Exploring Organisations and Organizational Elements - Research Paper Example

'Exploring Organisations' Individual Written Assignment - Resit Sheetal Prince 30656 11-07-2009 Report submitted to 'Exploring Organisations' Individual Written Assignment - Resit Joint Degree Programme - Management Pathway - Year 2 Word Count Introduction Brief about the company Enterprise Rent-A-Car (Enterprise) is based within the UK and is one of the largest. The annual turnover of the business is around 200m euro per year and profitability is 5 % of the turnover this year. It employs 200 employees in the Head Office and there are a number of personnel (5) at each of the 20 local showrooms. It operates as a formal structure and deals with supply of vehicles to individual customers and large organizations. Just like most organizations, Rent - A - Car also had its good and bad times. It faced several problems. Objective To develop an assignment using desk based, secondary research to identify how and where to improve the organization using the case study. Research methodology The researcher uses desk based, secondary research to analyze and evaluate organizational elements. Information was gathered on several main areas by searching the given case study, academic libraries, websites and reports. Findings Pollution was caused by leaking oil from servicing vehicles to near by river due to which a case was filed against the company and fined with a huge amount. Works director resigned and this caused issues in communication between the strategic management and the works manager and works staff arose which in turn led to many disputes. Management is very autocratic with all the decisions made in the organization. Scientific management approach is the style of management adopted where very little communication with work force exists. This lack of involvement with the work force has led to disputes. The company suffers from high labor turnover. Customer and supplier data was lost after the works director left the company. The share price on the FTSE stock exchange has fallen as the court case has built up very bad reputation for the company in the media. Rival competitor is about to set business near Rent- u - Like Enterprise. There has been decrease in volumes of car and van rentals have dropped due to the slowdown in the local economy, credit crunch and recession. Recommendations To solve pollution issue caused by leakage of oil from servicing vehicles to near by river: Best Management Practices that include the proper handling, storage and disposal of oil should be adopted instead of dumping the oil into near by river . Purchase recycled products such as oil and grease. By doing so, you help ensure a use for recyclable materials. Wash greasy equipment such as vents and vehicles in designated wash areas with an appropriate oil/water separator before storing outside. Ensure that designated wash areas are properly connected to the sewer system. To solve issues autocratic management and issues in communication between the strategic management and the works manager and works staff caused due to the resignation of works director which in turn led to many disputes: Democratic style: In contrast to the autocratic style, the organization should use democratic decision-taking in many parts of the business. Everyone has the opportunity to contribute ideas to the decision. There are two types of democratic decision-making: 1. Persuasive democratic management - here the leader makes the decision first and then persuades employees that he or she has made the right decision 2. Consultative democratic management - this involves the group contributing to the decision making process, with the leader making the final decision. To solve disputes arising out of lack of involvement and communication with the work force and issues arising out of scientific management approach which leads to very little communication with work force exists: Open door policy should be adopted in certain areas to make the work force feel important. Their views and problems should be attended to sincerely and they should be given the freedom to walk into the manager's cabin to discuss any issues. To solve issues of high labor turn over: The enterprise should try and adopt a "promote-from-within" policy in the company, which means that almost everyone working s at management level hasn't been hired in from outside, but has come up through the company. This means that it is vital to find ways to keep the employees happy, if not, all the skills, experience and commitment that have been built up over years of service will be lost from the company. One of the things that can be instituted to keep staff in the company was a diversity focus group. People from every level in every region in the UK could come together to talk about policy and business practice and whether there were any barriers to success that could be identified. To solve the issue of customer and supplier data lost: Back up of customer and supplier data in the form of hard copy and soft copy should be stored in the organization just in case any important information is lost or tampered with. To solve the issue of drop in share price on the FTSE stock exchange:. The company has to build up its reputation by covering up for what had happened with regard to polluting the river by coming up with exciting good market prices, very good service etc which will lead to customer satisfaction which in turn would lead to good efficiency and good profits. And hence the company would be able to regain its former share price on the FTSE. To solve the issue of rival competitor called Cars- are-Us: The company has to make better offers to its customers with regard to pricing and service to win over its competitor. Good pricing with certain discounts or attractive offers can definitely attract more customers over the rival competitor. Also the staff should be very cordial to the customers and should provide very good service to win over its competitor. Having a locally representative workforce and using locally sourced suppliers also puts customers at their ease, and an open-door attitude to customers is one of the keys to success. To develop an individual, written assignment using desk based, secondary research to analyze and evaluate organization, using a case study: Different methods of analysis such as SWOT analysis, Pestle analysis and the balanced scorecard can be used to evaluate the organization which will help in the efficiency and effectiveness of the company. SWOT Analysis Strengths Weaknesses Leading market position Losing too many employees Large scale of operations Communication issues between higher and lower level staff Robust financial performance Concentration of assets Opportunities Threats Stronger presence around the world(Expand to new larger location) Increasing fuel prices Increasing use of the internet Intense competition Buy local competitor to increase revenues Rising Interest Rates Large fleet of vehicles Downturn in car market PEST Analysis in Diagrammatic Format Political Economic Government type Business Cycle Stage Government Stability Growth Inflation & interest Rates Rule of Law Unemployment ,Labor supply ,Labor cost Regulation, Deregulation Trends Globalization Social/Employment legislation Likely economic change Likely political Change Socio - Cultural Technological Population growth Impact of emerging technologies Education, Social mobility Impact of internet, reduced communication costs Employment pattern, attitude to work R & D Activity Life style choices Likely technological change Press, public opinion Likely socio- cultural change Environmental - these factors result from macro-environmental influences on an organization. Things like the business climate, the economy, competitors, and technological advancements are included in this category. Legal factors also affect the organization. If the organization doesn't abide by the laws of the country to run the business, it can sued and punished with huge fine. The Balanced Scorecard: Develop Performance Measurements(The Balanced Scorecard):According to Kaplan and Norton, Balance Scorecard is a strategic approach and performance management system that enables organizations to translate a company's vision and strategy into implementation, working from 4 perspectives: financial perspective, customer perspective, business process perspective, and learning and growth perspective. ESQi : Adoption of this method helps to satisfy customers to a great extend which leads to more sale and profitability which in turn helps in improving the performance of the company. Conclusion :It is finally understood that the organization has several problems but using the above mentioned recommendations and methods of analysis, improvement can be brought about in the company with regard to productivity,more sales,more profitability which in turn helps in the efiiciency and effectiveness of the overall performance of the company. Reference List 1. Quick MBA. Knowledge to power your business, Strategic Management, Swot Analysis, [Online], Available: http://www.quickmba.com/strategy/swot/ [9 July 2009] 2. CIPD, Pestle Analysis[Online], Available: http://www.cipd.co.uk/subjects/corpstrtgy/general/pestle-analysis.htm [9 July 2009] 3. Value Based Management.net, Balanced Scorecard Method, [Online], Avaialble: http://www.valuebasedmanagement.net/methods_balancedscorecard.html [9 July 2009] 4. CiteHR.com,Help to improve Organisations,Enterprise Service Quality Index, [Online], Available: http://www.citehr.com/31072-esqi-enterprise-service-quality-index.html [9 July 2009] Appendices Swot Analysis Strenghths Weaknesses Leading market position Losing too many employees Large scale of operations Communication issues between higher and lower level staff Robust financial performance Concentration of assets Opportunities Threats Stronger presence around the world(Expand to new larger location) Increasing fuel prices Increasing use of the internet Intense competition Buy local competitor to increase revenues Rising Interest Rates Large fleet of vehicles Downturn in car market Strengths Leading market position and Robust financial performance: The annual turnover of the company is around 200 m euros per year and is considered to have one of the leading market shares.The company enjoyed a very strong financial performance with very good annual turnover and a good profit at 5 % of the turnover which is almost 10 m euros. Large scale of operations: The company is one of the largest in UK, being listen on FTSE. Its UK operations, comprising nearly 20 locations, are one of its largest operations to strengthen its presence in the UK. Weaknesses Losing too many employees: This results in increased labor turnover which means more cost as these staff have to be trained and by the time they start to deliver, they move to other organizations. Communication issues between higher and lower level staff: The resignation of the works director over the large fine given to the company has caused issues in communication between the strategic management , works manager and works staff. Concentration of assets: The company's assets are primarily located in the UK. Enterprise generates most of its revenues from the UK. As a result the company is exposed to demand fluctuations in the UK economy. The company's concentration of assets significantly increases its business risks. Opportunities Stronger presence around the world(Expand to new larger location): Enterprise's UK operations, comprising nearly 20 locations, are its largest regional operations. It has the opportunity to expand business in different parts of the world which in turn would result in efficiency of the business and more revenues which means more profitability. Increasing use of the internet: Due to increasing use of the internet, sale of services through the internet is forecast to grow. The trend of reserving vehicles through the internet is expected to continue. The company provides all its services through the internet as well. A sale through internet is yet another opportunity for the company to generate more revenues. Large fleet of vehicles: The company could expand its rental fleet within the next few years. It can add more vehicles to its rental fleet.The company can open more than one new branch a day in the neighborhood rental market, while its airport presence can grow at double the growth rate in the coming years. Buy local competitor to increase revenues:Once the company has grown to a great extend , it can actually look at buying local competitors to increase revenues. Threats: Increasing fuel prices:Enterprise operates a large fleet of vehicles. High oil prices are likely to drive gasoline prices even higher. High gasoline prices, in turn, would negatively impact the operating margins of the company. Rising interest rates:Rising interest rates on one hand is likely to boost demand for the company's leasing and rental services. On the other hand, rising interest rates also increases the company's interest servicing costs. Rising interest rates could adversely impact the company's liquidity. Intense competition:The company faces intense competition in the rental services segment. Its competitor includes Cars- are -Us which is an established player rental segment. Intense competition from this established player could prevent the company from enhancing its market share in the rental segment. ESQi A measurement called ESQi (Enterprise service quality index) could be created. It's a stastiscally valid sample of customers' opinions taken monthly, at every branch. There are basically two questions-The first asks about customer satisfaction level with five answers ranging from completely satisfied to completely dissatisfied and second asks how likely he is to return to the enterprise. The ESQi results helps to teach enterprise what drives customer satisfaction, the attitude and helpfulness of enterprise employees and the speed of the transaction.ESQi shows that customer satisfaction has a direct impact on sales and profits. This collection of data on customer opinions is a good example of qualitative data. The collection of data on the numbers of cars rented illustrates quantitative data. Together the help of both types of data helps improve enterprise's performance. PEST Analysis in Diagrammatic Format Political Economic Government type Business Cycle Stage Government Stability Growth Inflation & interest Rates Rule of Law Unemployment ,Labour supply ,Labour cost Regulation,Deregulation Trends Globalisation Social/Employment legislation Likely economic change Likely political Change Socio - Cultural Technological Population growth Impact of emerging technologies Education, Social mobility Impact of internet, reduced communication costs Employment pattern, attitude to work R & D Activity Life style choices Likely technological change Press,public opinion Likely socio- cultural change Environmental - these factors result from macro-environmental influences on an organization. Things like the business climate, the economy, competitors, and technological advancements are included in this category. Legal factors also affect the organization. If the organization doesn't abide by the laws of the country to run the business, it can sued and punished with huge fine. The Balanced Scorecard Develop Performance Measurements Using your overall strategy as your guide, determine the critical success factors in each performance area, set related goals and then identify ways to measure results. The Performance Areas are: The Financial Perspective:This includes those traditional financial indicators which measure progress towards the achievement of your strategy, and which give your shareholders the information they need. The Customer Perspective:Here, goals can be set which relate to the customers' perception of the business. These could include measures like customer satisfaction levels, numbers of customer referrals, or target market penetration. The Internal Business Processes Perspective:Here main business processes like production, logistics or sales are considered and then goals related to such things as quality, time/efficiency, and cost reduction are set. Here, you explore ways of improving the internal systems and functions. The Innovation and Learning Perspective:In this area, measures relating to employee development, retention, and skills improvement should be taken. Research and development of business. The focus here is on continuous improvement and value creation, by using people resources most effectively. Read More