Employee Empowerment Effects On A Company & Penetration Pricing

1064 words - 5 pages

We are going to use Security Business Bancorp in San Diego to evaluate the use of employee empowerment to address certain organizational issues and drive profitability. The company emphasizes on greater decision making and employee empowerment to drive performance (Press Release, 2011). In the area of penetration pricing, we will analyze the advantages that the Apple iPad has benefited from the market by introducing the iPad at a record price in order to capitalize the market.

Employee Empowerment
Employee empowerment is defined as giving employees the power to make decisions. It can also be referred to employee involvement in organizational procedures to enhance employee ...view middle of the document...

Ping (2010) provides that in today’s competitive environment a company should allocate more authority to its employees since they are the ones who are in direct contact with customers and since they face uncertainty from increasingly demanding customers.
The theory also addresses individual and organizational productivity through improving job commitment. When an employee is involved in processes he derives greater job satisfaction and commits more to his work thus resulting in improved productivity. Employee empowerment improves communication and cooperation among employees thus contributing towards team building.
Employee empowerment leads to specific actions by management in order to address intended issues. The most important action in employee empowerment is delegating authority to employees to make decisions in their line of work. By delegating authority it shows that the company has faith in its employees. Another action stimulated by the theory is increased communication between the management and employees. This allows employees to share ideas and goals with the management.
The results achieved from employee empowerment include reduced employee turnover, greater service delivery and customer retention and also increased individual and organizational productivity. When an employee is satisfied he or she performs better thus leading to improved organizational performance and profitability.
Penetration pricing
A current event that involves penetration pricing is the pricing of iPad by Apple Inc. The company launched the product at a lower price compared to similar products in order to ensure penetration into various markets (Gallagher, 2011). Penetration pricing sets the price of a product at a lower level compared to competitors. The strategy is used when the demand for a product is highly elastic thus new customers are attracted to buy the product and also current customers purchase a higher quantity due to reduced prices (Yuan & Han, 2011).
The issues being addressed by penetration pricing theory are market share and sales volume. When a product such as iPad is priced below similar products it will attract new customers and thereby assist the organization to penetrate into new markets and also to increase share in existing markets. Purchasing decisions may be based on the price of a commodity thus lower prices will attract more customers in the market (Yuan & Han, 2011).
Penetration pricing is also used to drive sales volume because it will attract customers interested in bargains. This is especially...

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