Marketing Strategy and Management: Case of Invercargill Licensing Trust - Essay Example

ILT case study Table of Contents 1.0 Introduction 2 2.0 Success Factors of ILT 3 3.0 Distinction of ILT mission 5 4.0 ILT as an anti-competitive organization 5 5.0 Social responsibility of commercial businesses 6 6.0 Sustainability of ILT models and commercial organizations 7 7.0 To promote ILT models or profit-oriented organizations 8 8.0 Recommendation for replication of an ILT model in my locality 8 9.0 Conclusion 9 References 10 Invercargill Licensing Trust Case Study 1.0 Introduction Licensing Trusts have a long standing history in New Zealand starting in the mid 1900s when the government of the time declared drinking a public menace in the country. Invercargill Licensing Trust (ILT) was among the pioneering licensing trusts founded with the aim of reviving Invercargill city through the reintroduction of liquor sale. The trust was proposed and implemented in 1944 and operates under the Sale of Liquor Act 1989. The mission of the trust is to ensure the liquor is sold with care, moderately and responsibly. ILT operates as a not-for-profit organization, that is, it directs all returns obtained from sale of liquor as well as other entertainment activities it offers, to community projects. Its vision is to enhance the wellbeing of every person in Invercargill. The strategic approach of supporting the community has earned ILT outstanding success. The people of Invercargill trust ILT and this is demonstrated in their readiness to support the organization through sponsorships, donations and voluntary work. The unique position of ILT can also be pointed to its exceptional kind of leadership that is mostly dominated by highly influential government figures including the city mayor and councilor. Owing to the special privileges offered to ILT, its rivals have continually contended that the trust is a monopoly a factor which has earned it monopoly and competitive advantages. This case study analysis seeks to discuss pertinent issues within ILT that have earned it an exemplary position among other licensing trusts as well as liquor retailers in Invercargill. 2.0 Success Factors of ILT Supportive leadership Good management is important for any organization that pursues achievement of its goals Kelly et al (2011) states that management, like a brain, is the main function of the entire organization which therefore implies that it makes all other functions in the organization run smoothly. Management is particularly fundamental in a not-for-profit organization as the organization is usually held accountable to a great deal of stakeholder with the general community forming the largest percentage. Basic roles underlying managerial positions include systematic and careful planning and organization of projects, their effective execution, precise monitoring and fine tuning of contingencies. In this regard a highly professional and competent management team is required. ILT demonstrates a properly managed organization which directly points to its success. The people of Invercargill do appraise ILT for its proper management which greatly contradicts other not-for-profit organizations and monopolies having special privileges. Community back-up The social capital and civic theories emphasize the important role played by the general community to the life of a not-for-profit and community-based organizations. According to these theories, establishing formal and informal participation of institutions and individuals in the community, builds interactions and trust between the parties (De Vita and Fleming, 2001). Additionally, this kind of interaction enhances creation of mutual obligations, establishment of accountability and authority systems and promotion of behavior patterns and norms that inhibit emergence of malpractices within the organization. Volunteering also becomes apparent when a not-for-profit organization works closely with the community. The organization is thus able to accumulate a wealth of human knowledge and experience; and outright competitive advantage. Close links exist between ILT and the Invercargill community. This is demonstrated by the way the president and the general manager of the trust, who are high profile people, are open to dialogue with members of the community even at their own homes. Furthermore, ILT is held accountable by Invercargill media, a factor which has also ensured proper management of the trust. Corporate philanthropy and Monopolistic privileges According to Porter and Kramer (2002), philanthropy is the easiest way a company can acquire a competitive advantage. In today’s business world, philanthropy is used as a public relations tool for promoting and advertising an organization’s image and brand. There is however, a major challenge in identifying suitable areas for charitable work. Porter and Kramer (2002) state that social needs such as education and heath provide good platforms for charity work as they are critical to society. By being involved in education matters, through the zero fees scheme, ILT has gained favor in the eyes of the people of Invercargill. ILT’s success is also attributed to a wide range of monopolistic privileges which have been denied other licensing trusts. For instance, it has exclusive trade rights which implies tax waiver for its retail products. In addition, it has the right to sell liquor in restricted areas where other liquor retailer cannot sell. 3.0 Distinction of ILT mission The primary mission of not-for-profit organizations is to render socially desirable services to the community at reasonable costs (Fealing, 2012). This concurs with ILT’s mission to ensure effective and efficient provision of quality products and services so as to increase profits to support the ongoing benefits to the people of Invercargill. ILT existence is founded on its mission implying that if the organization looses focus, its mission might become diffuse. On the contrary, the mission of any profit-oriented organization is to earn profits. The organization strives to earn returns for capital invested by stakeholder. For these organizations, the mission is simply a means to attract customers and not exactly a social responsibility. 4.0 ILT as an anti-competitive organization Anti-competitive practices are practiced by government organizations or other businesses intended to reduce or prevent competition in the market. Some examples of anti-competition highlighted in literature include dumping whereby a company forces its competitors out of the market by offering its products at completely low prices, prices fixing where specific companies collude to set prices thus crashing free market forces, absorption of a competitors and division of territories whereby two companies keep distance from each other so as to reduce competition. Additionally, critics of anti-competition contend that special privileges such as subsidies, quotas, tariffs and protectionism, give some firms advantages over others and effectively bar competition in the market (Sokol, 2009). ILT is arguably an anti-competitive organization. This is justified by the fact that it has full support and receives special treatment from the government. For instance, the government has given ILT exclusive trade rights due to the fact that it is a not-for-profit organization and unlike other licensing trusts, it was established through an act of parliament. In this regard, ILT is able to sell its products and services at highly competitive prices hence keeping away competitors. According to Qaqaya and Lipimile (2008), it is difficult for an organization to become anti-competitive if it lacks government backing or significant market share. Being a major contributor to the economy of Invercargill and the largest employer in the city, Invercargill is undoubtedly anti-competitive. 5.0 Social responsibility of commercial businesses Bhattacharya and Sen (2004) define social responsibility as the obligation bestowed upon an organization to optimize its positive effects and minimize its negative effects towards the society. Corporate Social Responsibility (CSR) is the concept used to refer to the social responsibility of businesses towards their stakeholders including employees, customers, suppliers, and their surrounding communities. CSR can take several forms including engaging in environmental conservation initiatives, developing partnerships with local communities and establishing socially sensitive investments. Ismail (2009) asserts that involvement of an organization in any community aspect makes its product or service more attractive thus accruing more profits (Hopkins, 2004). Therefore, since the goal of any commercial organization is to continually increase profitability, CSR is a mandatory consideration. ILT’s support to the society clearly goes beyond ordinary CSR and does not contradict its goal of making Invercargill a better city. This is illustrated by numerous projects the company has established including sporting facilities and the zero fees scheme. 6.0 Sustainability of ILT models and commercial organizations Weerardena et al (2010) asserts that not-for-profit organizations like other forms of organizations, constantly strive to improve their performance so as to keep going. Even though all these organizations equally wrestle to ensure sustainability, not-for-profit organizations are better poised for sustainability. Although some scholars have argued that most not-for profit organization are financially unsustainable, it is evident that organizations with the capacity to raise funds from external grant-makers such as governments, corporations and private foundations are more sustainable. Therefore, an ILT model which basically relies on donations and grants from donors and the government has a promising future than a private commercial organization that depends solely on its own profitability for sustainability. Another distinctive characteristic of sustainable non-commercial organizations is their ability to produce high quality products and services through effective program management. Accountability to the community underpinning this management is yet another factor that describes their quality control. The management of ILT is devoted to taking decisive and quick action whenever quality of services and products is seemingly compromised. As a result of this, the organization ensures optimal and constant satisfaction of its customers will in turn enhance its sustainability. According to Puntenney (2000) organizations that regularly collect high-quality data from stakeholder input as well as program evaluations for purposes of strategy planning and implementation are significantly more sustainable than others. Program evaluation is common among ILT models due to the nature of their mission which is to ensure the well being of the society and thus they are more sustainable than private commercial organizations. 7.0 To promote ILT models or profit-oriented organizations In the position of a city mayor, I would highly advocate for ILT models rather than private profit-oriented organizations so as to drive the local economy. This is because, in addition to leveraging social menaces such as irresponsible drinking and substance abuse, such organizations are more sustainable as justified above. In addition, it becomes easy to attract foreign investors into a city that is dominated by organizations whose mission is to ensure the well being of the community. Drawing from the example of ILT, not-for-profit organizations have a greater potential to expand due to their ability to attract external funding relative to private profit-oriented organizations. Quality of services and products as well as operations is a key principle within ILT models. As such, it is difficult to find malpractices and subsequent legal liabilities in these kinds of organizations. 8.0 Recommendation for replication of an ILT model in my locality A replica of ILT model would indeed be possible in my locality. The problem of drinking has increased to an alarming level and had adversely affected the lives of young men as well as married men. The issue is particularly of major concern to married women with alcohol addicted men as they have been turned to sole breadwinners. Additionally, my community is gradually losing young male professionals as majority of the young people are dropping out of school thus lacking chances to join institutions of higher education. Therefore, I tend to think that starting up a project similar to ILT would reduce the irresponsible sale of liquor especially to underage persons as well as enhance the entry of young adults to universities and colleges. 9.0 Conclusion ILT is indeed a compelling example of a not-for-profit organization that has registered constant growth over the years. Its success is attributed to proper management, community support as well as it monopolistic nature. The mission of ILT greatly contradicts that of a profit-oriented organization in the sense that it operations are aimed at improving the well being of the society. ILT’s anti-competitive practice is justified by its massive support from the government and the general community as well as the significant share it holds in the market. Social responsibility is important for all organizations including commercial organizations as it enhances the image of the company in the eyes of its customers thus increase its profitability. ILT model of businesses are undoubtedly more sustainable than private profit-oriented organizations as they have more financial support, are well managed and produce higher quality products and services. Therefore, it is recommendable to increase the number of not-for-profit organizations in any given city as this will greatly boost the local economy. References Porter, M. and Kramer, M. (2002). The competitive advantage of corporate philanthropy. Harvard: Harvard business school publishing corporation. De Vita, C. and Fleming, C. (2001). Building capacity in non-profit organization. Washington D.C.: The urban institute. Bhattacharya, C. and Sen, S. (2004). Doing better at doing good: Whe, why and how customers respond to corporate social initiatives. California management review. Vol. 47, No. 1. Ismail, M. (2009). Corporate social responsibility and its role in community development: An international perspective. The journal of international social research. Vol. 2, No. 9. Hopkins, M. (2004). Corporate social responsibility: an issues paper. Policy Integration Department World Commission on the Social Dimension of Globalization International Labour Office Geneva. Working paper 27. Fealing, L. (2012). International journal on governmental financial management. International journal of governmental financial management. vol 12, No. 1. Sokol, D. ( 2009). Limiting anti-competition government interventions that benefit special interests. The global competition law centre working paper series 02/09. Qaqaya, H. and Lipimile, G. (2008). The effects of anti-competition business practices on developing countries and their development prospects. New York: United Nations. Puntenney, D. (2000). A guide to building sustainable organizations from the inside out: An organizational capacity-building toolbox from the Chicago foundation for women. Evanston: The Asset-Based Community Development Institute School of Education and Social Policy Northwestern University. Weerardena, J., McDonald, R. and Mort, G. (2010). Sustainability of nonprofit organizations: An empirical investigation. Journal of world business. Vol. 45, p. 346-356. Kelly, M., Jennifer, D., Liz, H., Linshuang, L., Marian, R., Sarah, S., Nancie, Z. and Rick, P. (2011). Emerging leadership in nonprofit organizations: myths, meanings and motivations. Greensboro: Center for creative leadership. Read More