The Economic Environment - Assignment Example

Word count: 991 Q1a. Explain what is meant by the phrase “the economic environment is particularly challenging”. The phrase means that the economic environment in which the company operates is relatively difficult to work in. The market is full of competitors, among which are larger and stronger companies. In addition, the company works in business to business sales niche. B2B sales are, in some aspects, more complicated than selling to individuals. Economic environment is also influenced by the level of overall and sectoral inflation, interest rates, taxation policies and other microeconomic and macroeconomic policy factors, among others (Nandi, 2009). b. Identify ONE non-economic external environment factor [force] and explain how it might have a positive impact on RCP. [6 marks] Technological factor of the external environment is what might have a positive impact on RCP. This opinion is based on the fact that the company is devoted to product innovation and quality. The development of technologies, considering the fact that RCP is ready and willing to invest research and development, as well as launch of new or technologically enhanced products, works in favour of the company providing it with new opportunities for growth and development. Q2. a. What is meant by ‘distribution channel’. [2 marks] Distribution channel is the channel through which the company delivers its goods to end users and collects payments (Businessdictionary.com). b. Describe the distribution channel of RCP. [3 marks] The distribution channel of RCP is direct one, since goods move directly from RCP factories to clients’ facilities – it does not include any intermediaries, such as distributors or wholesalers. This lowers the price of RCP products for the clients, because no additional money is taken by the intermediaries. c. Identify and explain TWO advantages of that distribution channel to RCP. [8 marks] One of the advantages of RCP distribution channel is that it is short and direct. This helps the company to keep prices lower, since no additional expenses go to third party intermediaries. Secondly, selling directly to the clients allows the company to have a complete control over the sales cycle and, thus, ensure customer satisfaction. Selling directly RCP knows exactly and controls the volume of sales, flows of payments and provides post-sale service as soon as it is needed. Q3 a. List FOUR elements of a business plan that RCP’s bank would wish to see on its business plan before lending RCP the money they require to invest for expansion? [4 marks] Financial features, financial requirements, current business position and major achievements are some of the elements of a business plan that RCP’s bank would wish to see on its business plan before lending RCP the money (Entrepreneur Media, Inc., 2011). Financial features, such as sales, profit, return on investment and cash flows, as well as information on current business position, are needed for the bank to analyze how successful the company is. Financial requirements are needed for the bank to know how much of an investment the company needs, how that capital will be used, and what equity, if any, is being provided for funding. b. Explain the advantages [apart from allowing it to borrow money] to the management of RCP of producing a good business plan. [6 marks] A good business plan will serve several goals. First of all, it will ensure the management has a clear idea of what the company is going to do and how those goals should be reached. The business plan will, thus, serve as a guide for decision making and actual actions. Secondly, a well-constructed business plan may help RCP to get a bank loan on better terms: with lower interest rates, for instance, or for a longer period of time. Q4 a. Identify TWO stakeholders of RCP which are likely to be in conflict. [2 marks] The company’s management and its shareholders are the two stakeholders that might be in conflict. b. Explain clearly the conflict. [6 marks] The conflict might be based on the fact that the company, though potentially can, does not wish to increase prices. This, in its turn, makes the actual profit of shareholders lower. RCP’s East Asia.Marketing Director is not willing to increase price, though this might bring shareholders some immediate increase in profits, believing that price change is not what will make the company more successful. Q5. a. Explain how RCP might benefit from its brand strength. [6 marks] The brand strength, according to RCP’s East Asia Marketing Director, provides the company with an opportunity to extend the company’s market beyond Europe, as RCP plans. The created maintained through years brand strength of RCP builds customer loyalty, ensures the company is known by potential clients and supports positive image of RCP (Brandirectory.com) b. Explain how RCP’s clients might benefit from RCP’s brand strength. [6 marks] A strong brand of RCP gives its clients, first of all, protection – they can be sure that all their needs will be met and possible problems with RCP products – solved. The clients are provided with the brand’s responsiveness to market changes and, thus, to potential changes in clients’ needs. The strong brand helps the clients to understand its benefits over the others. In addition, a strong brand is a consistent one, so the clients are sure they won’t have any unsolvable problems with RCP and, therefore, feel more secure working with them (Oswald, 2011). Q6. With reference to the case study explain the difference between ‘hard’ and ‘soft’ HRM. [6 marks] RCP is planning to hire additional staff as a result of current operations analysis – these are the elements of hard HRM. At the same time, RCP devoted many resources to organizational development, staff education and organizational culture, which are all parts of soft HRM. Q7. a. What is meant by organisational culture. [4 marks] Organizational culture can be defined as a set of values, beliefs and practices that are shared by all of the organization’s members. Such values and practices are promoted and supported within the organization, as well as being passed over to every new employee (National Defence University). b. To what extent do you believe that the different levels of organisational culture at RCP are aligned. [15 marks] The company understands the importance of task culture, empowers employees and expects them to challenge bad practices. In order to align these goals with the actual situation RCP has the head office is designed in an open-plan way so that employees can communicate with management whenever they feel it’s needed. So, such a design reflects the company’s values. In addition, in order for the employees values to be aligned with corporate ones, the employees are getting training and coaching. Q8. a. What is leadership? [2 marks] Leadership is a person’s ability to effectively motivate other people for certain achievements. This involves leading a group of people toward a particular goal. b. With reference to ONE theory of leadership, identify and explain the style of leadership that you believe exists at RCP. [10 marks] Participative leadership theory claims that people’s involvement in decision-making leads to their commitment and, as a result, better performance. In the framework of participative leadership RCP, I believe, employs Lewins democratic leadership style – people take part in decision-making, enjoy effective communication and follow clearly planned steps toward the goal (Changingminds.org). Q9. Rachel states that the RCP workforce is highly motivated. How might motivation theory explain this. [10 marks] RCP devotes much attention to training, leadership style and the process of management. As a result, employees feel needed and empowered. They are highly motivated because their physiological, safety, belonging, esteem and self-actualization needs are met (Stuart-Kotze). References Brandirectory.com. 2011. Brand Strength – Definition. [online] Available at: [Accessed 3 April 2011]. Businessdictionary.com. Distribution channel. [online] Available at: [Accessed 3 April 2011]. Changingminds.org. Lewins leadership styles. [online] Available at: [Accessed 3 April 2011]. Entrepreneur Media, Inc. 2011. Elements of a Business Plan. [online] Available at: [Accessed 3 April 2011]. Nandi, Sukumbar. 2009. Economic Environement of Business: Importatn Factors. AuthorSTREAM. [online] Available at: [Accessed 3 April 2011]. National Defence University. Organizational Culture. Strategic Leadership and Decision Making. [online] Available at: [Accessed 3 April 2011]. Oswald, Nina. 2011. 10 Principles of Brand Strength. [online] Available at: [Accessed 3 April 2011]. Stuart-Kotze, Robin. Motivation Theory. [online] Available at: [Accessed 3 April 2011]. Read More