Category: Business 11471

Building an IFE matrix for Chipotle Mexican Grill Inc. allowed for a detailed evaluation of the companys strengths and weaknesses, or internal advantages and disadvantages. As seen from the first part of the matrix, one of the restaurants greatest strengths is its established presence on its domestic market, in the United States. The company has more than 2,400 restaurants in the US, taking up 57% of the share of limited service Mexican restaurants in the country and coming second only to Taco Bell (Lock, 2020). The second biggest strength is the restaurant chains integrity when it comes to sourcing raw materials: it has close ties with like-minded suppliers that are environmentally aware. Worth mentioning is Chipotles partnership with Doordash for delivery, which is especially relevant today amidst the COVID-19 pandemic. The restaurant owes its success to a simple, yet tasty menu with a customization menu and food made from quality ingredients.

For all its strengths, Chipotle has its own set of challenges, the biggest of which is probably its dependency on the US market and low presence on foreign markets. At the moment, outside the US, Chipotle is only present in the United Kingdom, Canada, Germany, and France, and its overseas growth is quite slow (Show, 2014). As seen from Chipotles 2017 annual report, the company has a limited advertising budget and low investment in research and development (Chipotle Mexican Grill, Inc., 2018). Interestingly enough, one of the companys greatest strengths is also its significant weakness. As reported by Giamonna and Patton (2015), because the chain uses fresh food, it is more prone to spreading E.coli bacteria, which caused outbreaks in the past.

Chipotle has been delivering on its promises outlined in the Food with Integrity statement. However, because of the limited advertising, not all customers are aware of the companys attempts to be more environmentally friendly and meet higher ends. For this reason, it makes sense for the restaurant chain to make consciousness front and center of its marketing campaign. Shaverien (2018) explains that today, customers expectations undergo significant changes: they are focusing more on conscious consumption, for which it is critical to check a companys background and practices. As reported by Shaverien (2018), as many as 71% of young customers say that they would stop using a companys products or services if they found out about a scandal or a controversy. Chipotle has a chance to stand out more among other restaurant companies if it appeals to customers endeavors to be more conscious about their consumption habits.

As for Chipotles weaknesses, they seem to revolve around the companys disengagement from foreign markets. Since Chipotle is not a recognizable brand outside the United States, other countries might not be aware of its existence. For this reason, entering new markets, offering the same product might be risky. Here Chipotle might have to face another major weakness: limited menu and prices higher than their competitors. To build a presence in a new market, the restaurant chain might have to localize its production and marketing strategy, which comes at a cost. It is generally challenging to strike the right balance between pandering to foreign customers tastes and retaining its unique identity. Aside from that, before making such as step, Chipotle needs to work on its reputation and show the public how it tackles the food safety crisis.

References

Chipotle Mexican Grill. (2018). 2017 annual report & proxy statement. Web.

Giammona, C. & Patton, L. (2015). Chipotles greatest strength not its greatest weakness too. 

Lock, S. (2020). Chipotle Mexican Grill  statistics & facts. 

Shaverien, A. (2018). Consumers do care about retailers; ethics and brand purpose, Accenture research finds. Forbes. 

Shaw, B. (2014). Three weaknesses for Chipotle investors to monitor in 2014.

Introduction

The Exxon Mobil Corporation (XOM) is a significant oil and gas conglomerate worldwide. The Standard Oil Company was founded in Ohio in 1870, and by 1880, it had evolved into an oil empire that controlled between 90% and 95% of all oil produced in the United States. Extraction of crude oil and natural gas and their transportation and storage are Exxon Mobils primary commercial operations carried out through its divisions and associate companies. The company also produces and sells crude oil, natural gas, petroleum products, and petrochemicals. (Morán & Bluher, 2019). According to CSI Market, Exxon Mobil no longer has the same market share as its progenitor in the late 1800s. However, it still has the largest share of revenues in the combined upstream, downstream, chemical, and other divisions of the oil and gas industry in the United States.

Exxon Mobil works not just in the United States but also in other parts of the world. Exon Mobils most recent venture is the discovery of oil in Guyana. Exxon Mobil Corp (XOM.N) announced in September that it had made a discovery at Pinktail in the Stabroek Block off the coast of Guyana as part of the development of a significant new oil and gas discovery (Mahmood & Furqan, 2021). The business operates the 6.6 million acres Stabroek Block in collaboration with Hess Corp (HES.N) and Chinas CNOOC Ltd. (0883. HK). The company has made at least twenty significant discoveries there.

Additionally, the business stated that the discovery would increase the companys earlier estimate of recoverable resources of more than 9 billion barrels of oil and gas without detailing the number of reserves in its latest discovery (Sanzillo, 2020). The Liza Unity, the companys second offshore production plant, sailed from Singapore to Guyana in early September. According to Refinitiv Eikon vessel tracking data, the floating production storage and offloading (FPSO) vessel is now crossing the East Indian Ocean and is expected to arrive in Guyana on November 15.

The Unity FPSO will be used for the Liza Phase 2 development, with production projected to commence in early 2022 at around 220,000 barrels per day (BPD). By 2027, the company anticipates the Stabroek block to produce at least 1 million barrels per day via six FPSOs. Additionally, Exxon expects to submit a development plan for Yellowtail, its fourth Guyana project, later this year.

However, the International community is fighting against the use of fossil fuels, which includes oil products. Organizations such as the International Energy Agency (IEA) have acknowledged the pollution that fossil fuel is associated with and are now campaigning for the use of renewable energy (Valle & Marks 2021). The IEA has a campaign dubbed Net-Zero by 2050, implying that the organization intends to achieve zero emissions from fossil fuels in 2050. The prospects by the Exxon Mobil company in Guyana are, however, going against the desired international direction since they involve the exploitation of fossil fuel, which pollutes the environment.

Despite the international needs, Guyana considers the exploitation of the oil since it might benefit it economically. The country is speculating a future where the newly discovered oil reserves will be running the economy of Guyana. Other nations have become successful economically due to the presence of oil in the countries. With Guyana, it is only fitting to speculate success from the sale of the oil (Sanzillo, 2020). However, success cannot be guaranteed as the world is shifting away from oil and other environmentally friendly and renewable forms of energy. The oil price is also shrinking. Therefore, Guyana needs to counter-check whether they would reap from allowing the venturing into the exploitation of the oil reserves or whether they should abort the project before they land on losses.

Environmental Analysis

The exploitation of oil by Exxon Mobil company in Guyana will be affected by several factors, that is either external or internal. The success of an oil-producing nation widely depends on the acceptance of the oil from the global community. International sanctions and campaigns against oil-producing activities can adversely affect the country, leading to losses (Mahmood & Furqan, 2021). The PESTEL analysis below showcases the external forces that affect the oil industry, and consequently, Exxon Mobil. Political, economic, social, technical, environmental, and legal aspects are all included in the PESTEL analysis tool. This tool will be beneficial to the organization in evaluating the external factors that will affect the company.

Political Factors

Oil and gas companies are well aware of the influence that political statements and conflicts between countries may have on the industry. The global oil market, for example, can be immediately destabilized by tensions between the United States and Iran (IEA, 2021). The Strait of Hormuz (near Iran), which is essential to world oil supplies, may also be affected by the conflict. The oil and gas business is vulnerable to instability in the Middle East. Several regional allies, most notably Egypt and Saudi Arabia, have a close relationship with the United States as a result of this.

Oil exporting countries policies are coordinated and harmonized by OPEC (the Organization of Petroleum Exporting Countries) (OPEC, 2021). The organization has ten member states which align with its policies (McDonald & Üngör, 2021). The oil and gas business in each of these countries is affected by a variety of factors, including domestic politics, rules, and regulations.

The relationship between Guyana and the oil mining business will also impact the countrys ability to extract oil. Guyanas current relationship with important countries like the United States is not strained (Mahmood & Furqan, 2021). It is possible that, as the country moves forward with its oil mining efforts, pressures will arise, preventing the countrys success. If the government goes it alone, OPEC will face tremendous opposition, which does not agree with the land.

Economic Factors

Among the worlds leading oil producers are the United States of America, Russia, Saudi Arabia, Iraq, Canada, China, UAE, Iran, Brazil, and Kuwait. The leading gas consumers in the world are The United States, Russia, Iran, Canada, Algeria, Qatar, China, Saudi Arabia, and the United Arab Emirates (Valle & Marks 2021). The top oil consumers globally are the United States, China, India, Japan, Russia, Saudi Arabia and Brazil, South Korea, Canada, and the United Kingdom. The oil and gas industry often has effects on the domestic economy in these countries.

For example, in the first week of August 2021, oil prices fell dramatically as Chinas manufacturing activity growth slowed sharply. Economic growth, on the other hand, increases global demand for oil and gas. Economic growth in Africas oil and gas exporting countries has historically been driven by the oil and gas industry (Sanzillo, 2020). The oil and gas industry is responsible for millions of jobs around the world. As a result, this business has both beneficial and harmful repercussions for other industries. While the oil industry profits from a high oil price, many other sectors are adversely affected. Contrary to popular belief, reducing oil prices is bad for oil companies but suitable for different businesses.

Guyana poses as more of an oil-producing country than an oil-consuming country. The success of the oil-producing company depends on the demand by the leading oil-consuming companies. Thus, Guyana needs to look into the future of the oil demand and decide whether it should venture into oil exploitation or not. If the future proves that the world will demand oil, Guyana should venture into producing it since it will be assured of a ready market. Still, if the future shows that the world is moving away from oil, Guyana should abort the project since it will lead to losses in the long run.

Social Factors

A PESTEL examination of the oil and gas (petroleum) industry will now assess social aspects. The rise of the middle class in many developing and expanding nations has resulted in a massive increase in oil consumption. Because these countries consume so much oil, it is no surprise that they are among the worlds most populous nations. The demand for oil increases as more people own cars and travel by various forms of transportation for holidays.

Exxon Mobil and Guyana will intend to sell their oil to the most significant oil-consuming countries in the world. The government and the mining company should look into such countries social and cultural patterns and decide how much oil they will be producing at what time. For example, during the December holidays, most of these countries register high travel rates. Thus, oil production should be peaking as the world approaches such periods as the December holidays.

Technological Factors

Oil and gas companies are known for their delayed response to new technological developments. In contrast, many organizations are now spending significantly on big data and analytics, cloud computing, artificial intelligence (AI), and machine learning, robotics, and drones, 5G networks, as well as collaboration tools, as a result of digitalization (Morán & Bluher, 2019). The use of these technologies is likely to increase their operations efficiency and profitability.

Exxon Mobil can also adopt digitization procedures and invest in technological products to make mining processes and other business functions even more manageable. When Exxon Mobil finally decides to adopt specialized tools in its operations, it will reduce costs and make mining efficient, which will be a plus for Guyana.

Environmental Factors

The seasons and the weather have an impact on the demand for oil and gas. While oil usage rises during the summer travel season, gas consumption increases during the winter season due to increasing heating fuel demand. On the other hand, significant weather occurrences can impact the production of oil and gas. Increasing numbers of people turn to renewable energy sources and reject dirty fossil fuels in their daily lives.

The major environmental factor that will affect Guyana will be the new trend that people are now avoiding dirty oil and are embracing the use of more environmentally friendly sources of energy such as solar and electric energy. Guyana should use the rate at which people will adopt alternative energy sources to determine whether oil demands will remain high or dwindle.

Legal Factors

For example, the United Kingdoms Petroleum Act, the United States Federal Oil and Gas Royalty Management Act, the United Nations Framework Convention on Climate Change, and the Petroleum and Natural Gas Rules of India each have their own rules governing oil-and-gas operations (Varga et al., 2021). Consider the fact that many countries have multiple laws. International oil and gas firms are allowed in some countries, while others have strict ownership restrictions.

The legal factors that will affect oil exploitation in Guyana will be internal and external. The internal legal factors will include the rules of the a=land set by Guyana on how the Exxon Mobil company should operate and how the oil mined in the company can be best be used locally (Valle & Marks 2021). External factors will involve how other countries will react to the oil from Guyana. Some countries might have alliances with other oil-producing companies and will thus limit the oil originating from Guyana, while some countries will readily accept the oil from Guyana. Therefore, Guyana should study the possible receptions that its oil might receive in the global arena.

Stakeholder Analysis

Stakeholders

Several stakeholders exist in the oil-producing business. The stakeholders in the oil business mainly include states, state-owned companies, and other major private investors. In Guyana, the major stakeholders involved are the state, Guyana, and private investors, the Exxon Mobil company (Canadian Audit and Accountability Foundation, 2021). Exxon Mobil identifies the oil fields and mines the oil with permission and on behalf of Guyana. Both parties will benefit since Guyana will receive profits from the sale of the oil and will also register employment opportunities for the people that will work in the oil firms. Exxon Oil will work on behalf of the government and will receive a percentage of the revenue that the government will make

Potential Benefits to Guyana

The discovery of oil in Guyana is good news for the country due to the value that oil products have. Oil is essential in almost all aspects of life, and its demand is always high. Further, most of the wealthiest countries have amassed their wealth from oil products (McDonald & Üngör, 2021). The discovery of oil will help Guyana earn foreign exchange from the sale of oil to external countries. The foreign exchange will increase the countrys cash flow and lead to the development of business activities.

Guyana is among the poorest nations in South America. Employments rates are high, and many people in the country live below the poverty line. However, with the discovery of oil, the fate of the people of Guyana can change. The discovery of oil allows the people to work on oil firms and other support establishments that work with oil products. The discovery of oil in Guyana will also lead to job opportunities and an increase in business activities in the country. Further, when the government uses its oil, it will improve its economic activities and rise in national revenue.

Potential Benefits to Exxon Mobil

Exxon Mobil benefits from dealing with oil. The company identifies oil deposits, conducts studies on the oil deposits, and establishes whether the deposits are enough for exploitation. Its activities in Guyana have enabled it to be able to secure its largest deposits yet. The company will benefit from the management and the sale of the oil on behalf of the Guyana government (Sanzillo, 2020). The massive discovery by Exxon Oil and the subsequent mining operations by the company will also raise its reputation, and any other countries that might have oil reserves will always be considering Exxon Mobil for a tender in identifying the resources and managing the reserves for them, just like in Guyana.

Potential Dis-Benefits to Guyana

The operations by Exxon Mobil in Guyana, however, are characterized by significant criticism from international institutions. Many critics believe that Exxon Mobil has only ventured into Guyana, not to profit the country but only to fend for itself (Rahman, 2021). The critics think that Exxon Mobil will only stay in Guyana till the oil fields run dry and then leave after making millions of dollars. The activities by the Exxon Mobil company are also expected to degrade the Guyana environment and adversely affect other economic activities such as fishing, which plays a massive role in keeping the people of Guyana alive.

Exxon Mobil has agreed that its activities will adversely pollute the environment by emissions of fumes and fluids into the rivers. Exxon Mobil company is, however, in Guyana only due to its business interests. They do not share the same claims of Guyana, which will still be there even after the oil fields have been depleted. Thus, the negative environmental impacts of the activities by Exxon Mobil in Guyana will leave the company in a poorer position than it is today in terms of environmental safety. People in Guyana will lead lower quality lives due to the adverse effects of oil mining on the countrys environment.

Project Lifecycle Model

Exxon Mobil mining has a variety of project models that they can adapt for their projects. However, the company can choose a five-factor project lifecycle model, which includes the following steps; exploration, appraisal, development, production, and decommissioning (Varga et al., 2021). The exploration phase will involve Exxon Mobil conducting geologic and seismic site surveys. The step further involves exploration drilling, which will estimate the potential production of the reserve.

The second phase of the project will involve appraisal drilling, which is undertaken to establish the quality, quantity, and other characteristics of oil or gas in the newly discovered field. The appraisal drilling will help the Exxon Mobil company assess the economic viability and carry out the impacts that the drilling of the oil will have on the environment. The third phase is the development of the oil mines (McDonald & Üngör, 2021). The development phase will involve Exxon Mobil bringing in its tools for the mining and setting up the mining fields, ready for mining the oil. The development phase also consists in constructing the facilities such as roads, pipelines, and terminals. At this phase, the company also estimates the site remediation costs.

The fourth phase is the production phase which involves production management, transportation of oil and gas to the processing facility, and maintenance of the mining sites. The production phase signifies that mining has already started, and the company is expecting to start making income, and with constant production, it should start making profits. The final phase involves the acts of the company after the oil reserves have been depleted. The stage is termed decommissioning and involves the retreating activities by the company. The company conducts site remediation, removes its facilities and equipment, and monitors the site to eliminate potential health and physical hazards.

Strengths and Weaknesses

Strengths

The Exxon Mobil oil mining project will be successful. Exxon Mobil has existed for centuries and therefore understands how oil wells work. The company is consequently unlikely to venture into a project that will lead to a loss due to the experience that the company has. The company has also registered its largest-ever oil reserve yet (Rahman, 2021). The largest oil reserve means that the company will register massive mines and will thus register more significant revenues. The demand for oil all across the world has always remained constant. Oil is the reliable and cheaply affordable energy source, making it the first source of energy that every person and company worldwide prioritizes. Thus, the company will have a ready market for oil all around the globe.

Weaknesses

The use of oil is being discouraged by international organizations all across the world. The world is shifting from the use of oil due to its depredatory nature. International organizations have spearheaded the development and the use of more user-friendly energy sources such as solar and geothermal energy (Panelli, 2019). Thus, Exxon Mobil is bound to face stiff competition from international organizations cautious about climate change. The organizations are also influential, and they might create policies aimed at limiting oil use and production; in the process, Exxon Mobil and Guyana might end up making losses as the world turns to more environmentally friendly sources of energy.

Success Criteria

The success of the Exxon Mobil mining project in Guyana is only valid if both the country and the company make profits from the sake of the crude oil that it is mining. Exxon Mobil Company is in business and intends to make profits from its ventures in Guyana (Panelli, 2019). On the other hand, Guyana has found natural resources that are vital for the countrys development. Therefore, Guyana seeks to receive funds from selling natural resources, while Exxon Mobile also aims to make money from exploiting the oil in Guyana. Also, Guyana has to be wary of the environment of the country. The oil will deplete with time, but Guyana will remain standing. Thus, the success of the project is also when the company avoids environmental degradation during mining. The company can also adopt proper remediation methods to mask the mining activities effects on the environment.

Quality Management

The quality management practices for the project will involve timely updates, a process approach, and continual improvement. The Exxon Mobil Company will update the Guyana government and the outside world, describing the stages of the project they are in. Timely updates help the company keep track of activities and help the company relate well with the outside world by offering transparency (Varga et al., 2021). Following the five-point project lifecycle model as a process is beneficial to the project since it will keep the project on track and always state its requirements. Finally, continual improvement will improve the quality of the project. The constant improvement involves the company adopting better methods than the existing methods in executing the projects requirements. When the company maintains the above three points, the quality of the project will always be maintained.

Conclusion

The Exxon Mobil company has discovered oil deposits in Guyana. The company intends to drill the oil and make Guyana among the oil-producing giants in the globe. However, the prospects of using oil as a source of energy are not guaranteed since the international society is now moving to utilize other renewable energy sources. The Exxon Mobil company is aware of the global position but intends to go on with the drilling. The drilling of the oil by Exxon Mobil is expected to be successful and will give profits to both Guyana and Exxon Mobil. However, Exxon Mobil will degrade the environment in Guyana and affect other economic activities through the mining that it intends to carry out. However, Guyana is a developing country. They should take advantage of the oil resource that has been discovered by Exxon Mobil and try to develop their country using the revenue that the company will gain.

References

Canadian Audit and Accountability Foundation. (2021). The Life Cycle of Oil and Gas Projects  Canadian Audit and Accountability Foundation. CAAF.

IEA. (2021). Net Zero by 2050  Analysis. IEA.

McDonald, L., & ÜNgör, M. (2021). New oil discoveries in Guyana since 2015: Resource curse or resource blessing. Resources Policy, 74, 102363.

Mahmood, H., & Furqan, M. (2020). Oil rents and greenhouse gas emissions: spatial analysis of Gulf Cooperation Council countries. Environment, Development and Sustainability, 23(4), 62156233.

Morán, A. M., & Bluher, L. (2019). Venezuela and ExxonMobil Oil Discovery in Guyana. International Affairs Issues. Published.

Panelli, L. F. (2019). Is Guyana a new oil El Dorado? The Journal of World Energy Law & Business 12 (5), 365-368. Web.

Rahman, M. (2021). PESTEL analysis of the oil and gas (petroleum) industry. Howandwhat.

Sanzillo, T. (2020). Guyanas oil deal: promise of quick cash will leave country shortchanged. Institute for Energy Economics and Financial Analysis. Published.

Valle, S., & Marks, N. (2021). EXCLUSIVE Exxon in talks to build fourth oil production rig for Guyana. Reuters.

Varga, A. L., Chandler, M. R., Cotton, W. B., Jackson, E. A., Markwort, R. J., Perkey, R. A., Renik, B., Riley, T., & Webb, S. I. (2021). Innovation and Integration: Exploration History, ExxonMobil, and the Guyana-Suriname Basin. Published.

Analyzis of the Japanese animation industry using Porters Five Forces model

Porters Five Force model is used to analyze the economic factors that influence the degree of competition in the marketplace. This model employs economic tools to analyze the Japanese film industry to establish how companies in the industry react to threats, and opportunities to ensure they make profits. Porter Five-Force model acts as a strategic platform for generating strategic choices (Hill and Jones 42).

However, there are limitations associated with employing this model. For instance, it does not address the size of demand or the role of government during the growth of a company. It does not focus on a particular firm, but instead analysis the whole industry. These limitations give rise to the assumption that all firms are affected by the same factors in the marketplace. Moreover, Porters model assumes that the intensity of competition is the only factor that affects the firm in the marketplace. Porters Five-Force model is used to determine the profit potential of the industry based on long-term investment opportunities (Ahlstrom and Bruton 131). The forces that affect firms in the industry include the threat of new entrants, bargaining power of suppliers, bargaining power of buyers, the threat of new substitutes and the intensity of rival (Grundy 217).

Threat of new entrant

The threat of new entrants in the film industry is controlled by the degree of competition between firms in the same industry. Companies in the same industry trying to create barriers to entry in order to reduce the level of competition. For instance, giant companies in the industry try to create barriers to entry by making film production very expensive by charging high fees for production firms.

However, the animated film industry is still easy to enter because of the lack of government policies and market regulations (Rice 382). The threat of new entrants in the Japanese animated film industry is very low. The lack of strict market barriers makes it very easy for new entrants to establish themselves in the market. For instance, the animated industry has an estimated 430 player, which is an indicator it is easy to enter the market. The threat of new entrant is very low which make it difficult for starters to be recognized in the market. For instance, the film industry has many players who prevent upcoming filmmakers from introducing their innovative products in the market. Moreover, the easy distribution channel via the Internet enables new players to penetrate the market easily.

Even a small firm with little capital can still be able to penetrate the market because of the immense distribution opportunities via the Internet. However, the cost of producing one film is extremely high which can be a barrier to entry for small companies in the industry. For instance, it cost on average about Y13million to produce one TV series, which is extremely high for starters. Moreover, high sunk costs might prevent some players from entering the market. Although the cost of producing TV series is extremely high, the animated film industry has little barriers to entry.

Bargaining power of suppliers

The bargaining power of suppliers is low. For instance, most of the activities in the Japanese film industry are conducted in-house which makes it very difficult for suppliers to increase their bargaining power. Moreover, companies in the industry have begun outsourcing in order to gain a competitive advantage. Outsourcing enables companies to lower production costs which have lowered the bargaining power of suppliers in the market.

Bargaining Power of Buyers

The bargaining power of customers in the animated industry is every high due to the availability of alternatives produces and services in the market. Consumers have many alternatives to choose from which makes them the ultimate determiner of the services to be offered in the market. Customers use different platforms via the Internet to access the services they need which increase online programming and entertainment.

Threat of substitute

The main challenge facing Japanese animated films is the threat of substitute products and services from other industries. The presence of substitute produce usually has a detrimental impact on a companys products and services. The technology giant has the capability to increase substitute products in the entertainment industry by introducing convergences. For instance, Google and Apple Inc. allow customers to purchase films online easily. Grundy argues that the Japanese music industry has also introduced substitute services where customers can be able to obtain multiple online music and films from one site (218).

The intensity of rivalry in the industry

The degree of rivalry in the film industry is very high due to the daunting challenges for alternative delivery platforms. TV channels can now be able to deliver their programs via high-speed Internet connection cables and satellites. Moreover, different players are collaborating in order to reduce the level of rivalry in the industry. The objective of many companies in the industry is to become market leaders in order to prevent new entrant which increases the degree of rivalry.

The influence of widespread availability of high-speed broadband internet on the industrys competitive conditions

The availability of broadband Internet in Japan continues to play a central role in improving competitiveness in the animated film industry. The availability of broadband Internet is improving competitiveness in the entertainment industry as more people gain access to the Internet. The increasing availability of broadband Internet has created new business opportunities in the animated industry because many people across the globe can now access the Internet.

Specifically, the increasing availability of broadband Internet in Japan has enabled the distribution of animated films. The broadband Internet can increase competitiveness in the industry by reducing the costs of people relocating. When there is a high-speed Internet, actors can perform their role anywhere in Japan instead of relocating skills. Many players in the animated film industry dwell in different parts of Japan.

Instead of incurring additional costs such as airplane tickets, reasonable broadband Internet can enable them to work in clusters whenever they are located. Broadband Internet can also allow audio houses to transmit files during filmmaking from demo to finish recording faster thus helping to reduce operating expenses. Moreover, filmmakers will benefit from broadband Internet because it will allow them to post the audio recording on websites where customers can comment and give their feedback after listening.

This would allow the industry to increase the quality of the films they produce. Ideally, customers understand what they want in a film thus; they can be resourceful to the industry if a broadband Internet allows them to participate in filmmaking. Moreover, a reasonable broadband Internet enables technicians to use digital editing equipment and other software to improve the quality of films. The animated film industry can become competitive by using broadband Internet when uploading extensive visual files such as edit films.

It allows filmmakers to post and update their progress online. Since the files are extremely large, a broadband Internet can help to save the amount of time required to upload one file. After the files are uploaded online, the high-speed Internet will allow editors to do their work better because they can constantly upload files to the host server easily. In simple terms, the film industry can become competitive by sharing large files with customers at a low cost.

Strategies that can be adopted by middle-size production company

Middle-size production companies should install broadband Internet that will allow them to introduce box which will increase convenience. In the film industry, convenience is the most intriguing factor for consumers. A middle-size production company can encourage customers to orders online instead of going to the movie store. A box office refers to a website created by a company where customers can pay and download movies.

Usually, these sites charge monthly subscription fees that will help the company to increase sales revenues. For instance, in the US, Netflix charges customers a monthly subscription fee for low-tech VOD Internet service (Scaria 106). These services allow customers to pay monthly subscription fees online and download movies online. A box office would allow customers in Japan to purchase movies online, efficiently which would be an efficient strategy for curbing piracy in the industry.

Flexibility is vital in the film industry that can be guaranteed by broadband Internet. Employees in the industry will be certain they can be able to operate their businesses anywhere, at any given time. Flexible services enable film companies to save cost because they can be able to host cloud-based apps without maintaining expensive systems in-house. A broadband Internet enables animated film companies to build a virtual infrastructure without incurring overheads (Plunkett 47). This allows filmmakers to focus on the core business without worrying about how much time it will take to upload files for editing. Moreover, a high-speed Internet will allow filmmakers to have access to their apps which will save traveling costs thus making lower bills in the industry a reality.

Works Cited

Ahlstrom, David, and Garry D. Bruton. International management: strategy and culture in the emerging world. Australia Mason, OH: South-Western Cengage Learning, 2010. Print.

Grundy, Tony. Rethinking and reinventing Michael Porters Five Forces Model. Strategic Change 15.5 (2006): 213-229.Print.

Hill, Charles W., and Gareth R. Jones. Strategic management theory : an integrated approach. Mason, OH: South-Western/Cengage Learning, 2010. Print.

Hillard, Robert. Information-driven business how to manage data and information for maximum advantage. Hoboken, N.J: John Wiley & Sons, 2010. Print.

Lientz, Bennet P., and Kathryn P. Rea. Dynamic e-business implementation management : how to effectively manage e-business implementation. San Diego: Academic Press, 2001. Print.

Plunkett, Jack W. Plunketts entertainment & media industry almanac. Houston, Tex: Plunkett Research, 2009. Print.

Porter, Douglas R. Managing growth in Americas communities. Washington, D.C: Island Press, 2008. Print.

Rice, John F. Adaptation of Porters Five Forces Model to Risk Management. Defense AR Journal 17.3 (2010): 375-388. Print.

Scaria, Arul G. Piracy in the Indian film industry : copyright and cultural consonance. Delhi, India: Cambridge University Press, 2014. Print.

Appendix

Introduction

The global retail industry is one of the most vital sectors in the world, providing various categories of goods to consumers. Tesco is a multinational company operating in the United Kingdom managing multiple groceries and general merchandise. Established in 1919, this corporations shares have been listed in the London Stock Exchange (Rosnizam et al., 2020). Apart from Americas Walmart, this English-based consortium has 2,300 supermarkets and other convenience stores and recruits about 326,000 employees (Rosnizam et al., 2020). However, in continental regions, the company operates in countries such as Slovakia, Turkey, Poland, Czech Republic, and many others. It has multiple business units but especially provides financial services through its subsidiary, Tesco Financial Services which manages 4.6 million clients account segmented between car insurance policies and credit cards. During the early years of the 21^st century, Tesco introduced its e-commerce platform which heightened its financial growth. This paper analyzes the financial position of Tesco using liquidity, efficiency, investment, and profitability ratios and suggests ways in which investors can make profits from a potential investment in Tescos shares.

Company Performance in its Industry Sector

The grocery market comprises several organizations competing against each other. In the United Kingdom, both Sainsburys and Tesco had the most significant market share accounting for approximately 42.3% as of May 2021 (Appelbaum et al., 2017). Tesco accumulated an annual revenue of 53 billion GBP in Ireland and Great Britain particularly in its 2019/2020 financial year. As compared to its previous year, the multinational retailer recorded an increase of approximately 1.3 billion GBP (Brigham & Houston, 2021). In addition, the corporation developed a strategic management model referred to as the Corporate Steering Wheel which enabled it to deliver its strategy and enhance its enterprise performance. In particular, this strategic tool has four components such as finance, people, operations, and customer. Each of these elements encompasses several strategic objectives that accentuate the priorities of the firm.

Competition

Tesco is a global-based company which is among the Big Four in Great Britain. Its core competitors are supermarkets such as ASDA, Sainsburys, and Morrisons. However, its other rivals in the retail segment operating the United States are retailers such as Walmart, Amazon, Walgreens, and Home Depot. Tesco has managed to maintain peak performance in its home country by focusing on both its employees and the customers. In essence, this firm outperformed its core rivals in the United Kingdom market having accounted for approximately 64.76 billion GBP in revenue (Cokins, 2017). Its competitors Sainsburys, Morrisons and Marks and Spencer Foods accumulated sales revenue of 28.99, 17.54, and 10.18 billion GBP respectively as illustrated in the bar graph below.

Key Areas for Investment

Tesco is an exceptional organization in the retail segment that a potential investor can consider investing by purchasing its shares. However, before considering this financial decision, a shareholder should first have a comprehensive understanding of the key aspects that drive the operations and performance of the UK leading supermarket. As such, several financial ratios can be utilized to assess the feasibility of investment by examining various components such as liquidity, profitability, efficiency, and investment options of the company.

Liquidity Ratios

Organizational liquidity refers to the ability of a company to easily turn its asset or security into cash without compromising its market price. As such, cash is considered the most liquid resource while tangible commodities are less liquid. In essence, liquidity ratios are imperative to stockholders and credits because it helps in determining if a corporation can settle their immediate debts (Davis & Davis, 2019). In particular, there are two types of liquidity metrics that can used such as quick and current ratio.

Quick Ratio or Acid Test

A quick ratio is a metric used by financial advisors to compute the ability of a firm to manage its short-term settlement of obligation while utilizing its most liquid assets. It is calculated by dividing the difference between current assets and inventories by a corporations current liabilities. Tescos current liabilities as of August 31, 2020 was $23.58 billion whereas its current assets minus inventories equal $18.86 billion (Guo & Wang, 2019). Therefore, its quick ratio for this particular period was 0.80.

Current Ratio

Current ratio is a metric used by financial advisors to calculate the liquidity of an organization by dividing the current assets by the current liabilities. It informs shareholders and market analysts how a corporation can capitalize on the current asset to meet its debt and other account payables. In Tescos case, its current assets accounted for approximately $21.74 billion whereas its current liabilities were reportedly $23.58 billion as of August 31, 2020 (Jiambalvo, 2019). Therefore, during this time, the UK supermarkets current ratio was 0.92.

Profitability Ratios

Profitability ratios are used in organizational management to gauge the ability of a company to make income relative to expenses, operating costs, and balance sheet assets. These metrics indicate how well a corporation exploit its assets to generate profits and create value for its investors (Cokins, 2017). There are several profitability ratios which can be used to evaluate Tesco such as gross profit, net profit, mark up, and return on capital employed.

Gross Profit

Gross profit can be described as the amount of money a firm generates after subtracting the variable expenses directly associated with producing and retailing its goods or providing its services. Tescos gross profit for the year ended 2020 was approximately $5.854 billion which is an increase from the amount recorded in 2019 (Shapiro & Hanouna, 2019). In particular, the figure below is a graph illustrating the gross profits the UK firm has been making since 2015.

Net Profit

Net profit is a metric that indicates the amount of money a company has after multiple expenses have been deducted from revenue. examples of these outlays include taxes, operating expenses, interest, and many more. In Tescos case, its net income can be illustrated in a line graph that shows whether the supermarket has been making either profits or losses. Since 2016, Tesco annual net profit has been steadily increasing except for 2017 when the company made losses of approximately $5.3 million (Rosnizam et al., 2020). Following these losses, Tesco improved its performance which was reflected in a consistent rise in income, thereby making a significant $7.961 billion in 2021.

Return on Capital Employed

Return on Capital Employed (ROCE) is a financial metric that enables managers to evaluate an organizations lucrativeness and capital efficiency. In particular, this ratio is essential in gaining insight into how well a corporation is making income from its capital. Renowned investment analyst Michael Mauboussin implied that a high ROCE shows that one dollar invested in the organization brings value of at least $1 (Weygandt et al., 2018). Therefore, this metric can be computed by dividing Earnings Before Interest and Tax (EBIT) by the difference between total assets and current liabilities. Therefore, in Tescos case, its ROCE equals:

ROCE = $2.95 billion ÷ ($68.85 billion  $29.51) (Reflecting the trailing twelve months (TTM) to February 2019)

Therefore, the UK supermarket had a ROCE of 7.4%.

When investors are comparing between various companies, they find the ROCE important. As such, Tescos Return on Capital Employed is approximately 7.4% as estimated by the Consumer Retailing industry. However, from the market comparison, Tescos figures are considered average, considering the risk associated with stocks versus bank account safety (Weygandt et al., 2018). Shareholders may wish to consider higher performing portfolio before deciding on the stocks to use. The analysis above finds that Tescos 7.4% is an increase from the percentage it recorded three years ago, when its ROCE was approximately 3.0% thereby suggesting the its firm performance has been improving.

Investment/Gearing

Dividend Yield and Cover

Dividend yield can be calculated by dividing the annual dividend per share by the current share price. In Tescos case, its total dividends of 9.15 can be divided by its current share price of 227.40 to get a dividend yield of 4.02%. In contrast, dividend coverage is a financial tool utilized by managers to evaluate the extent to which a company can pay dividends to its stockholders (Cokins, 2017). Tesco has a dividend coverage of 1.20 and this suggests that the retail is able to fund the payout from its earning without dependence on external sources of funds.

Earnings Per Share (EPS) and Price/Earnings Ratio (P/E)

Earnings per share is an expression of an organizations income dividend by the outstanding shares of its stock. Tescos EPS over the last five years has been consistent except for 2017 when the figure recorded was a negative since it made losses. Figure 4 below indicates a line graph illustrating the UK supermarkets EPS over the years. In contrast, price/earnings ratio exhibits the relationship between a firms earnings per share and stock price (Davis & Davis, 2019). As of today, Tescos share price is £227.40 whereas its EPS for the TTM ended February 2021 was £1.87. Therefore, the UK giants P/E ratio equals 121.60.

Capital Gearing

In the United Kingdom, capital gearing is a phrase used to describe the amount of debt a corporation has in relation to its equity. However, in the United States, this concept is alternatively referred to as financial leverage. It is calculated by dividing common stockholders equity by fixed interest-bearing funds. This metric is significant for investors because it helps them compare whether a corporation is holding an appropriate capital structure or not (Guo & Wang, 2019). As of February 2021, Tescos common stockholders equity was valued at $17.119 billion.

Efficiency Ratios

Non-Current Assets Turnover

Organizations use non-current assets turnover as an efficiency metric to measure the revenue generated relative to non-current assets. It is calculated by dividing the revenue with the non-current assets. Generally, a low non-current assets turnover suggests that a corporation to not effectively utilizing its assets while a high ratio may indicate that a company is more efficient in making the most of its non-current assets. Therefore, Tescos non-current asset turnover is as follows:

£64.76 billion ÷ £39.138 billion = 1.655

Trades Receivables Collection Period and Trade Payables Collection Period

Trade receivables is a financial metric that indicates the time interval between credit sale and receiving payment from the client. In Tescos case, the UK firm had a trade receivable of approximately $1.752 billion as of February 2021. This amount represents the monetary value of products and services sold and rendered to the customers but they have not paid for these commodities and packages (Jiambalvo, 2019). In contrast, trade payable collection period is a financial term used by accountants to evaluate the time interval between acquisition on credit and making payment to the merchant. Akin to other ratios, this metric is considered over a period of time and compared with other firms in the same industry.

Days Payable as of February 2021

= Average accounts payable

= Accounts Payable ÷ Cost of goods sold × Days in period

((10902.76 + 11649.1)/2) ÷ 37574.202496533 × 365÷2

Tescos trade payable collection period = 54.77

Sector Specific Impacts and Comparison with Other Industries

The competitive comparison of Tesco can be conducted with other firms in the same industry with headquarter located in the same nation. The figure below indicates various competitors of Tesco with their relative market capitalization in million United States dollars and PE ratios. As illustrated in the bubble chart, Americas Kroger company outperforms these firms with a market capitalization of $27.680 billion and a PE ratio of 3.59.

Limitations Associated with the Ratios

Utilizing liquidity ratios to analyze Tescos financial capabilities may be limited. For example, using liquidity metric on an impartial basis is not adequate to examine the liquidity position of an organization as it depends on the amount of current assets rather than the quality of the resources. Moreover, current ratio incorporates inventories in the computation, which may lead to overvaluation of the liquidity capability in several cases (Brigham & Houston, 2021). In addition, companies that have seasonal sales may record have fluctuations in their current ratios. Lastly, liquidity ratios may be affected by the variation in inventory valuation system by the corporation.

Profitability ratios are generally important in assessing the financial position of a firm. However, these metrics have several limitations since they are reliant on numerous calculations. As such, an error or fraud in the steps of estimation may be detrimental for investors and organizations in the future. Ratios may also be consistent due to the probability factor and hence, they should not be adhered to religiously (Davis & Davis, 2019). Moreover, the value of investment and income can simply be changed to reduce the profitability metrics as per individual requirements which may be deceptive for shareholders.

Investment ratios may have various weaknesses which might impact the companys investors and stakeholders. For example, the P/E ratio may mislead shareholders especially in regard to its growth prospects. Moreover, this metric is sometimes challenging to use especially when making comparisons across industries. Efficiency ratios may also be significant for businesses but they have their shortcomings such as impacts of inflation which may lead to misrepresentation of data.

Risks and Opportunities Facing Tesco

Tescos external environment presents various opportunities that will enable it to improve its performance. For example, the monumental transformations leading to the growth of online grocery sales following the advent of the coronavirus pandemic has allowed customers to purchase more groceries without having to visit brick-and-mortar stores. Moreover, the emergence of meat alternatives following an elevated global demand for plant-base sources of proteins is a factor favoring the growth of Tesco. However, the company has various risks that threaten its long-term strategic existence. For example, the economic consequences of Brexits have affected approximately 80% of imported foodstuff sold in grocery stores (Guo & Wang, 2019). Moreover, economic recession accompanied by increased competition in the retail sector pose as long-standing risks for Tesco.

The UK firm has incorporated various plans to address its threats. For example, investing resources to improve its online space will help it manage various risks associated with the challenges of the coronavirus pandemic. The company can also consider improving its differentiation and other competitive strategies to overcome the threat posed by aggressive rivalry in the retail segment. In essence, Tesco should enhance its management approaches to address the challenges presented in its external environment.

Recommendations

Following the financial analysis using various ratios, there are several suggestions that can help an investor to make feasible and lucrative decisions for a potential investment in Tesco. Since Tesco has a quick ratio of 0.80, it indicates that it does not have enough liquid assets to cover its debt obligations. In addition, Tescos profitability ratios suggest that it is a practical investment option for shareholders since its annual net profits have been increasing. Its dividend yield is approximately 1.20 implying that it is in a good financial position to fund payout without relying on external financiers.

Conclusion

This paper has analyzed the financial position of UKs leading firm, Tesco, from the stance of a potential investor and proposed various ways in which shareholders can benefit. Tesco is a multinational company operating in the United Kingdom managing multiple groceries and general merchandise. Currently, the company has several opportunities such as increased online sales, development of e-commerce, and the emergence of meat alternatives whereas its external environment has brought various threats such as global recession and detrimental effects of Brexit.

References

Appelbaum, D., Kogan, A., Vasarhelyi, M., & Yan, Z. (2017). Impact of business analytics and enterprise systems on managerial accounting. International Journal of Accounting Information Systems, 25, 2944. Web.

Brigham, E. F., & Houston, J. F. (2021). Fundamentals of financial management. Cengage Learning.

Cokins, G. (2017). Strategic business management: From planning to performance. John Wiley & Sons.

Davis, C. E., & Davis, E. (2019). Managerial accounting. John Wiley & Sons.

Guo, L., & Wang, Z. (2019). Ratio analysis of J Sainsbury plc financial performance between 2015 and 2018 in comparison with Tesco and Morrisons. American Journal of Industrial and Business Management, 9(2), 325341. Web.

Jiambalvo, J. (2019). Managerial accounting. John Wiley & Sons.

Rosnizam, M. R. A. B., Kee, D. M. H., Akhir, M. E. H. B. M., Shahqira, M., Yusoff, M. A. H. B. M., Budiman, R. S., & Alajmi, A. M. (2020). Market Opportunities and Challenges: A Case Study of Tesco. Journal of the Community Development in Asia, 3(2), 1827.

Shapiro, A. C., & Hanouna, P. (2019). Multinational financial management. John Wiley & Sons.

Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2018). Financial and managerial accounting. John Wiley & Sons.

Weygandt, J. J., Kimmel, P. D., Kieso, D. E., & Aly, I. M. (2018). Managerial Accounting: Tools for Business Decision-making. John Wiley & Sons.

Global trade and services have been affected greatly by the use of Internet technology. (Dull & Gelinas, Jr., 2008) The use of the internet made the transactions to be more often done electronically. Buying and selling of services and products through electronic systems like the internet or other computer networks is called electronic commerce or e-commerce. E-commerce applies electronic networks in order to exchange information and to link the business processes of different organizations. Business transactions that are done through electronic means makes relationship between vendor and customers founded on the Internet. A number of transactions can be made through this like EFT or electronic funds transfer, Internet marketing, inventory management, electronic data interchange, online transaction processing, automated data collection, and supply chain management. The World Wide Web is the medium that is used in order to make these transactions possible. Electronic mails are also used via the World Wide Web (Chaudhury & Jean-Pierre, 2002).

Nowadays, a significant amount of transactions are done electronically. Retailers use the internet in order to access other markets. Online retail is sometimes called as e-tail. It almost becomes a must for large retailers to have presence in the electronic market in the World Wide Web. (Rosen, 2000).

E-commerce users can help companies to disseminate product information. It can take orders via the Internet, thus it will result to greater effectiveness and efficiency. Transactions based on the internet can make placing orders more efficient. The transfer of electronic data can give companies greater efficiencies in business processing (Dull & Gelinas, Jr., 2008).

The use of the internet in placing orders can help the company by enjoying more competitive prices. The use of internet can also be more responsive especially for online real-time data processing. By visiting the suppliers website, they can also be informed of new sales promotions that can involve coupons, discounts or special offers.

Another thing that can result from this is that sales that would usually serve as the communication link between the two companies can be eliminated, thus reducing costs. Business events like placing an order is done more rapidly. Furthermore, if the company wants to check prices for supplies needed, they readily do that via the suppliers website (Dull & Gelinas, Jr., 2008).

Suppliers via the internet through the suppliers website usually provided the necessary procedure for placing the order. You will be provided an entry box where you will key in the product items that you will order. The web page will prompt you to enter the necessary details for each product. These include the products size, color and the number of items you will be ordering. The choice will be presented in a menu form, so all you need to do is to select among the options that are given. As the transaction is completed, the data are capture by the suppliers database and the order is instantly placed.

Placing orders via the internet will make orders and deliveries timelier. The expected shipping dates can be known. Orders placed via the internet will prevent you from being put on hold when calling or ordering your products. Furthermore, because this is done via the internet without or less human intervention, problems caused by human errors will be significantly reduced. Sales employees of the supplier might hear the wrong products you are ordering. He or she might also miss the necessary details of your orders. This may cause so much delay and for the business if these happen. By using the internet, you yourself are the one placing the order, and the computer captures it in verbatim. Thus, fewer mistakes are probable.

References

Chaudhury, A., Jean-Pierre K. 2002. e-business and e-commerce infrastructure. McGraw-Hill.

Dull, Richard B. & Gelinas, Jr., Ulric J. 2008. Accounting information systems. South-Western, Thomson Learning.

Kessler, Michelle. 2003. More shoppers proceed to checkout online. USA Today. 2008. Web.

Miller, R. 2002. The legal and e-commerce environment today. Thomson Learning.

Nissanoff, D. 2006. FutureShop: How the new auction culture will revoulutionize the way we buy, sell and get the things we really want. The Penguin Press.

Rosen, A. 2000. The e-commerce question and answer book: A survival guide for business managers. New York: American Management Association.

The demand for change occurs when an organization faces the need to adapt to the shift of the external environment. A change is required in other cases as well, such as if the current structure of an organization prevents it from achieving a specific goal. There are different types of modifications that can be implemented by leaders, such as new policies or legislations. Moreover, researchers identify different development theories, including teleological, dialectical, evolutionary, and life-cycle (Burke, 2009). The aim of this paper is to discuss the teleological argument while using the Joint Commission as an example of how and why organizations make changes.

It is important to note that the core of this theory lies in the philosophical doctrine of teleology, hence the name. This theory implies that an organization implements changes to achieve goals. Moreover, other researchers mention that this approach is the widespread view among strategists (Shvindina, 2017, p. 77). Furthermore, if leaders actively respond to such a necessity, it means that an organization is productive and flexible. According to studies, teleology focuses on the activities involved in the change process that implies development towards an outcome, in an envisioned state, assuming equifinality to achieve a goal (Sune & Gibb, 2015, p. 4). In other words, the change continues until a particular objective is reached in the final state.

However, even if the purpose was fulfilled, nothing stops an organization from creating new goals and strategies. As long as there is a constant need for something new due to external circumstances, an organization will experience dissatisfaction, which can be used as a reason to set new goals. As a result, the process of an organizational change can be ongoing. Ultimately, the leadership factor is vital for the concept of teleological theory since the heads of organizations are responsible for establishing the objectives. For this reason, their participation is essential in organizational changes.

The changes that are conducted in the Joint Commission (JC) can be interpreted as teleological. First of all, it is a non-profit organization that approves medical organizations and programs. The Joint Commission provides national standards for healthcare and makes sure that every medical organization meets these requirements. The set of goals of JC can be considered broad since it works with hospitals, hospices, clinical laboratories, etc. However, the main purpose of the organization is to guarantee that all these facilities are capable of providing high-quality healthcare.

One of the cases, where the organization conducted changes, is the policy update, which was carried out in October 2016. The modification altered the process of notification changes within accredited organizations (Notifying Joint Commission Organization Changes, 2020, para. 1). In the previous years, in cases of structural reforms, organizations were supposed to notify the Joint Commission within 30 days. Nonetheless, since specific changes required a thorough monitoring by the JC, the new policy demands that before implementing changes, the accredited organizations must send a written notification. After the Joint Commission receives it, the organization contemplates and approves the change.

Such an update can be applied to the teleological theory since that change helps to achieve the primary purpose of the Joint Commission. As was mentioned earlier, the goal is to ensure that they provide healthcare at the maximum of their abilities. The control over the accredited organizations provides such an opportunity. In conclusion, it would appear that the theory can effectively explain the need for organizational changes and the ways they can be implemented.

References

Burke, W. W. (2017). Organization change: Theory and practice. SAGE publications.

Shvindina, H. O. (2017). Leadership as a driver for organizational change. Business Ethics and Leadership, 1(1), 74-82.

Notifying Joint Commission Organization Changes. (2020) The Joint Commission. Web.

Sune, A., & Gibb, J. (2015). Dynamic capabilities as patterns of organizational change. Journal of Organizational Change Management. 28(2), 1-19.

Introduction

The value of a business is a function of how well the financial capital and the intellectual capital are managed by the human capital. Youd better get the human capital part right (Bookbinder 161).

Human capital plays the most important part in the functioning of any business. No enterprise can function without employees performing interactions with customers, facilitating the production of services and goods, or formulating its business strategies. At the same time, high turnover rates are a serious threat to many modern industries. Nursing, Hospitality, and the IT industries, for example, exhibit the highest turnover rates in their respective segments.

The overall turnover rate in the private and public sectors is much higher than it used to be 30 years ago. The majority of the companies attempt to solve this issue using various recruiting practices, promising excellent working conditions, and substantial payments to retain their employees. This approach, however, indicates a lack of creativity, which prevents many companies from investigating other solutions. The purpose of this paper is to inspect the issue of worker shortage through the lens of creativity blocks and propose solutions based on the analysis.

Types of Creativity Blocks

In any company, there is an HR department responsible for the recruitment, retention, and motivation of the employees. That department is made of people, who are suspect of creativity blocks, which prevent them from using innovative and effective ways of solving the issue of employee shortage. Types of creativity blocks are as follows:

• Strategic blocks: Affect the approaches to resolving specific problems.
• Value blocks: Personal values affecting the range of ideas.
• Perceptual blocks: Physical unawareness of certain issues, which affect final judgments.
• Self-image blocks: Timidity, fear of taking the initiative, low self-confidence in decision-making (Proctor 23).

As it is possible to see, different blocks affect different areas of HRM.

The following sections will elaborate on the most typical issues connected to the worker shortage, and the approaches were taken to resolve them.

Strategic Blocks in Dealing With Turnover

One of the major strategic blunders related to the HR department, which is responsible for recruitment and retaining skilled professionals to replenish the workforce, is the self-limiting strategy of addressing the recruitment part only (Bookbinder 44). Typically, the HR department interacts with potential recruits, finding suitable candidates, but it stops being a factor right after the contract is signed.

Then, all of the responsibility for keeping the employee occupied and satisfied falls upon the line managers. This approach lacks creativity, as it mirrors the antiquated ideas about HRM dating back to the first half of the 20th century. A modern approach to replenishing the workforce focuses not on recruitment alone, but on retaining, which is more effective in terms of time, money, and overall productivity.

Value Blocks and Employee Expectations

Many HR managers, when asked about their expectations towards employees, often project their own experiences as employees on others (Proctor 24). For example, older HR managers, who rose to their positions around 30-40 years ago, used to have different expectations and work ethics, incompatible with those of younger generations. Baby Boomers, for example, were raised in a corporate culture that did not require any additional incentives for workers to perform well and exhibit company loyalty, as the payment and promise of career growth were enough to do so. Modern workers do not have the same amount of compensation and require other strategies to become involved. Failure to understand the changing psychological trends is a value block, which prevents progressive HR strategies from emerging.

Perceptual Blocks

Perceptual blocks in trying to fix the issue with employee shortage often happen when the HR department is oblivious to the factors that are causing a turnover (Proctor 24). The reasons for such blocks to appear are numerous, ranging from the physical distance between the HR department and the line management to a lack of influence and contact between various departments in the organization (Bookbinder 45). As a result, HR is unaware of the problem and implements inaccurate strategies to change the situation for the better. A recommended approach, in this situation, is to establish a dialogue between the employees and the HR department, leading to increased awareness and improved human resource capital management.

Self-Image Blocks

This type of block is often found in young HR managers with poor practical experience, or in companies with a hero style of leadership, where the top managers have control over every decision made by their underlings (Bookbinder 91). In either of these situations, the HR managers may feel intimidated to propose a change from the existing course, which severely limits their capabilities of applying innovative HRM strategies to improve employee recruitment, retention, and compensation techniques. This type of creativity block can be fixed either by inspiring the employees with confidence or by erasing the source of their fear, whether internally or externally.

Conclusions

As is possible to see, the majority of the issues affecting the HR department, which in turn result in workforce shortages, can be interpreted through the lens of creativity blocks. They prevent modern and innovative strategies from surfacing and being implemented on a wide scale. There is a large body of academic literature dedicated to various methods of fighting turnover and workforce shortage. Nevertheless, the roots of this crisis could be in the lack of creativity on the part of the HR department.

Works Cited

Bookbinder, Dave. The New ROI: Return on Individuals. Limelight Publishing, 2017.

Proctor, Tony. Creative Problem Solving for Managers: Developing Skills for Decision Making and Innovation. 3rd ed., Routledge, 2010.

Abstract

This paper demonstrates the use of ratios in financial analysis. Financial data of Marks and Spencer for a two-year period from 2010 to 2011is reviewed. The study is based on comparative analysis of historical data for this entity. The study applauds the statistical highlights of this group and ratio analysis (ratios on profitability, liquidity, financial gearing and efficiency). In addition, percentages are used in the analysis to monitor changes overtime. Graphs are also used to portray trend of various variables in the study over the two-year period. The results are interpreted in comparison to ideal situations and recommendations made from the findings. Further, drawbacks of ratio analysis as a tool for monitoring financial performance are evaluated. Finally, an in-depth evaluation of accounting principles used in the preparation of Marks and Spencer accounts is reviewed.

Statistical highlights

Marks and Spencer is an international company having several stores in the United Kingdom. The Company deals with clothing and food products. For reporting purposes, revenue is divided into two segments, that is, revenue from UK and that from international markets. Vast amount of sales was generated from UK market than in other markets in the report. In 2011, UK generated 89.7% of the revenue amounting to £8,733 million while the remaining 10.3% was generated from international markets. There has been no major change in the capital structure for the corporation over the two-year period. The table 1.0 shows summary of financial performance of Marks and Spencer for the two year period from 2010 to 2011.

From table 1.0, Mark and Spencer had a growth in performance in the two year period. Revenue increased from £9,536.6m in the financial year 2010/2009 to £9,740.3m in 2011/2010. Profit after tax for the group similarly increased by 14.5% from £523 in 2010 to 598.60 in 2011. Dividends and earnings per-share also improved in the two-year period. This growth indicates a good trend for the entity. A thorough review of the financial statements is analyzed in the coming sections.

Scope and objective of the study

The objective of this paper is to carry out a comprehensive financial analysis using ratios on the financial statements of Marks and Spencer and draw inferences on the financial status of the company. This analysis will cover two-year period from 2010 to 2011. At the end of the study, it will be possible to conclusively locate the financial position of the company in terms of profitability, liquidity and efficiency. Further, drawbacks of ratio analysis as a measure of performance will be discussed and concluded with an evaluation of accounting principles.

Introduction

Marks and Spencer audited financial reports are used by various groups such as shareholders, government, employees, community and creditors among others. According to David (2005), financial statements provide the potential users with a narrow insight into the strengths and weaknesses of a business. This is because what is reported does not give an in-depth depiction of performance of an entity. Such full view of a business is important as it would ultimately influence users decisions on whether to continue their association with an entity and in addition, give potential investors adequate information to aid them in decision making. Thus, the concept of financial analysis.

Ratio analysis

Financial analysis is the process of evaluating businesses, projects, budgets and other finance-related documents to determine their suitability for investment. Basically, a comprehensive financial analysis is done on an institutions financial statements to establish if an entity is stable, solvent, liquid, or profitable enough to be invested in. When looking at a specific company, financial analyst will often focus on statements of income, statement of financial position, cash flow statement and statement of changes in equities. Ratio analysis is a key technique for financial analysis. While inferring the current performance into the future, time value of money is taken into consideration. This section will analyze financial statements of Marks and Spencer using ratio analysis for the year 2011 to 2010.

Profitability ratios

According to Eugene and Michael (2006), profitability is the ability of an entity to earn income and sustain growth in both short term and long term. Various ratios are used to analyze profitability such as gross profit margin, operating profit margin, net profit margin, the return on assets (ROA) ratio, and the return on equity (ROE) ratio (Eugene and Michael, 2009). Profitability of Marks and Spencer can be analyzed by reviewing the income and expenditure account. Several ratios will be computed to give a good outlook of the companys profitability from the year 2010 to 2011. Table 2.0 gives a comparative analysis of profitability of Marks and Spencer over the two years.

From the table, four ratios are computed to illustrate profitability of Marks and Spencer, that is, return on assets, return on equity, gross profit margin and net profit margin. Gross profit margin remained stable for the two years at 9%. This indicates that the company manages well its inventory, pricing and production efficiency. Net profit margin increased from 5% to 6% which imply that the group generated adequate sales revenue to cover fixed costs and also improved on profitability. Even though the net profit increased, return on equity declined in 2011 from 24.1% to 22.4%. The decline implies that return on investment has become less risky as high risk would attract high return.

Graph showing trend of profitability ratios:

• Horizontal axis represents years
• Vertical axis represents the percentage change

Liquidity ratios

According to Eugene and Michael (2009), analysis of liquidity is necessary as it establishes the ability of an organization to maintain positive cash flow while satisfying immediate obligations, that is, the availability of cash to pay debt. The computation of these ratios will be based on the cash flows or liquid assets. They define liquid asset as those tradable in an active market and thus can be quickly converted to cash at the going market price. The most common ratios used to analyze liquidity are current and quick ratio (Eugene and Michael, 2009). Table 2.1gives a summarized computation of the ratios.

From the table, it is clear that current ratio for Marks and Spencer ranges from 0.80 in 2010 to 0.74 in 2011. Similarly, quick ratio ranges from 0.48 in 2010 to 0.43 in 2011. Further, the liquidity ratios for the two years are less than one. It is in order to infer that Marks and Spencer has poor liquidity ratios and it is not able to meet its current obligations if compared with ideal rates. David (2003) states that ideal current ratio should be 2:1 while quick ratio 1:1, however this can change depending on the industry ratios.

Financial gearing

According to David (2003), financial gearing shows a companys vulnerability to risk, for example, the degree of protection provided for the business debt. Several ratios can be used to measure the safety of a business entity such as debt to equity. Computation of ratios for safety for Marks and Spencer is captured in table 2.2.

According to David (2003), debt to equity ratio quantifies the relationship between the capital invested by owners and investors and the funds provided by creditors. The higher the ratio, the greater the risk to current or future creditor and a lower ratio means clients company is more financially stable and is probably in a better position to borrow now and in the future. An extremely low ratio may indicate that a client is too conservative and is not letting go the business in realizing its potential. From the computations, it is clear that debt to equity ratio has declined from 2.27 in 2010 to 1.74 in 201, similarly long-term debt to equity declined from 1.05 in 2010 to 0.72 in 2011. This implies a decrease in risk to current or future creditor and that Marks and Spencer is more financially stable. On the contrary, earnings before interest and taxes/ interest charges have increased from 5.3 in 2010 to 8.5 in 2011. The increase implies that the entity has a greater ability to make its interest payment s or take more debt. This trend can be shown in the graph.

Graph showing trend of debt to equity ratio:

• Vertical axis represents financial gearing ratios
• Horizontal axis represents the years

Efficiency

According to David (2003), efficiency ratios provide an indication of how well a company manage its resources, that is, how well a company employs its assets to generate sales and income. Further, it also shows the level of activity of the corporation as indicated by the turnover ratios. Commonly used ratios are accounts receivable turnover, accounts payable turnover, days payable among others. Computations of these ratios in context of Marks and Spencer are shown in table 2.3.

From the table, level of efficiency of the entity has remained stable over the two year period as indicated by accounts receivable turnover (15.56 in 2010 and 15.00 in 2011). Average payable period declined from 5.13 in 2010 to 4.81 in 2011, this could indicate a decline in level of activity. On the contrary, sales to net worth have declined from 4.44 in 2010 to 3.64 in 2011. According to David (2003), sales to net worth ratio indicates how many sales units are generated with each unit of investment while sales to total assets ratio indicates how efficiently the company generates sales on each unit of assets. It measures the ability of a companys assets to generate sales (David, 2003). From above computations, the ability of Marks and Spencer to generate sales from net worth and assets has declined over the years. This scenario can lower potential investors confidence on ability of the entity to generate returns from their capital. From this, it can be deduced that the entity has not been able to generate adequate sales from the investment so as to maintain the same level of profitability. Sales to total assets has remained constant in the two year period, this indicates that the entity has been able to generate constant sales from the total assets. The graph below depicts the trend of efficiency in the years.

Graph of accounts receivable turnover and sales to equity ratio:

• Vertical axis represents ratios of accounts receivable turnover and sales to net worth ratio.
• Horizontal axis represents the years

Investment ratios

David (2003) states that price/earnings ratio is the most commonly used to evaluate investment in an entity. He further points out that historically, the average P/E ratio for the broad market has been around 15, although it can fluctuate significantly depending on economic and market conditions. A stock with a high price/earnings ratio suggests that investors are expecting higher earnings growth in the future compared to the overall market while a stock with a low price/earnings ratio suggests that investors have more modest expectation for its future growth compared to the market as a whole (David, 2003). From the computations of price/earnings ratio for Marks and Spencer in table 2.4, the ratio declined from 10.8 in 2010 to 9.44 in 2011. This decline may not be attractive to prospective growth investors despite the increase in earnings per share and dividends.

Drawbacks of ratio analysis

Ratio analysis forms an essential technique for financial analysis. However, this technique faces numerous hitches which subject it to reservations in using it. Eugene and Michael (2009) highlight the various drawbacks. First, they point out that numerous firms have divisions that operate in different industries, and for companies such as Marks and Spencer which operate in several industries, it is difficult to develop a meaningful set of industry averages. Therefore ratio analysis is useful for narrowly focused firms. Inflation has distorted many firms balance sheet as book values are often different from the market values. Market values would be more appropriate than book values but we cannot generally get market value figures for items such as used assets as they are not traded. Further seasonal factors can also distort a ratio analysis for instance, the inventory turnover ratio for a food processor will be radically different if the balance sheet figure used for inventory is the one just before versus just after the close of canning season. Also, different accounting practices can distort comparisons for instance inventory valuations and depreciation methods can affect financial statements and thus distort comparison among firms. Finally it is difficult to generalize about whether a ratio is good or bad, for instance a high current ratio may be good as it indicates a strong liquidity position, but it may also be bad as it indicate excessive cash (Eugene and Michael, 2009).

Accounting principles

Accounting principles are the regulations and guidelines used in recording and preparing the financial statements. One of the main accounting principles used in preparing financial statements for Marks and Spencer is the going concern principle. This principle assumes that an entity will remain in operation for the foreseeable future. The board is satisfied that the group will be able to operate within the level of its facilities for the foreseeable future. Further, the financial statements are drawn up on the historical cost basis of accounting as depreciation of assets is computed based on the historical book value of the assets and not the market value. Also, the entity adopted revenue recognition and matching principle as revenue is recognized when significant risks and rewards of ownership have been transferred to the buyer and revenue from sale of furniture and online sales are recorded on delivery of the goods to the customer. Finally, use of time period principle as final dividends are recorded in the financial statements in the period in which they are approved by the companys shareholders while interim dividends are recorded in the period in which they are approved and paid.

Conclusion

Financial analysis can be complicated depending on the nature of the company. Comprehensive analysis of financial statements of companies which do not fall into a single industry tend to be more complex than those which fall in one industry. Businesses of Marks and Spencer cut across various industries making it to have a complex structure. From the above analysis, profitability of the organization has generally increased in two year period as indicated by the profit margin ratios. The entity has a poor liquidity as both the current and quick ratios are low and deteriorating. Debt to equity ratio shows that the company has improved its ability to take up more debt and is able to pay interest expenses. Further, price/earnings ratio has declined which may paint a bad picture to the potential investors.

Even though ratio analysis is a vital tool for financial analysis, it has several inherent limitations. For instance, it is not possible to come up with different averages for companies whose business cut across several industries such as Marks and Spencer. Further, various accounting practices are applied in various companies and it makes it difficult to compare performance of two companies with different accounting practices. Despite the shortcomings, the results from ratio analysis heavily relied on in decision making process.

Appendix

Summary of financial performance from 2010 to 2011

Table 1.0 (All the amounts in this study will be in pounds unless otherwise indicated)

Table of profitability ratios

Table 2.0

Table of liquidity ratios

Table 2.1

Table of safety ratios

Table 2.2

Table of efficiency ratio

Table 2.3

Table of investment ratios

Table 2.4

Works Cited

David, Vance. Financial analysis and decision making: Tools and techniques to solve. United States: McGraw-Hill books, 2003. Print.

Eugene, Brigham, and Michael, Ehrhardt. Financial management theory and practice. London: Cambridge, 2009. Print.

Introduction

EasyJet Airline Company Limited is an airline that is part of a large holding EasyGroup. This British company, which has existed since 1995, at present is one of the largest and most influential corporations in the airline industry in the category of low-cost flights (Anderson 2014). EasyJet serves both domestic and international flights to over 300 destinations and operates in about 30 countries. It is essential to analyze the companys strategic capabilities and the external environment in which it operates to be able to assess which entrepreneurial opportunities will be the most effective for it.

Analysis of Strategic Capabilities and External Environment

The core capabilities of the company can be limited to the main three aspects that contribute to the preservation of the competitive edge: efficiency, speed, and flexibility. The airline does not have business class offers to boost the aircrafts volumes and use the vehicles more effectively (Bader 2015). Also, EasyJet outsources all the possible activities, and it has modernized its procedures.

Sources of Competitive Advantage of the Company

Value Chain

The value chain analysis is a method that allows assessing the way the combined products create more value to the customer rather than considered separately (Davila et al. 2013). This method enables rationalizing added value and categorizing the operations according to the effects they produce.

Table 1. EasyJet Value Chain.

Table 1 pieces of evidence how the company has been able to deliver value to the customers in an effective way through consolidating the inbound logistics, applying the Lean approach to eliminate wastes, utilizing effective marketing tools to address the target audience (EasyJet annual report and accounts 2015). There are issues to consider such as customer service and feedback; however, the companys competitive advantage emerges from the analysis of the value chain.

VRIN

The VRIN method allows analyzing the companys competitiveness in terms of resources (Evans 2013). The method allows reducing the list of all the resources in the enterprise to those that explain the difference between the work of the enterprise and the competitors. Table 2 describes the resources of EasyJet:

Table 2. VRIN.

VRIN reveals that the company is valuable. It has reduced its operational costs, eliminated wastes, and has been able to increase the market share.

External Environment Impact

To analyze the external environment impact, it is essential to utilize Porters five forces and the PESTEL method.

Five Forces

The threat of substitutes is the first category to consider. The rail services imply lower prices and fast reaching of the destination, and they will be able to challenge the EasyJets propositions. The second category is represented by the threat of new entrants. However, the UK market is close to reaching saturation especially considering the low-cost carriages (Fleisher & Bensoussan 2015). The third category is the bargaining power of suppliers. Airbus is the major supplier of the enterprise. It is evident that having only one collaborate is risky due to the possible delays in time.

The fourth force is the bargaining power of buyers. The company carries out various promotions to attract more clients. It sells tickets through the Internet, which allows decreasing the prices and lets the clients compare the prices of different airlines. The fifth force is the rivalry among existing firms. In the global market, EasyJet is not the leader; however, it is one of the leaders in the UK market together with Ryanair, which is also a low-cost carrier (Bader 2015).

PESTEL

As per EasyJet, the environment requires advanced technological growth and the boosted applicability of Internet resources. Environmental awareness is increasing, and companies should pay attention to environmental aspects (McManners 2014). In addition, low-cost carriers face customer dissatisfaction due to unideal service. Thus, EasyJet should concentrate on customer retention and safety as well as further technological development.

Unlike its competitors in the price segment, the company carries out the landing in major ports such as Gatwick port in London, from which it is easy for the customer to get into town. The wide margin (which is approximately 80% over the previous year) allows EasyJet to resist price increases from suppliers, which contributes to the long-term preservation of their loyalty (EasyJet annual report and accounts 2015). This combination of low prices and focus on the customer segment allows the company to sustain its competitive advantage.

According to the company report, their main goal is to ensure security and provide excellent customer service, which is not characteristic of other low-price carriers like Ryanair (EasyJet annual report and accounts 2015). The fleet strengths are its practicality and expandability. In addition, the company has a dense route network, high flight frequency, and dynamic tariffs. Moreover, unlike Ryanair, EasyJet does not pay a commission to intermediaries.

Analysis of Strategic Choices for the Company

The strategic choices for EasyJet should be based on the current situation in the market, the companys capabilities, mission, vision, and resources. The Ansoff matrix represented in Picture 1 was applied, and the strategies were evaluated with the SAFE criteria: suitability, acceptability, and feasibility (The Ansoff Matrix n.d.).

The two strategic choices offered include 1) expanding into new market segments and 2) modernization of brand image. The first strategy is believed to enable EasyJet to attain the student segment of the market and the second one should help to boost brand awareness (Bader 2015). The two approaches are aimed at reaching better market penetration through diversification and differentiation.

Strategic Option One (Expanding into New Market Segments)

The orientation on the students as prospective customers will enable the enterprise to compete with the main rival, which is Ryanair, and attain a competitive edge (Bader 2015). Regarding the SAFE framework, the suitability can be revealed in several aspects. The strategy implies targeting the price-sensitive group of customers and improving the customer experience. The proposed segment may bring profit to the company, and the key stakeholders may find this approach progressive and stimulating to meet the rivalry.

In terms of acceptability, boosting brand awareness is one of the objectives of the proposed strategy. Furthermore, the current promotional measures can be applicable and will support the current company activities. The company can utilize its IT business model to meet the aims of this strategy, and feasibility is likely to be achieved since the proposal is measurable. The enterprise has sufficient resources that can be allocated to implement the strategy.

Experts in the industry stated that Easyjets shares began to lose its activity after a long period of high profitability (Pratley 2016). The companys revenues dropped due to terrorist attacks in Europe and the falling value of sterling (Martin 2016). The airport disruptions and the presence of military coups in Turkey also impose a threat. Therefore, the company needs to continue to improve the flight volumes on the existing routes to achieve greater efficiency.

This method of growth is associated with the lowest risk (Pratley 2016). Also, it should introduce flights to intermediate points on the existing routes. Since these routes have been mastered and the interaction with consumers has been established, it will be easier for the company to reach a wider audience and win a competitive advantage. Finally, the company needs to expand the spectrum of its services and related activities following the example of Virgin.

Strategic Option Two (Modernization of Brand Image)

EasyJet is considerate about brand image, environmental issues, and social responsibility. The modernization of the brand image can enhance the companys visibility. The suitability is ensured by the fact that contemporary customers are increasingly environmentally aware. EasyJet emphasizes its objective to reduce carbon emissions, and the increased environmental awareness accounts for the sustainability of the market share.

The acceptability of the approach is evidenced by the PESTEL analysis discussed above. The intention of being an environmentally friendly response to the current social request and addresses the EasyJets corporate social responsibility (Bader 2015). Also, such practices imply value-added activities, which are beneficial for the firm. However, the feasibility of the proposal is relative. If the company fails to meet the claimed awareness of the environmental issues, EasyJet might face public debates.

To diversify through the proposed strategy, EasyJet needs to consider its environmental strategy. It should make efficient use of their aircraft and useless equipment when operating on the ground. It is essential to keep wastes to the minimum through sustainable development and green initiatives that can contribute to the companys brand image and corporate social responsibility. The orientation at societal marketing through the concerned attitude toward air and environment will allow the company to lower its cost of operation as well (Mayer, Ryley & Gillingwater 2012).

It can be implemented with the help of greener technology and fuel-efficient engines. Moreover, EasyJet can advertise through green groups and attain higher customer loyalty through increased environmental awareness. Thus, EasyJet should not lean on low pricing exclusively but retain loyalty by differentiating from such rivals like Ryanair or Virgin through cost savings from fuel efficiency and greener policies.

The strategies could be referred to as the companys objectives in a variety of ways. For instance, these approaches ensure higher sustainability and a focus on the long-term impact on the industry performance. The enhanced service provision means higher loyalty to the enterprise (Bader 2015). The minimization of environmental impact promotes green business features without the possibility of greenwashing. All of the mentioned is concerned with ethical liability, which is one of the leading objectives of the airlines corporate responsibility.

Conclusion

The present analysis involved several frameworks, including Porters five forces and PESTEL, the application of which was guided by their specifics. Both approaches are well-established and have a history of successful application (Tassabehji & Isherwood 2014). However, Porters five forces analysis has hidden challenges: the common mistakes of researchers include the lack of depth and analysis, which mimics the initial representation of the method (Dobbs 2014; Vining 2011). In the present paper, the difficulties were managed by embedding the analysis into strategy development.

Apart from that, Porters work is relatively generic; as a result, Vining (2011), for example, suggests adapting it to a particular company type if necessary, but the current paper did not demand customization. Concerning PESTEL, it is a very comprehensive tool, but this advantage also has drawbacks: in particular, an environment can include elements that belong to more than one category, causing confusion and what Kremer and Symmons (2015) have termed as a labyrinthine analysis (p. 139). In the present paper, the problem was solved by avoiding the strict categorization of the elements.

Of the most widely used strategic tools (that also include, for example, SWOT or BCG matrix), PESTEL and five forces are unique in their specific application. PESTEL is used for the environmental scan that is more detailed than the external elements of SWOT; the five forces method is meant to perform the industry analysis in greater detail than PESTEL (Tassabehji & Isherwood 2014). In other words, while other tools could have been employed in the paper as well, the needs of the analysis required specific tools, and as a result of their application, the following conclusions can be made.

The proposed strategies aim at customer satisfaction, securing the competitive advantage, and strengthening of the brand image. The mission statement of the company is supported by a strong focus on these three objectives and encourages stakeholders to have future-oriented visions (Bessant & Tidd 2011). It will be viewed as a viable enterprise that addresses acute environmental issues and reflects on its values.

The implementation of the strategies will allow delivering the vision of the company in an accurate and specific matter and stressing out its cost-efficiency. The consideration of customers perceptions ensures that EasyJet responds to their needs of clients and the society and adapts its strategy to bring the value in the most effective way.

Reference List

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Bader, M 2015, Quantitative and qualitative analysis of Easyjets annual report 2013, GRIN Verlag, Munich.

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EasyJet annual report and accounts. 2015. Web.

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Martin, B 2016, EasyJet shares drop as revenues tumble. Web.

Mayer, R, Ryley, T & Gillingwater, D 2012. Passenger perceptions of the green image associated with airlines, Journal of Transport Geography, vol. 22, pp.179-186.

McManners, P 2014, Corporate strategy in the age of responsibility, Gower Publishing, Farnham.

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Johnson & Johnson is a company that produces and sells goods worldwide, is crucial for multiple markets, and requires its internal management to be well-structured and diversified. Decision-making for such businesses must consider the overall mission yet address the local unit or product need (Mroua et al., 2017). Furthermore, becoming more diversified, dividing value creation into levels, and segmenting the products help a corporation maintain strong positions in multiple industries simultaneously (Hitt et al., 2017). Allowing organizations to expand and challenge themselves provides an opportunity to target new customers and ensure that a company has a unique competitive advantage. This paper aims to discuss how Johnson & Johnson utilizes diversification concepts in its organizational growth strategy.

The need for diversification at a company emerges once it selects to grow through expanding to other industries or going beyond its original countrys markets. Johnson & Johnson used both strategies throughout more than a century of its existence and can serve as an example of exercising varying its segments (Johnson & Johnson, n.d.). A firms performance is tied to the revenue and influences it produces; therefore, diversification can create additional value, reduce it, or be neutral to that aspect (Hitt et al., 2017). The strategy can be applied to managerial decisions, impact resources and incentives, or enhance market power and develop an economy of scope (Hitt et al., 2017). Diversification level depends on how much of its revenue is generated from a dominant segment, and Johnson & Johnsons flat is very high due to the variety of brands it earns (Hitt et al., 2017). Johnson & Johnson implied innovative brands gradually to the list of products that the company had to offer so that the range of variety increased exponentially and required strategic changes.

Today, worldwide multi-market corporations developed optimal strategic management approaches so that the units can maintain high performance independently. Johnson & Johnsons structure is now diversified into three general segments: consumer health goods, medical devices, and pharmaceutical products (Johnson & Johnson, n.d.). It is a value-creating separation and is mainly based on the specific requirements of the market niches the company addresses. Diversification is a corporate-level strategy, and for Johnson & Johnson, it is crucial to let each of its brands generate revenue and grow independently (Mroua et al., 2017). For instance, if Band-Aid bandage sales would drop, the Haldol medications production and distribution would not suffer. Moreover, to remain popular in the target market, Johnson & Johnson pursued a value-adding diversification type as a means of improving its performance and increasing the quality of its production.

Johnson & Johnsons diversification shows how the economies of scope can be successfully integrated into a companys operations even though the segments perform separately. Indeed, resource providers are similar for their healthcare goods and medical devices production, while the logistics are set to deliver all products based on the region rather than the type (Mroua et al., 2017). Furthermore, the theoretical concept that diversification allows vertical integration and creates multipoint competitive advantage can also be proven by Johnson & Johnsons practices (Hitt et al., 2017). The companys healthcare products segment includes a wide variety of goods for skincare, childcare, and basic hygiene so that one consumer buys from the firm while addressing multiple needs. Johnson & Johnson also uses their own inputs for producing similar products under different brands, enhancing its market power through vertical integration.

The issue of relatedness manifested itself during the diversification of Johnson & Johnson. The company deployed both approaches to ensure that the changes within its production process could be introduced into the organizational setting (Monga, 2020). As a result, the company translated into the context of every market, making its processes cohesive and promoting knowledge sharing (Monga, 2020). Johnson & Johnson managed to retain a fresh and original outlook on the industry and its opportunities.

Johnson & Johnsons example illustrates the differences between the theoretical perspectives and the actual changes that must be implemented to enable corporate growth challenges. The companys diversification addresses the theoretical concepts that emphasize how value can be influenced through it. However, Johnson & Johnsons strategies to vary brands and improve their performance were also necessary for managerial decision-making, resource distribution, and logistics (Mroua et al., 2017). Moreover, diversification was required for the corporation to ensure that its products were well-received and conducive to multiplying value. In Johnson & Johnsons case, both operational risks and external ones are calculated carefully based on a comprehensive analysis of key external (economic, political, social, and technological) and internal (organizational capacities-related) factors (Hitt et al., 2017). As a result, Johnson & Johnson managed to keep its products appealing to its target consumer audience.

Having created solid partnerships and implemented a branding strategy that has made its products instantly memorable, Johnson & Johnson has established itself as the prime example of properly executed diversification. The companys current status indicates that it has successfully built its brand structure and segmentation. Consequently, Johnson & Johnson should be credited for giving its partners creative initiative in developing easily recognizable brands that appeal to the target demographic. Diversification allows the corporation to maintain high performance even when not all of its parts operate at their best (Hitt et al., 2017). Johnson & Johnson shows that a company can combine internal managerial needs with external environment demands in their strategic decision-making.

Diversification is a strategy that allows businesses to create additional value, optimize their management, and timely facilitate the external environments threats, risks, and opportunities. Johnson & Johnson is a profound example of a corporation where dividing the segments led to growth and successful performance in various markets worldwide. The companys strategies address the theoretical concepts of diversification and reveal their usefulness for value creation, improved execution, and recourses use optimization. Johnson & Johnson is a highly diversified corporation that expanded to such a level through the long history and continuous innovations implementation necessary to maintain its competitiveness.

References

Hitt, M. A., Duane Ireland, R., & Hoskisson, R. E. (2017). Strategic management: Competitiveness & globalization: Concepts and cases (12^th ed.). Cengage.

Johnson & Johnson. (n.d.). Our products. 

Monga, A. S. (2020). When being good backfires: Overcoming misfits between brand and corporate social responsibility. Rutgers Business Review, 5(2), 153-158.

Mroua, M., Abid, F., & Wong, W. K. (2017). Optimal diversification, stochastic dominance, and sampling error. American Journal of Business, 32(1), 58-79.