This report discusses the impact of external environment changes on P&O Ferries, including the COVID-19 pandemic, and how the company deals with it. It covers topics such as PESTEL analysis, Porter's Five Forces, CSR, and communication strategies. The report also provides recommendations for sustainable growth.
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Table of Contents INTRODUCTION...........................................................................................................................3 MAIN BODY..................................................................................................................................3 Impact of external environment changes on organization.........................................................3 PESTEL Analysis of P&O...........................................................................................................5 Drivers of change.........................................................................................................................7 Change affect P&O......................................................................................................................8 Impact on the needs of the stakeholders......................................................................................9 Change influenced the type of decision.......................................................................................9 Changes important for P&O Ferries..........................................................................................10 Demonstration of good ethics....................................................................................................10 Carroll’s pyramid for CSR.........................................................................................................10 Evidence to show that P&O Ferries did not respond positively...............................................11 Opportunities that P&O Ferry has and strategies......................................................................11 Advantage and disadvantage of stakeholder interest.................................................................11 Communication in P&O Ferry...................................................................................................12 Challenges of cross culture barriers...........................................................................................12 Strategies for effective communication.....................................................................................12 Recommendations......................................................................................................................12 CONCLUSION..............................................................................................................................13 REFERENCES................................................................................................................................1
INTRODUCTION Change is very important for the organization and in order to sustain in the market company has to deal with it in effective manner. Along with this, the present report is based on P&O that is UK ferry operator that deals with cargo services. Moreover, the company has recently acquired by DP world and logistic company. The study will discuss about the driver of change and its impact on the business performance as well as the current strategy used by firm in order to deal with the changes present in the market. Lastly, it has recommended organization in order to build sustainable growth. MAIN BODY Impact of external environment changes on organization External environment is consisting of political, legal, technological factor which affect the growth of the company in effective manner. Along with this, one of the major threat which has been faced by business recently is COVID- 19 and it has changed the process of conducting the business. These factor affect the company growth as meeting with them required finance and innovative solution. Such for coping up with pandemic new business rules as been implemented such as online payment and social distancing. Due to these rules most of the organization has to make use of technology in order to attract customer and due to that their expenses has increased. However, the operations of business have been impacted as it has to deal with new changes. The company has to identify taste and preferences of customer so that it can make product according to them. Thus, meeting with changes is essential for firm as it will contribute in sustain in the competitive market(England and Hershberger, 2020).Although change is inevitable factor in the life cycle of business as change is driven factors within the company itself such as reposting the organization in new market area or making use of creative business model as well as adopting different nature of business. Along with this, change is also present in external factor of business like new competition in market, advance technology as well as shift in customer taste. However, government policies are also involved in external factor as any change in that will affect the company in both negative and positive manner as company has to sustain in business environment. (Idrees, Nowostawski and Jameel, 2021). Thus, it can be stated that external and internal factor drives the change and it
is up to company that it should help the in increasing their progress or tear them apart. Although change always lead to progress as many factor is considered as change affect both processes and structure of the company. Furthermore, the external environment includes set of factors and interest group like manager, customer, suppliers, owner that are directly affected by work of company and it have power to have control over it. The company while formulating the polices for business takes into consideration that it must take account of external environmental opportunity and threats. The political factor consists of laws and regulations made by the government and any change in commercial law or taxation policy will discourage or encourage business. Thus, organization has to follow them appropriately in order to avoid risk. (Khim and et.al., 2019). Furthermore, another factor like economy directly affect business through interest rates, exchange rates and price fluctuation.In addition to this, the another important factor is technological factor that include new technologies which contributes in achieving productivity, creating new products for consumption. So it is necessary for the company to make use of this factor correctly in order to attract customer as well as to sustain in the competitive area. Furthermore, the company need to make use of strategic tool in order to identify the factor available in external market. Along with this, this tool will allow organization to make appropriate decision for the growth. The strategic tool will also contribute in finding the threat and to get solution for that in order to reduce the impact(Lin and et.al., 2018). Although it helps in understanding the organization market and the business position as well as it helps in developing the strategy by conducting market research in new existing markets. Thus, it helps in evaluating how strategy fits into the broader environment. Moreover,PESTLEanalysishelpsmanagergainabetterunderstandingofthe opportunities and threat it face as well as it analysis aids in building better version of the future and how the firm might complete profitability. Thus, these tools are helpful in dealing with the factor that can have negative effect as well as making use factor which are advantageous. In addition to this, tool like SWOT can be used as it also contributes in finding the opportunity for firm that helps in success of company as well as identifying threat for the organization which can affect the performance in negative way. So it can be stated that both these tools are useful in order to deal with the external factor in effective manner. (Mihai and et.al., 2021). Hence, it
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helps in taking strategic decision appropriately which allow in increasing the growth of company in competitive market. PESTEL Analysis of P&O This is strategic tool that helps in analysing external factor and their impact on the performance of the company. Political:This factor has been affect company performance directly and indirectly. It includes laws and polices implemented by government and the authorities.During the time of pandemic there is policy of restriction on trade has been affected and due to company has to suffer huge loss.There was no export and import locally and internationally as well as most of the country has made act of closing this sector. Along with this, change in law affects the profitability of company in negative manner. Economic:This factor is consisting of Tax and interest rate in the market area and it affect the company revenue. Although P&O has been operating in market of UK and GDP rate of country is good and due to that it is able to earn good profit(Nair and Reed‐Tsochas, 2019). Along with this, due to good economic condition the income rate of consumer is also good and it generally spend more on purchasing and buying of products. Social:This factor is consisting of taste and preferences as well as segmentation of customer. Moreover, P&O industry generally focus on companies that have international connection as their main work is export. In addition to this, Technological:It is one of the fast disrupting in many companies across the board and it is very beneficial for transporting companies. Along with this, the organization is making use of various advance tools in order to maintain their functional unit appropriately as well as to increase their growth rate. Moreover, it has been making use ofonline website which allow customer to book for the ferry or track the status of theirparcel. (Nuseir and Ghandour, 2019). Although this factor impact on value chain of the company as well as cost structure in positive manner. Thus, it is important for the organization as it also impact on the product offering. Environmental:The organization is following CSR activity in order to develop the backward area in the environment as well as to attract customer. Legal:The company is following laws so that it can protect the intellectual property rights of company. It is necessary for the company to evaluate the legal structure so that it can protect the
organization from theft of intellectual property or intervention of government.The firm is following employment law andconsumer protection act’s Porter Five force It is known as holistic strategy framework which allow organization to take strategic decision by analysing the present competition in market. Along with this, P&O have various rivalry such as Air delivery and freight services industry. Although the manager of the company can make use of this tool for exploring the profitability of firm in wholeservices sector. Threat of new entrants: There are many logistic companies in the market area such as Air delivery and freight services. They are brining innovative ideas to conduct business and putting pressure onP&O company through making use of low pricing strategy, providing new values to customer and reducing their cost by using advance technology(Qamar and et.al., 2019.). Thus, P&O has to manage all these challenges and build effective barriers to reduce the competition. Although company can make use of innovative service to attract new customer. It can also build their economic scale in order to lower the fixed cost as well as spend money on research and development so that new market trends can be analysed. The company has to keep defining their standard regularly as it will discourage new players in the industry. Bargaining power of suppliers: Most of the companies dealing in logistic purchase their product from various supplier in order to run their business and provide quality services to the customer. However, if the suppliers have high power then it can decrease the revenue of P&O in the market. Power supplier use their negotiation power to extract higher prices from company involved in logistic(Radwan and Farouk, 2021).Thus, the overall impact of higher supplier’s power leads in lowering down overall profitability of freight services. Thus, in order to deal with P&O has to build efficient supply chain with multiple supplier as well as it can experiment with product design using different material so that even if there is increase in price of one raw material it can shift to another. Bargaining power of buyers: Customers are most demanding and it want to buy the best offering at lower price as possible. This put presser on P&O profitability in the long run as higher the power of consumer higher
their ability to seek discount and offer. The company can deal with this issues by building large customer base as it will be helpful in reducing the power of bargaining and provide an opportunity to the firm for increasing the sales and production process. Although organization should keep coming up with new product as customer is seeking for discount and innovative product will limit the bargaining power of buyer. Threats of substitute products or services: When an alternative product or service meets a similar customer needs in different ways then industry suffer in loss(Ruan and et.al., 2019). Thus, P&O by being service oriented rather than just product oriented as well as by understanding the core needs of the customer will help the organization in connecting with them. Rivalry Among the Existing Competitors: If there is high competition in the industry, then it will drive down prices and decrease the revenue of company. Along with this, P&O operates in competitive environment and it affects the performance of the firm in market area. It can be deal with it through building sustainable differentiation as well as collaborating with the competitors to increase the market share. Furthermore,Triple Bottom lineis known as business concept that force company to measure their social and environmental impact as well as financial performance instead of focusing on generating profit or the standard of bottom line.Along with this, it has been divided into three part such as Profit, people and plant. The business is first committed with profit and that can be achieved by using strategical tools and planning(Shrestha, Ohand Kim, 2021). The second commitment is toward people as they are the key source of running the business effectively. Although the third is making positive impact on plant. Along with this, it is important for business because it allow firm to have financial benefit by committing to sustainable business practices.Moreover, thus three pillar can contribute in change as business is dynamic in nature and any change in these factor will increase of decrease the performance of firm as these factors are key reason for running the business. Drivers of change Tambe, Cappelli and Yakubovich, (2019)has define two drivers of change such as CSR and social change and it affect the business in both positive and negative way. Along with this, CSR is known as responsibility of firm towards uplifting the backward region of the society or
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increasing the environmental practices.These activities docreate change in business as it allows the firm to earn huge profit through following sustainable business. It is a driver of change as most of the customer usually interested in organization that deal with such services. Thus, CSR helps the company in building good brand image and to connect with the audience.. (Minhas and et.al., 2020)CSR activities allow in building trust with their employees and keep them align with brands that adopt sustainable manufacturing and embrace ethical business standards.It also contributes in boosting the moral of employees which lead in greater productivity as well as increase customer retention and loyalty.Thus, it is a thoughtful practice that help organization in increasing the sales and performance by attracting skilled employees and access capital through investor. England and Hershberger, (2020)has stated about globalisation it the process world is connecting and due to that there has been increased trade a cultural exchange. It has impacted businessin positiveway such as technologicalchange which hasimproved the way of conducting business and made it more smooth. Due to use of advance technology it is easy for organization to understand the taste and preferences of customer through one click. It has also helped company in increasing overall profit of the organization through providing new marketing strategy. Although with help of digital marketing company can now access to have information of world business and it can share their details about their services on various social sites which helps in increasing their market share. In addition to this, technological change has improved the standards of machinery used by the companies. Moreover,Khim and et.al., (2019)has stated that globalization leads to increased competition in the market and it can be related to service cost, target market and quick production.Thus, there has been various changes due to globalisation like increased transport of goods and due to that there has been result of emission. It contributes to pollution, climate change and significantly impact of biodiversity. However, globalisation allows companies to find lower cost ways to produce their products and it increased global competition which lower down the price and generates large variety of choices for customer. Change affect P&O The driver of change is has affected P&O Ferries in positive and negative manner like CSR activities has allowed the organization in attracting large customer as well as building good brand image in the market area. However, conducting this activity not only increase revenue but also extra expenses. Whereas in case of Globalisation it has helped in company to adopt for
technological change like digital marketing or making use of advance tools and techniques. Although due to high competition firm has to come up with innovative idea so that it can attract customer and sustain in the market area. Impact on the needs of the stakeholders Stakeholders are necessary for the company as it contributes in success of firm by taking strategic decision and it also influence the objectives of the business. Along with this, they are important in company as it look for the requirement of operational level such as customers and employees. Although P&O engage with their stakeholders during the transition process so that it can set out the strategic objectives of firm easily (Lin and et.al., 2018). The change in the firm has been implemented through communicating with the stakeholders and aligning their personal goals with company. Moreover, P &O has made a change management plan in which mission and vision of the company was described and all the changes like making use of cost effective technology has been implemented in the company.In addition to this, currently company has removed more than 800 employees in order to cut down the price it was the major change made by P&O. Change influenced the type of decision Furthermore, change influence the type of decision taken by the company such as if there is opportunity available in the market them P&O has to develop new marketing strategy so that it can grab that opportunity. Although change in the values also influence the decision of company such as in case of P&O it diminish 800 employees without the notice period and trying to replace them with cheap worker. It is ethical change for the company as it has not been looking after their employees as compare to their shareholder (Mihai and et.al., 2021). Due to this change there are high chance that company may suffer loss as it need technical and other expert in order to run business.However, it has advantageous for company as it acts as cost saving strategy becauseall the new employees will be exempted from UK employment law and P&O can now pay below minimum wage rate but it is fulling the criteria of International Transport Workers Federations. In addition to this, the current strategy adopted by company will not be very beneficial in long run as it is necessary for the organization to have expert and large human resources as it contributes inexpanding business (Nair and Reed‐Tsochas,2019). Moreover, it will lead to sustainable growth as company will be saving the extra expenses and it can be used in conducing
other activities. However, it is an ethical concern that organization should give importance to their employees as compare to share holder as they are also important for the growth of the company. According to law also before terminating employee it is mandatory for organization to give notice period to them so that it can able find other job. Changes important for P&O Ferries Being one of the UK's leading ferry operations in order to build and maintain its position in the market has to make various modification sin its operations. Furthermore it is observed that the company is exempt from complying to the provisions of the employment law. In order to retain the employees and best talent in the company it is necessary to pay the wages according to the efficiency of the workers. The company is required to make various changesin its organisational structure and delegate the responsibilities to the workers who are capable of performing the relevant activities. Demonstration of good ethics Business ethics refers to the study of various policies and procedures that is related to the controversial projects which includes the corporate governance , discrimination , bribery etc. In order to effectively operate the business it is necessary for the business to follow the good ethics. It was observed that the company did not follow the principles of the goof ethics as they lay off more than 800 staff members and replaced it with the cheap agency workers which resulted in to discrimination among the employees and also violation of the policies of the company(Setiawan, and et.al.,2020). BY following the various good ethics which involves trust, loyalty with the employees and communication which helps in achieving the goals of the company and also helps in eliminating the legal issues which can impact the functioning of the company. Carroll’s pyramid for CSR Carroll's pyramid refers to the frameworks that defines how the organisation manage the social responsibility and highlights four stages in this regard: Economic responsibility:This is lowest pyramid which represents the first responsibility of the companythat is to be profitable. It is considered important in order to produce the goods it requires financial resources. P&O Ferries has to focus on making various improvement in its business for better customer experience.
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legal responsibility:Although the company is exempt form complying the provisions of the UK employment law but it should follow the safety and health relatedlaws for the security of the customers. ethical responsibility:From the case study it was observed the company is not following the ethical standards as they laid off many of the employees and hires cheap workers in order to reduce the cost that is incurred on the salary of the employees(Lu, and et.al., 2020) . Philanthropic responsibility :Various business have been criticisedfor the carbon footprint which includes pollution and preserving the environment , the companyis required to focus on providing services for the welfare of the society Evidence to show that P&O Ferries did not respond positively From the studies it was observed that the owner of the company accepted that they broke the provisions of the law by not consulting the workforce regarding the redundancy as it is the responsibility of the company operating in any sector has to comply with the respective that is covered under the act .This has negative impact on the customer base of the company as many of them cancelled their booking resulting into impact on the reputation of the firm. Opportunities that P&O Ferry has and strategies The opportunities that is faced by the P&O Ferry is that to make further investment and opt for strategic alliance ion order to expand its business and also further focus on asset expansion along the South America's west coast. Furthermore the company can include the HMM in the alliance for successful growth of the company. In order to achieve the opportunities it is necessary for the company to evaluates its current prosecution in the industry and also focus on the reducing their cost(Preston,and et.al.,2020) . It is also required to collect the necessary information. Advantage and disadvantage of stakeholder interest Advantages:The benefit is that stakeholder have business experienceand are the members of the company i.e. board of directors which are not generally involved in the affairs of the company but provides a bigger picture such as introducing long term plans(Shaik, 2019) . Disadvantage:It has been observed that many people put their personal interest on priority rather than thinking about the goals of the company which can impact the company and its profitability and also fear of operating the business which can be due to lack of communicationand proper planning.
Communication in P&O Ferry In order to effectively operate the business , the management is required to have proper communication with their employees as well as the customer or passenger to whom the services isbeingofferedwhichhelpsinunderstandingtherequirementsanddeliversservices accordingly(Radovic Markovic, 2018). It was observed that the company company lack effective communication which resulting into facing various crisis and it is need to implement effective practices in order to improve the communication . Challenges of cross culture barriers Every person belong to different cultures and belong to different background which results into facing various challenges regarding the cross culture which includes: 1.Barriers related to communication 2.Barriers related to language 3.Behaviours and belief Strategies for effective communication In order to overcome the challenges that is faced by the manager with their employees can result into affecting the productivity of the company. In order to overcome this situation it is necessary for the manager to create favourable environment at the workplace and also introduce open communication which help in communication with every members and respecting their cultural and belief(Morrison-Smith, and Ruiz, 2020). On the other hand in order to overcome this issue it is also necessary to develop the habit of listening the opinions of the other which can contribute in overcoming the cross culture communication at the workplace. Recommendations It is necessary for the company to ficus on introducing new changes within the company as it helps in the growth and expansion. It is recommended to the company to focus on adopting positive ethical approaches as it will help the company to build its image and also the customer base in the competitive market(Mikhaylov, and et.al., 2018). In addition to this the company is also required to comply with the various laws and regulations that applies to the company. In order to manage the resistance to change it is suggested to the company communicate the benefits of such changes within the company after evaluating the market environment and impact on the business.
CONCLUSION From the above report it has been concluded that management issue arises due to change present in external and internal environment of the company.Along with this, study has depicted about the way change helps in taking strategic decision which helps in taking competitive advantage.Moreover, the present report has also analysed about PESTLE and Porter five force that contributes in identifying the change.In addition to this, report has also depicted about drivers of change such as CSR and Globalisation and its impact on P&O and their performance.
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