Factors Influencing Organizational Success - Essay Example

? Factors Influencing Organizational Success (College) Factors Influencing Organizational Success Introduction A social enterprise may be a for-profit or non-profit organization which works to achieve philanthropic goals by the application of capitalistic strategies. Although community programs and thereby social welfare activities are set as the fundamental objectives of such firms, majority of them conceptualize that commitment to social welfare objectives would ultimately contribute to their economic interests. The Cooperative Group Ltd is a United Kingdom based organization which is cooperatively operated and run by its own members. This organization is headquartered at Manchester that maintains more than 123,000 employees across the UK. The Cooperative Group deals with an array of business sectors like food, healthcare, funeral care, travel, legal services, financial services, online electricals, and motors. This social enterprise is popular across the globe for its slogan ‘good for everyone’. This enterprise as the largest one, serves the interests of more than 5.5 million members. The most fascinating feature of this firm is that its all members have a say in the running of the business. The membership of this firm is open to all and every member has the right to acquire a share of the group’s profit on the basis of total profit amount. The Cooperative Group Ltd As described in Management paradise.com, although the framework of the Cooperative group was founded in 1863, it took a period of 140 years through a series of mergers and acquisitions. This evolution process entirely changed the structure of this organization changing it from a wholesaler to a major retailer. Around 300 individual cooperatives across Lancashire and Yorkshire jointly launched the Provident Society Limited and North of England Cooperative Wholesale Industrial in 1863; these ventures were changed into the name Cooperative Wholesale Society (CWS) by 1872 (Cooperative Wholesale Society, n.d.). This movement is regarded as a milestone in the history of the Cooperative Group as it was the beginning of the firm’s gradual conversion. Many other small societies such as Scottish Cooperative Wholesale Society and South Suburban Cooperative society merged with CWS (Management paradise.com, Dec 16, 2010). The CWS had been in a stable run before its grocery market share had considerably declined by the 1990’s. As a result, the organization sold its factories to Andrew Regan. Three years later, Regan was filed for his suspicious ?1.2 billion bid and it resulted in the rejection of his bid and dismissal of two senior CWS executives (SFO, August 3, 2003). Subsequently, Tony Blair’s Cooperative Commission initiated many recommendations for the uplift of the cooperative movement which mainly focused on retail societies’ organization and marketing strategies. It has greatly assisted the firm to resurrect its rejuvenation. In 2000, a major turning point in the operations of Cooperative Group occurred when it merged with its struggling affiliate Cooperative Retail Services (CRS) that included some other independent part owner societies. In 2007, the Cooperative Group merged with UK’s second largest cooperative United Cooperatives; this process gave invaluable market stature to the group. As reported in Co-op buys, the Cooperative Group purchased the Somerfield (a chain of small and medium sized supermarkets in UK) for a value of ?1.57 billion in 2009 (BBC News, July 16, 2008). In addition to the above mentioned mergers and acquisitions, the enterprise dealt with number of other integrations and purchases. Businesses and product lines The Cooperative Group dominates UK retail cooperative sector by covering 85% of business; and the organization has notable shares in certain large markets including travel, pharmacies, and funerals (Cooperative Group). It is essential to note that the Cooperate Group mainly deals with food retail business even though the enterprise has large numbers of other business areas. The concern directly deals with more than 2,900 stores which are mainly located at medium sized super market sectors and these chains of stores provide wider geographical coverage to the Cooperative Group. It is clear that the developing fast food culture of the UK offers potential opportunities to food industries; hence, the Cooperative Group greatly focuses on this potential business area. The group also maintains 450 travel agencies that make sales through telephone, internet, and home workers. As the Cooperative Group realized the emerging market opportunities in the field of tourism, the firm has launched its own tour operation in association with Cosmos Holidays (Cooperative news). The Cooperative Motor Group and Cooperative Farm also considerably contribute to the group’s marker convergence. The increased territorial coverage gives greater accessibility for the firm to larger number of market segments so that the group can differentiate its product lines according to the characteristics of each market segment. This type of segment focused business practice would greatly aid the firm to capture the market to a large extent and thereby enhance the sales volume. In addition, when the firm deals with ranges of business areas, it would considerably increase the group’s reliability. In short, the varieties of product lines and thereby increased territorial coverage have played a great role in lifting the Cooperative Group to the top position of the UK cooperative business sector. Although the organization had involved in engineering, non-food retail, footwear, and associated cooperative ceramics, frequent losses in these business areas compelled the group to sell all of them. Business strategies As discussed earlier, the Cooperative Group dealt with ranges of product lines as it was formed out of different independent societies that possessed distinct brand identities. This practice led the organization to many issues as it caused lack of brand consistency and gave vague information to the customers regarding the product features. Therefore, the firm moved towards a full scale re-brand of its subsidiaries with intent to unify the product identity in 2007. This conversion was a complex task as this process involved more than 4000 stores and branches. This process of conversion of thousands of stores and branches into the new logo is regarded as the “largest rebranding exercise in UK corporate history” (The Cooperative Group, Sept 15, 2008). It is identified that this rebranding process has assisted the enterprise to unite the family of businesses and thereby contribute to better customer experience. The positive effects of this brand unification strategy were observed when the total dividend paid in 2008 reached ?38.1 as compared to ?19.6m in the previous year (The Cooperative Group). Similarly, the Cooperative group sold its some business sectors due to decreased profitability or continuous losses. It clearly indicates that the group does not take unnecessary risks to boost the profitability. This business strategy adds shareholder value since the greater degree of risk taking may sometimes adversely affect the rate of return on shareholders’ investment. Hence, this practice would assist the firm to retain the existing shareholders and attract more and more new investors. Although the Cooperative group is motivated by economical interests, it is basically a social enterprise. Therefore, it gives emphasis on ethical and transparent trading and reporting. For instance, retail trade areas are frequently inspected by Area Committees in order to ensure the transparency and reliability of business operations (Area Committees, n.d.). Some features of the Cooperative Group distinctively vary from that of a pure consumer cooperative. For instance, the group shares voting rights between the individual consumer members and the corporate members. As in the case of any other cooperative society, the group distributed dividends on the basis of total revenues rather than capital invested at its beginning stages. Subsequently, the firm’s dividend payment system has undergone a sequence of changes over different periods and finally in 2006, the group relaunched its initial dividend system in the new name ‘The Cooperative Membership’. It has been observed that there was a sharp increase in membership after the relaunch of the dividend system. More than 2.5 million young people came forward to cooperatively operate with the group (Cooperative Group sees, Nov 5, 2007). Since the Cooperative Group runs profitably, the relaunch of the older system (dividend on the basis of the firm’s earnings) would offer more benefits to the shareholders and this realization persuaded more individuals to join the group. However, an interim financial report submitted by the Cooperative Group reveals that the enterprise acquired revenue of ?9.4 billion in 2008 (Interim Report, 2009). Conclusion The above case study has deeply discussed various organizational perspectives of the Cooperative Group. The firm deals with varieties of product lines and it enables the group to increase its geographical coverage and thereby market stature. The wider territorial coverage and diverse product lines also assist the firm to exercise market segmentation technique. It is also observed that the group does not wish to take up extreme risk. As this firm functions on a cooperative basis, it gets assistance from government in times of contingencies. Moreover, this enterprise gives great priority to transparent and ethical trading and reporting which are regularly overseen by Area Committees. In short, effective leadership policies have supported the Cooperative Group to exist in the UK market over 140 years. References ‘Area Committees’. (n.d.). The Cooperative membership. Retrieved from http://www.co-operative.coop/membership/have-your-say/area-committees/ “Andrew Regan acquitted of theft of ?2.4 million”. (6 Aug, 2003). SFO. Retrieved from http://www.sfo.gov.uk/press-room/latest-press-releases/press-releases-2003/andrew-regan-acquitted-of-theft-of-%C2%A324-million.aspx The Cooperative Group. (15 Sep 2008). The Cooperative- a super brand to watch. Retrieved from http://www.co-operative.coop/corporate/Press/news/THE-CO-OPERATIVE---A-SUPER-BRAND-TO-WATCH/ Cooperative Wholesale Society, Sheldon’s EMU http://www.cybermotorcycle.com/euro/wikig/Co-operative_Wholesale_Society.html “Cooperative Group sees surge in younger members”. (5 Nov 2007). Talking retail: The hub for grocery retail. Retrieved from http://www.talkingretail.com/news/industry-news/co-operative-group-sees-surge-in-younger-members “Co-op buys Somerfield for ?1.57bn”. (16 July, 2008). BBC News. Retrieved from http://news.bbc.co.uk/2/hi/business/7508982.stm Cooperative Group. (n.d.). retrieved from http://wn.com/Co-operative_Group “Cooperative travel to form Thomas Cook venture”. (12 Oct, 2010). Co-operative News. Retrieved from http://www.thenews.coop/news/Retail%20Societies/1931 Interim report 2009, The Cooperative Group, Changing business for good http://www.co-operative.coop/Corporate/PDFs/Interim-Report-2009.pdf Management paradise.com. (16 Dec 2010). “Marketing strategy of Cooperative Group”. (CWS) Ltd. Retrieved from http://www.managementparadise.com/forums/marketing-management/210884-marketing-strategy-co-operative-group-cws-ltd.html Read More