Almarai 1

International
Journal of
Management
Cases
Volume 9 Issue 1
EDITORS
Western Europe
Professor Barry J. Davies
Professor of Marketing, University of Gloucestershire, UK
bdavies@glos.ac.uk.
The Rest of the World

Professor Claudio Vignali
Arnold Ziff Chair in Retailing, Leeds Metropolitan University, UK
c.vignali@leedsmet.ac.uk
Central Europe
Professor Tihomir Vranesevic
The Graduate School of Economics, The University of Zagreb
tvranesevic@efzg.hr
EDITORIAL BOARD
Dr. David J. Bennett
Head of Department, Operations & Information Management Division, Aston Business School, Birmingham, UK
d.j.bennett@aston.ac.uk
Dr. Leo Dana
University of Canterbury, New Zealand
leo.dana@cantebury.ac.nz
Professor Alberto Mattiacci
Professor of Retailing and Marketing,The University of Sienna, Italy
mattiaccialbunisi.it
Professor Mark Dupuis
Professor of Marketing, Ecole Superiore de Commerce de Paris, France.
Dr. Labros Vasiliadis
Business Academy, Chalkida, Greece
labvas@yahoo.gr
Dr. Henk J. Gianotten
Director, Centre for Retailing Research, Economish Institut voor het Midden en Kleinbedrijf, Netherlands.
Dr. Hans-Rdiger Kaufmann
University of Applied Science, Liechtenstein
hans-ruediger.kaufmann@hochschule.li
Professor Dr. Jrgen Polke
Associate Dean, University of Applied Science, Vorarlberg, Austria
jurgen.polke@fhv.at
Professor Carlo A. Pratesi
Professor of Retailing Marketing, University of Urbino, Italy
capbox@tin.it
Professor Jurica Pavicic
Professor of Marketing, University of Zagreb, Croatia
jpavicic@efzg.hr
Professor Antonella Reitano
Professor di Economica & Gestione, Universita di Calabria, Italy
a.reitano@unical.it
Professor Brenda Sternquist
Professor, International Retail Management, Michigan State University, USA
steinqui@msu.edu
Dr. Tomasz Wisniewski
The University of Szczecin Poland
t.wisniewski@univ.szczecin.pl
Dr. Demetris Vrontis
Dean, School of Business Administration, Intercollege, Cyprus
vrontis.d@intercollege.ac.cy
PRODUCTION EDITOR
Gianpaolo Vignali
g.vignali@leedsmet.ac.uk
www.ijmc.org.uk
Centre for International Research in Consumers

Location and their Environments (CIRCLE)
ISSN 1741-6264
International Journal of Management Cases is published by:
Pallas Press, Pallas Villa, University of Gloucestershire
Business School, The Park, Cheltenham
Gloucestershire, GL50 2RH
Copyright
University of Gloucestershire 2006
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Contents
A CASE STUDY DISCUSSING THE IMPORTANCE OF INTERNATIONALISATION IN THE
CURRICULUM.
ISABELL HODGSON AND TANJA ALA-HIIRO
HIGHER EDUCATION KNOWLEDGE TRANSFER AND AT THE STIMULATION OF ECONOMIC

GROWTH. A CASE STUDY EXECUTED FOR UNIVERSITIES OF APPLIED SCIENCES IN AUSTRIA
13
HANS-RDIGER KAUFMANN, CLAUDIO VIGNALI, GRAHAM ORANGE AND JOACHIM HEINZL
CORPORATE SOCIAL RESPONSIBILITY AND EUROPES LEADING RETAILERS
PETER JONES, HIKMAT A. ALRAWI, DAPHNE COMFORT, DAVID HILLIER
A CONCEPTUAL REVIEW OF INFORMATION COMMUNICATION TECHNOLOGY IN
FACILITATING COMPETITIVE ADVANTAGE FOR SERVICE RELATED SMES.
NEIL ROBINSON, CRISPIN DALE AND TAHIR RASHID
CASE STUDY: MARKETING PERSPECTIVE OF ALMARAI DAIRY FOOD COMPANY
MUHAMMAD ASAD SADI
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32
42
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Journal of Management Cases, subject to an acknowledgement
of publication and copyright details.
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A CASE STUDY DISCUSSING THE

IMPORTANCE OF INTERNATIONALISATION
IN THE CURRICULUM.
ISABELL R M HODGSON
HOSPITALITY AND RETAILING SUBJECT GROUP, LEEDS METROPOLITAN UNIVERSITY, UK
TANJA ALA-HIIRO
SEINAJOKI POLYTECHNIC, FINLAND
Abstract
Introduction
The following case has been prepared following

research conducted through a Leonardo Project
which included 10 partner Polytechnics and
Universities from Europe.
The following report has been compiled following

research conducted with 10 universities and
polytechnics throughout Europe as part of a
Leonardo project. Partners represented several
subject areas including business education;
accounting; agriculture; health care and tourism
and hospitality management.
The focus of the project was to examine the

impact and effect of team teaching within Content
Language Integrated Learning (CLIL) across a
variety of subject areas and countries.
This particular research was carried out with
staff from Finland and the UK and the aim was to
determine the importance of internationalisation in
the curriculum.
It was determined that almost every partner did
have several elements of internationalisation
within their programmes. However, variations were
evident in the structure and development, where
some institutions have some very sophisticated
and well established elements whilst others were
very much in the embryonic stages.
The project commenced in November 2003,

with partners from 5 polytechnics in Finland; 2
universities in Latvia; 1 university in Poland; 1
in Spain and Leeds Metropolitan University in
England and will culminate in a conference in
Helsinki in June 2006.
The aim of the project was to examine team
teaching with particular reference to the transfer
and boundary zones in Content Language
Integrated Learning (CLIL).
The project was then divide into 5 themes The potential of CLIL
This particular research was carried out with

staff from Finland and the UK and the aim was to
determine the importance of internationalisation in
the curriculum.
Keywords
Leonardo; Internationalisation; curriculum; CLIL;
Team teaching; Work Based Learning; Exchanges;
Joint research projects; Cultural awareness;
Language teaching.
The potential of team teaching

CLIL Team Teaching and Internationalised
Education
CLIL and team teaching models
Professional CLIL and team teaching
competencies.
This case study is derived from the research
conducted from theme 3- CLIL Team Teaching
and Internationalised Education.
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Summary of methodology
What is CLIL
A questionnaire (refer to appendix 1) was

devised by the section 3 team and distributed to
all partners during July/August 2004. Research
was conducted by the team 3 members to
determine what internationalisation suggests
to educational institutions. The results indicated
several common factors such as- modules with
international in the title; a language component;
a placement/internship in another country;
exchange programmes for both students and
staff.
Much has been written recently about employability

and integrating competences for working life into
the curriculum. Several programmes and toolkits
have been developed to aid tutors and to assist
students to develop in this way. It is no longer
regarded as innovation in teaching and learning
but as a requirement.
The CLIL approach brings language and
communication skills, the hands-on tools all
people need to use effectively in working life, into
the heart of the curriculum Marsh, Marsland and
Stenberg (2001) p 1
The questions were, therefore, constructed to

elicit facts and opinions from all partners on a
variety of issues concerning the degree and
variety of international partnerships, exchange
programmes, internships and any other
initiatives which introduce and integrate some
form of internationalisation in the curriculum at
each institution. Questions relating to the use of
language proficiency testing and of the internet
were also included.
The authors believe that it changes the ways

students learn and offers them a fast-track way
of gaining extra skills for the workplace.
Globalisation and the internet have created more
opportunities for students and more importantly
for graduates. Employers across all industries and
professions demand competent employees and
expect graduates to display and demonstrate a
range of skills necessary for todays ever changing
workplace. Furthermore, the changing economic
situation means that academic knowledge is no
longer sufficient to satisfy todays employersemployability skills are essential to enhance
students prospects. Key employability skills
include communication and presentation and
social development and interaction Fallows and
Steven (2000). These skills can all be developed
using the CLIL principles as outlined below.
Ten responses were received and collated. One

response was received from each institution, not
from each school or department participating in
the project.
From the following report, there are strong
similarities between institutions, with most involved
in many forms of internationalisation within the
curriculum. Variations include the numbers of
partners with who each partner works. Whilst the
involvement in study exchanges, field trips and
internships vary, it is evident that all partners are
actively engaged in many activities to enhance
the students international experiences.
This in turn has changed the emphasis in teaching

and learning methods. Traditionally and certainly
in the UK, language teaching has been taught
in isolation with no integration with other subject
areas within the curriculum. There are very few
examples of team teaching in higher education
in the UK.
Some of the main differences appear to be the

integration of ECTS European Credit Transfer
System (ECTS) courses and the use of internet
based learning. Furthermore, it is apparent that
most institutions are not partaking in international
proficiency tests and in some cases partners
queried what is an international proficiency
test?
However, team teaching is seen as a key

component of CLIL, where the language tutor
teaches in tandem with the subject specialist.
CLIL has been practised in several areas in other
countries, e.g. Finland where there are many
examples of good practice within health care and
tourism.
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CLIL follows Do Coyles four principles
As outlined above, many academics, Elkin, et al

(2005) Fallows and Steven (2000) acknowledge
that because the world economies are becoming
increasingly interdependent, the need for
culturally aware and internationally orientated
graduates who can work in a multi-cultural
globalised society are in great demand. This
places demands and pressures on universities
and other educational establishments to plan and
develop their curricula to meet these requirements
together with attracting students from several
overseas countries. This interaction with students
from various cultures and backgrounds, in itself,
provides an international dimension to the student
experience and development.
Content- deepens and renews the teaching

and learning of content subjects
Communication- CLIL strengthens
communication skills in a foreign language
Cognition- CLIL provides intellectual
challenge
Culture/citizenship- the CLIL approach in
learning and teaching provides the learner
with skills required for internationalisation.
Colleagues from institutions where CLIL is
practised also report that it increases motivational
levels and encourages students to learn a second
language; increases independence and life long
learning; enhances employability skills necessary
for mobility in a global context.
There are several examples of good practice

where universities have recognized the
importance of internationalisation of the curriculum
and have developed programmes which provide
key organisations with graduates who meet their
needs in terms of internationalisation. However,
conversely there are also examples where gaps
occur and employers struggle to find graduates
with the necessary skills and knowledge required
to compete in a global environment.
Internationalisation in the curriculum

Defining internationalisation is problematic,
although there are similar patterns and templates
in many universities.
The OECD defines internationalisation of the
curriculum as curricula with an international
orientation in content, aimed at preparing
students for performing in an international and
multi-cultural context, and designed for domestic
as well as foreign students (IDP 1995 quoted on
Elkin, Devjee and Farnsworth 2005)
Research findings
The first set of questions requested partners to
rank the importance of 6 international activities1. Study visits abroad
2. Work placements abroad
Teekens (2002) offers amore detailed definition a

process of integrating an international dimension
into teaching, research and service functions
of an institution of higher education, with the
aim of strengthening international educationunderstood as education which involves and/or
relates to the people and culture and systems of
different nations (quoted in Elkin et al 2005)
3. Internet based communication

4. Studying in multicultural groups
5. Studying in foreign language
6. Obtaining international proficiency tests
Study visits and work placements abroad
were considered to be an important part of the
curriculum by 4 respondents but only for some
groups by 4 others. All other partners responded
that they were both in the planning stages.
Both these definitions imply that internationalisation

should be intrinsic throughout the education
institution and involve everyone in the offering
and delivery. It aligns with the research conducted
by the team in this research project and suggests
that any activity which involves exposure
and integration with any aspect on overseas
personnel, visits to an overseas country, study of
or research into an international topic all indicate
an international curriculum.
The number of external contacts with whom

individual respondents worked produced a huge
variation with some respondents stating 2, some
up to 20 and some only with CLIL partners.
The institutional figures were even more varied
from 20 to several hundred in some institutions.

Further information included the participation in
several Leonardo and other funded programmes
with institutions across Europe.
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Internships
The use of internships varies with some being
a compulsory part of the course which students
must complete to gain their degree. Working
overseas for the internship was an option but
not mandatory in any institution, however, all
encouraged students to take up the option
wherever possible.
Study trips and field visits are organised by 5

institutions but again some for very specific
groups and or as an integral part of a module.
When asked to state what benefits were derived
from such programmes, the following were the main
reasons: internationalisation of the programmes;
deeper awareness and understanding of cultural
differences; enhances educational programme
and adds value to the student experience;
professional growth; improvement in language
competences both in a professional capacity
and every day usage; ensures student learns
more than textbook theory; students realise the
application of skills in a practical environment;
realisation that they can make friends through
languages and communication skills.
The length of time varied from 400 hours, one

semester to 48 weeks; or in some professions
it is recorded in ECTS 30-75 credits worth of
internship for nursing and health care. It was
noted that Spanish Education Law does not
even mention internships however, students in
professional education do have to carry out a
set number of hours practice before gaining their
degree.
There were some differences across all institutions
in the organisation and planning of the internships.
Some institutions offer assistance with finding a
suitable internship, whilst others leave it up to the
student. Either way, the process does assist with
a variety of interpersonal and employability skill
development, not least job searching, CV writing
and interviewing.
The further 5 institutions stated that they did not

offer any trips or field visits at present but are in
the planning stages. Reasons included, the cost
is a prohibitive factor; some institutions offer but
students are reluctant to participate; whilst others
are limited to certain departments where partners
encourage exchanges. However, students
themselves often arrange visits to industrialists to
carry out research or to take part in on-the-job
training.
Again there were several benefits for integrating

internships into the programmes including,
facilitate students entry into working life; increases
employability skills and opportunities; acquire
practical experience in their specialist area of
study; makes them more competitive in the job
market; increases credibility with employers after
graduation; students often offered employment
with the internship employer- hence opening
doors of opportunity for them and easing the job
search and their entry into the job market; assists
students to apply theory to practice and vice
versa; assists their understanding of theoretical
concepts and models on return to their studies
at their university or college; provides networking
contacts for future projects and thesis; can
compare working practices in other countries
with their home country.
Exchange programmes
All 10 respondents offer and encourage students
to partake in exchange programmes.
Reasons included: to exchange ideas; again
practice language skills in a social environment
and in their own particular field of study; to provide
a different experience in the course programme;
gain international expertise with Erasmus and
Nordic programmes; enhances students ability
to operate in an international context; exchanges
were regarded as particularly important as it
makes integration in the working community
faster and easier, and to experience different
academic and professional experience.
It was also noted that students visibly mature

professionally and make contacts with
commissioners and a range of employers.
All respondents stated that they will continue and

most will aim to get more exchange partners for
the future.
Most students only use European countries

to complete their training, with some Latvian
students travelling to Russia. However, the
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translation students from Latvia only work at

home with translation agencies. Students in
British universities are encouraged to travel to
most countries across the globe. Many travel
to America and Canada where they can get the
opportunity to practice Spanish and French.
One university offers over 30 languages but

students are restricted to studying a language,
which they have previously studied at schoolusually French, German, Spanish or Italian but in
practice many study other languages- Japanese;
Norwegian; Chinese, Mandarin.
All partners would like to extend the countries

with whom they work and some are hopeful,
that through this project, this may be possible.
The benefits of having a more diverse choice
include the sharing of knowledge between
academics not just students, to keep up to date
with developments within the field of study and to
compare and contrast with own practices. Most
respondents stated that they try to encourage
students to choose a country which is going to
enhance their career. Britain and Ireland are
particularly favoured for students studying to
become translators.
Other responses included -None at the moment

but hoping to change the situation; being planned
for future; almost nothing.
The benefits and advantages of teaching and
learning in a foreign language were very similar
to previous answers under exchanges and
internships. However, it was stressed that cultural
awareness and internationalisation is becoming
more and more important and even a requirement
in many careers.
However, there were some disadvantages listed.
The principle one appeared to be the added
stress and demands associated with teaching
a language in a specific context particularly with
no or limited knowledge of the subject area and
not in moth tongue. It was also stressed that the
student groups are often of mixed ability which
increases the workload even more.
Most students have to complete some form of

project or work during the internship with one
university requiring a project set, agreed and
assessed by the employer. However, in some
institutions students are required to collect data
for their final year thesis during their internship.
There can also be difficulties with terminology in

the mother tongue. Students lack confidence to
communicate and hence do not make the most of
the opportunities available to them. Team teaching
can put extra demands on the resources, least of
all budgets.
ECTS
The responses to the question asking how many
courses in the ECTS are offered within each
school varied greatly from several to virtually
nothingOne institution indicated- 3
The use of Internet based teaching.
Four institutions- full degree programmes and

lots of modules in foreign languages, most in
English.
All respondents stated that their institutions all

offer some form of internet based education.
Some are fairly advanced and have been using
this mode of delivery for some time and with
several partners. Others are less advanced
and restricted to just English, some just with an
elective/option module, whilst others are just in the
planning stages. The Spanish partner institution,
are working on a proposal made by CIMNE to
join an internet based Education Programme
called My School in the Web.
Language requirements are different in various

vocational and Further Vocational Qualifications,
usually 1-3 credit units of English and/or Swedishsome also offered in other languages- French,
Spanish, and German
Approx. 50ECTS
Basic studies include 2 courses 3 ECTSof vocational language i.e. nursing English
compulsory
The benefits of such delivery are many- money

and time saving once set up; provides an
opportunity to collect new ideas; teachers can
compare experiences; there is more support and
hence problems can be solved easier and quicker
Degree nursing programmes 210 ECTS
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and it is much more suited to teaching a group of

mixed ability or which is at different competency
levels- it is not as complicated for the teacher and
students can get individual tuition.
Others noted that that the programme should be

developed first and then consideration given to
the appropriateness of the internationalisation
element.
However, there are disadvantages which need

to be considered, it is still impossible to rehearse
oral communication skills on-line and the lack of
personal contact is not suitable for all students. It
requires a lot of independent work and therefore
students need to be very self motivated.
Another initiative is the development of a joint

Masters programme within BOUA.
Students involvement in international

conferences and projects.
There are also demands on the tutor developing

classroom methods into effective on-line methods.
It is believed that the pedagogical aspect of on-line
learning is just beginning.
Very few institutions allow students to participate

in conferences unless accompanied by a tutorand this is very rare.
Unless sponsorship or funding is available the cost
is prohibitive to many institutions and particularly
the students.
Other partnerships- e.g. summer schools

Examples included, short courses with CISCO
Academy or Microsoft programmes; drug abuse
projects with Greece; Nordic programme Sweden,
Norway and Denmark; co-operation with other
institutions on different levels e.g. LdV; research
projects with several institutions; guest lectures
and the external examiner programme in the UK.
Some institutions may include students if the

conference is local and in some cases they may
be involved in the organisation.
However, most institutions do have several projects
which have student input. A final year group
industry based project, many with international
organisations is included in most business
management courses in the UK.
Three partners do not have any other initiatives.

Added benefits of these programmes include the
sharing of expertise and resources; students need
to gain high marks to participate therefore this can
increase motivational\levels and encourage them
to achieve their very best; sets them a challenge
and so develops skills which will be very useful
in the future. It can prove to them that they can
achieve anything if they set their minds to it.
The benefits derived from such ventures are

very similar to these outlined in other sections
within this study particularly enhancement of
employability skills; problem solving in a real work
situation; efficient practice of language skills and
a motivational tool to encourage students to learn
another language; usually challenges students
abilities and so develops higher level skills for
future; promotes student mobility.
Should all programmes include an

internationalisation component?
Encouragement with international

proficiency tests.
All partners responded positively and agreed that

some element of internationalisation should be
incorporated into programmes but the various
elements should not be compulsory on all
programmes.
Only five partners responded positively agreeing

that language proficiency tests usually enhance
the students chances of finding employment.
They also learn and develop new methods and
techniques when dealing with such tests, which
undoubtedly improves their professional skills.
Further comments advised that one school has

introduced a CLIL department to implement
multilingualism and bilingualism to the study
programme. It is a pilot programme which started
in September 2004.
One institution offers the tests but students very

rarely enrol.
The advantages are again seen as enhancement
within the labour market when applying for
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employment overseas. It further enhances the

reputation of the institution by offering as many
possibilities to applicants to further their education
and preparation for working life.
Each institution recognises the value of exchange

partnerships, international internships and study
trips and encourages their students to participate
in as many opportunities as possible. However,
infrastructural and financial obstacles are
inhibiting both opportunities and developments in
some countries.
Conclusion
This project has focused on internationalisation
of the curriculum from the students perspective.
The results are therefore restricted to student
activities or components aimed at developing
students understanding of the importance of
internationalisation and cultural awareness.
It has been noted that most internationalisation

activities appear to focus on the students
with limited examples of staff involvement or
participation with the exception of the planning,
organisation and delivery.
The earlier definitions of internationalisation
indicated that research and research projects
are a key component of internationalisation. This
area needs to be researched further within this
project and will be included in future research.
The definitions considered earlier in this case

study stress the need for a wide range of activities
and scope throughout an educational institution
and furthermore should include home students
and foreign students.
Elkin et al (2005) in their research into visualising

the internationalisation of universities have
recommended the inclusion of creating values,
beliefs and intellectual insight in which both
domestic and international staff and students
participate and benefit equally. It should develop
global perspectives, international and cultural and
ethical sensitivity and useful knowledge, skills
and attitudes for the globalised market place.
This research has examined a wide range of

internationalisation elements which can be
included in the curriculum and the results have
proven positive.
Responses received to this survey indicate that
all partners are actively engaged in many forms
of internationalisation elements of the curricula.
Some are well established whilst other initiatives
are more recent even as a result of this CLIL
project.
It is apparent that through the variety of activities

and collaborations which have been outlined in
this project, that many of these skills and attributes
are already being developed.
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APPENDIX 1
CLIL Project
Section 3 CLIL, Team Teaching and Internationalised Education
To fulfil the objectives of section 3, we would appreciate if you could complete the following questionnaire
providing as much detail as possible. The questionnaire focuses on Internationalisation within your
School or Department, consequently the questions relate to overseas, international visits, internships
etc.
If no, why not?
1. When you consider the internationalization

in your institution, what is the current state of
the following areas? Please answer using these
numbers:
Do you plan to arrange exchanges in the future?

5. Are internships a compulsory integral part of all
courses/programmes?
1. There is no need for this kind of activity in our

institution
Please expand your response to explain the

internship policy.
2. in the planning state
Please explain how internships enhance the

students education and employability.
3. only with some groups

4. Important part of our curriculum
Which countries do students normally complete

their internship?
a) Study visits abroad

b)Work placements abroad
Would you like to extend their choices? (I.e. more

opportunities in various countries? Why?
c) Internet based communication
Is final thesis included in internship or exchange

period? Together with students from other countries
and / or in English?
d) Studying in multicultural groups

e) Studying in foreign language
6. How many courses (in ECTS) your school

offers in foreign language?
f) Obtaining international proficiency tests

2. How many international contacts do you
personally work with?
What are the benefits, disadvantages and demands

of teaching and learning in foreign language?
And do you know how many your school or

department has?
7. Does your school offer internet based

education in foreign language? Together with
other institutions?
3. Do you arrange study visits or field trips for all

your students?
If yes, what are the benefits, disadvantages and

demands?
If yes please explain the benefits derived from

study visits?
8. Does your school work with other international

universities for any other reasons? E.g. summer
schools? Short courses? Joint degrees or double
degrees?
If no please explain why not and if you plan to

organise some in the future.
4. Do you encourage students to partake in
exchange programmes?
If yes, what are the benefits, disadvantages and

demands?
If yes, please explain why?
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9. Do you believe that your programmes of

study should all have some internationalisation
component- not just a module?
11. Do you encourage students to partake in

international proficiency tests?
If yes, please explain why?
10. How often your students take part in

international conferences or projects?
12. Please add any other comments, which you

wish to share.
What are the benefits and disadvantages of

this?
Thank you in anticipation for assisting with this research. Please complete and return
to either:
i.hodgson@leedsmet.ac.uk
or Tanja.Ala-Hiiro@seamk.fi
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HIGHER EDUCATION KNOWLEDGE

TRANSFER AND AT THE STIMULATION
OF ECONOMIC GROWTH. A CASE STUDY
EXECUTED FOR UNIVERSITIES OF
APPLIED SCIENCES IN AUSTRIA
HANS-RDIGER KAUFMANN
INTERCOLLEGE, NICOSIA, CYPRUS
CLAUDIO VIGNALI
LEEDS METROPOLITAN UNIVERSITY, UK
GRAHAM ORANGE
LEEDS METROPOLITAN UNIVERSITY
JOACHIM HEINZL
LEEDS METROPOLITAN UNIVERSITY
Abstract:
Keywords:
Innovation and technological change stimulate

economic growth on micro level and contribute
to the competitiveness on micro level. Innovation
and technological change increasingly depend on
the production, dissemination and utilization of
knowledge. Today knowledge might be regarded
as commodity. In this context, higher education
institutions are key economic institutions due
their role in the production and transfer of
knowledge to the industry. In this publication a preconceptualization of a knowledge transfer model
for Universities of Applied Sciences in Austria is
introduced based on the finding of the mainstream
literature. The model is based on a discussion of
knowledge as commodity and conceptual issues
regarding knowledge transfer (i.e. knowledge
transfer mechanisms, components influencing
knowledge transfer, support structures, public
framework conditions). This pre-conceptualization
represents a starting point for further analysis. The
model takes into account the idiosyncrasies of
Austrian Universities of Applied Sciences relating
to the small size, the specific legal and regulatory
framework, public framework conditions, the
requirements of the Austrian innovation system,
etc.
Knowledge Transfer, Higher Education, Industrial

Knowledge Demand, Innovation Performance,
Framework Conditions, Transaction Modalities;
Universities of Applied Sciences;
INTRODUCTION
Form a macro economic perspective, the effect of
innovative activity and technological change on
economic growth is analysed in the OECD growth
model (OECD, 2002a). This growth model defines
economic growth (measured in GDP per capita) as
function of inputs, i.e. labour and capital. Therefore,
GDP per capita can be increased by an increase
in the total amount of worked hours in an economy
(i.e. an increase in labour utilization). Another
possibility to increase GDP per capita is to increase
the output per worked hour (i.e. an increase in
labour productivity). The labour productivity can
be increased by an increase in capital per worker
(capital deepening) or by an increase in overall
productivity which is called multi-factor productivity
(cf. Nicoletti and Scarpetta, 2003a). A more
efficient use of inputs representing a rise in multifactor productivity goes back to an elimination of
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slacks in inputs, to increased innovative activity

and the adopting of new technology (Nicoletti
and Scarpetta, 2003a). Therefore, from a macroeconomic perspective an increase of innovation
and technological change on the aggregate level
among other important factors significantly
stimulate the economic growth of an economy.
turnover of the total sector per academic year. In

the academic year 2001/2002 the turnover was
5.906.138. This represents the highest turnover
since the establishment of the Universities
of Applied Sciences sector in Austria. These
numbers show the positive trends regarding
research performance of Austrian Universities
of Applied Sciences: First of all the total R&D
turnover is growing rapidly. The turnover in
the academic year 01/02 represents a 3,5 fold
increase compared to the academic year 98/99.
Secondly, the ratio of industry funding is growing
rapidly. Whereas in the academic year 98/99 only
25% of the total R&D budget was stemming form
industry funding, in the academic year 01/02
already 40% came from the industry. However,
besides the production of knowledge also the
diffusion of knowledge is required in order to
stimulate the competitiveness of the industry.
From a micro-perspective, firms are today

confronted with a new operating environment
in which buyers are becoming increasingly
demanding and discriminating, markets are
becoming more fragmented, product life cycles are
shortening, with the result that payback periods
are reducing, the expectations of distributors and
dealers are increasing, the pace of technology
is becoming ever faster and competition in
general is increasing (Wilson and Gilligan,
1997). For addressing the challenges of this
new operating environment one way to achieve
growth and sustain performance is to foster and
encourage creativity and innovative practices
from a companys perspective (Cottam, Ensor
and Band, 2001). However, in an increasingly
complex business world the knowledge base of
enterprises is no longer perfect (Pyka, 2002).
Therefore, the enlargement of the technology
and knowledge base is inevitable for remaining
competitive. This enlargement may be reached
by collaboration with the science base (e.g. higher
education institutions), multi-firm collaboration
(e.g. research consortia), licensing of new
technology, collaboration with customers and
suppliers, equity and company acquisition, joint
ventures and alliances and contract research (cf.
Tidd and Trewhalla, 1997).
Thus, in the light of a full exploitation of knowledge

production and diffusion capacities in Austria
the enhancement of the knowledge transfer
of Universities of Applied Sciences might be a
promising strategy for stimulating the innovation
performance in the industry and, therefore, might
contribute to the socio-economic development of
the Austrian industry. Therefore, this study aims
to develop a model describing the components
influencing the knowledge transfer performance
of Universities of Applied Sciences targeted at
the stimulation of regional economic growth, as
this topic has not yet been sufficiently addressed
in the literature.
KNOWLEDGE AS COMMODITY
Like in other European countries a dual system

of tertiary education has been established in
Austria by the introduction of Universities of
Applied Sciences the mid 1990s. This was
part of a fundamental process of reform of
the higher education sector as response to
changing economic and social conditions in
Austria (BMBWK, 2002a). The overall goal of
the establishment of the Universities of Applied
Sciences higher education sector was to extend
tertiary education offers, to create a permeable
education system and to provide a vocational
education that leads in contrast to secondary
level vocational educations to internationally
accredited graduations (cf. BMBWK, 2002b).
The R&D capacity of the Universities of Applied
Sciences sector can be demonstrated by the R&D
In the knowledge based economy

The knowledge-based economy is an
expression coined to describe trends in the
most advanced economies towards greater
dependence on knowledge, information and
high skill levels, and an increasing need for
ready access to all of these (OECD, 1996b,
p.6). According to Xiaozhou (2001, p.315) the
knowledge-based economy is an economy
focused on modern science and technology,
and based on the production, accumulation,
use and consumption of knowledge and
information.
- claimed by several authors in the literature
(e.g. Polt et al., 2000; Jacob et al., 2000; Cowan
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and van de Pal, 2000; Xiaozhou, 2001) capital

and manpower becomes increasingly substituted
by human and organizational capabilities
(Gunasekaran, 1998). Knowledge has become
the prime motor of economic growth (Jacob
et al., 2000; Etzkowitz, 1994; Gibbons et al.,
1994). Therefore, knowledge can be regarded as
commodity in modern economies by facilitating
innovation through the production of knowledge
based products and services, new organizational
settings and new processes contributing to an
increase of efficiency, etc. As a result, a basic
understanding of the nature of this resource is
required for establishing an efficient and effective
knowledge management in an economy. The
following properties of knowledge can be derived
from the literature:
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is a pre-condition for an effective knowledge

transfer concept.
Third, according to Doloreux (2002) a codification
of tacit knowledge takes places over time. This
means that over time tacit knowledge becomes
increasingly codified and might end up becoming
common sense in an economy (e.g. by defining
industrial standards). Therefore, the constant
renewal of knowledge is required for maintaining
competitive advantage on micro and macro level.
This renewal of knowledge (i.e. the production
of new knowledge) is closely related to scientific
research and experimental development (cf.
OECD, 2002b). As a result, sustainable research
efforts are required for the provision of knowledge
as prime production factor in an economic
system.
First, knowledge occurs in tacit and codified form

(Gibbons et al., 1994; Doloreux, 2002; Lin, 2003;
Saviotti, 1998). Codified knowledge are ideas
being stored outside the human brain, for example,
in books, compact discs, etc., whereas tacit
knowledge is defined as skills like convictions,
abilities, talents, etc. representing knowledge
which can not be separated from the individual
(Conceio and Heitor, 1999). Due to these
different forms of knowledge it can be argued that
from a knowledge-transfer perspective different
mechanisms for the transfer of tacit and codified
knowledge are required. Next, the transferability
of tacit knowledge is geographically limited as it
depends on personal contacts and collaboration.
Evidence is provided by Porter (1998) stating that
tacit knowledge is less easily acquired at a broader
level, as face-to-face contact and proximity count.
Fourth, it has been observed that over the last

decade there has been a shift in the way in which
knowledge is produced and disseminated. This has
been described as a shift from Mode-1 to Mode2 knowledge production (Gibbons et al., 1994).
According to Schibany, Jrg and Polt, (1999) Mode1 knowledge production is executed mainly through
basic research representing the traditional mode
of knowledge production. On the contrary, Mode-2
knowledge production is carried out in the context
of applications. According to Gibbons et al. (1994)
in Mode-2 the following prime characteristics can
be derived: knowledge is produced in the context
of application; different scientific disciplines in a
common framework of action are combined; and
different organizations closely work together (e.g.
universities, companies, consultancies, etc.) for
solving an application-centred problem.
Second, from a formal perspective codified

knowledge is a non-rival good whereas tacit
knowledge is a rival good (cf. Conceio and
Heitor, 1999). Due to the non-rival nature, codified
knowledge has to be protected against utilization by,
for instance, filing patents, registered trademarks
and copyrights. The protection of intellectual
property (i.e. the definition of intellectual property
rights) from a countrys perspective has two main
reasons, namely to give the moral and economic
rights concerning intellectual capital to the creator
and to give the public the possibility to access
these creations. The second reason relates to the
promotion of the dissemination of results under
fair conditions targeted at economic and social
development (cf. WIPO, 2001). Therefore, the
proper handling of IPR (intellectual property rights)
Fifth, knowledge is a production factor required

by the industry that can not be bought and used
like natural resources. Rather firms have to be
able to access, digest and utilize the results of
research effectively and efficiently (European
Commission, 2000a). This ability of firms to use
external knowledge is called absorptive capacity
(e.g. OECD, 1999c; Niosi and Bellon, 2002;
Todorova and Durisin, 2003; Zahra and George,
2002). However, according to Buono (1997) the
absorptive capacity of a company is enlarged
after every knowledge transfer project. Therefore,
if the absorptive capacity of company is poorly
developed, it can be enhanced step-by-step
through knowledge transfer mechanisms (i.e. the
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knowledge transfer might increasingly rest on

complex technologies).
CONCEPTUAL ISSUES OF
KNOWLEDGE TRANSFER
To sum up, as tacit knowledge becomes

codified over time ending up being common
sense in an industry and therefore being no
longer a competitive advantage, a successful
growth strategy of a region or nation requires
the continuous production and renewal of new
knowledge. As knowledge can not be locked up
(like natural resources) the protection through
IPR regimes is gaining importance (especially for
codified knowledge). For an effective and efficient
use of the production factor knowledge special
emphasis has to be placed on the dissemination
mechanisms of the knowledge production
institutions and the absorptive capacities in the
industry.
Knowledge transfer mechanisms

Knowledge transfer mechanisms are frequently
discussed in the literature (e.g. Van Looy,
Debackere and Andries, 2003; Ciesa and
Piccaluga, 2000; OECD, 2002a; Schibany, Jrg
and Polt, 1999; Hutschenreiter and Kaniovki,
1999; Mansfield and Lee, 1996; Martin and Salter,
2001). However, the taxonomy of knowledge
transfer mechanisms, which is in use in these
studies, varies according to the specific purpose,
focus and the perspective taken in these studies.
For discussing the knowledge transfer from
the higher education sector to the industry) a
categorization of knowledge transfer mechanisms
is established based on the taxonomy introduced
by Schartinger et al. (2002).
Figure 1: A taxonomy of knowledge transfer mechanisms
The knowledge transfer mechanism in this study

comprise new firm formation by higher education
staff, employment of graduates, licensing of patents
held by the science system, education and training
of the industrial workforce, industrial participation
in conferences and other events, informal meeting
and communications, temporary staff exchange
between academia and business, collaborative
research, contract research and technological
consulting, the use of higher education facilities
by the industry and monitoring the activities of
the higher education system (Figure 1). However,
the proper selection of the knowledge transfer
mechanisms is highly idiosyncratic depending

on the overall strategy of the higher education
institution, the type of knowledge to be transferred
and the mode of knowledge creation. According to
the European Commission (2000a) the major issue
in research utilization strategy is the selection of
the proper exploitation route (i.e. proper knowledge
transfer mechanisms). Furthermore, issues like
the costs of knowledge transfer or the risks coming
along with the exploitation strategy have to be
taken into account for the selection of the proper
transfer mechanisms.
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Figure 2: Contingent Effectiveness Model for Knowledge Transfer
plays a minor role. Second, the transfer mechanism

(e.g. patents and licensing, personnel mobility, flow
of graduates to the industry, etc.) and the transfer
object significantly influence the effectiveness of
knowledge transfer.
Components influencing knowledge transfer

According to Bozeman (2000) the effectiveness
of knowledge transfer depends on the transfer
agent (i.e. the organization seeking to transfer
knowledge), the transfer mechanism (i.e. the
formal or informal vehicle for transferring), the
transfer object (i.e. the transfer entity), the transfer
recipient (i.e. the organization receiving the transfer
object) and the demand environment (i.e. factors
influencing the need for the transfer object).
Support Structures
A number of competencies are required by the
higher education staff being engaged in knowledge
transfer, like the proper management of IPR
issues (patenting, licensing, contracting), network
development skills, marketing and business
planning, application for grants and subsidies, etc.
(Jones-Evans et al., 1999). According to Hagen et al.
(2003) these competencies have to be implemented
in a central organizational unit which provides
the required services for the higher education
researchers. This goes in line with numerous
publications suggesting the implementation of
intermediary structures (or facilitating structures)
for supporting knowledge transfer activities within
the higher education institution (e.g. Jones-Evans
et al., 1999; OECD, 1999c; Cooke, 2001). These
intermediary structures are designed for facilitating
the knowledge transfer between academia and
business by providing services and infrastructure
for both, the higher education researchers and
the industry. The services provided can be
categorized in business incubation services (cf.
Etzkowitz, 2002; European Commission, 2001f;
First, influential factors relating to the transfer

agent comprise the mission, the technological field
of activity (sector), the resources, the geographic
location, the overall culture (attitude towards
knowledge transfer), the organizational structures
and the management style. However, according
to Polt et. al. (2001) additionally the size of R&D
(of the transfer and the recipient institution), the
absorptive capacity, the market structure as well
as the research performance have to be taken
into account. The literature provides numerous
publications discussing these factors and their
relevance for the knowledge transfer. For instance,
Mansfield and Lee (1996) investigate the effects
of distance and faculty quality on knowledge
transfer from academia to business. The study
shows that while distance is very important for the
collaboration between academia and business in
applied research, in basic research distance only
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Heydebreck, Klofsten and Maier, 2000) and

knowledge transfer related services (cf. Cooke,
2001; Jones-Evans et al., 1999). Knowledge
transfer related services comprise the handling
of industrial research contracts, the general
management of intellectual property, the
identification of knowledge transfer opportunities,
the commercialization of inventions, assistance
in monitoring and applying for research grants
and subsidies, the establishment of information
flows between academia and business, etc. (cf.
Cooke, 2001).
Public framework conditions comprise promotion

programmes, intermediary structures, legislation
and regulation as well as the institutional setting
(Polt et al., 2001). First, promotion programmes
relate to financing of innovation in the industry
and the science base (i.e. funding structures) as
well as programmes targeted at the awareness
raising. Second, intermediary structures are
targeted at reducing information asymmetries
and transaction costs in the knowledge market.
Third, legislation and regulation represent the
rules of the game in knowledge transfer. Fourth,
the institutional settings in the higher education
sector determine incentives and barriers for
knowledge transfer. Similar mechanisms
influencing the overall knowledge transfer are
identified by the European Commission (2000a)
discussing structural support modalities targeted
at the enhancement of the knowledge transfer
between academia and business. Therefore,
framework conditions have to be taken into
account for establishing a knowledge transfer
model as framework conditions crucially shape
the market in which the knowledge transactions
take places.
Framework conditions
Besides factors directly influencing the interaction
between industry and science (e.g. supply-demand
matching) and factors relating to the characteristics
of the actors involved (e.g. geographic location)
the knowledge transfer between actors of the
industry and actors of the science base is
additionally influenced by public framework
conditions (Bozeman, 2000). Knowledge transfer
can be conceptualized as market transactions in
a knowledge market (Polt et al., 2001). For this
conceptualization, the specifics of the knowledge
market have to be characterized in order to
derive mechanisms to sustainable enhance the
amount of knowledge transactions. According
to Polt et al. (2001) the following characteristics
of the knowledge market can be observed:
high information asymmetries and low market
transparency; high transaction costs because of
the need for transfer and absorption capacities;
high spillovers and relative low level of private
return from knowledge acquisition; restrictions
on investment in knowledge production and
exchange due to risk averseness; invisibilities and
the existence of joint products and sometimes a
need for reciprocal interaction and collaborative
knowledge production. Form a market transaction
perspective all of these characteristics represent
barriers for the knowledge transfer. Government
intervention, therefore, from a research policy
perspective, has to correct the market failure
in the knowledge market (cf. Martin and Salter,
2001). These interventions significantly shape
the establishment of public framework conditions
conducive to innovation, which compensate for
market failure and stimulate knowledge transfer
by the provision of incentive structures (Polt et
al., 2001).
PRE-CONCEPTUALIZATION OF A
KNOWLEDGE TRANSFER MODEL
This pre-conceptualization of the Universities
of Applied Sciences knowledge transfer model
(Figure 3) is derived from concepts identified in
the literature. It is hypothesised that the concepts
from the literature (most often discussed in the
context of large universities) might to some
extent be successfully applied for Universities
of Applied Sciences. However, Universities of
Applied Sciences are highly idiosyncratic higher
education institutions (e.g. small in size, legal
constraints like the inability to award PhDs, etc.).
Thus, the identified concepts have to be validated
for their appropriateness for Universities of
Applied Sciences. In this conceptualized model
the overall knowledge transfer performance of
Universities of Applied Sciences depends on the
demand for knowledge in the industry, the supply
capabilities, the marketing capabilities, the public
framework conditions and the organizational
performance. The knowledge supply capabilities
of Universities of Applied Sciences depend
on the knowledge generation capabilities as
well as the knowledge acquisition capabilities
18
from international knowledge sources (e.g. the

international scientific community).
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demand matching, the type of transfer mechanism,

the type of knowledge to be transferred (i.e. tacit
versus codified), the transfer conditions (e.g.
price), distance, etc. (Polt et. al, 2001).
First variables influencing the demand for

knowledge in the industry might comprise
the industry sector, the absorptive capacity,
competition and the pace of technological
development (cf. Bozeman, 2000). Additionally,
the collaboration culture, the size of business R&D
as well as the overall strategy (e.g. technology
leadership strategy) might shape the industrial
knowledge demand.
Fourth, the framework conditions relate to public

funding structures, legislation and regulation,
public funded intermediary structures, etc. From
a University of Applied Sciences perspective the
variables influencing the framework conditions can
hardly be influenced. However, these variables are
suggested to be included in an overall framework
in order to derive the interdependencies of those
public framework conditions with other factors.
Second,
the
organizational
performance
(including facilitating structures located within the
higher education system like knowledge transfer
offices, patent offices, incubation units etc.) might
depend on the amount and quality of the services
provided by the facilitating structures (cf. JonesEvans et al., 1999). Furthermore, the organization
research teams (cf. OECD, 2002a), the research
processes which are in place (cf. OECD, 1999c),
the skills of the individual research regarding
project management, writing proposals, etc. (cf.
Ern-Kjlhede et al., 2001) and the management
style in general (cf. OECD, 1999c) might influence
the organizational performance on the aggregate
level.
Fifth, the knowledge supply capabilities might

depend on the knowledge generation capabilities
and the knowledge acquisition capabilities from
external knowledge sources (scientific community)
as due to the increasing inter-disciplinary nature
knowledge might not exclusively be produced
within the higher education institution. Variables
influencing the knowledge generation capabilities
might comprise the scientific excellence of the
staff, the size of the research teams, conditions of
work, motivation and incentives, IPR regulations,
etc. The acquisition capabilities might depend on
the networks existing with the scientific community,
the absorptive capacity, the reputation of the
specific higher education institution.
Third, variables influencing the marketing

capabilities might comprise the thematic supply-
Figure 3: Pre-conceptualization of the Universities of Applied Sciences knowledge transfer

model
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the Commission of the European Communities,

No. 17023. Luxembourg.
FURTHER RESEARCH
The model established in the pre-conceptualization

is of general nature as it has been derived from
the current mainstream literature discussing
knowledge transfer most often in the context of
large universities. During a qualitative research the
idiosyncrasies of Universities of Applied Sciences
will be applied to the model. Additionally, through
the qualitative research the variables shaping
the influential factors of knowledge transfer are
established. In a third step, the knowledge transfer
model for Universities of Applied Sciences will be
tested by quantitative research.
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14, pp. 313-324.
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capacity: A review, re-conceptualization, and
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CORPORATE SOCIAL RESPONSIBILITY

AND EUROPES LEADING RETAILERS
PETER JONES
UNIVERSITY OF GLOUCESTERSHIRE, UK
HIKMAT A. ALRAWI
DUBAI UNIVERSITY COLLEGE, DUBAI
DAPHNE COMFORT
UNIVERSITY OF GLOUCESTERSHIRE, UK
DAVID HILLIER
UNIVERSITY OF GLAMORGAN, WALES, UK
Introduction
Corporate Social Responsibility
In presenting its 2006 Global Powers of Retailing

report Deloitte (2006) suggests that heightened
concern about the growing risks facing retailers
is changing the management agenda from one of
managing for profitable growth to one of managing
and mitigating risk. The report argues that the
uncertainties of the global economy, the complexities
of a global supply chain, stakeholder demands
for greater corporate social and environmental
responsibility, technological innovation, the growth
of proprietary brands, the increasing difficulties
in finding and retaining talent, and the threat of
terrorism have all combined to significantly change
the landscape of risk management. In identifying
non-financial risks as one of seven key risks
the report suggests that being a good corporate
citizen is becoming increasingly important to the
risk management agenda and that the goal is to
bring together economic viability, environmental
sustainability and social responsibility, integrating
these concepts into the companys strategy,
operations and culture. This illustrative case study
offers a preliminary examination of the extent to
which some of Europes leading retailers are
reporting Corporate Social Responsibility (CSR)
commitments and agendas on their company
websites as part of their corporate efforts to build
trust with shareholders, consumers and other
stakeholders.
CSR is ultimately rooted in the recognition that

businesses are part of society and that as such they
have the potential to make a positive contribution
to social goals and aspirations. That said there
seems to be no universally agreed definition and
while Frankental (2001) has argued that CSR
is a vague and intangible term which can mean
anything to anybody, and therefore is effectively
without meaning and the UKs Confederation of
British Industry (2001) have suggested that CSR
is highly subjective and therefore does not allow
for a universally applicable definition, a variety of
definitions have been framed. The Commission for
the European Communities (2001) defines CSR as
a concept whereby companies integrate social and
environmental concerns in the business operations
and in their interactions with their stakeholders on
a voluntary basis. For the European Commission
this means not just fulfilling legal responsibilities but
also going beyond compliance to embrace wider
social, environmental and economic goals. For
the World Bank (2004) CSR is the commitment of
businesses to contribute to sustainable economic
development-working with employees, their
families, the local community, and society at large
to improve the quality of life, in ways that are good
for business and good for development. According
to Wood (1991) the basic idea of CSR is that
business and society are interwoven rather than
distinct entities. More generally a distinction has
been drawn between CSR seen as philanthropy as
opposed to CSR as core business. In the former
companies conduct their business unfettered by
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wider social concerns and then make charitable

donations to worthy causes while in the latter the
accent is upon operating the core business in a
socially responsible way which seeks to enhance
the competitiveness of the business and maximise
the value of wealth creation to society.
The European Union, for example, promoted

CSR in all member states and the European
Commission (2002) argues that CSR has gained
increasing recognition amongst companies as an
important element in new and emerging forms of
governance because it helps them to respond
to fundamental changes in the overall business
environment. These changes include globalisation
and the responsibilities companies find the need
to address as they increasingly source products
and services from developing countries; the
issues of image and reputation, which have
become increasingly important elements in
corporate success; and the need for companies
to recruit and retain highly skilled personnel.
Girod and Michael (2003) adopt a strategic
marketing perspective arguing that CSR is a key
tool to create, develop and sustain differentiated
brand names. In a similar vein Johnson (2006)
has suggested that CSR. has moved beyond the
initial activities of making charitable donations
to actively seeking competitive advantage
through changes that genuinely differentiate their
organisation and products and CSR today is
about how you generate your revenue not how
you spend your profits. More critically Corporate
Watch (2006) argues that CSR has evolved as a
response to the threat anti-corporate campaigns
pose to companies license to operate.
In some ways the underlying concept of CSR

has a long history. In outlining the growth of
CSR, Hopkins and Crowe (2003) for example,
suggest that there has always been a tension
between business and social goals and they
cite the power of the craft guilds in the Middle
Ages, the slave trade and the battles to improve
living and working conditions in Britains rapidly
growing towns and cities during the nineteenth
century as graphic evidence of these tensions.
Sadler (2004) has argued that the definition of
the functions of the corporation with relation to
wider social and moral obligations began to take
place in the centres of capitalist development in
the 19th century. More generally Mbare (2006)
has suggested that the concept of CSR is not
new, as some would want us to believe and that
the debate about business as a moral institution
goes back to the days of philosophers like Plato,
Aristotle, Kant, Marx. Turning to more recent
times Marlin and Marlin (2003) have identified
three phases in the development of what they
call CSR reporting. The first phase dating from
the early 1970s was seen to be composed of
advertisements and annual reports which focused
upon environmental issues but which were not
linked to corporate performance. The second
phase in the late 1980s was characterised by
the introduction of social audits, which examined
the performance of companies in the areas of
social responsibility with respect to communities,
employees, customers, suppliers and investors.
The third phase dating from the late 1990s saw
the strengthening of social auditing through
the introduction of externally set and verifiable
standards.
The business case for CSR is seen to focus

on a wide range of potential benefits (Bevan
et. al. 2004). These include improved financial
performance and profitability; reduced operating
costs; long-term sustainability for companies and
their employees; increased staff commitment
and involvement; enhanced capacity to
innovate; good relations with government and
communities; better risk and crisis management;
enhanced reputation and brand value; and the
development of closer links with customers and
greater awareness of their needs. At the same
time there are those who would champion the
case against companies integrating CSR into
their core business. On the one hand one such
set of arguments might follow Friedmann (1982)
in affirming that there is one and only one social
responsibility of business-to use its resources
and engage in activities designed to increase
its profits so long as it stays within the rules of
the game, which is to say engages in open and
free competition without deception or fraud.
In a similar vein Henderson (2001) has argued
that seemingly growing business commitment
A variety of factors are cited as being important

in building the current momentum behind CSR.
Ernst and Young (2002) suggest that five key
drivers have influenced the increasing business
focus on CSR viz. greater stakeholder awareness
of corporate ethical, social and environmental
behaviour; direct stakeholder pressures; investor
pressure; peer pressure and an increased sense
of social responsibility. National and supranational
governments have been active in promoting CSR.
24
to CSR is deeply flawed in that it rests on a

mistaken view of issues and events and its
general adoption by business would reduce
welfare and undermine the market economy. On
the other hand Corporate Watch (2006) takes
a more overtly political position arguing that
CSR enables businesses to promote ineffective
voluntary, market based solutions to social and
environmental crises under the guise of being
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All seven retailers claim, albeit in varying measure,

to integrate CSR into their business. Tesco, for
example, claim that CSR is integral to its entire
approach to business from the boardroom to the
checkout and that it is embedded in the companys
governance framework. Within the company a
cross-functional team of executives provides
leadership on CSR and the annual Corporate
Responsibility Review is the main method used
to report its CSR policies. Metro claims to view
CSR as a continuous and essential duty of
management and of each individual employee and
the company emphasises its explicit commitment
to the CSR as evidenced by its responsible human
resources and social policy, its commitment to
environmental protection, its participation in social
aid projects and its sponsorship of sport and the
arts. The seven retailers report on CSR issues
under differing banners. Tesco, for example used
the title Corporate Responsibility while the other
six retailers reported their CSR commitments and
achievements used the title Sustainability Report.
Within the reports the retailers report on CSR
issues under a variety of headings but this paper
follows Whooley (2004) in using four principal
headings, namely Environment; Marketplace,
Employees; Workplace and Communities in an
attempt to capture CSR agendas as reported by
the seven retailers.
The theories that have been used to analyse

and explain CSR have been summarised by
Moir (2001). Stakeholder theory suggests that it
makes sound business sense for companies to
understand the needs and aspirations of all their
stakeholders be they investors, governments,
employees, communities, customers or suppliers
and that these needs and aspirations should be
reflected in corporate strategy. Social Contracts
theory suggests that companies may pursue CSR
not because it is in their commercial interests but
because it is how society expects companies to
operate. Legitimacy theory stresses that society
grants power to businesses and it expects them
to use that power in a responsible manner.
Frame of Reference and Method of

Enquiry
In order to obtain a preliminary picture of the
extent to which Europes leading retailers were
reporting CSR agendas and achievements within
the public realm, the top ten European retailers
(Table 1), ranked by sales, from the Deloitte
report 2007 Global Powers of Retailing were
selected for study. Bowen (2003) has suggested
that the majority of large companies have
realised the potential of the World Wide Web as
a mechanism for reporting CSR activities and
has argued that its interactivity, updatability and
its ability to handle complexity adds value to the
reporting process. With this in mind the authors
undertook an Internet search for each of the top
ten European retailers corporate web sites in
January 2007 employing Google as the search
engine. The authors then navigated each of the
sites in a search for the most recent CSR report.
The search revealed that seven retailers namely
Carrefour, Metro, Tesco, Ahold, Auchan, ReweZentral and E. Lecelrc had posted CSR reports.
These reports provided the empirical information
for this case study.
Environment
All seven retailers stress their general
commitment to managing the environmental
impacts of their operations. Auchan, for example
emphasises that its environmental strategy is
designed to reduce the companys ecological
footprint, to encourage sustainable consumption
and to integrate its shopping centres into the
surrounding environment while Tesco claims to
work with our customers, staff and suppliers to
make sustainable choices and reduce our impact
on the environment. In a similar vein Carrefour
recognises that its stores have a wide-ranging
environmental impact and the company reports
intensifying its efforts to reduce the consumption
of resources and energy, to reduce waste and
pollution in all countries in which it operates.
Metro claims that environmental protection is a
strategic task and it forms an integral part of its
daily business activities and E.Leclerc stresses
that it has long been aware of its environmental
responsibilities.
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More specifically the retailers report on a wide

but relatively consistent range of environmental
issues including energy consumption and
emissions,
raw
material
usage,
water
consumption, waste management, packaging,
recycling, the use of chemicals and genetically
modified food ingredients. Rewe-Zentral, for
example, claims to be striving to reduce energy
consumption and green house gas emissions.
Within its retail operations the accent has been
on the introduction of energy management
systems for both lighting and refrigeration. Metro
reports its commitment to reducing the demand
for resources in facility management, the use
of returnable containers for transport packaging
and waste reduction, sorting and recycling and
environmentally friendly cleaning of buildings. At
the same time the company reports developing a
range of ecologically friendly products as part of
its retail offer. Thus in sourcing its fish products it
claims to attach great importance to the protection
of endangered species. All tuna fish suppliers,
for example, are affiliated with the Earth Island
Institute which defines rules for environmentally
sound fishing and which forbids the use of drift
nets that can indiscriminately entangle dolphins,
sharks, seals and seabirds. The company also
reports obtaining its fresh fruit and vegetables
from producers that have been certified according
to audited Eurepgap standards and the goal
here is to promote sustainable farming.
of the companys new store and store extension

development proposals. These plans focus on
reducing the number of store employees coming
to work by car via car sharing or walking buddy
schemes.
Ahold reports that product packaging is a key
factor in preserving the freshness, safety, quality,
and attractiveness of many of the products in
its extensive food range and recognises that
because of this, waste generation from packaging,
distribution fleet maintenance and unsold products
constitutes a significant environmental impact.
The company faces a continuing dilemma in its
desire to reduce packaging with the requirements
of food safety standards and the consumer
demands for convenience products, such as
pre-cut and ready-to-use salads, that require
packaging. The company claim to look to balance
these potentially conflicting demands by making
increasing use of biodegradable packaging
materials. There is also a clear recognition of
the complications involved in the recycling of
organic waste and here the company has been
experimenting with both composting and the
generation of environmentally friendly methane
gas as a means of keeping such wastes out of
landfill disposal.
Marketplace
The term marketplace is seen to embrace both
the sourcing of goods and services and their sale
to the customers. A number of the seven retailers
report on their sourcing policies and a number
of issues merit attention. Carrefour, for example,
claims to be accountable for the consequences
of its actions throughout the supply chain of
responsibility from the producer to the consumer.
The company reports working with three types
of supplier namely multinationals, agricultural
companies and SMEs and while striving to offer
competitive prices to its customers it claims to
always be looking to emphasise partnerships
with SMEs. More generally the company reports
that its relationships with suppliers are based on
respect for ethics and transparency. While the
company looks to offer its customers freedom of
choice by offering a wide and constantly adjusted
range of products and services within its stores it
also claims to be meeting the rising demand for
responsible products by stocking or developing
eco-friendly, socially responsible products.
The companys Reflets de France brand, first
The majority of the seven retailers report their

commitments to and/or achievements in, reducing
vehicle emissions. In all the countries in which it
operates Tesco, for example, reports seeking to
reduce emissions from its transport distribution
fleet, testing rail distribution and promoting
biofuels. More specifically the company reports
on its progress in increasing the volume of goods
delivered per litre of fuel and its policy of using
lorries returning from its stores to its distribution
centres to collect goods form suppliers and
recycling waste. This latter initiative led to a
reduction in the number of miles travelled by
suppliers to the companys distribution centres
by 23% and reduced fuel usage by 14%.
The company also claim to be the first major
UK retailer to offer biodiesel fuel, which cuts
particulate and carbon dioxide emissions by 20%
and 5% respectively and improves fuel efficiency
by 1%, to its customers. The viability of rail
distribution is being trialled from two stations and
green travel plans have become an integral part
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launched in 1996, includes some 300 products

that support local know how and thus help to
sustain traditional activities throughout France.
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Workplace
The majority of the seven retailers report their
commitment to their employees arguing that
caring for their staff is essential to their success
and they evidence this commitment in a variety of
ways. Such evidence covers a range of themes
including remuneration and benefits; recruitment;
inclusivity and diversity, working conditions,
training and development; health and safety; and
the work-life balance. Carrefour, for example,
employs over 430,000 people and claims to
attract and keep the most talented people and
to build employee loyalty by offering motivating
pay, company benefits and a culture of solidarity.
The company recruits some 100,000 people
worldwide every year and reports its commitment
to local hiring and to equal opportunities. Further
the company encourages mobility and internal
promotion and to that end reports optimising its
tools for evaluating its employees performance.
Tesco emphasises that it wants ethical trading to

be in integral part of the way the company does
business. The company claims that its aim is for
its buyers to work with suppliers to uphold labour
standards throughout the supply chain. The
company reports taking a risk based approach
to managing labour standards within the supply
chain and suppliers are placed into high, medium
and low ethical risk categories. All suppliers in
the first of these categories are required to have
an independent ethical assessment each year,
which is audited, while those in the other two
are subject to less stringent assessments. All the
companys staff involved in buying are expected
to understand and reflect ethical considerations
within their purchasing practices. The company
also organises ethical trading workshops and
courses for its suppliers.
Training and development is also a major theme.

Ahold report their commitment to being a great
place to work where people are treated fairly
and experience a fulfilling career and claim
that their employees expertise, knowledge and
commitment are key to the companys success.
The company emphasises its desire to select,
develop and retain the very best talent and to create
an environment that encourages innovation and
that it values a culture of learning which is centred
upon having the right skills, sharing knowledge
and evidence based decision making. In addition
the company has invested heavily in training
and staff development and operates a talent
exchangesystem which provides opportunities
for employees to work across its operations. In a
similar vein Tesco reports that all its employees
have access to training programmes and a
personal development plan with six monthly
reviews designed to ensure that they have the
right skills for the jobs they are undertaking.
Food safety is a high profile issue for a number of

the seven retailers. Ahold, for example recognises
that all its customers expect the food they buy in
its stores to be safe and claim that the companys
most important priority is to always provide the
safest possible products to all customers. Its
food safety policy embraces the whole of the
supply chain from farm and production through
distribution and retail to customers homes.
The company issues a range of guidance
manuals and procedures for farmers and food
manufacturers and on its stringent in-house food
safety programmes and procedures.
A strong commitment to customers is widely
reported by the seven retailers and this
commitment is evidenced in a number of ways.
Tesco, for example, claims that its focus is on
delivering value and providing informed choice
and on achieving appeal to customers across a
wide social and economics spectrum by offering
a very wide range of products, by striving to
deliver cheaper, better food and long term price
reductions and by offering customers a wide
range of store formats in a variety of locations. In
emphasising informed choice the company claims
to be recognising that customers are particularly
conscious about their health and eating habits.
To that end the company reports on its healthy
living initiatives, on communicating nutritional
information to customers and on salt reduction.
A number of the seven retailers report on their

policies on health and safety and on integrating
employees with disabilities. Metro, for example,
argues that occupational safety and health care
are central aspects of its role as a responsible
employer and it is in the process of establishing
a health management system designed to
improve the status of its employees health and
staff productivity and to reduce the number of
employees on sick leave. The company also
reports that, in principle, special measures, aimed
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at removing technical, spatial and psychological

barriers, for the advancement of people with
disabilities are operational throughout the
company. Decisions on whether or not to offer a
person employment are based solely on her/his
readiness to perform and her/his professional
qualifications and personal attributes regardless
of any disabilities. The company claims to employ
over 3,700 people with severe disabilities within
Germany, which constitutes some 4% of its total
staffing complement.
Discussion
The majority of the European top ten retailers
have been keen to recognise, and report on,
some of the impacts that their businesses have
on the environment, the economy and society
and a number of them claim to be committed
to integrating CSR agendas into to their core
business activities and governance frameworks.
These commitment raises four general sets of
issues that merit some discussion. Firstly as
customers, investors, trade unions and labour
organisations, pressure groups, governments
and non-governmental organisations become
increasingly informed and demanding, so
retailers that can demonstrate and evidence
their CSR commitments may be able to build,
enhance and retain reputation and competitive
advantage within the retail marketplace. Indeed
it is important to recognise that some of the CSR
commitments reported by the seven retailers
can clearly be interpreted as being driven by
business imperatives. Thus while many of the
environmental initiatives addressed in the CSR
reports are designed to reduce energy and water
consumption and waste emissions, for example,
they also reduce costs. In a similar vein the
retailers CSR workplace commitments focusing,
for example, upon good working conditions and
remuneration, health and safety at work and
training and management development all help to
promote stability, security, loyalty and efficiency
within the workforce.
Community
The majority of the seven retailers report, in
some measure at least, on their impact within
the communities within which they operate and
on their charitable donations. Ahold, for example,
claim that its community involvement and
charitable contributions grow out of its customer
focus and it looks to demonstrate its commitment
to customers by supporting causes that those
customers believe to be important. The company
looks to participate directly in community events
and to organize fundraising activities. More widely
the company is also in hunger relief initiatives
in partnership with regional food banks, which
provide food and distribute food products and
meals via soup kitchens, food pantries and other
emergency food providers. Auchan supports
a number of youth projects in Spain, Portugal
and Italy and it has also launched a scheme
to label products in Braille to help the visually
disadvantaged.
Secondly while some of the seven retailers

look to measure and benchmark their CSR
achievements this is not universal practice. Ahold
and Metro, for example, provide some quantitative
measures of their achievements, particularly in
relation to environmental and human resource
issues, while Carrefour and Tesco report their
use of Key Performance Indicators (KPIs) to
measure, monitor, compare and benchmark
their CSR achievements and performance. At
the same time other retailers report on CSR in a
limited and selective manner and on a number of
occasions case studies were used to as a means
of illustrating broader CSR commitments. Such
an approach might be seen to be user friendly
and to offer some recognisable details to illustrate
what might be perceived to be dry statements
of commitments and achievements but it does
not provide a comprehensive picture nor any
systematic measure of these achievements
A minority of the seven retailers report on their

role in urban regeneration. Metro, for example,
claims that it has a particular responsibility for
the promotion and development of the urban
environment. More specifically it has been
sponsoring the Ab in die Mitte (Off you go to
the centre) initiative in North Rhine Westphalia
since 1999. Here the focus is on strengthening
the cultural identity of cities, to reverse the tide
of visitor decline and to effect environmental
improvements. Tesco also reports on its
contribution to urban regeneration and renewal in
the UK. Here the focus has been on working with
local community groups and agencies to train
and employ people who have been out of work
for years and on bringing social, economic and
environmental benefits to deprived urban areas.
28
Thirdly the retailers are aware that their CSR goals

are often aspirational and that it is not always
easy to align their various CSR goals or for their
aspirations to be always fully reflected in the
every day operational imperatives faced by store
managers who are working to achieve demanding
targets in a fiercely competitive business climate.
On the one hand, for example, in looking to assess
whether the environmental costs of importing fresh
flowers from Kenya are outweighed by the social
benefits of trading with less developed economies,
retailers may have to make difficult trade offs
between competing goals. That said they report
little awareness of the problems emerging, for
example, along the River Ngiro where the large
scale extraction of water all year round by the
companies producing flowers is causing the river to
peter out in its lower reaches thereby dramatically
reducing water supplies to subsistence farmers and
threatening the livelihoods and lives of nomadic
pastoralists. On the other hand while a number
of the retailers admit, for example, to pursuing
laudable environmental goals when such goals
are economically viable and many emphasise their
commitment to the local communities in which their
stores are located, this is rarely at the expense
of commercial priorities. In a similar vein when
individual store managers are facing problems in
staff scheduling they may pressure employees
into working outside the hours that suit their worklife balance or refuse to release employees for
training and management development.
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arguing that their activities are having damaging

effects on the environment, on communities and
on the economy and disputing their credentials
as good corporate citizens. Friends of the Earth,
(2005) for example, have argued that one of the
UKs largest retailers is abusing its power by
forcing small traders out of business, killing off
the high street, bullying suppliers and damaging
the environment. In a similar vein the Tescopoly
website, launched early in 2006, is supported by a
range of organisations concerned about what they
perceive to be the market distorting powers of the
major supermarkets and about the consequences
that their trading practices are having for suppliers,
farmers, overseas workers, local retailers and
the environment. The large retailers vigorously
refute the vast majority of the accusations made
against them and they consistently argue that
their continuing growth reflects their success in
responding effectively and efficiently to customer
needs.
Conclusion
The majority of Europes top ten retailers publicly
report on their commitment to CSR on the Internet
and though there are variations in the nature, the
content and the extent of that reporting and while
some of these retailers look to provide quantitative
information to measure and benchmark their CSR
achievements others rely more on mini case studies
to illustrate these achievements. Strategically the
retailers essentially argue that by integrating CSR
into their businesses they will not only be better
placed to provide long term growth and financial
security for all stakeholders but also to maintain
or enhance their market position and reputation.
Finally it should be stressed that in some ways CSR
reporting emphasises the retailers aspirations
and that within a fiercely competitive business
environment these aspirations may at times not
only be conflicting but also not always be fully
reflected in everyday operations. The tensions
between the aspirations and the realities of CSR
will provide fertile, though probably contested,
ground for future enquiry and research.
Fourthly growing concern is being expressed

about the increasing concentration of retail power
in the hands of a relatively small number of
retailers and about the impact this concentration
is said to be having on a wide range of businesses
and on communities. Thus it is not surprising that
many retailers are looking to frame their CSR
reporting to communicate their environmental,
social and economic policies, achievements and
contributions and to emphasise the transparency
and accountability of their activities. However the
retailers claimed commitments to CSR have been
increasingly contested. A number of pressure
groups have been critical of large retailers
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Table 1 - Top Ten European Retailers
Source: Deloitte: 2007 Global Powers of Retailing
Deloitte (2007) 2007 Global Powers of Retailing,

http://www.deloitte.com/dtt/cda/doc/content/Globa
l%20Powers%20of%20Retailing_07(2).pdf
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A CONCEPTUAL REVIEW OF
INFORMATION COMMUNICATION
TECHNOLOGY IN FACILITATING
COMPETITIVE ADVANTAGE FOR SERVICE
RELATED SMES.
NEIL ROBINSON
UNIVERSITY OF SALFORD, UK
CRISPIN DALE
UNIVERSITY OF WOLVERHAMPTON, UK
TAHIR RASHID
LEEDS METROPOLITAN UNIVERSITY, UK
Abstract
facilitate understanding, the authors have utilised

a case study of primary origin.
The evolution of the service sector has seen

a huge increase in the provision for service
based products in the North-West of England.
Fundamental to this development is the role
of business enterprise as drivers of economic
change and prosperity, resulting in the growth of
small business enterprises (SMEs), responsible
for a sub culture associated with the service sector
and the wider leisure environment.
Keywords
service sector, ICT, SMEs, technology, competitive
strategy, learning environments.
SME development
Service sector small to medium sized enterprises
(SMEs) in the North West of England play a key
role in the development of an economically robust
environment. The hospitality sector has over a
number of decades grown in confidence and
contributes positively to this market, facilitating
growth and wealth in areas where traditional
industries such as manufacturing have experienced
stagnation and decline. Whilst many small to
medium sized enterprises are often defined by
size, turnover and business characteristics, this
itself is often inappropriate as there is no single
definition of a small firm, because of the wide
diversity of businesses, however, The European
Commission and DTI (Department of Trade &
Industry) define SMEs as having less than 250
staff. The European Commission definition also
states that an SME should have either a turnover
of less than 40 million euros or an annual balance
sheet total not exceeding 27 million euros. (www.
Service sector SMEs have developed greatly over

recent years and nowhere is this more evident than
in North West of England, where provision and
service have accelerated the pace of change for
both business entrepreneurs and consumers alike.
Aligned next to these developments is the increase
in competition between providers of service sector
consumables. One such mechanism which offers
potential savings both in terms of time and finance
is the employment of information communication
technology (ICT) to better enable the organisation
to learn its operating environment and develop
strategies accordingly.
This paper aims to examine in detail the provision
for SME development in the NW of England
and of the potential ICT strategies which can be
employed to aid business survival. In an attempt to
contextualise the SME environment further and to
32
dti.gov.uk/SME). According to the DTI Minister

for competitiveness Barry Gardiner, there are
currently a record 4.3 million small businesses in
the UK this is over 500,000 more than seven
years ago. (http://www.sbs.gov.uk). In the greater
Manchester area there are in the region of 58,000
small and medium enterprises.
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ICT can mean many things to many

people:
Telecommunications- phones, Internet access
and digital televisions- Software-email,
games, learning material, word processing
spreadsheets, database applications, account
systems and product processing
The theoretical environment in which SMEs

operate has been documented at length (Korte
& Wynne 1996, Haynes et al 1998 & Camison
2000), indeed whilst much of the established
literature has chosen to concentrate upon
manufacturing based businesses, a growing
collective of academics are now researching
SME development within other business sectors,
including the service industries (Inkpen, 1994,
Main 2000, Mols 2000, & Ma 2003). In conjunction
with this, a global shift in business operations is
dictating new and innovative working systems.
Such systems are themselves a direct response
to a form of post industrialisation, which has
seen global commerce opportunities manifest
themselves within the macro environment
and ultimately impact upon internal business
practices. These fundamental changes will
continue to revolutionise the small business
environment, exerting unremitting pressure upon
the organisation and at the same time forcing
small business entrepreneurs to identify new
techniques for aiding positioning and new market
development opportunities. This approach whilst
experimental in nature will see the owner manager
developing individual bespoke strategies for
coping with each of the differing environmental
situations in which they find themselves. ICT may
offer SMEs a way forward and potentially enable
the business to develop strategically and better
the external environment.
Hardware- computers, printers, fax, scanners

and digital cameras
Information news, online, shopping and
financial services
ICT in the service sector (cd Added refs)

The information intensive nature of the service
sector makes the use of ICTs crucial to its
long-term viability and sustainability (Sheldon
1997). There are a number of characteristics
unique to the service sector that can have
implications for the management of SMEs.
These are often described as intangibility,
inseparability, perishability, heterogeneity and
lack of ownership (Evans et al 2003). ICTs can
be used in the effective management of many of
these characteristics. For example the intangible
nature of the hospitality service, in that it cannot
be touched, tasted or sampled prior to purchase,
can bring about anxiety in customers making a
buying decision.
The use of ICTs in information dissemination,
via the World Wide Web in the form of video
streaming, can for example reduce the uncertainty
that customers may encounter as a consequence
of the risks involved in product purchase. The
use of ICT variables such as the Internet as a
marketing medium also enables the SME to
differentiate its offerings from its competitors.
The SME can provide an online value proposition
(OVP) that makes it possible for customers
to distinguish between competitors offerings
(Chaffey 2002). It also enables the SME to
build trust with its target markets which is a key
factor in consumers interaction and transaction
experiences with online travel related businesses
(Wu and Chang 2005). The perishability of the
service if it is not purchased and consumed
at the point of production can mean lost
revenue for the hospitality SME. Effective yield
management systems driven by ICT can be
crucial in determining the level of demand and
Information communication technology

Information communication technology is defined
by Buhalis (2003) as the entire range of electronic
tools that facilitate the operational and strategic
management of organisations by enabling them
to manage their information, functions, processes
as well as to communicate interactively with their
stakeholders, enabling them to achieve their aims
and objectives. Whilst many academics have
attempted to define ICT utilisation, the nature and
definition is in itself problematic and is greatly
misunderstood.
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adjusting pricing strategies accordingly (Main

2000). Hospitality organisations are also subject
to fluctuations in demand due to the seasonality of
production. ICTs can be used to forecast demand
thus enabling the efficient management of human
resources to meet peak periods. In addition, ICTs
can be used for automated online bookings thus
maximising opportunities for product purchase. It
is often the case that customers are more likely
to purchase an organisations product if they are
able to purchase directly online (Mintel 2005).
This also has the additional benefit of compiling
a database of customer details, thus enabling the
SME to build relationships with customers via direct
marketing initiatives (Dale and Greenbank 2001).
Perishability can also be minimised via the use of
electronic point of sales systems which can assist
SMEs in the efficient management and supply of
stock to the business based upon a just in time
(JIT) approach. The sales tracking of preferred
customer items can be more easily monitored
and the SME does not have to have cash tied
up in stock that could be spent elsewhere in the
business (OConnor 2004).
ICT usage and barriers

From the prospective of e-business and ecommerce, Maguire and Koh (2004) argue that
many SMEs are not equipped with, and supported
by, appropriate guidelines and models to allow them
to take advantage of the developing knowledge
economy and move towards the e-business era.
This is supported by Sheils, McIvor and OReilly
(2003) who state that although SMEs form a
substantial constituent of the global economy,
there is limited knowledge available surrounding
the adoption of ICTs by them whereby it is only
recently that interest in the relationship between
SMEs and ICT has begun to be explored in any
great depth.
It is clear from this discussion that the adoption
of ICT in SMEs could be improved by overcoming
some barriers. Murphy and Taylor (2004) highlight
six forms of barrier:
1. Many SMEs are unaware of the potential of
ICT to enhance their business operation.
2. Some SMEs occupy small and clearly defined
niche markets, sometimes entirely local, that
do not need the global connectivity available
through the internet
The heterogeneity of the service requires

hospitality businesses to interact effectively
with stakeholders including suppliers, banks,
solicitors, professional associations and so on,
to ensure the efficient distribution of information.
The inability to provide effective communication
systems can lead ultimately to a breakdown in
stakeholder relationships, thus impairing the end
service experience for the customer. The enabling
of intranet accessibility to stakeholders provides
enhanced communication to occur through the
network of stakeholder value chains (Buhalis
2003). Furthermore, Birkhofer et al (2000) note
that technology can facilitate the creation of added
value through the channel of distribution, thus
further building trust in the transaction process.
Destination management systems (DMS) are used
within the hospitality industry to enable SMEs to
gain access to customer markets that they would
normally find difficult. It is financially unfeasible for
hospitality SMEs to connect to Global Distribution
Systems (GDS) or Switch systems unless they
are part of a regional, national or international
consortium such as Best Western. Connecting to a
DMS enables the hospitality SME to exploit further
distribution channels and marketing opportunities
for its goods and services (Buhalis 2003).
3. Perception of security and privacy issues

associated with the use of the internet
4. Many SMEs lack the necessary IT skill base to
engage with the digital economy
5. High initial set up costs and perceived on-going
costs.
6. Finally, some SMEs will be restricted in their
ability to evolve their ICT provision because of
a legacy of IT sunk costs.
Overcoming these barriers is major a challenge
for policy makers and SMEs alike. However, it
could be argued that these barriers are crystallised
within the context of the SME owners own preconstructed perceptions and prior learning
experiences of ICT. Thus, ICT adoption by SMEs
can be slow, providing a further barrier to gaining
competitive advantage. This socialisation process
can be conceptualised within the wider framework
of Personal Construct Theory (PCT).
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understanding of the strategic learning process.

By this we are attempting to identify and better
understand how successful owner managers,
as quantified in terms of profitability, are able
to strategically learn and therefore maximise
potential business opportunities, ICT development
will play a part in this process.
The small business as a strategic

learning environment
The utilisation of personal construct theory (PCT)
(Kelly 1955), can be used to better understand the
many complexities that exist for SMEs in terms
of learning and organisational development.
Kellys theory, dictates that as individuals we
hold preconceived beliefs about our social
environments, which are in turn, either confirmed
or dispelled by the actions and experience of the
social world. The outcome of such actions act as
a mental blue print in designing and guiding our
future behaviour, much in the way that a positive
outcome of the past might confer particular
actions for the future, the same can also be
said if the outcome is negative. This technique if
applied to the SME environment, sees the owner
manager continually adopting new approaches or
frames of reference in which to better deal with,
and view the ever-changing SME landscape. By
developing this further, in the context of the small
business; one is immediately able to view the
owner managers response in terms of strategic
adoption, based upon their own preconceived
beliefs, of the external business environment.
The role of Personal Construct Theory (PCT)

might offer the small business manager a more
detailed insight, into the mechanistic workings
of their own business. The utilisation of PCT can
act as a viewing platform, through which external
parties can view the owner managers actions and
therefore better understanding the motivations
behind particular behavioural characteristics
and eccentricities, as employed on a day to day
basis. By way of an example, one might argue
that an individuals upbringing and social class are
themselves factors which may inhibit or facilitate
SME development and may dictate a particular
evolutionary strategy for the business, based
upon the owner managers lack of confidence and
personal constructs. Indeed we can relate the
work of Maslow (1943) to the level of confidence
held by owner managers and of the subsequent
direction in which the business moves, based
upon a sufficient number of pre-requisite levels
already attained by the proprietor in relation to
the hierarchy of needs.
The utilisation of Personal Construct Theory,

(Kelly 1955 &, Kelly 1970), as an underpinning
theoretical foundation to facilitate organisational
understanding of ICT utilisation within SMEs,
is one such method which may offer a richer
insight, into the strategic development process
and decision making activities as practiced
within the small business (Rae, 2001, Wyer et
al 2000 ). Key to the above is the recognition
that information communication technology
(ICT) offers the owner manager a vast array
of development opportunities both in terms of
operational development and the potential for
developing a keener understanding of the role
played by ICT in aiding the owner managers
strategic learning process. By examining
the changing business environment, owner
managers are often forced into a reactive state,
based upon unanticipated macro phenomena.
Fundamental to these actions is an understanding
of the pre-requisite management skills, which
are themselves developed by owner managers
and are used to direct, control and assist the
successful movement of the small business
enterprise. By understanding those actions that
enable managers to strategically learn, one can
either confirm or dispel previous management
Opportunities for understanding

To better understand ICT employment within
organisations and with the purpose of illustrating
small business learning, one such model, which
can be used in part, is that of Wyer and Mason
(1998) (tentative conceptualisation of the small
business strategic learning process). Whilst not
ICT specific, the model offers some rationale
behind management ability to embrace change
based upon stimuli or key informants. Such factors
are themselves beacons of opportunity that
attempt to involve organisational decision makers
and distil such data into meaningful information.
Whilst this approach is usually trial and error in
origin, the learning process is developed and
may result in the modification of manufacturing
practices, organisational business policy, product
development and technological employment.
Whilst not entirely appropriate for assessing all
levels of ICT adoption, the model does afford us
some luxury, in as much as it can be applied to a
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number of differing learning situations and this

itself is one of the models main facets.
directing business growth. Such architectural

designs are themselves by nature constructs
of the virtual business unit and will continually
attempt to map the manifestations of the
business environment over a period of time. By
viewing change as an organisational ally, offering
small businesses, the entrepreneurial freedom to
experiment and research new functional working
patterns, a parallel environment of holistic work
aides is opened up. This itself could include the
integration of an ICT medium, that not only plans
and executes daily operational practices, but also
engages in aiding future resources planning and
cognate areas of business infrastructure.
By deconstructing the model we are able to apply

its differing learning scenarios, one such scenario
is that of how small businesses go about adopting
technology and benefiting from its implementation.
Whilst not a complete tool kit, one might argue
that ICT employment at organisational level is far
too complex to be viewed in this tri-part manner
and that an incomplete and non representative
inspection glass is formed, which has the potential
to distort our understanding of the small business
environment. With this in mind, one potential route
might be to expand our viewing glass and rather
than relying upon traditional learning schools of
thought, based around strategic management
literature, that we utilise a holistic approach and
therefore design a kaleidoscope model, through
which we can view the many complexities which
face small businesses, when considering new
and innovative working systems such as ICT.
Technology in the work environment

An integral factor which builds along side SME
development, is the level at which ICT is embraced
and utilised on a day to day basis, indeed the
construct of any organisation is often dictated to,
by owner manager perceptions of the micro and
macro environment (Matlay & Westhead, 2005 &
Raymond et al 2001). This is to say that external
factors, will have ramifications upon the internal
running and management of an organisation
and therefore may dictate the operational and
strategic development of the business. The
perceptual world of the small business is itself
a living organic entity which is impacted upon
by a multitude of forces that are themselves
controllable and uncontrollable in terms of
management competences, understanding and
comprehension. It could be argued that many of the
owner managers business skills are themselves
developed out of a regular engagement with
the wider business substructure, which offers
a whole host of trials and cognitive challenges,
which are themselves learning opportunities
(Aradhana & Anuradha 2005, Landale 2005,
Bretherton & Chaston 2005, Anderson et al 2001
& Down 1999 ). By this we recognise that whilst
many of the day to day SME activities such as
debtor control, inventory compilation and stock
control, follow an organisational blue print that
often dictates a closed system approach to
business management, an alternative approach
does exist that embraces those organisational
methods which are based upon the owners own
experiences and constructs (Devins & Gold
2002).
One such system is that of Mintzberg (1998)

which advocates the positioning of ten schools
of management through which we can view an
organisations ability to develop strategically. In the
same way that an individual may change glasses
to view an object at distance, we can also view
organisational practices by using the differing
schools. By employing all ten schools Mintzberg
believes that a clearer picture will develop as
to how strategy develops, lives and changes
according to its environmental conditions and this
in turn might dictate ICT adoption. By illuminating
the inner recesses of the small business we can
better view the domestic workings of the business
and potential identify reasons for the differing
levels of ICT adoption.
As a spectacle of choice, the entrepreneurial
school, as advocated by Mintzberg (1998), can be
used to aid focus when observing organisational
traits. Indeed by viewing the organisation in this
manner, one instantly sees the cultural sinew that
holds together and directs organisational decision
making and therefore, some might argue, directs
or impinges upon leadership styles, which in
turn aid or limit ICT adoption. By screening the
organisation with our entrepreneurial monocle, a
clearer vision develops as to the shared values
and direction in which the business may develop.
In many cases business orientation is emergent,
based upon shared ideals and intuition of those
individuals who are charged with the task of
By viewing the organic development of ICT

uptake and usage within an SME, it allows for
36
contextualisation and exposure of the character,

shape and function of ICT practice at SME level.
This will allow for a clearer picture to emerge of
ICT usage, as an express catalyst for strategic
learning, with operational level activities being
studied to identify potential benchmarking
opportunities, for the ways in which day to day
activities are managed. This could manifest itself
in the provision for improved operational control of
day to day activities, offering the owner manager
additional down time, not normally available in the
day, to review and judge the operational practices
of the business within a macro setting (Shiles et
al 2003).
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take-up, utilisation and employment of technology

within any organisation is dictated to by a multitude
of factors, some of which are controllable and
other that are not. By investigating the use of
ICT within such a setting an enhanced picture is
developed, that further enables the researcher to
understand the strategic learning process of those
individuals central to the organisation and who
ultimately dictate the levels and employment of
ICT adoption / usage. By investigating further how
owner managers, become ICT literate; or choose
to adopt; or not to adopt is central to this debate,
as an understanding of the cognitive process,
will enable are more fuller explanation to emerge
as to the managers learning process and the
contribution that ICT makes in respect of this.
Furthermore this additional down time will act

as review mechanism, through which the bigger
operational picture of the business can be viewed,
allowing for the consideration on new innovative
strategies to deal with change. Not only does
this approach allow for viewing of the present in
terms of profitability, turnover and productivity, it
also allows for this level of data to be employed to
service the long tem strategic development of the
organisation.
Methodology
The case study (Yin, 1994) has been defined
by Robson (1993: 40) as the development of
detailed, intensive knowledge about a single case
or small number of related cases. This approach
has been employed within this research in order
to gain a richer understanding of the context of
the SME. A case study has been written following
qualitative semi-structured interviews with the
owner of a tourism related business in the North
West of England.
For example the daily operational process of

dispatching customer orders, from information
already contained within an internal database,
could itself; if managed correctly feed into a future
marketing campaign / development of external
business relationships and therefore inform the
strategic decision making process and direction of
the company. From an evolutionary perspective, the
The SMEs involved in this case study has

requested to remain anonymous and therefore the
name of the business has been changed.
Table 1 - The Case study
(not niche based, unlike Smiths Travel) and is able

to offer additional services (free parking, free travel
insurance and discount incentives). However,
more fundamentally, the SME owner-manager
has recognised that they are a laggard when it
comes embracing new technology, tending to rely
on antiquated viewdata systems for maintaining
product supplier relationships and making
bookings. The owner has admitted that this is due,
Based in the North West of England, Smiths Travel

is a family travel agency specialising in niche
holiday products for the over 50s and special
needs markets (assisted travel, disabled friendly
travel, short term care breaks and health care
products) and has for a number of years been
experiencing a downturn in business. The main
competition for Smiths Travel comes from the local
holiday supermarket that offers holiday products
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in part, to prior learning experiences of using

technology. Technology breakdowns, financial
anxieties and a fear of the unknown are all factors
that have predetermined the personal construct
of the owner manager and their receptiveness
to new technologies. Furthermore, the ownermanager also likes to think that they are closer
to understanding their key target market (Over
50s) by mirroring their supposed technophobic
tendencies. With the fiercely competitive nature
of the external environment, coupled with the
personal construct of the owner-manager, Smiths
Travel has had to consider its long-term survival.
is also created. For the owner manager the

beneficial experiences of using new technologies
has developed their personal construct, enabling
them in the future to be more receptive to new
situations as they may arise.
Conclusion
Whilst recent SME research has attempted to put
into context the service sector SME, these attempts
are arguably over generalisations and borrow
much from the traditional SME format (by this we
mean manufacturing / production based SMEs)
and are therefore non representative of service
sector SMEs. Whilst a number of academics have
attempted to theorise the differing SME types, it is
clear that an established theory of ICT adoption,
in service sector hospitality SMEs is yet to be fully
developed. In an attempt to alleviate this and to
gain a clearer understanding of ICT employment,
it is imperative that SME owner-managers better
appreciate the potential benefits that can result
from ICT employment. SMEs need to recognise
that ICT usage is a long term commitment, one
which impacts upon the strategic direction of the
business and one that cannot be easily reversed
once adopted. Indeed whilst many SMEs have
chosen to utilise ICT with no clear direction or
purpose, one might argue that such a strategy
is non operational and will only cause problems
later on, with ill experienced staff being asked
to perform activities and employ technology for
activities that they have comprehension of. This in
itself predetermines their own personal construct
of new situations and possibly influence their own
use of technology adoption in the future.
In an attempt to alleviate the aforementioned

environmental conditions, the owner and his staff
developed a web page, to better promote and
distribute their products and at the same time
reach customers who may be geographically
inaccessible. With the growing trend towards
health tourism, the owner- manager decided on
placing a banner advertisement on a health care
website. This resulted in a flurry of enquiries from
individuals wishing to purchase related travel
products.
Whilst the intention of the web site was to increase
turnover and support the loss making components
of the main business, it was never envisaged that
demand would grow to such an extent that over
95% of daily transactions and enquiries would
be via the Internet. Indeed when questioned on
the role of technology in facilitating business, the
owner-manager of Smiths Travel identified four
main benefits to the business as a consequence
of using new technology.
It is clear from the above case study that the
utilisation of technology has resulted in a number
of benefits. Firstly, Smiths Travel has been
able to identify a new market for their existing
products, one which would have probably not
identified itself without the advent and use of
technology. Secondly, Smiths Travel now has a
clearer understanding of its own organisation,
including customer segmentation, product
range and demand patterns. Whilst many
travel SMEs employ the internet to market their
product, Smiths Travel has actively embraced
technology in facilitating customer understanding
of an intangible service (ie the travel product) and
therefore reduce purchase fear for the customer
pre departure. In addition to the interactive nature
of the technology, an increased awareness of
market information and customer preferences
A key part of this article has concentrated upon

ICT utilisation within SMEs and of areas where it
can be used to aid strategic direction. Key to any
successful ICT adoption is the context in which
the system is used. This is an area that many
SMEs have yet to fully appreciate and often go
about employing ICT with no real understanding
as to their organisational needs. By viewing the
SME as a learning environment and by employing
systems such as personal construct theory, one
is better able to appreciate organisational needs
and appreciate specifically where and how ICT
can be used to aid strategic direction.
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Table 2 - Advantages of Technology
Questions
1. Critically appraise the role of Personal Construct
Theory (PCT) as a mechanism for internally
viewing any business organisation.
received from employing technology, in an attempt

to facilitate product information dissemination.
3. How might an understanding of customer
demographics, better enable businesses to provide
products that are more in tune with customer needs
and wants.
2. From an external perspective, theoretically

appraise the benefits that Smiths Travel has
39
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CASE STUDY: MARKETING PERSPECTIVE

OF ALMARAI DAIRY FOOD COMPANY
MUHAMMAD ASAD SADI
KING FAHD UNIVERSITY, DHAHRAN, SAUDI ARABIA.
Abstract
and the distribution strategy is to maintain an

intensive distribution network locally and to seek
new channels in Middle East as well as South East
Asian markets.
The case is concerned with Almarai which is

based in Saudi Arabia and is a leading dairy food
company in the Middle East. The challenges faced
by the organisation at home and overseas due to
competition and changing market conditions are
outlined and management is shown to be seeking
further expansion. Attention focuses particularly on
marketing activity, allowing discussion of existing
strategies and future possibilities. Information was
obtained from personal interviews with Almarai
executives, supported by material from various
company documents and the Internet.
Almarai
Almarai, meaning green pastures in Arabic, is the
dairy market leader in the GCC (Gulf Cooperation
Council which is a grouping of Bahrain, Kuwait,
Oman and the United Arab Emirates in addition
to the Kingdom of Saudi Arabia). It is based in
the Saudi Arabian capital of Riyadh and was
founded in 1976 as a joint venture between His
Highness Prince Sultan Ibn Mohammad Ibn Saud
Al Kabir who is a member of the royal family,
the Savola company and Al-Muhanna family.
The shareholdings of these partners are 51%,
31% and 18% respectively. It is recognized that
the potential and expertise offered by the Irish
company Masstock has helped in transforming
the traditional farming sector of Saudi Arabia to
meet the needs of a rapidly developing country.
Masstock was employed as a consultant and laid
the ground work while also facilitating the adoption
of more scientific methods by the dairy food
business. Although Almarai is a Saudi company in
its equity holdings, it employs a large number of
Irish citizens who hold high-level positions.
Introduction
Almarai is a well established dairy food company
in the Middle East, but is facing some challenges
due to increasing competition from national and
international brands. It has responded by price
discounting, product development and exploiting
opportunities for exporting to overseas markets.
However, there is concern about whether these
steps are the most appropriate and the company
is discussing future strategies, especially those
relating to marketing at home and abroad. There
may also be scope for improvements regarding the
efficiency of some operational practices, especially
related to the amount of time it takes to develop
new products.
Subsequent growth has been mainly organic and

Almarai has expanded each year to become one
of the foremost food corporations in the region and
a leading brand name. Its activities range from
dairy and arable farming to dairy processing and
the manufacture, sale, distribution and marketing
of a wide variety of fresh and long life branded
dairy products. The enterprise is driven by the
desire to fulfil the need to translate up-to-date
developments in agriculture and food industries
into practical activities.
Almarai at present is second to Al-Safi Danone

as a dairy food market leader in the entire
Middle East. In pursuit of the first position, it
has adopted a strategy of market penetration to
fight off the competition and generate profits. Its
product strategy has been to design versions of
the same items for different segments and its
pricing strategy has been to beat the competition
by heavy discounting. The promotional strategy is
to emphasize brand strengths across segments
42
Almaria is divided into three operating divisions,

two central support divisions and a central
marketing division. The workforce exceeds 3,500
who come from 27 different countries. The largest
groups are from the Philippines, Bangladesh,
India, Pakistan, Egypt, the Sudan and Yemen.
Management personnel are primarily European
with a limited number from America, Australia
and New Zealand in addition to Saudi nationals.
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The company produces half of Saudi Arabias

fresh milk and is the countrys largest food
exporter. It has also contributed to the evolution
of the agriculture, dairy processing and food
distribution industries in the Arabian Peninsula.
Figure 1 contains some statistics related to the
scale of Almarais operation.
Figure 1: Key Statistics
Source: Arab News, 3 December 2004
Commercial achievements are reflected in the

winning of a number of national and international
awards; for example, Almarai was voted the
Worlds Food Plant of the Year by the US-based
Food International Magazine in 1998. It was
also the first dairy farm in the world to gain ISO
9002 accreditation. Additional accolades relate to
services to the community and it supports health
education, road safety and anti-drug campaigns
as well as offering assistance to orphan welfare
and benevolent societies in Saudi Arabia.
The Dairy Food Market in Saudi Arabia

Dairy products are an essential and popular
component of the Saudi Arabian diet and there is
evidence of rising demand amongst the growing
population which numbers just over 24 million.
Consumption of all types of dairy products reached
1.3 million metric tons in 2004 and is projected to
reach 1.4 million in 2005 and 1.9 million in 2010.
Expenditure on dairy goods was US$2.26 billion in
2004, each Saudi resident spending an average
of US$94 that year. The demand for all types of
dairy products grew at an annual rate of 5.8%
annually between 1994 and 2004, surpassing
domestic population growth. The trend is expected
to continue in the coming years until 2010 when
the population will be 29.2 million.
The companys mission statement is to achieve

enhanced shareholder value by satisfying Middle
Eastern consumer demand for branded food
products of superior quality and value. It has
also issued a quality statement which maintains
that Almarai is committed to quality which means
providing products and services which continually
satisfy consumer expectations and maintain our
competitive advantage.
Domestic market demand for all type of dairy

products is estimated to be worth US$2.1 billion.
Prices have not increased across the product mix
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since 2001 and, based on 2004 constant prices,

the market value is expected to be US$2.7 billion
in 2007. The projected pattern of demand is
depicted in Figure 2 and such trends mean that
there may be difficulties in meeting domestic
demand without a significant increase in output.
countrys total non-oil exports. Principal exporters

are Almarai, the National Food Industries Company
(LUNA), SADAFCO, Al-Rabie, Al-Othman, Al-Rai
(Danya) and United Food Industries Corporation
(Pride). Al-Safi Danone, Nadec, Halwani and
Jamjoom Formost are companies which have
done well domestically and are in the process of
developing their export capability.
About 81% of dairy produce consumed in Saudi

Arabia comes from suppliers within the country,
the remainder being imported from overseas. The
volume of imports reached 235,092 metric tons in
2003, compared to 78,715 metric tons in 1993,
with a corresponding increase in expenditure
from US$176 million to US$600 million.
The dairy goods that are exported include milk,

cream and cheese products as well as yoghurt
and laban. Laban is a traditional Middle Eastern
drink similar in taste to natural yoghurt which is
popular with families because of its refreshing
taste and nutritious value. The main export
markets are GCC countries, Jordan, Lebanon,
Yemen and selected African states. Preliminary
indications suggest that the export markets for
Saudi dairy products will expand even further
and market penetration in Iraq and Kuwait will
continue. Malaysia, Singapore, Hong Kong,
Brazil and Mexico are also being considered as
new markets.
Imported items include butter, cheese and

other solid forms of dairy products which need
to be imported because the Kingdom lacks
the necessary technological infrastructure and
production capacity. It will therefore have to rely
increasingly on imports, unless it is able to boost
its output by 450,600 tons every year in the next
decade. Reliance on exports could cost as much
as US$587 million in terms of foreign exchange.
With regard to per capita consumption, the
Kingdoms population consumed 53.5 kilograms
of dairy products per head in 2004 and this
figure could rise to 63.5 kilograms by 2010.
The per capita consumption of dairy products
is significantly higher than that in developing
countries, but it is about 42.3% lower than in many
industrialized states where average per capita
consumption is 90 kilograms. If the Kingdom aims
to increase its per capita consumption to reach
parity with the industrialized world, it will have to
boost its production capacity to two million tons
by 2010. This target is considered desirable as it
will permit the satisfaction of local market needs
and demands from Hajj and Umrah religious
pilgrims who travel to Saudi Arabia in large
numbers, in addition to creating new commercial
opportunities.
Almarais Marketing Strategy

Almarai claims that its marketing strategy is
based on integrated marketing activity which
involves the whole company and seeks to align
customer needs with the capabilities and goals
of the organization. The company scans the
environment to identify risks and opportunities
and the factors which are outside its control, but
which impact on operations. It also gives proper
recognition to market segmentation and the
marketing mix. When the company makes major
decisions, it invariably takes into account specific
market segments to target. Fruit yogurt, for
instance, is directed mainly at customers within
a certain age range and occupational profile who
have certain characteristics in common. Low
fat milk and unsalted butter are also directed at
groups of people who have specific health related
requirements. Once the strategic decision has
been made to target a specific market, Almarai
positions its products to meet the particular needs
or wants which characterize that segment. When
doing so, Almarai tries to ensure that the product
has features which make it competitive with other
products in the market.
At the same time, demand from other Middle

Eastern countries has also been strong and
is predicted to grow further. Figure 3 illustrates
trading activity in dairy products. Saudi Arabia
exported some US$665 million worth of products
in 2003, in contrast to US$54 million in 1992, and
analysts anticipate exports will total US$1 billion
in 2007. Dairy goods now account for 7.8% of the
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Figure 2: Projected Domestic Demand for Dairy Products 2000-2010
Source: National Commercial Bank Report 2004
Figure 3: Exports of Dairy Products from Saudi Arabia 1995-2005
Source: National Commercial Bank 2004
The company presents itself as a dairy which

produces milk and milk related items, using
the marketing slogans reproduced in Figure
4. Emphasis is given to attributes which are
expressed in phrases employed in advertising
and on packaging such as 100% natural, no

preservatives added, fresh cows milk and good
for children. The benefits of low fat and low calorie
content are highlighted where appropriate.
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The Fresh Dairy Division is responsible for

marketing fresh and long life milk and laban.
These goods comprise 72% of the total sales
and are regarded as the cash cow for the
company.
Figure 4: Principal Marketing Slogans
The Fresh Food Division markets a variety

of fruit and vegetable juices (orange, apple,
mango, mixed fruit and orange and carrot).
The company has a 20% share of the juice
market and the divisions products are
considered to be a star.
The Food Division looks after processed
cheese (tins, triangles, slices and jars) natural
cheese (feta, halloumi, and mozzarella),
butter and butter ghee. The share of the
cheese and ghee business is 15% and this is
considered another star for the company.
Source: Almarai Handbook, 2004
Products and Market Share

Almarais main products are milk, cream, cheese,
yoghurt, juices and dairy desserts. About 25%
of its raw milk is pasteurized and packaged in
plastic bottles and degradable paper containers
of various sizes. A further 60% is fermented to
make laban. Milk and labon are sold in full fat
and low fat versions. The remainder of the milk is
used in a diversity of branded dairy goods. These
include zabadi (a type of yoghurt), ghista (a
thick spooning cream) and labneh (a fermented
fat product). The company also offers a wide
assortment of fruit-based dairy products such as
stirred and set yoghurts and fruit laban.
The Potted Products Division is responsible

for marketing products such as crme
caramel, fromage frais and different types of
yoghurt.
The Gulf Division is responsible for marketing
products only within Gulf countries.
The Public Relations Division is in charge
of external communications with public
interest groups, charitable organizations,
environmental agencies and governmental
bodies. The division also handles
arrangements for the Almarai Prize for
scientific innovation which is awarded to two
outstanding scientific achievements annually.
The company is also involved in other civic
and charitable activities and supports health
and anti-crime programs and an orphanage.
Visits are arranged to company farms for local
groups and delegations of overseas officials
are often hosted.
Table 1 summarizes Almarais product range,

market share and key competitors. Overall, the
company accounts for 40% of dairy product sales
in Saudi Arabia and 42% of those across the
GCC. In terms of product development, Almarai
is pursuing continuous expansion and extending
its portfolio to include long life dairy products
and those with low fat content and sometimes
added nutrients. It relaunched its revamped and
improved Zady range in 2003 with new items
such as jelly custards aimed at children.
Attempts are being made to enlarge the market

through segmentation and demand in general
seems set to increase in the next decade. The
annual growth rate of Saudi Arabias population
is 3.5% and the per capita consumption of dairy
products is rising at a faster pace as described in
the final section.
Promotion and Publicity

Marketing activity is divided into six different
divisions which deal with the areas outlined
below.
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Table 1: Almarais Product Range
Source: Almarai Handbook, 2004
Currently almost 65% of Saudis are aged

between 20 and 35 and this is the key group
targeted by Almarai. Principal advertising media
are magazines, newspapers, the Internet and
television. School children are another important
market and Almarai products are distributed during
prize giving ceremonies. Corporate clients include
Saudi Airlines, with which Almarai has contractual
agreements, and hotels and restaurants across

the Kingdom.
Much sales promotion is directed at retailers and
some of the most common tools are listed in Figure
5.
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Figure 5: Sales Promotions
Source: National Commercial Bank Report, 2004.
and covers cities in the west and north of the

Kingdom.
The company supports retailers in other ways by

providing free trials and consumer samples, point
of purchase display materials and demonstrations.
Low cost items bearing the companys name
and advertising messages are given to retailers,
prospects and customers. Almarai also participates
in trade shows and conventions within Saudi
Arabia such as the Annual Agricultural Expo,
Saudi Export Expo and National Products Expo as
well as international events. On average, it attends
between six to 10 such events every year.
The Gulf Sales Region is headquartered in

Dubai and covers cities in the GCC countries.
Each region contains several Sales Departments
which are located in various cities in the Kingdom
as well as in GCC countries. Regional headquarters
make decisions about the quantity of products to
be distributed within the region and each Sales
Department then arranges for distribution within
the city where it is based.
Distribution and Sales

Pricing and Competition
Almarai has established its own distribution network

throughout the Kingdom as well as overseas. The
network is divided into four Sales Regions and 28
Sales Departments which serve approximately
20,000 customers on a daily basis. The Sales
Regions and their coverage are as follows.
The number of dairy companies in Saudi Arabia

has been steadily increasing and the industry now
comprises 60 firms, producing around 1.4 million
tons of various products. The Kingdoms major
producers of liquid milk and associated items
besides Almaria are Al-Safi Danone, the National
Agricultural Development Company (Nedec), the
Saudi Dairy & Foodstuff Company (Sadafco) and
Jamjoom Foremost with additional rivals listed
in Table 1. Almarais principal competitor is AlSafi Danone, although their dominance is under
some threat from the large number of companies
attracted by the growing market. It is, however,
difficult for smaller firms to match the competitive
prices of the leaders and a challenge for them to
position themselves and their products effectively,
The Central Sales Region is headquartered in

the capital city of Riyadh and covers central as
well as eastern regions.
The South Sales Region is headquartered in
Khamis Mushayt in Abha Province and covers
cities in the southern part of the Kingdom.
The North Western Sales Region is
headquartered in Jeddah in Hijaz Province
48
establish a niche, cultivate brand loyalty and gain

market share.
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in and the price of many products such as milk

and buttermilk was stabilized. The details of the
agreements were not made public. There have
been no major price wars since, although there
is a possibility that another will erupt and price
competition continues to be intense.
Overseas companies like Kraft, Nestle and

Chesdale also have a presence in the food
market, but certain restrictions are imposed on
dairy businesses. There is a possibility that more
overseas companies might be enticed to enter
joint ventures or they may wait until the Kingdom
joins the World Trade Organization (WTO) in
2005. It is anticipated that this will result in a more
open and free market.
Future Challenges for Almarai

Amlarai has aspirations to enter more international
markets such as Malaysia, Singapore, Hong
Kong, India, Pakistan and Mexico which will
have implications for its pricing and marketing
strategies as well as distribution policies. The
price wars and discounting practiced in the
home market may not be successful overseas,
however, and there could be greater competition
from companies with lower costs. Other important
factors which management appreciate must be
taken into account include market and cultural
differences, fluctuating exchange rates, invoicing
and payments difficulties across borders, the
tariffs and taxes, and government regulations of
the host country.
Almarai and Al-Safi Danone have frequently

embarked on price wars, conducted over an
extended period, which have posed serious
difficulties for local as well as overseas dairy food
businesses. For instance, Almarai announced in
July 2003 that it was slashing its prices by up to
33%. The move was made despite an agreement
in May 2002 amongst 24 dairy firms that they
would not enter into a price war. Al-Safi Danone
immediately undertook reprisals and cut the prices
of its own dairy products. It accused Almarai
of launching a price war, but the latter refused
to accept the blame and claimed that the 2002
agreement had already been breached. Many
other companies had been reducing their prices
and carrying out promotional campaigns, leaving
Almarai with no choice except to discount.
Official agricultural subsidies will also be gradually

eliminated after Saudi Arabia joins the WTO
in 2005 and this will affect costs and pricing.
Subsidies currently cover 30% of the total cost of
dairy farm equipment, 100% of all shipping costs
including airfreight for at least 50 cows, and 50%
of the price of irrigation pumps purchased by
integrated dairy projects. The General Silos Flour
Mills Organization (GSFMS) also subsidizes feed
supplies purchased by the dairy farm industry.
Such financial assistance has allowed Almarai to
slash its prices in the past, but this will no longer
be so easy in the future.
Al-Rabia, a local dairy firm, accused Almarai

of damaging the interests of the national dairy
market by its actions. Al-Rabia maintained that
the price war would ultimately harm consumers
because it would inevitably lead to a compromise
on quality. Almarai responded by saying that the
quality of products would not suffer because well
established companies would apply advanced
technology and modern administrative methods
to protect their brand image. Customers would
therefore be retained and the industry would
become more efficient and competitive.
In preparation for accession to the WTO, the

government has decided to lower the custom duty
on imports of dairy products to 5% and create an
Arab Free Trade Zone (AFTZ) in Saudi Arabia.
This is likely to attract more foreign businesses,
including those related to dairy farming and
food production. The Ministry of Agriculture
also recently announced that it favours a policy
of relying more on market forces and will not
intervene in regulating raw milk prices in the
future.
A national newspaper reported that the price

war started by Almarai would drive the small
producers out of the market as they would
not be able to withstand the competition. The
newspaper asked for intervention by the Ministry
of Agriculture and Water, but officials refused to
interfere and stated that market forces should be
allowed to resolve the situation. Competition was
believed to be healthy and the industry sufficiently
robust and deeply rooted to survive. However, in
late September 2003, the government did step
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Conclusion
The dairy food business in Saudi Arabia is
relatively advanced and Almarai is a household
name throughout the entire Middle East whose
products are associated with freshness, quality
and value for money. Nevertheless, it does
confront changes which are affecting both
demand and supply. Consumer behaviour in Saudi
Arabia is evolving rapidly as a result of progress
in science, technology and education as well
as increasing modernization and globalization.
Customers are becoming more sophisticated in
their tastes, purchasing behaviour and evaluation
of alternatives which means that existing products
must be improved and new products developed
in order to satisfy needs.
Entry into the WTO will also be a significant
turning point for all Saudi industries because it
is likely to intensify competition domestically and
internationally. Some industries and companies
will also lose the benefits of government subsidies.
Almarai will therefore have to be alert and
innovative if it is to retain its status as one of the
countrys dairy food market leaders and realize
its goal of occupying the premier position.
Questions
1. What are the overall strengths and
weaknesses of the company?
2. What are the advantages and disadvantages
of Almarais marketing strategy?
3. How will its pricing strategy be affected when
Saudi Arabia enters the WTO?
4. Is the company too sales oriented and
insufficiently market oriented?
5. What should Almarai do to meet future
challenges in the domestic dairy food
industry?
6. Should Almarai expand further overseas and
which countries offer the best prospects?
Acknowledgement: Support provided by King
Fahd University of Petroleum & Minerals is
gratefully acknowledged. I would also like to
thank all the secondary source material that
enabled me to put together this case study.
50
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International

The Rest of the World

Centre for International Research in Consumers

University of Gloucestershire 2006

HIGHER EDUCATION KNOWLEDGE TRANSFER AND AT THE STIMULATION OF ECONOMIC

Individual journal editions can be purchased at the following

A CASE STUDY DISCUSSING THE

The following case has been prepared following

The following report has been compiled following

The focus of the project was to examine the

The project commenced in November 2003,

This particular research was carried out with

The potential of team teaching

A questionnaire (refer to appendix 1) was

Much has been written recently about employability

The questions were, therefore, constructed to

The authors believe that it changes the ways

Ten responses were received and collated. One

This in turn has changed the emphasis in teaching

Some of the main differences appear to be the

However, team teaching is seen as a key

CLIL follows Do Coyles four principles

As outlined above, many academics, Elkin, et al

Content- deepens and renews the teaching

There are several examples of good practice

Internationalisation in the curriculum

Teekens (2002) offers amore detailed definition a

3. Internet based communication

Both these definitions imply that internationalisation

The number of external contacts with whom

from 20 to several hundred in some institutions.

Study trips and field visits are organised by 5

The length of time varied from 400 hours, one

The further 5 institutions stated that they did not

Again there were several benefits for integrating

It was also noted that students visibly mature

All respondents stated that they will continue and

Most students only use European countries

translation students from Latvia only work at

One university offers over 30 languages but

All partners would like to extend the countries

Other responses included -None at the moment

Most students have to complete some form of

There can also be difficulties with terminology in

The use of Internet based teaching.

Four institutions- full degree programmes and

All respondents stated that their institutions all

Language requirements are different in various

The benefits of such delivery are many- money

Degree nursing programmes 210 ECTS

and it is much more suited to teaching a group of

Others noted that that the programme should be

However, there are disadvantages which need

Another initiative is the development of a joint

Students involvement in international

There are also demands on the tutor developing

Very few institutions allow students to participate

Other partnerships- e.g. summer schools

Some institutions may include students if the

Three partners do not have any other initiatives.