Pearson Education Company and Its External Factors - Essay Example

The study seeks to critically analyse the external factors that affect the operations of Pearson Education which according to Datamonitor (2007), is a global publishing company which focuses its operations in education, business information and consumer markets. The analysis would basically employ STEEPLE and SWOT analysis in order to identify the main challenges facing the company. The study will also analyse mainly three concepts namely: leadership, creativity and innovation in an attempt to establish and analyse the operations of the organisation in the face of the external challenges surrounding it. Like any other organisation, Pearson Education does not exist in a vacuum but operates in an environment that is characterised by stiff competition from other rival competitors like McGraw-Hill, Reed Elserivier, and Thomson among others. In this context, STEEPLE analysis mainly takes into consideration the environmental factors that may impact on the operations of business. According to information obtained online, there are mainly seven factors that affect the operations of business and these are social, technological, economical, environmental, political, legal and ethical. (See appendix 1). It is very important for any business to diagnose the external environment in which it is operating in order to gain a competitive advantage over the other competitors. An organisation ought to strategically streamline its operations so as to be able to remain viable and profitable while at the same time ensuring that its operations conform to the expectations of the customers. Whilst there are various external factors, technological as well as economic factors form the basis of this study as going to be analysed in detail. On the other hand, a SWOT analysis defines the relationship between the internal and external environmental factors in the appraisals in strategic analysis of the operations of a business (Robinson 1997). Basically, SWOT stands for strengths, weaknesses which represent the internal environment of the firm while opportunities and threats are external environmental factors. It is primarily concerned with analysing the key factors of the environment and the fundamental internal strengths and weaknesses of the organisation which will help dictate the strategies appropriate to the firm. The internal factors include the operations of the employees at Pearson Education while the external factors are mainly concerned with technological developments as well as competition from the other rival players. Therefore, the objective of this study is to analyse the existing business strengths to exploit the opportunities, create new opportunities, to counteract threats and repair the weaknesses (Robinson 1997). (See appendix 2) In the given case study, it can be noted that the main problems affecting the operations of Pearson Education include competition, in some instances bookshops are unable to stock sufficient books in demand and the other problem is that the market is still weak in developing countries. Competition is a major challenge that often affects the viability of any organisation Woodman (1995). As noted, the major competitors in the publishing industry include McGraw-Hill, Reed Elserivier, and Thomson as well as other niche publishers. For instance, the mentioned competitors are also major forces to reckon with in the publishing arena at international level. Against this background, Politis (2005) concurs that there is every need for the organisation to be creative and innovative in order to meet the ever changing demands of the customers. Another problem is that Pearson Education’s textbooks are mostly English based but it can be seen that in some European countries like France and Germany, they require the books to be in their own language to meet the expectations of their respective curricula. Against this backdrop, it can be noted that the organisation will be facing stiff completion against the local publishers which certainly lowers its overall market share. It is assumed in this case that local publishers stand better chances of enjoying competitive advantage since they will be better positioned to fully know the requirements of the curriculum. As noted by Chief Executive, Marjorie Scardino in her 2007 review, the developing countries comprise of about 80% of the total world population but only about half of the people who go to the colleges come from these countries. This literally translates into saying that the market for Pearson Education is weak in the developing countries. In the same vein, local publishers can as well take a leading role with regards to publishing books for lower level schools. It is assumed that lower level education often requires the generation of locally produced knowledge which can imply that it would be a bit challenging to penetrate those countries. According to information obtained from the organisation’s official website (2009), Pearson Education is a leading player in publishing educational books in about 60 countries but the problem is that the world is big. It may not be able to penetrate other countries for various reasons ranging from political to economic factors as illustrated in appendices one and two. Another problem noted in this case study is the aspect where the bookshops often fail to stock sufficient textbooks that are in demand. In such an event, there would be likely chances of loosing the sales if there are limited books in stock. This problem greatly affects the viability of the organisation since there would be likely chances of loosing customers to other rival competitors who may have the required books in stock. In this scenario, it is assumed that the bookstore owners may decide to keep limited stock of books for fear of limited storage space which can negatively impact on the viability of business. It should be the duty of the organisation to establish the books that are likely to be in demand then liaise with the responsible authorities to make sufficient copies in anticipation of demand of certain textbooks. The bookshops are just agents of selling books and the organisation itself should take a leading role in carrying out research about the needs of the consumers. The main objective of the study therefore, is to evaluate possible alternatives or solutions to the problems that have been highlighted above in order for Person Education to remain a leading player in the global industry of publishing educational related books and other material. In this case, particular attention will be paid on the concept of operations management as well as marketing strategies that can be utilized to ensure viability of an organisation. With reference to Pearson Education, this is seen as the best possible alternative that can be used to maintain competitive advantage in the environment it operates in that is characterised by ever changing environments. There is need to take into consideration the essence of marketing in order to ensure that there is consistence in its operations as far as the need to satisfy the educational needs of the customers is concerned. Basically, “marketing is the art of finding, developing and profiting from opportunities,” Kotler (1999 p. 36). A need satisfying product or service is exchanged for a certain value and there are mainly four variables that constitute a market offering and they are: product, distribution/place, price, and marketing communication (Strydom, 2000 p.2). As a point of departure, it must be noted that marketing is concerned with satisfying the needs of the consumers with the aid of using various tools in marketing mixes. The primary aim of marketing therefore, is attempting to satisfy the needs and interests of the customers profitably. It is a business concept that is meant to increase the profitability of a company which can be of great benefit especially to Pearson Education which seeks to retain its status as a leading player in the industry of publishing educational related products. John Kotler of the Harvard Business School (cited in Robin 2001), argues that the concept of channel management and logistics is about coping with change where there is need to establish direction by developing a vision for the future with regards to the way various channels of an organisation are coordinated. The contemporary period is characterised by changing patterns of doing business and it must also be taken into consideration that the people’s lifestyle is dynamic and is ever changing, so the needs of people especially their educational requirements are also changing. Whilst Pearson Education is widely seen as a leader in the supply of educational material, it must constantly revise the ways it operates so as to be able to keep pace with the changing environment it operates in. During the contemporary period, the educational requirements are constantly moving away from the traditional way of using hard copies in the form of text books which are being replaced by digital technology (King & West, 1985). However, such changes must take into consideration the interests of the people and the level of technological advancement in their respective areas. Knowledge management is a virtue in this regard and there is need to ensure that the management of its operations conforms to the needs of the employees to have the right knowledge with regards to the dictates of the market environment. Basically, knowledge management is about making sure that knowledge from employees, team units within the organisation is captured, remembered, stored and shared with others (Jackson and Schuler 2000). During the current period, it is imperative to manage knowledge in order to operate viably. Thus, channel management posits to the effect that there is need to gather all the necessary information about the operations of an organisation as well as the needs of the customers in order to provide satisfactory products (Brand, 1998). Besides concentrating on publishing educational products, Pearson Education should first embark on carrying out research about the requirements of their target markets and gather all the relevant information that can be useful in designing the products that will meet the requirements of the customers. This can be achieved through embarking on holding consultions with the responsible authorities who design the curriculum in order to keep pace with the developments in the targeted educational sectors. This includes streamlining the ideas and views of the educators as well and the leaders ought to take a leading role in implementing such initiatives. In the same vein, it can be noted that technology does not remain the same but is constantly changing (Bates B. et al 2005). The operational logistics of Pearson Education ought to take a leading role in spearheading the changes that can positively impact on the operations of the organisation. About 20 years ago, most of learning and teaching activities were conducted using mainly hard copies in the form of textbooks and other files. However, during the contemporary period, technology has brought sweeping changes to the ways people do business Nadler et al. (1997). In most industrialized countries, it is now possible to conduct studies without the use of hard copies as a result of digital technology. As noted already, organisations do not exist in isolation but they function in an environment where most of the times they do not have control over the changes in this environment. Thus, according to Kleynhans (2007), for organisations to be successful, they need to adapt to these changes by keeping up with the technological and other developments taking place in the environment. Nadler et al. (1997), posits to the effect that for organisations to be profitable, they must always strive to have the smallest possible input for the biggest possible output which is the case with Pearson Education. The concept of channel management and logistics posits to the effect that there is need to give every worker an opportunity to show that he can use the power of reasoning to think about other new ideas that can positively contribute to the operations of an organisation (Gill 2006). The market in which businesses operate these days is complex and the organisations should be open enough to accommodate the views of the employees that might be creative enough to improve the operations of the organisation (Andriopoulos, C. and Patrick, D., 2009). Workers particularly in the technical department must be allowed to use their skills to design products and services that may appeal to the interests of the consumers. Workers play a great role in shaping the products and services that are offered by the company hence the need to incorporate their ideas where possible. The best possible alternative is the concept of channel management and logistics which can be effectively harnessed through the use of especially new information technology to market the products offered by Pearson Education. The environment in which Pearson Education operates is characterised by unprecedented changes which are inevitable. The company logistics should be premised on the overall role in implementing change and the way they behave with regards to suppliers and customers outside the organisation as well as the overall performance of the whole company. The environment in which the company operates is dynamic and management must constantly take note of those changes in order to remain viable and gain a competitive advantage over the other rival competitors. It can be noted that technology is also changing and the organisation should swiftly adopt any new change that can positively affect its operations. Over and above, it can be concluded that whilst Pearson Education is widely regarded as a global leading player in supplying educational material, it however does not exist in a vacuum but operates in an environment that is affected by various external factors. STEEPLE as well as SWOT analyses were used in this study to critically analyse how the organisation operates in view of the outlined factors in the environment. In conclusion, it has been noted that while there are various alternatives that can be adopted by Person Education in order to improve its operations, leadership and innovative techniques are highly recommendable since they are the most viable. The business environment is constantly changing and there is need for the leaders to keep pace with these changes and the organisation also ought to keep pace with new technological advancements so as to remain viable in the digital world. References Amabile, T.M., (1996). Creativity in context, Westview Press Amabile, T.M., (1998). ‘How to kill creativity, Harvard Business Review, Vol. 76 No. 5 Andriopoulos, C. and Patrick, D., (2009). Managing change, creativity and innovation, Sage Publications Bagraim J. et al (2007). Organisational Behaviour, 2nd Edition, Cape Town. Van Schaick. Bates B. et al (2005), Business Management, fresh perspectives, Pearson SA Brand, A., 1998, Knowledge management and innovation at 3M, Journal of knowledge management, Vol. 2 No.1 Brewster, C. et al (2003), Contemporary Issues in Human Resources Management: gaining a competitive advantage, 2nd Edition, Oxford University Press, SA Carrell, R. et al (1995), Human Resources Management: Global Strategies for managing a diverse workforce, 5th Edition, Prentice Hall, USA. Cook, P., (1998). The creativity advantage – is your organisation the leader of the pack?, Industrial and Commercial Training, Vol. 30 No.5 Data Monitor (2007). Pearson. Retrieved October 14 2008. From http//www.datamonitor.com/[put ‘pearson’ into search facility] Finlay, P. (2000). Strategic Management: An Introduction to business and corporate strategy. Harlow. Pearson Education. Gill, R., (2006). Theory and Practice of Leadership, Sage Publications Jackson S.E. and Schuler R.S. (2000). Managing Human Resources: A Partnership Perspective. 7th Edition. NY. South Western College. King, N. and West, M. A., 1985, Experiences of innovation at work, SAPU Memo No. 772, University of Sheffield Kleynhans R. et al (2007), Human Resource Management: fresh perspectives, Prentice Hall Pearson announces plans for integration of learning technologies with oracle. http://www.pearson.com/about-us/education/news/?i=1180 Accessed 05 November 2009. Personalized Learning: The Nexus of 21st Century Learning and Educational Technologies (21 July 2009) retrieved on 08 November 2009, from: http://www.pearsoned.com/pr_2009/072109.htm Pearson Wins Teachers Choices Awards. Retrieved 08 November 2009 From: http://www.pearsoned.com/pr_2009/091609.htm Politis, J. D., (2005). Dispersed leadership predictor of the work environment for creativity and productivity, European Journal of Innovation Management, Vol. 8 No. 2 Nystrom, H., (1979). Creativity and Innovation, John Wiley and Sons Robins S.P (2001), Organisational Behaviour, Global and Pearson Education Robinson W (1997), Strategic Management and Information Systems, 2nd Edition, Prentice Hall, UK Schein, E.H. (2004). Organizational Culture and Leadership. 3rd Ed., Jossey-Bass STEEPLE Analysis, Retrieved on 6 November 2009, from: http://innovationwiki.brighton.ac.uk/index.php/STEEPLE Strydom J. (2000). Marketing. 3rd Edition. Cape Town. Juta & Co Ltd. Official website Retrieved on 07 November 2009 from: http://www.pearson.com/ Kotler P. (1999). Kotler on Marketing: How to create, win and dominate Market. London. Free Press. Woodman, R.W., (1995). Managing creativity, Creativity action in organisations: Ivory tower visions and real world voices. Eds. Ford, C.M & Goia, D.A. Sage Publications Appendix 1 STEEPLE ANALYSIS OF Pearson Education STEEPLE stands for factors which may affect the operations of business such as social, technological, environmental, political, economic, legal as well as ethical factors. The table below illustrates these factors. Social factors -The welfare of the ordinary people is greatly influenced by basic social factors such as the need for shelter as well food. Most developing countries are poverty stricken and the acquisition of education is often regarded as a secondary issue which can lower the chances of successful operation by Pearson Education. -Some religions do not encourage their members to acquire academic education and this can be a set back for Pearson Education to operate in areas characterised by such religious cults. Such issues lower the chances of penetrating diversified markets at a global scale. Technological factors -Advanced information and communication technology improves the chances of better performance of business (Use of the internet and computers) -Centralised management systems aided by the use of computers Economic Factors -Increase or decrease in disposable income affects the welfare of the people which mean reduction of business for Pearson Education as noted in the case study. -Global economic recession has negatively impacted on various facets of the economy and Pearson Education is no exception -High operating costs can negatively impact on the organisation. -Competition is a major challenge. As noted, the major competitors in the publishing industry include McGraw-Hill, Reed Elserivier, and Thomson as well as other niche publishers. Environmental factors -Pollution- each company ought to strive to protect the environment it is operating in to safeguard the interests of the community and it is the duty of Pearson Education to follow suit. Political factors -The operations of any organisation are determined by the political factors of the countries they would be operating in. Some countries have policies that require foreign owned companies to cede a certain percentage of shareholdings to the nationals of host countries. These vary from country to country and Pearson Education cannot be spared from this requirement which may deter if from venturing into business in other countries. -Countries with political instability are risky to invest in and this can negatively affect Pearson Education’s endeavors to invest in such countries though they may be lucrative markets. Legal factors -Statutory regulations that promote competition among different organizations in the market affect the operations of an organization to a certain extent. No one company can enjoy the monopoly of dominance in the market. -Labour laws which allow the grievances of the workers to be heard such as industrial actions against poor working conditions that may affect the operations of an organization. Ethical -It is imperative for any organisation to be ethical in order to be successful. Pearson Education as noted always strives to do good things for both its customers and workers in order to create loyalty. An organisation is bound by external factors such as ethical considerations of being socially responsible in its operations. Appendix 2 SWOT Analysis of Pearson Education Strengths -The major strength possessed by Pearson Education is that it is better positioned to meet as well as satisfy the needs of its customers in most cases. -Motivated workers are likely to be productive hence the need for Pearson Education to take into consideration the factors that affect the welfare of employees every time in order to avoid disruption of business internally. Its open policy to diversity in recruiting is another major strength possessed by the firm. -It is a renowned global company operating in more than 60 countries which is a major strength compared to other competitors. Weaknesses -One notable weakness of Pearson Education is its suppliers in some instance often fail to meet the demands of the customers where books in some cases would be in short supply. This can create a negative perception among the customers. -Some products, customers as well as technologies are changing but there are some things that stay the same in Pearson Education which can be a setback since there is need to keep pace with most of all the current developments. Opportunities -Harnessing new information and communication technology fosters development and growth of the company. This also increases its effectiveness and the costs are likely to be lowered since most of the business will be done online. -Another major opportunity is the introduction of e-learning facilities in schools that are meant to equip the learners with their educational requirements in the information society that is characterised by the dispensation of digital technology. Threat -Competition in the market as noted is the major threat which needs to be carefully countered in order for the firm to maintain its status quo in terms of high sales. -Another threat is the apparent publishing of academic books that may not conform to the requirements of the curriculum hence there is need to closely interact with educators and keep pace with any changes that may take place in the curriculum. Read More