ASSESSMENT - PORTFOLIO
The comparison is between Oxfam, a UK-based charity, and British Airways. British Airways is a profit-based organization, while Oxfam is a not-for-profit corporation with an interest in the alleviation of poverty. The primary difference between the two is that BA is a service provider and profit-making organization, whereas Oxfam aims at alleviating poverty and is not profit-oriented. Thus, BA maximizes profits on behalf of the company's owners and shareholders, while Oxfam aims to solve society's needs (Oxfam International, 2013).
Both BA and Oxfam have their headquarters in the UK and operate at domestic and international levels. BA is a public limited company, which implies that it is owned by shareholders with limited liabilities (British Airways Plc, 2016). As a public limited company, BA is a large organization in terms of size and scale, and it has its shares traded on the Stock Exchange. On the other hand, Oxfam is an international confederation of charitable organizations that focuses on global poverty alleviation (Oxfam International, 2013). The purpose of Oxfam is to develop structures that can benefit people faced with injustice and poverty by empowering them. British Airways Plc, (2016) contended that the purpose of BA is to meet the rising expectations of its customers and be the leading service provider in the airline industry. Oxfam partners and allies ensure that people living in poverty, particularly women can realise their rights and dignity like other people.
The BA has a fleet of 272 and operates in 183 destinations around the world. As of 2016, the company generated £11,443 million from its business operations (British Airways Plc, 2016). On the other hand, Oxfam generates its revenues via different forms of fundraising such as the London Marathon (Oxfam International, 2013). Oxfam provides support to national, local, and international organizations as well as social movements.
LO2
PESTLE is a strategic management tool used to analyze and monitor external factors that affect the operations of a business. PESTLE analysis is composed of political, economic, societal, technological, legal, and environmental factors (Thompson & Martin, 2010). The role of PESTEL analysis is applied by marketers and business strategists to make decisions related to a business, product, or concept (Barney. & Hesterley, 2010). This is achieved by highlighting macro-environmental factors that may affect the success of an organization.
Economic Factors: The primary economic factors affecting BA include the currency exchange rate, inflation rate, and the general economic climate in Europe. An increase in fuel prices also affected the ability of BA to operate and make profits. Highly sensitive to economic conditions such as the domestic and global economic deterioration impact the financial position of BA. The UK referendum to exist EU posed a major economic effect related to regional operations British Airways Plc, 2016).
Technological Factors: The development of social media has improved the company’s ability to market itself on the online platform. However, the company is prone to cyber-attacks and security breaches that may affect the business operations of the company. BA depends on IT systems and any failure may result in significant disruption to its operations, business activities, and eventually revenues (British Airways Plc, 2016).
Political Factors: BA operates more than 200 destinations across 80 countries and the political stability of the nations could affect its operations (British Airways Plc, 2016). Political stability and security threats affect BA’s operations. For example, the March 2016 terrorist attacks at Brussels airport resulted in IAG share price decline by 1.5 percent (Fletcher 2016). Work strikes and activities of trade unions also affect the operations of BA. Thus, instability linked to geopolitical factors could have a detrimental effect on BA's operating results (British Airways Plc, 2016).
LO3
Apple iPhone is a high consumer demand in the UK. For example, in both 2013 and 2014, the demand for iPhone outstripped its supply. The demand for the iPhone is influenced by both internal influencers and external influencers. Internal influencers are such as perceptions and motivations, while external influencers include reference groups, culture and subculture, and social class (Gibson, Ivancevich, Donnelly, & Konopaske, 2012).
Internal Influencers: Consumer behavior is influenced by perceptions towards a product, and motivation to make a purchase. For example, the iPhone is regarded as the best mobile phone in the world, and such a perception influences consumer decisions to purchase (Gibson et al., 2012). Thus, the motivation for the iPhone is quality and durability, regardless of the high prices associated with the phone. A consumer assigns meaning to the iPhone and this motivates them to make a purchase. Under perceptions, a consumer when exposed to iPhones via advertisement, their attention is taken, interpreted, made, and immediate or long-term decisions are made (Gibson et al., 2012).
External Influences: External influences are associated with the environment or society. Cultural and subculture factors influence the purchase of iPhone. Cultural factors are divided into social status (class), culture, and subculture (Lamb,, Hair, & McDaniel, 2012). Culture relates to values, customers' beliefs, and customers associated with a specific group of consumers. A subculture is a group that coexists with another group, but with a distinctive set of characteristics and behaviors (Lamb et al., 2012). A reference group attracts consumers to purchase iPhones to please a set of people. A youth sharing technological beliefs and ideals is more likely to purchase iPhone in conformity with the social group. About iPhones, social groups sharing a culture of trendy mobile products are attracted to iPhones. Subcultures act as a kind of peer pressure that compels members to purchase iPhones, especially young adults.
LO4
Ethical issues affect the operations of a business. When a business acts ethically, it entails making the right choice. The chosen company is Tesco Plc, which is the largest retailer in the UK. The three ethical issues a business must consider are discrimination, integrity and trust, and environmental protection. To the employees, Tesco has implemented an antidiscrimination policy to ensure that its employees are not discriminated against and that all people in the society are considered (Tesco, 2015). For example, Tesco does not discriminate against its employees based on ethnic, religious, or racial backgrounds. Tesco ensures trust and integrity at both societal and employee levels. For example, it ensures that employees manufacture and sell products that meet Tesco's processes aimed at assuring reliability, safety, and quality (Tesco, 2015). Its products are of quality and safe for consumption by the society. On the other hand, ensuring employees are trustworthy promotes accountability and transparency in the workplace.
Environmental protection is achieved when a company like Tesco balances between profit-making and the ability to adapt to sustainable operations. Tesco must consider practices that when applied prevent pollution and contribution to greenhouse gases. To its employees, Tesco has a policy implemented to ensure that its employees follow it to protect the society and environment. Additionally, Tesco strives to protect of safety and health of all employees by following laws and regulations (Tesco, 2015). Through corporate responsibility, Tesco meets all regulatory and industry standards needed for environmental protection, such as the use of green energy.
Operating ethically ensures that both employees and society are protected from that may result to pollution of the environment. It also ensures that employees are treated equally and respected by the organisation and society. Ethical operations are costly, and affect the profitability of the company, employee’s salary, and number of social corporate responsibility activities.
LO5
Globalization defines the process whereby societies, regional economies, and cultures have become incorporated via a global network of trade, travel, cultural diffusion, and communication (Great Britain. 2007; Nankervis, Miyamoto, Taylor, Milton-Smith, 2005). Three primary drivers of globalization are technology, shared customer needs, and competitive drivers (Nankervis et al., 2005). These drivers are linked to the transfer of information between different parties across domestic and international boundaries.
The news story was published on 27 July 2017 in the Guardian by Jill Treanor. The story focuses on Amazon founder Jeff Bezos, his business, and how he was the world's richest man within a short period (Treanor, 2017). Technology is at the center of this story because as a means of communication, the business operations of Amazon in terms of share price were reported by Forbes and shared across the world within a short period. Technology stocks outpaced the rest of the United States stock market, and Jeff Bezos was ranked the wealthiest man in the world (Treanor, 2017). Nonetheless, the shares fell following speculations, and Microsoft founder, Bill Gates retained his place as the richest man in the world.
The second driver is shared customer needs, whereby technology and products are conveyed via the use of communication across countries sharing common needs. For example, Amazon is an online retailer that uses technology to supply its products across the world. Thus, the story of Amazon and Jeff Bezos was quickly communicated across the world because of the shared customer needs.
Competitive drivers for competition focus on competition at the global level. For example, from the story, Jeff Bezos and Bill Gates operate IT-based companies that compete in the stock market. Based on the story, competition between the two companies is the basis of the increase in Amazon’s share which declined afterward.
References:
- Barney J.B. & Hesterley W.S, (2010) Strategic Management and Competitive Advantage concepts, and cases, 3rd edition, Pearson: Prentice Hall.
- British Airways Plc. (2016). British Airways Plc Annual Report and Accounts Year ended 31 December 2016. British Airways Plc
- Fletcher, N. (2016) “Travel and tourism shares sink after Brussels attacks” The Guardian, PP. 1-2.
- Gibson, J. L., Ivancevich, J. M., Donnelly, J. H., & Konopaske, R. (2012). Organizations: Behavior, structure, processes. Dubuque, IA: McGraw-Hill.
- Great Britain. (2007). Globalization: Prospects and policy responses: report, together with formal minutes, oral and written evidence. London: TSO.
- Lamb, C. W., Hair, J. F., & McDaniel, C. D. (2012). Essentials of marketing. Mason, Ohio: South-Western Cengage Learning.
- Nankervis, A., Miyamoto, Y., Taylor, R., & Milton-Smith, J. (2005) Managing Services. Cambridge University Press,
- Oxfam International (2013). Oxfam International Strategic Plan 2007–2012.
- Tesco (2015) Tesco Corporation Code of Business Conduct and Ethics.
- Thompson, J & F Martin (2010) Strategic Management: Awareness and Change, 6th ed. London: Thomson.
- Treanor, J. (2017). Amazon Founder Jeff Bezos – Briefly – Becomes World's Richest Man. The Guardian, pp. 1-2.
