Organisations, competition, environment

mtmnmt

New member
R. P. Raamkumar

Module Title: Organisations, Environment and Competition.


1.0 Organisational purposes and objective.

a) Compare and contrast the objective within private and public sector organisations.

In an economy, organisations in the private sector are owned and controlled by individuals and public sector organisations are those owned and controlled by the government. The objectives of companies in these distinctive two sectors differ widely. In the private sector, companies are driven to achieve greater profits. Private company objectives too differ according to size and vision yet the ultimate goal is profit maximisation. Generally companies aim for the following:
Increase market share in the industry.
Maximising sales volume
Growth – E.g. maximising pay for workers.
Level of service – E.g. honesty to customers, supplier fairness
Objectives among public sector organisations are noticeably in favour of the general public. Objectives among corporations in the public sector include:
Avoid wasteful duplication of resources.
Benefit from large scale production
Non-profitable services – E.g. essential water, power, bus/rail services.

b) To what extent is diversification an important factor towards achieving growth within your organisation? In what way can this meet the organisational responsibilities?

Ceylon-T Exports is a tea exporting company in Sri Lanka. At present tea is bought from the weekly auction for exports, the prices change every week, and if there is heavy rain, there is likely to be a shortage as there is demand for many blends of tea from the international market. The packaging and printing costs have been constantly rising during the recent past as quality of packaging has too become important.
With a view of diversification, there are quite a few possibilities that Ceylon-T Exports could consider to enable further growth.
One of the most suggestible options would be to have acquisition with large tea factories and estates. Ceylon-T can keep higher profit margins in its sale of tea and also offer cheaper prices to its customer. It is also noticeable that many other export companies incur heavy costs due to quality printing and packaging too. Given this situation, it is also suggestible to form acquisition with a good printing and packaging company. By investing in printing and packaging, there would be also a good amount of demand from other similar exports too. Both the above would mean backward integration for Ceylon-T in the scope of diversification. This would definitely reduce the risk factor in the current running of the operations. Assets could be shared and be used in the most efficient way by printing and packaging for other companies too.

c) Identify three stakeholder objectives within your organisation. Comment on how successfully these are achieved.

Shareholders – the main objective would be to have good profits and have capital gains over time.

Employees – To increase shareholder’s wealth, have better perks, benefits, good working conditions, job satisfaction and security and recognition.

Customers – Excellent quality, good price, attractive and presentable printing and durable packaging.

The above can be successfully achieved by employing good dynamic managers, commitment of employees, excellent training and equal opportunities and fairness in conduct in the workplace.


2.0 The economic environment in which the organisation operates.

a) Give a brief overview of the three main types of economic systems. Describe any advantages or disadvantages each may have for your organisation. How can the state influence a system?

The Planned/Command Economic System - This is a type of economy where all its resources allocation and production are completely planned by the government. And all the activities are carried out according to that plan. Complex mathematical models are used to make these plans yet it mostly fail as it is next to impossible to plan for a whole country.

Free Market Economic System – This is a type of economy where prices are determined by the market forces. The role of the government here is minimal. This system enjoys lower costs and better quality of outputs as consumers are regarded as sovereign. But not much service is available for the environment, old, poor and the sick. There can also be wasted resources due to duplication and business failures.

Mixed Economic System – This type as the words imply, is a mix of the above two economies. There are public sector corporations which look after the welfare needs of the people in general and the private sector companies commercially driven by the market forces.

The state can influence a system in many ways.






b) How might local variations in house prices impact upon the future operational planning for your chosen company? What other local economic factors, liable to change, are likely to have a significant effect upon your organisation?

Local variations in house prices can affect the cost of living for the employees of Ceylon-T. Houses for high rent would mean employees demanding higher wages. If in an event to move the company to another location in the future, apart from the cost of living, labour mobility will be a problem as the employees have settled their lives along with their families in the present location. This issue will turn out to be an entry barrier to moving to other locations.

c) Each economic policy is likely to have pronounced effect on an organisation. Describe the effect of two contrasting policies on your own organisation.
Fiscal – tax/g.e
Monetory – interest rate





3.0 The main external market factors.

a) Royal Mail holds a monopoly position within its market. Explain why this may be an undesirable situation, and what action can be taken to improve the situation for the consumer. Briefly describe other market positions.

Monopoly is a situation where a single company dominates the market in the product or service it sells. It should have at least 25% of the market. These types of companies are called ‘Price Makers’.
Monopolies are not preferable in any market and Royal Mail being such an organisation tends to maximum gain what it can, when it can from the market. Other competitors cannot compete as the size and cost competition base for Royal Mail is very large. They decide the price in different markets as they wish. This situation can also be described as Royal Mail gaining more profits from the society than the quality of service given back to the society.
The only action that can be taken against this would be by the government, to ask Royal Mail to sell at a lower price. This would also encourage Royal Mail to act more efficiently in their operations to maintain their profitability.






b) Describe the organisational mechanisms that used in ‘Price Wars’, and their consequent effects. Use a specific example as a case study. Identify two other examples of the relationship between market forces and organisational response.
















5.0 The equilibrium price of consumer good ‘A’ is £5. How would this equilibrium price change under the following scenarios? Illustrate your answer pictorially.

i. Decrease of price of a substitute product.










ii. Increase of personal income tax on households.




iii. Decrease of price of a complementary product.













iv. An improvement in the level of its manufacturing technology



v. Increase of import duty on machines used in the manufacture of product ‘A’
 
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