We have been preparing video tutorials on key topics in economics, finance, strategy, management etc – basically the entire curriculum.

While we test the videos and edit them, we would like to invite a few users early access to review and provide their comments.

If you are interested, please write to kris@lillilooloo.com. You will need internet access to review the videos.

Thanks for all your useful feedback thus far.

Factors to consider when selecting a business location

Selection of location is often a once-off decision. Relocation is usually very costly and time consuming but sometimes is necessary if the choice of location was incorrect.

The importance of location differs depending on the type of product or service provided by the business. However, there are number of important factors that should be considered by entrepreneurs when selecting a location for the business. Depending on particular business and situation, each factor may be more or less important but all of them should be considered.

The first factor that should be considered is proximity to customers. The importance of proximity to customers depends on the type of product of service provided by the enterprise. For retail outlets location is the key. Service providers such as hair salons and shoe repairs services also largely depend on the location to drive traffic to their stores. However, if it is small manufacturing business which sells its products only over the internet than proximity to customers is not very important, if important at all.

Site-selection software can be used by businesses to help select a location with good proximity to customers. Such software is relatively sophisticated and allows evaluating such information as demographic information, traffic flow and businesses which are located in the area when choosing a location with good proximity to customers.

Proximity to customers is also a very important consideration when businesses supply product which is very expensive to ship, especially if shipping costs are high compared to the value of the product, such as soft drinks. Such businesses need to be located as near to customers as possible to decrease shipment costs.

An internet presence allows good customer accessibility to many types of businesses and should be considered.

Proximity to employees is also very important. Business need to be located in the area where employees of the right calibre, skills set and education are available. Requirements that business have to employees depends on the type of the business and may include wage rates levels, history of relationships between employees and employers in the area, general labour productivity in the area, certain type of skills and availability of surplus labour which refers to the situation when supply of labour is higher than demand and therefore many workers are searching for a job.

Proximity to suppliers is also can be important consideration. For example, it may be very important for a manufacturing business to be close to the raw materials’ supplier. In this case, the cost of shipment or the need to maintain close relationships may be critical.

Proximity superior transportation facilities: Availability of transportation is also very important. For example, a retail store may require a good highway, roads and public transport services nearby to ensure that customers can access the store. For manufacturing businesses it may be important to ensure that good roads are available to transport its products. When considering cost of the location it is also important to consider whether target customers will be able to afford this location. For example, the cost of parking and transportation to access the business location should be considered.

Cost of te location is also an important factor. Generally, it is better for new businesses to first rent a location. This allows business to refine its understanding of its location needs before purchasing a location as well as saving its available funds for necessary operating expenses.

Leasing also reduces risk as it means businesses will have less debt. Risk rises as the debt of the business increases because businesses can be forced into bankruptcy by lenders if debt obligations in terms of interest and principal payments on debt cannot be met. Since sales and other income sources of the new business are usually uncertain during establishment phase of the business, it is much less risky not to have large debt obligations.

If the leasing option is selected, it is important to ensure the insurance policy is adequate for the business’s needs and it does not expose the business to unnecessary risks due to confusing clauses. It is advisable to have an attorney to review the agreement before signing it.

When considering cost of the location it is also worthwhile to consider taxes. Some areas of the country may offer lower tax rates and this could be very helpful for a new business.

If entrepreneurs have very limited funds, and if type of product or service permits, it may be a good idea to initially locate the business on the internet and operate it from home. This will significantly decrease the operational costs required to start a business.

Facility requirements are also important to consider. Entrepreneurs need to consider if the business has any particular facility requirements such as high power consumption.

Competition is another factor to consider when selecting location. For example, if the business is a coffee shop than selecting a location where there are no other coffee shops are currently located can be advantageous, especially in the start-up phase.

Specifics of the community must be understood. It is important to investigate the community in the locations considered. Entrepreneur can do research at almost no cost by reading local press, watching local television, speaking to other business owners in the area and understanding the background of the area.

Entrepreneur’s preferences are another factor that must be considered when choosing a location for the business. Many entrepreneurs give this factor the most attention. Entrepreneur may wish to locate business in the area in which he/she is a resident of and which he or she knows well.

This can have many advantages such as better understanding of the target customers, including their needs and preferences. Other advantages include established relationship that can be utilized for the benefit of the business. An example of this could be a relationship with the local bank manager which can be helpful in obtaining a loan. Another example is the relationship with other business owners which can be helpful in obtaining general advice and guidance.

Entrepreneur’s family and friends may be the first customers of the business and may recommend businesses to other people, which would make it easier to jump start sales of the business.

Entrepreneurs also may choose the location they are comfortable with due to the specific life style that they wish to maintain. For example, certain individuals may prefer to live near the ocean and would want to locate the business in such an area.

However, it is vital to keep in mind all other important factors that must be considered when choosing a location and do not allow just personal requirements to be a sole reason for locating in the specific area.

Entrepreneurs may even consider locating at home. This has a number of advantages such as lower costs, saving time that could be spent on the commute and ability to spend more time with the family. Entrepreneurs, however, need to consider if it will be possible to maintain a professional image by being located at home. Establishing special and non-special boundaries may help to achieve this. It also needs to be considered if the city in which entrepreneur resides allows to locate this particular type of business at home in this area and if there are any restrictions on activities of the business that apply in case.

Prestige of the location will be more important for some types of businesses. For example, if business targets an elite customer than prestige of the location is an important consideration.

Entrepreneurs should also consider sharing facilities with other business. Business incubators offer facilities for the new businesses. Such facilities usually allow new business to become operational right away. Business incubators generally provide businesses with building space, clerical assistance, general equipment such as phones and fax machines and management advice. Such choice will result in lowering operational costs and therefore decrease the risk of business failure due to insufficient funds.

Generally such business incubators are sponsored by governments or universities and their purpose is to help new businesses get established before such businesses become strong enough to move to their own locations. The main benefit of business incubators is management advice that they provide. This could be especially beneficial to inexperienced entrepreneurs.

Other considerations when choosing a location is economic and (business) environmental factors. This refers to such factors as tax structure, legal requirements, crime levels and weather. Safety is an important consideration when choosing a location. Therefore, location at a high crime rate area may not be very suitable, especially if this is a type of business where customers will need to visit the location.

Some areas of the country may offer location incentives such as enterprise zones. Enterprise zones are established to entice businesses to locate in the areas which are economically deprived and in need of job creating by offering businesses lower taxes.

However, many cities also place certain restrictions on businesses. For example, it is common for cities to have zoning requirements which place restrictions on businesses which operate from home. This is a problem especially over the last few years since more and more businesses consider locating at home and home based business are no longer considered to be “second grade” businesses in the eyes of both consumers, business partners and owners.

Main concerns of investors: It is important to clearly address areas that investors are looking for first and foremost. This includes whether the product or service will be accepted by the market as well as potential demand for the product or service. The calibre of the management team and critical risks are also of vital importance to prospective investors. Investors also look for honesty and transparency in the way information is presented to them.

Short, simple and to the point: Investors receive a lot of business plans. Therefore, generally, investors will spend only five minutes briefly looking through the business plan to determine whether this particular plan deserves more time investment for exploration.

Investors usually briefly consider new business opportunity by the reading executive summary or by listening to in-person presentations by entrepreneurs. If within five minutes the opportunity does not seem to be promising, investors will likely to move on to another opportunity.

Therefore, it is vital to be well prepared. An executive summary must highlight all important details why this opportunity is promising. Presentations by the entrepreneur should be concise, to the point and first focus on what investor is most interested.

Value credibility: When an opportunity is presented to an investor in person or via a business plan, the fact whether the investor feels he or she can believe entrepreneur or not will play an important role.

Perceived credibility of an entrepreneur influences the interest of the investor. If the investor will not believe an entrepreneur’s claims and will see entrepreneur as not being trustworthy, the investor most likely will not do business with such an entrepreneur even if the opportunity is promising. Therefore, it is imperative to provide factual support for any claims made in the presentation to the investor, verbally or in writing. The plan should include realistic sales projections and profit margins which are aligned with average figures for the industry, with the exception where the opposite can be factually supported.

High level of preparation: Investors want to see the entrepreneur thoroughly researched the opportunity and considered all important areas.

Value passion: Investors look for passionate entrepreneurs. Investors often invest in entrepreneurs and the management team rather than the business opportunity itself.

After investing: After an investor provides funds to help establish a new business venture, it is imperative to act with integrity and follow through the business plan as agreed at the commencement of the relationship between an entrepreneur and investor. Furthermore, an entrepreneur should monitor actual performance against performance standards and milestones to ensure that he or she stays on track. In building relationship with the investor, it is advisable to follow the simple rule of under promising and over delivering instead of the opposite, which is more customary. Also, the entrepreneur can only control what he or she can control. However, as long as the entrepreneur remains true to his or her word and acts with integrity – natural setbacks and troubles should not be a problem with investors as they usually understand that in the turbulent start-up enviornment setbacks and troubles are inevitable.

Portia can consider debt as a source of external financing. Debt financing increases her financial risk because debt must be repaid regardless of whether or not the firm makes a profit. If debt is not repaid according to an agreed upon schedule, creditors may even force the enterprise into bankruptcy. Alternatively, equity investors are not entitled to more than what is earned by the enterprise.

When borrowing from the bank, an entrepreneur has number of options. The following types of loans are generally available:

Lines of credit – this is when bank agrees to make money available to the business. Agreement is made for up to a certain amount and is not guaranteed, but only in place if the bank has sufficient funds available. Such agreement is generally made for a period of 1 year.

Revolving credit agreement – this is similar to the lines of credit but the amount is guaranteed by the bank. A commitment fee of less than 1% of the unused balance is generally charged. Therefore, such arrangement is generally more expensive for the borrower.

Term loans – such loans are generally used for the financing of equipment. The loan is generally corresponds to the useful life of the equipment.

Mortgages – such loans are long-term loans and are available for purchase of the property which is used as collateral for the loan.

Portia can also consider equity financing. Private equity investors include venture capital firms and business angels. Venture capital firms raise a fund and then select portfolio of businesses in which to invest. Portfolios generally include start ups and existing businesses.

In exchange for investment, venture capital firms obtain partial ownership of the business. Convertible preferred stock or convertible debt is usually preferred. This is because the venture capital firm would like to have the senior claim on assets in case of liquidation but still wants to have an option to convert it to common stock if the business becomes successful.

Business angels, which are also referred to as informal venture capital, are wealthy private individuals who invest in the firms in their individual capacity. A very small percentage of start ups manage to get such funding. Therefore, entrepreneurs should have other options available as well.

There are also government supported financing options available to Portia which are specific to Portia’s location.

Further, Portia can use personal sources of funds. The “personal” sources could be personal savings, credit cards, borrowing from friends and relatives or any other way of obtaining money such as selling an asset, such as a car or a summer house, to free up funds for investment in the enterprise.

Personal savings are usually the leading source of “personal” funds. Credit cards are often used but needed to be used with extreme caution as interest rates on outstanding amounts can be incredibly high.

Borrowing from friends and family is also very tricky and should be done with extreme care. If Portia’s business fails or does not perform as expected and money is not repaid when agreed than it can destroy or severely damage relationships. When borrowing from friends and family, it is a good guideline to ensure that it is seen as an investment rather than a gift by the lending side of the transaction. An agreed upon deal should be put in writing since memory is not always reliable. Moreover, the amount borrowed should be repaid as soon as possible.

Overall, Portia has a number of the sources of external financing to choose from. Portia needs to evaluate upsides and downsides of each option and consider all options in light of the unique situation of the business to choose the best option or combination of options.

Staff functions are differentiated from line functions. Staff functions are supportive functions. Examples of staff functions are public relations and human resources. Such functions directly support line functions.

Line functions are the main functions of the organization and are concerned with directly achieving the objectives of organization. Examples of line functions are marketing and production. Line functions directly affect the operating profit and the bottom line. Whereas, staff functions are support which is necessary for line functions to function satisfactorily.

What we need to understand now is where does public relations fit within an organization. Public relations is one of the elements of the promotional mix. Other elements are advertising, sponsorships, direct marketing, sales promotion and personal selling. Promotional mix is used to ensure success of the integrated communication of the organization (read about integrated communication as a strategic management process within the organization).

Public relations practitioners usually undertake public relations campaigns. Public relations campaigns are a set of deliberate and planned activities directed at targeting various stakeholders within a specified period with the purpose of achieving certain objectives.

Objectives of public relations can be to create awareness, to educate, to attempt to alter attitude or behavior, to persuade or just to inform.

Public relations can use various tools to achieve its objective, which is to establish mutual understanding with all stakeholders. Such tools include sponsorships, publicity, special events, media relations and promotions.

There are various types of public relations campaigns that organizations can use. They can be categorized broadly into: issue oriented, politically oriented or product/service oriented. They can alternatively can be categorized into campaigns which have as its goals to create awareness, campaigns which attempt to inform public (public and stakeholders are synonymous), campaigns that have as its goals to be a reminder of something that the public already believes in, campaigns that attempt to alter attitude and, lastly, campaigns which attempt to modify behavior.

Public relations uses different media to achieve its objectives. Such media includes internal media (targeting internal stakeholders), mass media (targeting external stakeholders), private media and folk media (both targeting external stakeholders).

Integrated communication

Integrated communication is a strategic management system which is concerned with overseeing all messages sent by the organization and which have a purpose to develop a long-term and profitable relationship with all the organizations stakeholders (internal and external). Therefore, integrated communication is a broader concept and public relations is just one of the elements which is required for the success of integrated communication as a strategic management process of the organization.

Integrated communication evolved over time and developed into a full-blown strategic management process which focuses on two-way communication (dialogue with stakeholders) as apposed to one way communication (monologue). Contemporary integrated communication processes within an organization focuses on all stakeholders. This is in comparison to earlier efforts when focus was only on customers. Further, whereas before focus was on transactions, now the focus is on the relationship with stakeholders. A successful integrated communication process requires integration and collaboration of all functions. It is across-functions rather than a functional process. Contemporary integrated communication process is also very data driven since data enhances the performance of the process.

Stakeholders (internal and external)

Organizations have various stakeholders which must be taken into account to ensure the success and sustainability of the business. Internal stakeholders are stakeholders who are within the organization such as employees, management and shareholders.

External stakeholders are stakeholders who are affected by organization or affect organization but are not part of the organizations. Examples of external stakeholders are customers, labor unions, suppliers, the community, media, potential customers and the federal, state/provincial or local government.

Stakeholders can also be primary, secondary and marginal. Primary stakeholders significantly affect the organization or are severely affected by organization. Examples of primary stakeholders are employees and customers. Secondary stakeholders are generally less affected or have a smaller affect on the organization. Examples of secondary stakeholders can be media and government. Marginal stakeholders have the least affect or are least affected by the organization. Examples of marginal stakeholders can be the community which is almost not affected by organization at all. Categorization of primary, secondary and marginal stakeholders can alter based on a specific situation. For example, if environmentally irresponsible actions of organizations lead to significant pollution of the environment and nearby communities experience negative externalities as a result health than we can say that the community is no longer a marginal stakeholder but a primary stakeholder. This is especially true should the community choose to react.

Stakeholders can also be categorized into current (traditional) and future. Current stakeholders include all stakeholders which currently affect or are affected by the organization. Examples are employees and customers. Future stakeholders are stakeholders whom are likely to be affected or affect the organization in the future. Examples of future stakeholders are students and potential customers.

Further, the attitudes of stakeholders can be the basis for further categorization. Some stakeholders agree with actions of the organization and can be labeled proponents. Some stakeholders disagree with actions of the organization and can be labeled opponents. And some stakeholders are unconcerned with actions of the organization and can be labeled indifferent.

Media and Public Relations

A public relations practitioner uses various media to achieve its goals. Such media includes the following:

Internal media

Internal media is used to enhance communication with internal stakeholders. Internal media includes online media, printed periodicals, interpersonal media and audiovisual media.

Online media

Online media (digital media) is further discussed below. In the context of internal communication, online media is putting a lot of pressure on more traditional media such as printed periodicals. Online media includes such tools as emails, intranets, websites, electronic bulletin boards, internet chats, sms (cellular short messaging services), e-newsletters, social network sites and discussion forums. Online media is attractive due to its significantly lower cost (compared to printed materials, for example), flexibility (changes can be done in minutes) and speed (e.g. messages via email can be received almost instantly). With the increasing role that online media plays in internal communication, there is no reason to doubt that this media will be increasingly used by organizations.

Printed periodicals

Despite the availability and advantages of online media, many organizations still use printed periodicals to communicate with internal stakeholders. Many large organizations such as Deloitte and Toyota use magazines to communicate with employees. Bulletin boards with motivational messages, special announcements and pictures are common news boards in organizations. Some trade unions have their own printed publications. Printed newsletters are still common and convey information about current and future happenings associated with the organization and its employees. Annual reports, although often available in electronic format, are still available in print. Some employees have their own “underground periodicals” which are unauthorized publications prepared by employees themselves. In a sense, it is a grapevine in the printed format.

Interpersonal media

Interpersonal media refers to face to face communication. It is still the most important type of media that organizations can utilize to enhance communication with internal stakeholders. Any face to face interactions such as meetings, interviews and conversations are examples of interpersonal media. The grapevine is also an example of interpersonal informal communication media. It refers to interpersonal communication between employees through which news, information and rumors are spread throughout organization. Because employees usually believe information which is spread via grapevine and because information via the grapevine is spread extraordinarily fast – public relations practitioners should take grapevine communication into account during internal communication planning and should take advantage of this type of communication.

Audiovisual media

Audiovisual media refers to media which uses audio and visual elements such as videos, power point presentations and flip charts. With the advance of technology, organizations should utilize this type of media to enhance its’ internal communication.

Mass media

Mass media can be used by public relations practitioners for communication with external stakeholders. Mass media is further divided into press, broadcast and digital media.

Press includes magazines and newspapers. The advantages of press is that it allows to publish a more in-depth message as apposed to more limited messages that can be used in television or radio advertising. People often keep the articles from newspapers and magazines and pass it to their friends and family. Magazines and newspapers allow more time for the reader to comprehend the message as well as the added advantage that it can be read anywhere. Comparatively, messages provided via television or radios have to be comprehended instantaneously or it will be lost. Disadvantages of using the press include often less than objective reporting, the fact that people do not read every section of the newspaper or the magazine and the fact that total readership claimed by publishers is often overestimated as many copies will be discarded after a brief view over coffee or during a train ride to work.

Broadcast media includes radio and television. Television is usually a costly media. It is also more time consuming than many other alternatives due to the time it takes to negotiate and than produce the message. Messages that can be communicated via television are usually very limited due to the high cost and other factors. Moreover, the viewer cannot refer back to the message at their convenience, as is available with press options. However, television provides for visual and audio elements which enhance the strength and comprehension of the message, along with other advantages.

Radio is less costly than television but does not provide visual elements and is limited to audio elements to enhance the strength of the message. Radio, as well as TV, can be used by illiterate people, which is an advantage if compared to press options discussed above. Radio also provides companionship and can be taken anywhere. It can be listened to while doing other things and many people listen to radio more in terms of time per week when compared to the viewing of television. Radio has similar disadvantages as television. Listeners do not have ability to refer to a message at their convenience or to have more time to comprehend the message, if necessary. Moreover, messages are usually limited due to cost and other factors.

Digital media can also be used by the public relations practitioner. It includes new media (not available previously) that the public relations practitioner can utilize. Digital media includes podcasts (audio messages distributed to interested individuals), online forums, blogs, video blogs, social networking sites and others. Digital media can be used for communication with internal and external stakeholders.

Private media is another media that the public relations practitioner can utilize when communicating with external stakeholders. Private media is media over which an organization has complete control and includes videos, seminars and presentations conducted by the organization, printed publications to be used with external stakeholders such as educational publications for selected external stakeholders.

Lastly, organizations can also utilize folk media for public relations purposes. Folk media refers to traditional media. It is very culturally oriented and includes gossip, puppet shows, festivals and theatre productions in villages and rural areas. Folk media are associated with communication with few individuals at a time, usually with the use of symbols and in their own language. It can be very effective in communicating with rural areas of countries.

There is an important difference between the internet and the World Wide Web or the Web. Internet refers to the entire infrastructure which allows otherwise incompatible individual computers to communicate with each other, regardless of where they are located. Basically, the internet refers to all computers, telephone or cable lines and network cables that make it possible for any computer to mcommunicate with any other computer, as long as they are connected to the internet.

The Web is situated on top of the internet and allows internet users to share information on the internet by using a URL, which refers to the Uniform Resource Locator. The Web is also often called the “information superhighway”, as coined by Al Gore. It is used to indicate that the Web allows internet users to “travel” in search of information and that all other internet users also “travel” in the same direction (in search of information), which is similar to a highway.

The Web originated from work done by developers Robert Gailiau and Tim Berners-Lee in the European Centre for Nuclear Research (CERN) in Geneva in 1989.

Impact of the Internet on public relations

Due to the rise of the internet, organizations no longer just function only in the market place (off-line environment). Now they also function in the market space (on-line environment).

The internet opened many new opportunities for organizations to engage in communication: including two way communications, with stakeholders. Corporate websites, e-newsletters and email are some of the ways that allow new and exciting opportunities for organizations to build relationships with stakeholders.

The Internet enhances communication with media. The media relations section of the website may include news and press releases, photographs and any other information and resources that may be useful to media and which may result in positive publicity for the organization. If crises occur, the PR practitioners may use the media relations section of the website as well as emails to keep media informed about the situation and any new information available regarding the crises. The PR department may also offer to media a subscription to weekly email with updates on any happenings connected to the organization.

Websites of organizations may also be used to acquire new customers, build business partnerships and promote the organization’s brand. A well optimized website may contribute greatly to visibility of the brand without any significant investments other than on site optimization and maintenance.

Corporate blogging may be used by the organization to enhance relationships with stakeholders. The concept of blogging originated from the word “weblog” (weblog), as coined by Jorn Barger in 1997.

Corporate blogs are a communication and public relations tool that organizations can use. It is presented in the form of an online diary which is presented in the reverse chronological order. Corporate blogs can be internal, where the target audience is internal stakeholders such as employees and shareholders of the organization. It can also be external, where the target audience is external stakeholders of the organization such as customers and suppliers. 

One such activity is sponsorship. Sponsorship refers to a situation when an organization supports a cause or event via contribution of some of its resources, which may include monetary and other resources. Examples of sponsorships include supporting sports events, charities and providing education grants.

Sponsorships allow an organization to create and enhance its goodwill. Moreover, due to sponsorships, organizations may obtain VIP tickets to the event that is being sponsored and important clients or business partners may be invited to attend the event by accompanying senior leadership, which is good for the development of relationships with clients and business partners. Further, the mere fact that an organization is a sponsor enhances the reputation of the organization as a being stable, sustainable business which acts responsibly towards society. This improves stakeholders’ acceptance of the organization.

Another example of may be an attempt to obtain publicity. Publicity is controlled or uncontrolled mass communication which is unpaid. The reason media is willing to publish or broadcast unpaid messages about organizations is because they see it as newsworthy or as socially responsible behavior by organization which again makes it newsworthy.

There are two types of publicity. First is marketing publicity which refers to publicity which has an objective of enticing stakeholders to buy a product or service of the organization. Second is public relations publicity which has the objective of persuading stakeholders that theorganization or cause that the organization supports is worthwhile of their support and association.

The PR department may use press releases and news releases, news conferences, media conferences and interviews to entice media to give the organization publicity.

A close activity related to seeking publicity is media relations. This refers to all actions public relations practitioners undertake to obtain publicity or to respond to media interest in the organization, which is again likely to result in publicity.

To ensure good long-term relationship with the media, all communication with the media must be honest, comprehensive and timely. Public relations practitioners need to make it easy for media representatives to give organization publicity by providing honest, comprehensive information with all relevant details, such as photographs, that are necessary for the information to be considered for publication. Other ways to build good relationship with the media is by providing photo opportunities, facility’s visits and media receptions.

Media refers to the channels via which particular message of the public relations campaign reaches stakeholders. Medium makes it possible for the campaign to reach stakeholders through the use of one or more channels. It can refer to mass media or to individual. Channel refers to a tool which is used to carry information. A channel is a medium of communication.

PR and media

Media refers to the channels via which a message of the public relations campaign reaches stakeholders. Media is not only an important stakeholder for a business but also make it possible to communicate with all other stakeholders of the business.

Types of media

Media can be of two types, controlled or uncontrolled. Controlled media are usually paid media over which businesses have some control. An example of controlled media can be the annual report. Uncontrolled media is unpaid media over which organization does not have control. An example of uncontrolled media is a news release. Media representatives, such as editors of a newspaper, will have control in such situation regarding whether this information will be published and in which form it will be published.

Choosing the media

When choosing appropriate media, public relations practitioners should consider which media is accessible to targeted stakeholders and which media they prefer. Available budgets should also be considered.

Internal communication

Internal communication is directed at internal stakeholders. Internal stakeholders include employees, management and shareholders. Many firms consider employees and customers to be the two most important assets of the business.

The profit and growth of organization are mainly the result of customer loyalty. Customer loyalty is the result of customer satisfaction. Customer satisfaction is mainly a result of value provided to customers by the business. Satisfied employees and organizational alignment, which refers to situation when employees are aligned with and internalized the values and beliefs of organization, will deliver better value to customers. This will result in enhanced customer satisfaction and customer loyalty and greater growth and profit for the business.

Since internal communication is one of the important ways to ensure organizational alignment and employee satisfaction, internal communication is of crucial importance.

Philip Kotler, a well-known marketing expert, advises that in any organization with a service component, there are three types of marketing that occurs in the organization.

Internal marketing occurs between the organization and employees.

External marketing occurs between the organization and customers. It concerns design and implementation of the marketing mix.

Interactive marketing occurs between employees and customers. Its effectiveness depends on how well employees can meet customers’ needs.

External marketing cannot occur without internal marketing which refers to motivating and educating employees to be able to meet the needs of customers through interactive marketing. Therefore, for effective marketing, all three types of marketing should be undertaken efficiently.

Print publications can be used for internal communication and include newsletters, magazines, annual reports and bulletin boards. Internal communication media can also include audiovisual media such as power point presentations, videos and audio recordings of the messages.

The combination of different audiovisual media is often used. For example, a power point presentation made by the CEO of the organization may also include a number of video or audio messages. Along with a number of audiovisual media, such presentations are amongst the most used media for interpersonal communication. It is a form of interpersonal communication media.

Interpersonal communication media refers to communication which occurs face to face. For example, interpersonal communication media occurred in the previous example because the CEO was presenting to his team in a face to face format. Other examples of interpersonal communication media are staff meetings, interviews and training sessions.

Another example of interpersonal communication media is informal communication which is also called an organizational grapevine. An organizational grapevine refers to informal and unsupervised communication within the organization. It allows to rapidly disseminate information throughout the organization. Organizations need to use informal communication media to its advantage.

Mass media

Mass media is generally considered to be an uncontrolled type of media. Mass media refers to media which targets a broad audience of various stakeholders and include, but not limited to, the broadcast media, which is television and radio and the press, which is the newspapers and magazines.

The press is a type of mass media and includes newspapers and magazines. The advantages of press over broadcast media include information being presented in greater depth. Further, when information is presented in the press, it is portable. Individuals can take newspapers or magazines with them and read it anywhere.

The press is also often passed from one individual to another. For example, if one likes certain articles in a magazine, he or she may bring this magazine to his or her friends and family to share it with them. Friends and family will likely take a look at the entire magazine and not only at the recommended article. Some individuals even cut out and keep articles or information that they find particularly interesting or useful.

However, the press also has certain disadvantages. The disadvantages include the fact that the management of the press usually prints what will sell and the information in the press may not be objective or may even be distorted. Moreover, the readership of the press may not be as big as claimed by the newspapers and magazines. Many individuals only read newspapers over morning coffee or on the way to work. Moreover, with newspapers now available online, many office workers read the headlines only online and read specific articles only if it is particularly relevant or interesting. Therefore, a lot of information in the newspapers and magazines gets ignored by a large proportion of the readership.

Broadcast media offers certain advantages over the press. It may reach a larger audience than the press. This is especially true as more and more people around the world gain access to this media. This media offers various sounds or combination of sounds and colors which enhances the message. It is also watched or listened to mostly at the leisure time. Therefore, on average, the messages communicated may enjoy higher attention of the target stakeholders. Moreover, if an organization targets illiterate stakeholders, than broadcast media is more relevant when compared to the press. When it comes to advertisements, with broadcast media, individuals are almost forced to listen to or to watch the advertisements. With the press, individuals have more control over which advertisements to take notice of and which to ignore.

Disadvantages of the broadcast media include that it is expensive and may be time consuming to arrange. Further, for messages to be absorbed by the stakeholders, it needs to be absorbed immediately as it is being broadcast.

Various exhibitions and shows are also a type of mass media. Their advantages over broadcast and the press media include the ability to engage in two way communications with the targeted stakeholders and therefore have better control over media and have better chance for creating a long-term relationship with the stakeholders.

Other types of media include folk media which refers to such media channels as puppet shows, gossip, music, community theatre, city or village celebrations such as festivals and family or community celebrations and events such as weddings or funerals.

There is also private media, which refers to media which an organization creates for its own consumption. An example of private media includes videos, literature and private exhibitions, such as factory tours, produced by an organization.

Lastly, there is of course a digital media, which can also be called a new media or technology driven media. New media channels include websites, blogs, video and audio podcasts, online forums and social networking websites.

Specific objectives of PR campaigns can include changing or reinforcing an attitude or behavior of targeted stakeholders. It can also be to educate, create awareness or inform stakeholders about specific issue. Objectives of a PR campaign may also include all of the above.

PR campaigns can focus on products or services, be political or be ideological or focus on particular issue or cause.

PR campaign management consists of four phases: research, planning, implementation and evaluation.

The public relations campaign is affected by the business environment. A business environment is very turbulent and continuously changes. Ongoing environmental scanning is essential for public relations practitioner to be well informed about happenings in the business environment to ensure that such changes can be incorporated into the public relations campaign planning and management.

PR campaign planning

Effectiveness of the PR campaign is measured by whether or not the general objective of the PR campaign is achieved. In other words, whether the behavior of the targeted stakeholders was influenced in a way organization intended. To ensure effectiveness of the PR campaign, it is vital to undertake systematic public relations campaign planning.

There are various campaign models the public relations practitioner may use to systematically plan a PR campaign. One of the models is four-step public relations campaign model by Cutlip, Center and Broom. Other modules include the communication by objectives model developed by Fourie, Steyn and Puth’s. All models are similar but differ in some respects.

To take a look at one of the models, we will briefly discuss the Cutlip, Center and Broom model. The four-step process suggested by those authors are:

1. Defining the problem – this refers to the research phase. The focus is on understanding the current situation.
2. Planning and programming – this step refers to determining programs and policies. The focus is on what should be done to achieve the objectives of the campaign.
3. Taking action and communicating – this step is where implementation takes place. It focuses on how particular actions should be undertaken to achieve the objectives of the campaign.
4. Evaluating the campaign – the last step focuses on evaluating the effectiveness of the campaign. This refers to whether the objectives were achieved.

In planning the PR campaign, other important aspects to consider would be the profitability of the campaign. A PR campaign can be very expensive and analysis should be undertaken to see if the campaign will bring a greater benefit to the organization compared to the cost involved in implementing it.

In the planning stage of the PR campaign, the important aspect is feed-forward. This refers to researching beforehand the targeted stakeholders and how the stakeholders might react to particular messages.

Research of targeted stakeholders should include such variables as demographic characteristics of the targeted stakeholders. This refers to such aspects as age, gender and religious beliefs. Comprehension capacity of the targeted stakeholders also must be understood. In other words, how well educated are the stakeholders and what is their level of understanding and knowledge about the subject of the campaign. Communication habits of the targeted stakeholders also must be considered. This refers to such aspects as which language the targeted stakeholders speak and which media they prefer. In researching targeted stakeholders, public relations practitioners may gain a better understanding on what kind of approach for the campaign they should select. The types of approach may include being serious, emotional or humorous.

The probing of how targeted stakeholders might react to particular messages may be achieved by, for example, giving an indication to the stakeholders of the message of the proposed campaign. This can allow evaluating of potential opposition of the stakeholders to the campaign. This information can be used to adjust the campaign to better meet the needs of opposing stakeholders or to prepare to deal with the opposition.

Ensuring effectiveness of the PR campaign

For the PR campaign to be effective, it must establish an image of being revolutionary in nature. It must entice targeted stakeholders to buy into the message communicated and to identify themselves with the message.

Moreover, for campaign to be effective, the communicator, organization and medium must be perceived as credible by targeted stakeholders. Media makes it possible for campaign to reach stakeholders through use of one or more channels. It can refer to mass media or to individual mediums.

It is important to ensure the  public relations campaign is culturally acceptable to all stakeholders and that channels used to communicate messages are accessible to targeted stakeholders. Channel refers to a tool which is used to carry information. Further, media refers to the channels via which the message of the public relations campaign reaches stakeholders.

The PR campaign must also incorporate values and norms of the organization and of targeted stakeholders. If this aspect is ignored and the values and norms of stakeholders will conflict with the campaign – such a campaign will likely not be effective.

For a PR campaign to be effective, it must be supported by top management.

During and after implementation of the PR campaign, public relations practitioners need to obtain and respond to the feedback from the stakeholders.

Market research – is research with intent to find information on specific issues, problems or opportunities. It is conducted when a need arises and not on an ongoing basis.

Market intelligence – it is an ongoing process of obtaining relevant information about the business environment on a formal and informal basis. Formal market intelligence procedures occur when specific personnel are assigned to search for any relevant information on the business environment. Informal market intelligence procedures refer to ongoing scrutiny of newspapers, magazines, industry related publications, relevant books and any other external sources which may contain relevant information on the business environment.

Internal data – refers to data which is collected from internal reports of the organization. Internal reports may include billing reports, reports on inventory levels, at cetera.

The role of public relations in an organization

Public Relations is a supporting function of the organization that purposely channels the ongoing effort of building, maintaining and enhancing acceptance and support of an organization by relevant internal and external stakeholders. The objective is to establish, maintain and enhance a positive image of the organization. It seeks continuous feedback from stakeholders and responds to such feedback.

Public Relations is both a proactive and a reactive function. It is proactive whenthe  function attempts to create and enhance organization’s reputation with the external stakeholders. It is reactive when function attempts to rectify any damage done to the image of the organization by an event or issue.

There were four major drivers which resulted in the increasing importance of public relations as a profession and as a function within organizations. One of the drivers was democratization throughout the world and the importance of communication in a democratic society. An evidence for democratization was the fall of the Berlin Wall and demolition of the USSR.

Another driver that led to the increasing importance of public relations as a profession and function within an organization is developments in communication technology which led to increasing transparency in the business world and increasing awareness of consumers and other stakeholders as well as level of their knowledge and power. Other drivers were increasingly larger organizations and growing conflicts and changes among various groups within society such as women’s rights movements and animal rights movements.

The role that the public relations function plays in organizations is not consistent. In some organizations public relations practitioners play a minor role and have no input into management decision making. In other organizations public relations practitioners play a more important role, have an input into management decision making and the head of the public relations function reports directly to the CEO of the organization. Public relations also often are sub functions of another function of the organization, such as marketing.

It is suggested in the literature on public relations that for public relations to play an important role in the organization, the organizational structure has to be established in a way where there is a strong fit between public relations and the organizational structure. In other words, the organizational structure needs to allocate an important role for public relations.

Marketing and Public Relations

Marketing is a functional area of management and refers to everything that is undertaken by an organization to market products and services.

Marketing and public relations functions are often confused. However, the two functions have different main objectives. Public relations function focuses on establishing good long-term relationships between organization and all internal and external stakeholders. It focuses on establishing a proper image and enhancing the company’s reputation. Marketing, on the other hand, focuses on acquiring customers and keeping them content. Therefore, public relations focus on all internal and external stakeholders of an organization and marketing focuses exclusively on customers of an organization.

Marketing and public relations functions often work very closely, especially in large organizations. Close collaboration of the two functions results in synergy benefits. For example, if the goal of the marketing department is the introduction of the new product to the market, the public relations department can work collaboratively with the marketing department by taking steps to obtain publicity with the help of press conferences and news releases. This way, the public relations department can arrange for a product to be announced by the media in a way other than advertisement. Publicity is usually perceived by stakeholders as more credible than advertisements.

Marketing is a line function and public relations is a staff function. Line functions refer to functions that perform primary activities which are necessary to achieve an organization’s objectives and which directly contribute to the bottom line, such as marketing and operations. Staff functions are those functions that support functions that perform primary activities. Examples of staff functions are public relations and human resources.

Overall, marketing focuses on selling organization’s products and services to customers and public relations focuses on selling the company itself to all internal and external stakeholders.