Business organizations are operating in a highly competitive markets, due to which operating environments for them has become highly insecure and unstable (Morfaw, 2009). It is because of this very reason, companies are finding it very hard to successfully operate in the market and fulfill their aims and objectives. The present report is an attempt through which business environment of Premier Foods and Vodafone has been conducted. In addition to it, an analysis of the general business environment of both the firms has been carried out. Further the report also consists of details on international and legal requirements.
IPO is a model through which an evaluation can be carried out into regular operations of a company and also information about they obtain various kinds of information or data can be evaluated (Doving and Nordhaug, 2010). In subsequent points, IPO model for the two companies has been assessed.
Through the above process, it can be said that the very first step taken in the company is related to obtaining the raw materials. Herein, management of the company has to find vendors that can supply them with such products that can be used and mixed with other products that eventually would lead to development of the final good (Schaefer, 2001). Once the raw material is obtained, it is made to undergo through different processes and systems that help in preparing the final food items.
Vodafone, so as to process the request from customers to subscribe to them and use their own connection, uses a very different and unique IPO model. Input in this case is receiving subscription request from customers. It is the very first stage (Tsiakkiros and Pashiardis, 2002). Here customer(s) wish to subscribe to network of the firm. Next, management has to conduct a verification test of the person who sends a request to company. This is a very important stage, as only after going through this stage, can the organization can make an individual their subscriber. The last stage after this is to provide network and communication related services to the person.
For business firms, it is imperative that they are able to survive in varied economic conditions and scenarios, as through this method only can pre-determined goals and objectives be met. By taking into account operations of the two companies, it can be said that Primer Foods has more chances to effectively survive in a centrally planned economy. This can further be supported through fact that FMCG industry is one of the highly regulated markets, primarily because of reason that it is more vulnerable and susceptible to market changes and developments (Carter, 2007). This is the reason for the industry being such a sector where there are plenty of rules and regulations to be complied with. Thus, it may not be wrong to say that Primer Foods has the capabilities to survive, operate and fulfill the decided targets, it FMCG industry of UK becomes a centrally controlled market.
On the other hand, although telecommunications industry is also characterized to be consisting of many policies and procedures, but Vodafone can much effectively survive, if gets to operate in market economy system. This is mainly because of reason that the inputs, i.e. subscriber requests that it gets from customers, many a times is a very different from previous ones. Large customers, such as business houses demand very unique and unconventional desires (Wessels, 2006). To fulfill those demands, Vodafone may have to take such routes that may be very different and new, i..e ‘never tried before’ techniques. Therefore, there are more chances for the firm to serve to different customers and satisfy stakeholders, if it exists and functions in a market economy.
Over the years, there have been substantial changes in needs, wants, desires and demands of customers in FMCG industry, in addition to the fact that it is one of the highly volatile and unpredictable markets today in the nation. In last ten years, substantial changes have happened in different aspects of customer environment. Thus, it may not be wrong to say that outputs of Premier Foods will be affected significantly because of this trend in the market. These can be supported through fact that today mass urbanization is becoming increasingly popular. More than 70% of population has migrated to cites, due to which their demands and desires also have undergone significant changes (Kent, 2012). Now demands for fast food items has become extremely popular, as people now demand for such eatable items that can be consumed on the go. Lifestyle changes have brought about such a shift in the nation. Lives of people have become so hectic that they don’t even have enough time to take rest and eat their food with patience and love. This is in stark contrast to what the earlier people or ancestors used to do. Other than this, customers also have started to demand for such goods that not only fulfill their own needs and demands, but the process of manufacturing, creating or obtaining does not have serious ramifications on natural environment and resources.
For a business organization to effectively operate in the market, identifying and evaluating stakeholders from a variety of angles is of paramount importance. Power/interest grid, basically gives information about which stakeholders have great interest in operations of the company and who possess a great power over the firm (Power, 2004). There are a lot many stakeholders that management at Premier Foods tries to make sure that their needs & wants are met and that they are happy and satisfied. Following is such an analysis.
Manage Closely: These are those stakeholders whose interest in operations of the company is low, but the power that they have is high. In current scenario, they would be those individuals, who if are not managed properly can get dissatisfied with the firm. For instance, they can be the shareholders.
Monitor: Herein, management at Premier Foods will have to identify those associates who have very low interest in company’s operations and also possess very less power. They can be the government and various regulatory bodies operating in the nation.
Keep Satisfied: These are the associates, who can exert their influence on firm in a very substantial manner, as the level of power that they hold is very high, but have very less interest in operations of firm. Suppliers and vendors are the best examples of it (Ahmed, 2012).
Keep Informed: Competitors are some of the individuals who have great interest in the firm, but do not own much power to affect their functioning.
It is a well known fact that for any organization, regardless of the market that it may be operating in, satisfying needs and wants of different stakeholders in every possible manner, is of great importance. Management at Premier Foods has taken a lot of steps and procedures so that it can identify needs of different stakeholders and try to fulfill them. Different stakeholders have different demands and desires off the company. For instance, customers expect that firm would provide them with quality oriented products, but also that they are cheap or are moderately, i.e. competitively priced (Moxham, 2010). To be able to do so, authorities have divided its different products into two categories – ‘Power Brand’ and ‘Supporting Brand’. Through this approach authorities can make an attempt to meet the varied needs and wants of customers and thus make sure that are happy and satisfied. Another stakeholder(s) of the firm is the government and various other regulatory agencies. Their expectation of the organization is related to compliance with all rules and regulations. For this, special committees and departments have been developed in the firm that help the management to make sure that mistake in this regard do not happen.
Political: Political environment in UK is very unstable, due to which it can be said that operations as well as very existence of the organization. It is a very important factor affecting the environment that company may be operating in. On a scale of 10, it can be ranked as 8. This ranking can be given to the element, as it has a significant impact on all of the other constituents of environment (Delener, 2000).
Economic: At present member nations of EU are on the road to recovery from that of the recent Eurozone crisis. This essentially means that purchasing power of customers is low in comparison to what it should have been. Out of 10, it can be given a rank of 7, as this part of the surroundings has substantial impact over working of companies.
Social: This is a very major element of external environment analysis. Today, a major shift has been happening in social environment of the country (Grier, 2006). People are demanding such products, which neither does have a negative impact on nature as well as their own health. It can be ranked as 8, because this factor determines and affects the trends that may prevail in market, as well as needs and wants of customers.
Technological: Role to technology and tools & machineries in the food manufacturing industry has increased by great margins. Companies in this sector are focusing on using the latest gadgets into their operations, so as to be able to focus on cutting down on their costs. It is 6 ranking element of the environment. Although it is a very crucial factor, but its impact is not very substantial on operations of industry.
Legal: There are a lot of rules and regulations which companies in food manufacturing industry have to follow (Fernando, 2011). It is because of this reason, it may not be wrong to say that it is one of the highly regulated markets in the country. It is a very critical factor, as it can be ranked as 8. If firms do not comply with rules and regulations, then there are very less chances for them to operate effectively.
Environmental: Firms such as Premier Foods have a substantial impact on natural environment. It can be ranked as 7, as one of the trends prevailing in market is that people tend to buy products of those companies, which have a minimum negative impact on environment.
Macroeconomic factors have been ranked according to their importance:
Interest rates: This is a major factor that affects working of the firm, thus it can be said that it is a very important factor for the company (Johnston, Bringall and Fitzgerald, 2002). Interests that the company would pay for any loans for its operations, then the effect for paying such interest can be seen in terms of prices that the company charges from customer.
RPI Inflation: It is another very prominent and important factor that has to be considered by the management. It provides details regarding amounts payable by company on its index-linked securities.
CPI Inflation: It provides details regarding the average changes that have happened over years in prices that are paid by customers over a period of time. The data related to shape pricing strategies of the firm (Rodgers, 2008).
Unemployment rate: Management of the company takes into consideration the unemployment rates that are prevalent in market. Firm’s style and rate of giving jobs to people is completely dependent upon rate of unemployment prevalent in the market.
Exchange rate: This is the factor which is of least importance to company, mainly because of reason that it does not operate in the international market.
There are a lot of factors and forces that led to management taking a decision to create two different brands of products – Power Brand and Supporting Brand. One of them is that products falling in category of Power Brand are the ones which have high growth potential (Buthe and Milner, 2008). Thus, it can be said that sales and overall performance of these goods is far better than that of the other brands’. Since, the management had observed that demands of such products was substantial, they took the decision to make them front line products. This also means that liking of customers for these goods are superior to the others.
On the other hand, decision as to why the company decided to name some of their products as supporting brand was that their sales as well as overall performance was not substantial. It is in this sense that a decision was taken so as not to push sales of these products, instead market them as such products, which when are used with goods of the power brand, can improve overall experience and satisfaction level of customers (Gellner, 2004).
The present decision of management of the firm to stop acquiring other companies is a right decision. This is primarily because of reason that the operations, effectiveness and efficiency of the company was declining at a very rapid pace in recent times. It was becoming the ‘victim’ of its own success (Kárpáti, 2001). This essentially meant that the firms’ expenditures and costs were increasing at a rapid rate. In this regard, it may not be wrong to say that the management’s decision to stop such acquisitions was that the firm was expending a lot of money in acquiring companies. Through this approach, intention of management was that their intention was to cut down on excessive costs and thus improve overall standing in the market.
EEA is based on four freedoms as the European community because the free movement of goods, persons ,services and capital among the EEA countries. Thus the countries that are not component of the EU enjoy free trade with the union. The nations in the EEA that are part of the EU do not accept the financial burden linked with the EU membership, however the offer financial help to the euro pen single market (Rejc, 2004). Premier foods have to suffer loss because they operate in the UK market and if they expand their international market then they have to pay more tax rate. Further they will be facing high exchange rates and high interest rates. On the other side, with operating in local market they can easily perform its IPO process and they can easily avail the raw materials of beverages and baking products. They can proceed and get the best output from it in form of product ready to use. On the other side operating in the international market will increase their production cost. There will be high amount of risk in international market as company will have to follow government rules and policies. Further there will be financial losses to the business because this will decrease their areas of operations. They will also lose a high rate of customers in all areas which will negatively affect their business.
This announcement becomes a bad news for Premier Foods in the terms of the company’s input because EU enjoys free trade with the European Union (Mansfield, Milner and Rosendorff, 2002). As it operates in the local community it has already set up its market as well as customers. And the non EU members of the EAA have agreed to enact legislation similar to that passed in the EU in the areas of social policy, consumer protection, environment, company law and statistics. These are some of the areas covered by the EU. As it becomes difficult for Premier Foods to process the IPO process as after leaving this membership they will not be able to enjoy free trade that in results increases their production costs. Once the production cost gets increases than the cost of Premier Goods’ products will also increases so the consumers may switch to the other products so this is a loss for this company. The main reason behind this is that the company would not be able to operate effectively in the market and thus the task of attaining different goals and objectives would be hampered in a very bad manner. In this way it may not be wrong to say that company’s overall performance as well as existence in market would be affected very badly.
Vodafone have to lose more by the UK being outside of a common regulatory framework for business, because it has to face several changes regarding the operation of the business different laws rules and regulations of the government, taxes rates, regulations for civil emergencies and some EU legislation (Coulter, 2005). It becomes very difficult for Vodafone to make the strategies regarding its product and its promotions. It can better be supported through fact that Vodafone is a multinational company and much of its customer base is made up of the belief that it is one of the best firms in terms of corporate governance, due to reason that it exists in UK as well, which is one of the highly regulated markets, thus clearly indicating that the firm operates in a very legal fashion.
Analyzing the environment that a company operates in, is one of the most crucial tasks that has to be carried out by management, mainly because of reason that it is a way through which the firm can be made to sustain and survive in the market in a mush efficient and effective fashion. During the study, it was observed that Premier Foods would have to face serious repercussions, if government of UK decides that they have to move out of the European Union. This is primarily because of reason that there are chances that image of the firm would be hampered in a negative way.
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