To: Jeremy Smith

From: Victoria Rock

Date: April 14, 2012

Subject: Management Theories

In researching Management Theories in the areas of Human Resource regarding employee

empowerment and Marketing and the theory of penetration pricing, I found two companies; Life

Healthcare for the empowerment culture and Apple with penetration pricing.

In the Human Resource area, moving toward an employee empowerment culture.

Life Healthcare has achieved great results for the company in its revenues,

operating profit, normalized earnings and cash generated from operations which

have all increased. (Group Overview) The theory of empowerment is the process

in which individuals or groups gain power, access to resources and control over

their lives. The specific actions that empower employees are the freedom to

direct their own work. As the employees gain greater direct control over their

own work, their performance improves. (Empowerment: What is it?, 1999) This

action is in the values of Life Healthcare and has been used to improve the overall

performance. The results achieved by this company have been the success of its

financial results, and their abliatity to commission two new hospitals as well as

acquire a third. (Group Overview)

Considering the success of this company and their use of empowerment of

employees, if I was senior manager I can’t think of anything differently that I

would have done. Success speaks for itself.

In the marketing area, the theory of penetration pricing

The theory of penetration pricing is the charging of low price for a new product to

attract customers, gain a large sales volume, and build market share. This strategy

helps keep competitors out of the market, and creates a good name among early

buyers of the product. (Penetration Pricing) Apple has used penetration strategy

in the launch of its 3G iPhone. The phone has been priced at $199 compared to

earlier launches of $599. The reason for the use of this strategy is that Apple does

not have a large share of the Smart Phone market. The theory being followed in

penetration pricing is to achieve a large market share. The assumption by Apple

is that the market for smart phones is price sensitive and is use by Apple because

of is small market share. The results achieved are satisfactory and the total

number of units sold as of April 2010 was 50 million since its launch in 2008.

Due to the success of the penetration pricing iPhones are now available for $99

with the purpose of gaining additional market share. (Baig, 2008)

If I had been senior manager, I would have decided on the exact market share I

wanted and fixed a penetration price at that level. Apple has left a large number

of its customers unsatisfied because they paid a much higher price then what the

product is sold for now. By studying the competitions price I would have decided

on a penetration price lower than theirs and stuck with it. Customer satisfaction

plays an important role and the pricing should satisfy the customer.

Reference

Baig, E. C. (2008, July 10). Apple's new iPhone 3G: Still not perfect, but really close. Retrieved from USA Today: http://www.usatoday.com/tech/columnist/edwardbaig/2008-07-08-iphone-3g-review_N.htm

Empowerment: What is it? (1999, October). Retrieved from The Journal of Extension: http://www.joe.org/joe/1999october/comm1.php/INTEMPOWERMENT

Group Overview. (n.d.). Retrieved from Life Healthcare Group: http://results.lifehealthcare.co.za/life_healthcare_ar2011/go_purpose.php

Penetration Pricing. (n.d.). Retrieved from NowSell.com : http://www.nowsell.com/marketing-guide/penetration-pricing.html