Ferrari S.p.A: Case Study
Introduction
The Ferrari S.p.A is an Italian super sports car manufacturer established in 1939 by Enzo Ferrari. Norway has a record of having the highest percentage of women members on company boards. The high percentage is attributed to the law that was set forth by the Norway government requiring that all companies should have at least 40% women as board members or else they would face delisting("Official Ferrari website", n.d.). The regulations put in place in 2003 saw numerous companies adapt to the changes within the two year grace period that was provided. As a result, presently, Norway has 35.5% of seats of companies on the Norway stock exchange held by women.
The success of this policy is also attributed to the introduction of quotas as a way of addressing gender imbalance in management boards in various organizations. Quotas have however become non-issues in Norway since the country has adapted to the changes and the issue has now become a culture for companies to ensure that their boards have 40% of women. Norway thus became the first country in the world to have the largest percentage of women on their boards as compared to other countries such as Japan that performed poorly in that.
Analysis
Gender inequality is an issue that has existed for several years and many countries are working on fighting it to promote equality. Activists consider the practice primitive and old age thus it cannot bring change to the society. Consequently, governments have worked to device on various ways of ending this practice through introduction of policies that will ensure that there is equality (Bose, 2012). The issue affects not only public companies, but also government institutions such as the parliament, high courts and supreme courts benches and judges, among other related institutions.
The argument in favor of ending gender equality is based on the facts that women possess different capabilities that the men do not have. Having women on boards and institutions will see increased need for development of a high quality group of employees who will see diversified ideas and opinions. Gender equality is thus a major concern to most countries as the ways of people’s thinking on women changes day by day.
Effects of introduction of quotas in Norway to the rest of the world
The introduction of quotas in Norway was effected in 2003 and the integration of the idea into the system came in a few years later. This fact has forced many countries to take this as a lesson for them to effect similar needs. Many countries initially had a very low gender ration in the company boards and management positions which were seen dominated by males in most cases. Quotas in Norway came in handy to solve the problem of gender inequality and the need to increase the number of women seats in power. Countries admired this policy while other have already adopted the system that would see a boost in competencies and development.
Some of the countries practicing the use of quotas to solve gender issues include; France, the Netherlands, Spain, Germany, Belgium and Italy. Quotas adopted in these countries provide a specific figure that is required for board members of companies that are publicly traded in the stock exchanges. Currently, many other countries in the world are moving towards having quotas imposed to regulate the public company boards’ appointment. The rapid change in the dynamics about gender balance on boards has seen changes in terms of number of CEO’s in companies.
Quotas have generally helped dictate the threshold that should be used to gauge the percentage of women in the company boards. However, challenges still exist preventing the ability to ensure effectiveness in all areas. For example, in Norway, the quotas were only imposed on the public companies. In the private companies, the law did not apply since the independence of these companies protected them from such rules. Gender balance is thus not yet achieved fully within the society. The society has increasingly found ways to prevent increased opportunities for women. The problem exists in all other countries which do not care about the quantity of women in the boards of private companies. A solution to this problem can however be found and used to solve the problem and ensure that there is full achievement of gender equality in the working environments.
Importance of gender diversity in company growth
The board of directors of companies makes important decisions that affect the growth of a company positively or negatively. Decisions made by boards impact every person in the country employed or unemployed. Boards of directors choose CEOs, make decisions with regards to compensations, make decisions on whether to sell, buy or merge with competitors, and the social responsibility of a company among many other tasks. When there are different points of view from different people from different backgrounds, perspectives, and experiences, a good corporate decision is likely to be made. Companies with women in positions of executives or directors lead by example in showing how diversified they are in the business they run.
A study conducted by McKinsey through an examination of gender diversity in numerous companies across Canada, the United Kingdom, Latin America and the United States came up with a comprehensive result based the financial result and the management and boards composition. The study was meant to find out whether financial result of a company can be affected by the quality and composition of top management.
The survey discovered that;
Companies with a higher diversity in terms of race, ethnicity and gender are more likely to increase their financial returns above those of their peers in the same industry whereas companies that perform poorly in gender, ethnic and racial diversity are likely to have their financial difficulties in terms of growth. The companies are found to grow but drugging behind, in that, they are not likely to achieve their true potential.
The United States case on race, gender and ethnic diversity show increases in financial performance. However, racial and ethnic diversity has the strongest effect on the financial performance of companies in the United States than gender diversity. This shows that, gender diversity is a step ahead in the United States than any other country in the research. The United States had already placed efforts to increase women representation in top company management positions which is seen to have yield fruits.
In the United Kingdom on the other hand, gender diversity in managerial positions responded with an excellent financial performance for companies in the long run. Despite this result of study, industries in the United Kingdom are poorly performing in terms of gender and ethnical diversity. The companies in the country are less diversified as the ones in the United States. This comes despite the fact that diversity in the United Kingdom is seen as a competitive differentiator moving the industry’s market share towards companies that are more diverse. The opportunity that lies in this country is thus higher the one in existence in the United States.
This study was just done in a few countries but represents a situation that occurs in several other countries in the world. Companies have failed to see opportunities that exist from diversified personnel. Gender diversity is majorly attributed with better financial performance in many companies because of the wider scope of knowledge that women possess which could be shared and used to bring in creativity, innovation and sound decision making in companies in the long run.
Generally, women in company board of directors’ positions or as chief executives promote;
Diversity in thought – women in board positions promotes diversity in thought which is considered important in increasing productivity. Diversity in thought brings in multiple talents that increase a company’s productivity since different talents work together towards achieving a common goal thus igniting different sets of skills on problem solving. Diversity in thought also increases creativity by attracting and retaining talents. As more individuals come together to bring in different sets of skills, more solutions will be brought forward, problems will be solved faster, and more talented individuals will feel the urge of exploring their talents at the work places (Meier, 2013).
Competitive advantage – Diversity brings about competitive advantage through increased opportunities for all people in the world. It is important to note that competitive advantage helps companies move towards achieving their set goals for the company. On the competitive advantage, the changes in technology in the world has seen many companies look for diversified staff members to bring in ideas about ways of staying ahead of others in the market. Competitive advantage helps beat competition from all other companies since there will be an increased market share of the company in the long run.
Stakeholder representation – a good corporate board of directors represent shareholders who include employees and customers. A corporate board that lacks women in its board will be criticized in terms of representation. The women will view themselves as disadvantaged since decisions made are likely not to be in their favor. Diversity helps relate to many different people from different backgrounds in terms of gender, religion, race and social backgrounds. When there are women on a board, there is likelihood to attract women as customers due to the ability to know what women need in terms of products and services. It will be easier for a woman to come up with a strategic plan on how to market a particular product on a given market. In addition to this, diversity increases the market share of any company through the creation of a diverse customer base.
Available essential knowledge – women are known to provide a vast knowledge with regards to industry, functional and operational expertise. The importance of these factors is seen in the development of a strategic plan for the growth of the company or sector. Women are thus necessary in providing the required expertise for growth and company branding. Women are also skilled in providing public relations duties which are importance when looking at trying to maintain brand loyalty so as to reduce competition and enhance creativity within companies thus proving best products that would make customers happy in the long run.
Gender diversity is, thus, important in this age for specifically driving the power of innovation and creativity. In the US only, a study showed that only 17.9% of directors in companies were women. The number is small considering that women compose half of the total work population in the United States and also form 80% of consumer spending. It is thus important for companies to look for ways in which they would increase the gender balance ratio which will resultantly change the diversity (Campbell & Mínguez-Vera, 2008, p.34).
The type of people who would find this product attractive in the Kenya is university students and young middle-income families. Since the product will be relatively affordable, these type of people will find it interesting since it will save them the cost of purchasing a new computer and a home theater at the same time. Combining the two products in one will see the demand increase significantly. The middle-income families' consumer patterns show that their consumption increases with the affordability of goods. For students, the product will be marketable to them since they will be able to use it as a computer system for studying.
The product would be easily transported by sea or air to the country since the country does not have sufficient materials to build it. The country has a major port in Mombasa and international airports in all the key towns and cities that would serve as a door for the product into the country. A large number of goods transported to the East African or Central African countries are through the port of Mombasa then through rail transport to their destination.
The regional sales center for the product will be Nairobi. The reason for the selection of this city is because, first, it is the capital, Kenya with a population of 4 million providing a potential market. Additionally, the city has a large number of leading universities in Africa and also a large number of multinationals and local companies. This means that a large number of Kenyans will be able to afford the product (Vincent, 2004).
The product will be sale highly in this environment. The first is the reason is that there is a high number of the working class population and students. Secondly, the country has a strong response to the adaptation of new technology and products witnessed with the high sales of new products such as Netflix, Uber and highly prices UHD-4K televisions provided by Samsung and LG.
The team should immediately launch the product online through e-commerce selling sites such as jumia.co.ke, theafriquemall.co.ke, dukalako.com, kaymu.co.ke, and alibaba.com. These channels work similar to amazon.com. The recommendation of these channels is based on the high levels of usage and awareness about affordable products retailing through online shops. The channels that can be adopted later include social media, above the line marketing and below the line marketing to promote brand awareness. However, all the strategies can work at once to ensure that the marketing campaign is widespread.
Recommendations;
There should be the introduction of Quotas in all sectors of employment. These sectors include both employment in the formal sector and employment in the informal sector.
Quotas should be introduced in all sectors of employment. The ability of women to perform better should be reflected in all the sectors of employment despite how masculine the employment sector may seem. In some countries, jobs positions such as in the military and security, men are given first priorities despite the ability of women to lead the men in such positions. Countries should thus introduce quotas that would dictate the percentage of women in every job opportunities that exist in a country. These will see more diversification in the sectors and further increase the potential of enhanced performance by different sectors in the countries across the world.
Quotas should be introduced to government sectors and departments to increase representation. This effort is currently in place in several countries in the world. Some countries contain a constitution that dictates the total number of female leaders that are supposed to sit in parliament. Such diversified leadership positions will see a growth of new ideas that will see everyone in the country benefit in the long run. However, in some countries such rules do not exist. Countries in the third world and some second world still have the traditions of the role of male and female in leadership positions. These backdated traditions have increasingly become a barricade for growth and development of women. Full potential of such economies is most likely not to be achieved thus poor performance.
There should also be a revision of company formation rules under limited liability partnerships
Governments can work on a rule that will see a mandatory partnership between women and men in the formation of companies. In the cases of limited liability partnerships, rules can be set in such a way that women have to be included in the formation of companies. This will see a gender balanced company structures. The condition placed will ensure that companies with no gender balance are not registered and the existing companies with gender inequality reformed or face deregistration within a short period of time. Generally, this will not only improve equality but also sell the country’s competitive advantage due to the diversity in all industries, public.
Imposition of sanctions to countries with huge gaps in terms of gender inequality
The European Union in 2012 made a directive that would see improvement in the female representation on corporate boards. The directive was clear about a minimum representation percentage as 40% of the non-executive positions on a company board. The EU targeted companies with 250 employees and above with returns of 50 Euros annually. As a result, approximately 5000 listed companies were affected. The obligation to the member states was important since failure to it; countries will be sanctioned by the union. The member states are supposed to draft rules that will see companies increase representation of women in their boards and resultantly reduce the amount inequality.
The directive by the EU should thus be adopted by the major international bodies and countries such as the United Nations, Commonwealth, African Union, and the United States among others that will see representations increase across the world. The United Nations can act as the major stepping stone towards achieving this milestone since it has coverage of a large percentage of the world through introduction of the quotas. Once a country has been sanctioned by the United Nations, it would be difficult for it to progress economically and politically since there will be barriers existing everywhere in the world. Countries will thus struggle to adopt rules to govern companies on women representation in corporate boards and governmental institutions.
Conclusion;
Gender diversity is an important factor towards achieving goals set by companies in business. The essay has enhanced the knowledge about Norway, the quotas imposed and how it has seen diversity improve business in terms of broadening the niche and market share. The imposition of quotas in Norway saw other countries take a similar step which has now become an international issue. Even though the matter is being campaigned for, companies should see the need of gender diversification for them to achieve the competitive advantage that they require. The push for this type of diversification will not only help in achieving equality, but also present women with opportunities to reach their potential and explore it in a bid to change the traditional dynamics of companies and industries. Gender equality should, thus, be pushed to achievement in all sectors of the government and private institutions in general.
References
Official Ferrari website. Ferrari.com. Retrieved 5 March 2016, from http://www.ferrari.com/en_us/
Bose, C. (2012). Intersectionality and Global Gender Inequality. Gender & Society, 26(1), 67-72. http://dx.doi.org/10.1177/0891243211426722
Meier, P. (2013). Quotas, Quotas Everywhere: From Party Regulations To Gender Quotas For Corporate Management Boards. Another Case Of Contagion. Representation, 49(4), 453-466. http://dx.doi.org/10.1080/00344893.2013.850323
Vincent, L. (2004). Quotas: changing the way things look without changing the way things are. The Journal Of Legislative Studies, 10(1), 71-96. http://dx.doi.org/10.1080/1357233042000318882
