Study Of Power And Politics In The Workplace Management Essay
Power is a function of dependency where one entity is dependent upon another. It is segmented into multiple sections, each affecting the company in a distinctive way. “Bases of power” classifies the sources of power into multiple sections. “Dependency” Organizations worldwide all have many different ways of achieving power and with that power leads to whether or not the power manifests positively or negatively.
Leadership is a key factor to the success of a business. Successful leaders have great awareness of using power to influence employees, in order to make commitments towards the goals of the organization. This enables them to provide direction, implement plans, and motivate employees, thus benefiting the well-being of any organization. When influencing employees, leader uses various tactics based on their personal attributes. For example, an authoritative leader tends to make decisions independent of their employees and discourages group work, while a democratic leader embraces the concept of group work and encourages employees to work freely and participate in goal decision making. Though each leader differs in ways of managing their employees, a common factor that every leader possesses is power. Power is the ability to command and control others based on the dependency of each party. It is a key factor in terms of influencing employees to produce results. The most important aspect of power is the function of dependency. For instance, within an organization, the information technology department often has considerable power because all related workers including the CEO are dependent on IT to assure that systems and networks are functioning on a regular basis. Moreover, power comes from the five power bases, which allows leaders to have influence over others. The bases of power refers to the different types of methods leaders utilize in order to influence their employees. These bases include coercive power, reward power, legitimate power, expert power, referent power, and information power. Each of these bases is different in its way of influencing an organization’s overall potential. To explain, coercive power is defined as power that is based on fear. It depends on a leader’s ability to force an employee to comply with a desired behaviour through the threat of punishment and failure. This typically leads to physical threats. Unfortunately, coercive power is most often used in real life. For instance, at an economical level, countries use military resources to intimidate nations and individuals use this power also to manipulate others. Within a workforce, coercive power is evident when authoritative leaders threaten to dismiss or suspend an employee if they do not follow the rules or tasks assigned. Coercive power has effects on both the long and short term. In the short term, employees listen to the commands based on fear. In the long run however it leads to dysfunctional behaviour and reduced output and satisfaction and ultimately leads to turnover. Fortunately, there are other power bases that can positively influence employees and benefit the well being of an organization. Let’s begin with reward power which is the total opposite of coercive. This power depends on the ability of a leader to give employees a reward or benefit in exchange for compliance. These rewards include money, performance appraisals, promotions, and preferable working conditions. Reward power enables workers to work diligently and effectively. It allows for motivation and job satisfaction among employees, as a result creating a friendly and secure working environment. In some cases, however, excessive reward power can lead to corruption. To explain, employees may be tempted to behave unethically such as increasing sales numbers illegally in order to receive a appraisal from the manager. Also, reward power tends to divert employee’s attention from the task at hand and focus more on the rewarding result. This can lead to inefficiency and reduced potential of an organization. Moreover, legitimate power is concept that is much broader than coercive or reward. This power represents the belief that one person has the ability to influence others as a result of their position of authority. An example of this is as follows, at the scene of a crime, people regardless of position; people will usually comply with orders from the officer based on the fact that the police have a higher authoritative position. From a business point of view, employees will comply with orders of a manager who relies on legitimate power based on the position in the organizational hierarchy that the manager holds. With legitimate power, employees may feel a lack of commitment and cooperation. Another power base is expert power which is influence based on expertise, and knowledge. It is based on the belief that an individual has a particularly high level of knowledge will have the power to influence others. Individuals that possess expert power include computer engineers, chartered accountants, and economists. Each of these individuals has expert power because each occupation requires exceptional knowledge and expertise. For example, a computer engineer is able to use several software programs proficiently and can navigate the internet with ease. As a result, those who do not have the expert knowledge or experience need the expert’s help and, therefore, are willing to be influenced by the expert’s power. Furthermore, expert power is not dependent on position of authority such as a CEO; rather it is based on the knowledgeable positions. It relies on trust that all relevant information is given honestly and completely. As a result, it allows for full commitment from all positions in the hierarchy of an organization. Nevertheless, similar to every power base, expert power does possess a few weaknesses. The expert power of a person diminishes when knowledge is shared. For instance, when a computer expert explains the steps to function a software program, the amount of expert power lessens due to the fact that the employees are now knowledgeable of the expertise. As a result, expert power can lead to manager’s authority diminishing or the manager intentionally deciding not to share knowledgeable skill sets with their employees. This can weaken an organization’s effectiveness in the long run. In addition, a similar concept is the power of referent which is influence based on possession by an individual of desirable resources or personal traits. To explain, employees tend to be motivated if they have desire to model themselves in same way of their leaders. With referent power, leaders must develop trust and lead by example. By doing so, leaders are able to develop an influential aspect that employees potentially may desire. Referent power can be observed in everyday occurrences such as celebrity testimonials in advertisements for example, David Beckham in clothing ads for Emporio Armani. Lastly, a power base that comes from access to and control over information is called information power. This power base is similar to expert power, however differs in ways that it does not depend on expertise knowledge rather it is dependent on a person’s possession of valuable information. From a business setting, managers have power of information because they have access to employee sales, business costs, salary, and profit all of which can be used to influence employee performance and behaviour. For instance, when employees lack in product sales, a manager has information power over them due to the accessible sales numbers can influence their employees to increase work efficiency.
Overall, leadership is important aspect of any organization. Leaders dictate the direction of a company’s potential to complete their goals. In order to do so, leader must be able to direct and guide their employees in the most efficient manner in order to maximize the well being of the company. When approaching this, leaders have various methods which are based on their attributes and use of power. As shown above, power is an important factor when influencing employees to produce results for any company. However, each power comes with a responsibility, and if used excessively can negatively affect a company’s overall performance in the long run. Each power base leads to a respond of commitment, compliance or resistance from employees. To explain, coercive power tends to lead to resistance, decreased satisfaction and increased mistrust. Reward power tends to result in compliance if the rewards are consistent with employee needs. Legitimate power also results in compliance but does not promote commitment nor inspire employees on a basic level. Lastly, expert and referent powers are most likely to increase compliance and commitment. To conclude, effective power does not necessarily mean control, rather it is determined by the goals of an organization. Successful leaders use power ethically, efficiently, and effectively by sharing it. When power influences employees to perform in ways that are not related to the company’s image then that power is abused. The key to power is dependency, where understanding the concept of dependency allows leaders to use bases of power more effectively resulting in the benefit for their company.
Influence tactics are strategies that workers can use to achieve certain outcomes. (Judge, Langton, Robbins, 2009, p. 306). Influence tactics are important because they essentially, are ways members of an organization can persuade others in order to achieve what they want. There are multiple tactics seen inside organizations such as rational persuasion, inspirational appeals, consultation, ingratiation, personal appeals, exchange, coalitions, pressure and legitimacy (Judge, Langton, Robbins, 2009, p. 307). All of these influence tactics can be classified as either hard tactics or soft tactics. These influence tactics are then seen through the upward-influence styles in many companies. Also, in today’s growing global community, influence tactics can be seen cross-culturally. Influence tactics are definitely important to understand for multiple reasons.
Influence tactics take many different forms and can be used in many different situations. Influence tactics are all about individuals trying to reach a certain outcome. Judge, Langton, Robbins (2009), talk about multiple tactics as listed. Rational persuasion is the ability to use facts and data to present your ideas (p. 307). This tactic can be used by all levels in an organization (p. 307). Inspirational appeals are ways individuals use values, ideals and goals when making a request (p. 307). Consultation is the way people get others involved to support one’s objectives (p. 307). Ingratiation is the way people use flattery and being friendly to others to influence a certain outcome (p. 307). Personal appeals, is using friendship and loyalty to get something (p. 307). Exchange is the offering of favours in exchange for support (p. 307). Coalitions are the grouping of people to provide backing when making a request. Pressure is using demands and threats in order to influence people (p. 307). Legitimacy is the claiming the authority or right to make a request (p. 307). These influence tactics are found in all organizations worldwide, and are a means of achieving ones desired outcomes.
Upward-influence styles are the normal routine reporting relationship that exists in all organizations (Kipnis et al., 1988). For example, it could be an employee (subordinate) talking to a manager. Within organizations as previously noted, individuals have different influence styles and therefore can be classified according to their styles (Kipnis, 1988). In the article Upward-Influence Styles: Relationship with Performance Evaluations, Salary, and Stress; Kipnis and Schmidt (1988), identified five clusters of employees. The first cluster consists of individuals who use multiple influence strategies in order to get what they wanted. The second cluster deals with individuals who use expert knowledge in order to influence others, the third cluster consisted of individuals who used friendly tactics, the fourth cluster was made up of individuals who used their positions in the organization and the fifth cluster consisted of employees who did not use influence of any kind, these people were referred to as non-influencers. With this said management also falls into three different categories in the ways that they influence subordinates (Kipnis, 1988). Some managers use shotgun styles of influence. These managers use the most influence and emphasized assertiveness and bargaining, they are classified as multiple influencers. The second type is Tactician influence styles. These managers use an average amount of influence and emphasized reason; they are classified as expertise users. The last style is bystander; these managers used little influence and are classified as noninfluencers (Kipnis 1988). These are important concepts for management to understand because CEOS and managers of companies can use these styles to be most effective when communicating to lower levels.
Moving from the inter-organizational aspect, influence tactics can be applied on a larger global scale. There are many different cultures around the world, which give countries a different style of use of their influence tactics. The different influence styles cultures value place a huge significance in the business environment. If different cultures doing business with one another do not understand the way the other negotiates then failed opportunities will be inevitable. In a study conducted by Fu & Taber (1998), they identified that Chinese managers prefer indirect forms of influence; they value trust and use personal relationships. The Chinese also value collectivism and power distance more and assertiveness less. Fu & Taber (1998), also seen that the American and Swiss cultures are more inclined to confrontation to solve problems. With a number of companies starting to offshore their businesses, management needs to recognize differences in cultures in order to promote a healthy work environment and ensure the success of their companies.
There are many companies that have failed at some point or another when dealing with different influence tactics. Wal-Mart for example depicts the error between two different cultured styles of business. In 1997 Wal-Mart began expanding into Germany with the acquisition of Wertkauf (Kottolli, 2006). Wertkauf was a leading retail chain in Germany; it has 21 chains and 4,900 workers and sales of $1.4 billion (The New York Times, 1997). In August 2006 Wal-Mart had to leave this market (Kottolli, 2006). Wal-Mart apparently had a lack of managerial skills which led to many problems with its employees and customers (Kottolli, 2006). When employees tried to communicate with upper level management about the mistakes they were making dealing with the customers, management simply ignored them (Kottolli, 2006). For example, store hours are shorter in Germany, and had no shopping on Sundays, which ultimately means customers do not spend a lot of time shopping and also Germans do not like to be assisted by the store assistants; they prefer to do their own bargain shopping (Kottolli, 2006). Wal-Mart should have researched the German culture prior to the acquisition and should have listened to the employees when they complained about what Wal-Mart was doing wrong. The employees should have used a shot-gun style of influence towards these managers and displayed all the facts to possibly make their arguments more strong.
Empowerment in the Workplace
In the business environment, power is typically something that is held by managers and used during their interactions with employees. In the modern workplace however, there is a growing trend as more power is starting to be placed in the hands of employees. Through placement in more independent teams, and more responsibility for decisions regarding their jobs, employees are finding themselves much more empowered.
Empowerment can be defined as: “the freedom and the ability of employees to make decisions and commitments” (Judge, Langton, Robbins, 2009, p. 308). However, this definition is not always agreed upon, particularly by managers and researchers. During their consultation work with a Fortune 50 manufacturing company, Robert E. Quinn and Gretchen M. Spreitzer discovered that executives were split in half regarding the definition. One group maintained that “empowerment was about delegating decision making within a set of clear boundaries”, while the other group insisted that empowerment was “a process of risk taking and personal growth” (Quinn & Spreitzer, 1997, p. 38). The first group’s definition meant for empowerment to start at the top, with specific goals, tasks and responsibilities being assigned, and those people given assignments being responsible for their own results. Conversely, the second group’s definition had empowerment starting at the bottom, taking into consideration the needs of the employee, leading by example, forming teams, promoting risk-taking and exhibiting trust in the employee’s competency.
The empowerment of employees
The empowerment of employees has generally been positively received, with executives and employees impressed with the latter’s capacity to make important decisions. However, the trend has met with its share of criticism, as some believe that the talk of empowerment is insincere. These people find that while organizations tell their employees that they have decision-making responsibility, the employees are not given the necessary authority to carry out said decisions. A fully empowered employee only occurs when the employee has full access to the necessary information to make decisions, when there are rewards for acting in an appropriately responsible manner and when they have the authority to make the necessary decisions.
As a result, cynicism has developed in many work environments regarding employee empowerment. In addition to employees feeling they lack the authority required to make decisions, many managers are hesitant to empower their employees. This is due to the manager’s fears of sharing or losing their own power. Other managers feel that empowered employees may begin working on projects not fully associated with the goals of the organization itself. Some managers do not even fully comprehend the manner in which to empower their employees.
In order to understand the degrees of empowerment, one must look at the job’s content, the tasks and procedures required to perform the job, and context, the reason for doing the job. Employees are empowered when given decision-making authority over some aspect of their job, and there are three general examples of employee power based on job context and content. According to R. C. Ford and M. D. Fottler these examples are: No Discretion, Participatory Empowerment, and Self-Management (Ford & Fottler, 1995, p. 24). No discretion is the typical assembly-line job. The employee is assigned a task and most likely monitored by a supervisor. An employee in such a job is likely to be unsatisfied due to their lack of power, and less productive due to a lack of initiative. Participatory empowerment consists of autonomous work groups given more decision-making authority over job content and context. Individuals in these work groups are more likely to have higher levels of job satisfaction and productivity than those in no discretion jobs. Lastly, self-management is when an employee has complete decision-making power over job content and context. Managers who grant an employee such a level of power must have a considerable amount of trust in the individual, and thus self-management is generally reserved for top-management or high-level salespeople.
Empowerment carries with it a strong psychological element. According to Gary A. Yukl and Wendy S. Becker, there are four defining factors that must be taken into account. These factors are meaningfulness, competence, choice, and impact (Becker & Yukl, 2006, p. 211). Meaningfulness can be defined as “the value of the task goal or purpose, judged in relation to the individual’s own ideals or standards; the individual’s intrinsic caring about a given task” (Thomas & Velthouse, 1990, p. 672). Empowered employees who find meaningfulness in their work care about what they do and find that their work is very important to them. Choice “refers to the causal responsibility for a person’s actions and whether behaviour is perceived as self-determined” (Becker & Yukl, 2006, p. 211). The term is inter-changeable with self-determination and means that empowered employees are able to choose how to do their work, free from being micromanaged by supervisors. Impact is “the degree to which behaviour is seen as “making a difference” in terms of accomplishing the purpose of the task, that is, producing intended effects in one’s task environment” (Thomas & Velthouse, 1990, p. 672). An empowered employee would believe that they have an influence over their work, and that others are open to their ideas. An example of empowered employees having an impact in their work is the South Korean based Good People Company.
The clothing company holds a monthly “Pyjama Day” where throughout the day employees where clothing designed by the company itself. Managers of the Good People Company then hold meetings with employees in order to gain feedback and inspirations. As a result of this, employees for the company feel that as individuals they can have an impact on their work, actively contributing to the design process of products. Lastly, competence is “the degree to which a person can perform task activities skilfully when he or she tries” (Thomas & Velthouse, 1990, p. 672). Empowered employees who have a degree of competence in their work feel confident in their capabilities to accomplish any required tasks. An example of a company that has taken this aspect of empowerment to heart is Durabelt Inc. The company specializes in customized conveyor belts for harvesting fruits and vegetables, and employees need to be highly responsive to customer requests. Managers at the Prince Edward Island based company recognized that in order for their employees to have a sense of empowerment, they required a high degree of competence to handle their tasks. Consequently, the organization created Duraschool, a training program for its employees, in order to better train them and increase company-wide competence.
Despite the problems that can arise with employee empowerment, research has shown that productivity has increased at both a team and an individual level due to the growing trend. While not all people are affected by empowerment the same way, those who are empowered often work with an ownership mentality. They have a clear definition of the organization’s objectives. The empowered individual tends to find their work recognized and has a high degree of skill in what they do. Finally, an empowered employee will find that proper decisions are supported by management, and not criticized for taking the initiative.
The Abuse of Power: Harassment in the Workplace
The harassment in the workplace is one of the key segments in illustrating the misuse of power. Harassment occurs when one individuals has a power over another. This can occur in two situations. The first one deals with manager-employee relationships in the workplace. A manager has control over many different aspects that directly affect employee such as performance review and monetary rewards, in turn placing power in the hands of the manager. Due to that power, a manager can request employees to engage in acts that they would not otherwise be involved in. The second situation deals with co-worker relationships. This is not as clear as the manager-employee relationship; however it is the one that is most commonly linked to sexual harassment. The power of one co-worker over another is displayed when there is a need for information, co-operation or support. In this situation, one employee might persuade another to perform tasks in exchange for receiving the needed information, co-operation and support (Langton, 2010, p. 313). Two of the most prominent types of harassment in the workplace are bullying and sexual harassment which are the results of misuse of power in the above situations.
Although there is no clear definition for workplace bullying, it can be best defined as “Systematic aggressive communication, manipulation of work, and acts aimed at humiliating or degrading one or more individual that create an unhealthy and unprofessional power imbalance between bully and target(s), result in psychological consequences for targets and co-workers, and cost enormous monetary damage to an organization’s bottom line” (Mattice, 2010). Bullying occurs in every type of organization from public to private sectors, in profit and non-for-profit organizations. While anyone can be bullied, minorities tend to experience workplace bullying the most. According to one of the studies, 97% of visible minority respondents admitted to experiencing workplace bullying (Martin, 2010, p. 4). Looking at the global picture, one research suggested that workplace bullying is most prevalent in the U.S. due to the cultural values such as individuality, assertiveness, masculinity, and achievement. The same research indicates that US cases tend to be more common between a manager and an employee rather than in between co-workers (Martin, 2010, p. 5). Furthermore, a research suggests that, individuals in an individualistic culture might see bullying as more harmful than individuals in collectivistic cultures due to a lack of identification with the group or a company. (Giorgi, 2009, p. 3). Due to many researches done in the previous years, there is a strong correlation between workplace bullying and physiological and psychological consequences. The most common effects of workplace bullying are depression, burnout, post-traumatic stress disorder, alcohol abuse and suicide. It is more likely that individuals with poor social skills or with certain characteristics will become victims of bullying (Martin, 2010, p. 6)
Sexual harassment can be defined as an “unwelcome behaviour of a sexual nature in the workplace that negatively affects the work environment or leads to adverse job-related consequences for the employee” (Langton, 2009, p. 314). Fitzgerald’s research states that the term sexual harassment represents two types of behaviour. A “hostile work environment” in terms of sexual harassment as a behaviour that is sex-related which makes individuals uncomfortable; and a “Quid pro quo” which refers to individual’s sexual requests or advances in exchange for a raise or a promotion (Hunt, 2007, p. 3). The research also identifies physiological dimensions such as gender harassment and unwanted sexual attention. Kohlman states that sexual harassment is not gender-dominant based (Hunt, 2007, p. 5). In other words, sexual harassment can occur whether the company consists of mostly men or women. It is also important to state that the companies with substantial power difference between men and women are more likely to experience sexual harassment. A research by Pryor suggests that the repeated sexual harassment is caused by a combination of personal factors (such as self-esteem) as well as situational factors (such as permissive culture)(Hunt, 2007, p. 5). Gutek’s research suggests that an environment that openly allows sexual behaviour is more likely to experience a case of sexual harassment. Leadership style can also influence the probability of harassment occurrence therefore the company must carefully choose the leadership approach (Hunt, 2007, p. 5)
One approach in dealing with workplace harassment is through an intervention model. The model separates interventions into three levels: primary, secondary, tertiary (Hunt, 2007, p. 11). At the primary level, organizations need to develop effective procedures as well an efficient way of implementation. In order to achieve this, the company must educate employees on what the harassment is and how to deal with it. During the design of policies, it is crucial to contribute each level of organization into the planning process. In order for the employees to find this approach useful, a company must ensure that each employee feels empowered and safe in the case that an incident has to be reported (Hunt, 2007, p. 13). During the secondary level, organizations need to identify an effective complaints procedure. This is one of the most important steps because if an employee does not feel confident that the complaint will solve an issue, it is most likely that employee will resolve to other solutions or even extreme situations such as alcohol abuse or even suicide. In order to satisfy this level, a company may employ staff specifically for handling complaints. By hiring trained staff, the organization can create an open communication for employees to use without feeling fear or discomfort (Hunt, 2007, p. 14). At the final rehabilitation stage, the organization develops a best solution that will support both a victim as well as an organization. In order to help victim cope with the harassment, counselling is a best alternative. It is crucial for an organization to not only immediately address any harassment issues, but attempt to prevent it from occurring in the first place (Hunt, 2007, p. 14).
One of the best cases that demonstrate the issue of sexual harassment as well as its solution is a lawsuit against a Mitsubishi production plant in Normal, Illinois in 1996. At the time of the lawsuit, the company employed 4200 employees (MacNeil, 1996). After a number of female employees contacted Patricia Benassi, civil rights attorney, with the stories of sexual harassment women had to go through at the plant, Benassi filed a lawsuit Equal Employment Opportunity Commission. According to Benassi, women were subjected to rude name-calling, sexual innuendos, dirty jokes and pornographic images. What is surprising is that these women were not aware that what they are subjected to is considered sexual harassment. Instead, they thought that it was simply because “women did not belong there”. A few female employees stated that they had to engage in sexual acts in order to receive a promotion (MacNeil, 1996). The lawsuit was finally settled in 1998 when Mitsubishi and EEOC reached a $34 million settlement (EEOC, 1998). The company has also formed a third-party Decree Monitors who will oversee the re-design of sexual harassment policy as well as make sure that the policy is implemented within the company (EEOC, 1998). This example illustrates both types of behaviour, as identified by Fitzgerald. It is a “hostile work environment” because most women felt extremely uncomfortable working for the company due to reasons mentioned above. It is also a “quid pro quo” due to instances where women had to be involved in sexual acts for the purpose of receiving promotion. At the time of a lawsuit, roughly 70% of employees were male (MacNeil, 1996), indicating a strong gender dominance in the workforce, which complements Kohlman’s research. As evident from the lawsuit, sexual harassment cost Mitsubishi $34 million which could have been avoided if the right policies and procedures were set in place. The intervention model also applies to this situation. The company has designed a new set of policies and procedures in order to eliminate any harassment events from happening again. To supplement the new policy, the company has also developed a training and information course for all of employees on the topic of harassment in the workplace. The new policy is effective as it is a zero-tolerance policy, thus eliminating any “gray area”(EEOC, 1998). By hiring third-party representatives for dealing with development of policies as well as monitoring the implementation, the company has created both an unbiased policy as well as a safe and secure environment for employees to report any of the harassment occurrences. As a personal conclusion, this situation has been very harmful to Mitsubishi. It has cost company much more than the sum of the settlement due to its damage in reputation. It is most likely that many customers and future employees are forever lost due to this incident. Fortunately, the company’s redesigned policy has changed the environment completely, which allowed company to regain some of its reputation. As long as the company prioritizes the policy effectiveness, there should not be any other reoccurrences of such proportion.
As companies strive to achieve more and more power, they look to sell products and services that people are dependent on. Dependency is one of the key factors to achieving power. If people are dependent on your product or service the chances of your business failing are significantly lower. The more dependent people are on your business, or the more they need your product or service, the more power you will hold. People become dependent on products or services that are a life necessity, or that they have a strong desire to possess because it is a luxury or a trend. A company can gain power through dependency in cities, provinces, or throughout the entire country. The larger the population is that depends on a particular company, the more powerful that company will be.
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Dependency on a product or service is created when that product is important, scarce, or cannot be substituted. It must be important because if no one feels a need to have your product or service then no one will buy it. If people feel like they can live without a product they will not be dependent on it, and not purchase it. An example of a very important product is hydro. It is a service that people cannot live without and they need it every day for multiple purposes. In Ontario people rely on Ontario Hydro to provide them with this service. This results in Ontario Hydro being extremely powerful. Hydro is not something that can be bought anywhere and therefore Ontario Hydro can set the prices, and charge what they like without having to worry about competition that might put them out of business.
Also, the scarcer a product or service is the more people depend on the companies that actually supply it. If one company sells a product, or contains knowledge that no one else has, then everyone will depend on that one company, resulting in that company being very powerful. If the product or knowledge is very common and can be purchased in many places then no one will depend on one particular company, and none of the companies selling that product or service will be very powerful. An example of this would be Canada Post. There are very few places that provide a mail service. In Canada it is either Canada post, or UPS, and most people prefer to use Canada Post. Without Canada Post many businesses would not be able to function, as well as people would not be able to mail important letters or parcels. 85% of Canadians still prefer to receive their bills or invoices by letter mail (http://www.canadapost.ca/cpo/mc/business/productsservices/lettermail.jsf). This means that most of Canada is very dependent on Canada Post regardless or e-mail or any other means of technology. Another example of a scarce service in Canada is the LCBO. It is the only company that supplies liquor to Canada, and therefore holds all the power. It sets all the pricing, without the worry of competition. People will never stop buying alcohol, and since the LCBO is the only place to buy it, it will never go out of business.
If a product cannot be substituted it also results in the company carrying it to be very powerful. If a company supplies a product that cannot be replaced by anything else then they will hold a lot of power. Also, if the company supplies a brand that everyone wants then they will hold more power because people will not be willing to settle for anything less than that name brand. A good example of this is Apple. Apple is always staying one step ahead of other companies that supply technology. They come out with the newest products first, and therefore everyone wants to buy from Apple. Also, since Apple is such a well known brand, even after other companies come out with similar products they still prefer the buy from Apple. This leaves Apple with most of the power when it comes to setting prices, providing extra services, and getting to customers first. Another good example of this is Google. People have become very dependent on search engines for business, school, or personal uses. According to “Search Engines” by Ross Shannon, in 2009 Google was preferred by 85.35% of people who used search engines (http://www.yourhtmlsource.com/promotion/searchengines.html). This means that Google holds the power in the market. They set the standards for all the other search engines.
Obviously coming up with and supplying products and services that people are dependent on are very important to a company because they determine the amount of power you can hold and how successful your business can be.
A good example of how a company can either become successful or fail by dependency is Google vs. Bing. They show all aspects of dependency from a view of a very powerful company compared to a not so powerful company.
In this example, Google is the more dominate company, controlling the market for many years. Google was founded in 1998 and began quickly growing into the post popular search engine in the world. In December of 2009, 85.35% of search engine users used Google (http://www.yourhtmlsource.com/promotion/searchengines.html). This put almost all of the power into Google’s hands. People needed Google for their everyday tasks. People used it for their jobs, for school work, as well as for personal use. It could be used to find any information that you needed in seconds. It became extremely important to them to have a search engine that was quick to use, simple to understand, and gave them the most reliable information. Google really had no competition, because no one had the technology to keep up with Google. There were no other search engines that were as reliable, and understandable as Google. Google had all three aspects of dependency needed to be an extremely powerful company. It was important, scarce, with very few substitutes. This continued for many years until other search engines started catching onto Google’s ways, and people began to use them instead. One of the bigger search engines used was Bing. During the same survey in December of 2009 Bing had 3.27% of the market using it as their number one search engine (http://www.yourhtmlsource.com/promotion/searchengines.html). Although this number doesn’t seem very high, it continues to grow as more people become familiar with Bing. Bing is a good example of a company that doesn’t hold a lot of power in the search engine market because people do not yet depend on it like they did with Google. Bing is important, because it is used to find information quickly and effectively, but it is not scarce, and it has a substitute. People are not as familiar with Bing, and are comfortable using Google, so there is no reason for Google users to switch. If Bing wants to become more powerful, and have its customers become more dependent on it, it will have to come up with some technology that Google has not thought of yet, and advertise it to as many people as possible. Bing had many good ideas to try and compete with Google, such as instant answers, filters, unlimited scrolling, etc, but it didn’t take long for Google to catch onto Bing’s technology, and incorporate it into their own search engine.
This is a very good example of how dependency can either give your company power to lead the market, or leave your company trying to compete with the top company in the market. Because so many people were dependent on Google for so long, without any other options, it will be very difficult, if not impossible for another search engine to gain power over Google. This goes for any company, because in order to gain the power in the market, your company needs to have the majority of consumers dependent on its product or service. If you have a product that is unique, and that people feel that they cannot live without, then your company will hold the power in the market.