State Trading Organization PLC Commerce Essay

To what extent State Trading Organization Plc could enhance their business operation effectively, in the absence of suitable knowledge management system?

In the present of postindustrial society, knowledge has become a most vital resource of the economy. Faced with global competition and increasingly dynamic business environments, organizations are being advised to assemble people of diverse talents and employ their expertise to gain access to new markets and new technology. Further, large vertical organization, such as State Trading Organization Plc, STO(Maldives Trading company) which is consider as unassailable as a result of their huge technological infrastructure and physical facilities, have become inflexible in responding to volatile markets and meeting customers’ demand in products and services promptly.

The goal of knowledge management is a practical one: to improve organizational capabilities through better use of the organization’s individual and collective knowledge resources. These resources include skills, capabilities, experiences routines and norms, as well as technologies. Astonishingly, despite the now-solid consensus on the importance of knowledge or “intellectual capital” to every company’s success, most companies actually manage knowledge very badly (Collins, 2005). Further, very few have clearly defined management roles, such as Chief Knowledge Officer (CKO), or organizational structures for the management of knowledge as a resource. Of that, few have a shared knowledge language that allows efficient communication.

However, attention to knowledge management is growing. Companies are recognizing that they compete in interestingly knowledge-intensive markets (Huber, 2003). To thrive and even to survive, they are forced to rethink the management of their organizational knowledge base.

The prime purpose of this essay is to identify importance of realizing value from central way of access to organization-wide knowledge resources. By providing ready access to information that had been scattered around the organization and also by providing an alternative to labor-intensive coordination mechanisms such as faxing team document, the organization realized benefits in terms of growth rate, retention, and moral.

In accordance to facilitate the objectives of the essay, will also evaluate the existing knowledge management system of State Trading Organization Plc of Maldives (STO), and their implemented strategy to share and utilize the knowledge management system, and its impact on their operational effectiveness. Further, the essay will also accentuate on the possible mechanism, from which STO could utilize information technology to implement proper knowledge management system, and how the system can be a solution to over come their challenges in the area of information technology, in modern and dynamic business environment.

02.00. LITERATURE VIEWS ON KNOWLEDGE MANAGEMNET

Ahmed Mohamed and Ibrahim Shareef

Article of Knowledge Management and its Impact for Organization

2004; Vol: 12, Issue: 5

Ahmed Mohamed and Ibrahim Shareef defines that the knowledge-organization through its ability to adapt to the changing environment by creating new knowledge, disseminating it effectively and embodying this knowledge into practice. According to them, the sole business of a “knowledge-creating company” is continuous innovation (Haveeru daily news paper, retrieved on 9th September, 2008).

Tile: Knowledge Management and Organizational Performance

Mohamed Hussain Manik

Journal of Knowledge development for better performance

2004; Vol: 16, Issue: 6, pp: 1/3

As company expands there is a limit to the effectiveness of the informal ways of knowledge has always been shared within the organization. M.H. Manik suggested that companies above certain number of employees are too large for people to have a group of collective organizational knowledge (Manik, 2004).

Title: Knowledge development status: A study of employee reaction

Ibrahim S. Mohamed

Journal of Knowledge management and & Data system

February; 2003; Vol: 65, Issue: 14, pp: 113/117

The rapid increase in technology within the workplace required new skills and flexibility on the part of the employee. Organizations began to see that they needed to coordinate information and knowledge in a new ways. This meant helping employees to respond to change, encourage creativity and innovation and learn and improve productivity (Mohamed, 2003).

“For better information system” (2005). Retrieved on 9th September 2008, from Ministry of Trade and Economic & Development, website: www.Trademinstry.com.mv

It has been argued that Asian business society is in the midst of a profound revolution, a second industrial revolution based not on energy, but on information, linked to the development of the computer. M.W.H. Manik noticed as early as the 1980s that there were an increasing proportion of knowledge workers making up the workforce (Trade Ministry of Maldives, retrieved on 9th September, 2008).

“Distinguishing Knowledge from Data system” (2005). Retrieved on 10th September, 2008, from Ministry of Information and Arts, website: www.inforministry.com.mv

In order to understand knowledge management, it is necessary to see the subject within the broader context of the enormous changes taking place in the global economic framework itself (Ministry of Information and Arts, Maldives, retrieved on 10th September, 2008).

Title: Better Knowledge management System through Innovation

Mohamed Firaag

Journal of Knowledge for better performance

2006; Vol: 12, Issue: 2/4, pp: 1/5

Changes in computer technology during the mid 1980s were a key to the shift of knowledge management system; as computer grew exponentially in speed, reduction in cost and availability their users changed. Organizations were, for the first time, able to quickly capture, codify and disseminate huge amounts of information across the globe (Firaag, 2006).

Ismail Shaugee and Mohamed Hassan

Article of Importance of Developing Knowledge for better performance

2006; Vol: 26, Issue: 3

Shaugee and Hassan (Shaugee & Hassan, 2006) argue that data, information, knowledge and competences corresponds to different levels or forms of human activity. They argue that data is a formalized representation of information, and that information us essentially a charting of knowledge within a shared practices.

Title: Knowledge Management for Intellectual Capability

Ibrahim Khaleel

Journal of Intellectual Capital for better Economy

2007; Vol: 12, Issue: 34, pp: 21/23

Intellectual capital models take a highly scientific approach to knowledge and its management. Such approaches view knowledge as a “medium of exchange” which is assumed to have intrinsic (or at least believed) valued (Khaleel, 2007).

Title: Performance gain through Better Knowledge management

Ahmed Massoodh and Ibrahim Shaafiu

Journal of team performance Management.

2007; Vol: 10, Issue: 5, pp: 18/23

Knowledge management can improve efficiency and effectiveness, and increase responsiveness to market change (Massoodh & Shaafiu, 2007).

Tile: Affirmative action on managing knowledge management

Adam Mauroof

Journal of Importance of creating Knowledge Management System

2003; Vol: 16, Issue: 4, pp: 56/63

According to Mauroof (2003), all organizations have a number of resources, some of which can be converted into capabilities such as know-how or tacit knowledge. Knowledge management’s purpose, simply put, is the creation, collection and conversion of individual’s knowledge into organizational knowledge.

03.00.0VERVIEW OF STATE TRADING ORGANIZATION PLC (STO)

State Trading Organization Plc with its subsidiaries, a joint ventures and associates in a nation wide leader in the business sector. It has significant and focused interest in petroleum, construction materials, and electronic items, cooking gas, cement, roofing sheets products, home appliances, super markets and insurance. The company is geographically diverse, with operation and developments in Maldives and Singapore.

The roots State Trading Organization PLC, dates back to 1964 when it was opened to finance the purchasing and importation of essential food items needed for the Maldivian community in bulk. Today STO has sustained this important responsibility to oversee the food security concerns of government and diversified into many other areas of importance such as energy needs of the country which now become part and parcel of STO’s mandate. Within the framework that includes these tow areas STO has diversified and is also competitively engaged in trading in other areas including Consumer electronics, Home appliances, Medicals, Canned foods, Health foods and a rang of other high quality products.

The fast growing technology brought a revolution for market place around the globe. Through advanced IT system, consumers are well informed and sophisticated on many perspectives, and within the matter of few seconds consumers are able to get whatever relevant information concerning their desires. In these fast growing market economies, on the other hand, business executives and managers are compel to identify the changes taking place, together the every movements of their competitors. However, this could be only achieve through proper mechanism of gathering, evaluating, storing and also enhancing the knowledge base of the companies distinct from that of their competitors.

STO is the biggest trading company in Maldives who cater for different customer base with distinct demands from different geographical locations throughout the country. For such a business and their operational effectiveness, undoubtedly they ought to have proper mechanism with respect to the knowledge/information of different market segments, needs, demands customer preferences and market movements, competitor’s behavior and their strategies, and many more information in order to dominate the market and maintain their market position efficiently. Although this is a fact to be accepted without any hesitation, unless the organization concentrate on the area and identify the meaning and its importance to over come the challenges faced by the executives of the organization, and tackle the issues effectively, STO might not be able to reach their targets successfully. Further, by utilizing the available resources and necessary capital investments company can able to build and develop business physically to the certain extent, but to make it as real show they should require extensive knowledge and information in many different areas and which is know as knowledge management system.

04.00. PRESENT CULTURE, STRUCTURE AND MANAGEMNET STYLE OF STATE TRADING ORGANIZATION PLC.

The importance of organizations in modern economy and development of new and large organization are facts that make the issues like efficiency and control on the centre of attention in different social science. Efficiency in organization is directly linked with its organizational system. However, due to inappropriate structure adopted, STO is facing tribulations to enhance their efficiency to meet the demand effectively.

Organizational structure of STO has with multi-layers, generally split by functions. The functional units-manpower, logistics, transportation (imports and exports) and construction are central units, and are common to the business unites. Due to the centralized system, the heads of these functions reports directly to Chief executive officer. Furthermore, due the culture adopted by the company, it seems that they have family like culture where the emphases are given mainly on relationships rather than individuals achievements. Delegation without proper authority, found no empowerment and line of authority is rigid where stream lines have not been defined properly. With all that, morality and accountability does not exist, and employees are been isolated among the department heads.

Although knowledge management is all about gathering information, analyzing and retrieving and utilizing when necessary (Blacker, 2006), due to the system implemented by STO, management is facing difficulties to deliver the goods and service at maximum level to their customers. STO provides its service too many different customers at different segments by their SBU’s, at different geographical locations. But to provide these important services in dynamic business environment is not an easy task unless they manage their knowledge management effectively.

05.00. WHAT IS STRATEGIC KNOWLEDGE MANAGEMNET IN OPERATIONAL PROCESS?

At the level of the organization, benefits are perhaps potentially more immediate, although there are a number of views. Nonaka and Takeuchi (2002) present managerial views of a knowledge management company expressed in terms of knowledge vision, knowledge crews, high-density interaction, leveraging product development, empowering middle managers, hypertext organization and a network with the outside world. Further, Grant (2003) in proposing knowledge-based firms in which knowledge is the overwhelming productive resources argues that there are different types of knowledge which vary in their transferability.

Of that, individuals are the primary agents for knowledge, and most knowledge is subject to economies of scale. In addition to that, these two authors discussed knowledge in Polyani’s terms of tacit and explicit knowledge and usefully remind us that a consideration of knowledge is not something new. Further, Barnard (2001) describes the function of the executives as to bring together to create the organization, the material, social and individual subsystems that makes up the firm. And also, within the organizational context, and individual dimensions and relates each to tacit and explicit categories (Figure 1).

The firm is seen as a self-organizing system which can use its cultural knowledge as much as the hard knowledge to accommodate the uncertainties within its environment. Managers are often catholic in their choice of ideas so it may be possible to accommodate the spread of views by starting from a position where all resources are considered to have a knowledge components. Investigating where strategic or core competences lie within the firm’s processes has, in a resource-based view, focused attention on the physical resources and the way in which they are used.

A knowledge based approach would encourage physical resources to be associated with knowledge. For instance the competences associated with the construction of Formula One cars in firms in the south of England are not in the physical technology used to design and build cars, but in the know-how and experience of people.

06.00. WHY STO NEED A CHANGE TO IMPROVE KNOWLEDGE MANAGEMNET SYSTEM?

Today’s business environment is characterized by continuous, often radical changes. Such a volatile climate demands a new attitudes and approach within the organization, and action must be anticipatory, adoptive and based on a faster cycle of knowledge creation. Further, new products and innovation are increasingly at a faster than ever before, along with evolution in customer preferences and need. Therefore, managers should no longer investigate their customers superficially; they must rather dig more deeply than survey and feedback forms.

As STO have become more complex and information ought to be readily accessible, forward thinking managers have grown concerned with how to allow knowledge to flow freely and how to control and manage this vital flow of information and technology at the same time. Of that, all of these factors make knowledge management a necessity rather than a luxury. As a result, STO must have a clear handle on how knowledge is discovered, created, dispersed, and put to use.

When STO started their business across the country, they were the only business party who were able to meet the demand and cater them accordingly. As sole business entity for entire country without interfere from any competition, STO has achieved a lot and captured market share tremendously. As there was no competition in the market, STO was charging as much as they wanted and enhanced their revenues effectively. However, unlike those days, at present many business parties and companies are doing same types of business that of STO, and enabling to create competition and rivalry among the competitors.

With all the fact above, their competitors are in the same level concentrating on same segment and almost similar products. So that, for better and further development, STO need to have an advantages over the competitors, and this can be overcome through implementation of proper knowledge management to enhance their business operation effectively.

Today’s volatile business environment demands a new attitude and approach within organizations actions must be anticipatory, adaptive, and based on a faster cycle of knowledge creation.

07.00. PROPOSED CHANGE FOR KNOWLEDGE MANAGEMENT SYSTEM OF STO

Knowledge management is discussed in a number of ways, including the economic level (Mauborgne, 2005), which predicts a knowledge age to follow, and an industrial age where knowledge becomes the limiting resources, rather than financial capital. The level of the firm with a knowledge-based view (Grant, 2003 & Botkin, 2004) proposed a shift from a focus on resources, as in the resource-based view of the firm (Grant, 2004, Prahald & Hamel, 2005). The later perspective focused at a strategic level on the notion of core competences which might give the firm sustained advantage over its competitors through their use in processes. The meanings of knowledge and organizational learning are aired (Leonard & Straus, 2002), and measurement of knowledge as intellectual property or assets is advocated as an important component of management control system for future organization (Edvinsson & Malone, 2005).

Through advancements of information technology, KMS technology has evolved to incorporate the three components into a single package. These include organization’s knowledge portal and knowledge management suites. Further, there were some innovative applications such as expert location system, which a company like STO could consider to acquire more and extensive knowledge for effective and smooth business operations. Through development of IT application, STO can use this technology to locate experts who can provide necessary information within the reasonable time period.

The below diagram show the model of Expert Location System (ELS). In this system, employee of STO who need help may post their problem on the corporate intranet and ask for help. Similarly, even STO may request for any advice on how to make their business strategies suitable for the business environment around them. Successful companies like IBM also frequently use method to implement their strategies effectively.

Following steps are the process which includes in this method. And scenario demonstrations are to help employees of STO could use the method to acquire more information and to share them effectively among their SBU’s around the country.

Step: 1. when managing several SBU’s at different geographical location of the country, if an employee wants to specific information he/she may submit request stating the area and purpose of the information, into the expertise location management system.

Step: 2. then the software will search its database to locate an answer to the question or request already exist. If it dose, the information (requested reports, spreadsheets, etc.) is return to the employees within the reasonable time periods. If not, then the software would searches documents and archived communication for an “expert”.

Step: 3. once qualified candidate is located, the system would ask if he is able to facilitate the request from a colleague. If so, he could then submit a response. If the candidate is unable (perhaps he is in a meeting or otherwise out of office), he can then elect to pass on the question. The question is then routed to the next appropriate candidate until one responds.

Step: 4. after the responds is sent, it would received for accuracy and then send back to the person who request. At the same time, it would add to the knowledge data base. In this way, if the question comes up again, it will not be necessary to seek real times assistance.

Success rate of this method is clear evidence to employ this mechanism and enhance business operations distinct from that of the competitors. Expert Location system are interactive computerized system that help employees and companies find and connect with colleagues with expertise required for specific problems , whether they are across the country, or across the room. As per Levinson (2005), companies that have been frustrated by traditional knowledge management are interestingly looking for suitable mechanism to enhance their business operations efficiently.

In addition to that, above model would be an appropriate tool for STO, who is having difficulties to enhance their knowledge management system from traditional ways of handling them. Further, STO dose have all the necessary resource for them to sustain in the market. However, in this dynamic business environment they need to establish proper knowledge management system for further growth and make their operation effectively than what they have been handling the business in the past.

Below table shows the benefits and advantages which STO could have through implementation of above recommended method to improve their knowledge management system.

Process Outcomes:-

Communication-

Efficiency-

Will enhance communication

Reduce problem solving time

Faster communication

Shortening proposal time

More visible opinion of staff

Faster the results

Will increase staff participation

Faster delivery to market

Greater overall efficiency

Organizational Outcomes:-

Financial-

Marketing-

Will increase sales

Better Services

Reduce costs

Customer focus

Higher profitability

Target marketing

Proactive marketing

08.00. CONCLUSION

It is clear that organization operating in today’s complex and dynamic business environment must have a clear understanding of knowledge management for better and effective business operation that will have advantage for the organization.

If STO could revise their entire system and identify the barriers due to which they are not able to enhance their operation within the competitive business environment, and they could identify the importance of implementing proper knowledge management system through which they can provide and meet the expectation of their stockholders.

Further, with the help of proposed model in this essay, they could find the weak areas and departments and how they can fill the gap between the departments. In fast growing business economies organization should have extensive information or knowledge in order to provide better and quality services to customers. The model illustrated on how to place the request and to obtain information for their desires.

With help of the model, STO could not only acquire information, but also will help to identify the preferences of their customers and make their goods and service available accordingly.

Potentially, a knowledge perspective should help those managing operational processes to understand the knowledge-based capabilities they need, especially when customers demand is tending to increase rather than decrease the level of customer. According to Zack (2005) a knowledge approach will inform and guide the design of products and services and the processes to produce and deliver them, will help in the planning and control of the attainment of performance and will enable improvement to be made.