Organisational Insight Analytical - Case Study Example

Organisational Insight Analytical Essay The two organisations that are being assessed are Boyes and Bostonair. The internal and external environments of both organisations are being analysed. The strengths and weaknesses of the organisations relative to its competitors will comprise the internal environment analysis. The opportunities and threats facing the firm will cover the external environment analysis. External factors are those uncontrollable elements while internal factors are to a certain extent changeable within the control of the organisation (Ip & Koo, 2004). Although both companies play at different markets and engage in different industries, they are of equal scale in terms of organisational structure and number of employees. Comparing and contrasting both companies with respect to their individual industries will provide significant insights on the nature of organisations, in general. A. Organisation: Boyes, Scarborough I. Internal Environment Analysis Strengths Strong Market Position in Scarborough – The company has a strong retail brand that built a reputation for selling quality goods at bargain price (Boyes, 2006). Boyes’ strong market position in Scarborough enhances the customer perception, company reputation, provides economies of scale and presents a platform to launch new products. It also enhances the brand image of the company. Strong market position enables the company to penetrate the market more effectively and serve a wide range of customers. (Best R. J., 1997) Balanced Product Mix – Boyes, Scarborough is engaged in operating a chain of department stores. The company’s key products include apparels, accessories, confectionery, cosmetics, electrical appliances, furniture, gifts, groceries, house wares, home decorative, stationery and toys. They sell virtually everything for the home and family (Boyes, 2006). A balanced product mix coupled with friendly and helpful services allowed Boyes to serve multiple customer segments which heighten its revenue growth. It provides greater choice to customers and encourages customer loyalty. (Best R. J., 1997) Weaknesses High dependence on Scarborough – Boyes is heavily dependent on the Scarborough market. Concentration of operations in the Scarborough area makes the company vulnerable to market conditions and environmental instability in this area. It puts the company in a competitive disadvantage relative to rivals and competitors with larger presence in different market geographical areas (Porter, 1985). As a business based largely in UK, Boyes is particularly exposed to any economic downturn which affects customer spending. II. External Environment Analysis Opportunities Expanding product portfolio – Boyes offers several products with a diverse range. It sells over 30,000 different items. The company is always on the lookout for new suppliers that would furnish their stores with merchandise. They are constantly acquiring new great-value items that would keep the store interesting (Boyes, 2006). As a result for expanding product range, the company would incur lower operational costs and gain greater demand (Waters, 2002). Growth in online retail spending – Online retail spending is expected to increase in 2010. More online users are likely to shop over the Internet in the coming years. It is expected that the Internet will influence about half of total retail sales in the industry (Datamonitor, 2008). The growing online spending will provide good opportunities for Boyes to invest in ecommerce and grow its business in the long term. A strong online presence would enable the company to serve new customer segments, avoid physical infrastructure investments and earn better margins (Rayport & Jaworski, 2002). Online sales would offer convenience to customers and cut down the company’s operating costs. (Best & Reinhard, 1989) Increasing store network – Boyes plans on increasing its store network. It is now operating 34 stores located in Yorkshire, Humberside, the North East, Lincolnshire, and recently into Nottinghamshire. The company is enthusiastic in increasing their image in the area such that they are finding suitable opportunities for expansion. They are interested on locating good secondary sites in larger towns or city centres, town centre positions, or out of town retail parks. (Boyes, 2006) The increase in store network would increase the proximity to customers which would lead to increase in customer traffic and eventually, result in more revenues to the company. Threats Intense competition – Boyes is facing stiff competition from a large number of companies in the retail and discount market. The company’s stores competes with retailers operating discount, department, variety and specialty shops, grocers, supermarkets, super centre-type stores and hyper marts. Such operators compete with merchandise selection and availability, service offered, location, store hours and price (Datamonitor, 2008). Intense competition leads to pricing pressures which could negatively affect the revenues and profitability of Boyes, Scarborough. Increased minimum wages in the UK – Labour costs in UK are rising. According to the Department of Business Enterprise and Regulatory Reform, the adult minimum wage has increased. The rate of those aged 16-21 has also risen (Datamonitor, 2008). An increase in labour costs would adversely impact Boyes’ profitability and margins. Low consumer confidence in UK – Consumer confidence in UK has weakened recently. This is due to the continuing rise on food and energy costs. According to the National consumer confidence index, consumer confidence fell by several points with respect to previous year. Also, the consumer’s outlook on the general economic situation in the region has decreased. Moreover, a measure of their financial situation over the year dropped several notch (Datamonitor, 2008). A declining consumer index suggests that consumers will tend to purchase less goods and services. Furthermore, the decline would affect the demand for Boyes’ products. B. Organisation: Bostonair, Ltd. I. Internal Environment Analysis Strengths Responsive and integrated service management – Bostonair takes pride on their dedicated management team. The team is committed in providing exceptional service to the airline industry. Their excellent airline industry knowledge and vast pool of engineers generates loyalty and respect from existing clients as well as positive reputation to potential customers. The responsive and integrated service gives rise to the successful and dynamic business of Bostonair, Ltd. (Bostonair, 2009) Powerful partners relationship – The relationship of the company with their clients goes beyond providing human resource. Bostonair is flexible to the increasing competitive market of the aircraft engineering and maintenance sector. The company aims at building relationships with clients that will facilitate the placement of best people who are fit and responsive to the requirements of the clients. The company also excels in dealing with staff retention and finds innovative ways of answering industry challenges. (Bostonair, 2009) Weaknesses High dependence on the performance of the airline industry – The core competence of the company is providing engineering and maintenance services to airline companies. Bostonair’s reliance and focus on the airline industry makes them vulnerable to the business performance of airlines. Sluggish operations of the industry especially with their key accounts, KLM and Lufthansa, would greatly affect the revenues of the company. II. External Environment Analysis Opportunities Continued growth in the aeronautics maintenance market – The aeronautics maintenance market is realising significant growth. The growth rate in Europe is close to market average. The proportion of outsourced maintenance is also increasing within the next ten years. (Datamonitor, 2008) The continued growth would provide an opportunity for the company to acquire new clients and expand its operation. Diverse service portfolio – Other industries also offers opportunities for the company to diversify its service portfolio. Bostonair is currently considering the power sector. The company provides staffing solutions to the power generation and power services industries. They are also targeting the industrial and marine turbine industries (Bostonair, 2009). With their successful staffing solutions in the airline industry, Bostonair can capture related markets with similar requirements and needs. Diversifying their service portfolio would generate more revenues for the company and opportunities for growth. Threats Economic Slowdown in UK – UK is experiencing an economic slowdown as with the rest of the world due to the global financial crisis (Datamonitor, 2008). A weak economic outlook for the company’s key market could put pressure on the revenues of Bostonair. Increased minimum wage in UK – The organisation employs 258 personnel of specialists, engineers and staffs. An increase in labour costs would affect the profitability of the company and may hamper its growth. Weak operating performance of key accounts – KLM and Lufthansa are the two key accounts of Bostonair. Both companies reported sluggish performance in their operations in the previous year (Datamonitor, 2008). The employee productivity is perceived to be low. The weak revenue per employee of the key accounts increases the cost burden of the company. As a result, poor operating performance negatively impact their recruitment strategies. As a placement agency, the revenues generated by new recruits and placements will be affected. C. Comparative Analysis of the Organisations Focus on the core competence of an organisation spells success in their business operations. Boyes and Bostonair do well on their respective business because they understood their expertise and proficiency. Core competence provides potential access to variety of markets and creates a significant contribution to the perceived customer benefits (Prahalad & Hamel, 1990; Lei & Hitt, 1996). Boyes has over 120 years of stock clearance experience that provides great trading opportunities for suppliers and attracts high customer traffic. Bostonair values the relationships with their partners and clients in providing staffing solutions and customer focused services. As a result, Bostonair positioned itself as a trusted supplier to major airline companies. Both companies exploited their core competencies to create competitive advantage. (Goddard, 1997) A dedicated management team is a critical requirement for achieving the organisation’s vision and goal (Daft & Marcic, 2008). Their effective strategies in the role of value chain or supply chain management play a key factor in both companies’ success (Chandra & Kumar, 2000). Value chain analysis is essential for the companies to attain competitive advantage and defend their market position (Porter, Competitive Strategy, 1980). Convergence strategy is the best way to serve different market segments. Convergence is a method of entering different industries with requirements that are similar. Companies can easily take part in one market as it has entered another (Dollar & Wolff, 1993). Boyes offers a wide range of bargain products from a variety of suppliers in order to increase sales and customer footfall. Bostonair plans of entering similar industries with turbine requirements such as power generation, marine and industrial sector. Convergence strategy is driven by a desire to please customers in an environment that is uncertain and rapidly changing. Customers wanted convenience and buys a wide range of goods and services from one single trusted supplier. (Whitley & Kristensen, 1996) In summary, both companies illustrate similar approaches in enhancing their market positions and value propositions in their product and service offerings to consumers. They provide greater value and create competitive advantage through improved product and service performance, innovative market strategies, and use of core competencies through their knowledge and experience. These companies can overcome their weaknesses by analysing and anticipating demands and economic conditions; through communications with suppliers and clients; and promoting high quality products and services as a foundation for loyal and solid customer base. To exploit market opportunities, both companies shall actively seek new markets, new customers and new industries in order to enhance growth and increase profitability. Bibliography Best, R. J. (1997). Market-based Management: Strategies for Growing Customer Value and Profitability. New Jersey: Prentice Hall, Inc. Best, R., & Reinhard, A. (1989). Strategies for Leveraging Technology Advantage. Handbook of Business Strategy . Bostonair. (2009). Building Powerful Partnerships. Retrieved May 5, 2009, from http://www.bostonair.co.uk/client.aspx Bostonair. (2009). The Growth of Bostonair. Retrieved May 5, 2009, from http://www.bostonair.co.uk/aboutus.aspx Boyes. (2006). About Boyes. 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