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MGT501 Business Environment

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The general environment consists of six (some now argue, seven) forces, summarised in the acronym, PESTL. political economic environmental social technological legal.

The general environment consists of large, macro forces that impact all organisations, regardless of the industry or sector that they occupy.

As a manager you must factor these forces into your analysis of strategy.

The second part of appraising the external environment is called industry analysis. This involves analysing the specific industry context of your organisation. Here, we use a piece of theory developed by Michael Porter, a leading figure in the management discipline. Porter’s five forces

framework helps us to identify the attractiveness of an industry using an int grated framework of five competitive forces (albeit in a fairly artificial, clinical way):

The threat of entry - how easy is it to enter the industry. the threat of substitutes - substitutes are products or services that offer a similar benefit to an industry's products or services.


the bargaining power of buyers - if buyers are powerful, then they can demand cheaper prices, or product or service improvements, which may reduce profit.

the bargaining power of suppliers - suppliers provide inputs to production of a product or service. Supplier power is increased if they are few in number, or where switching costs are high, and the extent of rivalry between competitors - the more competitive rivalry exists, the harder it is for incumbants.

In the first article, Reeves, Love and Tillmanns from the Boston Consulting Group and RWTH Aachen University, Germany, argue that managers need to match their strategy-making processes to the specific demands of their competitive environments.

They suggest that, [in a VUCA environment], industry analysis can be narrowed down to two critical factors:

- predictability: how far into the future and how accurately can you confidently forecast demand, corporate performance, competitive dynamics and market expectations?, and

- malleability: to what extent can you or your competitors influence those factors?

Answer:

A business culture portrays the professional traits that a company implements and as such gives direction on how the employees and customers relate on their day to day basis (Sull, Homkes, & Sull, 2015). It is important for Sam to develop a mission strategy as it will enable him in formulating functions and beliefs with regards to his IT enterprise and such an approach may help the company in achieving its organizational goals. One reason why corporate culture is vital since it is the driving motive responsible for how the company operates its activities and as such plays a crucial role in the formulation of a business strategy (Govindarajan, 2016). It is the corporate culture that will enable Sam to determine how much regarding the risk his company is willing to trade with regarding research and development, developing a new pool of clients and in purchasing new equipment for his IT company.

Topic seven elevator pitch

Walking both sides of the street

With the development of technology in the 21st century, it has become essential for businesses to adopt technology in their business operation for purposes of increasing efficiency and also to help meet the current needs of the customers (FitzRoy, Hulbert, & Ghobadian, 2012). The use of company websites has become the norm for most businesses where companies provide the products they sell together with their prices and means of delivery. Customers are no longer willing to go window shopping but want to do all their shopping at the comfort of a phone or a computer. Thus, it would be strategic if the company develops a website that has all the products sold by the company, their descriptions, any discounts offered and means of delivery if it wants to improve its sales (Reeves, Love, & Tilmanns, 2012).

The case studies

Can you win back online shoppers?

The issue of showrooms seems to have aroused interest and concern to Bertice who according to her opinion it is a cause of significant problems for most retailers particularly those in the field of electronics (Teixeira & Gupta, 2015). Bertice observed how Amazon had revolutionized the trade by making it possible for shoppers to obtain products through online shopping. In her opinion, a counterstrategy is essential where she plans to level the battlefield. As opposed to Bertice, Ben has a different view; instead, he is of the strategy where the company should give discounts, and Benjy’s app would help them achieve this.

Ben also advises on the concept of matching online prices. Ben illustrates how many suppliers will be strategic in putting a price ceiling on the published online products and this will lure online customers as the company will have products for both the online and offline clients and this will help increase the already dwindling sales.

Stanley who happens to be the CEO of the company holds a different view. He is of the idea of promoting products considered to be of high-value. He also advises on the importance of educating customers about high-value products and is opposed to having such products being floundered in a retail landscape that appears overwhelming. Ben interrupts by stating how consumers will continue with their habit of showrooming as long as they find lucrative deals online. Stanley still holds his position by saying that they could match the prices (Teixeira & Gupta, 2015). According to Bernice, matching the prices seems an expensive affair that could consume a lot of time to come to suffice. This is because Benjy is a large business enterprise and any changes implemented could take time before being effectuated.

Recommendations to Benjy’s board

Although Ben Jenson seems skeptical about the whole idea of showrooming as he fears that it may drain away the profits, Stanley’s advice of harnessing suppliers who would ensure regular supply of exclusive products to Benjy’s is prudent. Benjy’s products require differentiation at the highest level with the comparison of online products. The use of surveys and research that is in-depth may help the company to see the logic behind most consumers doing online shopping while others opt for showrooms. The notion that price is the primary determinant driving most consumers to shop online is not logical. It could be that other many reasons make consumers buy online, for instance, products being out of stock on some occasions or problems arising out of product assortment could affect Benjy’s sales negatively. The key to seeking and finding answers to such questions could be helpful in assisting Benjy’s crack the nut and helping it win the trust and confidence of showroomers. Also, Benjy’s will be better positioned to understand how to tailor and cater to the needs of people who are passionate about doing their shopping in physical retail outlets.

Benjy’s should also focus its attention on curation functions and efficient service delivery if it is to establish a competitive edge over its competitors. Research and studies conducted reveal how customers value interacting with sales representatives that are well acquainted with the products particularly if the customers are trying the product for the first time.

Integrating interceptions that are in-store with an online plan could be meaningful as both the in-store and online plan supplement each other. This will leave the customers with an open perception of Benjy’s products. Benjy’s can also utilize its website in diversifying its in-store procurement enabling customers to choose the best regarding product and quality which will make them satisfied and come back.

Management competencies

The adoption of technology to help consumers shop online and choose the best products regarding quality and price has become an essential concept that businesses cannot ignore. The emergence of business websites that facilitate electronic commerce has become a crucial component if the companies are to succeed and compete favorably in their respective markets. This is an emerging trend in the contemporary business practice, and with the increase in the number of shoppers who prefer doing their shopping online, it is fundamental for businesses to adopt and implements such technologies.

Can a Strong Culture Be Too Strong? 

Parivar, a company, considered to be mid-sized stationed at Chennai dealing with providing IT services seems to be struggling with high attrition rates problems. The head of operations at the company, Kumar Chandra asks of the long list of employees who were considering exiting the company. It is shocking that more than 100 workers were considering leaving the company as they had given notice (Garvin, Natarajan, & Dowling, 2014). Kumar is worried about the rate of losing employees that the company is facing compared to how fast they are attracting new talents. The turnover rate at Parivar stood at 35%.

Vikram however, seems unconcerned by the problem at hand and gives a justification that it is not the fault of Parivar but instead the labor market in India. Vikram goes further to state how it might not be a bad thing basing his justifications from the fact that studies reveal that the mobility of employees within the industry helps such a sector to become innovative.

Indra on the other hand with cost factor in place may not be the best direction that the company wants to follow. According to her, the people had revealed the so-called love culture by Sudhir, sensitivity to personal and professional issues was no longer effective and relevant. Employees according to Indra no longer wanted to be associated with family stuff at work. Vikram, on the other hand, believes that that is the company’s selling point and that with the inclusion of managers and Sudhir, they will give an ear to all employees and that all people at Parivar are valuable and vital. Indra remarked that such anticipations might lure new talents into the company. However, it could not hold them for long now that the competitors were offering lucrative packages that were more by 30%. Vikram failing to get convinced revealed that the company needed to get bigger and adopt the people support function by demonstrating that they were fully dedicated to a caring culture.

Recommendations

The high attrition rate at Parivar is a clear indication that the company is not doing well enough of satisfying the needs of employees and it is thus for Indira to support and be at the forefront in implementing the People Support function. With such a move, Indira will be better positioned to facilitate her, and her team recognizes and solve problems that people are facing before they exit the firm. It is also crucial that Indira critically evaluate the new function before moving forward to implement such an initiative. Indira has to be straight on how to implement such a program since if workers view it as hand-holding or a bother in their lives as demonstrated by Amal, then such a program will fail to achieve its desired purpose and objective.

Culture should be a voluntary aspect and not mandatory on the part of employees. The People Support Idea at Parivar should not advocate for cultism instead it should be implemented in a way that is deemed fair and transparent. The People Support provides an opportunity to demonstrate that the leaders at Parivar treat all people equally.

Management competencies

The need to appreciate and promote a culture that encourages creativity and innovation in helping the company solve some problems facing it can be termed as one of the management competencies. It such innovations that a solution lies that can help transform the way of doing things in a company leading to an absolute competitive edge for the company. The Human Resource should also streamline salaries to make sure that they are what is being offered in the market. This may help in curbing many employees considering moving to other companies due to lucrative salaries in such companies.

References

FitzRoy, P., Hulbert, J. M., & Ghobadian, A. (2012). Strategic management:The challenge of creating value. Retrieved from ebook central: https://ebookcentral-proquest-com.ezproxy.csu.edu.au

Garvin, D. A., Natarajan, G., & Dowling, D. (2014). Can a Strong Culture Be Too Strong? Havard Business Review, 92(2), 113-117.

Govindarajan, V. (2016). Planned Opportunism. 94(5), 54-61.

Reeves, M., Love, C., & Tilmanns, P. (2012). Your strategy needs a strategy. Harvard Business Review, 90(9), 76-83.

Sull, D., Homkes, R., & Sull, C. (2015). Why strategy execution unravels-and what to do about it. Havard Business Review, 93(3), 57-66.

Teixeira, T. S., & Gupta, S. (2015). Can You Win Back Online Shoppers? Havard Business Review, 93(9), 117-120.


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