The shrinking world due to Globalisation

The world is getting smaller day by day in terms of business perspectives, communications, relationships, decision making etc. Globalization makes narrower to the people as well. Now-a-days the multinational companies are introducing their brand in globally with their variety of products and services. Companies are focusing the demographic issues and cultural barriers when they designed their products or service. With their prior concern regarding the management structure specially deal with public relation and government legislation like Import rules, duty and vat, customs’ process and others related new company entry rules and licensing stuffs. For example, Unilever are spreading its products every where in the world, its popular beauty soap “Lux” is every where in the world almost. The product colour and flavour are not exactly same as well. Beside bar soap they are now more focus on liquid soap with different flavour and colour. It’s because of increasing competition in the market. In every minute one leading company’s are struggling to keep their position in the market. Developing new strategy and approaches, cost minimization, making most of the company’s resources.

Case study:

In uk Waitrose supermarket is one of the leading food retailers and for the quality of foods and services is renowned. Waitrose is a part of John Lewis partnership and Greenbee also it’s another wing called name. John Lewis has 28 department stores and one John Lewis at home. 69,000 partners have in john Lewis (all staffs are called by partner) and the first profit scheme which called partnership was established in 1920. For best service and success of the organization, continuous improvement is very essential for the Partners because they are directly interacting with customers and facing noble situations. In John Lewis they have some unique motivation key like increment, Partnership bonus and many kind of reward that motivate partners and management leading their team in good way and its effect we saw in 2009 due to financial crisis Waitrose did very well without any job cut. Yes there was some hour cut in branch and for that’s why they faced some difficulty like, for a customer it was bit difficult to find out available staff in shop floor for help. Strong leadership, motivated hard working team and effective organizational culture is the main pillar to become Waitrose successful retailer in the UK. In 1937 John Lewis partnership acquired Waitrose and in 1955opened first supermarket. In present Waitrose have 222 supermarkets, catalogue and an online business in the UK and also they have branches in UAE. Partnership turnover was £6bn In 2009/10 report and second half of this year they increased their sales 11.4%% and sales are 1.3% lower in John Lewis. In Dubai 5137sq meter with 150 employees in Dubai mall operating with Spinney company. At November 2008 First Waitrose established in Dubai and around 2010 there will be open 20 more stores and also one in Bahrain will have by 2010.

Waitrose has today announced that it will open its first smaller format convenience store this summer as part of its plans to increase its presence in the UK’s convenience sector. The first of the new format stores, which will offer shops with sales areas ranging from 2,000-4,000 sqft, will open in Fitzroy Street, Cambridge in early summer and create up to 40 new jobs. It will be the first of four initial trials of the format planned for this year and will become the first Waitrose shop in its core estate to measure under 3,000sqft.The smaller convenience shops will help the supermarket in bringing its brand to the 6.5 million potential customers it has identified who are currently unable to easily access Waitrose.

To read this above paragraph we can see that organizations are constantly changing day by day. Employees are affected by this change and need to adapt, learn new skills, knowledge in order to be able adapt and keep up with the pace in the market. However, due to the changing of business climate and Technology Company should provide the entire knowledge and skills make a competent workforce. There are many external factors which can be identified, which affect the working culture and environment of the company and in this case Waitrose. Here we look at the various external factors under various heads in the analysis such as Political, Legal, Socio-cultural, and Environmental.

Change facts:

Organizational change occurs when a company makes a transition from its current state to some desired future state. Managing organizational change is the process of planning and implementing change in organizations in such a way as to minimize employee resistance and cost to the organization, while also maximizing the effectiveness of the change effort. And also compete with competition in the market.

Organizational change initiatives often arise out of problems faced by a company. In some cases, however, companies are encouraged to change for other, more positive reasons. Change commonly occurs because the organization experiences some difficulty, or sometime for more efficiency with resources. But sometimes the most constructive change takes place not because of problems but because of opportunities. The Bateman, Thomas S., and Carl P. Zeithaml (1990) used the term “performance gap” to describe the difference between a company’s actual performance and the performance of which it is capable. Recognition of a performance gap often provides the impetus for change, as companies strive to improve their performance to expected levels. This sort of gap is also where many entrepreneurs find opportunities to begin new businesses.

Analysis:

World is getting smaller day by day and every thing is changing in this planet. Business is also affected by these changes. To meet the government new legislation or develop their new product they are changing their organizational system, characteristics structure and sometime business environment as well. To do these changes there is a lot of resistance and here we will analyse how to reduce this resistance. PESTL analyse and SWOT analyse is the easiest way to do this analyse. “PESTL analysis makes the companies understandable about external environment where they are operating their business and they can establish their future plan” (Blery & Sfetsion, 2008). On the other hand to find out the relationship between the external and internal appraisals in strategic analysis we need SWOT analysis. SWOT analysing the key factors of the environment and the fundamental internal strengths and weaknesses of the organization will help dictate the strategies appropriate to the firm.

PESTL Analysis on Waitrose:

It’s very important for any organisation to give attention of there external environmental factor. External environmental analysis can help to identify the direction of the industry and thus predict the future. Waitrose may use PESTLE analysis as various benefits. It is useful for Waitrose when used as a checklist, from when little deduction can be maid. It may enable the identification of key pressures and drivers of change. When Waitrose has workout which elements are most important which are less and their differential impact may change over time.

(Ray Donnelly, 2000)

Political-factors:

Law and political stability is the most common political issues. Law is very important for any business State. The Government is always changeable. All the politicians come from different level so they may have indifferent views. They will create the Law from their different views. So business industry will be affected by that Law. As an example in UK, 1996 they introduce a law about restriction of selling and marketing Knives. Australia also band automatic weapon. Belarus obstructs to sell some foreign product. (Chee and Hassis, 1998).

It may as well include the legal aspect and is composed of laws, government agencies, and pressure groups that influence and limit various organizations and individuals. These laws may often create new opportunities for businesses.

Economical- factors:

Economic conditions have enormous implication for business strategy. The interface between the business and its economic environment are several. Economic factors affects cost, consumer demand, financing option, raw materials availabilities, pricing and many more matters. (Roger Bennett 1999)

United Kingdom has very strong economic growth and high GDP trends. Bank Rate to raise towards 5.75% by the end of 2007, Interest rate futures in the United Kingdom. The effective exchange rate for Sterling fell almost 2%, the growth of credit and broad money remained rapid. UK domestic products increased by 0.7% then 2006.

Markets require purchasing power as well as people. The available purchasing power in an economy depends on current income, prices, savings, debts, and credit availability. Waitrose one of the biggest retailers in UK has managed to retain its competitiveness within the market and its demand for products has been high ever since.

Market expansion

Employment

Inflation

Exchange Rates

Interest Rates

Trade balance

Structure and structural change

Socio-Cultural- factors:

A social issue is an important factor for a business. Day by day people are become internationalists. People are involved with different business. They are changing their life style. UK in 1960 if any non-smoker gives complain against smoker its abnormal, in 1980 non- smoker were the majority and become common in office and in 1990 smoker was atypical. Now it is anti-social and prohibitten on public transport and work place.

A countries culture effect on there residence lifestyle and there behaviour. UK is one of the country where the life style rapidly change it may cause for unstable market. It also focuses on:

What people buy

Who does the purchasing and

Overall pattern of consumer buying behaviour.

Human rights

Career Expectations of people

Employee Motivation

Growth of population

Age distribution of population

Regional shifts in population

Technology- factors:

Technology spends on R&D, innovating new product, new service, electronic point of sales; online shopping. As the technological advancement is going faster in UK the e-business is moving concurrently. Introducing the Fibber optical, V-set installation, Radio Link and Broadband are available in UK. The people are using the online to buy their daily necessary. Very frequently Waitrose can expand their online shopping business where they earned their most of the revenue. Quality of product will take customer demanded as well as those products that has the latest up-gradation from the distributors predicting its demand in near future.

Research and Development

Computerise processing system

Online Shopping

Payment protection system

Use of new Technology

Legal factors:

The company is regulated by federal, state and international environmental laws governing their utilization of substances and control of emissions. These laws have a direct impact on the development of its products. The company is required to comply with air emission standards which are applicable to internal combustion engines.

SWOAT analysis for Waitrose:

Robson believes that a SWOT analysis defines the relationship between the internal and external appraisals in strategic analysis. Analysing the key factors of the environment and the fundamental internal strengths and weaknesses of the organization will help dictate the strategies appropriate to the firm.

Strengths:

The firm’s main strength is its solid revenues which are generated from its presence all around the world and help the organization to survive now and in future.

It has set out standards and policies which are used to approach different markets appropriately. It also has techniques to retain markets against its competitors.

It has managed to remain competitive in the market.

It has established a multi brand differentiation strategy which has accordingly been adopted to meet different needs in different countries.

It has maintained strong and steady relationship with the government.

Ability to manage highly qualified and motivated human resources

Weaknesses:

Instability of foreign exchange rates makes planning of budgets and profits difficult.

It engages in heavy costs of production especially in Europe due to excessive tax deduction requirements in some of the countries.

Product information website is not clear

Operation performance is poor

HR strategy is not to strong

Opportunities:

The establishment of common business process and information systems allow the company to collect data and making decisions for overseas markets more easily.

Although, Waitrose is a recognised brand, its current process of innovation and development of new products, indicates a rapid growth in the highest potential markets around the globe.

Owner by John Lewes

Globally online business.

Marketing & sales

Outbound Logistic – Goods Issue

Threats:

Fluctuations in foreign exchange rates mean a high risk for the company.

Fluctuations in demands especially the increased demand in overseas markets make the planning process more tough, and hence a continuous price pressure arises from various markets.

Another threat is its rising labour and health care cost, owed to the increasing number of employees working for the company.

Risk of strikes from trade unions and new country policies are another major threat to the organization.