Location, Location, Location

Location within the IB programme has often been a traditional, static approach to the concept of place within the marketing mix – examining where firms are located and the importance of getting location decisions correct for retail outlets.

However, the commercial scene is changing rapidly with technology providing increasing mobility and information and markets becoming progressively more global and interconnected. Location is more about distribution networks, changing employment practices and virtual organisations than the siting of physical assets and entities, with significant implications for all areas of business activity, including marketing, HRM and operations management.

In recent years, employers have developed more flexible working patterns for their employees. These trends include:

• Increasing self-employment – this area is increasing in many countries
• Reduction in full-time employment – firms now use fewer full time employees and tend to offer more short-term contracts
• Part-time working – there has been a growth in the level of part-time employment. This may be a lifestyle choice on the part of many, but firms have encouraged this trend as part-time employment offers more flexibility
• Contractors – many firms now use contractors and consultants for a wide range of task. This has led to many previous employees setting up as self-employed contractors.
• Temporary employment – increasing numbers of employees have been on temporary working contracts. Again these are used by firms to ensure flexibility – we look at this in more detail below.

With costs of office space and labour rising, firms are examining flexible working practices to reduce their expenses. Firms like a flexible workforce as it enables them to adapt their employee levels to meet fluctuations in demand and maintain their competitive advantage in the face of external changes. To achieve greater flexibility, firms are using more part-time, temporary and external contractors, which allow them to increase or decrease their work teams as required. It may also provide more flexibility to the employees themselves who may work from home and select their own working hours and days.

A survey by the office machine company, Brother, showed that the trend towards flexible and mobile working was not surprisingly, even more evident among business start-ups. It identified a phenomenon dubbed ‘cappuccino commerce’, with 22% of start-ups saying they had no permanent office, but based themselves in coffee shops to minimise overheads. Working from home was the most popular choice for start-ups with 72% setting up in a spare room. Alongside cappuccino commerce, there is also the increasing popularity of co-working spaces, virtual office spaces and short-term rentals of office spaces of meeting rooms – shops, restaurants and hotels. As long as there is internet connection, there is a possibility of operating a commercial enterprise.

The fear of social isolation among remote workers has diminished with the advent of social networking. Apart from Twitter and Facebook, there are several sites which offer specialised networks for developing communities of home workers and small businesses, such as iHubbub.

The trend towards home, mobile and remote working has become a global phenomenon. Several significant research studies have shown a direct link between flexible working and improved productivity and motivation. Indeed, the opportunity for flexible work patterns is becoming a major factor in employment decisions. Cisco Systems conducted a survey of young employees in 2011, which found that two-thirds of employees desire work flexibility, with 40% of students and 45% of young employees saying they would accept a lower paid job if it offered more flexibility and mobility. Most governments and local authorities are actively encouraging flexible working practices as they recognise the positive environmental implications of fewer business-related journeys on traffic levels, pollution and congestion.

According to a survey by Regus:

• Working from home results in a 10% – 20% increase in employee productivity.
• 76% of telecommuters are more willing to put in extra time on work.
• Telecommuters report having 25% less stress and 80% say they have a better work-life balance.
• Just one day of telecommuting could be the equivalent of taking 77,000 cars off the road for a year.

Working from home offers a relatively cheap and simple alternative to office-based employment, with the technology supporting homeworking becoming ever more powerful and cost-effective. Technology provides homeworkers with exactly the same access to systems as onsite employees enjoy. As long as employees have a phone and a broadband connection they can be taking customer service enquiries from anywhere. The same technology gives employers the ability to report on how productive their employees are – by looking at logged in times, percentage of time spent on calls, and sales or customer satisfaction statistics and counters fears of a lack of control.

A recent US survey by mobile security software firm Good Technology, highlighted that 80% of working adults in the US work an extra seven hours a week thanks to smart devices. That’s almost an extra work day a week and evidently there are no qualms about staying connected to work at all times. According to the survey, 68% of the respondents check their work emails before 8 am, 50% check their work email while still in bed and 40% still do work email after 10 pm.  Ownership of a smartphone may indeed equate to never-ending workday!

In his 1989 book, The Age of Unreason, Charles Handy examined a time when life and the work environment was shaped by us, and for us. Handy foresaw new organisations emerging as well as new working patterns, such as teleworking, outsourcing, and portfolio working. He believed these new working patterns will be reflected in changing patterns of business, with a mix of small enterprises and large conglomerates creating temporary alliances to deliver particular projects.

Handy suggested, however, that organisations do not consist of just the Core and the Periphery, since the periphery can be subdivided. He calls this a shamrock organisation:

• The first leaf of the shamrock represents the multi-skilled core of professional technicians and managers, essential to the continuity of the business
• The second leaf Handy calls the contractual fringe, because non central activities are contracted out to firms specialising in activities such as marketing, computing, communications and research
• The third leaf consists of a flexible workforce made up of part-time, temporary and seasonal workers.
• To Telecommute is to periodically or regularly perform work for one’s employer from home or another remote location.
• To Telework is to perform all of one’s work either from home or another remote location, either for an employer or through self-employment.

IB-style questions

Read the article, Future Travel Virtual Call Centre and then answer the questions below:

1. Define the following terms

• Offshoring
• Homeshoring

2. Explain the benefits of virtual call centres for the Future Travel and its employees.

3. With reference to Handy’s Shamrock Theory, analyse the advantages and disadvantages of homeworking and teleworking arrangements for firms.

4. Using the infographic below and your knowledge of business, discuss the factors driving the increasing trend to telecommute and telework.