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As a student of Business Advance level 6 I study Business Management. This is big pleasure to absorb this kind of information especially in recession time what it is not enough. For better understanding of internal and external influence on organisation using my work experience placement as an example I found as much as possible information about this subject. In this way I established what I have learned in my school so far. Also it helped me to better understand the rules of my company to be a better employee in the future. I would like to prove that good understanding and using environmental analyses of the CDVEC can be lead to success in the business in this difficult time for the economy in the world.
3 . METHOD OF PROCEDURE
In order to obtain relevant information the following sources of information were used to construct this report.
3.1. Primary. I received relevant information about IFG group company from my colleague especially from persons who have been looking after me. They showed me how to make my work properly. They explained me company rules. As a work experience worker I have been observing strengths and weaknesses of my company and used them in my report.
3.2. Secondary. A lot of information about history and services provided I obtained from company brochures and company website, www.IFG.com,. The biggest source of information was Internet, academic books and knowledge learnt during the marketing lessons.
4.1. Description of organisation
The beginning of the company is dated on October 1989 when after corporate restructuring IFG company started being public company. In the following order companies started to be a part of IGF group:
since 1989 IFG International Limited and IFG Private Clients Limited
since 1990 IFG Corporate Pensions, IFG Life and Pensions Limited
since 1992 First National Trustee Company Limited
since 1997 Santhouse Whittington Actuarial Services Limited
since 2000 Planlife Advisory Services Limited, IFG Trust Limited
since 2001 Saunderson House Limited
since 2002 Pension Associates Limited, John Siddalls Limited, IPS Pensions Limited and Trade Credit Brokers Limited
At the end, the 6th of October 2008 IFG Group plc acquisitioned two Irish pensions companies PENSCO and Nameridge Limitet.
IFG Group is international, public limited company and it is located in Booterstown co Dublin. It is medium size company. It employs about 60 employees (29 persons in department where I have been working) in Ireland. IFG Group has branches in UK, Switzerland and Japan.
Logo of the Company consists of three elements: the red box, name of IFG company and a smile below the name.
Services of IFG Group focus on pensions, investments and advisory. It is divided into: IFG Corporate Pensions, IFG Private Clients, IFG Trustee Services and IFG Self-Administered. In my report I put emphasise on IFG Corporate Pensions because I have been working this department as a pension support administrator.
The organisation's customers are another companies (example Telephonica O2, Siliconsoftware, White Young Green, GTECH, Fexco) and individual customers as well.
IFG Group is managed by CEO. The company is divided into 6 departments. The Directors of all departments report to CEO. The investments report to investment director and consultants report to Business Development Director. Operation Manager is reporting to Client Service Director. The Operation Manager manages 3 teams. I have been working for team 3 as a support administrator. During my work experience I have been scanning documents, creating new documents but as well putting data to CPAS.
In IFG Group is wide span of control - CEO is in charge of a large number of directors and quite tall structure configuration (the company has more then one level in the hierarchy).
4.2.Internal influence on organisation
4.2.1.Resource Based View
Each company is composed with a set of resources. The more difficult the resources art to duplicate the stronger a company is among competitors. It means resources have to be inimitable (can not be imitated), immobile (can not be moved) and non-substitutable (can not be swiped by another similar resource).
There are three classes of resources:
tangible assets (having a physical existence e.g. buildings, vans, IT system, stock and so on)
intangible assets (can not be physically touched such as brand , good will, reputation, patent)
capabilities (ability of company to provide good service)
The tangible assets of IFG Group are: HP computers, monitors and printers, scanners, software necessary to use computers and as well software such as PROFOUND and CPAS, well done webside. The buildings (with furniture, telephones and some of printers) are rented. The company always has stationery in reserve.
The intangible assets of IFG Group are: good reputation what attract clients, name of the company, international good trained employees with big knowledge and good experience.
The capability of IFG Group is software CPAS. It is the best, from customers' point of view, software on pension market. Thanks to CPAS clients can follow the situation of the money that was put by them to pension or simulate future situation of their pension. In Ireland only IFG Group has software like that what make them very competitive on the market.
4.2.2.Value chain analysis
Value Chain Analysis is a set of activities that takes place in a business deciding that the particular company is strong or weak competitor comparing to companies with similar business. The idea was created by M. Porter in 1980. According to this idea the activities of a business are divided into two groups:
Primary activities - creating and delivering a product:
Inbound Logistics (receiving materials necessary for production)
Operations (making final product from materials)
Outbound Logistics (distributing product to distribution centres, wholesalers, retailers of customers)
Marketing and Sales (informing customers about product)
Services (set of services offered to customer after purchase a product / service)
Secondary Activities - set of activities which are not directly involved in production but necessary for efficiency
Procurement (getting materials for productions on easy terms)
Technology development (using technology for efficient production)
Human Resource Management (recruiting and training employees)
Firm Infrastructure (organization activities such as a finance, legal, management that work good enough to move company forward)
Below I would like to show how value chain is working in the company where I have work experience.
Inbound Logistics and Procurement - The IFG Group is a company providing services. They do not need goods to direct production but they need materials that help them provide efficient services to customer. From stationeries to software everything is excellently provided to employees. In special room there are paper, envelopes, labels, pens, markers and other necessary office stuff, easy to find without wasting time. Computers, printers, scanners are modern and efficient and as well they help to provide services to customers efficiently and on time. Because of the recession materials for productions are provided in convenient way for the company. About software I will write in the next part of my report.
Operations - all listed above materials help to finish and provid final services - collect money from customers and pass them to investment managers for investments and profits for future pension of customers.
Outbound Logistics - services of IFG Group are aimed to particular customers. They are not waiting for potential client. As a service it is impossible to give a client material, touchable product. Customers can only be informed about results of work of the company. What of course takes place in IFG Group. Because of correct activities like inbound logistics and operations customer is on time informed about results of service what make of the company credible stronger and makes employees pleased with their job.
Marketing and Sales - IFG Group has a very good webpage. All information about services, people who are working for the company, news about pension and future pension simulations are located on the Internet. The webpage is a strong point of the company and attracts its customers. Beside that the company publishes a quarterly magazine about the company and pensions.
Services - all products of the company are based on services. Services provided are in time. Employees collect information about customers, archives the information, change if it is necessary, make monthly contributions, sent money to investment managers and so on.
Technology development - in pension companies the appropriate technology is a source of competitive advantage - reduces costs of productions, helps efficient use of working time and reaching to customers. It is no doubt that good IT stuff (computers, monitors, printers, scanners and so on) has big influence on work of employees. Something what differentiate one pension company from another is software. Until 2009 IFG Group was using one system - PROFOUND - it was easy and efficient for employees. From this year they have started using CPAS. It is unique selling point of the company and the best software for customers (they always know what happened with their money after they login into the system on the Internet). Unfortunately it is not good software for employees. They need much more time for transforming data to this software, it is not easy to use and it makes mistakes.
Human Resource Management - employees are adequately recruited and trained. Because of lack of employees the human resource management recruits some work experience students to help.
Firm Infrastructure - all departments work efficiently. Thanks to intranet the communication system between them is very good. Every employee knows what going on in the company.
4.3.External influence on organisation
4.3.1.PEST analysis is one of the tools that are very helpful for scanning the external influence on organisation. It is giving information about external factors that affect market environment. Good PEST analysis can help avoid making failures especially when you want to lunch a company in a new country and will help you to adapt quickly your business to the new environment. PEST is abbreviation for political, economical, social and technological factors.
Below I would like to present PEST analysis using my work experience place as an example.
cost of living
Political Stability - there is no political uncertainty in Ireland at the moment. Political system (democracy) is stable and even thought people are not happy enough about the government behave (strike in public sector) there is no strong appearance against it. It means Ireland is a good, reliable partner and a good place to make business. Unfortunately the situation in the world is less optimistic. There are some parts of the glob where is almost impossible to lunch business (some parts of Asia and Africa, South America) because of danger of terrorist attacks or dictatorial government.
Rules of law - law in Ireland is quite stable, except tax law. Amendment of legislation is not very common comparing to another European countries (for example Poland). It creates good environment to create or to do business in Ireland. Tax that companies have to pay for government is still low .
Ireland like a 27 other countries belongs t o European Union. EU creates stable conditions to create business in one of the EU counties. There is the same law, in most of the countries is the same currency. There is no duty inside EU. Because of EU is much easier to open branch (like IFG group) in European country then before. There is unfortunately a dark side of that. You can choose country where you can pay the lowest tax for your office, but can make profit in another countries or choose county where the costs of production is lower (egg Dell) and in this way make bigger profit with lower costs - and makes bigger unemployment in your country. The bigger unemployment can affect companies (like my work experience company). People have no work, spend less many what affects the marketing environment.
Employment law - affects every kind of business. The most important issues in employment law for business are legal regulation about payed holidays and the minimal pay. Ireland is the country with one of the highest minimal pay what increases costs of business. Maybe lower minimal pay could give permission to employ more workers. On the other hand Irish employment legislation about payment holiday is one of the most strict in Europe (Poland -26, France - 30, Greece - 25, Ireland - 20) In Ireland there is no legal obligation to put aside every month on pensions like for example in Poland. It affects pensions companies - not everybody is interest in putting money on pensions. There is not legal obligation to pay social money and pension for employees.
Tax policy - so far according to tax legislation in Ireland, everybody can contribute a certain proportion of his income to his pension without being liable for tax. The more somebody earns the better this policy is for him. And egg the employee under 30 years are intitle to 15%, between 30 to 39 - 20%, between 40 to 49 - 25%At the moment there is new project that the tax relief will be abolished and in place of that the Exchequer will be pay 1 euro for every 1.6 euro paid by the individual. That can encourage every body no matter what the income is to pay for pention.
Unemployment in Ireland is one of the biggest in UE at the moment (over 13%). That mean less people have money to spend part of their salary/wages on pension- the company has less customers. On the other hand company has more possibilities to find good qualified employees, more experienced then before.
It is harder to keep business running. It can discourage employers to pay for employee part of pensions (so far many companies take care of pensions their employees giving them big part of saving money -50% for pension)
Bad economic cycle to result in closing a lot of small and middle companies. As a response for that the pension business is shrinking.
Tragic situation on share market from 2007 has resulted in big losses especially for the companies based on shares like pension companies. That could lead to bad atmosphere. Customers can lose their trust for put their money to pensions in the situation where their pensions depend on to share market.
Euro at the moment is strong currency comparing American dollar or pound sterling. There are advantages and disadvantages of that. Week pound or dollar makes customers to purchase products or services in other countries then their own. Every long term contract made before recession (when egg dollar or pound was strong), if the prices were described in the currency other then euro, the company is loosing money. I guess as the IFG group has branches in UK it has to be affected by this.
A lot of immigrants come back to their countries what make the situation on pension market worse because there are less potential costumers.
Population - from 1996 population of Ireland is systematically growing. For pension companies it is a very good sign - it is likely that in the future there will be more customers for this kind of business.
Education - because of the recession more young people consider to take higher level of education. This is to give them more opportunities to find a job. A lot of older people come bake to education after loosing job. Better education means better awareness about pension. The government's decision to make the education paid will decrease the number of students and will weaken the level of education in Ireland.
Recession makes the future uncertain. The high level of unemployment, unpaid mortgage can affect the pension companies. First people always think about satisfying the basic needs.
The cost of living is much lower then 2-3 years ago. There are cheaper apartments to rent or buy, in general cheaper food, holidays. If somebody has secure work it is very good time for him and time for thinking about future, when he will be +65.
Quick development of medical technologies causes longer and healthier life. It gives more possibilities to use saved money after the retirenment.
Technological developments - create opportunities for quicker and better services. From 80's when the first computers were introduced in companies to 2009 there is a huge difference. Every company is fully computerised. Computer organise work, make communication between colleagues and costumers easier. Every presentation can be done by using computer what makes it more interesting. Nobody has to count manually - computer (specially excel) can help. On the other hand too big dependence on computers can be dangerous specially when the new software is not perfect and may have bugs. Situation like this can cost a company a lot of money.
Internet is one of the best and quick ways to promotion service in the world. Almost everything can be purchased by Internet. There are no borders. Americans can purchase stuff in Ireland, Irish in UK without leaving their countries. There are even web pages where everybody can compare the same service offered by different companies. It is very good for customers but not always good for companies.
Good software can make more profits for a company as well. In the company where I have work experience, because of the new software, customers can simulate future pension using Internet questionnaire. That makes the company services more attractive and more competitive.
In my work experience company there is no better invention then scanner. The company every day is getting more and more documentation from customers, investment managers etc. The documentation has to be archived. For better everyday use employees scan the document and keep them on computer hard drives.
Unfortunately there is dark side of technological development. Technical devices reduce demand for workers.
4.3.2.Porter Five Forces - idea of Michael E. Porter about business strategy. It is consist of 5 factors: competitive rivalry, power of suppliers, power of buyers, potential entrants and treat of substitutes.
184.108.40.206 Competitive Rivalry
There is quite a large number of pension's firms in Ireland. The market is growing slow what increase rivalry. The cost of switching a pension company is not high. The level of service differentiation is not high. This situation makes competition higher. They have to work really hard to find unique selling point to make new and keep present customer.
IFG Group Company is medium pension firm. Her rivals are: Invesco, Mercer, Hewitts, Aon Source, Watson Wyatt. The biggest one is Mercer who is European Investment Consultant of the year for 6th years in a row by financial news. Invesco has the most competitive prices which are sometimes below market price. But IFG Group has the best pensions technology -CPAS.
220.127.116.11.Power of Suppliers
There are three kinds of suppliers working for IFG Group Company: IT suppliers, investment management suppliers and stationary suppliers.
At the moment the biggest software supplier is CPAS Systems Inc (Toronto, Canada). CPAS is a global supplier of pension administration and its system is created for employees of pension companies but as well for customer these companies. Only this company can provide services for IFG Group in CPAS area. It is non doubt that CPAS as a supplier has power. Nobody else can provide this service. Switching this software to another one would cost IFG Group a lot of money and a lot of time to transfer all date from one software to another.
Daily IT service is provided by employees of the IFG Group.
Investment managers as suppliers have no power. There is a lot of companies provide this kind of services, IFG Group can choose which one is more suitable for them. There is no huge cost to switch one investment to another. So for IFG Group as investment management suppliers are working: Bank of Ireland, Irish Life Investment Management, New Ireland Investment Management and Hibernian Aviva.
There is a big competitive market in stationary area. Customer can easily choose suitable stationary for them or change suppliers from one to another. The suppliers have no power.
18.104.22.168.Power of Buyers
During the recession customers of almost all businesses have powers. The same situation is in a pension's companies. There is no high differentiation over the service and customer can easily find and switch one company to another. If the written agreement between suppliers and buyers does not makes special relationship between buyers and suppliers it is easy to switch from one to another. Customers do not have to pay special money for switching.
22.214.171.124.Treat of Substitutes
The treat of substitutes is in the situation when possibility of change a company for another by customer is high. When the switching costs are not high, services are not unique and prices are competitive the treat of substitutes is real.
IFG Group Company as a pension company does not provided unique services. The switching costs are not high. Treat of substitutes are high. Only strong company name, good service and loyalty customers can keep business running.
126.96.36.199.Treat of New Entrant
Currently the economic situation does not create good circumstances for new entrants. It is hard to make new customers. There is a quite high number of companies specialised in pension. The cost of entry is high (specialized software). In general customers of pension companies are employers and they have contract relationship with the pension company what make them quite loyal. On the other hand it is not difficult to have access to suppliers (quite competitive market). It is not necessary to have specialised assets exclusive software. Even software is easy to buy when the new company has enough money.
It would not be easy to start new pension company in Ireland but if company already exists in another country started new pension business for them is possible.
4.4. SWOT is a set of tools helping to scan internal and external factors that affect business environment. SWOT analyse is consist of: strengths, weaknesses, opportunities and threats.
4.4.1. Strengths of the company are a set of factors, resources and capabilities, that make a company stronger comparing to competitors.
Strengths of IFG Group company:
Good internet web-page and good software (CPAS) - customer can simulate their pension - unique selling point
Good location - heart of Dublin
Quarterly newsletter of IFG services - easy explanation situation in pension for customers
Brochures are professional, clear and easy source of information about IFG group company
International staff - different points of view
Flexi hours for staff. In this way the company is open from 7am to 6.00 pm - longer opening hours for customers
Good marketing expertise what make easier win with competitors
Most of staff began his work from assistant and finish as a expert in pension - they know situation of the company very well, employees know that because of good work they can be promoted to higher level of the company hierarchy
Fast development of the company - last purchase of Pensco and Nameridge Limited in 6th October 2008 was successful and give IFG group access to CPAS software
4.4.2. Weaknesses of the company are lack of resources and capabilities. It makes a company worse in confrontation with another, similar companies.
Weaknesses of IFG Group Company:
Two different using software's (new CPAS and older Profound) make small chaos in the company. Profound is easy and quick to use for staff, it does not make a lot of problems, everybody likes this software. CPAS is the best software for customers. They can see in Internet where their money go, they can simulate their future pensions. Unfortunately employees do not like this software. It is slow, complicated and not perfect - need service many times. And because of new software all data have to be transferred from Profound to CPAS.
Lack of staff makes the employees work quicker but not better. They make some small mistakes because it is too much pressure on them there.
Every employee has his schemes (customers) and takes care only about them. But before dividing schemes into staff nobody notice that some customers (companies) are bigger and some are smaller. In the situation where everybody has similar number of scheme to work some employees have much more work to do then the others. That situation makes morale of staff lower.
Even though there is too much work in IFG Group Company nobody replaces the leaving staff.
Buildings where IFG Group is located are not owned by the company
Bad situation on the share market - big losses
Offering similar services to competitors
4.4.3. Opportunities are some indicating factors in which direction a company should go to make a better future for them.
Opportunities for IFG Group Company:
Lunched their services in Europe where there are not too many competitors in pension area e.g. Poland - easy entry, a lot of potential customers, especially in the time when a lot of Polish people come back to their country. They saved money on pension in Ireland. It would be easier for them to transfer money to the same company with the office in Poland.
New services e.g. insurance can attract more customers
To make brand name stronger then at the moment. Organized open days for customers can attract more potential clients.
To make awareness about pension bigger. Educated people about necessity to save money for pension to attract more customers. At the moment when the government's money is shrinking it is necessary to put extra money for better pension. Organise the training for people living in Ireland with the government can help to make bigger awareness about pension. Bigger awareness means more customers.
Buying the building where offices of IFG Group in Dublin are located can make assets of the company bigger and limited expenses in the future, especially when the prices of properties are lower
More attention of Asiatic market (not only Japan). Asia is the most growing part of the world. In the future it can be the biggest market.
Changing tax policy by government (idea that the government give 1 euro to every 1.6 euro for every person paying tax) can attract more customers
Growing up population in Ireland and lower cost of living what can bring more potential customers.
4.4.4. Threats are external factors that can make a company unsertain future. Especially when a company has a lot of weaknesses and lack of strengths.
Threats of the IFG Group Company:
Bigger and longer recession can affects the company and shrink its profits. More companies (customers of IFG Group Company) can be closed because of bad economic situation what affects profits of IFG.
The new worse legislation, especially tax legislation
Long lasting bad situation on the share market can bear more losses
Prices war with competitors can affect, especially not a big company like a IFG Group
Make powers of suppliers bigger can make more expenses for the company
New, bigger competitors with lower prices and better staff
Lack of new customers
If the employers have the lower income they can decrease the amount of spend for pensions (so far employer give 50% to employees for pension) and make profit of a pension company smaller
The people can lose interest in pension because of lower salaries.
Lost of unique selling point - good software (CPSA) can be used by other competitors
The first failures on share market in USA in 2007 began bad economic situation. Big unemployment, falling demand for products and services makes situation difficult for companies. A lot of them do not stand the test of recession and have to shut down. IFG Group Company is not one of them. It is not a big company but it still grows up - the last purchase of PENSCO and Nameridge Limited is dated on 6th of October 2008. Good marketing strategy and a good recognised marketing environment make this company strong. IFG Group Company is example that SWOT, PEST and porters five forces analyses are necessary to keep company running and making profit. CPAS software gives the company unique selling point. Because of CPAS customers of IFG Group can follow their pension 24/7.
6.RECOMMENDATIONS - even the best company can be better. After over 2 months of work experience for IFG Group I can recommend them some changes.
5.1.1.First of all the company should make her brand name stronger. Maybe sponsoring would be helpful.
5.1.2. To make awareness about pension bigger. Educated people about necessity to save money for pension to attract more customers. At the moment when the government's money is shrinking it is necessary to put extra money for better pension. Organise the training for people living in Ireland with the government can help to make bigger awareness about pension. Bigger awareness means more customers.
5.1.3.Make morale of employees higher to give employees enough time that they will be able to perform their duties. More people should be working for IFG Group company.
5.1.4.Give employees IT support after changing software which is fantastic for customers but not for staff.