Research Korner

VALUATION METHODS

This paper analyses the feasibility of a takeover bid of the commercial aviation company Ryanair Holdings PLC by a North American airlines firm through determination of the appropriate method of valuation which the latter can adopt to verify the practicability of bidding for the takeover of Ryanair Holdings. Financial factors need to be taken into consideration when deciding for any decision to bid for takeover. Generally, the target company’s financial statements, such as the balance sheet and profit and loss statement are the basis for such financial analysis. There are non-financial issues that must be carefully weighed as well. These issues are those that need to be sorted out in order to come up with a decision which will lead to either taking the takeover bid forward or not. The valuation methods available for utilisation may produce different results as they are based on a variety of variables. The approach deemed most fit for the situation of Ryanair is the earnings-based model which assumes that the value of an entity is equal to the present value of future earnings that will be generated by the business. This approach is applicable to the Ryanair case, as the company’s financial documents offer the year when they have observed a decline in net profit, it will be most useful to use this type of approach to company valuation. INTRODUCTION             With a North American airline’s plan to takeover Ryan air PLC, it is imperative that the latter be valued either formally or informally. Owing to asymmetry in terms of the underlying financial incentives, it is fundamentally important for the purchaser to understand the principles of business valuation so as to anticipate and, more importantly, to interpret the other's offer. Valuation, as a science, deals with, among other things, the following: (1) adherence of general accounting principles for the organization and presentation of the financial data of the business; (2) chronicalization of the facts associated with the historical growth of the business; (3) extrapolation of financial data into future time periods; and (4) calculation of various valuation ratios and statistical formulae (Boger & Link 1999). These are, without question, critical dimensions to a business valuation, but they are not the only dimensions of a business valuation that are important. All too often, for a variety of reasons, individuals may fall into the trap of believing that business valuation is little more than a formulistic exercise.             There are, in line with the above, non-financial factors affecting business valuation. It deals with, among other things, the following concepts: (1) understanding the economically efficient life of productive assets, compared to the general accounting practice defined depreciable life of productive assets; (2) understanding the economically relevant industry in which the business being valued operates; (3) understanding the appropriateness of one valuation method or one statistical method over another; (4) understanding the limitations of financial information from comparable businesses; and (5) understanding the economic environment into which financial data are being extrapolated, and the appropriateness of such an extrapolation. As such, there is the need for the detailed analysis of Ryanair Holdings PLC in terms of the financial and non-financial factors affecting the planned takeover of the North American Airline in order to arrive at a recommendation either a bid should be made for the takeover or not. FINANCIAL FACTORS AFFECTING THE TAKEOVER BID             In general, the data needed to provide a valuation of Ryanair are: projected and historical financial data, ownership records, information on products and services, sales and marketing data, and supplementary information on banking, legal and contractual relationships (Mastracchio Jr. & Zunitch 2002). Before work could be started, company data that is needed include financial statements and tax returns for three to five years; an accounting of all outstanding payables, and receivables, if there are any; the actual value of inventories; identification of key customers and the percentage of business tied to the relationship; equipment, including its age; industry, geographic and market comparisons; sales and other projections; resumes of key personnel; the most recent business plan; published corporate literature and press articles; and the percentage of revenues dependent on each product line or service. There is also the need to gather information from other sources, including industry and geographic comparisons, as well as a survey of sales of comparable businesses.             The preparation of financial statements should be foremost in mind in the preparation of a corporate valuation in order to come up with a recommendation if the takeover bid is going to push through or not. It is through peruse of these documents that the valuator will most accurately provide a recommendation for the North American airline client. Another issue relevant to any valuation is whether the valuation should be conducted on a pre-tax or an after-tax basis. The valuation profession differs with regard to this issue, and there is no definite right or wrong answer. What is important is for all parties to understand the underlying assumptions being brought to the valuation and for all parties to verify that the data used in the valuation process are consistent. Valuations are generally conducted on a pre-tax basis. Some who frequently argue that valuations should be done on a pre-tax basis often point to the fact that courts have argued that future tax liabilities are too uncertain to be included in a valuation. In other words, while all valuators rely on assumptions regarding the future and attempt to predict future financial situations (e.g., profitability), predicting the tax rates that might be applicable to those future financial situations adds another level of judgment and an entirely new set of assumptions. Although this is true, future tax liabilities are no more uncertain than other elements in a valuation, such as the economic conditions that will surround the business in the future. Some who frequently argue that future tax liabilities should be included do so by making the rather obvious observation that taxes are a reality of doing business. These points aside, the justification for conducting business valuations on a pre-tax basis comes from a more pragmatic perspective. It is generally the case that the valuation is done as if there were a reasonable and fully informed buyer, when in most cases there is no buyer at all. As such, there is no a priori way to know the tax liabilities that will pertain to such a hypothetical, and it would be speculative to assume that the potential buyer's tax structure will be the same as that of the seller. As a general rule, the smaller in size and the more limited the scope of activities of the business being valued, the less likely there will be a set of publicly traded companies that are comparable, or even a single comparable publicly traded company. Publicly traded companies are for the most part large, measured in terms of revenues or assets, and they are diversified across product lines. This diversification implies that reported revenues are from various lines of business, not all of which are relevant for comparison purposes. Also, diversification reduces the operating risk of the company, and to the extent that this reduced risk is reflected in the company's realized earnings and in the publicly reported price, the comparison may be less than accurate. Most small closely held companies are not diversified, and this characteristic alone makes financial comparisons difficult. There are many sources for information on publicly traded companies including information provided by Value Line and Standard and Poor. Internet access to traded securities research services is the more common means to acquire the needed information.             In particular to Ryanair Holdings PLC, their sales, operating profit, and net income have recorded an increase since the company went public prior to the financial setback in 2004. Regardless of the poor financial performance of the company during the said year, they still continued to acquire assets while managing to keep down their flight fares through internal efforts on the part of the Ryanair management and employees to lower costs of providing their commercial aviation services to the public. And although they posted a decrease in net profits in 2004, they still managed to have the highest return on equity percentage among fifteen flight passenger carriers that the company was compared with. To discuss further, published research on the application of marketability discounts when valuing a business on the basis of information from publicly traded companies follows two lines. One line of research is based on reviews of court cases and the marketability discount that the court has allowed. The conclusions from this line of research are interesting, but not generally applicable to a particular business valuation. First, there is selectivity bias in the sense that only those valuations that are litigated and appealed are available for such study. Second, the court's decision reflects the opinion of a judge or small group of judges, as swayed by the rhetoric of attorneys, many of whom may have less expertise in valuation than the valuator. The other line of research is based on comparisons in the price of initial public offerings of stocks to actual transaction sales, where the initial public offering is viewed as a reliable observation of fair market value in the absence of market demand. Again, there is no reason to assume that the companies involved in the initial public offerings are comparable to the particular businesses being valued. NON-FINANCIAL FACTORS AFFECTING THE TAKEOVER BID             Apart from the financial considerations, there are non-financial factors that would affect the decision to bid for the takeover of Ryanair Holdings PLC as well. For instance, the business model of the particular company that is under analysis would have to matter. The fundamental business structure of Ryanair is the proven Southwest model, where low fares are combined with high frequencies and excellent punctuality, while giving emphasis to on-time performance, baggage handling and customer satisfaction. Their smaller market share leaves ample room for growth, which is why room for expansion is likewise considered in takeover bids. Britain is saturated, but there is plenty of room in Spain, Low Countries, Germany, Italy, Scandinavia for Ryanair to explore and penetrate. For long-term markets, there is the need to look into regions yet untapped, in particular Eastern Europe. Also, keeping an eye on Singapore/Asia ventures, as it is still enormously untapped markets, will prove helpful in making the decision whether to bid for the takeover of Ryanair or not. As it appears that Ryanair is well-poised to take advantage of new opportunities in the emerging markets of the next decade, it is one point towards a positive reaction to taking the takeover bid. However, there are also certain considerations to look out for, for example, the Charleroi case, because if Ryanair loses, as they are appealing to EU Supreme Court in Luxembourg, the company will lose all revenue from that airport, numbering to an estimated 2 million passengers. This is a huge hit, if ever the case fails, though it may be made up in growth in other airports, so it is another dimension to look into. Long term, analysts say it may lead to more transparency, shorter leases with publicly-owned airports. This can elevate costs and hurt the bottom line, thus affect everyone in the company equally. It might be wise to wait for the Charleroi decision to settle before entering a position. If it decides against Ryanair, it is expected that headline influence will drag prices down further than fundamentals, which leads to a better entry. If it decides for Ryanair, then it is a very good decision to enter based on its long-term potential. There is the wide belief that EU will not side with Ryanair due to lobbying/protectionist pressure. After all, they saw what happened to UAL/AMR in the time span of a single year. Additionally, politics must also be considered. Ryanair claims that the EU decisions are heavily lobbied by its traditional competitors like the British Airways and Air France. A similar battle played out in U.S. courtrooms with Southwest and American Airlines over Dallas is observed. It could just be a matter of time in Europe, as well, because in the end, the customers – the public – are on Ryanair’s side due to the low flight fares that they are offering. On a deeper inspection, even British Airways and Air France could not be considered a competitor of Ryanair, as the said companies have a notably higher rate of air fare if compared with the commercial aviation firm under analysis. Thus it can be said that they operate with a different market profile than where Ryanair is currently operating. Deregulation and strong growth is also seen in Europe, as an accompanying depreciation in the dollar makes the European company more attractive. The consensus is that the dollar will depreciate further in 2004 as the deficit soars, so the company is a very lucrative venture to become involve with. VALUATION METHODS There are six general types of valuation: (1) earnings valuation; (2) revenues valuation; (3) cash flow valuation; (4) equity valuation; (5) yield valuations; and (6) member valuations. The type of valuation that the North American airline company should adopt would depend on what reliable information they have at hand in order to pose for easier company valuation and arrive at a decision to bid or not to bid at the earliest time possible. The choice of a valuation method requires thought and contemplation. The valuator should first learn about the business and then select the one valuation method that is the ‘most appropriate’ based on the relationship between the circumstances for understanding the valuation and the assumptions that underlie each of the valuation methods. The valuator should not, in Boger and Link’s (1999) opinion, define ‘most appropriate’ based on the results that follow from the application of several methods. There should be an a priori reason for selecting one valuation method over another. Income-based valuation methods use the businesses or a comparable business's income statement as the starting point for the analysis. Doing a corporate valuation is not a mysterious process that is open only to the few (Copeland, Koller & Murrin 2000). It does require, however, a different perspective from that taken by many managers. It requires focus on long-run cash flow returns, not quarter-to-quarter changes in earnings per share. It also requires a willingness to adopt a dispassionate, value-oriented view of corporate activities that recognises businesses for what they are – investments in new productive capacity that either earn a return above their opportunity cost of capital or do not. There are many areas in valuation where there is room for disagreement, according to Damodaran (2002). This includes how to estimate true value and how long it will take for prices to adjust to true value. But there is one point which there can be no disagreement: asset prices cannot be justified by merely using the argument that there will be other investors around willing to pay a higher price in the future. Similarly, asset-based methods use the business's balance sheet at the starting point. However, even when conducting an income-based analysis, the valuator should carefully study the balance sheet, and vice versa. Income statements and balance sheets describe aspects of the financial condition of the business, and hence, both should be examined. In fact, all financial information should be considered in detail. A fundamental and extremely important assumption that underlies all business valuations is that the financial health of the business is accurately characterized by its financial statements. If the financial statements are incorrectly prepared, or if they overstate or understate the true financial picture of the going concern for some accounting reason, then it follows logically that the valuation will be imprecise. Analysts use a wide range of models in practice, ranging from the simple to the sophisticated. The models enumerated previously belong to the general category. These models often make very different assumptions, but they do share some common characteristics and can be classified in broader terms, which makes it easier to understand where individual models fit into the big picture, why they provide different results, and when they have fundamental errors in logic. Following is the recommended valuation model that fits the need of the North American airline company to aid in its decision whether or not to take a bid for takeover. RECOMMENDATION             It is deemed that the earnings valuation method is the best model to use for valuing Ryanair. It is, first and foremost, the most common way to valuation. It is an approach to valuing a company by capitalising its earnings, which generally involves multiplying one or another income statement earnings figure by some multiple (Luecke 2002). The earnings-based valuations assume that the value of an entity is equal to the present value of future earnings that will be generated by the business. Further, this method is based on two elements, the price/earnings ratio and the post-tax earnings per share of a business, which, when combined, give the market price per share (Ogilvie 2006). There maybe a different (higher or lower) future earnings estimate based on efficiencies arising from new management (higher earnings) or restructuring costs (lower earnings) that will gave an impact on price negotiations.             Particularly, the Normalised or Average Earnings should be used. This approach, which is similar to that used for cyclical firms, uses an average average-based valuation upon a period when the earnings were healthier as the base-year earnings for analysis (Damodaran 2002). The assumption is that the firm will revert back to health in the near future. As the company’s financial documents offer the year when they have observed a decline in net profit, it will be most useful to use this type of approach to company valuation. When there are difficult choices to make between relevant treatment of accounting items on the balance sheet or income statement, the income statement tends to win out. The earnings-based formulation has intuitive appeal. It implies that if a firm can earn only a normal rate of return on its book value, then investors should be willing to pay no more than the book value for the stock. Investors should pay more or less than book value if earnings are above or below this normal level. Thus the deviation of a firm’s market value from book value depends on its ability to generate ‘abnormal earnings’ (Damodaran 2002). The formulation also implies that a firm’s stock value reflects the cost of its existing net assets (that is, its book equity) plus the net present value of future growth options (represented by cumulative abnormal earnings). To further strengthen the argument, the AICPA’s Management Advisors Services Practice Aid, Valuation of Closely Held Businesses indicates that the Internal Revenue Service strongly recommends the use of earnings-based valuation models for valuing businesses (as noted by Sipes 2005).             But, as with any other model, the output of an earnings-based valuation model will only be as good as its inputs. To help improve the quality of accounting inputs in the valuation process, earnings should be properly classified according to their components. To further assist in seeing through the potential biases inherent in financial data provided by Ryanair management, it is important to understand the discretion involved in making accounting classifications. As asserted by Hirst & Hopkins (2000), being armed with better knowledge about how accounting data are generated puts analysts in a better position to use the information effectively.

VALUATION METHODS

This paper analyses the feasibility of a takeover bid of the commercial aviation company Ryanair Holdings PLC by a North Amer...

Assignment I: Management of Change HK Uranus Investment Ltd

Assignment I: Management of Change HK Uranus Investment Ltd   Executive Summary In order to cope with the changes in the business market, companies must be able to cope with this changes and HK Uranus Investment Ltd is never an exemption.  This report, tackles the change process of the company and how the company handle or will handle this change process. The change process is with regards to the new integrated marketing communication of the company. It is concluded that in order to have successful change process, the management must consider how the company will handle and manage it effectively and how they are able to overcome the resistance of the change process.   The main goal of this report is to analyse the change process of HK Uranus Ltd in terms of their promotional and marketing approach. Being a consultant, it is my core responsibility to determine which part of the change process is in the right path and which part needs intervention. In addition, it is also my duty to know how the company has implemented the change and if their approach adheres to the organizational objective.   The report will include brief description of the change process which includes the time line, people involved and major events of the change process. Further, this will also include the analysis of the current state of the business through the use of different marketing analysis approach. Drivers of change, sources of resistance and styles of leadership and management used will also be included in the analysis of this report.  Furthermore, this will also provide discussion of scenario planning both for change and no change scenario. Introduction HK Uranus Investment Company Limited is known as a manufacturer and distributor of digital cameras and other electronic gadgets in Hong Kong. It has been established in 2005 by Mr. Tommy Chan. It is said that the competitive advantage of the company its broad experiences in terms of research and development, OEM capability, large product line, reliability and good reputation.  HK Uranus Investment Company Ltd’s brand name is ECA which is currently being exported to major countries such as Mid-East/Africa, Asia, North America, Central/South America and Western Europe.   HK Uranus Investment Company Limited is an ODM and OEM manufacturer to produce different ranges of electronic devices like digital cameras, MP4 and mp3 player, mobile phone, GPS car navigator and digital camcorder. The main objective of the company is to provide quality products and services to the global market.   With the emergence of and rapid advancement of technology and digital and electronic gadgets, organizations that do not have the ability to adjust their system and innovate their problems are being left behind by larger and innovative companies. In this regard, it is important that the management will be open for changes, especially on their business and management approach so as to ensure that they are coping with the latest in the global market. Since HK Uranus Investment Company Ltd is a new company, the management should ensure that when they decide to implement some changes. They will have the enough ability, resources and skills to meet the objectives of the change management process. In their change management approach, the company decided to engage more in promoting their business in the HK market as well as international market.  The company aims on having more intensive promotional tools to reach more customers and target market. The change management process initiative that will be given consideration in this report is about the Integrated Marketing communication change process that HK Uranus Investment Ltd.   1.            Drivers of Changes 1.1       The External Drivers:  Environmental Analysis (PEST) Political Analysis Hong Kong political aspect has less impact to its business sectors or more specifically, to the electronics industry. HK Basic Law is actually protecting organizations from major transitions in law in spite of their transfer to China. With this basic political aspect, it can be said that HK provides minimal effect on electronics industry. For instance, the production, import and export of materials for digital cameras will not be affected for the next ten years because of this political agreement. In this regard, the electronic firms like HK Uranus Investment Ltd will have more opportunity to benefit from low cost production in the country.   Economic Analysis Hong Kong economy is known in the global market as a hub for international trade. Hong Kong is one of the leaders in trade and this is an important aspect for the economy of the country.  Hong Kong market has been favourable to trade and most of the businesses have been efficient in balancing its exports and imports. The significance of trade in Hong Kong suggests the richness of its other related fields such as the electronics industry, specifically with HK Uranus Investment Ltd.  This has been proven by the high contribution of digitalized products to different organisation sales and the entire economic development.   The essential role of the electronics industry in the country have suggested that that there are several similar businesses which emerges in the country. Because of the stiff competition, industries operating Hong Kong are positioned under much stress of offering their very best. In addition, this implies the importance of change management approach not only contribute to the economy, but most significantly to maintain strong business foundation as well as combat competition.   Social Analysis It can be said that the social and cultural background of Hong Kong mainly influenced by the Eastern and Western nations. This is because of the status of Hong Kong as a major center for business and trade.  Although the Hong Kong is greatly influenced by a number of different cultures, their people and their style still follow its old Chinese features intact. While keeping old Chinese traditions as well as cultural practices, the Hong Kong is also open to changes brought about by international influences. This in turn makes the nation’s culture rich and varied. This implies that the people of Hong Kong have access to some of the finer things in life, including technology.   Technological Analysis Accordingly, Hong Kong is a melting pot of both Eastern and Western backgrounds (Chu, 1997). These Western and Eastern influences that make up the country’s socio-cultural background play a significant role to its current technological status. Knowing the HK has direct access to technological developments (Simon, 1995) from different countries worldwide, these can be being technologically inclined is quite easy. Furthermore, the high standards of living among the country’s citizens indicate the capability of the individuals to support technology as well as their ability to apply or implement them. The exposure to technology of both local and international market makes digital products, like digital camera and electronic gadgets, a marketable product.   1.1.1   Johnson & Scholes After carrying out the PEST analysis, another important aspect to consider is the nature of the market environment. This is because firms in the same industry are facing various factors and be categorized differently. Accordingly, the nature of environment can be categorized into two dimensions. Simple                                               Complex Static                                                  Dynamic and Analysis   For the electronic and technology industry like HK Uranus, the technology of the gadgets and devices can be considered as complex; however, the company ensures that the products are user friendly. Hence, HK Uranus can be considered in the complex status. On one hand, the business environment of the company depends on the external environment. As human resources have higher wage, they will expend more. Hence, the company should be able to do something to retain clients and improve customer services to meet their demands. In addition, HK Uranus has also been able to initiate various activities for their clients. 1.2       Internal Driver:  1.2.1   Strengths & Weaknesses Analysis   Strengths The strengths of HK Uranus include the high potentials for growth and development of their electronic products and their ability to innovate in terms of their business and marketing approach. In addition, their strengths include the highly skilled labour forces and the policy and provision initiatives of HK local government. Aside from that, the company has the ability to innovative electronic gadgets designs to meet the needs of the customers and their intensive focus on marketing approach development.   Weaknesses The only weakness of the company is their inability to match up with the larger industries in the HK market with high competitive position in the market place. Since they only start in 2005, they need to catch up with the marketing ability of the company and this can be done through initiating change management process.   1.2.2     Stages of Organization Growth According to Churchill & Lewis (1983) identify six phases of growth: I           Conceptual Existence II          Survival          III         Profitability – Stabilization          IV        Profitability – Growth          V         Takeoff          VI        Maturity             In terms of growth status, it can be said that HK Uranus is in the stage of growing. Since, HK Uranus has been able to provide and distribute products in 5 continents, it can be said that it owns a stable client based and most of their clientele are in the average to middle and higher class. In order to grow more, the company is in need of reaching more clients through promotional and marketing activities. The goal is to establish a brand name by reaching more clients all over the world. Hence, the company is in the growth stage. Because of this, the company is in need of increasing their competitive power; hence a new integrated marketing communication will be needed for the company. This new integrated marketing communication should combine technological aspects with business strategy and align both management approaches to ensure that the company will be marketed effectively to reach and attract more clients in the global market. Through the use of internet and other media and print ads, this change process will be initiated.                 1.3       Current State                         1.3.1   Cultural Web                        Accordingly, organizational development identifies the aspects which employees are seen as an important asset of the company (Chemers, 1997).  This part will discuss the cultural state of HK Uranus through cultural web (See Appendix 2). In                         Stories:             HK Uranus provides their new employee the chance to know more about the company through orientation and other workshops. This is to ensure that the employees know the standards and policies of the company as well as how it becomes competitive in the electronic market.                           Symbols:             In terms of symbol, it can be said that HK Uranus has a triangular relationship between the clients, company and the employees. The mission of the company is to ensure that they provide quality products to their clients through the efficient work of the employees with a good management.                         Power:             In terms of power, it can be said that the top management of HK Uranus has the final say in terms of decision making process. Though they allow their staffs to say their opinions and perceptions, the final decision still comes from the top management.                                     Organization Structure:                The HK Uranus’ organisational structure is somewhat hierarchical and vertically integrated. Hierarchical because the top managements made the decision and the employees follow orders from the top management. However, vertical because they also give their employees the chance for saying their opinion and grow professionally.                                     Control Systems:             The company uses comprehensive performance measurement and reward system as well as performance appraisal approach. The company motivates their employees by rewards and promotions. By due recognition given to employees by the company, they become more productive and positive.                           Routines & Rituals: . To ensure that the company adheres to quality and standards, they have a monthly meeting for the top management and quarterly meeting with the employees of each department. In addition, the company also provides training and development as part of their routines and rituals.   1.4 Growth stages (SWOT)   1.4.1     Threats The threats of the company includes the strict and meticulous international standards for electronic gadgets, specifically the emergence of companies in China who are skilled in making electronic gadgets in bulk and the inability to meet the needs of the target market in terms of designs, and styles for consumer needs. 1.4.2     Opportunities The opportunity of the HK Uranus Investment Ltd includes the rising potential in the global market and the growing awareness of international market for HK Uranus Investment Ltd. In addition, this also includes their opportunity in using advanced technology to aid in creating new designs for a shopping centre.   2.         The Scope of Change It can be said that industries initiate organizational changes because of the Internal and external drivers (Yee, 1998).  In this regard, the internal drives of change include the need of the company to enhance their competitive position and performance.  In addition, the internal drives include the need for reforming the marketing approach of the company. The external drivers include the improvement of their marketing approach through the use of integrated marketing communication. The following change agenda is showing the scope of be change to fit the environment. 1.         Strategy   (Please described) It can be said that change can be regarded as the initiation of reorganization, restructuring or reengineering of an organization. The main goal of this is to improve company performance and output by coping with the new and efficient business approaches (Carlopio, 1998). As a competitive company in the electronic and digital camera, Uranus Investment Company Limited has always been trying to change their products as well as their marketing approaches in order to attain achieve quality products and services to their customers which is a major part of their strong commitment in the market. This change process will be in line with the new integrated marketing communication approach to reach for customers for the company. 2.         People     (Please described) For the change process of implementing a new Integrated Marketing Communication approach, the people who were involved include the top management who is responsible for the approval and evaluation of the change process. In addition, the people involved also include the marketing department from marketing manager to their down line, human resource management and audit management. The role of the marketing manager is to ensure that all levels of their department are well-informed about the implementation of the integrated marketing communication. Furthermore, the role of the HR management is to ensure that all staffs needed for this change process will be up and available. The audit management will ensure that financial resources will be available in case the marketing department will need it to implement the change process. The next person involved is the consultant.   3.            System          The top management will be responsible to ensure that all system is properly set up for the integrated marketing communication. In this regard, the change process will conduct marketing research to know the latest about marketing communication and integrate the result with the change plan. 4.            Structure      The major structure for this change process includes the development of change plan including goal and objective setting from the top management to marketing manager who will have the major responsibility for the entire change. In addition, another major event is the proper dissemination of the information for all the involved staffs responsible for making the change process possible and successful. The change process is the initiation of IMC focusing on advertising and promotion of the entire company and their brands.  The change process also includes the released of new commercial ads from prints and media advertisement as well as the internet.   3.         Sources of Resistance Although there are aspects which support change process, there are also some contexts which inhibit or restrain change process. The following are the resistance which inhibits the success of the change process for the HK Uranus; these include the perception or reaction of stakeholder, absence of management support and organisational culture. 1.            Job-related Issues In terms of job related issue, the major issue to be considered is the setting up of website and internet for the staff and the members of the organisation for online communication. 2.            Inertia of Manager Furthermore, the inability of the top management to provide support on the implementation of the change process will hinder the transformation in attaining the set goals. In addition, it is essential to consider good communication skills because lack of communication among the involved people will affect the entire progress of the change process. It can be said that in HK Uranus, these    resistance have been given enough attention and consideration (Wilkins & Dyer, 1988). 3.            Fear of the Unknown One of the sources of resistance that can be attributed with this change process is from management and employee of the HK Uranus which include the negative reactions. There may be staff which doesn’t have the ability to meet the needs of the change process specifically in implementing the integrated marketing communication approach.   4.         Styles of Leadership         In dealing with the change process, it can be said that the current leadership approach of the company is the authoritative and democratic style. In this regard, the marketing manager who has the major responsibilities for this change process involved the staffs in decision making process.  In this regard, the employees have the right to voice out their ideas and though which they perceive as helpful for initiating their change process. According to McGregor (1960), leadership style can be considered to fall under theory x and y. In this case, the leadership of HK Uranus is authoritarian (Theory x) as well as participative and soft management (Theory Y). The company has shown that although the power comes from the authority (leader), they also give their employees the chance to explain what they know to enhance the outcome of the change process.   4.1       The Leadership / Managerial Grid         The management style of the company to implement this change is diversification approach. In this regard, they will integrate their business approach with their marketing approach to reach more clients in the global market.  Blake and McCanse (1991) have provided that leadership and management styles matrix into two major dimensions (concern for people and concern for production). In the case of HK Uranus, it can be noted that the main revenue of the firm comes from their electronic sales. Hence, the company carries out lots of practices to facilitate their production; they provide comfortable and friendly zone for their skilled workers and make a good connection with their clients. The company ensures that they provide high tech and innovative products.   5.         Scenario Planning             5.1       No change scenario HK Uranus Investment Ltd is ensured that they need they still do not need the changes of their products since they know that all their products are still more advanced in terms of technology than other company. In this regard, Uranus Investment believed that having a new marketing approach through the use of integrated marketing communication is not yet advisable for the company since they are able to have balance export and import because of the ongoing support of their customers to the digital and electronic products they are offering. With the international trade that they are engage in, the management also believe that changes in this aspect are not required because they are still have strong position in local and international level. Herein, the choice of the HK Uranus is to continue their marketing and promotional approach without imposing or changing their marketing communication approach. Hence, the company will continue to utilise their market approach and give support with their existing business strategy.   5.2       Change Scenario The change is needed in order to reach more clients in the global market in order to make their customers be more aware of their existence. With this, the change will be implemented as soon as the change plan has been implemented and all the contexts needed to make the change successful. The change is needed in order for the company to be able to have a more comprehensive marketing communication approach specifically with the use of internet, print and media advertisements and other promotional tools.   Conclusion Being a consultant, it can be said that the management of Uranus must be willing on the needs of the company by monitoring what is effectively working and now working in the change process. In order to execute the change for having a new integrated marketing communication, the management must be able to establish a better environment for changes, reassure support as well as commit all their management and financial resources. Thus, it can be concluded that the change process is indeed a crucial and critical management aspects that must be considered by an organisation. The management must ensure that the change process really improved the strength and competitiveness and meet the objectives of the company.  It is said that this will be successful if through assessment and evaluation of the company performance has been made.  It is recommended that HK Uranus Investment Company Limited must see to it that that the changes are well planned and strategically imposed because these will the basis for having a successful change process.   Reference     Adler, NJ 1991, International Dimensions of Organizational Behavior, Boston, MA: Kent.   Blake, RR and McCanse, AA. Leadership Dilemmas-grid Solutions. Houston: Gulf Publishing.   Beverage, MW 2003, Slow Change in a Fast Culture, Illustration, Kirfland Ohio, 2003.   Carlopio, JR 1998, Implementation: Making Workplace Innovation and Technical Change Happen, McGraw-Hill, Roseville, NSW.   Chemers, M.M. (1997). An Integrative Theory of Leadership. Lawrence Erlbaum Associates.   HK Uranus Investment Company limited (2008). Retrieved July 31, 2008 at http://tome9732.trustpass.alibaba.com/.   Hong Kong Trade Development Council. (2004, November 8). Hong Kong's Audio-visual Equipment Industry. Retrieved July 31, 2008 at http://www.tdctrade.com.   Hong Kong Trade Development Council. (2005, March 23). Hong Kong's Electronics Industry. Retrieved July 31, 2008 at http://www.tdctrade.com.   Simon, D.F. (Ed.) (1995). The Emerging Technological Trajectory of the Pacific Rim. Armonk, NY: M. E. Sharpe.   McKie, S 2004. Let Innovation Thrive, United Business Media Company.     Reigeluth, CM 1994, ‘The imperative for systemic change.’ In C.M. Reigeluth & R.J. Garfinkle (Eds), Systemic Change in Education, Englewood Cliffs, NJ.   Schein, E 1985, Organisational Culture and Leadership, Jossey-Bass, San Francisco.   Swenson, DX 1997, Change Drivers. Available. Online, Updated Aug 31, 1977. Accessed [09/07/2005].   Yee, JA 1998, ‘Forces motivating institutional reform.’ ERIC Digest. ED 421179. Wilkins, AL & Dyer, WG, Jr. 1988, ‘Toward culturally sensitive theories of culture Change,’ Academy of Management Review, vol. 13 pp 522-533

Assignment I: Management of Change HK Uranus Investment Ltd

Assignment I: Management of Change HK Uranus Investment Ltd Executive Summary In order to cope with the changes in the bus...

The Future of Customer Service

The Future of Customer Service               According to (2006), as the world of technology becomes more and more sophisticated, businesses find themselves with an overabundance of customer service management software. While this software continues to invade the marketplace, some companies use it to effectively cut themselves off from their customers. Many companies rely to technology to render customer service. Customers are being instructed to jump through voice-activated hoops or press buttons through phone-activated menus while their frustration grows. Many companies focus more on expansion and have too many business strategies to employ and sometimes, these companies rely on technology alone to monitor customer satisfaction. The lack of human contact is a major reason why customers are dissatisfied. Companies nowadays are struggling to regain customers they should have taken for of in the first place.  Competitive advantage cannot be sustained unless it can be protected from competitor matching. Any aspect of the product can be matched by the competition. What is most difficult for the competitor to match is how the firm approaches and treats the customer. Customer loyalty can be retained even if the product is flawed if companies assign good front-line employees to handle customers. The firm serves the customer by providing product enhancements in the form of service. Technology cannot replace humans. Technology should only enhance the human element of customer management. Customers look for convenience, cost, and quality of the total experience (2003). Technology alone will not provide a competitive advantage. The combination of superior technology and superior employees with a service orientation will contribute to achieving sustainable competitive advantage. The future of customer service for me is not a customer service that is not technology dominated but rather technology enhanced. The key to the future of customer service is the integration of technology with quality management techniques in order to rebridge the gap in customer service. In order to improve the quality of customer service, innovative marketing research methods must be used. The goal is to systematically generate actionable information that will enhance the ability to swiftly attend to customer satisfaction issues by making managers responsible for bringing human contact back into the realm of Customer Relationships Management.             Market research has always been a powerful tool enabling companies to gauge customers’ needs, wants, desires, and satisfaction. However, with regard to customer satisfaction, if the data are not usable, reliable, relevant, and timely, a company wastes its energy and resources. Furthermore, a business must react immediately to the information or the whole venture is an exercise in futility. An effective customer information system ensures that the appropriate knowledge of the customer is available for customer-focused decisions and actions. Without customer information it would be impossible to customize customer experiences, let alone manage customer relationships. Knowledge of the customer is about being intimate with the customer. Customer intimacy is not just a cliché. Customer intimacy is a value discipline for firms that value and use an intimate knowledge of their customers to determine precisely which types of customers to serve and then align all their value-creation processes to create and deliver solutions to their specific type of customer (2003). Many firms use their knowledge of the customer to tailor their products and messages, or to promote new services to their customers. But good customer information management goes beyond targeting messages and promotions. Customer-focused firms must have good customer information to support the decisions and activities of the firm. Good customer information is an asset of the firm. Logically, anything that contributes to sustainable competitive advantage is an asset to the firm. Since information on customers is useful in better matching a firm's products as solutions to customer needs, customer information is an asset that contributes to sustainable competitive advantage. The focus will be on what the customer feels rather than hoe the company is doing. The ultimate goal of customer satisfaction is increased revenue and customer retention. Six Sigma             Organizations are constantly on the alert to gain a competitive edge, using the many tools that have long been touted as a way to beat the competition. Yet, despite the focus on innovative ways of making products and providing services, there remains one constant: Organizations that produce better quality products and services than their rivals beat the competition time and again. Six Sigma Improvement is a tried-and-tested method that has been effective in helping businesses dominate their competition (2001). Six Sigma, at its basic level, is attempting to improve both effectiveness and efficiency at the same time. Six Sigma is a measure of customer satisfaction that is near perfection (2003). Six Sigma is a process that will help a company to render effective customer service. The company must be aware of the customers’ needs, wants and requirements. The best way to improve the service is to ask the customers. By asking the customers, and working hand in hand with them on improving the service the company will encourage customer loyalty and will maximize customer satisfaction. Six Sigma focuses directly on the customer. Online research will be focus on getting fast, accurate, and inexpensive data. Online research will target customer satisfaction. While online research is still in its infancy, the future is unlimited if a company can harness its own customer database. Furthermore, online research delivers superior results over traditional methods because it leverages the unique strengths of the Internet by: 1. Eliminating group bias and dominant personalities 2. Getting unrushed and thoughtful answers from each respondent 3. Gaining instant responses from the entire sample 4. Having the ability to test, change, and retest on the fly ( 2003).             Real-time collection methods can be used to produce important information about the customers quickly. Six Sigma elements can make the data gathered from the customers more understandable and easily measured. The company will have a clear understanding of what the customers need and want. They can also improve their product and service by asking the customers. Customer satisfaction information will be readily available and the company will see the areas that need improvements in terms of customer service.               The future of customer service is more fact-based. The decisions of the company will be based on data gathered from the customers. The people inside the organization will become familiar with the concept of process. Companies will truly become customer focused by measuring, managing, and improving the processes in order to meet the customers’ needs and wants. Companies will be able to be aware of the key measures of effectiveness and efficiency for every process. The goal of Six Sigma is to improve both effectiveness and efficiency. Six Sigma, unlike other quality initiatives that have come before it, is a management philosophy. As such, management must become actively involved in its application. The vehicle for this involvement is creating the strategy of Six Sigma called Business Process Management. The steps involved in creating this strategy include identifying the key processes that affect the strategic business objectives of the organization. Once those processes have been identified, measures of effectiveness and efficiency need to be collected and validated. Once measures of effectiveness and efficiency are collected, the worst performing, highest impact processes are then targeted for improvement.

The Future of Customer Service

The Future of Customer Service According to (2006), as the world of technology becomes more and more sophisticated, bu...

Compliance of Nurses to New Technology

As one of the developing countries in Southeast Asia, the Philippine health care system and facilities are generally thought of as underdeveloped themselves. With this kind of perception, the Philippine health care system is deemed to be unreliable. Doctors in the Philippines do not enjoy the same level of high credibility as compared to those who come from medically-complacent countries like the United States of America and India. The nurses in the Philippines, however, have found their name to give credit to their country for producing such a wide population to supply nations all over the world for the quality service nurses from the Philippines can give.At the turning point of the decade, however, it has been apparent how the Philippines have been moving up in the advance technological ladder of status. The Philippines today have proved itself as a favorable spot for both domestic and international health seekers. It has been found by Ledesma how the Philippines has risen to the levels of the more developed countries in being able to supply clients from cross-country and worldwide competition-worthy services through excellent facilities and medical attention at costs infinitely more affordable[1].With a thriving heath care sector, the Philippines have been able to move further into the 21st century and improve on supplementary hospital technologies. This revolution of hospital technology now has given leave for a new issue to arise in the fields of work concerned. One must take into consideration the past experiences of these institutions. In order to achieve the right footing in perspective, the past must be taken into account. Before the revolution of acquisition of new medical technologies, one must remember that older and less state of the art technologies were the norm of hospital processes.Nurses and medical technicians in hospitals from the Philippines were used to akin do with equipment that may not exactly be up to par with the world’s conditions before. Their training may be assumed to have been in consideration of this situation. This would simply be apparent affording regards to the fact that these nurses would be using those kinds of under-developed and substandard equipments. This, of course, would delegate them to skills which are more suited to these kinds of equipments. Another factor in this issue would result to the fact that the population demographics of the nurses we are talking about would most usually represent nurses who have been serving the country as newly trained graduates. The demographics would represent young nurses who are fully equipped on taking on both under-developed and revolutionized technical assistance through machines.Since these nurses greatly benefit from these technical innovations, they do not find it difficult to cope with. These technological advances were made to help the nurses with their duties and make it easier for them. These innovations actually serve as incentives for these nurses as it helps them in their tasks. A singular problem may lie in the nurses’ possible inability to cope with these advancements by way of their lack in expertise or background in the usage of these machines. However, nothing cannot be solved by plain old training and practice.As the Philippines movies forward in the realm of advanced medical practitioners and technological machines, its personnel are challenged to cope and do the same. One might see the issue in two sides: one, whether they would not be able to cope and stick to what they already know how to do, since that is what they are used to and comfortable with, or two, whether they would see these technological advancements as something to be thankful for since it gives the country confidence in the services which they offer and take it as a challenge to make themselves better to cope with the changing world. One would actually lean on how these nurses would take the second scenario as more favorable, since this world is truly changing for the better. This would hopefully provide the country with better equipment and better nurses in order to cater to the needs of not only its nationals, but also other from foreign countries.             <span lang="EN-US" style="font-size: 11.0pt; line-height: 115%; font-family: 'Arial','sans-serif'; mso-fareast-font-family: Calibri; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;"> ReferencesLedesma, J. 1992, The status of medical technology and the healthcare system in the Philippines, Pacific Medical Technology Symposium, Hawaii  <span lang="EN-US" style="font-size: 11.0pt; line-height: 115%; font-family: 'Calibri','sans-serif'; mso-fareast-font-family: Calibri; mso-bidi-font-family: 'Times New Roman'; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;">[1] Ledesma, J. 1992, The status of medical technology and the healthcare system in the Philippines, Pacific Medical Technology Symposium, Hawaii

Compliance of Nurses to New Technology

As one of the developing countries in Southeast Asia, the Philippine health care system and facilities are generally thought of as underdeve...

STRATEGIC CAPABILITY OF TESCO PLC IN THE UNITED KINGDOM

STRATEGIC CAPABILITY OF TESCO PLC IN THE UNITED KINGDOM Table of Contents   I.      Introduction.. 3 II.     Background of the Company.. 3 III.        Resource Audit.. 4 A.    Financial Resources. 4 B.    Human Resources. 6 C.    Physical Resources. 6 D.    Intangible Resources. 7 IV.       Value Chain Analysis.. 8 A.    Primary Activities. 8 B.    Support Activities. 9 V.    Core Competencies.. 9 1.     Card Club. 9 2.     The Tesco Database and IT.. 10 VI.       Analysis of the Company.. 11 VII.      Conclusion.. 12 VIII.     References.. 13   I.              Introduction Studies in business and trade have tackled the conditions surrounding the retail industry. Almost every scholarly article has indicated the retail market as cutthroat and highly competitive. In the case of UK, one company has apparently acquired an accurate formula in neutralising this level of competition in the market, Tesco Plc. This report will be giving an account of the strategic capability of the company in the retail industry. Majority of the data used in this report will come from the annual reports and website of Tesco. Other information will be taken from academic articles and scholarly journals that took account on the case of Tesco.    II.            Background of the Company The organisation under consideration is the brainchild of Jack Cohen in 1919. The retail monolith was said to have started in a humble stall in the East End of London and primarily peddled surplus merchandise to the public. Recent reports have indicated that the company has become one of the most influential organisations in the retail industry, placing companies like Sainsbury's, Safeway, Asda and Somerfield trying to catch up and gain their individual competitive advantage over the other. As an organisation, Tesco operates under the principle “to create value for customers to earn their lifetime loyalty.” Closely examining this mission statement, Tesco is apparently taken a great deal of their efforts in caring for their customers. Aside from offering the best products and service in the retail industry, they are apparently pent up in striking a close relationship with their customers. Moreover, the company also realises that to strike a great relationship with their customers, they must similarly take good care of their staff.  According to its website, the company offers numerous employment opportunities and development initiatives to their workforce giving all the reason for the employees to perform at the highest level possible. The following discussions will establish the strategic capacity of the company, particularly focusing on its resources, value chain and core competencies.     III.           Resource Audit The following discussions will be pinpointing the resources that Tesco have amassed over the years and could be used whenever their operations require it. More specifically, discussions on the financial, human, physical, and intangible resources will be given.   A.   Financial Resources The following discussions will provide a clear indication as to whether Tesco is able to support any future strategic initiatives. Early reports on the company have indicated that they have broken the billion dollar mark with reference to their profits. (Child 2002, 135) This has been substantiated in the 2005 annual report of the company as it indicated that it has accumulated over two billion pounds worth of profit. (Tesco Plc 2006) Basically, this is a hands-down indication that the company is more than financially capable in funding its strategic endeavours.      Table 1. Tesco's Profit and Loss Account, 2005   2005 (£m) 2004 (£m) Sales at net selling prices 37,070 33,557 Turnover including share of joint ventures 34,353 31,050 Less: share of joint ventures' turnover (379) (236) Group turnover excluding value added tax 33,974 30,814 Normal operating expenses (31,845) (28,925) Employee profit-sharing (65) (57) Integration costs (53) (45) Goodwill amortization (62) (52) Operating profit/(loss) 1,949 1,735 Share of operating profit/(loss) of joint ventures and associates 130 97 Net profit/(loss) on disposal of fixed assets 53 (9) Profit/(loss) on ordinary activities before interest and taxation 2,132 1,823 Net interest payable (170) (223) Profit on ordinary activities before taxation 1,962 1,600 Underlying profit before net profit/(loss) on disposal of fixed assets, integration costs and goodwill amortisation 2,029 1,708 Source Tesco PLC, 2006 The table above summarises the profit and loss incurred by the company in 2004 and 2005. Looking closely at the data above, one could notice that there were quite a few areas where the losses of the company have risen significantly, like that of the operation expenses of Tesco. However, these losses are rather justifiable as it could be a result of economic activities like inflation and other shifts in the exchange rate. Moreover, the seeing the profits and concurrent effects on the shareholders as well as with the other aspects of the company, it still reinforces the fact that Tesco is not only financially stable but also commanding in this area.     B.   Human Resources In UK, Tesco employs over 270,000 emloyees. (Tesco Plc 2007b) With the training and career opportunities provided by the company, they have achieved an 84.1% of retention which basically shows that the company is taking good care of their employees. The website also indicated that in the past years, they have “appointed 27 Directors, 200 Store Managers and 8,000 Department Managers” all of which are from the pool of employees that they have in their organisation.   C.   Physical Resources The company prides itself with the hundred of establishments that carries its brand name. The claims in their website indicate that Tesco manages five types of store arrangements. These stores are spread around strategic places all over the United Kingdom. For instance, Homeplus is the type of Tesco store that is most recently introduced in UK. It is a standalone store that offers non-food merchandise. The remaining types, Extra, Superstore, Metro, and Express, are among those that has been raking all the profit for Tesco’s UK operations The Express stores are characterised as those with the smallest space which could pass up as the company’s version of the convenience store. It is said to have 735 stores all over UK to date making it occupy at least 5% of the total land area of the region. On the other hand, the 162 Metro stores are those that are situated in the busy streets of UK. Occupying at least 7.3% of the land area of UK, it is scattered in malls and other city centres. Possibly the most famous stores of Tesco is its chain of Superstores. With four hundred thirty-three stores, it occupies 53.7% of the total space in UK. This means that it covers a very large area housing foodstuff and other non-food merchandise. Lastly, the Tesco Extra stores are deemed as the largest in terms of area with over sixty-thousand square feet per store. In its 147 establishments, it provides the public their food and non-food items at the most reasonable price.   Table 2. Tesco's Turnover, Number of Stores and Selling Space, 2001-2005   2001 2002 2003 2004 2005 Turnover (£m) 20,800 23,400 26,004 30,814 33,974 Number of stores 907 979 2,291 2,318 2,365 Selling space (000 sq ft) 28,362 32,491 39,944 45,402 51,772 Source: Tesco Plc, 2006   The table above summarises the physical resources of the company. The discussions above have established that the physical assets of the company also double as a means of getting close to its core consumers. With the vast area covered by all the stores, convenience is given to the consumers and at the same time makes it hard for the other players in the retail sector to position themselves well in the UK market. D.   Intangible Resources Tesco is considered as among the world’s top organisations that manage a loyalty system with their core customers. In accordance with their website, there are more than thirteen million individuals in UK who owns a Tesco club card. This denotes that Tesco have this amount of individuals guaranteed to purchase in their stores in the future. Therefore, it seems that the organisation has established its edge over the Sainsbury's, Safeway, Asda and Somerfield as seen in their consumer’s loyalty.   IV.          Value Chain Analysis The following discussions will provide an account on how the company acquires competitive advantage over its competitors. (Porter 1985, in Swiercz and Spencer 1992, 35) A.   Primary Activities In the case of logistics, both inbound and outbound, Tesco is one of the first proponents of “stack ‘em high, sell ‘em cheap” approach to the retail industry. This means that each store would be placing a considerable amount of their inventory in the open shelves as display for easy access for the consumer. Their main suppliers are players from the consumer product industry as well as local producers. For instance, the meat products as well as the greens section are often filled from British farmers and work with the state (Red Tractor standard) to ensure that the products are of high quality.    In terms of operations and service, these activities are often carried out in individual stores of Tesco. The sales of each store tend to equate with the type of service provided by the personnel assigned in the same store. Normally, these employees are also the ones who inform the consumers with the new programmes and marketing initiatives of the company.   B.   Support Activities In the case of support activities, the company makes sure that the resources procured and sold in their stores are acquired from local distributors. This is especially true for the perishable merchandise that they sell. In the case of human resource development, the company follows a programme that allows career growth for their diverse staff. They have training programmes, apprenticeships, and agenda for their “seasoned” personnel. At any rate, the company still follow the basic principle of care for their people, both internal sand external of the organisation. V.           Core Competencies The following discussions will provide a description of the activities that the competitors of Tesco have a hard time emulating. 1.    Card Club In 1995, Deputy Director of Tesco, Terry Leahy, introduced the card club scheme. (Tesco Clubcard 2007) Initially, the concept was then ignored and was met by apprehension by the other members of the company. Nevertheless, the said design went out to be an enormous achievement for Tesco which fundamentally prompted a new formula for the retail industry as the other stores have attempted to establish their individual loyalty card agendas. The club card system, in accordance with the Tesco site, is a form of showing gratitude by the organisation to its loyal buyers. Essentially, the card permits the owners points as they pay for merchandise sold in Tesco establishments. Moreover, these points that they build up in these cards will likely offer the customers a way of gathering vouchers or coupons which amount to certain gifts or discounts in the stores. Particularly, for every 250 points, the owner of a card is able to collect a voucher that they could employ to buy other merchandise offered in the stores. The most current series in operation in their card club is the trade of vouchers into Deals. These deals vary from airline miles, journal subscriptions and even free jewellery.  2.    The Tesco Database and IT Following the effects of the club card scheme implementation, one great thing that came out of it is that the company is able to discern the number and identity of their core customers. Pointed out in Tesco.com, those who intend to be cardholder have to file an application which requires their names and other information that goes directly to the Tesco Database. This means that the company has a record of the individual cardholders in UK. The number of times that these cardholders use their cards will also signify the frequency at which they go the store and what items they have purchased.   In connection with the company website, the creation of Tesco.com has also introduced the company to a whole new level of retailing, specifically e-business and online marketing. With the appeal of convenience, the buyers could now do their grocery shopping online and get it delivered on their front doors by the company. Grocery shopping has never been so virtually effortless. In the same manner, the company is also implementing added points to cardholders that purchase their groceries online. Once more, this manifests Tesco’s intention to provide their people with the best possible service they could offer. VI.          Analysis of the Company Tesco is already a legend at its own right. As manifested in the discussions above, its strategic capacity has constantly been a couple of steps ahead of the other competitors in the industry. Aside from looking at the “local market conditions, for consumer behaviour, competitive environments, management styles, and legal regulations,” the ability of the company to take the needs of the consumers into consideration adds to their overall success. (Gurdjian, Kerschbaumer, Kliger, and Waterous 2000, 68) Moreover, the discussions above have similarly indicated that the company’s club card system has not only that given great deals for its core customers but ensured that the company will continue to do business in the future. Additionally, this attempt significantly fashioned a chance to maintain loyalty to Tesco’s chain of stores.   All in all, Tesco’s resources are strong as it has dominated the entire retail industry of UK. Its value chain keeps their operations intact without incurring numerous losses and infringement with their social responsibilities. Lastly, their core competency, specifically their consumer-centric model, has been their ticket in being at the top of the retail industry’s major players.     VII.         Conclusion The report highlights that in the retail industry of UK, a standard of service accepted by the public is already established. This standard has is required to all the major players in the said industry and has become so common that the consumers have regarded it as somewhat negligible. The success of Tesco shows that knowing what the consumer needs defines the level of success that one could acquire. In their case, they focused their attention on convenience and customer relationship management. With the combination of these two factors, they have taken the retail industry by storm as loyal customers come flocking their chain of stores. Essentially, Tesco has been deemed as strategically capable because they have ultimately acquired loyalty from their customers. Their brand has become synonymous with the concept of superstores and groceries in UK. However, these apparent strengths could only be sustained by the company if they keep the customers happy by anticipating their every demand. In this regard, a major weakness is uncovered in this scenario. Eventually, all other players like Sainsbury's, Safeway, Asda and Somerfield will be implementing their own loyalty scheme which will essentially allow them to once more catch up with the competitive advantage of Tesco. To this end, Tesco must start finding a way, even this early, to keep their advantage over the other players in the market.     VIII.       References Child, P. (2002) "Taking Tesco Global: David Reid, Deputy Chairman of the United Kingdom's Largest Grocer, Explains the Company's International Strategy." The McKinsey Quarterly. p135. Gurdijian, P., Kerschbaumer, G., Kliger, M., and Waterous, P. (2000) “Bagging Europe's Groceries.” The McKinsey Quarterly. pp68. Tesco PLC (2006) Tesco Annual Review, 2005. Available at: http://www.tescocorporate.com/images/Tesco_review_1.pdf [23 January 2008] Tesco Plc (2007a) Economy. Available at: http://www.tescocorporate.com/economy.htm [23 January 2008] Tesco Plc (2007b) Society: Career and Training. Available at:http://www.tescocorporate.com/page.aspx?pointerid=791634D5066E4B9C9BE29A45587D82FE [23 January 2008]

STRATEGIC CAPABILITY OF TESCO PLC IN THE UNITED KINGDOM

STRATEGIC CAPABILITY OF TESCO PLC IN THE UNITED KINGDOM Table of Contents I. Introduction .. 3 II. Backgroun...