Knowledge management in business refers to the manner in which entrepreneurs use the human resource within their disposal to increase productivity.
This is normally a difficult task as one is required to determine the relevant knowledge within a given area of specialization and thereafter tap the very knowledge through innovations to achieve the required objectives within the firm. While expanding a business to the international status requires the management to undertake a number of activities so as to achieve the success that should come with such expansions (Jeffery 2001).
Knowledge is an asset to the company but it needs to be tapped first before it is exploited, in the process of tapping, the first step is to carry out a recruitment process.
The company that is expanding would most definitely require more human resource, the competence of this contracted people would be in line to laid down qualification requirements and one fact that comes out so boldly in the list of the requirements is normally the academic qualification.
The level of education of workmanship makes management a lot less daunting as the manager would trust the staff with low level decision making and trust that the resulting decision would be an appropriate one. It is thus mandatory that every single person that comes to the company to hold any office meets the academic requirements that are provided by the human resources department.
In laying down the requirements, the human resources department must consider the type of work that would be required in every office in the firm and ensure that the requirements are in line with the same.
Requiring one to hold a degree in chemical engineering to become a public relations officer in an international breweries company would be derogative. As much as the individual is learned, he would not perform the communicative functions effectively in addition to the fact that his knowledge would be lying unexploited.
Introducing a new product to a people that do not know hot to use that very product would result into the targeted market not yielding as expected. It thus becomes mandatory for the firm to improve the level of awareness and not only the awareness of the product but the knowledge of the market in general.
This can be done through the firm’s public relations department organizing seminars to educate the locals on the product and how it would impact on their lives. This makes socially responsible investing necessary. This is a type of investing that every firm must engage in and it is the undertaking in which the firm seeks to support certain local programs that are aimed at benefiting the locals.
HP an international information Technology firm that prides in the production of some of the best computers and accessories has in the past done this through investing in the promotion of literacy levels in Africa. The firm supports schools and sponsors individual bright students through collages and universities.
This they do with an overriding target knowing so well that with an enlightened community, it becomes necessary for the individual to require information processing tools such as computers and that is how their business would begin harvesting.
The other intelligent way of practicing the socially responsible investing is by a firm operating a parallel college in which they recruit the most intelligent students and offer them scholarships. In this way the firm shapes the very knowledge that they want their staff to posses as their curriculum would be formed on the basis of that which they will call for in the company.
This ensures that the firm will have individuals who are relevant to the operations of the firm and would directly be useful in the process of production. Such individuals would demand a little less in remuneration than individuals who privately took themselves through school. This therefore becomes a way for the company to save money as because it employs self trained loyal staff. This reduces the expenses of the firm.
Knowledge is dynamic and this means that what is relevant today would not be tomorrow and what is relevant in America would not be relevant in Africa. With an expanding firm it becomes prudent for its management to determine the challenges that time and differences in topography presents in the daily operations. Developing conventional ways of solving problems and market operations would fail the firm.
It calls for tailor made strategies for every single region and time. To effectively impact timely knowledge to the employees, the company is required to carry bout seminars and trainings on a regular basis. These seminars keep the staff abreast with the current trends of conducting business.
It would also be of significance if the firm was to allow employees get themselves study leaves for them to further their studies. Increase in the levels of study makes the employees more relevant to the management of the company.
With proper management of knowledge within the staff, the firm is likely to benefit more and some of the benefits that arise as a result of proper knowledge management include:
Time management
There results proper time management in the firm. The time that would be spent rectifying mistakes made by inexperienced employees is rather used to further the process of production. In the production process, time is of essence as the competition is also rife in the market, one would thus need to produce goods with the immediacy that is necessary and get the products delivered to the market in time.
Reduced cost of production
With proper management of knowledge, the production costs get reduced. This is because there is effective utilization of resources. There are no unwarranted estimations that result in wastage of resources that are of essence in the process of production.
This translates in the firm making more profits, further more the knowledgeable staff that the firm would be operating with do not normally require exorbitant allowances, this is when the allowances are put in comparison to the role that they play in the production process (Britton & Jorissen 2010).
In a nut shell, it is cheaper to operate a knowledgeable workforce than to hire an inadequately knowledgeable work force that will keep creating looses for the firm through breakages and misappropriation.
Survive competition
A firm that has the managers effectively manage the knowledge would always be a head of their operational game. Market researches are conducted effectively and within the time lines and at very low costs. Innovations that the staff comes up with are informed and of significance with direct use in the process of production. Below is a brief knowledge management outline:
Knowledge in a firm is an intangible asset, intangible assets are defined as being identifiable non monetary assets without physical substance, in which case the phrase “without physical substance” means that they are assets that can not be seen, felt or physically measured. Yet an asset means a resource that can be controlled by the entity to generate more revenue.
In a nut shell an intangible asset is therefore majorly a concept that can be turned into revenue. An intangible asset is thus identifiable only when it is separable i.e. it can be separated and sold, transferred, rented or exchanged. (Badaracco 2003) another criterion for identifying them is through contractual or other legal rights.
From the above definition, it is realized that it perfectly covers the definition and the roles that knowledge plays in a given company, knowledge can never be measured physically but the effects it has in the firm can indeed be measured and the results felt. The resulting ideas from knowledge can be packaged and sold and this quantifies knowledge as an intangible assets.
Microsoft is an international firm that prides itself in the production of soft wares; majorly sofa wares which are computer programs that are built from scratch based on the knowledge of the builder. This is a type of trade that purely banks on the level of knowledge of the human resource it hires. In such firms, it pays lot to hire highly knowledgeable individuals that would be of relevance to the job specifications in the company.
Examples of some of the intangible assets would include patents, customer lists, copyrights and computer software. Some of these can be included in the financial statements of a given firm. The sale of computer software would indeed be included in a financial statement.
Computer software is an individual’s intelligence converted into programs acceptable to the computer platform. Intelligence is an asset that one would not see, touch or physically measure yet the products developed from the same are of great value.
Looking at these intangible assets in this light, that they can be converted onto tangible assets then one would rightly argue that they should be included in the financial statements of the company. However, such assets as the market strategies that the firm is preparing to undertake that are in deed products of knowledge should never be leaked out of the firm.
This can be done through their inclusion in any book of facts in the company. Experienced managers do not need to jot down the undertakings that they have planned, this is because not every member of staff can bear the required secrecy necessary for the success of the company and should the managers not take such precautionary measures, their ideas would be developed by yet another competing firm.
Through the knowledge of the staff, internal brands are born; internally generated brands are those product brands that are unique to a given firm only. The uniqueness comes into play owing to the fact that they are generated right within the company. They are not bought from outside then sold from the firm but they are those generated from within the company (ibid).
They are born of the intangible assets within the firm. Software manufacturing companies are most commonly known for this: there are avast, kaspersky, avira among others, these are soft wares manufactured by different companies thus the difference in uniqueness.
Lots of debates have been put forward criticizing the inclusion of these internally generated brands into the financial statements. Internally generated brands are the competitive advantage that a firm would ever have (Richard 2003).
A super store such as the American Wall Mart specializes in the sale of quite an assortment of goods. But when they realized that there was a better way of consolidating their customers and manage them better, they introduced the Sam’s club which is a members only coffee club. From an experienced manager’s point of view this was a move that resulted from the level of knowledge ability of the staff.
It is therefore a product of the intangible assets and now is a physically present asset. Inclusion of the proceeds from this coffee shop would show positive growth and share holders in the firm would get higher dividends but competitively it would be suicidal as it will be an open revelation of the undertakings of the firm and their competitors would all come up with similar ideas.
But whichever way one decides to look at it, their inclusion would have both advantages and disadvantages and these are:
The main advantage lies on the fact that not a lot of monetary resources would be used in their creation. The normal monthly salary of the employee is all it takes to make an employee working in a given firm and employ the best of his/her intelligence to the firm. The resulting products from an employee’s creativeness would generate lots of bookable income to the firm.
The management should just ensure that their staffs are motivated. Motivation can be improved by creating a good working environment at the work place, training employees so that they have the required skills and giving them both material and non material benefits. Therefore their inclusion into the books of account of a given firm would always translate into profits for the given firm.
It is mandatory that a company books all the monies that come into the firm and those that leave thus revenue and debit. A lot of money is put into place to come up with an internally generated brand.
From inception of the idea to the time the idea is turned into a product and later when the product is to be advertised a whole lot of the company’s money is spent, for accountability purposes it is only worth the while that the company includes all these in its books of account (Donaldson 2007)
In conclusion, operating a multi national business would not only require availability of capital. Each and every region presents strange challenges and this calls for products that are unique to that very market. This is a concept that would only be understood when the company employs effective management of knowledge that is at their disposal.
When Samsung discovered the African market, they understood the problems of the continent, among which were frequent power failures and poor infrastructures. They thus settled down and accustomed their goods to resist these.
Currently, their products are designed to address the challenge of poor infrastructure in Africa and the preference for Samsung home appliances in Africa is of no match to any other western product in the content. This is a clear indication of results of proper knowledge management in business ventures that are going international.
Reference list
Badaracco, J. 2003, Defining Moments: When Managers must choose between right and wrong. Harvard; Harvard University Press.
Britton, A & Jorissen, D 2010, International Financial Reporting and Analysis. Oxford University Press, oxford.
Donaldson, S 2007, Income taxation of individuals: cases, problems and materials,St. Paul University Press, Thomson West.
Jeffery, F 2001. Introduction to Business Law, Boston: Boston University Press, Boston.
Richard, B 2003, Vocational business training, developing and motivating people, McGraw-Hill Publishers, New York.