength of the company is its advanced and attractive advertising and marketing abilities. Apple’s brand recognition is maintained via media giants and technology companies such as Forbes that acknowledges that the company is worth about 205.5 Billion US Dollars. Its reputation is maintained by quality advertisements such as “1984” and “Think Different” that guarantee superior marketing skills, promising to attract new customers by using advertisements as psychological tools. This enables the building of brand loyalty and confirms future customers.


Apple’s weaknesses are not many but are sufficient enough to be mentioned.

Expensive Products

One of its most targeted weaknesses is that it has extremely expensive products. iPhone 7 cost $649 in 2016, and in about three years, its price increased by 54%. Apple is the first American company toreach the trillion-dollar mark. Even Switzerland’s GDP is lesser than Apple’s market cap in monetary terms. Since its logo has become a status symbol; the company is alleged to charge the “Apple Tax” for its branding. The prices are so high that brand sales are decreasing exponentially in India.


Exclusivity of Apple Products

One of the major criticisms of Apple is that the company’s software is incompatible with working with other any other software. This has given rise to the concept of Apple universe whereby the customers are propelled to buy supportive products to enhance their products that are already in use. The exclusivity of the Apple products faces criticism by customers that complain that not only are their products expensive but are compatible only with other Apple products.


The opportunities available for Apple Inc. are external factors that affect its supply. These opportunities also help in the strategic planning of the company by highlighting the areas it can potentially take advantage of to enable economic growth.

Digital Revolution

One of the major areas of opportunity is granted by the overall trend of increased dependency on technology in this subtle digital revolution that is underway. This entails the increased use of Apple computers, iPhones, Keyboards and the accessories attached in furthering the increased use of technology. Offices, schools and freelance places are all now more dependent on technology than they used to be, and this increased demand for technology does propel the supply to increase to meet the demand.


Another opportunity provided to Apple Inc. is the very fact that globalization has successfully taken place. Globalization is the process whereby a company gains international scale and influence and expands its operational procedures. Globalization has boosted the company’s profit margins as consumers can easily request and purchase Apple products that are more readily available. This aspect increases sales, and thereby the profits also increase.

Product Diversification

Additionally, another strategy the Apple Inc. can take advantage of is the strategy of product diversification. This propagates that the company may increase the number of products it offers or may offer cheaper products to attract middle or low-income customers. Also, increasing their supply chains distribution centres, especially in developing countries, will help boost their sales that will, in turn, assist in earning more profits.


Apple Inc. also faces many threats, as any multinational company does.

Market for Products

One of the important areas of the threat the company faces is the potential market for phones and tablets might be on the fall as evidence show that the smartphone demand has fallen by 3%. Reasons for the fall might include the fact that when one has already purchased a phone or a tablet, he or she might not feel the need to buy that again when the older one is fully functional already. This argument suggests that sales might slow down.


Additionally, another threat present for Apple Inc. may be the emergence of new companies that offer the same products. These competitors might provide the same product with more or less the same features. The product also might be less expensive, so it is attractive to the consumers. Apple Inc.’s competitors include Samsung, Google, Nokia, Sony and many more.

Fear of Imitation

Another threat to the company may be the fear that its products can be imitated. Imitation has been one of the biggest threats for recognized companies. The fear of having their software or any aspect of the technology stolen is big enough to take measures to cover for it.

All in all, it can be observed from the SWOT analysis that Apple Inc. has many strengths, weaknesses, opportunities and threats. Analyzing and assessing all of these will help the company, its customers, and its competitors alike to make a decision that benefits the respective parties.


 Resources (page 2) (page 2) (page 1 and 2)


World Economic Forum (page 1)





Executive Summary

The following report aims to critically review the current strategic opportunities available to the Waterstones book chain when it comes to digital transformation. These opportunities arise as a result of various political, economic, social, technological, environmental, and legal factors present within the United Kingdom’s business environment.

With the recent outbreak of the Coronavirus Pandemic, firms are trying to shift to online operations readily.And the firms already having most of their operations online, are looking to capitalize on the opportunities that are present on the digital front. This report not only just reviews these factors, but it will also try to provide strategies on how to make use of these opportunities.

The incorporation of technology, or digitalization, of all business processes, is known as Digital Transformation. It is a structural change that completely changes how a business operates and delivers values to its customers.

Furthermore, some internal and external factors are at play. This report aims to analyze those factors thoroughly and looks to provide strategic solutions on how to counter or make use of such factors.

Lastly, one of the main focus of this report is to identify a new strategic aspect that the Waterstone book chain is yet to discover and capitalize on that before any competitor firm cashes in on that.

Digital Transformation

The digitalization of a business is known as Digital Transformation. Digital Transformation changes how a business conducts its operations and creates value for its customers. Apart from an operational change, a business that introduces digital transformation has to go through a complete cultural reboot. In recent times, the emphasis on e-commerce and the digitalization of businesses has grown a lot. Businesses have started to introduce digital transformation in different areas.

Every firm has a different sort of digital transformation based on its particular business conditions and demographics. However, there are a few common elements that all digitally transformed firms have. Firms having incorporated digital transformation are more customer-centric than other firms. Their idea is to enhance and enrich the customer experience at each touchpoint. A digitally transformed firm is very smooth and agile when it comes to operations. One of the main benefits and motivations for digital transformation is the fact that it enhances operational efficiency.

Lastly, as mentioned earlier, digital transformation means a change of culture. Digital Transformation is not about introducing the latest technologies. Instead, it is more about embracing change and leaving the old practices behind.

With developments made over the last decade, digital transformation is the way to go forward. It will be crucial to any business’s success.

Current Factors

Over the last decade, the world has increasingly been shifting to online businesses. The customers are satisfied with placing their orders online and paying through online channels. Items that can only be used physically are delivered at doorsteps. In contrast, the items that can be used in softcopies are simply being stored in the customers’ computers—for example, books and journals. With the outbreak of the COVID-19 in recent months, social distancing has become mandatory. Going out of the house is considered hazardous and dangerous. With all these circumstances, digital transformation has become even more critical. When it comes to Waterstones, it has been open to digitalization. And hence it seems to be in a pole position to capitalize on the current market conditions.

Politically, the UK government’s policies regarding the use of the internet for conducting online businesses have been somewhat flexible. Through various studies, the government has discovered the growing influence of digital services on multiple age groups across the country, which allows Waterstones, a healthy space online.

The UK has had a rather stable economy over the last decade, and this crucial factor allows Waterstones to introduce digitalization throughout its supply chain. And with the support of government policies, Waterstone can easily benefit through such measures.

Socially, the general direction of the whole world, and now especially with the Coronavirus, the preference has shifted mainly to online purchasing. Since Waterstones mainly sells books, it is a massive opportunity for it to go online.(Pînzaru, Zbuchea and Viţelar, 2019)

The concept of E-Books has become dominant because all the books can now be stored on a computer. This concept saves a lot of time that a consumer takes to make a physical purchase; it saves the space that hardcopies occupy. And for students, it saves the burden of physically carrying multiple books. (Pînzaru, Zbuchea and Viţelar, 2019)

And adhering to the guidelines laid out by the governments around to combat the Coronavirus, E-Books and softcopies comply with social distancing as well.

Although Waterstones is technically well equipped, with the current situation in light of the COVID-19, there will mostly be a sharp increase in the demand for E-Books and softcopies. Hence, Waterstones could benefit from more investment in Cloud or Artificial Intelligence. Technologically, it is an excellent time for Waterstones to expand digitally and adapt to digital transformation.

Through selling books and other related items online, Waterstones can significantly reduce its environmental footprint. For books, the first and foremost thing is paper, through hardcopies the manufacturers of books is directly linked to deforestation and hence leaves a critical environmental footprint. Furthermore, the transportation of raw materials and the deliveries of hard copies of books leads to large amounts of fuel emissions resulting in severe air pollution. Indulging in such practices can seriously taint Waterstones’ brand image. Environment preservation has continued to become quite essential in recent years, and customers prefer to opt for brands who are contributing to the environment. By emphasizing more on online operations, Waterstones can make a crucial contribution to the environment and reduce its environmental footprint to a great extent.(Shaughnessy, 2018)

On the legal front, the UK government, as discussed earlier, has been somewhat flexible and supportive with online businesses. And since most of the regulations and legal issues are related to the environment, conducting business online is considerably safer in that regard.

Implementation of Strategies

The recent shift towards technology and consumer preference of buying online, combined with the business atmosphere in the UK have presented Waterstones with a bunch of opportunities that it can use. (Berman, 2012)

Waterstones can look to increase investment on its online platforms. Since the government is supportive of such ventures, there is minimal risk of any political invention in Waterstones’ online operations. Having supportive government policies can also help Waterstones in expanding abroad. Since the business is online, Waterstones doesn’t have to have a physical outlet in overseas countries. The buyers from abroad can simply connect with Waterstones on its online platform and purchase E-Books and softcopies. (Matt, Hess and Benlian, 2015)

Apart from that, the UK’s stable economy means that the general business conditions are right, and firms are having a good time conducting business. Waterstones can use this opportunity to invest in digital transformation throughout its supply chain. With each touchpoint of the supply chain introduced to digital transformation, Waterstones can drastically increase its operational efficiency. The firm policy, inflation, and unemployment rates also mean that it will be more comfortable for Waterstones to expand through obtaining cheaper loans. Moreover, such stable conditions indicate that the customers will also have enough buying power to shop online in an instant without thinking twice.

Socially, with the COVID-19 situation, the growing awareness of the general population about using digital services makes it an excellent opportunity to go digital. Waterstones can develop its smartphone app that is accessible for almost everyone. This concept makes for a unique consumer experience since each user is carrying their virtual library in their pockets. The app is a quite convenient option since everyone has a smartphone in this day and age. Waterstones can earn a lot of revenue through its app downloads and then the in-app purchases.

Furthermore, through digital transformation, Waterstones has a massive opportunity to collaborate with online giants like eBay, Amazon, and Alibaba. With its books being displayed on their platforms, Waterstones can dramatically increase its market size. Moving on, Waterstones can partner with Universities and research centres and provide special discounts to the university’s students and the members of the research centre on their E-Books. This strategy will increase Waterstones’ customers base and help it to make a long-lasting mark. Lastly, one of the best strategies the Waterstones can implement is to partner with Schools, Colleges, Universities, and NGOs. Waterstones can provide digital library services to Universities and research centres. And with the increasing shift towards technologies, students prefer carrying their course materials on their computers rather than

coursebooks to the students through their digital application. This strategy will solve the students’ burden of physically carrying books while also providing the schools with a one-stop solution for coursebook provision across all levels of the school. All of this will do wonders for Waterstones’ brand positioning and market share.

By digital transformation and automation, Waterstones automatically becomes environment friendly. And with the increasing shift towards environmental sustainability, a brand that is contributing to environmental preservation outshines others. By merely conducting its operations online, Waterstones can attract a cumbersome amount of customers, which will increase its sales, brand reputation, and successful performance.

Challenges associated with Digital Transformation

One of the main challenges faced while shifting online and using digital transformation is that it is particularly hard to gauge consumer sentiment. In the business atmosphere today, customer experience matters the most. For an online business, it is harder to gauge customer experience. An unsatisfied customer may simply stop purchasing from your online store. (Schwertner, 2017)

The results of resistance to change, show themselves in a plethora of ways. Advanced ventures crucial to an organization’s going-concern can experience difficulty in getting subsidies, resources, or advertisements. These ventures might be changed so as not to compromise retail or accomplice brands. They are kept down by worries about tearing apart other income sources. They are approached to legitimize ROI to an unusual degree of conviction. They are sent through interminable lawful audits.

Kodak envisioned the automated camera, yet it was the inside assurance from a change that drove the association to cover it since it subverted the association’s legacy film business. Did mobile phones beat the landline business? The truth is out. Regardless, Bell Atlantic “guaranteed” itself by enduring that change was not very far away, and changed by choosing the irksome decisions required to conform to that change.

Another challenge that a company faces when adapting to digital transformation is the risk of employee pushbacks. The introduction of technology across the whole business might severely demotivate the existing workforce. With technology comes a massive threat of layoffs for the current employees. This threat brings the morale and productivity of the employees down drastically. There is a massive skill gap between those employees who know how to operate technology and those who don’t. The gap means that the skilled workforce already has hands full and hence, don’t have the time to train the old employees. (Digital Transformation- The Internet of Things- Opportunities and Challenges, 2020)

One of the most crucial challenges faced by companies operating online is the problem of substandard analytics. Whenever a customer visits an online store, they like personalization. They like to be shown what they’ve been buying or products of a similar nature. Substandard analytics ruin the customer experience, having the potential to convert profits into losses. (Digital Transformation- The Internet of Things- Opportunities and Challenges, 2020)

Associations that adequately “cross the void” to modernized reasonability consistently discover they need to oblige free what they used to charge for, sell as participation what used to be “independently.” Adapt through publicizing things that used to be paid for in various habits, and reconsider how they get pay from the value that they make. Those that do so deftly can every now and again find that the gathering of an electronic procedure offers more scale, pay, and advantage than the legacy approach. However, it takes experimentation, a notion of danger, and – to be uncaring – some mistake on the way. In spite of the fact that this approach is comprehensively recognized among new organizations, it is one that the organization and money related masters being developed associations, generally, fear. Notwithstanding, this is the gauntlet they should race to gain electronic ground.

Overcoming Challenges

Challenges are there to be faced and overcome. Hence is why the challenges that are present with shifting majorly to digital transformation can be faced. Its a fact that with online businesses, it is nearly impossible to gauge customer sentiment. If the customer has a bad experience, they might silently go away without any conversation at all. To overcome this crucial challenge, Waterstones can make sure that it is not just trying to achieve a higher sales target. The focus should primarily be on customer experience. By improving and enhancing all the touchpoints throughout the customer experience, Waterstones can firmly place itself in the minds of the customers. It will also help in automatically boosting sales, and retaining customers, providing stability in future growth.

To counter the employee pushback issues, Waterstones needs to think out of the box. It can tackle this challenge by incorporating a customer-centric culture. The focus needs to be on the customer more than anything. When a company strives to provide the best experience to its customers, there is a cultural reboot from top to bottom, which ultimately leads to employee training and development. Such actions help in massively boosting the morale of the employees, and they try to produce the best results as a result. (Borate and Borate, 2014)

Waterstones might not be able to delete uncertainty and vulnerability from employees’ brains. However, you can positively reduce them. Being steady and straightforward is vital. Keep your workers connected through the entire procedure. Engage them and paint them a future they would all be able to move in a specific direction. By helping its workers comprehend what’s in question, you can positively motivate them.

The issue of substandard analytics can be resolved through investment in better AI systems. Through introducing high-quality Artificial Intelligence systems, Waterstones can dramatically increase its database and gather more data efficiently. Through a comprehensive database, personalization becomes very simple and easy. When the customers are provided with interface personalization, they are displayed content of their interest, which enhances the customer experience and satisfaction significantly. (Pichan, Lazarescu and Soh, 2015)



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Steve Jobs had an unconventional life and was raised by two working-class parents. Steve Jobs was an entrepreneur that dropped out of college and worked on becoming the owner of Apple. Entrepreneurship is defined to be a key driver for economic growth, job creation, and also competitiveness. (OECD, 1998) There is also a growing understanding that entrepreneurship is best defined as a field of business that works on seeking to understand how opportunities create something new. Through entrepreneurship, new ways to organize existing technologies arise, and individuals use these discoveries to create something new and exploit or develop these opportunities. (Shane and Venkataraman, 2000)

Steve Jobs relied heavily on intuition to make managerial decisions throughout his life. In his statements, he claims that intuition is a great force, and a person’s gut is always telling them something. Steve Jobs believed that to reach success,individuals needed to be able to deploy their talents wisely. (Srinivasan, 2013) Jobs explained that most of the workers on his Mac were poets and musicians. Jobs strategy is not one that comes without historical precedent since the convergence of art and science has created artists like Leonardo da Vinci and Michaelangelo. (Snow, 1960)

Steve Jobs, during his time at reeds, learned how to do calligraphy and also learned to experiment with different fonts and styles. Learning this skill proved to be instrumental for him while designing the Mac, and it was one such situation where intuition worked. (Highhouse, 2008) claims that there is a stubborn reliance on intuition and human decisions are claimed to be more reliable than scientific aids for a study.

This behavior is not uncommon and is even seen in seasoned practitioners who often neglect to seek out new evidence because they trust their research and studies more.(Pfeffer and Sutton, 2020) Evidence-based management has been hard to apply, and there is often too much evidence available, which at the end of the day clouds an individual’s ability to make judgments. Therefore, many people rely heavily on intuition and steve jobs has also signified his reliance on intuition in several situations. In his lecture to recent graduates, he advises them to trust their gut while going for anything because it is impossible to connect the dots looking forward.

Bounded rationality is also in harmony with these theories. Bounded rationality theory claims that decisions individuals make are limited by multiple factors such as the time they have at their disposal, the information they have available, and their mental information processing ability. In certain situations, people are often called out to give numerical predictions on the well being of a stock. If a favorable description is given, it attracts a favorable review, and if a negative description is given, it attracts a negative review regardless of the authenticity of the information. In most situations, individual predictions are insensitive to the accuracy of the information. (Tversky and Kahneman, 1974)

Steve Jobs relied heavily on rationality to make his decisions and also employed the use of emotional intelligence in stressful situations. Situations where he was removed from Apple, and he started from the ground up again and was successful. (Steve Drucker, 1995) claims that innovation is a destabilizer that allows for the creative destruction of the steady-state and therefore allows constant changes to occur.


Decades of research have concluded that people care deeply about their self-concept and also expend a great deal of effort maintaining a positive image of self often by engaging in motivated reasoning (Steele 1988, Kunda 1990).

Steve Jobs is also no stranger to this. He engaged himself in positive images of self once he was laid off from Apple and motivated himself to start neXt and Pixar. These two initiatives ended up in him gaining back his lost position at Apple and also finding a partner that he could spend his life with.

Finance researchers have developed a Hubris hypothesis theory through studying the effects of over-optimism and overconfidence and have found out that overconfident managers end up overestimating the returns on their investments. CEO hubris is also fanned by the celebrity status that has come to pervade the upper echelons of business culture like steve jobs. In situations where Hubris becomes involved, tragedy can quite easily form. (Sadler-Smith, n.d.)

Steve Jobs has played a central and pivotal role to Apple, and much of Apple’s success is tied to his role. However, in some situations,steve jobs has executed poor managerial and unprofessional decisions as well. In a particular board meeting, Steve jobs was claimed to have barged in hurling profanities to the managers which ended up having the entire agreement going in bad taste.

Steve jobs rejoined apple not to make a profit but to donate to the cause. In his speech, he claimed that he loved what he did, and whatever happened at Apple was not enough to make him give up. Instead, it freed him up to start over, and once he was provided with the chance, he rejoined apple to make the most of his learnings. This version of executive leadership has been developed in the book ‘good to great.’ Level 5 leaders are individuals that are wholly and completely dedicated to the cause and the cause alone.

CNN reported that Jobs, in some cases, was not afraid to get his hands dirty and sometimes attended to customer service requests himself. Leaders who manage firms by taking in inputs from their employees and those who trust their employees more end up making their firm more productive and successful. Steve Jobs was able to bring about good results through walking a calculated balance of Hubris and Humility.

Steve Jobs has been known as an individual having a sharp eye for detail,and he had an autocratic style of leadership where he did not just stop at products. Steve also made a few mistakes in his professional life, but he did not let those mistakes get to his head and always picked himself up. (Economy, 2018)

Traditional economics Postulates that an economic man is also someone rational, and this man is also someone who is assumed to know relevant aspects of his environment which, if not complete, are at least impressively bright and also voluminous. (Simon, 1955)Moreover, Steve Jobs was also someone who possessed similar characteristics as those of a rational leader.


Managerial Decision making is the act of making decisions about something or about a position or opinion or judgment that has been reached. For effective management, a significant level of prior accumulated knowledge and insight needs to be naturally present to be able to formulate a practical insight that can connect the dots effectively. (Manchester, 1995)

For most of his managerial decisions, steve jobs was an Individual that relied on perfection and an individual that had a preset vision in mind. His vision alone was the sole reason through which he was able to convert a small scale garage company into a billion-dollar company with 4000 employees. Wallas, in his four-stage model of insight, describes a stage between incubation and illumination. The illumination stage is one in which our fringe consciousness is near a rising consciousness that success is coming. There is an intuition that the direction we are following is the right path, and breakthroughs are also just around the corner. (Sadler-Smith, 2012)

From an analysis of steve jobs’ life and the decisions he has made throughout, it can be said that Steve Jobs was operating strikingly similar to the four-stage model of insight as proposed by wallas. Steve was a Level five leader that was not motivated by profit.Instead, he was someone that was motivated by the impact he can create. Level 5 leaders are individuals that love what they do and are motivated towards creating innovative products.

Intuition itself has many stages. Researchers were able to split the findings in dual processes, namely recognition based intuition and intuition-based inquiry. Gerd Gigerenzer’s book ‘Fast and Frugal’ Heuristics also talks about the importance of a harmonic balance between intuition and analysis to be able to make effective managerial decisions. Steve Jobs is a big proponent of following one’s intuition and claims that one should always have the courage to follow his or her gut because they somehow already know what one is going to become.

In the Gestalt psychology view of problem-solving, prior knowledge and expertise can be a barrier to creativity (King and Anderson, 2002). steve jobs also faced this problem and enjoyed his freedom when he started NeXT and Pixar and claimed that it freed him to enter the most creative periods of his life. The technology Steve Jobs was able to develop at NeXT with no pressure was so brilliant that it became the heart of Apple’s current renaissance.

Steve jobs applied a sensible approach to problems where he did not solely rely on his intuition or gut. He also placed in consideration various other factors as well. Achieving a balance on intuition and analysis can be said to be the best possible way to arrive at decisions.

Creative problem solving is at the heart of every successful business, and most creative solutions do not occur in situations of stress or situations of expectation. Steve Jobs uses his intuitive approach and trusts his gut feelings to be able to create innovative solutions. The classical model of decision making is a very dubious one, and most leaders fail to follow simply one model of decision making.Instead, they follow multiple different decision-making models and often end up mixing them up to be able to achieve favorable outcomes.



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Bounded rationality
Based on research, bounded rationality is the decisions individuals make when they are pressed for time. Steve Jobs was a bounded rational who used to make the best possible decisions based on his gut. Time is a scarce resource for many, and in many circumstances, there is simply not enough time to calculate future decisions. He encourages people to be creative and be brave enough to follow their gut.


Evidence-Based Management
As discussed above, evidence-based management is a management strategy that requires much time and motivation to execute. Something which is not as easily available, and this management strategy rarely gets practiced because most managers have a stubborn reliance on intuition.
Steve Jobs was someone who relied on intuition and relied on his gut more than anything. He simply did not pursue things when they did not feel right, and it is for this very reason that he dropped out of college and eventually ended up starting a business empire.
Shortcuts are everyone’s favorites, and Steve jobs also used mental shortcuts to ease the cognitive load of making critical decisions.
Motivated reasoning


Steve jobs employs motivated reasoning by claiming that getting fired from Apple was the best thing to happen to him. His reasoning helped him make use of his skills to start new things that ended up becoming successful as well.






Every individual idealizes some other individual and sees them as a leader. We often need some leadership figures in our lives because they motivate us to become better people and be more productive (Ramanaiah, Balaji, 2012). There are very different types of leaders with various leadership styles and they appeal to us for different reasons based on our personality traits and passions in life. One such leader that inspires me is Bill gates. In this paper, I will be talking about Bill Gates and his leadership style.


Bill Gates is one of the most well-known individuals on this planet and he is known for all the right reasons. He was born in 1955 in Seattle in the United States. His real name is in fact, William Henry Gates III. Today Bill Gates is a business magnate who has to build his empire through his love for software programming. Ever since a little kid, Gates loved computers and had a passion for them. So, at just the young age of thirteen, he learned about computers and started working on programming mainframe computers. While attending college at Harvard, Bill Gates was successful in creating his very own BASIC computer programming language. Soon afterward he began his venture of Microsoft with a friend named Paul Allen. By 1981, this partnership led to Microsoft becoming an incorporated company that sold computer operating systems that today we use in almost every personal computer by the name of Microsoft Windows and Microsoft office (Bellis, 2020).

Amassing this empire and becoming a billionaire wasn’t something that Gates achieved overnight. It took a lot of hard work. He was an amazing leader who led not only himself but his workforce to achieve the level at which they are today. He did not exactly start in a way we would picture a leader in our minds which only makes him more awe-inspiring. Bill Gates dropped out of college to follow his dream and took risks with only his knowledge and creativity to get by. Due to these qualities, I am inspired by him. We are often told to follow a strict path that is not only stereotypical but also not guaranteed to be successful. I applaud him for creating his path, breaking the norms.

Leadership style and strengths

From amongst the different leadership styles, the one most befitting for Bill Gates is that of a transformational leader. A translational leader is one who follows a powerful vision with fervor and passion for his work. The energy he surrounds himself with as a product of his passion is what inspires others to follow him as well. Transformational leaders encourage effort on a personal and individual level. So, motivation is more directly transmitted on an individual level from the leader to those below him. In this way, they reach the result with a clear path in mind (Mauri, 2017).

Transformational leadership came naturally to Bill Gates.He is an exemplary leader. He is very focused on what he is good at and made that into his business. he has clear goals and picture in mind that he works towards. He makes a clear line of action that he follows and preaches others to follow. All the goals he sets are practical and approachable. Progress is achieved one step at a time rather than a leap. He inspires a vision for others and models a unique way for them to follow. He promotes creativity and innovation on an individual level. So, he enables others to act and to face challenges rather than being laid back in comfort zones. At the same time, Gates is also compassionate and caring. This quality of his also one of my favorites. He supports not only his workforce and strengthens them but is also very charitable. He has contributed billions in philanthropic efforts for various worldly causes and yet he has a very down to earth and humble personality (The Lancet, 2005). So, he is not only a good leader when it comes to business but also as a teacher and as the head of a social charitable organization. He is always looking for something new to learn. In his leadership style, learning and acquiring more knowledge does not stop (Sahin, Cubuk, Uslo, 2014).


On the other hand, it is also important to understand that to err is human and after all Bill Gates is also a human. He has some weaknesses that he can work upon to become an even better leader. Identifying one’s weaknesses and working on them is a leadership quality in itself. For Bill Gates, arrogance is a weakness. Being as passionate as an individual he is, it is difficult for him to consider his ideas wrong or not the best. He should be able to consider other ideas for the betterment of his company. As a transformational leader, he is also very results-driven. He focuses on the end goal only rather than on the process that leads to the goal. This can cause losing track of the steps needed to achieve the result. lastly, Gates wants everyone to be on the same page as a transformational leader but this is not always easy to achieve and may cause conflicts. Gates needs to work on facing these conflicts heads-on rather than ignoring them (Patching, 2011).


All in all, Bill Gates is an extraordinary leader. It is underestimation to say that it is hard to be the kind of leader that he is. If only he could include a little patience in his leadership recipe, he would be nothing less than a perfect leader.


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