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(A) PEST analysis students for "Political, Economic, Social, and Technological analysis'' and describes a framework of macro-environmental factors used in the environmental scanning component of strategic management. The model has recently been further extended to STEEPLE and STEEPLED, adding education and demographics factors. It is a part of the external analysis when conducting a strategic analysis or doing market research and gives a certain overview of the different macro environmental factors that the company has to take into consideration. It is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations.
The growing importance of environmental or technological factors in the first decade of the 21st century have given rise to green business and encouraged widespread use of an updated version of the PEST framework. STEER analysis systematically considers Social-cultural, Technological, Economic, Ecological, and Regulatory factors.
(B) SWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture.
It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective.
A SWOT analysis is designed to help an organization understand how it relates to its external environment. In other words, to act as a way of seeing if the organization is aligned with the world going on around it .
The strength in First Choice PLC: providing reliable, innovative and sustainable transport services.
By providing a vast range of transportation solution, First Choice differentiated its self, so this is a benefit for them.
They have developed strict operating practices based on the latest industry standards.
They aim to deliver the perfect journey by offering personalized service in a simple, distinctive, accessible way.
Forward thinking, innovative and possessing 'can do' attitudes are qualities they value in their employees. In everything they do, they set the highest standards, rather than meet them.
Weakness of First Choice PLS: First is a global business, but it aims to be local in its approach. This could have a negative impact on first operations.
Opportunity of First Choice PLC: people are turning mobile and travel a lot that means they will use public transport, so this First Choice is providing for them and encouraging the costumer to turn green and care for environment.
The number of older people in the UK is rising. There are more people with bus passes in this country then ever before.
Society's habits and tastes are changing. People are aware of the importance of the environment and becoming 'green consumers'. Green consumers prefer goods and services that are 'environmentally-friendly' and which have less impact on the environment. The green consumers, for example, prefers to travel by bus or train than by air or in a large car.
Safety: parents and students wanted the buses safer, and the first experimental design services especially with the student in mind, and based on lessons learned from the company's operations in the United States. Drivers and trained to work with the students. Every day the students step on the bus itself, and can take the same seat, and are done after consideration by the driver himself specially trained. Vehicle safety features include padded seats, safety belts integrated exit ports and additional closed-circuit television. The first is to work with government through a specially appointed yellow school bus committee to investigate the possibility of rolling out specialized yellow bus services throughout the United Kingdom.
Threats of First Choice PLC: easy entry of competition due to gouts privatization initiative.
This can be solved because first differentiating it self and it aims to satisfy the customers.
First Choice PLC aims to deliver the highest levels of services also give greater customer and employee satisfaction. First aims to deliver the perfect journey by offering personalized service in a simple, distinctive, accessible way. Also First aim is to be the most reliable and best run public transport operator and it aims to be the most progressive public transport provider. If
First want to ensure the stuff and stakeholders ,it should review and achieve these standards.
An assumption is a proposition that is taken for granted, as if it were true based upon presupposition without preponderance of the facts.
First employee has a responsibility for safety. The right attitude to safety:
Putting in the right policies, procedures, equipment, training and support. They will live the safety and ensure the future of the business.
First offers personalizing service in a simple distinctive, accessible way.
Employee must understand what people need and deliver it in a simple way.
They treat each other as equals and deal with situation in an honest and professional manner.
Deal and Kennedy's Model of Culture:
Deal and Kennedy's model of culture is based on characterizing different four types of organization, based on how quickly they receive feedback and reward after they have done something and the level of risks that they take.
The culture that First using is (work hard play hard) culture
Play- hard culture
Bet-the- company culture
This culture includes: rapid feed back, reward and law risk, it will lead to;
This has rapid feedback/reward and low risk, leading to:
Stress coming from quantity of work rather than uncertainty.
High-speed action leading to high-speed recreation.
E.g. Restaurants, software companies.
The Work Hard/Play Hard Culture is characterized by few risks being
Taken, all with rapid feedback. This is typical in large organizations, which
Strive for high quality customer service. It is often characterized by team meetings, jargon and buzzwords.
Employees are given quick rewards like incentive share bonus.
At First, focuses is on delivering good customer service. There is no stress due to uncertainty. Focus is on satisfying and relating customers. The feed back is quick as employees in First are given quick rewards like in certain bonus for their performances.
Organization Behavior is the study of individuals and groups in organization.
The shared values and beliefs among people in organization that affects the way they interacts, behaves and accomplishes certain task that distinguishes one organization with other organization.
First aims to be transparent in their dealings with others. Behaviors and values focuses on customer services. First predicts this culture as they are transparent in their dealings with customers, they deal with them in an honest and professional way to serve them. Thus the culture and behavior exhibited at First is consistent.
This has slow feedback/reward and low risk, leading to:
Low stress, plodding work, comfort and security. Stress may come from internal politics and stupidity of the system.
Development of bureaucracies and other ways of maintaining the status quo.
Focus on security of the past and of the future.
E.g. Banks, insurance companies.
The Process Culture occurs in organizations where there is little or no feedback. People become bogged down with how things are done not with what is to be achieved. This is often associated with bureaucracies. While it is easy to criticize these cultures for being overly cautious or bogged down in red tape, they do produce a consistent result, which is ideal in, for example, public services.
- Risk in the Process culture is low.
- Feedback and reward in the Process culture are slow.
It will lead to more stress because of the quantity of work; the high speed action will also lead to high speed recreation. The employee will not be motivated to work harder because the rewards are slow.
FIRST is a United Kingdom company operating BritishFIRST a world's leading transport operator . FIRST is the largest bus and train company in the U.S . and U.K . The company runs a quarter of the UK rail network. It provides very safe transport service.
This report shell use strategic tools like what is the organization adopting, this includes the business environment which will be appropriate for the business strategy.
I will also show what strategy choice and business strategy of FIRST. What are the factors that FIRST chose to conceder before changing its business strategy? The forces for change and against change. What is the role of FIRST .
A) Porter's Generic strategies :
Porter's Generic strategies :
A firm positions itself by leaving it strengths. Porter has argued that a firm's strengths ultimately fall into one of two headings: cost advantage, differentitiation and focus.
By applying these strengths in either a broad a narrow scope three generic strategies in either a broad or narrow scope, three are applied at the business unit level . They are called generic strategies because they are not firm or industry dependent.
The following illustrates Porter's generic strategies:
1. Cost Leadership.
The low cost leader in any market gains competitive advantage from being able to many to produce at the lowest cost. Factories are built and maintained , labor is recruited and trained to deliver the lowest possible costs of production. 'cost advantage' is the focus. Costs are shaved off every element of the value chain.
Products tend to be 'no frills.' However, low cost does not always lead to low price.
Producers could price at competitive parity, exploiting the benefits of a bigger margin than competitors. Some organizations, such as Toyota , are very good not only at producing high quality autos at a low price , but have the brand and marketing skills to use a premium pricing policy.
Differentiated goods and services satisfy the needs of customers through a sustainable competitive advantage. This allows companies to desensitize prices and focus on value that generates a comparatively higher price and a better margin . The benefits of differentiation require producers to segment markets in order to target goods and services at specific segments, generating a higher than average price. For example, In FIRST choice had differentiated the business by providing vast range of transport solution; this also includes a very safe and sustainable transport service.
In a differentiation strategy a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers. It selects one or more attributes that many buyers in an industry perceive as important , and uniquely positions it to meet those needs. It is rewarded for its uniqueness with a premium price.
3. Focus ( differentiation focus and cost focus )
The generic strategy of rests on the choice of a narrow competitive scope within an industry. The focuser selects a segment or group of segments in the industry and tailors its strategy to serving them to the exclusion of others .
The focus strategy has two variants.
In cost focus a firm seeks a cost advantage in its target segment , while in differentiation focus a firm seeks differentiation in its target segment . Both variants of the focus strategy rest on differences between a focuser's target segment and other segments in the industry . The target segments must either have buyers with unusual needs or else the production and delivery system that best serves the target segment must differ from that of other industry segments. Cost focus exploits differences in cost behavior in some segments, while differentiation focus exploits the special needs of buyers in certain segments.
The customers in FIRST were demanding on environment friendly service, therefore FIRST focus on the customers who would like to use friendly environment service.
B) Business strategy
Business strategy : " Strategy is the direction and scope of an organization over the long- term: which achieves advantage for the organization through its configuration of resources within a challenging environment , to meet the needs of markets and to fulfil stakeholder expectations".
In other words, strategy is about:
Where is the business trying to get to in the long-term (direction)
Which markets should a business compete in and what kind of activities are involved in such markets? (markets ;scope)
How can the business perform better than the competition in those markets? (advantage) ?
What resources (skill , assets ,finance, relationships , technical competence, facilities) are required in order to be compete? (resources)?
What external , environmental factors affect the businesses' ability to compete? (environment)?
What are the values and expectations of those who have power in and around the business? (stakeholders)
FIRST 's strategic choose was formed first as differentiation then they decided to use the differentiation focus , there main concern and focus is on the friendly environment customers, FISRT is pioneer is the transport service business who is trying to reduce CO2 emission to the minimum.
Strategic choice : or managerial choice . The views that, because of the power that organizations dispose of , in practice managers are often not constrained by contextual factors (like technology or environment) but exercise great discretion . Strategic choice is an implied criticism of contingency theory.
The strategic choose that FIRST had chosen Climate change. Climate change is generally recognized as the major environmental problem facing the globe.
They key elements that FIRST has included in its climate change strategy is, to improve its fuel efficiency of its vehicles, purchase vehicles with grater fuel efficiency, using fuels such as bio-diesel and improvement through drivers training and new technology to monitor driver performance.
FIRST had gained some benefit from implementing the climate choose strategy, which will effected on the way of reduction on the number of competitors as very few will be focusing on environment service. One of the most important stakeholders is the government and the customers, FIRST will increase the government expectation and make them satisfied by their performance and probably enhanced pubic image.
While the enviromantly customers will develop loyalty for FIRST 's service. One most important benefit that FIRST will get from choosing climate change strategy , is that they will be prepared for any straight and rules that comes in the future, the government will respect to emission of harmful gasses.
C) Comparing the two strategy
The strategy that FIRST is adopting is Differentiation focus. Companies that use Focus strategies well concentrate on particular niche markets and, by understanding the dynamics of that market and the unique needs of customers in it, develop uniquely well-specified products for the market. Because they serve customers in their market uniquely well, they tend to build strong brand loyalty amongst their customers. This makes their particular market segment less attractive to competitors. The key to making a success of a generic Focus strategy is to ensure that you are adding something a success of a generic Focus strategy is to ensure that you are aging something extra as a result of serving only that market niche.
Differentiation focus exploits the special needs of buyers in certain segments. Such differences imply that the segments ate poorly served by broadly-targeted competitors who serve them at the same time as they serve others. The focuser can thus achieve competitive advantage by dedicating itself to the segments exclusively. Breadth of target is clearly a matter of degree, but the essence of focus is the exploitation of a narrow target's differences from the balance of the industry. Narrow focus in and of itself is not sufficient for above-average performance.
Another strategy which FIRST can adopt is differentiation. A differentiation strategy, a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers. It selects one or more attributes that many buyers in an industry perceive as important, and uniquely and uniquely positions it to meet those needs . It is rewarded for its uniqueness with a premium price. The means for differentiation are peculiar to each industry. Differentiation can be based on the product itself, the delivery system by which it is sold , the marketing approach, and a broad range of other factors.
FIRST is focusing on friendly environment service and how to reduce the carbon emission. If they adopted the differentiation strategy will be concentrating on how to provide a vast range of solutions and aim to be local in its approach.
The management in FIRST will not be very bad if they adopted differentiation strategy, but it clearly shows that percentage of the number of people who prefer friendly environment service in UK is rising . They might loss big number of customers if they concentrated on something other than friendly environment service and reducing the carbon emission.
D) factors that FIRST should consider
Before FIRST consider changing its strategy they must assist on some factors and those are :
Social attitude towards Green consumers. Whether there is a big number of green consumers. The number of people who will be willing to use the public transport service.
Government initiative and expectation , the government is encouraging FIRST to reduce the emission of harmful gas in the air .They should know if the government is really supporting FIRST to reduce the carbon.
Improve the fuel efficiency of it vehicles.
They should identify of the climate change and also identify the ways of managing those risks.
Reduce the resistance from drivers would have to undergo training.
Responding to the change in demand from customers .
Preparing the employees within the organization for any new change whether technologically or enviromantly.
E) Key issue FIRST must consider
FIRST must consider some few issue while managing its business strategy .
They should first think of how they will manage if they got any climate change and what risk will they be facing and how to manage it .
They should also keep in mind that drivers will need to have special training; they should reduce reduction and resistance .
They should keep on budgeting for carbon credit due to carbon reduction commitments.
FIRST has to improve the fuel efficiency of its vehicles.
They need to start thinking of how to purchase vehicles vehicles with greater fuel efficiency.
F) Force Field Analysis
Force Field Analysis
It consists of a two column form , with driving forces listed in the first column , and restraining forces in the second.
The force field diagram is derived from the work of social psychologist Kurt Lewin .
According to Lewin's theories , human behavior is caused by forces ââ‚¬" beliefs , expectations , cultural norms, and the like ââ‚¬" within the "life space" of an individual or society. These forces can be positive , urging us toward a behavior , or negative, propelling us away from a behavior . A force field diagram portrays these driving forces and restraining forces that affect a central question or problem. A force field diagram can be used to compare any kind of opposites , actions and consequences, different points of view , and so on .
G) Stakeholder power
I shall use the stakeholder as a factor that I think will impact the management of change in FIRST choice
Stakeholders are the people who matter to a system. This tool helps understanding of how people affect policies and institutions, and how policies and institutions affect people. It is particularly useful in identifying the winners and losers and in highlighting the challenges that need to be faced to change behavior, develop capabilities and tackle inequalities.
Stakeholder power analysis is particularly useful for assisting in decision-making situations where various stakeholders have competing interests , resources are limited, and stakeholder needs must be appropriately balance.
Stakeholder power analysis can be used progressively to empower important but marginalized groups, and to improve policies and institutions. But the techniques can also be used more cynically to work out who should be manipulated, undermined or disposed of .
The two most important stakeholders to FIRST are government and customers.
Body of people that sets and administers public policy, and exercises executive, political, and sovereign power through customs, institutions, and laws within a state.
A person, company or other entity which buys goods and services produced by another person, company , or other entity.
Government is one of the most important stakeholder to FIRST. Privatization made it very easy for FIRST to enter new competitors, it made the business more competitive and help implement change in the strategy. They had to change their strategy. They had to change their strategy and focus on Green consumers.
The customers as stakeholders had a large influence on the management of change in FIRST. Change had to be implement not only because they were turning Green and demanding environment friendly service.
H ) Readiness assessments
Assessments are tools used by a change management team or project leader to assess the organization's readiness to change. Readiness assessments can include organizational assessments, culture and history assessments , employee assessments, sponsor assessments and change assessments. Each tool provides the project team with insights into the challenges and opportunities they may face during the change process.
Assess the scope of the change, including: How big is this change? How many people are affected? Is it a gradual or radical change?
Assess the readiness of the organization impacted by the change, including : What is the value-system and background of the impacted groups? How much change is already going on? What type of resistance can be expected?
Assess the strengths of your change management team.
Assess the change sponsors and take the first steps to enable them to effectively lead the change process.
Communication and communication planning
The first step in managing change is building awareness around the need for change and creating a desire among employees. Therefore , initial communications are typically designed to create awareness around the business reasons for change and the risk of not changing.
Likewise, at each step in the process, communications should be designed to share the right message at the right time.
communication planning, therefore, begins with a careful analysis of the audiences, key message and the timing for those messages. The change management team or project leaders must design a communication plan that addresses the needs of front-line employees, supervisors and executives. Each audience has particular needs for information based on their role in the implementation of the change.
Coaching and manager training for change management
Supervisors will playa key role in managing change. Ultimately, the direct supervisor has more influence over an employee's motivation to change than any other person at work .Unfortunately, supervisors as a group can be the most difficult to convince of the need for change and can be a source of resistance. It is vital for the change management team and executive sponsors to gain the support of supervisors and to build change leadership. Individual change management activities should be used to help these supervisors through the change process.
Training and training development
Training is the cornerstone for building knowledge about the change and the required skills. Project team members will develop training requirements based on the skills, knowledge and behaviors necessary to implement the change. These training requirements will be the starting point for the training group or the project team to develop training programs.
Resistance from employees and managers is normal. Persistent resistance, however, can threaten a project. The change management team needs to identify, understand and manage resistance throughout the organization. Resistance management is the processes and tools used by managers and executives with the support of project team to manage employee resistance.
Date collection, feedback analysis and corrective action
Employee involvement is a necessary and integral part of managing change. Managing change is not a one way street. Feedback from employees is a key element of the change management process. Analysis and corrective action based on this feedback provides a robust cycle for implementing change.
If FIRST would want to change so that they can meet the expectation of the customers and government they should have a very strong communication with one another, therefore the decision will be made very easily and they will plan for a better service. A better communication in an organization reduce conflict in the business
FIRST should keep on training not only their drivers but the people who are working in the business, therefore they will be prepared for any change, the drivers have the most important role in the organization therefore they should make sure they have the best qualities to do the job.
I) Kurt Lewin
Kurt Lewin theorized a three-stage model of change that has come to be known as the unfreezing-change-refreeze model that requires prior learning to be rejected and replaced. Edgar Schein provided further detail for a more comprehensive model of change calling this approach ''cognitive redefinition."
Stage 1- becoming motivated to change ( unfreezing )
This phase of change is built on the theory that human behavior is established by past observational learning and cultural influences. Change requires adding new forces for change or removal of some of the existing factors that are at play in perpetuating the behavior. This unfreezing process has three sub-process that relate to a readiness and motivation to change.
Disconfirmation where present conditions lead to dissatisfaction, such as not meeting personal goals. However, the larger the gap between what is believed and what needs to be believed for change to occur, the more likely the new information will be ignored.
Previous beliefs now being seen as invalid creates "survival anxiety." However, this may not be sufficient to prompt change if learning anxiety is present.
Learning anxiety triggers defensiveness and resistance due to the pain of having to unlearn what had been previously accepted. There stages occur in response to learning anxiety: denial; scapegoating & passing the buck; and maneuvering & bargaining.
It is necessary to move past the possible anxieties for change to progress. This can be accomplished by either having the survival anxiety be greater than the learning anxiety or, preferably, learning anxiety could be reduced.
Stage 2-change what needs to be changed (unfrozen and moving to a new state)
Once there is sufficient dissatisfaction with the current conditions and a real desire to make some change exists, it is necessary to identify exactly what needs to be changed. Three possible impacts from processing new information are: words take on new or expanded meaning; concepts are interpreted within a broader context, and there is an adjustment in the scale used in evaluating new input.
A concise view of the new state is required to clearly identify the gap between the present state and that being proposed. Activities that aid in marking the change include imitation of role models and looking for personalized solutions through trial-and-error learning.
Stage 3-making the change permanent (refreezing)
Refreezing is the final stage where new behavior becomes habitual, which includes developing a new self-concept & identity and establishing new interpersonal relationships.
FIRST has consciously introduce new and better ideas to reduce their internal and external environment they should raise their customers and government's expectation about the organization. FIRST should keep on training their employees so they can perform better and somehow it makes them feel motivated and encourage doing a better job.
It had shown that FIRST' started its business with differentiation then decided to move to differentiation focus. More making any move FIRST should first take into concretions of whether their customers like it or not. It clearly shows that the government and customers are satisfied with their performance. They should keep on improving their business and make sure they are up to date with the new technology and their drivers are well trained.