Marks and Spencer - Conflict between Shareholders, Tesco Management - Assignment Example

Business Functions Name Course Tutor Institution Date Business Functions 1. (a) Marks and Spencer: Conflict between shareholders wanting higher profits and customers wanting high quality The case of Mark and Spencer is a good illustration of how such conflicts arise in a business environment (Moore, Cain, Loewenstein & Bazerman 2005). Marks and Spencer created their own market niche that stayed ahead for a long duration, but after the peak something went wrong and customers no longer seem interested in buying there products any longer. The reason is that the company did not realize the changing trends with the new technologies and at the moment customers want to keep up with the changing world. They now demand high quality products for sensible prices especially in the clothes department. Even though their clothes may not be trendy, they are more comfortable to wear at all seasons (Moore et al 2005). But simply, their customers are recently from another era that appreciates quality products at fair prices rather than fashion and personality and therefore the shareholders of Marks and Spencer will have to come up with a business plan that considers the changing needs of their customers (Moore et al 2005). (b) Tesco: Management wanting to expand globally, customers locally not liking the product choices available, or the prices In this case Tesco Company may choose to retain its local customers by removing from their market supply the brands that their customers seem to be disinterested with and concentrate on the profit-making products (Moore et al 2005). Removing some brands from the market could be the best way for Tesco to increase its performance as the hidden costs of production that are cut from operation can be used to better their free brands and make them more appealing to customers (Moore et al 2005). On the other hand, venturing into new businesses could be another opportunity for Tesco to boost its profits but even then it needs to understand what the international markets require and if it finds the new market viable, then it should go for it (Moore et al 2005). (c) NHS: Government wishing to modernize the services provided, some staff resisting changes Change will always face varying stages of resistance, but for NHS to succeed in providing its services to the public, change is unavoidable (Moore et al 2005). The Government needs to work towards converting resistance to dedication for the improvement and changes to succeed in NHS. If the government understands the level from which the resistance is coming from, then it stands a better chance develop strategies of dealing with it (Moore et al 2005).   1. ‘An entrepreneur is a person of unique qualities, is a risk-taker and passionate about business.’ Sir Richard Branson – Virgin Group Excellent Communication skills Sir Branson has exhibited excellent qualities in developing friendships and good contacts globally. This is because he possesses good communication skills across cultures which help him in enhancing relationships (Johnson 2015).    Confidence, persistence and determination Lord Alan Sugar – Amstrad Group Visionary Leadership Lord Alan Sugar is a visionary leader and that contributes so much to its unique quality in entrepreneurship. Inspired by Steve Jobs of the Apple business, he came up with the home made computer (Johnson 2015). He focused on the simplicity of the computer and therefore came up with the CPC 464 which consisted of two items only; the monitor and the keyboard. The power supply was contained by the monitor and several wires linked the two items since they were enabled by one plug (Johnson 2015). Alan set his business idea to solve the problem of struggling to figure out where to put in certain things and this indeed did solve the complexity of using the computer. He envisioned that enthusiasm will be sustained by easy assembling of the product (Johnson 2015). Levi Roots – Reggae Reggae Sauce Passion and planning Levi roots unique qualities were passion and planning (Johnson 2015). As a reggae musician, he combined his love for music and passion for food to come up with the Reggae Reggae sauce, unique delicious food stores in the United Kingdom (Johnson 2015). The idea also succeeded because of the excellent business planning strategy that Levi Roots adopted in addition to his passion for food. These two unique qualities enabled him to succeed immensely in the food industry (Johnson 2015). Deborah Meaden –‘Dragon’ Investor and various Business Holdings Hard work and Determination Hard work is exemplified as a unique quality in Deborah’s business prowess. She relocated to Italy at nineteen years and began her first business in supplying high quality ceramic and glass items to specific retailers (Johnson 2015). Afterwards she faced a lot of competition from rivals and moved on to another business in UK contract of Italian Shoe Company Stefanel with a partner. Her desire to move up the ladder inspired her to move to other positions with other companies and she succeeded in becoming an operations director and later a managing director in a holiday park business. She later purchased the company in 2005 and it continued to prosper (Johnson 2015). She is presently occupied with various businesses including the Dragon Investor in which she has become a star in BBC TV where she portrays a shrewd, sensible dragon who explicitly tells investors the truth on how to invest and expect returns in the Popular Dragon’s Den TV Show (Johnson 2015). 3. Comparing the profit achieved by one business with that achieved by another similar business is important. There may be many reasons why profitability is a key issue within a business. (a) Choose a company that you have knowledge of and advise on its current profitability. Ralph Lauren Corporation is involved with the designing, marketing and distributing quality lifestyle products. The company’s stocks are not performing well in the market and at the moment, the stock had gone down by 30% in 2015 and its profitability has gone down remarkably (Hill, ‎Schilling & ‎Jones 2016). (b) Analyze why this may have changed over time, what key factors have influenced the profitability and how the company could increase profits in the future. One factor that has affected the profitability of Ralph Lauren Corporation is the challenge of competitor companies that have come up with similar products at lower prices. In order to increase its profits in future, the company may have to increase the percentage of its accessories such as handbags which stands at 10% at the moment rather than focusing on men’s brands(Hill, ‎Schilling & ‎Jones 2016). Another thing would be to expand it’s on line business as well as expand its overseas market in potential regions (Hill, ‎Schilling & ‎Jones 2016). 4. (a) Stakeholders are important in any business; suggest who are the three most important stakeholders in Hey Presto Ltd and why. The three most important stakeholders are: Christine is one of the most important stakeholders because she is the major shareholder meaning that she has invested huge amounts of money and she is very critical in the running of the business ( DePamphilis 2013). London Community is another stakeholder because Hey Presto Ltd draws its resources from London. The third important stakeholder is the Government and its agencies because it controls the way in which businesses are run within a certain locality ( DePamphilis 2013). (b) Discuss the advantages and disadvantages of the merger with Fast Track. Advantages Duplication Avoidance Since Hey Presto Limited and Fast Track Ltd are two companies dealing with delivery of parcels, merging would not be a bad idea in order to avoid duplication ( DePamphilis 2013). As a result of the merge, customers will benefit from a single company at reduced costs. This would also help the company beat its competitors. Cost Reduction When companies merge, they work more efficiently and this reduces the cost of production that would otherwise be higher in single companies. Cost reduction eventually leads to higher profits hence this could lead to greater competitiveness in the market ( DePamphilis 2013). Network Economies Since Hey Presto Limited wants to gain a national outlook, merging could be the option to enhance it access to a broader coverage in a less expensive way. Therefore the merger will end up acquiring a larger market share (DePamphilis 2013). Disadvantages Loss of Jobs The merger may lead to loss of jobs for some of the employees of Hey Presto Ltd and this should be taken into consideration while making the decision (DePamphilis 2013). Diseconomies of Scale The new company may experience dis-economies of scale especially if the company increases in size to an extent that it loses its control and is unable to motivate its employees. Unmotivated workers will decrease in productivity and this will affect the business’s performance ( DePamphilis 2013). (c) Explain any potential benefits to Hey Presto of choosing to replace diesel vans with more expensive electric vehicles. Though buying the electric vehicles could be initially expensive, to maintain them will be cheaper than the diesel ones, hence they will be more efficient. Another thing is the issue of increased speed in delivery of parcels hence more profits in the long run ( DePamphilis 2013). (d) Advise Hey Presto on which of these two methods of expanding the business would be more suitable for the business. Use Item B to support your answer I would recommend Hey Presto to continue with its plans to merge with its competitor Fast Track Ltd because there are a variety of benefits that come up due to the merge which include: reduced competition, broad coverage and reduced cost of production. This will be a sure way to expand the business and retain its competitiveness ( DePamphilis 2013). Appendix Ralph Lauren’s Profitability Table (2015) _____________________________________________________________________________ Profitability Gross Margin 57.09 ______________________________________________________________________________ Operating Margin 13.77 ______________________________________________________________________________ Pretax Margin 12.95 Net Margin 9.21 ______________________________________________________________________________ Return on Assets 11.51 ______________________________________________________________________________ Return on Equity 17.72 ______________________________________________________________________________ Return on Total Capital 15.12 _____________________________________________________________________________ Return on Invested Capital 15.57 ___________________________________________________________________________ Bibliography DePamphilis D. (2013). Mergers, Acquisitions, and Other Restructuring Activities. Academic Press. Hill C., ‎Schilling M. & ‎Jones G. (2016). Strategic Management: Theory: An Integrated Approach. Singapore, Cengage Learning. Johnson K. (2015). The Entrepreneur Mind: Atlanta, Jaico Publishing House Moore D., Cain D., Loewenstein G. & Bazerman M. (2005). Conflicts of interest: challenges and solutions in business, law Law, Medicine and Public Policy. NewYork, Cambridge University Press. Read More