1. To: Jeremy Smith
From: Victoria Rock
Date: April 14, 2012
Subject: Management Theories
In researching Management Theories in the areas of Human Resource regarding employee
empowerment and Marketing and the theory of penetration pricing, I found two companies; Life
Healthcare for the empowerment culture and Apple with penetration pricing.
 In the Human Resource area, moving toward an employee empowerment culture.
Life Healthcare has achieved great results for the company in its revenues,
operating profit, normalized earnings and cash generated from operations which
have all increased. (Group Overview) The theory of empowerment is the process
in which individuals or groups gain power, access to resources and control over
their lives. The specific actions that empower employees are the freedom to
direct their own work. As the employees gain greater direct control over their
own work, their performance improves. (Empowerment: What is it?, 1999) This
action is in the values of Life Healthcare and has been used to improve the overall
performance. The results achieved by this company have been the success of its
financial results, and their abliatity to commission two new hospitals as well as
acquire a third. (Group Overview)
Considering the success of this company and their use of empowerment of
employees, if I was senior manager I can’t think of anything differently that I
would have done. Success speaks for itself.

2.  In the marketing area, the theory of penetration pricing
The theory of penetration pricing is the charging of low price for a new product to
attract customers, gain a large sales volume, and build market share. This strategy
helps keep competitors out of the market, and creates a good name among early
buyers of the product. (Penetration Pricing) Apple has used penetration strategy
in the launch of its 3G iPhone. The phone has been priced at $199 compared to
earlier launches of $599. The reason for the use of this strategy is that Apple does
not have a large share of the Smart Phone market. The theory being followed in
penetration pricing is to achieve a large market share. The assumption by Apple
is that the market for smart phones is price sensitive and is use by Apple because
of is small market share. The results achieved are satisfactory and the total
number of units sold as of April 2010 was 50 million since its launch in 2008.
Due to the success of the penetration pricing iPhones are now available for $99
with the purpose of gaining additional market share. (Baig, 2008)
If I had been senior manager, I would have decided on the exact market share I
wanted and fixed a penetration price at that level. Apple has left a large number
of its customers unsatisfied because they paid a much higher price then what the
product is sold for now. By studying the competitions price I would have decided
on a penetration price lower than theirs and stuck with it. Customer satisfaction
plays an important role and the pricing should satisfy the customer.

3. Reference
Baig, E. C. (2008, July 10). Apple's new iPhone 3G: Still not perfect, but really close. Retrieved from USA
Today: http://www.usatoday.com/tech/columnist/edwardbaig/2008-07-08-iphone-3g-
review_N.htm
Empowerment: What is it? (1999, October). Retrieved from The Journal of Extension:
http://www.joe.org/joe/1999october/comm1.php/INTEMPOWERMENT
Group Overview. (n.d.). Retrieved from Life Healthcare Group:
http://results.lifehealthcare.co.za/life_healthcare_ar2011/go_purpose.php
Penetration Pricing. (n.d.). Retrieved from NowSell.com : http://www.nowsell.com/marketing-
guide/penetration-pricing.html