Essentially the internal environment can be interpreted as the trends of an organisation that effect the management, the employees and the overall culture of the business itself. These effect people’s thoughts, feelings and general attitude towards their work. In the case of the restaurant this is fundamentally a part of a family-run chain and there will always be the risk factor involved with family run enterprises and the possibility of internal feuding which could impact on the existing manager, Alex at any time. Operating as a franchise the business will always be influenced and directed organisationally by a set of objectives that are filtered down by a much larger umbrella of management. Alex is used to working in a Retail environment which automatically assumes that he will not have such a good understanding of the catering trade. In addition, if his background is common knowledge amongst staff members generally they may have less respect for the types of decisions he makes as they may consider them uninformed. This could have an effect on the way in which his team respond and react to him. This is not helped by the fact that there is confusion over his role as Manager. He is incapable of delegating the more basic and operational tasks down to his Deputy Manager. Consequently this will have a knock on approach to how both the Deputy Manager is viewed, as someone in the middle who has few responsibilities and a team of ground-level staff who are expected to take their everyday domestic and operational issues to the Manager and not the Deputy Manager. Leaving less free time to focus on the marketing and staff training which are integral to running the business successfully. If the staff are not receiving adequate training and work only to a substitute handbook of instructions they may be working ineffectually. They will also no doubt be performing tasks without clear health and safety guidelines and therefore will be more likely to be asking more questions, taking longer to do their tasks, putting themselves and the customers at risk and ultimately be working in a confusing environment which is harmful to the business. Alex will be trying to respond to the demands of his hierarchical external managers, whilst dealing with the day to day problems of his own team and the problems arising from his failure to clarify roles and responsibilities effectively.
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With the NHS based domestic services business, the internal environment will influence Rose tremendously as she is overseeing a period of change, where the roles of her staff will be affected and are threatened by the oncoming competition that the team must face through external contractors. Managing periods of change are always difficult and Rose will come up for criticism amongst all her team members regardless of whether she exacts a good job or not. The attitude of the staff will be low, and angry under the threat of redundancy. This will make a consolidated workforce difficult to maintain, particularly if there are regular union differences and employment issues to deal with. Levels of speculation and gossip will be influencing an already constantly interrupted negative approach to everyday tasks and duties.
Rose will also need to maintain relationships with other hospital personnel in order to sustain a profile and level of satisfaction amongst ward staff. Her inability to liaise with nursing and medical staff may have negative implications for her own team as these are the key staff that they will need to impress in the face of slow down competition. The level of the organisation will also present added pressures to the existing uncertainty and staffing issues, making the internal environment a stressful and unpredictable one for Rose to be operating effectively in as a Manager.
1.2 The External Environment
The external environment in which Alex is working in will influence and impact in a number of ways. Basically as the business is a franchise he will not have any control over whether the decision to close the business or not is made in the future and all major strategic and financial decisions are made for him. As a catering business there could at any time be a significant change in consumer interest and they could loose passing trade, particularly if a competitor chose to set up a similar restaurant along the same stretch of road. Alex could loose both his customers and staff to a restaurant nearby offering better incentives. This is a particular threat in that no one person currently seems to be taking responsibility for the Marketing and PR. The Manager should be leading this as it is essential for the
business is to remain popular and maintain its local profile and appeal within its market. Although the restaurant has a reputation to be value for money, it could be affected by the economic situation of the company or even the locality in which it is based at any time. Which is even more reason to ensure a widespread marketing strategy is adopted.
Rose’s business has to contend with the ever shifting goal posts of national Government policies and the objectives and budget allocations for the NHS.
In addition to this she has to manage the process by which she handles the inevitable and impending external competition which is about to come into operation. This means that she will need to have a fully operational team of staff who are above average in their abilities to fight off competition for contracts within the hospital.
Another ongoing external factor may well have to take into consideration the attitudes of the patients themselves regarding health and cleanliness. The cleaning staff may come under the scrutiny of the general public and need to be prepared to respond to public complaints regarding general standards of hygiene etc.
Changes in Employment Law and how it applies to the current transitional state that the service is operating in will have an external impact on the business from the point of view of the existing and new rights of Rose’s staff members as will the role of the Trade Unions. She will need to respond and react to these forces quickly and with knowledge and confidence as to how she takes them forward and eventually implements them.
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2.0 Explain the Resource-Based approach in the context of strategic analysis
Strategic business decisions are usually complex. This complexity arises because the decisions that need to be made are often speculative and involve uncertainty. They need to include a fully integrated approach of all the elements of an organisation. Strategic analysis is therefore concerned with understanding the actual strategic position of the company and measuring its activities against its environment, including identifying the resources that are necessary in order to achieve this. The resource-based approach takes into consideration the following factors in order to determine the level of relevance and importance each resource has within the company. Once the key resources have been identified, they then need to be evaluated in terms of whether they are valuable, rare, in-imitable and non-substitutable.
When defining what constitutes a resource a need to consider all the financial assets, capabilities, information and level of knowledge and skills that exist within an organisation need to be rationalised.
On this basis the resource-based approach can be measured in the restaurant in terms of the building itself; which must hold an investment value, although this may be determinable by whether it is lease-hold or not. Other assets might include its location. Situated right on the main road it is ideal for attracting regular passing trade. The restaurant is controlled by another company who has a profile and reputation by way of their successful national chain. This in itself is a valuable resource. It possesses the capabilities and knowledge that are necessary for running a catering business within its team of experienced staff, together with any profits it has gained from its success. In addition the business has the skills and reputation behind it of its main backers and directors who have over twenty years experience of working in this sector.
Comparatively the hospital domestic service has shifted from being an invaluable resource to the hospital as the only provider of this type of service, to one that can now potentially be replicated by any number of competitors.
As a business it can place value on its equipment which will include all of its industrial machinery. It is currently quite weak in terms of its resource levels in an environment which is changing but may consequently strengthen and improve in value by way of being forced to become more independent in its overall structural organisation and thus more competitive. The level of resources is likely to change with the new role of the business which might need to upgrade its equipment and recruit more experienced, better trained staff, in addition to re-training the existing ones to up skill and increase their overall marketability.
3.0 Identify the strategic capabilities of each of the organisations in the case study, and discuss how they can be best used to achieve and continually improve cost efficiency for them
A simplified definition of strategic capabilities lies in the amount of competencies, knowledge, and skills that an organization can employ in order to sustain and increase their level of success in a competitive market. It also includes the consequent need to adapt and change with the current trends – be innovative and incorporate a unique selling point that can be flexible and reinvented accordingly.
The strengths of the restaurant are apparent from the success of its reputable chain and that it provides a simple set-menu service for a wide audience, in particular families which has a low budget price but is also one step above cheap fast food as it provides a sit down waitress service.
Another novel aspect of the business is that the large food and leisure company that own the franchise are a family business, which makes the restaurant more appealing to that same family market and this will carry a degree of respect and reliability attached to the name as a consequence.
The fact that there is also a small shop and playground facilities on site will enhance the capabilities of the business. The shop might consider retailing local produce sourced from local providers like farmers and craftspeople. This would enhance their wholesome image and may increase revenue as the popularity for local, organically produced fare continues to increase. In addition it will strengthen their local profile and build on local partnerships which can only benefit the company in the long-term future. If they can maintain local support this could assist them in the future if their current passing and road-side trade is jeopardized in any way. It is also helpful to consider that the current Manager Alex has a background and managerial skills based in Retail, so his leadership skills in developing this area would be invaluable.
This organization may also want to look at benchmarking some of their ideas against other successful models. For example the Marriot Hotel chain developed a recruitment campaign aimed at retirees and other part-time workers which included a new system of managerial awards and incentives for their staff. So rather than trying to maintain its level of competition through product and undercutting prices across all the other hotel chains, it decided instead to look at its organizational capability. As a result it became the employer of choice and created a unique framework within its own competitive field.
The chain of restaurants under discussion here might consider adopting a similar model that it could roll-out across all of its restaurants only using a scheme that looked at recruiting and training the long term unemployed or as Jamie Oliver has done concentrating on up-skilling disadvantaged young people.
In relation to the domestic services unit their strategic capabilities are less obvious. The main one being that they did have the monopoly across the hospital for delivering this type of work. Despite the change in hospital policy enabling external contracting and Rose’s existing service having to adapt to the need to be more competitive, the business she manages does still have the advantage of being the one provider which is actually based on site and may be more economically and operationally in a stronger position to gain the contracts they need across the hospital. Increasing the strength of their relationships between staff internally will assist with their overall promotion. If they are seen to be available, contactable and possessing a noticeable profile within the hospital they will be more likely to gain the work they need in order to maintain their service.
In addition they might want to explore the possibility of investing in a new line of environmentally friendly cleaning products. This could promote them as a more eligible and ethical option for consideration. They could organise a series of awareness self-promotional days in the hospital by inviting potential clients including medical and nursing staff to come and sample their new cleaning products range through demonstrations. This might help them achieve the presence they need to legitimise themselves within the hospital itself.
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