Business Environment McDonalds

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The Business Environment MEP Group1

Title

Strategy is the direction & scope of an organisation over the long term: which achieves advantage for the organisation through its configuration of resources with in a challenging business environment, to meet the needs of the markets & to fulfil stakeholder expectations.

Abstract

The proposed study is focusing on an academic evaluation of the role of the strategy development in the business. It concentrates on the aspect of the accumulation of the available resources in the business with the impact of Micro & Macro environmental factors on the Strategic Management. Different academic tools of the corporate strategic planning & control are pre-screened in the view of their implementation in the business

Introduction

Strategy planning is an effective tool of the management of the business. Strategy of the business relates to the long term planning of the objectives of the business. It prefixes the goals of the proposed business activity which are to be achieved in the determined future period. In the business organisation strategy can be planned for the 3-5-10 yrs. It is the prospective business activity sustainable with the efficient & effective execution of the planning, organising, directing, staffing, controlling of the business activities for the future period. It enables the organisation to implement its optimum utilisation of the resources in the business in order to achieve the desired objectives of the business. It enables the organisation to enhance its capability towards the prospective growth & development in the business which is helpful to maintain its consistent stability in the competitive market. Organisation can satisfy changing demands of the customers in the emerging market to achieve the high turnover & high potentials in the business. It can adopt the latest advanced technology developments in the market to improve its production techniques. With the help of that strength of the business can be improved leading to higher turnover & profitability. It is commensurate to satisfy the expectations of the interested parties in the business as owners are getting higher returns on their investments, suppliers can decide the effective credit periods for their credit sales, financial institutions can assess the repayment schedule of their loans & advances, customers can achieve satisfaction of their demands & employers can decide the scope of employment vacancies to be fulfilled in the business.

Main Body

Literature Review

Business Operational Strategy is a directive guideline organised to deliver the corporate & business unit level strategic direction, Operational strategy always pre-screened the resources, processes & people. [James, 2008] In the area of markets & scope business strategy focuses on which markets should a business compete in & what kind of activities are involved in such markets? [Hudson, 2009] Business Strategy Development is an Executive Director of the business to determine the long term goals of the trade activity to be achieved in future [Philip, 2009] Business Strategy Management represents precise direction of how to improve the day to day performance in the emergent competitive market, it focuses on the required skills,assets,finance,relationships,technical competence, facilities & the overall resources mobilisation in the business for achieving the corporate objectives, it includes all the internal & external environmental factors affecting the ability of the business to stand in the competitive market, it affects the persons around the business who have power of virtue in terms of its value & expectations [Johnson, 2008] Corporate Strategy is planned & scopeful towards meeting the business objectives & expectations of the stakeholders - Owners, Financial Institutions,Customers,Suppliers,NGO,Public,Employer [Alex,2008] Business Unit Strategy is related to the strategic decisions about the choice of the products, meeting needs of the customers, gaining advantage over competitors, exploiting or creating new opportunities etc. which is an efficient & effective norm of the strategic analysis which contents of the selection of the right strategic choice & the right strategic implementation in the business [Robinson,2007] Managerial Tools have a significant impact in the process of the strategic management in the business, tools can be implemented in the form of strengths,weaknesses,opportunities,threats as well as political,social,environmental,ecological,legal,technological factors as a major part, it can also examines the Market Development, Product Development, Threat of New Entrants in the competitive market. [Taylor, 1982]

Discussion

Business Strategy is the determination of the corporate plans for the long term future. It decides the objectives & goals of the business to be achieved in the prospective period. It determines the directive guideline of the allocation of the available resources in the business in order to execute the predetermined corporate objectives & goals. It always focuses on the growth & development of the business. It is aimed by the different stakeholders who are holding the powers & interests in the management & control of the business in order to achieve their decided targets. In the group of stakeholders there are different Micro & Macro environmental factors are affecting the business playing an elementary role in an organisation's immediate area of operations impacting the business performance with the day to day decision-making of the business. Internal Environment also impacts the strategy management in the business along with the planning premises of the prospective business activities which includes organisation culture ,organisation structure,employees,internal systems,machinery,internal marketing. These are all the factors inherent & internal to the organisation. They have close relationships with the business activities in the organisation in the process of strategy planning & decision-making. Organisation Culture determines trends & ethics of the business in the day to day activity of the business. Organisation Structure comprises of the managerial hierarchy in the business at the top, medium ,lower level managers taking place in the process of technical, managerial & operational processes. Employees are the staff working in the administration & operations in the business. Internal systems in the organisation are playing a major role in the execution of the working environment & help to channels the day to day operations of the business. Machinery & internal marketing is the productive & business development tools internally developed in the organisation having major impact on the day to day performance of the business.

There are different Micro Environmental factors affecting the process of decision-making, policy making & strategy planning in the business. They have close impact on the operative direction of the business in the decision-making process. Following are the Micro Environmental factors impacting the business having close relationship between firms & driving forces in the management & control.

a) Customers -

Organisation is maintaining their business activity on the basis of the customers in the market. Strategy should be planned in such a way as to exclusively fulfil demands of the existing customers in the emergent market.

b) Employees -

Recruitment & selection of the right staff for the right type of the business activities is an important part of the process of the strategic management. It is the duty of the human resource department in the organisation to control over appointments of the people in the organisation with giving them training & development at the right time to achieve the optimum performance.

c) Suppliers -

Making a good relationships with the suppliers is a token of the availability of the needful raw materials at any given point of time in the business. It ensures the competitive strength of the organisation with the qualitative output.

d) Shareholders -

This is the source of an inward investments of the organisation useful for the time to time growth & development of the business. Increasing trend of the changing structure of the ownership of the business into private to public impacts the strategy of the organisation.

e) Media -

Attention of the media on the products or service of the organisations have close impact on the stand of organisation in the emergent market ie consumer programmes.

f) Competitors -

Product differentiation is the aim of marketing. It is the challenge before the marketing dept to present the competitive strength of the product to show how the desired product is superior to competitive manufacturers.

Different Macro environmental factors are having relationship with the decision-making & strategy planning process. Amendments in taxes, laws, trades, custom, demography, Government policy are denoting the macro changes in an environment in terms of the following factor analysis -

a) Political -

These factors are relating to the time to time changes in the policy of the Government affecting the level of economy of the nation. It implies the goods & services Govt desirous to provide, Is it suitable to subsidise the firms in the view of the Govt.,essential requisites of the business support along with the education of the workforce, national health, quality of the infrastructure of the economy eg.bridges,roads,rail.

b) Economic -

These are the factors influencing the economic position of the nation such as exchange rates, interest rates, changes in taxation, economic growth, inflation, recession etc. Higher interest rates increases the cost of the borrowed capital which is closely affecting capital investments in the market. Exchange rates impacting the foreign currency transactions in an international market. Inflation leads to higher production costs. Higher national income can be resulted in to the growing demand for the products.

c) Social -

When the trends in the society are changed in the market leading to the change in the demand for the product. For instance higher the proportion of ageing population leads to increase in the costs of pension payments for their employees as their staff are living longer. It also leads to the certain organisations to initiate the recruitment of the older employees in their labour pool. It is leading to the close impact on the demand in terms of ups & downs.

d) Technological -

These are the factors leading to the Product & process development in the organisation. Branded products can achieve the development of the new markets with the technological advancements.eg.MP3 Players, Computer Games. It is the sign of the cost reduction & quality appreciation with innovation.

e) Environmental -

These are the factors of changes in the climate,temperature,weather in the atmosphere. They have close impact on the performance of the business. Temperature changes impacts farming,tourism,insurance.Climate changes affects the travel & transportation industry.

f) Legal -

It implies legal changes in the environment in which firm operates.eg.age discrimination, disability discrimination legislation, increase in the minimum wage etc. Legal changes are resulting in to ups & downs in costs, demands & supply in the market.

Tools of Environmental Analysis

SWOT

Following are the strategic analysis of Tesco plc. At Goodmayes, one of the famous & useful supermarket as considered by the people all over London with the variety of products available.

Strengths -

Large scale supermarket in London & one of the biggest branch of Tesco in London having the vide variety of the products at the reasonable costs. Location of the supermarket is in the local area covered by the residential living beings. Situation on the road frontage & as a feasible,suitable,acceptable place of the business in the international city of London. Products available from the lowest price to the optimum highest price in several varieties & attractive colours at the cheaper rates. Suitable for the all the lower,middle,upper class of the people living in London. It is nearer from the bus stop as well as Goodmayes railway station.

Weaknesses -

No adequate parking place is available for vehicles so that customer many times fill trouble for coming for shopping There are only 5 cash counters & 1 help desk centre so that customers many times required to wait for a long time when they came for shopping.

Opportunities -

Wide opportunities of the business development are available in the hands of the owners as there is much more response from the customers in all classes of the people. The scope for the extension of the super market store is available for keeping more products/items for sale. With the help of the self service scheme given to the customers in the relation to select their items as per the desires there is an opportunity to save the labour cost & capital investment in the business. Wide scope for the appreciation of profits through the way of efficient & effective cost control.

Threats -

Close competition in the surrounding market area. Same products can be available at the costs in the local market. Limited staff & heavy rush of the people in the supermarket many times creates obstacles to the existing customers in the selection & confirmation of their product & many times they diverted to the nearer shops for purchasing of their desired products. Problem of the less shop floor space leading to the problem of accommodating the customers to stand at the shopping place leads to diversion of the customers in the nearer shops.

PESTEL

Survival of the business in the economy is depended on these socio cultural factors. Their impacts in the business are required to be considered in the strategic planning. For the long term period following are the factors to be implemented efficiently & effectively for the standing in the competitive market with regards to Sony Computers

India.

Political -

Recent national & international legislations about imports & exports of the electronic goods determines executive strategy Increase in the rate of Vat decreases the sale of the electronic goods due to the higher prices in the market. Govt.policies of excise duty levy increases burden on the sellers. Trading policies forcible in the market along with the norms of the regulatory bodies & processes have a significant impact due to unavailability of the raw materials in time.

Economic -

National economic situation of the country with overseas economic trends are affecting the plan of strategy of the computer business. With the impact of the Monetary issues, interest rates, exchange rates, taxation issues, trade cycles in the economic market strategy became restricted. Lower tax rates leading to moreover reinvestment in the business growth, lower exchange rates feasible for imports-export trade with regards to electronic items of the company.

Social -

Strategy is changed on the lifestyle trends ,consumer opinions,media,changes in laws & ethical issues. Let the buyer beware is an essential code of conduct in the maintained in the company business for determining a long term sales strategy So that customers are able to choose their products as per their habits & the recent market trends.

Technological -

Research & Development,Innovations,technological access ,mechanism, global communication is the focused aim in the business.Abundancy of technology with the latest innovations available in the company is resulted into potential growth of the business along with it is helping to the product & market development in the competitive market.

Environmental -

Market values, Global values, investor values, ecological & global factors are impacting the Global marketing of the computers around the world. Business dealing in the customer oriented products & electronic items is helping the business to capture the wide area of market e.g.MP3 player, Digital CDs.

Legal -

Laws relating to the custom duty are affecting the inter state business of the company. Information technology acts are playing the role of abiding the exclusive sale of electronic goods which are imported in the country from the European countries. This certainly reduces the turnover of the business due to the restrictions of the entry & exit in the domestic market.

These PESTEL factors can also be analysed in SWOT for the efficient strategic planning to fulfil stakeholders expectations.

Boston Box Matrix

It evaluates products of an organisation as per their market share towards the growth & development prospects. The diagram shows the beginning position of the Eventemps Ltd.a catering products agency in London.

Question marks are new products in the market with the high growth rate. Market entry was made here with a small market share. They were trying to improve their market position with investments. Successfully developed question marks implies high market shares & becomes Stars. Stars are products in their growth phase. Further investment was needful to maintain the high share in the growing market. When the market growth slows down there was saturation in the market. Product with a high share become cash cows generating a positive cash flow. There could be a well balanced portfolio if the cash flow from cash cow will be used for investments in question marks & stars. If cash cows are welpositioned they can have stable demands in the threat of new products releasing into markets. Dogs indicates products with a low market share & the low growth rate. Products in all other categories can become Dog. Even if at the poor prospects Dogs can be profitable.

This model is simplistic in the strategy planning of the business. A single element is to be properly selected from two parts of the strategic analysis so that valuable insights can be revealed in actual compositions of a company product portfolio & the remedial actions had taken to improve it.

Porters Generic strategies for E7 General stores at the Romford Road, London.

Cost Leadership Strategy

This generic strategy focuses on the lower cost & optimum quality. Shop sold its products at the average sales prices to increase the profits & in certain cases it sold below the average prices to sustain the market share. In times of price war profitability was maintained but competition suffered losses. When price war was over industry matures & prices decline, at that time shop was producing with in the less costs so that remain profitable for a longer time. Always broad market is targeted by the business.

Differentiation Strategy

This generic strategy helped to unique product development. Customers were perceiving to be better than or different from the competitive products. Premium prices were levied for the products. Internal strength of the shop was built up accessing to the leading scientific research & highly efficient, effective product development team.

Focus Strategy

It concentrated on the cost advantage & the differentiation of the product. A shop enjoyed higher degree of consumer loyalty in the competitive market. With this strategy shop was able to tailor an extensive range of product development strengths.

Conclusion & Recommendation

On the basis of the overall projected study it can be guessed that strategy planning is the long term objective of every organisation. It determines the projected activity in the predetermined future period. It helps the organisation in mobilising & implementing the available resources in an efficient & effective way in the competitive market environment. It facilitates the Market Development & Product Development in the Micro & Macro Business Environment. It develops a suitable, feasible & acceptable norm of fulfilling the expectations of stakeholders of the business.

From the point of view of developing the sustainable standing of the business in this challenging business environment it is advisable to every firm to -

a) Use strategic analytical tools of the management to make the classification of the available resources & make its feasibility for the timely implementation in the business.

b) Strategy planning & development should be the directive goal of every organisation for getting success in the business.

References

1] James,R 2008, Operational Strategy Planning, Strategic Management,London,UK5642632159

2] Hudson, A 2009,Activities of Market segmentation: Business Strategy,Richard,Cambridge,UK75894561

3] Philip,S 2009,The Legal & Regulatory Environment of the business: Strategic Planning Premises,Landmark,ISBN4568951

4] Robinson,V 2007,Resourse Optimisation in the business: Trade Strategy, Romford Publications,London,UK45685

5] Taylor,F 1982,Business Development Strategy, The Business Environment, Ferguson Education,Paris,FN4589756

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