The Technological Competencies and Waste Management Incorporation - Essay Example

? External and Internal Environments: Waste Management Incorporation Contents Background………………………………………………………………………….3 General Environment………………………………………………………………3 i. Political and legal environment…………………………………………….4 ii. Economic environment……………………………………………………..5 Forces of Competition……………………………………………………………...6 i. Competitive Rivalry………………………………………………………..6 ii. Power of Suppliers…………………………………………………………7 Recommendations for the Forces of Competition…………………………………7 External Threats……………………………………………………………………8 Strengths and Weaknesses…………………………………………………………9 Resources, capabilities and core competences…………………………………….10 Bibliography……………………………………………………………………..13 Background Information Waste Management incorporation is one of the largest waste disposal firms in the United States and the world. This company has many subsidiaries in different countries across the world. Arguably, this company serves more than 2.5 million organizations and 26 million residents in Canada and the United States. This company has segmented its geographic environment into five regions, which include the Southern, Eastern, Western and Midwestern United States and Canada. The company recycles the waste products and also uses it to generate energy (Waste Management, 2012). The company provides waste gathering, transportation, and reprocessing and disposal services. Waste Management incorporation carries on its activities as the world leader in waste management that range from medical and solid waste to extremely poisonous chemical waste. This organization has in the past been experiencing growth and increase in stock prices at healthy rates (Waste Management, 2012). The General Environment A firm’s environment consists of aspects that the firm can readily influence as well as aspects that are distant from its influence (Hitt et al, 2011). The general environment relies on the external environment of business. The general environment consists of factors that have dramatic effects on firm strategy. In essence, organizations have little capacity to forecast trends and events in the general environment and even less capacity to control them (Longenecker, 2005). The general environment consists of the demographic segment, technological segment, political and legal segment, environmental segment, and the social factors segment. Waste Management Incorporation operations have been profoundly influenced by the political and legal environment and the economic environment (Waste Management, 2012). i. Political and legal Environment The political environment of many nations directly influences the operations of Waste Management Incorporation. Since this company disposes waste that drift from normal consumer refuse to toxic industrial waste, drafting and implementation of new legislations concerning the industry can have a severe economic effect on the organization’s outcome. The United States government has implemented laws and regulations that influence this company (Waste Management, 2012). The United States government has enacted many public, occupational and environmental health and safety associated acts that have impacts on waste disposal industry in the nation. The Solid Waste Disposal Act together with Resource Conservation and Recovery Act of 1976 are acts which transformed the industry of Waste Management Incorporation to the present state. Many organizations had to change and adapt to the new guidelines (Waste Management, 2012). In addition, the management of perilous waste was stipulated in Comprehensive Environmental Response, Compensation and Liability Act (1980). The Clean Water Act as altered regulates the discharge of noxious wastes into rivers, ground water, streams or any other surface water. This affects the development and sustenance of landfills (Waste Management, 2012). The political environment of United States substantially affects the activities of Waste Management Incorporation. The Clean Air Act (1970) adopted by the United States government regulates the amount of noxious wastes that are discharged into the environment (Waste Management, 2012). This also affects the development and sustenance of landfills. On the other hand, the safety of employees working in Waste Management Incorporation is supervised by the Occupational Safety and Health Act (1970). This is because waste management is a physical operation that involves physical contact with the waste materials. This is imperative in ensuring the safety of the employees. Such an act requires the company to have safety equipments which will increase the company expenses and costs (Waste Management, 2012). The United States government also has put in place regulations which control the location of landfills. For instance, directives have been enforced in Texas which necessitate wider cushions between dumps and communities, more rigorous overflow checks, and setting up of contemporary liners before waste can be mounded on top of older dumps. In this regard, the political and legal environment affects the industry and is a substantial threat to Waste Management Incorporation (Waste Management, 2012). ii. Economic Environment The economic environment focuses on the prevailing economic conditions within which organizations maneuver (Hitt et al, 2011). The United State’s economy is recovering from its earlier recession at a high speed. This can be attributed to the increase in technology that led to the dot.com rupture in the market. In addition, the housing industry has played a part in reviving the nation’s economy (Longenecker, 2005). The interest rates on borrowing, which had been low for many years, are now high to assist in slowing and curbing inflation rate. These high interest rates affect companies such as Waste Management Incorporation when they take loans for investment projects. Such high interest rates have resulted in the postponement of plans and developments thus resulting in the slowing of the growth of the company (Waste Management, 2012). Gross Domestic Product affects the overall performance of an organization and the levels of disposable income among the customers. The United State’s Gross Domestic Product was markedly affected by the recession which resulted in the loss of jobs and the levels of disposable income declined. The level of disposable income determines the demand for waste disposal services. A high Gross Domestic Product results in high employment rate, which leads to high disposable income (Waste Management, 2012). A high disposable income implies that consumers will have an increased demand for these services. During the period of recession, Waste Management experienced a decline in the demand for its services, resulting in low cash flows. However, the changes in consumer’s view on disposal of waste have increased demand for Waste Management’s Incorporation services. This affects the organization by increasing its cash flows (Waste Management, 2012). On the other hand, the increasing world oil prices have affected the operation of the organization. Waste Management Incorporation uses fuel to transport the waste products to landfills. For this reason, the organization incurs high transportation costs which increase the cost of operation of the company. Till the world oil shortage is resolved, the problem of high oil prices will continue to be a significant saddle on the proceeds of Waste Management Incorporation (Waste Management, 2012). Forces of Competition The competitive forces are the aspects that affect the competitive position of an organization in a market. Rivalry among existing competitors and the power of suppliers is the most significant factors that affect Waste Management Incorporation’s ability to serve its customers (Hitt et al, 2011). i. Competitive Rivalry The waste disposal industry is typified by a high number of competitors. Waste Management Incorporation faces stiff competition from governmental and non-governmental organizations in the market (Waste Management, 2012). In North America, the North American branch faces competition from local and small regional firms. The major corporations in the industry have large landfills. For this reason, such companies bid lower prices to community disposal contracts. Since most of the services rendered by the companies are homogeneous, much of the rivalry is based on prices (Waste Management, 2012). ii. Power of Suppliers The suppliers in the value chain of Waste Management Incorporation are few but immensely significant. The large disposal companies such as Waste Management Incorporation own their own convoy of trucks used to transport the waste materials for disposal in the United States. The main suppliers in the industry are the fuel, truck, and land suppliers. For the minor companies, they may have to seek the supply of trucks to transport the waste products. In addition, companies such as Waste Management Incorporation may seek the supply of trucks when the demand for waste disposal services is high (Waste Management, 2012). On the other hand, the fuel suppliers have created a challenge where they charge high oil prices. This results to high transportation costs and low profits for Waste Management Incorporation. For Instance, Waste Management Incorporation incurred high transaction costs at the start of this year due to increased oil prices (Waste Management, 2012). While there seem to be an adequate supply of trucks, there is a limited supply of land for landfill expansion. The process of obtaining land for landfills experiences opposition from consumers and the government through its regulations. Waste Management Incorporation was not able to acquire a piece of land last year when it needed to expand its activities. In addition, it is not easy to acquire land in a favorable location to assist in minimizing the transportation costs (Waste Management, 2012). Recommendations for the Forces of Competition In order to gain a competitive advantage over the other companies in the industry, Waste Management Incorporation will purchase part of the small companies and firms (Waste Management, 2012). This will ensure that it has control over the other companies and that it will benefit from both companies if any one of them has a higher competitive advantage over the other (Longenecker, 2005). In addition, the company will intensify its advertising and promotion to increase market share. Marketing is one of the most significant aspects of a business. Advertising will create awareness of the services the company offers which will attract customers. In order to solve the problem of inadequate trucks, Waste Management Incorporation will increase the number of trucks to cater for the high demand season. Since the oil fuel prices keeps on fluctuating, the company will buy fuel in bulk when the prices are favorable to reduce future costs that may be incurred as a result of increased oil prices. External Threats In reference to Hitt et al (2011), external threats are the external factors that affect the functioning of an organization. The cyclical nature of business, regulatory environment and fluctuating fuels prices are the principal external factors that affect Waste Management Incorporation (Waste Management, 2012). Availability of supply and fuel prices is frequently unpredictable. Notably, these situations are beyond the control of the company and are forecasted by aspects such as political, international and economic developments. Waste Management relies on fuel to run its trucks in collecting the waste as well as running machinery in its operations. Unquestionably, price and supply fluctuations negatively affect the company’s productivity (Waste Management, 2012). Apparently, due to the nature of the operations of the company, Waste Management’s operations are conditional on the existing and changing laws (Waste Management, 2012). These laws include safety, environmental, transportation and health laws at the national or local levels. Various agencies oversee these rules such as the Environmental Protection Agency. In addition, other governmental and non-governmental agencies control such areas as transportation, health, land use and safety. These agencies supervise Waste Management business activities and have the jurisdiction to impose conformity, adopt restrictions and enforce penalties when the company infringes any of the laws which negatively affect the organization. The observance of the different laws results to considerable costs incurred by the company (Waste Management, 2012). Waste Management Incorporation is prone to seasonal environmental conditions. Notably, the company experiences low business during winter due to the fact low volumes of demolition and construction waste together reduced housing and company waste. This affects the company and extreme environmental conditions may lead to closure of the business (Waste Management, 2012). Strengths and Weaknesses Waste Management seems to enjoy brand recognition. This is due to its high quality services and discounts it offers to its clients. In addition, this has been created through expansive advertising. This has assisted the company enjoy customer loyalty. Waste Management Company has a vast asset base that assists it to carry out its operations (Waste Management, 2012). Waste Management has effective transport management which ensures that all commercial and residential areas are well served (Waste Management, 2012). This helps deliver fast and effective services to the customers resulting to increased customer satisfaction and customer loyalty. This company encourages environmentally sensitive innovative culture. The company faces numerous weaknesses. The company has a high debt structure. Arguably, the company operates at high costs and, as a result, seeks external funding to service its costs (Waste Management, 2012). Because of the seasonal nature of the business, the company has a high number of temporary employees employed during high season who are laid off during low season i.e. during winter. Waste Management is dependent on the growth of inorganic industry. For this reason, the company can collapse if the government decides to sanction the industry. Lastly, Waste Management is significantly affected by landfill dynamics (Waste Management, 2012). Waste Management should take advantage of the strengths by offering extended service options. This is because the company has a wide asset base, and this will comply with the company’s strategy to differentiate its services of providing all-inclusive environmental service solutions. On the other hand, in order to fix its weaknesses, Waste Management may have to search for alternative services to branch out away from landfill model of waste disposal. Availability of land is a long term distress for the company. The company needs to look for other alternative ways of waste disposal that branch out away from the restricted capacity of landfills, which present the company with substantial strategic repercussions. Waste Management Resources, Capabilities, and Core Competencies The competitive advantage of an organization is determined by its capabilities, resources and core competences (Hitt et al, 2011). Resources refer to the inputs that the firm uses in product and are divided into physical, organizational and human categories. Longenecker (2005) defines capabilities as the organization’s capacities to deploy resources while the core competences, according to the researcher, are the capabilities and resources that act as a source of the company’s competitive advantage. Waste Management has tangible assets which include 24.8 million shares of common stock worth 710 million US dollars. In 2011, the company obtained cash flows of $3 billion and $1.5 billion from its operating activities (Waste Management, 2012). In addition, the company has offices in the Southern, Eastern, Western and Midwestern parts of United States. Waste Management has invested a lot in technology. The company owns bioreactor landfill technologies, gas to energy and waste to energy technologies. The company’s human resources represent the nontangible assets (Waste Management, 2012). The capabilities of the company materialize through the complex interactions of the intangible and tangible resources. Waste Management Incorporation translates more than 90 million tons of solid waste into more than 40 billion kilowatt-hours of dependable electricity. In addition, the company naturally breaks down the waste in the landfill into gas used as energy (Waste Management, 2012). The core competences include the aptitude to make use of opportunities to create value for customers. The company’s aptitude to gather and set out waste and convert them into useful products creates a “one-stop shop” for their consumers (Waste Management, 2012). Waste Management Company has strong tangible and intangible resources. However, the company has a higher number of intangible resources than tangible resources (Waste Management, 2012). In order to perk up its financial resources, the company should lower its debt to increase allocation on capital investments. The technological competences are the capabilities that add considerable significance to Waste Management Incorporation. References Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2011). Strategic management: Competitiveness & globalization: concepts. Australia: South-Western Cengage Learning. Longenecker, J. G. (2005). Small business management: An entrepreneurial emphasis. Princeton, N.J: Recording for the Blind & Dyslexic. Waste Management (2012). Company Profile. Waste Management Incorporation. Retrieved October 31, 2012, from https://www.wm.com/about/company-profile/index.jsp Read More