While analyzing the macro-environment, it is important to identify the factors that are likely to influence the organization's supply and demand levels and its costs. PESTL is an acronym for Political, Economic, social, Technological and Legal Factors of external macro- environments. A PESTL analysis is one of them that are merely a framework that categorizes environmental influences as political, economic, social and technological forces. The analysis examines the impact of each of these factors (and their interplay with each other) on the business. The results can then be used to take advantage of opportunities and to make contingency plans for threats when preparing business and strategic plans.
Political factor- Political factor has a lot of influence over the regulation of businesses, including the spending power of consumers and other businesses. Things such as stable or unstable political environment, government policy influence, government's policy on the economy, governments view on the culture and religion, etc, are to be kept in mind. Political factors may also include goods and services which the government wants to provide or be provided (merit goods) and those that the government does not want to be provided (demerit goods or merit bad).
FIRST Choice Plc faces several political factors in the countries it operates. The Government started to privatize the bus services in the UK. It was done so with a belief that allowing private firms to compete to run bus services would keep the prices low and the companies would try harder to give customers what they want and fulfill their demands and needs. This has resulted to more efficient, innovative and sustainable bus services. The government's key policy to focus on the reduction of CO2 emission is also being followed up by all the transport services. The UK government has signed a treaty which was also signed by the other countries to reduce the emission of harmful gases. This can succeed only through partnership with business. Children have been encouraged to use bus services rather than travelling to school by car.
Economic Factors - these factors include economic growth, interest rates, exchange rates and the inflation rate. These factors have major impacts on how businesses operate and make decisions. For example, interest rates affect a firm's cost of capital and therefore to what extent a business grows and expands. The short and long-terms state of a trading economy should be kept in mind by the marketers, especially when planning for international marketing. Things such as Interest rates, level of inflation Employment level, Long-term Gross Domestic Product (GDP), etc. are to be kept in mind.
Along with Political Factors, FIRST also faces economic factors based on the change in demand and supply, interest rates, exchange rates, etc. The public has started demanding for more public transport. The number of old people in the UK has been rising and they feel more comfortable, convenient and safe in using the public transport which has increased the demand for bus transport. The users can travel free as the local authority pays FIRST for providing the service.
Social Factors- This factor is very important to be considered. It includes the cultural aspects and includes health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors affect the demand for a company's products and how that company operates. The social and cultural influences on business vary from country to country. It includes factors such as dominant religion of the country, attitudes to foreign products and services, language impact upon products and markets, etc.
Social factors also have a great impact on the workings of FIRST. People in the UK are now more mobile and they travel more. Major trends were picked out by the statastics produced by the department for Transport in 2007. These statistics show a positive picture for FIRST. The market has been growing well and more people are realizing the benefits of the environmental friendly forms of transports. FIRST provides comfortable convenient and safe travel facilities for the public. The society's habits and taste is also changing. People are getting aware of the importance of environment and becoming "green consumers". The green consumers prefer only environment friendly products which have a less impact on the environment and also are working towards reducing the CO2 emission and reduce usage of many cars and use public transport. The prefer using bus or trains for travelling.
Technological Factors- Technological factors should always be kept in mind. These factors include ecological and environmental aspects, such as R&D activity, automation, technology incentives and the rate of technological change. They can determine barriers to entry, minimum efficient production level and influence outsourcing decisions. Along with the innovation of new technology even the business ways should be improved. Technology is vital for competitive advantage, and is a major driver of globalization. Things such as: - if technology can produce cheap and with good quality, if the products are innovative, if it offers better communication with consumers, etc.
FIRST has also been continually developing new technologies to provide the best solutions for the market place and for appropriate technologies for their business and to use them well. FIRST is providing the public with low- floor buses so that it is easy for the disabled, elderly people and also for the children to enter the bus. In FIRST's choice's rail division, Scot Rail has set up ground-breaking alerting services for passengers, Journey Check and Journey Alert. These enabled the passengers to receive up to date train information by text or email. These services provide a convenient way of letting people know if there are delays or alternations to train times so they can plan their journeys accordingly. Other technological solutions include the use of prepaid Smart Cards to make the payment on buses faster and easier. It has provided buses which have a lower floor to step in which is much convenient for the disabled, elder people and small children. FIRST has also heavily met the government targets to provide low floor buses.
Legal Factors - a business must operate within the laws of the country. The 2 main important areas of laws to be considered are Employment law and consumer law.
FIRST should also keep into consideration the Legal Factors. FIRST has to anticipate and prepare to meet the future legal changes. From 2010, as a part of an initiative called Carbon Reduction Commitment, FIRST and the other companies will need to buy carbon credits. These credits will permit companies to generate specific quantities of carbon emission. FIRST is already preparing a budget to do this and is setting out clear plans for anticipating how much CO2 it will produce after 2010. The UK government has also signed an international treaty- The Kyoto Protocol, which aims to reduce the emission of harmful gases. This can succeed only through partnership with business. It has been keeping up to the legal changes of the government and providing the consumers with environmental friendly services. FIRST needs to keep these legal factors in mind as the changes of legal changes can have a great impact over the business operations and it also has to prepare for the future legal changes that would be made. FIRST is trying hard to stay in line with the legal changes to ensure the prosperity of its business.
Strengths in the SWOT analysis are attributes or characteristics within the organization that are considered to be important to the execution and ultimate success of the project. Strengths gives rise to opportunities. Examples of strengths that are often cited are factors such as experienced management, state of the art manufacturing facilities, and a solid profit line already in place.
FIRST is the leader providing reliable, safe, innovative and sustainable transport services. FIRST has always differentiated itself by providing a vast range of transportation solutions. It aims to be local in its approach even though it is a global business. Local issues are dealt with by people that largely live and work in that location. This ensures a clearer understanding of that needs to happen and a more prompt response. Transport services are the heart of the UK economy. All these serve as strength to FIRST choice Plc.
Weaknesses in the SWOT Analysis are a formula have to do with internal factors that could prevent the achievement of a successful result to the project. Weaknesses give rise to Threats. Factors such as a weak internal communication system, unhealthy levels of rivalry between departments, lack of raw materials, and inadequate funding for the project are often cited as weaknesses that can threaten to derail a project before it even begins.
FIRST Choice Plc is conducting vast operations in UK and North America. They also aim to be local in their approach with customers. This management approach could result in the building up of their biggest weakness as it is difficult to implement such a strategy with huge operations. FIRST anticipates meeting the future legal changes and from 2010, will be a part of the Carbon Reduction Commitment. They will need to buy carbon credits which will permit them only to generate specific quantity of carbon emission. FIRST has started preparing its budget to do this and is setting out clear plans for anticipating how much CO2 it will produce after 2010. This looks like a strength but also has a weakness within. FIRST will have to make a lot of efforts to reduce the carbon emission and prepare their budget for accomplishing their aims. Managing huge operations and training the employees to satisfy the customers will not only be time consuming but also need a lot of effort to be put forth to achieve what is desired.
The third classification of factors in the SWOT analysis is Opportunities. This classification has to do with external elements that will prove helpful in achieving the goals set for the project. Factors of this type could be the positive perception of the company by the general public, a network of vendors who are willing to work with the company to achieve success with the project, and market conditions that will help to make the project desirable to the market at large, or a least a significant segment.
FIRST should understand what goes outside the business, such as the new government legislation. Some changes may bring in opportunities for the business. The environmental impact of CO2 emission is a very important issue to be concerned by FIRST. It has a good opportunity to help reducing the emission of harmful gases which will provide them with a useful opportunity to attract customers also. A business should have asses with its external environmental changes and take advantage of them. FIRST has set out its ambitious targets of reducing its CO2 emissions from its busses and rain divisions by 25% and 20 % by 2020. This gives FIRST a clear advantage over its competitors. The number of mobile customers has been increasing including the green customers. By providing good service and environmental friendly transportation, customers enjoy using FIRST's transportation.
Last, the final essential component for the SWOT analysis is Threats. Here, external factors that could threaten the success of the business venture or project are listed and addressed. Among the possible threats that will be critical to any SWOT analysis is a negative public image, the lack of vendors who can supply raw materials for the project, and no readymade market for the final product of the project.
In 1980's the government had started to privatize the bus services such that it creates competition in the market and would keep the prices low and ensure that the companies would try harder to give the customers what they wanted. Privatization means more competition in the market and this serves as a threat to the firm. If there are new firms entering into the market then there will be more competition for FIRST but as FIRST is working very hard to provide the customers with good services and facilities it creates less space for any competitor to enter the market. Another factor that is affecting the business is taxation. High taxation on fuel encourages the customers to switch from using cars to more economical bud and rail transport.
FIRST is the leader in providing reliable, safe, innovative and sustainable transport services. It has always differentiated itself from providing a vast range of transportation solutions. It is a global business but still aims to be local in its approach. All the local issues are dealt by the people that largely live and work in that location. This ensures a clearer understanding of what needs to happen and more prompt response. Keeping in mind all the external factors that might affect the business, FIRST has taken wise steps to make use of the opportunity of having environmental friendly transport and also providing them with comfortable and safe journeys till they reach their destination. The UK government has signed the Kyoto Protocol treaty in which all the countries agreed to reduce the emission of harmful gases. The government has also been encouraging people to use the public transport services and the children to use the buses to go to schools. There is more demand for public transportation. FIRST is also providing high quality Yellow School Bus Transport for the children to have a safe transport as well as special pilot service. The drivers have been trained to work with the students. Students are provided with the same seats and are looked after by trained drivers. Vehicle safety includes seatbelts, padded seating, additional escape hatches and CCTV. FIRST has also introduced the low-floor system which is very convenient for the disabled, elder people and the small children to step into the buses. FIRST has set out its ambitious targets of reducing the emission of CO2 from its busses and rail division by 25% to 20 % by 2020.
3) It is the first stage of planning and helps marketers to focus on key issues. SWOT stands for strengths, weaknesses, opportunities, and threats. Internal and external environment should always be kept in mind during the planning process. Environmental factors internally can be classified into Strengths (S) or Weaknesses (W) and the external factors can be classified into Opportunities (O) and Threats (T). SWOT analysis provides information that is helpful in matching the firms resource and capability to the competitive environment in which it operates. Some of the problems that you may encounter with SWOT are as a result of one of its key benefits i.e. its flexibility. Since SWOT analysis can be used in a variety of scenarios, it has to be flexible. However this can lead to a number of anomalies. Problems with basic SWOT analysis can be addressed using a more critical POWER SWOT.
There are a set of guidelines to be followed by the management of FIRST on how to conduct SWOT analysis;
A better understanding can be gained in FIRST of how the organization can relate to its external environment. And then look at the internal strengths and weaknesses of the organization and see how they relate to the opportunities and threats external to the organization.
A laundry-list of ideas can be taken up by FIRST, within each category and reduce them to the top five to ten ideas (per category).
After taking down all the list of ideas and categorizing them, FIRST can review each category separately and discuss each of these ideas and the potential implications to the organization.
A method of shared problem solving in which all members of a group spontaneously contribute ideas can also be taken into account by FIRST. This method can also be referred to as Brainstorming session and list down all of the strengths, weaknesses, opportunities and threats based on the internal and external environment. After conduction the SWOT analysis, FIRST can use PESTL to analyze the external environment and identify the OT.
Look at the areas which are considered as strengths of the organization and opportunities in the external environment that represents a potential area for growth. And followed by the weaknesses of the organization and threats in the external environment.
FIRST was focusing more on its expansion and growth for which they had concentrated more on the internal strengths which could affect the external opportunities. They took advantage of these opportunities and framed many strategies to help the business respond effectively. It helped in framing many transportation plans that helped to compete with the other bus services and to ensured customers with the services they demanded. They analyzed many weaknesses in framing the strategies and adopting to the changes according to the legal policies. They understood the importance of framing operations in order to maintain the balance in the business by adopting many methods such as budget preparation, reducing the emission of CO2 and to face the challenges of the threats in the external environment.
As defined by Allaire and Firsirotu, Organizational culture is a system of knowledge, of standards for perceiving, believing, evaluating and acting that serve to relate human communities to their environmental settings.
FIRST wants to lead the way in transforming the way people travel and the way they feel about public transport and is working hard to achieve its targets. FIRST has been trying its level best to fill the needs and wants of its customers by providing them with environmental friendly, convenient and safe travel services along with innovative technological facilities. FIRST aims to deliver the perfect journey to its customers by offering them personalized service in a simple, distinctive and accessible way such that the customers find the services easy to assess and user friendly. Employees are made to understand the needs of the people and deliver it in a simple way. The staff is given regular training and support and their efforts are valued. FIRST also celebrates both personal and business events with great enthusiasm. Special occasions are celebrated in FIRST.
Shared values are what engender trust and link an organization together. Shared values are also the identity by which an organization is known throughout its business areas. These values must be stated as both corporate objectives and individual values. Every organization and every leader will have a different set of values that are appropriate to its business situation. Most organizations have values statements or mission statements; yet many do not follow them. Winning organization create successful cultures in a systematic way using various approaches that may include visual representations, training seminars, and/or socializing events.
Ensuring employee's understanding of organization's values and vision requires the organization to have clearly defined values. Without this, the organization can get itself into real trouble.
FIRST aims at most reliable and best run public transport operator and lives high to the expectations and believes of the customers. Each customer is treated equal and are dealt with honestly and in a professional manner. Thus the company gains respects of customers and colleagues. By delivering on operational and corporate commitments, they build trust. FIRST aims to be the most progressive public transport provider. It is based on forward thinking, innovative and possessing and 'can do' attitude along with providing highest standards; they meet the value of the employees. Long view is taken and much work is put into making things happen as planned. The standards should be continually achieved and reviewed to ensure the staff, customers and stakeholder's expectation. People are the key to success and so they need to invest employees and ensure they recruit, develop and retain the best people in the industry. FIRST takes these values into consideration to attract and maintain the loyal customers in the market. Public has been demanding for environmental friendly transport services which FIRST is been fulfilling and also providing them with more than expected services.
Taken For Granted Assumptions
Assumptions are those unconscious, taken for granted beliefs, perceptions, thoughts, underlying shared convictions that guide behavior and are the ultimate source of values and action.
Safety is to be considered as an assumption taken for granted. Strict Operating practices have been developed based on the latest industry standards which they adhere to and regular review. This helps in achieving the highest levels of safety for the customers and staff. the right attitude towards safety is putting in place the right policies, procedures, equipments, training and support to ensure safety of culture and ensure the future of the business. Safety is an unconscious yet taken for granted belief or thought that guides a behavior and is a source of values and actions. Ever person traveling in FIRST's transport service wishes to reach their destination safe and don't need to specifically mention it. FIRST maintains their safety, living up to the standard of service they want and deserve.
5) Deal and Kennedy's Model of Culture
There are different types of models to describe the culture in FIRST Choice Plc. Deal and Kennedy's model best suits the firm. FIRST is based on the Deal and Kennedy's model of culture. Deal and Kennedy's model of culture is based on four types of organization, how quickly they receive feedback and reward after they have done something and the level of risks that they take.
Feedback and reward
Feedback and reward
A major driver of people in companies and hence their culture is the general feedback and specific rewards that tell them they are doing a good or bad job.
If this feedback is fast and quick, it will quickly correct any ineffective behavior and hence lead to a consistent culture. Fast feedback help in faster decision making.
If the feedback is slow, it can lead to uncorrected mistakes and slow decision making which causes wastage of time but the delay might help in letting people look further out into the future.
Uncertainty and risk are something that some people hate and some people thrive on. In either case, it is another motivating force that leads people to focus on managing it.
Where the risk is low, people may be willing to take risks up to their acceptable limit. Where they are high, the risks need to be managed or accepted. High risk companies are more likely to include people who enjoy the frisson of taking a gamble.
FIRST has a high value of teamwork and open communication between employees at all levels. There is a weekly functional Department meeting and bi annual meeting of all departments with the department head. The Department head also presents the information on where the company has headed and other relevant news and employees are free to ask questions. This shows that there is a good and fast feedback of the firm. The employees are empowered to make decisions which improve their sense of worth and self esteem and also helps them to use creative skills within their role and motivates them to perform better. Lower level staff are allowed to make decisions which helps them to meet the customer's needs and enable individual pride in their job. This helps in motivating the employees by factors other than the financial ones. FIRST provides portfolio of schemes that recognized the employee's commitments to the company and the employees are given quick rewards such as incentives, shares, bonus, etc.
The FIRST's strategy has identified some risks in the climate changes. These included the vulnerability of roads and rail infrastructure to flooding and storm surges along the coast. To manage this risk FIRST is working with the transport network providers to monitor and maintain the roads and rails.
The four cultures are;
a) Work-hard, play-hard culture: - Fast Feedback and Rewards and Low Risk
b) Tough-guy macho culture: - Fast Feedback and Rewards and High Risk
c) Process culture: - Slow Feedback and Rewards and Low Risk
d) Bet-the-company culture: - Slow Feedback and Rewards and High Risk
FIRST is based on the Work Hard/Play Hard Culture which is characterized by few risks being taken and fast feedback and rewards. This is typical in large organizations, which strive for high quality customer service. The stress usually comes from the quantity of work rather than the uncertainties. It is often characterized by team meetings, jargon and buzzwords. The feedback is fast and so the decisions can be taken quickly and the culture is consistent. It is mostly customer oriented and tries its best to satisfy the customers by providing them with innovative and satisfying services.
There are frequent meetings held between the department head and the employees in FIRST choice plc and the employees are motivated to perform better and encouraged and they are given quick rewards in the form of incentives, bonus, etc. There is low risk in the firm.
6) Organizational Behavior is the study of human behavior in the workplace, the interaction between people and the organization with the intent to understand and predict human behavior.
Organizational culture is the values, customs, rituals, attitudes, and norms shared by members of an organization, which have to be learnt and accepted by new members of the organization
The organizational culture at FIRST Choice Plc is consistent with the organizational behavior. FIRST is based on the Work Hard Play Hard culture, which states that the company is based on Fast Feedback and Rewards and Low Risk. FIRST's values bind and unite the organization and its employees and create the unique culture. FIRST strives to bring values to life everyday and in everything they do. They aim to have transparent dealing with others, so it's clear on what they are striving for and how the firm intends to achieve it. Every FIRST employee has a responsibility for safety. This basic assumption of safety, a very important component of organizational culture is put into practice. The organizational behavior shows that they have to develop a strict practice on their operations that is based on the latest industry standards, which they adhere to and regularly review. This helps the firm to achieve the highest levels of safety for the customers and staff. To accomplish this, the right policies, procedures, equipments, training and support should be put in place to live the safety of culture and ensure the future of the business.
FIRST values to deliver the perfect journey to its customers by offering them personalized services in a simple, distinctive and accessible way. FIRST has been providing them with innovative, convenient and safe technological services such as the low- floor bus, alerting services, Journey Check, Journey Alerts and usage of Smart Cards to make payments easier and faster. The values held by the employees have been put to practice by them. FIRST plc also celebrates festivals suck as Christmas and Easter throughout the organization where all the employees are invited and gifts are exchanged.
The organizational culture is reflected on the organizational behaviors of the company. Due to the culture that prevails in the organization the staff has been able to maintain their organizational behaviors. this intern helps them in maintaining the organizational efficiency and increase the prosperity of the business by satisfying its customers.
7) FIRST has adopted a work hard play hard culture as it is based on Fast Feedback and Rewards and Low Risk. They look forward to provide high quality customer service and frequent meetings are held in the company in order to motivate and encourage the employee with quick rewards. If the company is adopting process culture then it will be based on slow feedback and low risk. If FIRST adopts this kind of culture then the feedback and rewards within the firm will be slow and the risk faced by it will also be low. There will be low stress and work and will have comfort and security in the business. Stress may come from internal politics and stupidity of system. FIRST Choice Plc can adopt Process culture as an alternative culture. Process culture is based on slow feedback and rewards and low risk. In the Process Culture there is less stress, comfort and security in the working of the firm. It focuses on details and process excellence. Stress level is low but even if it occurs it may be due to the internal politics or stupidity of system. FIRST has low risk as it is mostly customer service based. It is trying its level best to live up to its customers demands and satisfy their wants and needs. FIRST will have to reduce the amount of meeting from weekly to monthly and reduce the duration of the meeting in order to reduce time wastage. If FIRST adopts this culture, the management will have to deal with de-motivation due to slow feedback and stress due to the internal politics. Management will have to deal with inaccuracies and mistakes which will be repeated over and over again.
FIRST has been doing its best to live up to the expectations of its customers and has been able to achieve its desired goals. It has not only satisfied its customers but also satisfied its employees.
I have examined the external and internal environment faced by First Choice Plc, examining the factors responsible for first choice's behavior and strategies. Strategic tools like PESTL analysis and SWOT analysis were used to achieve the above purpose. In addition, the organizational culture of first choice plc has been examined with respect to values and taken for granted assumptions held in the organization. The culture was analyzed by using an appropriate model, which is Deal and Kennedy's model. Alternative management approaches for alternative cultures were explained with respect to the firm. The consistency between the organizational culture and organizational behavior was examined.
Thus, first choice Plc is a firm which is devising strategies taking environment into consideration and maintains the organizational behavior consistent with the culture.