Sim336 Strategic Management: Responsibilities Of Assessment Answers

Answer:

Task 1: The organizational purposes of businesses

Introduction

Different stakeholder groups

Stakeholders are the main people on whom the entire ongoing business relied on. These people are both within the organization and outside the organization as well. The different activities of the organization are closely linked with these main people who influence the organization in big ways (Cumming and Worley 2014). This context can be seen from a broader scenario when these people will be looked from the perspective of the organization, the marketplace and the concerned industry sectors. These main people are called as the stakeholders. They are very important in day to day activities of all the organizations. There are two implications of the stakeholder groups. Either they can influence the performance of the organizations or they can be influenced by the same. There can be many types of stakeholders such as the owners, shareholders and investors of the company, employees, managers, suppliers, customers, creditors, regulators and the local community in which the particular organization operates. Since, their opinions have a great value in the decision making, it is important to know what they want or what their demands are.

Every organization has some responsibilities to these stakeholders and likewise DFS Group also has some serious responsibilities to their stakeholders (Lienert, Schnetzer and Ingold 2013). There are generally two types of stakeholder and these two are internal stakeholders and external stakeholders. Internal stakeholders are those people who operate within the organizations and influence their business performance. They can be identified as the managers, CEO and the employees as well. The external stakeholders of the business organizations include the different people like the vendors, suppliers, creditors and other people not directly associated with the organization (Lienert, Schnetzer and Ingold 2013)  The different responsibilities that can be associated with the organization are-

Internal stakeholders

Owners/shareholders

The owners and shareholders have to increase their shareholder values so that they can expect better growth and dividend from the market.

Employees

The employees can expect better wages and facilities from DFS Group as it will motivate them to work better for the welfare of the organization. They also expect work satisfaction and a healthy working environment from the part of the organization so that they can maintain a proper work-life balance (Wiese 2015). They want to go through a continuous organizational learning that will improve their skills and work efficiency.

External stakeholders

Customers

DFS Group has to deliver their customers with proper quality products like the luxury brands. All the five pillars of the luxury brands have to of best quality. They have to keep in mind the customer satisfaction always.

Suppliers

Both the local and international suppliers have to dealt with efficiency. They have to honor the contracts made with their suppliers so that they can be assured of best materials all the time.

Community

One of the most important responsibilities of DFS Group is to safeguards the community in which they work. The people of Hong Kong have to be provided with the best services and they have to perform their corporate social responsibilities as well.

Government

DFS Group has to obey all the employment laws that are made by the Hong Kong government.

Some kinds of conflicts of interest among stakeholders may arise if there are some contradictory things happen between the different stakeholder groups (Lienert, Schnetzer and Ingold 2013) DFS Group may make some decisions regarding their product suppliers which the other stakeholders may not like. Suppose, if they decide to buy the raw materials from the cheapest supplier of goods and it might affect the product quality. This will not be liked by the customers surely because they will not allow their money to be wasted.

Ethical responsibilities 

Ethical responsibilities are one of the most crucial aspects in maintaining the reputation of the business organizations (Chandler and Werther 2013). The organizations have to maintain certain code of ethical practices towards their employees, customers and the people associated with them. They have some social responsibilities and besides that they need to maintain these values as well. An organization is entirely dependent upon how is its reputation among its customers. DFS Group is no exception of that. They have to maintain some ethical responsibilities that are related to them in the perspective of their clients, employees and consumers. The responsibilities are also towards their macro and micro environments under which they run their business (Van Wormer and Besthom 2017).

There are some important factors that are responsible behind the maintaining the ethics of the organization (Sekerka, Comer and Godwin 2014). It is a proven fact that all the organization do not cut down their moral and ethical standards when the time is good for the company and everything is going well. They have to be sure that DFS Group should value their customers and employees as they value other important things. They should always look after the welfare of the employees and encourage them in many ways. The way of motivating the employees works as a stimulator as well (Sekerka, Comer and Godwin 2014). DFS should make it sure that no employee is involved in any kind of threat, forgery or anything of serious importance. If this happens this will harm their reputation a lot and result in loss of the numerous clients and customers. This may also result in the loss of faith in the branded luxury products of DFS Group. An employee outrage might take place if they do not value their employees properly according to their benefits and monthly wages. DFS Group can also put into practice some code of ethics for the international customers so that they can behave with their customers fairly keeping those guidelines in mind. DFS Group also has to be as transparent as one can be in order to deal with the customers, employees, service providers, suppliers and the surrounding business environment (Sekerka, Comer and Godwin 2014). It can be given an example that the consumers can treat some business judging to be unethical as they practice some unethical things. Thus, DFS Group should judge the business environment properly so that they can survive in the competitive market.

Task2:The nature of the national environment in which businesses operate

Mixed economy contains the elements from capitalized economy as well as the state economy (Meade 2012). In the present scenario, most of the countries are implementing mixed economy. Countries such as United Kingdom are being benefited from the mixed economy. Allocation of resources in the mixed economy is most effective than the other types of economy. In the mixed economy, private and government participation are being promoted for the effective allocation. This is one of most prime advantage of the mixed economy where, the shortcomings of the either parties can be rectified or covered up by the other. Being a mixed economy, decisions are being determined by the marketing forces according to the basic principles of supply and demand in the United Kingdom (Hildenbrand 2014). It enables the consumers with having more options for their buying decisions.

However, government also has a key role in the mixed economy. It is quite normal that, private forces will take decisions on the basis of profit. Generation of profit is the main motive of the private sectors. This may have negative impact on the social welfare. Thus, in order to provide equal basic facilities to every stakeholders of the country, governments provide the basic facilities such as health by their own (Gibbons and Roberts 2013). Education may also being included in the service provided by the government. It helps in effective and equal allocation of the resources among all the people in the country. In many cases, it has been seen that, the decisions taken by the private sectors are being influenced by the government. In the United Kingdom also, there are various legislation regarding the competition and other aspects in the market are being introduced. Private sectors have to operate and take decisions which will adhere with these legislations. Thus, in the mixed economy, resource allocation are mainly done by the private sectors, however government plays the role of guiding or influencing their decisions (Gibbons and Roberts 2013). The main motive of this economy is to avoid the inequality in allocation of resources.

Impacts of fiscal policy on the business organizations:

• If the public expenditure of the government is more, then it will have favorable impact on the business organizations. It is due to the reasons that, increase in the government spending will help in creating more government jobs. It will eventually increase the purchasing power of the customers. Increase in the government expenditure can be made on the infrastructure sectors (Arrow and Kruz 2013). Therefore, construction of infrastructure will generate more jobs which will again increase the purchasing power of people. Therefore, increase in the purchasing power will increase the demand of the customers. Organizations will be benefited from the increase in the demand.
• The opposite phenomenon of the above discussed situation will have the negative impact on the business organizations. Decrease in the government expenditure will reduce the rate of spending on the infrastructure and social welfare. It will lead in low injection of money in to the system. Rate of recruitment in the government jobs will also be reduced. This will led to decrease in the purchasing power of the customers (Hansen 2013). Thus, the revenue or sale of the organizations will be affected due to low demand.
• Taxation is another mode of fiscal policy. Government may impose high rate of tax which will reduce the purchasing power of the customers (Fair and de Boissieu 2012). In addition, decrease in the rate of the tax will increase the real income of the customers. It will eventually increase the purchasing power of the customers. During the last economic crisis, government of United Kingdom reduced the taxation rate to increase the demand in the market. This year, government will determine the fiscal policy according to the condition of the market after Brexit.

Impacts of monetary policy on the business organizations:

• Monetary policies are being implemented by the central bank by determining the rate of interest (Stein 2012). Increase in the rate of interest will take away more money from the people and eventually reduce the purchasing power of the customers. It will have negative impact on the business organizations. Moreover, reduction in the rate of interest will increase the purchasing power of the customers. Decrease in the interest rate will enable the business organizations to take loans and credits. It will lead to more inflow of money in the market.
• Bank of England determines the rate of interest in the United Kingdom. At present, government has only set the target of inflation being 2 percent. Bank of England will determine the interest rate according to that (Schularick and Taylor 2012).

Impacts of regulatory legislations on the business operations

Various regulatory policies including competition act, 1998, office of fair trading, 2002 and companies act, 2006 are being introduced to regulate the marketing and operating activities of the business organizations in the United Kingdom. Sainsbury is one of the leading retail organizations in the United Kingdom. They operate in the market by complying with the rules and regulations related to their business. One of the notable business legislation is competition act, 2006 (Whish and Bailey 2015). This act is being introduced to prevent creation of monopoly in the market. Any undue breach in the competitive market will be prevented under this law. Mergers and acquisitions and other business strategies will be looked after to check that it will not affect the competition in the market. Sainsbury will not able to offer predatory pricing to attract customers and they have to maintain their pricing policy according to the market price.

Adhering with these legislations, Sainsbury have to maintain fair and transparent organizational policies and practices. Generating of more innovative ideas due to barrier in the pricing is another impact of these legislations on them. Employee welfare and providing good quality to the customers is another important implication on them. Complying with the companies act, 2006 helps them to take in to consideration the interests of all the stakeholders of the organization.

Task 3: The behavior of organizations in their market environment 

Concept of oligopoly can happen in a market when there is only a few sellers and a huge number of buyers. This made the sellers having the upper hand over the buyers (Okuguchi and Szidarovszky 2012). One of the main characteristic of oligopoly market is the interdependence of the competitors. Decision of one competitor in the market effects the decision of others and vice versa. Extensive promotional activity initiated by one player will lead to the same initiatives from the others. Barriers of entry are there in the oligopoly market which leads to the presence of only a few firms in the market. Pricing strategy of any firm will be influenced by the others and vice versa. One of the main disadvantages of oligopoly market is the creation of cartel by the firms. Due to the presence of a few firms, all the firms come in to a agreement where they create virtual monopoly collectively.

In the oligopoly market structure, organizations tend to intentionally reduce the product output to maintain an artificial deficit in the market. It helps them to charge higher price for the products. Due to the presence of a few competitors in the market, they can determine the market price by their own through the formation of cartel. However, in some cases, cartel is not being formed and the organizations charge their product accordingly. In that case, pricing decision of one organization effects the decisions of others in the market to maintain the market share.

Market structure affecting the price elasticity

Price elasticity of supply refers to the ratio in which the supply of the product changes with the change in price (Caldera and Johansson 2013). If the supply of the product of any particular organization is elastic to the change in price then the organization will likely to change their production process with the change in the price. In the case of Sainsbury, supply of retail goods is highly elastic to the change in price. Thus, if the prices of a certain retail item increase then they can immediately increase the supply of the product and vice versa.

Price elasticity of demand refers to the change in the demand of a product by the change in its price. If the product of an organization is highly elastic to price then it will be difficult for them to change the price frequently (Thimmapuram and Kim 2013). In the case of Sainsbury, retail goods are highly elastic in nature due to the presence of several other retailers in the market. Thus, they cannot able to increase the price of their products as that will make the customers to go for other substitutes. Thus, Sainsbury has to follow the market determined price rather than determining the price by their own.

PESTEL Analysis

When judging the business organization, it is of utmost importance to judge both the micro and macro environment so that the pros and cons of the particular organization can be sorted out. In order to judge the macro environment of an organization, it is indeed relevant to carry out a PESTEL analysis of the same (Yüksel 2012). The different factors like the political, economical, social, technological, environmental and legal conditions that surround the organization have to be discussed.

Political factors

As Hong Kong is basically a politically stable country and enjoys free rights in most of the cases just excluding the foreign affairs and defense; there are no such political barriers that could prevent DFS Group to undertake their business all over the country and the world at large. They have to be updated with all the political events that are going on throughout the country and utilize from the systems that are taken up by the government to help the business organizations (Yüksel 2012). 

Economical factors  

The economical factors are very important in determining the various aspects of operating of DFS Group. It is noteworthy that they have their own stores across the whole country. They participate in biddings in the biggest cities whenever they feel the need to get rid of any stagnate product. DFS also use many media sources for the marketing of their products. These media sources include Electronic Channels and Print Media Channels (Yüksel 2012). They use mediums like television, fax and telephone to market their products. Whereas, the different Print Media channels they use are magazine, websites and newspapers. In this way, they collect some revenues that help to stabilize their market value. Besides these things, the recent recession shows a downward shift of DFS regarding sales of their products (Yüksel 2012).

Social factors

The social factors include that DFS have to assess the needs of their customers properly so that they can deliver them their desired goods. The society is comprised of different kinds of people so it is important to meet the requirements of those people. This will help to increase the reputation of the organization (Yüksel 2012). They have to take care of their employees that are a key to the motivation for the other people of their society. The social demographic factors have to be kept in mind as well by DFS Group as to what percentage of their products is needed by the men, women and children (Yüksel 2012). 

Technological factors

The important technological factors that are important in this context that they use the fastest computers that work on the fastest manufacturing machines. They also use the RFID technology so that they can assess the technological factors very easily and swiftly (Jia et al. 2012). They have the online consumers who order their requirements through their website and they use the recent technologies like online shopping, bar coding, and computer aided designs that help them to progress in technology (Yüksel 2012).

Environmental factors

The environmental factors include the some socio-cultural factors like the demographics of the operating areas and how they handle the customers of different regions. They also have to take into consideration the climatic features of the countries they operate in. these assessments help them to stay ahead of their competitors (Yüksel 2012).

Legal factors

There are some important legal factors like the age discrimination and disability discrimination legislation, increasing of the minimum wage and the importance of recycling; the recent laws made in Hong Kong are the legal factors in this context of DFS Group (Yüksel 2012).

Task 4: The significance of the global factors that shape national business activities 

As all the countries are independent in this world and they have to depend on each other for many things, it is of utmost importance to support one another’s economy. The most important thing in this aspect is the export and import policies of the countries (Feenstra 2015). There are many aspects that a country has to focus on like the health services, military expenses and wages of the employees. It is impossible to cover all these things by the taxes only. So, they need to borrow money from other countries.

One of the most important features to sustain the economic balance is to involve in international trade. The world economy is so competitive and they have to keep their position and focus on their strengths to stay in this competitive environment. The role of the international trade has always been vital from the colonial and post war period. The role of the European Union has been very significant as well in determining the economical stands of the country. The important things that have to be noted in this context are about the economic integration and the global markets (Feenstra 2015).

The international trade helps to broaden its horizon by and widen their markets so that they will not be limited within the concerned country. They would be able to gain a steady market from their country’s customers but they would not be able to grow internationally. When the companies in UK decide to trade outside the country, it can produce their goods at a lower expense. The availability of various materials from other countries is also a factor in determining the influence of international trade in UK. The factors of Gross Domestic Product (GDP) and Gross National Product (GNP) and the unemployment in the UK are very relevant (O’Riordan 2014). It is important to be noted that UK is an important member of the some economic-based organizations that are Commonwealth of Nations, European Union, G7, G8, G20, International Monetary Fund, World Bank and others. The business services sector has hold over 70% of the country’s GDP. The causes of unemployment have to be found to apply a remedy to it.

Descriptions of the global factors’ impact

Transatlantic Trade Investment Partnership (TTIP)  

The Transatlantic trade investment partnership has greater influence on the UK economy. It has been seen that UK has exported products amounting up to £39 billion and the imports have been up to £ 30 billion (Bendini and de Micco 2014). This has impacted on the foreign direct investment (FDI) as well. More international companies are attracted to invest in UK. It is also a factor that the total import amount of UK from EU has been £200 billion in the year 2011 (Bendini and de Micco 2014). It was recorded as six times higher than the US. TTIP also allows covering some of the health services of NHS.

BRIC countries

United Kingdom is generally allied with the European Union but it has been receiving threats from the emerging economic power in the world the BRIC countries that is comprised of Brazil, Russia, India and China (Gough 2013). UK has been receiving threats from these countries in terms of markets for the product export and growth in GDP. The different sectors in UK will feel an impact of this power shift in supplying the raw materials in this competitive market. This may also cause in price rise.

WTO

The World Trade Organization has a big role in determining the economic progress of the various countries and impacts of certain policies on them (Matsushita et al. 2015). The very recent event of UK leaving the EU will have a large impact on the economy of UK (European Union - European Commission, 2017) The decision of Brexit will have long lasting implications on the economic factors such as the consumers within UK may have to pay up to £9 billion (Matsushita et al. 2015). . It is a common concern that the departure from the EU would put question marks on the currency reserve status and it could result in deterring of foreign direct investments of the country.

Benefits and drawbacks of the EU policies

There are some policies of the European Union that have large implications on the various business organizations doing business within United Kingdom (European Union - European Commission, 2017) These policies can be identified as the EU Competition policy, Common Agricultural Policy, Enterprise policy, CE Marking, free movement and others (Puetter 2012).

EU Competition Policy

The Competition Policy of EU has made some guidelines according to which the companies have resolved to put a limit to the competition in the free market. Some big companies within the UK can make some agreements so that they can restrict their markets setting a set of rules for their own (Golub 2013). The big companies in the same industry can be merged permanently or temporarily so that they can legitimately provide to expand their markets and thus the consumers can be benefitted (Golub 2013). Financial support is available from the UK government when some organizations suffer from economical instability and cannot manage in the competitive market (Anderson and Simester 2013).

Common Agricultural Policy

The common agricultural policy of the European Union has some very important implications in the economy and growth of businesses in United Kingdom (Zanten et al. 2014). They can get the subsidies on agriculture and support for regional development. The United Kingdom is supposed to be big contributor of the EU budget because the agricultural opportunities are smaller because UK is mainly an urbanized country (Zanten et al. 2014). The EU subsidies to any country depend on how big the agricultural sector of the particular country is. As per the question of Brexit, the cabinet declared that if UK left EU, it could fund more money on agriculture (Inglehart and Norris 2016).

Enterprise policy

The Enterprise policy of the European Union has focused on improvement of the small business enterprises and motivates their entrepreneurship (Bridge and O’Neill 2012). The small businesses have to be encouraged so that it can produce better results in the future for a better production rate. Some of the important business initiatives must be supported within the UK so that the market can be shaped according to that. The areas in which the main focus has to be shifted are improving the access to finance, enhancement of accessing the market and to create a supportive environment for the SMEs (Bridge and O’Neill 2012). Some of the areas in which UK government has to focus on are creative business, green industries; participate strongly in public tenders, providing access to finance and markets, continuously supporting the female entrepreneurs and other factors.

CE Marking

CE marking is a part of the harmonization legislation of the European Union. When the organizations affix the CE mark on their products, it is confirmed that they have obeyed all the guidelines according to EU. When the organizations of UK go through these steps they get a confirmed assurance of business growth for their product quality in the international sphere. Thus, the CE marking is confirmed by the Directorate-General of Internal Market and they get open access to do business in UK (Horton 2012).

Free movement

Free movement of EU refers to the fact the people of the member countries of EU can travel to any other member country without any obligation. These people should not face any discrimination regarding job opportunities, remunerations or other things. Thus, the business organizations in UK can shift their employees to other countries according to their work skill and experience (Rechhi 2015). This would help to the growth of the organizations. They can move freely within the territory of the member states.

Conclusion

This paper can be concluded by saying that the business environment depends a lot on the various things and all these things have to be kept in mind when trying to open a business or trying for the growth of the business. In this assignment all the important things are discussed from the perspective of a Hong Kong based organization. The purpose and objectives are explained clearly by assessing the roles of the stakeholder groups on their business performance. The ethical responsibilities are discussed as well. The role of mixed economy on the current media, the impacts of the fiscal and monetary policy, the effect of certain economic policies are assessed. The impact of oligopoly has been discussed by describing a macro-environmental analysis on the chosen organization. The significance of the international trade on UK has been analyzed by throwing light on the different policies of European Union.

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