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FIRST Choice plc is the UK's Largest Surface transportation company. It has revenues of over 5 billion Euro a year. It employs over 135,000 staff throughout the UK and North America and moves more than 2.5 billion passengers a year.
FIRST is the largest UK rail operator carrying almost 270m passengers every ear. This is one quarter of the passenger network.
First is the leader in providing reliable, safe, innovative and sustainable transport services.
In this report will discuss about the company possible strategies in which FIRST can adopt. Will indicate the business environment would be appropriate for this strategy. Also will discuss the strategy FIRST could follow as alternative strategy.
Also, will discuss about the factors that FIRST Choice should consider before changing its business strategy, and describe the key issues that FIRST Choice must consider while managing its business strategy.
Will talk also about the role of FIRST's management and how could play in dealing with the change situation.
Possible strategies which organization may adopt
Cost Leadership Strategy
A firm pursuing a cost-leadership strategy attempts to gain a competitive advantage primarily by reducing its economic costs below its competitors. The associated distribution strategy is to obtain the most extensive distribution possible.
This generic strategy calls for being the low cost producer in an industry for a given level of quality. The firm sells its products either at average industry prices to earn a profit higher than that of rivals, or below the average industry prices to gain market share. In the event of a price war, the firm can maintain some profitability while the competition suffers losses. Even without a price war, as the industry matures and prices decline, the firms that can produce more cheaply will remain profitable for a longer period of time. The cost leadership strategy usually targets a broad market.
Firms that succeed in cost leadership often have the following internal strengths:
Access to the capital required to make a significant investment in production assets; this investment represents a barrier to entry that many firms may not overcome.
Skill in designing products for efficient manufacturing, for example, having a small component count to shorten the assembly process.
High level of expertise in manufacturing process engineering.
Efficient distribution channels.
Approach under which a firm aims to develop and market unique products for different customer segments.. This can provide considerable insulation from competition. However there are usually additional costs associated with the differentiating product features and this could require a premium pricing strategy.
Firms that succeed in a differentiation strategy often have the following internal strengths:
Access to leading scientific research.
Highly skilled and creative product development team.
Strong sales team with the ability to successfully communicate the perceived strengths of the product.
Corporate reputation for quality and innovation.
The risks associated with a differentiation strategy include imitation by competitors and changes in customer tastes. Additionally, various firms pursuing focus strategies may be able to achieve even greater differentiation in their market segments.
Focused Differentiation Strategy:
Â Companies following focused differentiation strategies produce customised products for small market segments. They can be successful when either the quantities involved are too small for industry-wide competitors to handle economically, or when the extent of customisation (or differentiation) requested is beyond the capabilities of the industry-wide differentiator.
Costs focus strategy:
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 focus strategy concentrates on a narrow segment and within that segment attempts to achieve either a cost advantage or differentiation. The premise is that the needs of the group can be better serviced by focusing entirely on it. A firm using a focus strategy often enjoys a high degree of customer loyalty, and this entrenched loyalty discourages other firms from competing directly.
Because of their narrow market focus, firms pursuing a focus strategy have lower volumes and therefore less bargaining power with their suppliers. However, firms pursuing a differentiation-focused strategy may be able to pass higher costs on to customers since close substitute products do not exist.
Firms that succeed in a focus strategy are able to tailor a broad range of product development strengths to a relatively narrow market segment that they know very well.
Some risks of focus strategies include imitation and changes in the target segments. Furthermore, it may be fairly easy for a broad-market cost leader to adapt its product in order to compete directly. Finally, other focusers may be able to carve out sub-segments that they can serve even better.
Source:Course study materials
Strategy of FIRST Choice to produce to (transfer travel )
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 fulfill stakeholder expectations".
Business strategy is a top management responsibility that involves identifying the future direction of the enterprise as well as managing the creative interaction of the functional disciplines of operations, marketing, finance and human resource management. It is both a process and a way of thinking which leads to the development of a set of strategies that assist the business in achieving its corporate objectives.
In practice, a thorough strategic management process has three main components, shown in the figure below:
Source: Course study materials
This process involves understanding the nature of stakeholder expectations (the "ground rules"), identifying strategic options, and then evaluating and selecting strategic options.
FIRST has produced a Climate Change Strategy that shapes every action the company takes. This is part of FIRST's vision-to 'Transform Travel'. It wants to change how people feel about public transport by delivering the highest levels of service and customer satisfaction.
FIRST's new strategy (Transform Travel) is related to Strategic Choice as FIRST's took in mind its customers expectation as reality and also involves of the society needs.
This also involves to the environmental needs, FIRST recognizing its responsibility to reduce CO2 emissions to as low a level as possible. FIRST is the pioneer in the transport service business who is trying to reduce CO2 emissions to the minimum. FIRST's implemented change-customers not only wanted improved services, but were demanding environment friendly services. FIRST knew to implement this change, several changes in organization would be needed.
Actually, if we are trying to find out the relationship between ' business strategy' and ' strategic choice' we will recognize that, business strategy of FIRST choice was designed to implement their goals and what they were planning for in order to meet the standards and fulfilling the desires of customers. Hence, FIRST strived strongly to adopt Climate change strategy in order to enlightenment the customers and raise the perspective of the people regarding the public transport. However the strategic choice is very beneficial for the company; whereby it can expand the company business strategy and leave it continue to exist. The main things in this relation, this choice strategic could help the business of the company effectively.
Benefits that FIRST gains from these strategies:
It has improved the productivity and profitability of the company.
Improved understanding of competitors strategies.
Enhanced awareness of threats.
It has reduced resistance to change.
Improving the fuel efficiency of its vehicles
Purchasing vehicles with greater fuel efficiency
Using alternative fuels, such as bio-diesel.
Operational improvements through driver training new technology to monitor driver performance.
Alternative Strategy could FIRST Choice follow
Comparison between two different strategies (cost leadership& differentiation strategy)
The differentiation and cost leadership strategies seek competitive advantage in a broad range of market or industry segments.
Strategy - Differentiation
This strategy involves selecting one or more criteria used by buyers in a market - and then positioning the business uniquely to meet those criteria. This strategy is usually associated with charging a premium price for the product - often to reflect the higher production costs and extra value-added features provided for the consumer. Differentiation is about charging a premium price that more than covers the additional production costs, and about giving customers clear reasons to prefer the product over other, less differentiated products. In First, they are focusing more on focus differentiation strategies as they are trying to offer unique quality services to the customers. FIRST has always differentiated itself by providing a vast range of transportation solutions. FIRST focused on many strategies that helped the business to grow and expand. FIRST's strategy relates to its transportation plans and takes into account the entire PESTL factors in its environment.
Strategy - Cost Leadership
First could adopt an alternate strategy such as Cost Leadership strategy, and the can become the lowest-cost producer in the industry. Many (perhaps all) market segments in the industry are supplied with the emphasis placed minimising costs. If the achieved selling price can at least equal (or near) the average for the market, then the lowest-cost producer will enjoy the best profits. This strategy is usually associated with large-scale businesses offering "standard" products with relatively little differentiation that are perfectly acceptable to the majority of customers. Occasionally, a low-cost leader will also discount its product to maximise sales, particularly if it has a significant cost advantage over the competition and, in doing so, it can further increase its market share. This would help the company to expand their business to new areas of market.
Factors that FIRST Choice should consider
First should consider the following factors before changing their business strategy:-
Customer Service - First has to think if the new strategy will be acceptable by its customers and if they can cope easily with it.
Product: also they should think if the new strategy is related to their main service giving and how it will impact on it.
The Market Place: FIRST has to put the strategy which is be reasonable and fit for the purpose especially in places that FIRST is serving.
Competition: the new strategy has to focus to put FIRST as the first transportation company in UK and not only gaining profit. FIRST has to consider its competitors and do more service for its customers.
Financial Situation/ Promotion: the new strategy needs a budget to develop and also a special budget for promotion and marketing of it.
With above factors FIRST can implement a new strategy which will support and develop their business. Also FIRST has to think of their Manpower, it is drivers and employee has to be trained well to satisfy the customer's requirements.
Many of these external changes may be outside the control of the company, for example new government legislation. Some changes may bring opportunities. Environmental impacts, such as those caused by carbon dioxide (CO2) emissions or the management of waste are of particular concern to businesses like first. A business must assess what external changes are likely and which it needs to react to or take advantage of Business planners can then create strategies to help the business respond effectively.
Key Issues in Managing Business Strategy at First Choice
The Key issues in Managing Business Strategy at FIRST are as follows:
All policies and strategies must be discussed with all managerial personnel and staff. Proper communications are made possible at FIRST.
Managers must understand where and how they can implement their policies and strategies. First should try to implement this, when they are adopting the Climate Change Strategy.
A plan of action must be devised for each department. At FIRST the employees are empowered to take decisions.
Policies and strategies must be reviewed regularly. There is a weekly functional Department Meeting and a bi annual meeting of all the departments with the Department Head at FIRST. Employees are free to ask questions at the meeting.
Contingency plans must be devised in case the environment changes at FIRST.
Assessments of progress ought to be carried out regularly by top-level managers.
A good environment and team spirit is required within the business.
The missions, objectives, strengths and weaknesses of each department must be analysed to determine their roles in achieving the business's mission.
The forecasting method develops a reliable picture of the business's future environment.
A planning unit must be created to ensure that all plans are consistent and that policies and strategies are aimed at achieving the same mission and objectives.
Forces for Change
Managing and Leading the Forces of Change is recommended for all professionals who are interested in learning specific ways to either create positive change or prosper in spite of change being forced upon them.Â Â
In fact, the change could occur for so many reasons and there are some forces which may lead to change such as:
Technological forces : As FIRST choice wanted to develop their own technology by provision of buses by lower the floor for easy entry for disabled and elderly people, road layouts and bus shelter, ground- breaking alerting services for passengers, made payment easy by offering smart cards. Hence, all of these could lead to strategy change. This could a force for change.
Social forces: Society's habits and tasted are changing. People are more aware of the importance of the environment. Therefore, green consumer prefers to travel by bus or train than by air or in large car. So, FIRST it's committed to change its strategy over time in order to fulfill the desires of society. This could act as a force 'for' and at times force 'against' change.
Business and economic forces: The inflation rate, interest rate and the industry competition with other companies will lead FIRST choice to change.
Organizational forces: Variants of their strategies will force them to bring change in the company. These changes can affect the employees work behaviour. They may feel that it would affect their nature of work at work place.
Employee needs and values: Employee's needs and values are changing. Each one of them is looking for better quality of life. Hence, FIRST is engaged to change in their strategy to prevent employees shifting to other company.
A method could be adopted which is introduced by Kurt Lewin,i.e.,Force Field Analysis which is a method for listing, discussing, and evaluating the various forces for and against a proposed change. When a change is planned, Force Field Analysis helps look at the big picture by analyzing all of the forces impacting the change and weighing the pros and cons. By knowing the pros and cons, can develop strategies to reduce the impact of the opposing forces and strengthen the supporting forces.
Organization Culture and its impact in FIRST Choice
Definition of organizational culture:
Organizational culture refers to the general culture within a company or organization, and is often also referred to as corporate culture, though that isn't the best description since a large non-profit organization or charity could also have its own organizational culture even though they are definitely not corporations. Here are some of the many definitions of organizational culture that can be found.
How does it affect the company's?
Organizational culture consists of shared beliefs and values established by the organization's leaders and then communicated and reinforced through various methods, ultimately shaping employee perceptions, behaviors and understanding. Simply speaking, a company's structure and design can be viewed as its body, and its culture as its soul. Because industries and situations vary significantly, it would be difficult and risky to propose there is a "one size fits all" culture template that meets the needs of all organizations.
How does it effect the management of change in FIRST choice?
The main objective is to describe how organizational culture helps management of FIRST choice achieve its objectives and understand how cultural symbols, rites, ceremonies, heroes, and stories are used to sustain an organization's culture. There are various shills which help in bringing a change. These are cultural diagnostic skills, cultural strategic skills, and managing culture skills, change management skills. Some of the functions performed by organizational change are socialization, implementation Support. The main reason for the change is mainly due to two factors: internal as well as external. Hence, learning the specifics about the company culture can help determine fit with the organization and the possibility of succeeding.
The Organization Culture and FIRST:
The organizational culture at FIRST affected a lot of because of the following points:
The number of older people in the UK is rising and many elderly peple prefer to travel by bus because it is safe.
The people are more aware of the green consumers and environmentally friendly trasport.
More people are realizing the benefits of more environmentally friendly form of transport.
FIRST is working with the government via a specially appointed Yellow school bus commission to investigate the possibility of rolling out specialized yellow school bus services throughout the UK. The government initiative to encourage more children to use bus services rather than traveling to school by car. This will help to reduce carbon emissions.
FIRST Choice Management dealing with the change situation
FIRST Management can minimize or avoid potentially negative aspects of change by following "seven P approach" that includes purpose, people, plan, process, product, perception and problem.
Purpose: The need of change in the organization must be clarified.
People: People who will be affected by the change. Are they committed, and do they have the needed skills to participate in the change process?
Plan: The plan has to be clear and solid and realistic.
Process: Process to success the change must be identified.
Product: The vision of product be clear.
Perception: How do others perceive you, your colleagues, the change process and the end product?
Problem: How will you deal with problems that inevitably occur? Do you have a crisis plan in place? Are your team members able to identify potential problems or obstacles before they get out of hand?
If the above is identified well by FIRST Management, then they can cope very well with the change.
First can also turn the change vision into an overall plan and timeline, and plan to practice forgiveness when the timeline encounters barriers. Solicit input to the plan from people who "own" or work on the processes that are changing.
Also FIRST Management should gather information about and determine ways to communicate the reasons for the changes. These may include the changing economic environment, customer needs and expectations, vendor capabilities, government regulations, population demographics, financial considerations, resource availability and company direction.
Advice to FIRST Choice to help in analyze change situation
FIRST Choice should work to make sure that all individuals involved keep an "open mind." The management has to explain that any changes or improvements will be done to help everyone, not hinder. Also to explain that feedback and input from everyone is crucial and welcomed. Using an outside consultant also provides a benefit in this area by helping to eliminate any resistance to change.
FIRST remains connected to their customers who they give us important feedback which help FIRST a lot in their growth.
Change in organizations necessitates changes in skills, and some people will feel that they won't be able to make the transition very well.Â They don't think they, as individuals, can do it.Â The hard part is that some of them may be right.Â But in many cases, their fears will be unfounded, and that's why part of moving people toward change requires you to be an effective motivator.Â Even more, a successful change campaign includes effective new training programs, typically staged from the broad to the specific.Â
FIRST has a high value on teamwork and open communication between employees at all levels. There is a weekly functional department meeting and a bi annual meeting of all the departments with the department head.
Training and development is a core part of the human resource strategy. FIRST want to help employees to reach their full potential and believe that investing in them will provide direct business benefits.
FIRST can analyze the change situation by the following steps:
Classify the data
Disregard what is not in control.
Help set reasonable expectations.
Analyze the rest of the data to implement change.
Implement change and communicate it.
Dealing with resistance
Here is a small raft of things you can do to handle resistance, starting with kind and moral approaches and ending with the harsher end of gaining compliance. According Kotter and Schlesinger, the following methods can be adopted to resist change.
The best approach to creating change is to work with them, helping them achieve goals that somehow also reach to the goals of the change project. This is a good practice when people want to collaborate but are struggling to adjust to the situation and achieve the goals of change.
When people are not really bought into the rationale for the change, they may well come around once they realize why the change is needed and what is needed of them. In particular, if new skills are required, it can be provided with proper education.
When people are not involved physically or intellectually, they are unlikely to be involved emotionally either. One of the best methods of getting people bought in is to get them involved.
When the other person cannot easily be persuaded, then it is required to give order to get it done. Sit them down and ask what they are seeking. Find out what they want and what they will never accept.
Manipulation means controlling a person's environment such that they are shaped by what is around them. Only consider this when change is necessary in the short term and all other avenues have been explored.
Even more extreme than subtle manipulation is overt coercion. This is where you sit them down and make overt threats, for example that if they do not comply that they will lose their jobs, perhaps in a humiliating and public sacking. This should only be used when speed is of the essence or when the other person themselves has taken to public and damaging actions.
FIRST as a transportation company it deals directly with customers. In this report, we discussed about FIRST business strategies that FIRST adopted.
We identified issues managing a strategy within FIRST as an organization.
Also we spoke about the factors that may cause change and also to consider how FIRST management can cope with the change.
From this report, I can say that FIRST is a very successful organization as its aims to build a strong relationship between its employees and also its customers. FIRST management thinking is bright and it all lead to achieve the goal of organization and get big profit as they want.