Protestant Reformation Essay Example | Topics and Well Written Essays - 1000 words

Protestant Reformation - Essay Example He was against corruption that prevailed in the Roman Catholic Church. John Calvin, a reformist of French origin was the father of Calvinism, a religion whose English believers were known as puritans. He was famous for his uncompromising theological and moral position and for instilling harsh teachings. He also placed a lot of emphasis on the freedom of the church and encouraged it to arrange its internal affairs by means of its own consistory. Hulrich Zwingli was another reformer. Most of the beliefs that he supported were Martin Luther’s. Like Luther, he was against how the church defined sacrament (Eucharist), celibacy, prayers to saints, confession and use of relics. He also emphasized on the existence of communion and baptism as the only two sacraments. Despite being more radical than Luther and more political than Calvin Zwingli’s vision and movement never developed into a church. The protestant reformation is also known as the reformation era. It refers to a great religious reform that took place in Europe during the 1500s (Grcic, 2009). According to Grcic, it â€Å"was a revolt against the authority of the Catholic Church and that destroyed the religious unity of Europe† (2009, p. 109). Different aspects of life, such as economics, government and homes were affected by reformation. In regard to the impact of the period on an international level, it changed religion, the church and the world as a whole. The protestant reformation developed from the values and ideas of the renaissance. During the reformation, reformers such as Martin Luther, John Calvin and Huldrich Zwingli among others accused the Catholic Church clergy of being corrupt and abusing the power bestowed on them (Grcic, 2009). They urged that Christianity ought to be more pure. As a result of the step taken by the reformers, the Catholic Church was very grieved

The Macroeconomic Situation In The United States Of America Essay

The Macroeconomic Situation In The United States Of America - Essay Example The country is facing issues with the unstable price of oil in the global market and this has also made the prices of commodity unstable and the level of inflation in the country is rather alarming (Jones, 2008). Thus, the current macroeconomic situation in the country is such that the citizens are faced with the instability of the price of commodity in the market. There are also issues with an absurd increase in the interest rate which has discouraged prospective investors from borrowing money from financial homes. The macroeconomic situation in the country has actually put the US Congress and the Federal Reserve on their toes. There are different things that can be done to salvage the macroeconomic situation in the US. The monetary policies in the country should be tightened through the use of expansionary fiscal policies that would help the country to fully recover from the economic recession that it is faced with. The problem of inflation could also be dealt with by making the ag gregate demand lower than the production capability of the economy.

Celebration Essay Example | Topics and Well Written Essays - 2000 words

Celebration - Essay Example The paper discusses that there are two traditional festivals attributed to the Islamic faith, which includes Eid-ul-Fitr and Eid-ul-Adha, both of which are observed according to the lunar Islamic months or sighting of the moon. The term Eid simply means festivity, happiness or joy; consequently, both the Eids are considered to be synonymous with happiness. The Muslims in Saudi Arabia begin the 1st day of Shawwal with Fajr prayer, one of the five daily obligatory prayers. The houses are especially cleansed and decorated all over the country to welcome the festival. After it, some sweet dish is taken, which has already been cooked for Eid day by women. The Saudis wear new clothes, which are specially prepared for this day, and start gathering for another prayer, called Eid prayer, which is generally offered in some vast ground, field or spacious mosque (Cartright~Jones, 2001:5). Before offering the prayer, the Saudis pay fit ran or charity to the deserving and needy people, from all family members, which is obligatory for every Muslim. To conclude, it becomes evident that both the Eids contain meaning and message in their nature and scope. Celebrating the festivals reflect the true spirit of the faith that all humans are equal in the eyes of the Creator, and only the pious and sacrificing enjoys superior status according to the noble teachings of the faith. Since Eid-ul-Fitr and Eid-ul-Adha serve as the two sole religious-cultural festivals of the country, the Saudis take very active part to celebrate them in an exciting and thrilling manner.

Ad Proposal for Apple 2014 Research Paper Example | Topics and Well Written Essays - 1500 words

Ad Proposal for Apple 2014 - Research Paper Example He was awarded the Lange-Tailor Prize in 2009, and best Magazine Writing from the Society for Professional Journalists (Christian Parenti.com). Parenti’s book â€Å"the tropic of chaos† is the result of his immense research and hard work. It took him six long years to produce this outstanding work of art. Parenti travelled to various slums, countries that were at war and countries that were affected with scarcity of food and water shortages. In the book â€Å"Tropic of chaos,† the writer shows his concern of how climate change results in ruining our ecological civilization. The author discusses the region, which lie between the Tropic of Cancer and the Tropic of Capricorn. Parenti’s focus is on East Africa, Afghanistan, India, Pakistan, Kenya, Kyrgystan, Brazil, Mexico. These regions according to him are: â€Å"a belt of economically and politically battered post-colonial states girding the planet’s mid-lattitudes†(Parenti, 9). He labels thes e countries as â€Å"Tropic of chaos† because these countries are facing what he calls a â€Å"Catastrophic convergence of poverty, violence and climate change† (Parenti, 5), which means that climate change is not only causing water and food scarcity but also giving birth to violence in the regions. According to the writer, these countries are too sensitive to shifts in weather changes because they rely on farming and fishing. The writer explains how that the Global North has reacted to this impending crisis with greater oppression and surveillance instead of finding friendly ways to reduce tensions. In short, between the tropic of Cancer and tropic of Capricorn, we mostly find â€Å"most of the failed and semi failed states of the developing world.† (Parenti, 9). Hence, the crisis is taking a toll because the Global South is getting involved in warfare to attain there basic needs. The author begins his narrative by asking, â€Å"who is responsible for killing Ekaru Loruman?† Ekaru Loruman was from Kenya, belonged to a Turkana tribe, and was killed by a rival tribe for stealing cattle, or what the author explains as â€Å"the age old tradition of stock theft† (Democracy now). Moreover, the reason for these frequent killings is that the country is experiencing severe drought and the Turkana Pastoralists are forced to stealing cattle because their animals die due to scarcity of water, so they have to take laws in their own hands, as there are no proper government rules regarding this issue. Here, the author is pointing to an important issue of how the ugly U.S. policies have given rise to everyday violence in these countries. Moreover, the answer to all Parenti’s questions can be answered only if we go back in time when the British rules Africa. History tells us that British during their rule have adopted harsh methods to stop violence. Since that time the violence has never stopped. He gives examples of countries like S omalia, a failed state, which was attacked and demolished by Cold war. After the downfall of the Somalian government, the weapons were transferred to Kenya which resulted in more violence and killings in the form of cattle raids. Moreover, as Kenya does not run any support programs for farmers, this has given rise to more corruption because the farmers have only weapons to defend and protect themselves. The worst part is that when the Somalian refugees reach Kenya, most of the women are being raped and tortured and the sad part is that it is usually the brother who is ordered to rape her sister and if he denies he gets killed. In addition, when the refugees cross the border and reach Kenya they are unable to make a living because Kenyan government is unable to support millions of Somalians who are living in camps. Pakistan is

Listening and Paraphrasing Essay Example for Free

Listening and Paraphrasing Essay The first person I interviewed was my sister’s friend who is nineteen years old and is in college. She works part-time a crew in a coffee shop just outside our village. I asked her about her job and how she was able to manage her time juggling work and studies. According to her, what she is doing is tiresome but she was able to do both activities since it is not simultaneous and that, she really has to be able to do so. She mentioned how she prioritizes work over her studies. She attends to her class regularly but admits that, most of the time, she isn’t attentive. She said that she had to miss some of her morning classes because she’s too tired to get up in the morning. She gets to miss several classes but never miss even a minute of work. She told me that she doesn’t resent having to work while studying unlike other students because she believes that she is learning more and is getting personally better when she is forced to work and study at the same time. She takes everything as a training for what else worse that could happen. She said she feels like there’s nothing that she won’t be able to get through because she has gotten stronger after all the early struggles in her life. She also said that her job as a crew is not all about the money she is earning. She said that she is also enjoying the work because she wants to put up business someday and she is planning to pursue food business. She has been learning a lot by working and feels more unfortunate than other students because she was able to directly apply what she learns from school. In this interview, I would have to repeat some of her answers to make it appear that I am deeply interested in what she is saying. I have learned that paraphrasing also eliminates bars between two communicating parties because it makes one believe one is interested with the other’s tales (USDVA, 2004). When I repeat what she tells me, I say it in a different manner like this one time when she said, â€Å"I really don’t mind if I don’t get too good grades. Passing is enough for me. I just know that I am more knowledgeable than them and I understand exactly what the principles are saying. They only know it by words! † I would say, â€Å"You are no longer after the high grades because you know you understand the subject very well and school grades are just evaluation of school performance. † And I would follow it immediately with a question to keep our conversation going. The next person I interviewed is my grandfather who is already seventy-eight. We’ve talked about his life as part of the navy, how he met my grandmother and who is his favorite among his children. The talked about who is his favorite child is the most interesting part of our conversation. He said, â€Å"Your father wouldn’t lift a hand to reach something and would wait for his siblings or his mother or me to pass by so we could reach it for him. † I said, â€Å"My dad wouldn’t bother himself trying to reach something and would have to rely on someone else so he could get that something. † Having to repeat their words would mean understanding the matter more clearly (RMIT, 2005). It is also a tool for clarifying ideas. In communication, it is very effective because when one feels that the other understands him, he feels more comfortable to talk about anything without any hesitations (Rowley, 2002). I was able to demonstrate it when I was able to extract information from my sister’s friend that is in a more personal level and when I was able to let my grandfather to bring back the memories he had with my father. References: RMIT University. 2005. Paraphrasing. Study and Learning Center, RMIT. Retrieved February 10, 2009 from http://www. dlsweb. rmit. edu. au/lsu/content/4_WritingSkills/writing_tuts /paraphrase_LL/index. html. Rowley, Richard. 2002. Active Listening. Retrieved February 10, 2009 from http://www. aligningaction. com/activeli. htm. U. S. Department of Veterans Affairs. 2004. Listening to Paraphrase. Retrieved February 10, 2009 from http://www1. va. gov/adr/page. cfm? pg=46.

Analysis Of Change Initiative At Toyota Motor Corporation Management Essay

Analysis Of Change Initiative At Toyota Motor Corporation Management Essay Over the past several decades change management has become one of the mostly discussed topics across different industries on the market. The importance of change management has turn out to be a crucial task for managers and leaders of not only the big global corporations but also small and medium sized enterprises. Research suggests that the change management is fundamental issue that has to be considered especially when it comes to introducing and adjusting new strategies and policies that will influence the companys future perspectives and developments. It is essential part of the long-term competitive success formula (Pettigrew and Whipp, 1991). Although many research findings imply that change management can be defined in different ways depending on the industry and the company, there is a common ground on which the perceptions of the roles of the managers are build on. It is argued that people are the main drivers of change and innovation in the competitive environment of the business world. For this reason, human resources departments play a major role in choosing the right people for the right position and train and develop their employees to become goal and future oriented. Findings suggest that in order for a company to have a successful change management implementation, human resources managers have to be able to cope with both transformation and change within a single company (Urlich, 1997). According to Urlich (1997) transformation entails fundamental cultural change within a firmà ¢Ã¢â€š ¬Ã‚ ¦HR managers managing transformation become both cultural guardians and cultural catalysts. Since nowadays many companies operate on a global scale, the main issue in managing transformation is to lead the company through adaptation and acceptance of new culture without influencing the old beliefs and values. On the other hand change is usually related to introducing a certain degree of newness to the company, starting from employing new employees up to introducing new strategies and reshaping the overall corporate culture, mission, and vision of a company. More precisely change can be considered to be interrelated with transformation. It is defined as à ¢Ã¢â€š ¬Ã‚ ¦the ability of an organization to improve the design and implementation of initiatives and to reduce cycle time in all organizational activities (Urlich, 1997). In order for a change to be enacted and successfully accepted within a company, it is argued that change has to happen at three different levels 1) organizational, 2) team and 3) individual. When the new strategies and initiatives are accepted at all of the three levels, the implementation of change is successful (Hirtz, 2008). In order to have a successful change management implementation across the different levels of processes within a single company, research findings emphasize on the importance of having change agents. According to some historical data on human resources, the main drivers for change within a company were considered to be the human resource managers (Urlich, 1997). Being a global company inflicted with differences among the team members, individuals, and the overall organizational structure, the role of the change managers have changed over the years. It is claimed that nowadays the managers and the leaders at all levels within a single company are obliged to assert the need for change and its productive implementation. They are the key to successful understanding of cultural, social, political, and legal differences and the main drivers of motivation to the company as a whole (Hartley et al., 1997). In todays business world companies are striving to achieve a high level of change management implementation. In order to do so, an important factor that has to be taken into consideration is the time scale and planning. According to Caudwell (2004), a successful change management should be carefully planned and it should consist of an identified beginning and an ending that will provide desirable outcomes. However, research suggests that during the change implementation, managers often forget to go back and look at the results that they get at the very beginning of the process, which is the reason why many companies failed to transform and change according to their initial plans. For this reason, findings imply that the change management has to be perceived not as a one-time implementation project, but as an on-going, long-term and future oriented strategy (Caudwell, 2004). Lewins Force Field Analysis Model More than fifty years ago Kurt Lewin, using his experience in social psychology and human behavior, developed the widely known force field analysis model in order to explain how changes can happen within a single company. The force field analysis model, or also known as the 3-step model was primarily developed to help change managers identify the so called driving (or external) and restraining (or internal-individual and group behavior) forces that might influence the change within a single company (Burns, 2004a). In order for a successful and effective change to happen, Lewin proposed that there are three stages that every company and the individuals and groups being part of that environment should go through. Graphical depiction of the model is shown in Figure 1. Figure 1 Note: Table is taken from http://rapidbi.com/management/kurt-lewin-three-step-change-theory/ The first stage is the so-called unfreezing stage where the current situation should be carefully analyzed by producing disequilibrium between the driving and the restraining forces. By identifying the field- term referring to the current individual attitudes and beliefs within a group change agents are ready to move on, from the so-called status quo position, into the next stage called the move or change stage (Burnes, 2004a). At this point change managers are required to develop a plan that will initiate the urge for change among their employees. The change agents are expected to influence their employees and initiate acceptance and adaptation to the new processes, by strongly focusing on motivation and support. Finally, the third and the last stage is the so called refreezing stage where the role of the change managers is to successfully implement the change strategy (in terms of norms, practices, policies, and culture) and make sure that these newly accepted changes are not subj ect to deterioration (Burnes, 2004b) Even though Lewins model is one of the most widely used contributors to understanding the change management within a company, there are some critics that have been developed over the past fifty years. Research suggests that the implication of the model is useful in identifying the need, the type, and the resources needed to implement a certain degree of change within a company. It implies that the change occurs only at the times when the need for change is identified and that, once the individuals beliefs and attitudes are influenced and the social conflict is resolved, the change is accepted as a positive influence (Greener and Hughes, 2006). Findings propose that the model is based on simplistic assumptions that the companies operate as static and mechanistic environments and that the change would follow a clear pattern (Burnes, 2004a). Victor and Franckeiss (2002) suggest that in todays highly globalized and highly competitive business world, influenced by the differences in cultures, economies, and politics, change management is a phenomenon that occurs constantly and is planned, revised and updated on a regular basis. It is considered to be a must-do element of their day-to-day activities, and their future growth and expansion plans (Victor and Franckeiss, 2002). Analysis of change initiative at Toyota Toyota Motor Corporation is a multinational corporation with its headquarters located in Toyota city and Tokyo- Japan and it is the worlds leading automaker. Since its establishment in 1937, the company has successfully managed to expand globally entering the US market in 1957, Asia, Middle East, and China in 1962, and Europe and Africa in 1987. Today Toyota has its overseas bases in 27 countries and regions, as well as 52 production bases and 8 overseas offices. Toyota employs approximately 320,808 employees in their directly affiliated companies around the globe not counting the substantial number of indirectly employed dealers and suppliers. One of the main differentiation strategies of the company is that they managed to keep the same organizational culture and strategy throughout the years of their existence. The company has their own Guiding Principles at Toyota and the Five Main Principles of Toyoda that have been successfully implemented in every Toyota subsidiary, factory, a nd even among their dealers and suppliers. The main purpose of their principles is to keep their stakeholders motivated and prompt to change at any time (Toyota, 2010). More detailed information on the Toyota principles can be found in Figure 2. Figure 2 Guiding Principles at Toyota Honor the language and spirit of the law of every nation and undertake open and fair corporate activities to be a good corporate citizen of the world. Respect the culture and customs of every nation and contribute to economic and social development through corporate activities in the communities. Dedicate ourselves to providing clean and safe products and to enhancing the quality of life everywhere through all our activities. Create and develop advanced technologies and provide outstanding products and services that fulfill the needs of customers worldwide. Foster a corporate culture that enhances individual creativity and teamwork value, while honoring mutual trust and respect between labor and management. Pursue growth in harmony with the global community through innovative management. Work with business partners in research and creation to achieve stable, long-term growth and mutual benefits, while keeping ourselves open to new partnerships. Five Main Principles of Toyoda Always be faithful to your duties, thereby contributing to the Company and to the overall good. Always be studious and creative, striving to stay ahead of the times Always be practical and avoid frivolousness. Always strive to build a homelike atmosphere at work that is warm and friendly. Always have respect for God, and remember to be grateful at all times. Note: Table is taken from the official web page of Toyota Motor Corporation. Since the birth of Toyota, the companys philosophy has been based on successfully contributing to the society, meaning identifying the local cultural and social differences and creating products that will satisfy the needs and wants of the local customers all around the world. Throughout the years the company has managed to keep up with its corporate principle of delivering glocal products by creating a business model that is mainly a mixture of localization for their global markets (Toyota, 2010). Although keeping their unique corporate culture and values, and implementing the same business strategies and principles of doing business all around the globe, they have managed to differentiate and bring innovativeness to the international markets. The key behind this success is in the regiocentric management orientation. The company has effectively managed to spot the differences and similarities in the home and host countries and develop local view that allowed them to bring changes into their company, starting with the development of few global names of their products with localization content, and developing special training and support programs that will sustain the cultural differences and will allow their new employees to merge with the company much easier (Toyota, 2010). Toyota is one of the worlds widely known companies not only because of their successful business plan that has been implemented at home and overseas, but also because of their revolutionary change that made their management strategy stay the same over the years. By developing the Toyota Production System or TPS which is the method of managing people engaged in work that emphasizes frequent rapid problem solving and work redesign, the company has set the global model for successful performance and productivity (Thompson et al, 2003). The model was originally developed in the 1970s and it was mainly used to facilitate production and improve the speed. Over the last several decades the model was widely accepted by many companies operating in different industries. The reason behind the adoption of the model lies in the efforts of Toyota to bring constant change through experimenting and applying new concepts to the already existing processes (Spear, 2004). But what is the main drive behind successfully applying the TPS strategy? According to Parks (2002) Toyota has been the only company that has managed to apply the process without facing major failures. He claims that for introducing such innovative approach, the whole organizational culture and management should undergo the necessary changes. At Toyota the changes always start with their stakeholders. All the ideas and possible solutions to the existing problems are generated from their employees from all over the world. The solutions are discussed and are implemented as part of their experimental processes after which the final assessment is done. After the decision is made, extensive cross-functional training programs are inducted in order to have productive multifunctional workers who will understand the processes and the implementation of the new strategies. In order to get the desired results, strong change management is needed that will provide guidance and will result in disci plined and effective implementation of the change strategies (Parks, 2002). Having a strong management that promotes open and fair corporate activities involving all of the companys employees, introducing diversity programs that support the different cultural backgrounds, and following a clear set of rules (The Code of Conduct) enacted by extensive on-site training activities, is the key factor for success of Toyotas change management processes and strategies (Toyota, 2010). Conclusion Although the importance of having an effective change management has been introduced more than five decades ago, it seems that in todays business world its significance and implementation has a greater influence and application among the companies operating in different industries. Globalization and internationalization had significantly influenced the companies to embrace the change management strategies. Operating on different markets around the world requires compliance with the local cultures, economies, and politics which are the main factors for success of an international company. The main issue is to manage to create synergies between the home business strategy and corporate culture and the host- local cultures and procedures. Although it might seem like a logical transformation that has to be done, without implementing strong change management policies that will be based on the differences and similarities of the markets and the people, administering change can turn out to b e one of the most difficult processes. Following the example of Toyota, in order to have efficient change management teams and change strategies that would be accepted within a company, managers should stress out the importance of all of their employees. By becoming part of the problem solving and decision making processes, managers would get the opportunity to understand the cultural backgrounds of their employees and eliminate the factors that might influence their behavior. On the other hand the employees would feel involved and motivated and the implementation of the possible changes would result in positive outcomes. This is the reason why over the years Toyota has managed to keep the same organizational culture and strategy, yet always being able to bring innovativeness and set benchmark for other companies on the market to follow.

Grey Marketing Activities Within the Software Industry

Grey Marketing Activities Within the Software Industry Future ABSTRACT The research work has presented an enlarged view of the operation within the grey markets, their functioning, pricing structure, the customer base lastly the arguments in favour, thereby evaluating -‘Can grey be good? It has also focussed on grey markets- as a subject of annoyance for the IT players OEMs. Counter-arguments hostile measures adopted to combat grey goods have also been the point of discussion. Overall, this piece of research is being successful in presenting a balanced view of the goods the bads of the grey industry from the perspective of industry players, grey entrepreneurs as well as consumers. INTRODUCTION 1.1 AIMS To obtain information insights about grey marketing activities within the software industry. With the help of Journals, case studies secondary research activities shed light on the present scenario of the grey markets (consumer targeting inclination, pricing etc). The pros cons of grey marketing shall also be presented to have an equalised view. To know what are the hostile measures adopted by firms to prevent grey activities. Present cases to depict the preventive measures adopted by firms like HP Microsoft to combat grey market products. The paper also focuses on the initiatives adopted by independent agencies such as AGMA BSA towards grey market activities. Market Penetration Grey Markets Can grey market ever be an alternative to market penetration? If yes, to which extent can it be possible? In addition, understanding the concept of ‘free riding as a way for market penetration, as mentioned in the Journal of Business Venturing (Vol 4). To evaluate: Can grey ever be good? Based on the research undertaken, evaluating thereby concluding the positives negatives of grey markets. Should they be encouraged? Can they boost an economic scenario of a country? lastly how effective can they be in increasing sales of a product? 1.2 OBJECTIVES The methodology that is to be adopted for fulfilment of the above aims is as under: Journals, Newsweekly, Internet (secondary research) along with white papers provided by firms shall be the main sources of information for this research. Primary data obtained through interviewing shall be the most vital aspect (it shall be considering not only the consumer perspective towards grey markets its products, but also of dealers operating within this arena). finally, the crux of the research (insights, analysis evaluation) will be presented to obtain a concluding perspective. 1.3 GREY MARKET: AN NTRODUCTION Majority of distribution companies are flourishing thanks to distribution channels that shepherd product from a manufacturer eventually direct them to the consumers through a chain of legitimate distributors across the world. But a mounting quite detrimental market subsists that can cause ignorant customers to buy technology products with untrue warranties, several designed for use in other countries or worse products consisting counterfeit parts. These practices can erode customer satisfaction harm brand integrity, causing major profit attrition for manufacturers. Welcome to the global ‘Grey Market where branded products have been sidetracked from the authorised supply channel within a country or are imported into a country without the approval or awareness of the manufacturer. Grey market goods are usually sold at lesser prices than those proposed by the legitimate distributors. And the pricing disparity amongst various legitimate markets customers generates an opportunity for the brokers to procure labelled products at discounted prices move them to markets where they can fetch high income. A research study by KMPG demonstrates that grey market goods pose a grave challenge to information technology manufacturers their authorised dealers. The study reveals that IT manufacturers are communally losing up to US$5 billion in profits on yearly basis, a figure that is mounting. While the grey market affects many businesses, including automobiles, consumer products, pharmaceuticals, fashion accessories others, this study shall validate that computers related products are the industry segments most affected by grey market actions. 1.4 INTRODUCTION TO THE PROBLEM (a) Software Counterfeiting Counterfeiting is amongst the most exigent problem facing the information technology (IT) industry today. Illegal replicas of brand-name high tech products are flooding the marketplace, causing harm to legitimate companies profits and dropping their aptitude to invest in research and development (RD). Multiplication of technology employed to make computers, servers, and a host of high tech products—as well as a lack of regulatory enforcement in developing countries—is speeding up counterfeiting. It is now estimated that as much as 10 percent of all high tech products sold globally are counterfeit. (b) Free Riding: A Way To Penetrate Markets? ‘Free Riding is a term which comes into picture when software products have been counterfeited. Free-riding was first introduced by Tan et al. (1995, 1997) as an alternative explanation for the incidence of grey marketing, whereby grey entrepreneurs are provided with the opportunity to enter money-making markets that are presently supplied by big firms. However, hostile measures have been taken to prevent grey market activities by agencies like AGMA BSA as well as biggies like Microsoft, HP etc. HP is administrating reseller spot checks and distie reviews to stamp out the grey market in a variety of regions without being hesitant to exercise the law courts against resellers who â€Å"breach contractual requisites†. The firm, at the moment, is taking legal action in opposition to one UK reseller for violation of agreement and cautions it has other cases under review. While, Microsoft has collared another plagiarist in the UK for flogging grey software on eBay. The software giant has scored  £35,000 in compensation against an internet trader for copyright violations and illegitimately bringing in cheap American software to Europe. Meanwhile, an agency like Business Software Alliance (BSA) is outing bandits by setting a bounty on their heads. The group announced its Blow the Whistle operation which presents $1m to workers who squeal on their companies. Certain firms are trying to launch software which might allow manufacturers detect sales through unofficial mediums. 1.5 SCOPE FOR THE REASERCH The main reason behind the proposed research subject is to obtain information on the grey markets the practices that are being carried out. The scope for undertaking the research work is as under: Understanding the global phenomenon of ‘grey marketing. Understanding the logistics within grey markets. The precautionary measures adopted by the firms agencies to prevent grey activities. The concept of free riding to penetrate markets within the software arena. lastly analysing evaluating the research produced to gather provide insights. 1.6 LIMITATIONS TOWARDS THE REASERCH The possible shortcomings for the proposed research topic are as under: Being an unconventional subject for research, obtaining information can be tough. Tracking the right sources of information is a major challenge. Information gathered through ground research cant be entirely relied upon, as it can be manipulative. Information obtained from grey suppliers may not be fruitful, as they might not give out precise information about the present scenario Interviewing people from companies or firms who are being targeted by grey marketers may prefer to remain low profile on the preventive measures they plan to adopt in future. 1.7 REASEARCH STRUCTURE The research has five focus groups (in order to understand the information.) The first chapter offers an inside view of the topic with its backdrop. It also contains the customary objectives which form the foundation for a focused research study. Meanwhile, it also describes how the established purpose will be achieved and the manner they would provide help. This section gives rationale and importance of conducting this research. The second chapter comprises the prior literature on grey markets, constructed by a range of authors and researchers in earlier years. This would aid to shed light on the pros cons in grey marketing. In addition; this chapter provides live cases published in reputed newsweekly. The third chapter talks about the type of methodology the researcher has employed to achieve the study. It gives out the arguments in favour against of each method in order to gain understanding. Furthermore, it exemplifies of some important sources which have been accessed to complete the study. Thus, this chapter explains the different techniques to achieve the objectives. The fourth chapter forms the body of the thesis as it entails the detailed analysis of the various aspects to establish the objectives. This chapter generates convincing points to support the study. The fifth and the last chapter of the paper summarises all the information gathered, finally, concluding the thesis. 1.8 SUMMARY HYPOTHESIS To summarise the above literature in few words, I shall be basically focusing weather grey markets can influence the sales of a product, thereby helping towards market penetration. Concepts, rather strategies, such as free riding shall be looked researched upon to present realistic as well as optimistic view towards grey markets, thereby analysing -‘Can grey ever be good? ‘Can grey goods help in market penetration? LITREATURE REVIEW Almost exclusively, the existing literature on grey marketing regards the occurrence as a pricing problem but falls short to identify it as a market entry opportunity for start-up entrepreneurs. The grey marketing strategy forms apt for start-up entrepreneurs in view of their resource limitations and the risk of being a first-mover in market development. Within this paper, the researcher shall be focusing on how an entrepreneur can effectively penetrate an established market by adopting suitable approaches. This is most favorable for an incumbent trader to accommodate the entrepreneur/grey marketer even if the former could compel the latter out of the market through hostile counter actions. Moorthy (1985) demonstrated the game theoretic methodology is most appropriate to investigating the behavior of market participants in such a state. This game theory is being pursued by Lim G.H., Lee K.S., Tan S.J. (Journal of Business Venturing, Jul 2001, Vol 16) to depict the strategic communications between parties concerned in grey markets and to recognise the circumstances under which entrepreneurs can effectively enter these markets. 2.1 THE POSITIVES OF GREY MARKETING A study offered by USC Marshall Research in fall 2004 by Mark Bergen (Carlson School of Management, Kersi D. Antia (University of West Ontario, London) Shantanu Dutta (Marshall School of Business, University of California) portrays the optimism towards grey markets. According to the paper, grey markets are often an helpful way to react to competitive demands, control distribution channels, fragment markets, reach unexploited markets alter the changes in market conditions. Some of the positive aspects of grey markets are being highlighted below: Incremental Sales: Grey markets are favourable if they reach formerly untapped markets. Grey markets also disclose the existence of new markets. Cell phone manufacturers competing in Malaysia, for instance, discovered a buying segment keen to pay premium prices for the newest phone gadgetry. Supply restrictions: Grey markets are advantageous if they permit dealers to overcome supply constraints scarcities. For example, IBM relied on the illegal outlets in China to get around government policies requiring the participation of local companies. Rather than make huge investments to fake partnerships with local distributors, IBM turned a blind eye to a flood of grey market imports from Hong Kong. Competitive need of opportunity: Competitors will frequently exploit grey markets if they are lucrative companies which do not follow trail shall lose significant market share, position power. This is precisely what happened to Indian-branded manufacturers of PCs. With the evident competition and sales went on at high-end retailers, the actual sales volume that led to economies of scale market penetration took place in the unorganised sector, accounting nearly 60% of total market. Several branded PC maker in India, uncared for this market, failing to reach a large unexploited segment of customers whose wants were not being met by the existing channel. Competitors that did sell to this sector have since grown to be key players. Market Segmentation: It is at times complicated to segment market within an existing distribution channel structure. Grey markets permit firms to segment their customer base more profitably than they could if they employ only a constricted base of distributors, customer uncertainty branded dilution that arrives from selling through a multi-channel network of legitimate dealers. IBM used a twofold channel approach to sell profitably in high end markets while still attaining more price responsive consumers with grey market goods; this strategy helped the company meet sales targets, spawn profits produce sales economies in manufacturing. Channel Management: Occasionally it is less expensive to abide grey market activity than to close it entirely. Shutting down grey market can be very pricey in terms of management time other resources required sensing breach, filing them, communicating them internally with distributors, and punishing the lawbreakers. Grey markets may also be a less expensive means to serve small customer sections that do not have access to authorised outlets or customers who do not value the services offered by authorised dealers. Varying market environment: In many situations, distribution channels cannot modify adequately to meet new market realities. For example, auto dealers have supply networks in places that are hard to switch. But in an epoch of soft sales, sustained incentives continually growing competition, they are struggling for numbers, even if it means forgone revenues. With effect, dealers have been more tolerant to grey markets as long as these markets let them to get in touch with a broader set of customers at improved prices. Market Aptitude: Companies that reveal grey market activities the causes following them discover about their customers their markets. Since grey markets materialise on their own, outside existing supply channels structures, they are frequently driven by influential market forces (such as short supply to a particular segment that wants the product) therefore put forward some of the purest forms of market intelligence accessible. 2.2 CONS OF GREY MARKETING 1. Dilution of exclusivity: Perhaps the most instant outcome of grey market is the draining down of exclusive rights to distribute a product. Instead of being the solitary distributor or one of a select few enterprises for delivering a product, the authorised distributor becomes merely one of several sources. The consequence is a radical drop in margins as multiple outlets struggle for the same customer. What follows promptly thereafter is only to be expected: loud complaints from the legitimate distributors and calls to the company to â€Å"do something concerning it!† 2. Free riding: But what if a manufacturer turns blind eye or, worse yet, writes off its authorized distributors complaints? While it is improbable that a distributor would split relations with the supplier in protest, there are several indirect but possibly more insidious ways of reaching the manufacturer. One of these is free riding. Free-riding was initially offered by Tan et al. (1995, 1997) as an alternative justification for the event of grey markets. In such situations, authorised traders, dispirited by anemic margins and manufacturers ineffectiveness, begin skimping on the imperative services they generally offer—such as presale service, consumer awareness education on product features, salesperson training and so on—in an attempt to lessen their expenses and match grey marketers price. This approach can weaken the value-added services and activities that often lay at the heart of several enterprises sources of differentiation and competitive plan in the market place. As one automobile dealer put it, â€Å"We invest millions in sales and service facilities. Its hard to compete with someone whose only investments are a briefcase and a cell phone.† The under provision of services is the death knell of high-end brands, as customers who value service will discard the brand in droves. 3. Damage to channel relations: Perhaps the prime cost of grey marketing is its impact on the relations and trust amid members of the distribution system. When a manufacturer has made major investments in official channel members or is dependent on one or a few associates (or both), grey markets that rip off these relationships can be particularly pricey. Visualise an official supplier that has recently coughed up $2 million to set up a new outlet and its related trappings—all to accomplish its contractual obligations. The manufacturer has guaranteed the dealer that ownership of an exclusive region will more than add up for his venture. Just as the distributor begins to foresee the promised sales, he receives word that the cash cow of the product line is offered down the street at a markdown of 15% to 20% off its own posted price. Frenzied phone calls to the manufacturer are met with empty reassurances or even stony silence. What should the enterprise do? Should it (a) match the price of its grey market opponent, doing whatsoever necessary to cut costs, (b) complain robustly to the manufacturer or (c) seek assistance from the courts, suing whoever appears liable for his current remorseful situation? 4. Undermining segmented pricing schemes: The spill over from this distribution headache expands with equivalent viciousness to most essential elements of a marketing strategy, including pricing. A basic characteristic of multinational operational strategy is the facility to price goods at levels that every local market can bear. As long as a company can fragment each market, it has a winning hand. But globalisation tosses a twist in the works. Tumbling trade barriers, easy accessibility of information and improved logistical potentials have collectively made the watertight local market a quaint belief; these factors also make it easier for grey market operators to flourish. 5. Repute and legal liability: A manufacturers ability to support its product is taken for granted. In the case of grey market goods, however, the manufacturer loses control of the product. FOR AN EXAMPLE OF how these five fundamentals can work together, consider the troubles faced by manufacturers of new, high-end IT products. High levels of services are often required to instruct customers on the features and benefits of these products. To really understand quality new product features and their functioning with other technologies, it is obligatory for the customers to learn from a salesperson at the retail outlet. To make such services available, the manufacturer time and again needs to develop a relatively elite set of distributors, fostering strong contacts and supporting the distributors actions with subsidies and an opportunity to achieve high margins. Authorised suppliers are chiefly vulnerable to grey markets in this condition. Illegitimate dealers can free ride, allowing other dealers invest in the service and offering the similar products at lower prices. Budding customers can take what they discover from authorised dealers and hunt for low-service, lower-price grey markets. The authorised sellers thus face high costs, shrinking margins and low sales. Often, the clarification they opt is to provide less service and to be more price competitive. As their margins contract, channel clashes grow, and the dealers start routing customers to competitors products which offer higher margins. The difficulty, then, eventually budges from the authorised distributors and comes to rest on the shoulders of the manufacturer. Below presented are two different cases providing two different perspectives towards grey practices. The first consist of a comparative study amongst countries the pricing structure of the grey goods that are being sold. The second case depicts the current scenario of grey activities in China. The case focuses mainly on the problem of counterfeiting of IT products the preventive measures that can be taken to minimise this nuisance. CASE 1: BUYING FROM THE GREY MARKET Are you tempted to buy cheap and cheerful goods from the grey market or should you take the authorised route? asks Sean Fleming. Anyone who has visited the US or the Far East will have found themselves going misty-eyed and waxing lyrical on the subject of how cheap things are over there. But you dont have to cross an ocean to see bargains. The difference in the price of new cars in Britain and mainland Europe they are often as much as 20% cheaper on the continent has many people hopping mad. The UKs Director General of Fair Trading has concluded the market isnt working, and has now ordered the Monopolies and Mergers Commission to investigate whether or not cartels exist in the car industry. Whatever the cause, people are realising that we must be paying over the odds in the UK for a whole range of goods and services. But do we complain? No, thats not the British way, is it? So that decision to investigate high prices in the UK will come as music to many peoples ears. Trade and industry minister Stephen Byers says he has identified this as a key obstacle to the concept of a harmonised Europe. If you want proof that things cost more here in the UK, there is plenty of it around. Bureau European des Unions de Consommateurs (BEUC), the European consumers organisation, carried out a survey last year in 52 cities across Europe in which it compared the prices of 400 different products. From this it produced an index of the cheapest and most expensive countries. The UK turned out to be the dearest of the 10 countries sampled, with a rating of 124 overall. By comparison, France scored 107, Luxembourg 102 and Germany a rating of 100. Report after report, survey after survey, they all come back with the same result when you compare like-for-like goods, we in the UK are paying more than just about everyone else in the developed world. Sure enough, its the same story with IT equipment both hardware and software. Feel like paying through the nose? No? Thats unfortunate, because the chances are youre going to. There is a painfully simple solution to all of this, of course. If stuff is cheaper somewhere else, then go somewhere else to buy it. Plenty of people import cars from Holland and Germany, and even from the Far East, so why not do it with IT? The practice of buying from non-standard, unauthorised outlets is often referred to as buying from the grey market. The grey market is a bit like the black market, except in this case no ones actually breaking the law just risking the annoyance of original manufacturers. There are big savings to be had from going grey. For example, an IBM PC 300GL, with PII 400MHz chip, 32Mb memory and a 4.2Gb hard drive running Windows 98 would set you back about #814 in the UK, but bought on the European mainland, the same PC will cost you #689. Thats a 15% saving. How about a Cisco 1601CH router? Itll cost you about #779 here and only #649 on the other side of the channel. Mike Almond is business development manager at ProSource, a company which specialises in finding this sort of deal for its customers. Using a combination of overseas contacts and the Net, ProSource keep tracks of international prices on a daily basis. When asked by a customer for a particular product, it can go out and find the best price. Were not saying were better than established channels or that our approach is the right one for organisations to adopt, but our results speak for themselves. More importantly, we offer an alternative option to our customers. Thats what a free market should deliver, Almond says. Its not difficult to find this stuff. Some manufacturers will discount heavily in particular countries to make in-roads into that market. We can use those markets to buy products back cheaper. There is, of course, a catch buy your kit from another country and the manufacturers warranty is invalid when you get home. No warranty means no technical support, no helpline advice and certainly no upgrades. Some manufacturers are so inflamed at the thought of people saving money like this that they will not just refuse support; they will also claim the law is being broken. This is despite the fact that Europe is now a single market. Phil Humphries is head of IT services at Surrey Police and it is no surprise that hes extremely cautious about ending up on the wrong side of the law, whether statutory or a manufacturers warranty rule. As part of his forces year 2000 project, a lot of equipment has been replaced, at the same time as migrating to Windows NT. He may have seen lots of expensive equipment being bought, but Humphries is not tempted by the lure of the grey market. I am aware that some of the things we use could be bought cheaper overseas by using the grey market, but I dont think the differences are as great as they used to be, he says. Apart from which, the hassle factor would be enough to put me off. This is an important factor for many people. All too often you dont know exactly what youre buying and who you are buying it from. In the event of a problem, can you be sure youll be able to get hold of them? Humphries said. But theres more to it than that. Saving money on initial capital outlay may have its attractions, but Humphries feels this is a short-term gain had at the expense of longer term success. We are moving away from a situation where we are buying boxes. Now we want to deal with a partner which can offer the right support we need from start to finish. Most of the bargain-basement IT offers that crop up in the small ads will be for software. Adverts purporting to have US versions of Microsoft Office at less than half price are fairly commonplace. David Gregory, Microsoft UKs customer legal licensing manager, warns there is more to these offers than meets the eye. He explains: Our biggest problem with people using unauthorised sources is that the overwhelming majority of this software is counterfeit. It will be passed off as being from the US, but in about 90% of cases it is pirated. The individual serial number on the product tells us where that product was bought or if it is a copy. Finding anyone with IT purchasing responsibility who will admit to using the grey market is difficult, although one IT manager confided anonymously: Most of our procurement has to go through a centralised process. However, some stand-alone projects are bought on an ad-hoc basis and thats when buying on the cheap becomes a viable option. But why is any of this stuff priced so much higher in the UK in the first place? Almost all the major manufacturers operate different pricing policies in different countries, but few can explain why the UK gets clobbered quite so comprehensively. As far as Microsoft is concerned, Gregory says: The majority of software originates from the US and there are certain unavoidable costs incurred when taking that software into other territories local support services, language support, translating documentation and so on. Not to mention currency fluctuations. But with the worlds foremost software vendor moving toward shipping single every-language versions of its products, this position is set to become obsolete. On the hardware front, the worlds number one in PCs, Compaq, also varies prices between the countries that it sells to. David Petts, Compaq UK commercial unit business manager, explains: Local pricing exists because different markets have different patterns of economic behaviour. In Europe, Compaq prices are set by the companys European HQ in Munich, and individual countries are then able to fix their own prices within a given range. So, if one were to charge at the top end of the range and another charged at the lower end, you could, in theory, see material price differences, he says. Why the UK is hit hardest by these price differentials is obviously a difficult subject for manufacturers to discuss candidly. One source within a major hardware company begrudgingly admits: Lots of things are cheaper in the US and Japan. Its the way of the world people just need to face up to it. So, there you have it put up and shut up. If you dont put up, and instead succumb to the grey market, your warranties wont work. However, there are ways to get around the warranty issue. In the case of Compaq, any warranty in operation in the UK will also cover the rest of Europe and vice-versa. You can buy Compaq kit in Holland, for example, and not have to worry about your warranty. ProSources Almond explains that it is important to keep geography in mind when venturing into the grey market. Manufacturers will claim warranties are not valid, but under EC law there is nothing to stop you buying things from any other EC country. If we have a customer that is very sensitive about maintaining the warranties, well be careful to only buy from within the right region, he says. In the case of IBM, things are even more straightforward: good old Big Blue offers global support on all its products, so it doesnt matter if you bought your ThinkPad in Durban but you live in Doncaster. A long-standing champion of the grey market is Cirencester-based RBR Networks, Ciscos largest European distribution partner. Before getting its Cisco accreditation in October 1997, RBR was something of a thorn in Ciscos side. It was doing so much business in grey-market Cisco product that in the end the company had to be brought into the fold. RBR marketing director, Jos White, takes a fairly pragmatic view of the subject. He does, however, prefer the term second sourcing to grey market he believes it doesnt sound so grubby. Using second sourcing, we could make a healthy margin and still sell cheaper than most of the competition, says White. It has to be up to the manufacturer to make it worth everyones while to use the authorised channels, he adds. Manufacturers cannot simply try and ban this sort of thing and it is definitely not on for them to throw their weight around, threatening everyone by saying that their licences are invalid and they may be breaking the law. It comes as no surprise that a manufacturer such as Compaq is against the use of the grey market. It has nothing to Grey Marketing Activities Within the Software Industry Grey Marketing Activities Within the Software Industry Future ABSTRACT The research work has presented an enlarged view of the operation within the grey markets, their functioning, pricing structure, the customer base lastly the arguments in favour, thereby evaluating -‘Can grey be good? It has also focussed on grey markets- as a subject of annoyance for the IT players OEMs. Counter-arguments hostile measures adopted to combat grey goods have also been the point of discussion. Overall, this piece of research is being successful in presenting a balanced view of the goods the bads of the grey industry from the perspective of industry players, grey entrepreneurs as well as consumers. INTRODUCTION 1.1 AIMS To obtain information insights about grey marketing activities within the software industry. With the help of Journals, case studies secondary research activities shed light on the present scenario of the grey markets (consumer targeting inclination, pricing etc). The pros cons of grey marketing shall also be presented to have an equalised view. To know what are the hostile measures adopted by firms to prevent grey activities. Present cases to depict the preventive measures adopted by firms like HP Microsoft to combat grey market products. The paper also focuses on the initiatives adopted by independent agencies such as AGMA BSA towards grey market activities. Market Penetration Grey Markets Can grey market ever be an alternative to market penetration? If yes, to which extent can it be possible? In addition, understanding the concept of ‘free riding as a way for market penetration, as mentioned in the Journal of Business Venturing (Vol 4). To evaluate: Can grey ever be good? Based on the research undertaken, evaluating thereby concluding the positives negatives of grey markets. Should they be encouraged? Can they boost an economic scenario of a country? lastly how effective can they be in increasing sales of a product? 1.2 OBJECTIVES The methodology that is to be adopted for fulfilment of the above aims is as under: Journals, Newsweekly, Internet (secondary research) along with white papers provided by firms shall be the main sources of information for this research. Primary data obtained through interviewing shall be the most vital aspect (it shall be considering not only the consumer perspective towards grey markets its products, but also of dealers operating within this arena). finally, the crux of the research (insights, analysis evaluation) will be presented to obtain a concluding perspective. 1.3 GREY MARKET: AN NTRODUCTION Majority of distribution companies are flourishing thanks to distribution channels that shepherd product from a manufacturer eventually direct them to the consumers through a chain of legitimate distributors across the world. But a mounting quite detrimental market subsists that can cause ignorant customers to buy technology products with untrue warranties, several designed for use in other countries or worse products consisting counterfeit parts. These practices can erode customer satisfaction harm brand integrity, causing major profit attrition for manufacturers. Welcome to the global ‘Grey Market where branded products have been sidetracked from the authorised supply channel within a country or are imported into a country without the approval or awareness of the manufacturer. Grey market goods are usually sold at lesser prices than those proposed by the legitimate distributors. And the pricing disparity amongst various legitimate markets customers generates an opportunity for the brokers to procure labelled products at discounted prices move them to markets where they can fetch high income. A research study by KMPG demonstrates that grey market goods pose a grave challenge to information technology manufacturers their authorised dealers. The study reveals that IT manufacturers are communally losing up to US$5 billion in profits on yearly basis, a figure that is mounting. While the grey market affects many businesses, including automobiles, consumer products, pharmaceuticals, fashion accessories others, this study shall validate that computers related products are the industry segments most affected by grey market actions. 1.4 INTRODUCTION TO THE PROBLEM (a) Software Counterfeiting Counterfeiting is amongst the most exigent problem facing the information technology (IT) industry today. Illegal replicas of brand-name high tech products are flooding the marketplace, causing harm to legitimate companies profits and dropping their aptitude to invest in research and development (RD). Multiplication of technology employed to make computers, servers, and a host of high tech products—as well as a lack of regulatory enforcement in developing countries—is speeding up counterfeiting. It is now estimated that as much as 10 percent of all high tech products sold globally are counterfeit. (b) Free Riding: A Way To Penetrate Markets? ‘Free Riding is a term which comes into picture when software products have been counterfeited. Free-riding was first introduced by Tan et al. (1995, 1997) as an alternative explanation for the incidence of grey marketing, whereby grey entrepreneurs are provided with the opportunity to enter money-making markets that are presently supplied by big firms. However, hostile measures have been taken to prevent grey market activities by agencies like AGMA BSA as well as biggies like Microsoft, HP etc. HP is administrating reseller spot checks and distie reviews to stamp out the grey market in a variety of regions without being hesitant to exercise the law courts against resellers who â€Å"breach contractual requisites†. The firm, at the moment, is taking legal action in opposition to one UK reseller for violation of agreement and cautions it has other cases under review. While, Microsoft has collared another plagiarist in the UK for flogging grey software on eBay. The software giant has scored  £35,000 in compensation against an internet trader for copyright violations and illegitimately bringing in cheap American software to Europe. Meanwhile, an agency like Business Software Alliance (BSA) is outing bandits by setting a bounty on their heads. The group announced its Blow the Whistle operation which presents $1m to workers who squeal on their companies. Certain firms are trying to launch software which might allow manufacturers detect sales through unofficial mediums. 1.5 SCOPE FOR THE REASERCH The main reason behind the proposed research subject is to obtain information on the grey markets the practices that are being carried out. The scope for undertaking the research work is as under: Understanding the global phenomenon of ‘grey marketing. Understanding the logistics within grey markets. The precautionary measures adopted by the firms agencies to prevent grey activities. The concept of free riding to penetrate markets within the software arena. lastly analysing evaluating the research produced to gather provide insights. 1.6 LIMITATIONS TOWARDS THE REASERCH The possible shortcomings for the proposed research topic are as under: Being an unconventional subject for research, obtaining information can be tough. Tracking the right sources of information is a major challenge. Information gathered through ground research cant be entirely relied upon, as it can be manipulative. Information obtained from grey suppliers may not be fruitful, as they might not give out precise information about the present scenario Interviewing people from companies or firms who are being targeted by grey marketers may prefer to remain low profile on the preventive measures they plan to adopt in future. 1.7 REASEARCH STRUCTURE The research has five focus groups (in order to understand the information.) The first chapter offers an inside view of the topic with its backdrop. It also contains the customary objectives which form the foundation for a focused research study. Meanwhile, it also describes how the established purpose will be achieved and the manner they would provide help. This section gives rationale and importance of conducting this research. The second chapter comprises the prior literature on grey markets, constructed by a range of authors and researchers in earlier years. This would aid to shed light on the pros cons in grey marketing. In addition; this chapter provides live cases published in reputed newsweekly. The third chapter talks about the type of methodology the researcher has employed to achieve the study. It gives out the arguments in favour against of each method in order to gain understanding. Furthermore, it exemplifies of some important sources which have been accessed to complete the study. Thus, this chapter explains the different techniques to achieve the objectives. The fourth chapter forms the body of the thesis as it entails the detailed analysis of the various aspects to establish the objectives. This chapter generates convincing points to support the study. The fifth and the last chapter of the paper summarises all the information gathered, finally, concluding the thesis. 1.8 SUMMARY HYPOTHESIS To summarise the above literature in few words, I shall be basically focusing weather grey markets can influence the sales of a product, thereby helping towards market penetration. Concepts, rather strategies, such as free riding shall be looked researched upon to present realistic as well as optimistic view towards grey markets, thereby analysing -‘Can grey ever be good? ‘Can grey goods help in market penetration? LITREATURE REVIEW Almost exclusively, the existing literature on grey marketing regards the occurrence as a pricing problem but falls short to identify it as a market entry opportunity for start-up entrepreneurs. The grey marketing strategy forms apt for start-up entrepreneurs in view of their resource limitations and the risk of being a first-mover in market development. Within this paper, the researcher shall be focusing on how an entrepreneur can effectively penetrate an established market by adopting suitable approaches. This is most favorable for an incumbent trader to accommodate the entrepreneur/grey marketer even if the former could compel the latter out of the market through hostile counter actions. Moorthy (1985) demonstrated the game theoretic methodology is most appropriate to investigating the behavior of market participants in such a state. This game theory is being pursued by Lim G.H., Lee K.S., Tan S.J. (Journal of Business Venturing, Jul 2001, Vol 16) to depict the strategic communications between parties concerned in grey markets and to recognise the circumstances under which entrepreneurs can effectively enter these markets. 2.1 THE POSITIVES OF GREY MARKETING A study offered by USC Marshall Research in fall 2004 by Mark Bergen (Carlson School of Management, Kersi D. Antia (University of West Ontario, London) Shantanu Dutta (Marshall School of Business, University of California) portrays the optimism towards grey markets. According to the paper, grey markets are often an helpful way to react to competitive demands, control distribution channels, fragment markets, reach unexploited markets alter the changes in market conditions. Some of the positive aspects of grey markets are being highlighted below: Incremental Sales: Grey markets are favourable if they reach formerly untapped markets. Grey markets also disclose the existence of new markets. Cell phone manufacturers competing in Malaysia, for instance, discovered a buying segment keen to pay premium prices for the newest phone gadgetry. Supply restrictions: Grey markets are advantageous if they permit dealers to overcome supply constraints scarcities. For example, IBM relied on the illegal outlets in China to get around government policies requiring the participation of local companies. Rather than make huge investments to fake partnerships with local distributors, IBM turned a blind eye to a flood of grey market imports from Hong Kong. Competitive need of opportunity: Competitors will frequently exploit grey markets if they are lucrative companies which do not follow trail shall lose significant market share, position power. This is precisely what happened to Indian-branded manufacturers of PCs. With the evident competition and sales went on at high-end retailers, the actual sales volume that led to economies of scale market penetration took place in the unorganised sector, accounting nearly 60% of total market. Several branded PC maker in India, uncared for this market, failing to reach a large unexploited segment of customers whose wants were not being met by the existing channel. Competitors that did sell to this sector have since grown to be key players. Market Segmentation: It is at times complicated to segment market within an existing distribution channel structure. Grey markets permit firms to segment their customer base more profitably than they could if they employ only a constricted base of distributors, customer uncertainty branded dilution that arrives from selling through a multi-channel network of legitimate dealers. IBM used a twofold channel approach to sell profitably in high end markets while still attaining more price responsive consumers with grey market goods; this strategy helped the company meet sales targets, spawn profits produce sales economies in manufacturing. Channel Management: Occasionally it is less expensive to abide grey market activity than to close it entirely. Shutting down grey market can be very pricey in terms of management time other resources required sensing breach, filing them, communicating them internally with distributors, and punishing the lawbreakers. Grey markets may also be a less expensive means to serve small customer sections that do not have access to authorised outlets or customers who do not value the services offered by authorised dealers. Varying market environment: In many situations, distribution channels cannot modify adequately to meet new market realities. For example, auto dealers have supply networks in places that are hard to switch. But in an epoch of soft sales, sustained incentives continually growing competition, they are struggling for numbers, even if it means forgone revenues. With effect, dealers have been more tolerant to grey markets as long as these markets let them to get in touch with a broader set of customers at improved prices. Market Aptitude: Companies that reveal grey market activities the causes following them discover about their customers their markets. Since grey markets materialise on their own, outside existing supply channels structures, they are frequently driven by influential market forces (such as short supply to a particular segment that wants the product) therefore put forward some of the purest forms of market intelligence accessible. 2.2 CONS OF GREY MARKETING 1. Dilution of exclusivity: Perhaps the most instant outcome of grey market is the draining down of exclusive rights to distribute a product. Instead of being the solitary distributor or one of a select few enterprises for delivering a product, the authorised distributor becomes merely one of several sources. The consequence is a radical drop in margins as multiple outlets struggle for the same customer. What follows promptly thereafter is only to be expected: loud complaints from the legitimate distributors and calls to the company to â€Å"do something concerning it!† 2. Free riding: But what if a manufacturer turns blind eye or, worse yet, writes off its authorized distributors complaints? While it is improbable that a distributor would split relations with the supplier in protest, there are several indirect but possibly more insidious ways of reaching the manufacturer. One of these is free riding. Free-riding was initially offered by Tan et al. (1995, 1997) as an alternative justification for the event of grey markets. In such situations, authorised traders, dispirited by anemic margins and manufacturers ineffectiveness, begin skimping on the imperative services they generally offer—such as presale service, consumer awareness education on product features, salesperson training and so on—in an attempt to lessen their expenses and match grey marketers price. This approach can weaken the value-added services and activities that often lay at the heart of several enterprises sources of differentiation and competitive plan in the market place. As one automobile dealer put it, â€Å"We invest millions in sales and service facilities. Its hard to compete with someone whose only investments are a briefcase and a cell phone.† The under provision of services is the death knell of high-end brands, as customers who value service will discard the brand in droves. 3. Damage to channel relations: Perhaps the prime cost of grey marketing is its impact on the relations and trust amid members of the distribution system. When a manufacturer has made major investments in official channel members or is dependent on one or a few associates (or both), grey markets that rip off these relationships can be particularly pricey. Visualise an official supplier that has recently coughed up $2 million to set up a new outlet and its related trappings—all to accomplish its contractual obligations. The manufacturer has guaranteed the dealer that ownership of an exclusive region will more than add up for his venture. Just as the distributor begins to foresee the promised sales, he receives word that the cash cow of the product line is offered down the street at a markdown of 15% to 20% off its own posted price. Frenzied phone calls to the manufacturer are met with empty reassurances or even stony silence. What should the enterprise do? Should it (a) match the price of its grey market opponent, doing whatsoever necessary to cut costs, (b) complain robustly to the manufacturer or (c) seek assistance from the courts, suing whoever appears liable for his current remorseful situation? 4. Undermining segmented pricing schemes: The spill over from this distribution headache expands with equivalent viciousness to most essential elements of a marketing strategy, including pricing. A basic characteristic of multinational operational strategy is the facility to price goods at levels that every local market can bear. As long as a company can fragment each market, it has a winning hand. But globalisation tosses a twist in the works. Tumbling trade barriers, easy accessibility of information and improved logistical potentials have collectively made the watertight local market a quaint belief; these factors also make it easier for grey market operators to flourish. 5. Repute and legal liability: A manufacturers ability to support its product is taken for granted. In the case of grey market goods, however, the manufacturer loses control of the product. FOR AN EXAMPLE OF how these five fundamentals can work together, consider the troubles faced by manufacturers of new, high-end IT products. High levels of services are often required to instruct customers on the features and benefits of these products. To really understand quality new product features and their functioning with other technologies, it is obligatory for the customers to learn from a salesperson at the retail outlet. To make such services available, the manufacturer time and again needs to develop a relatively elite set of distributors, fostering strong contacts and supporting the distributors actions with subsidies and an opportunity to achieve high margins. Authorised suppliers are chiefly vulnerable to grey markets in this condition. Illegitimate dealers can free ride, allowing other dealers invest in the service and offering the similar products at lower prices. Budding customers can take what they discover from authorised dealers and hunt for low-service, lower-price grey markets. The authorised sellers thus face high costs, shrinking margins and low sales. Often, the clarification they opt is to provide less service and to be more price competitive. As their margins contract, channel clashes grow, and the dealers start routing customers to competitors products which offer higher margins. The difficulty, then, eventually budges from the authorised distributors and comes to rest on the shoulders of the manufacturer. Below presented are two different cases providing two different perspectives towards grey practices. The first consist of a comparative study amongst countries the pricing structure of the grey goods that are being sold. The second case depicts the current scenario of grey activities in China. The case focuses mainly on the problem of counterfeiting of IT products the preventive measures that can be taken to minimise this nuisance. CASE 1: BUYING FROM THE GREY MARKET Are you tempted to buy cheap and cheerful goods from the grey market or should you take the authorised route? asks Sean Fleming. Anyone who has visited the US or the Far East will have found themselves going misty-eyed and waxing lyrical on the subject of how cheap things are over there. But you dont have to cross an ocean to see bargains. The difference in the price of new cars in Britain and mainland Europe they are often as much as 20% cheaper on the continent has many people hopping mad. The UKs Director General of Fair Trading has concluded the market isnt working, and has now ordered the Monopolies and Mergers Commission to investigate whether or not cartels exist in the car industry. Whatever the cause, people are realising that we must be paying over the odds in the UK for a whole range of goods and services. But do we complain? No, thats not the British way, is it? So that decision to investigate high prices in the UK will come as music to many peoples ears. Trade and industry minister Stephen Byers says he has identified this as a key obstacle to the concept of a harmonised Europe. If you want proof that things cost more here in the UK, there is plenty of it around. Bureau European des Unions de Consommateurs (BEUC), the European consumers organisation, carried out a survey last year in 52 cities across Europe in which it compared the prices of 400 different products. From this it produced an index of the cheapest and most expensive countries. The UK turned out to be the dearest of the 10 countries sampled, with a rating of 124 overall. By comparison, France scored 107, Luxembourg 102 and Germany a rating of 100. Report after report, survey after survey, they all come back with the same result when you compare like-for-like goods, we in the UK are paying more than just about everyone else in the developed world. Sure enough, its the same story with IT equipment both hardware and software. Feel like paying through the nose? No? Thats unfortunate, because the chances are youre going to. There is a painfully simple solution to all of this, of course. If stuff is cheaper somewhere else, then go somewhere else to buy it. Plenty of people import cars from Holland and Germany, and even from the Far East, so why not do it with IT? The practice of buying from non-standard, unauthorised outlets is often referred to as buying from the grey market. The grey market is a bit like the black market, except in this case no ones actually breaking the law just risking the annoyance of original manufacturers. There are big savings to be had from going grey. For example, an IBM PC 300GL, with PII 400MHz chip, 32Mb memory and a 4.2Gb hard drive running Windows 98 would set you back about #814 in the UK, but bought on the European mainland, the same PC will cost you #689. Thats a 15% saving. How about a Cisco 1601CH router? Itll cost you about #779 here and only #649 on the other side of the channel. Mike Almond is business development manager at ProSource, a company which specialises in finding this sort of deal for its customers. Using a combination of overseas contacts and the Net, ProSource keep tracks of international prices on a daily basis. When asked by a customer for a particular product, it can go out and find the best price. Were not saying were better than established channels or that our approach is the right one for organisations to adopt, but our results speak for themselves. More importantly, we offer an alternative option to our customers. Thats what a free market should deliver, Almond says. Its not difficult to find this stuff. Some manufacturers will discount heavily in particular countries to make in-roads into that market. We can use those markets to buy products back cheaper. There is, of course, a catch buy your kit from another country and the manufacturers warranty is invalid when you get home. No warranty means no technical support, no helpline advice and certainly no upgrades. Some manufacturers are so inflamed at the thought of people saving money like this that they will not just refuse support; they will also claim the law is being broken. This is despite the fact that Europe is now a single market. Phil Humphries is head of IT services at Surrey Police and it is no surprise that hes extremely cautious about ending up on the wrong side of the law, whether statutory or a manufacturers warranty rule. As part of his forces year 2000 project, a lot of equipment has been replaced, at the same time as migrating to Windows NT. He may have seen lots of expensive equipment being bought, but Humphries is not tempted by the lure of the grey market. I am aware that some of the things we use could be bought cheaper overseas by using the grey market, but I dont think the differences are as great as they used to be, he says. Apart from which, the hassle factor would be enough to put me off. This is an important factor for many people. All too often you dont know exactly what youre buying and who you are buying it from. In the event of a problem, can you be sure youll be able to get hold of them? Humphries said. But theres more to it than that. Saving money on initial capital outlay may have its attractions, but Humphries feels this is a short-term gain had at the expense of longer term success. We are moving away from a situation where we are buying boxes. Now we want to deal with a partner which can offer the right support we need from start to finish. Most of the bargain-basement IT offers that crop up in the small ads will be for software. Adverts purporting to have US versions of Microsoft Office at less than half price are fairly commonplace. David Gregory, Microsoft UKs customer legal licensing manager, warns there is more to these offers than meets the eye. He explains: Our biggest problem with people using unauthorised sources is that the overwhelming majority of this software is counterfeit. It will be passed off as being from the US, but in about 90% of cases it is pirated. The individual serial number on the product tells us where that product was bought or if it is a copy. Finding anyone with IT purchasing responsibility who will admit to using the grey market is difficult, although one IT manager confided anonymously: Most of our procurement has to go through a centralised process. However, some stand-alone projects are bought on an ad-hoc basis and thats when buying on the cheap becomes a viable option. But why is any of this stuff priced so much higher in the UK in the first place? Almost all the major manufacturers operate different pricing policies in different countries, but few can explain why the UK gets clobbered quite so comprehensively. As far as Microsoft is concerned, Gregory says: The majority of software originates from the US and there are certain unavoidable costs incurred when taking that software into other territories local support services, language support, translating documentation and so on. Not to mention currency fluctuations. But with the worlds foremost software vendor moving toward shipping single every-language versions of its products, this position is set to become obsolete. On the hardware front, the worlds number one in PCs, Compaq, also varies prices between the countries that it sells to. David Petts, Compaq UK commercial unit business manager, explains: Local pricing exists because different markets have different patterns of economic behaviour. In Europe, Compaq prices are set by the companys European HQ in Munich, and individual countries are then able to fix their own prices within a given range. So, if one were to charge at the top end of the range and another charged at the lower end, you could, in theory, see material price differences, he says. Why the UK is hit hardest by these price differentials is obviously a difficult subject for manufacturers to discuss candidly. One source within a major hardware company begrudgingly admits: Lots of things are cheaper in the US and Japan. Its the way of the world people just need to face up to it. So, there you have it put up and shut up. If you dont put up, and instead succumb to the grey market, your warranties wont work. However, there are ways to get around the warranty issue. In the case of Compaq, any warranty in operation in the UK will also cover the rest of Europe and vice-versa. You can buy Compaq kit in Holland, for example, and not have to worry about your warranty. ProSources Almond explains that it is important to keep geography in mind when venturing into the grey market. Manufacturers will claim warranties are not valid, but under EC law there is nothing to stop you buying things from any other EC country. If we have a customer that is very sensitive about maintaining the warranties, well be careful to only buy from within the right region, he says. In the case of IBM, things are even more straightforward: good old Big Blue offers global support on all its products, so it doesnt matter if you bought your ThinkPad in Durban but you live in Doncaster. A long-standing champion of the grey market is Cirencester-based RBR Networks, Ciscos largest European distribution partner. Before getting its Cisco accreditation in October 1997, RBR was something of a thorn in Ciscos side. It was doing so much business in grey-market Cisco product that in the end the company had to be brought into the fold. RBR marketing director, Jos White, takes a fairly pragmatic view of the subject. He does, however, prefer the term second sourcing to grey market he believes it doesnt sound so grubby. Using second sourcing, we could make a healthy margin and still sell cheaper than most of the competition, says White. It has to be up to the manufacturer to make it worth everyones while to use the authorised channels, he adds. Manufacturers cannot simply try and ban this sort of thing and it is definitely not on for them to throw their weight around, threatening everyone by saying that their licences are invalid and they may be breaking the law. It comes as no surprise that a manufacturer such as Compaq is against the use of the grey market. It has nothing to