Applying Motivational Theories

FY021: Task-3 &4

Assignment on:

Applying Motivational Theories

Contents

Introduction: 2

Different Motivational Theories: 2

Content Theories: 3

Process Theories: 3

Choosing the Best Motivational Theories for Jack Store: 4

Maslow’s Needs Hierarchy Theory: As 4

Vroom’s Expectancy Theory: 5

Conclusion: (100-120-150) 5

Introduction 9

Main body 9

Long term financing 9

Short-Term Financing 9

Investment appraisal techniques 10

Conclusion 11

References 11

Introduction:

High job satisfaction of employees leads the business entity to the ultimate goal. This can be ensured by providing effective motivation that can be either monetary or non-monetary. Motivation increases the employee productivity and loyalty effectively(Capozza et al., 2006). In this case, some motivational techniques have been analysed to choose the best motivational tool for increasing the productivity and ensuring job satisfaction for new store of Tesco management that is “Jack Store”. Motivation is more important for employees of “Jack Store” as it ensures high commitment and dependability towards the responsibilities.

Different Motivational Theories:

Some scholars have provided several motivational theories to describe the concept of motivation in organizational context. Motivation is driving force that pushes the employees to work hard and accomplish the organizational objectives in time(Cubbon, 2000). Motivational theories have been developed in two ways, one is content theory and another one is process theory. These have been analyzed below:

Fig1: Motivational Theories (Source: Maslow, 2020)

Content Theories:

Content theories describes the answer of what motivates people and more concerned about employees’ needs and wants. The content theories have been analyzed below:

Maslow’s Need Hierarchy Theory: This theory has provided by Abraham Maslow. The theory explains the employees’ needs on certain aspects such as self-actualization needs, esteem needs, social needs, safety needs and basic needs. The scholar assumed that a person has strength of needs like a series. For example, a person desires for food then he wants medical and treatment, then he wants a house to live, after that he desires a self respect and finally he wants for intrinsic capabilities(Halepota, 2005).

Herzberg’s Motivation-Hygiene Theory: Fredrick Herzberg and his associates have developed this theory that describes the variables that are perceived to be desirable and undesirable conditions(Kini and Hobson, 2002).

McClelland’s Needs Theory: A famous psychologist David McClelland has developed this theory that describes an individual desires for specific needs over a time period and that decreases after getting the experiences(Rudolph, 2016).

Alderfer’s ERG Theory: This theory has developed by Alderfer that is the extension of Maslow’s needs theory and the five stages of that theory has been categorized into three theories such as Existence needs that includes basic needs and safety needs, ness needs that includes social and esteem needs and growth needs that includes self-actualization needs.

Process Theories:

Process theories describe how the motivation occurs for influencing the employees and process of motivation. The process theories have been analyzed below:

Vroom’s Expectancy Theory: Victor H. Vroom has developed this theory that describes employees are motivated to achieve the goals if they expect that specific actions would be helpful to attain those goals(Capozza et al., 2006).

Adam’s Equity Theory: The theory explains that employees always believe that there is equal relationship between employees’ performances and rewards(Cubbon, 2000).

Reinforcement Theory: B.F. Skinner and his associates have developed this theory that describes that employees’ behavior is developed after completing the functions.

Carrot and Stick Approach to Motivation: This theory describes that employees desires rewards as payment, promotion, other financial and non-financial(Halepota, 2005).

Choosing the Best Motivational Theories for Jack Store:

By analyzing the case study of Tesco management, Maslow’s needs Hierarchy theory and Vroom’s expectancy theory can be suggested for Jack discount stores. These theories have been discussed in the light of Jack stores with benefits and limitation to that store.

Maslow’s Needs Hierarchy Theory: As Tesco established new Jack Stores for selling the discount products it requires new employees to operate such products. To know the needs of these new employees, the company can apply Maslow’s needs hierarchy theory that describes the needs and wants through highlighting some points of strengths. The theory is more effective due to explaining the motivational factors as a whole. The theory can be explained by the following ways for Jack Stores’ employees:

Basic Needs: The first parameter of this theory is to explain the basic needs of employees that find the primary needs of employees in the organization. New employees in Jack Stores want salary for work for eight hours has been identified by applying the theory.

Safety Needs: The needs explain that employees always want security in organizational functions. By applying the theory it has been found that the new employees wants job security and safety for long-term.

Social Needs: The needs explain that the employees desires for social status and honor in the society. It has been found that new employees of Jack store desires for promotion and want to get senior post that increase the social status of them.

Esteem Needs: The needs explain that employees have a desire for self-confidence, self respect and personal worth. By applying the theory, it has been found that after getting the social needs the new employees of Jack stores desires for power and control in the organization.

Self-Actualization Needs: The needs explain the maximization of satisfaction level of employees. The theory finds that the new employees want for developing intrinsic capabilities in the organization.

Vroom’s Expectancy Theory: This theory finds the ways of ensuring motivation through finding the best strategic aspect of attaining the goals of organizations. In Jack Store, there is an aim of selling large volume of product at discount rate to take competitive advantage against Aldi and Lidl. For knowing the motivational ways, this would be best one for Jack Stores’ management. By the application of this theory in Jack stores; employees, the management can understand about the employees’ behavior over other behavior that employees expect and desired for results. The theory can be applied by the following way:

Fig 3: Source:

Valence: It describes the employees’ preference for expected rewards for given outcome. For example, in Jack Stores, the employees are provided promotion as motivation that is expected by employees than incentives and this is called positive valence. There is negative valence when employees get incentives than promotion as this is not expected by employees.

Instrumentality: It describes that a degree to which first level outcome leads to the second level outcome. By the application this theory in Jack stores, it has been found that first level outcome of high performance leads to the second level outcome of promotion that is expected by the new employees.

Expectancy: The input factor describes that a particular action’s probability will lead to the desired outcome. For example, it relates to efforts of high performance than second level outcome of new employees.

Conclusion: (100-120-150)

By analyzing the above motivational theories, it can be concluded that employees should be motivated positively as these increase the productivity and job satisfaction that lead the organization to be succeeded vary rapidly. Employees are now treated as the valuable resource of the organization. it can be suggested that Jack Stores’ management can apply Adam’s equity theory as it will help to create relationship between performances and rewards equally.

Task 4: Business Scenario for Individual Report

 

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Introduction

Business studies are considered an important aspect for a successful organisational business that includes management of individual and resources for enhancing the overall productivity for generating high profits margin. In the current report, a discussion is made regarding business expansion plan done by an organisation named Zylla Limited. The organisation is to providing various services included in the river crossing through ferries. The organisation is presently planning to expand its services with a new ferry for satisfying the increasing demands of the customers. The reports below discuss various fund sources along with different investment appraisal techniques that are required by Zylla Limited for supporting its expansion.

Main body

For a successful business, the organisation needs a steady flow of capital. Finance or working capital can be considered a lifeline for any business organisation. Financing is very significant as the organisation need to invest in a different area for proper business functionalities including payment to be made equipment, resources etc. for Zylla Limited (Brealey et al 2013). However, the organisation can choose to implement long term, short term or mix financing considering their financial needs:

Long term financing

Long-term financing is mainly required by the organisation to acquire equipment requirements, cash flow enhancement, company expansion, and R&D(Adair et al. 2013). Few long-term financing methods that can be applied by the organisation is stated below:

Equity Financing: This technique includes common stocks and preferred stocks. Equity Financing is considerably less risky regarding cash flow commitments than other financing methods. Conversely, this technique is leading to decreasing revenue and dissolution among shared ownership. This type of financing increases the rate of the hurdle as the cost associated is comparatively higher.

Corporate Bond: This is a special bond issued that is established among different organisation for collecting funds for business expansion. Corporate Bond is long-term debt having maturity date usually one year after date of issue.

Short-Term Financing

This type of financing comes with time duration, which is used by the organisation for supporting the organisation regarding increasing payrolls, daily supplies and inventory orders. Some of the Short-term financing techniques are:

Commercial Paper: It is unsecured promissory note that has maturity time nearly of 1 to 364 days pre-noted in money market globally. It is originally issued by a big organisation like Zylla Limited for raising money for its short-term debt (Kahl et al. 2015).

Promissory Note: This is a negotiable method used by the organisation for financing where the issuer establishes issue-less promise by writing a payback for a pre-decided among to be paid to the payee after maturity period or under some precise terms.

As, Zylla Limited is planning to expand its business with a new Ferry with different river crossing services the organisation needs proper financing that can be achieved through long term finance, supporting the organisation with access to funds for encouraging growth in trade of episodic instalments (DAILY et al. 2014). As the long term financing debts taken by the organisation is tied to big up-front payouts, Zylla can invest on the new ferry that will help in attaining immediate growth. The organisation need to pay small instalment that will be helpful for the Zylla to manage is monthly cash flow for performing other business associated operation..

Investment appraisal techniques

For building and expanding the business, an organisation is subjected to different Investments in research and development, expertise, product development, new assets etc. that helps in gaining competitive benefits. Investment appraisal for a business organisation is a collection of various techniques that are used for identifying the investments attractiveness of an organisation (Gotze et al. 2016). Investment appraisal is a quantifiable approach used for understanding the profit earned for the investment made. For calculating and determining the discounted cash flow, techniques like NPV or IRR can be implemented for evaluating benefit value and also to determine alternative methods for delivering.

Net Present Value (NPV): The NPV techniques are used for determining capital budget and for effective investment planning in an organisation by considering the difference between present cash inflows value and current cash outflows value over some time. The formula used for calculating the NPV is Cash Inflow – Cash Outflow. (Baum, and Crosby, 2014).

NPV for Zylla Limited over a time period of 5 year

Table 1: Flow of Cash in Zylla

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Discount

factor

£000

Cost of ferry

1.000

150,000

Cash inflows for five years

Year 1

0.971

55,230

Year 2

0.943

70,045

Year 3

0.915

88,375

Year 4

0.888

79,870

Year 5

0.863

57,555

Sale of decommissioned ferry in year 5

0.863

45,000

NPV= {(0.971*55,230)+(0.943*70,045)+(0.915*88,375)+( 0.888*79,870)+( 0.863*57,555)+( 0.863*45,000)}- 15,0000

NPV=£209973.415

Internal Rate of Return (IRR): It is a metric that is used for calculating the capital budgeting and for estimating profitability by an organisation through its potential investments. The internal rate of return can also be stated as the discount rate which is effective in makes NPV of various cash flows of an undertaking to zero (Cheremushkin,2012). The calculation of IRR relies on the same formula used for calculating NPV. IRR is used mainly for comparing the profitability of new operations with expanding exists. The formula used for calculating IRR for Zylla is:

 

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IRR calculated for Zylla Limited: 39.019% and NPV is 0%.

The IRR result calculated for Zylla is found to be in a percentage that interprets rate of project return generated by the organisation. From the above discussion and calculation, it can be concluded that IRR and NPV techniques can be used by the organisation for calculating the rate of profit. NPV is the most effective and strongest of the two techniques as results generated by IRR can be several which may mislead the process of decision making. Thus, Zylla Limited can use NPV techniques considering its advantages and features.

Conclusion

From the above discussion, it can be concluded that for an effective and successful project implementation proper financing is required so that cash flow for performing various activities to the organisational business is maintained. Considering the case study of Zylla Limited is a service provider it can be stated that for business expansion of introducing a new ferry the organisation must focus on long term and external financing that supports the organisation to reduce the pressure of repayment. The report has also discussed different Investment appraisal techniques used by Zylla for understanding profit earned by the organisation through various investments in five years. From the above discussion, it can be concluded that NPV techniques are the most effective way to calculate and identify the rate of profit using the basic idea.

References

Adair, A., Downie, M.L., McGreal, S. and Vos, G., 2013. European valuation practice: Theory and techniques. Taylor & Francis.

Baum, A.E. and Crosby, N., 2014. Property investment appraisal. John Wiley & Sons.

Brealey, R.A., Myers, S.C., Allen, F. and Mohanty, P., 2012. Principles of corporate finance. Tata McGraw-Hill Education.

Cheremushkin, S., 2012. There is No Hidden Reinvestment Assumption in Discounting Formula and IRR: Logical and Mathematical Arguments.

DAILY, J.E., KIEFF, F.S. and WILMARTH JR, A.E., 2014. Introduction. In Perspectives on Financing Innovation (pp. 13-16). Routledge.

Gotze, U., Northcott, D. and Schuster, P., 2016. INVESTMENT APPRAISAL. SPRINGER-VERLAG BERLIN AN.

Kahl, M., Shivdasani, A. and Wang, Y., 2015. Shortterm debt as bridge financing: Evidence from the commercial paper market. The Journal of Finance70(1), pp.211-255.

CAPOZZA, D., BROWN, R., AHARPOUR, S. & FALVO, R. 2006. A comparison of motivational theories of identification. Social identities: Motivational, emotional and cultural influences, 51-72.

CUBBON, M. 2000. Motivational theories for clinical managers. Nursing Management (through 2013), 7, 30.

HALEPOTA, H. A. 2005. Motivational theories and their application in construction. Cost engineering, 47, 14.

KINI, R. B. & HOBSON, C. J. 2002. Motivational theories and successful total quality initiatives. International Journal of Management, 19, 605.

RUDOLPH, C. W. 2016. Lifespan developmental perspectives on working: A literature review of motivational theories. Work, Aging and Retirement, 2, 130-158.

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