Business Environments - Essay Example

?BUSINESS ENVIRONMENTS Question Introduction Scenario planning which is also referred to as scenario analysis or thinking is a process through which companies lay strategic plans in order to survive in the competitive business environment. Hanafizadeh, Kazazi and Azam (2011) assert that in scenario planning, various scenarios are considered in the decisions of company management which involves making long term plans for the organization. Managers consider laying plans which are flexible enough to enable the company to adapt to the changes in the legal, economic, political, social cultural and environmental scenarios within a market. The role of scenario planning is to remove the uncertainties which face the business processes as explained by Mason (2003). In this regard, it is explained that scenario planning enables managers to make flexible long term plans which enable an organization to make use of the business opportunities in the business market while reducing the risks associated with the various uncertainties of conducting business in a competitive environment. This paper gives a critical analysis of the various scenarios which managers of an organization consider in scenario planning with an aim of illustrating how this planning enables organizations to survive the competitive global business environment. According to Mason (2003), scenario planning begins with the decision of company management on the most suitable and most appropriate drivers which enable the organization to make the most effective changes for the survival of the uncertain business environment. The re many assumptions which face the business process which include assuming that the social cultural scenario of conducting a business is not likely to change in the near future. Nonetheless, the global business environment is characterized by increasing diversity in business environment especially within the work force. In this regard it is necessary for the organization to lay strategic plans which will enable it to meet the changes in the social cultural scenarios of business operations. Schoemaker (1995) argues that the diversity which is likely to affect the organization is the fact that globalization is causing cultural diversity in the employees. As such organizations must decide on necessary changes within the organization which will enable it to meet the demands of the culturally diverse work force. Mason (2003) points out that the human resource are the drivers of change within an organization, as a result, the management must make decisions which will ensure that the strategic plans meet the needs of the organization. Such planning must be within the social and cultural scenario of the business environment. This is to ensure that the social needs of the employees are met by the organization. These needs include a suitable working environment and a communication and relationship enhancing working conditions. Schoemaker (1995) exemplifies that strategic decisions and planning of adoption and implementation of technological techniques which will enhance the communication process of the work environment. This means that the employees or subordinates will be allowed to have an enhanced communication and relationships among themselves and the management. This is a process of a social cultural scenario planning through a planning process which ensures that suitable decisions are made to enable the employee needs to be met in the most suitable manner. Hanafizadeh, Kazazi and Azam (2011) explain that the importance which is made on the employees as the drivers of change is attributed to the fact that the workforce of any organization comprises of the most important stakeholder of business success. This is demonstrated by the fact that it is the employees who enable organizations to achieve innovation, creativity and increased production and thus competitiveness in the business environment. Tenaglia and Noonan (1992) assert that in scenario planning, companies must bring the drivers of change together and thus create a viable framework which will enable the organization achieve its needs for success within its market. In addition to the employees, the drivers for change or an organization include the management, the investors, suppliers and distributors as shown by Mason (2003). These are the stakeholders of an organization who also include the community and thus play different roles in bringing positive change within the organization. Nonetheless, it has been argued that a company’s systems for business processes are the most important drivers of change. These include the hardware and software applications, procedures, policies and processes of conducting business which motivate positive change through increased and enhanced productivity (Schoemaker, 1995). In scenario planning, the drivers of change within the economic, social cultural, political and environmental scenarios must be brought together through accommodative strategic plans. In order to bring the drivers of organizational change, scenario planning ensures that the stakeholders of the organization or company are enabled to make positive contributions for the success of the business operations. Hanafizadeh, Kazazi and Azam (2011) illustrate that the contributions of the stakeholders are the drivers of change must be planned in a way that they are focused at attaining a common goal or objective. In this regard, the decisions of the management team must accommodate the strategic roles that the various drivers of change play in the success of the operations of the company. For example, the economic scenario of business environment ensures that the employees are well compensated and thus motivated for increased productivity. Additionally, the planning of the economic scenario must ensure that the investors as one of the stakeholders and drivers of change are considered in terms of transparency in provision of returns of their investment. This will in return attract more investments and thus growth of the business. Mason (2003) elaborates that the drivers of business change can be brought together by ensuring that there is proper communication and coordination of all stakeholders within the supply chain. This is more important for internationalized or global businesses in which the drivers of change must be coordinated properly to ensure that they work toward the achievement of a common goal. Within the larger scenarios within the business environment, mini scenarios must be produced in the process of scenario planning. Tenaglia and Noonan (1992) explain that the larger or main scenarios within the business environment cannot be achieved if the mini-scenarios within the organizational activities are not met. For example, the larger legal scenario in the business activities can only be achieved if the mini scenarios in terms of policies and procedure of conducting business are not achieved. In this regard it thus makes sense that the planning of organizational adaptability to the uncertainties of business environment includes flexible policies and procedures for conducting business. Mason (2003) demonstrates that policies and procedures of business activities are mini scenarios in a business which must be planned for flexibility and suitability to the possible changes in the legal business environment. Additionally, the economic mini-scenarios include the benefits which employees are rewarded with such as flexible working hours, holidays and bonuses. These mini scenarios are within the larger economic scenario of compensation in terms of salaries. It is thus necessary that the scenario planning of the economic environment considers the mini economic scenarios of compensating employees through benefits. This will reduce the employee turnover and retain employees which are important drivers of positive change and survival in the business environment. Hanafizadeh, Kazazi and Azam (2011) say that scenario planning also involves reduction of the many scenarios into about two or three crucial scenarios which play the most significant role in the achievement of business success. Therefore, the strategic planning of the organizational management must focus on the most important scenarios which would help the organization to survive the uncertainties of the globalized business environment. Schoemaker (1995) illustrates that the social cultural and economic scenarios are very important for organization and their endeavors to achieve flexible survival in uncertain business environment. This is due to the fact that business survival is dependent on the ability of a company to survive the uncertain changes in the social and economic environment (Mason, 2003). Conclusion The inevitable uncertainties in the business environment as attributed to the globalized economy mandates the management of companies to make suitable scenario plans for survival. The management must begin at deciding on the most effective drivers of business change and then bring these drivers together for success. This involves the inclusion of all stakeholders of the business in the achievement of success and attainment of a common vision r goal. Mini scenarios must also be considered in the scenario planning as they are internal factors which determine the achievement of global scenarios. The planning process then is followed to the reduction of the possible scenarios into two or three of the most important scenarios for flexibility and survival of the changing global business environment. It is however conclusive that scenario planning must be end with writing the scenarios and the possible issues which arise in order to achieve successful implementation of the plans for business survival. Question 2 Introduction Stakeholders of a company who include employees, investors, suppliers, management, distributors and the community may be opposed to possible takeovers by a larger company. The opposition which the stakeholders would have to takeovers of a company is normally motivated by the need to safeguard their investment into the company. Additionally, the employees may be opposed to the change of management which would emanate from the takeovers. Kale, Kini & Ryan, Harley (2003) defines that the process of takeover prevention and application of measures is referred to as takeover defense. Moreover, the economic and social benefits that would be lost due to a takeover can be prevented by the implementation of preventive measures. In this regard therefore, it is postulated that appropriate measures must be taken to ensure that the company is protected from takeover by a larger firm or corporation. This paper presents an analysis and critical discussion of the various measures which should be taken by a company to prevent takeovers especially when the stakeholders are opposed to it. Through a stakeholder’s right plan, takeovers can be prevented by a company. Easterwood (1998) explains that this measure involves drafting a plan that demonstrates that stakeholders have the right of purchasing more stock of the company at discounted prices. Through this measure, the company which wants to takeover finds it hard to take control. The drafting of the stakeholder’s rights plan is usually done at the event of announcement of a larger company of its intentions of taking over the smaller company. This takeover defense has been described as the most appropriate measure of safeguarding a company from takeovers. Additionally, it is postulated that the stakeholders of a smaller company are enabled to retain their ownership of the company while they exercise their rightful rights (Weld & Price, 1998). The drafting the stakeholder’s rights plan is a takeover defense which becomes necessary when the value of the company is not intended to be lost to a larger company and thus the need to retain ownership and control of the company’s assets and resources (Kale, Kini & Ryan,Harley, 2003). To prevent a takeover into which the company stakeholders are opposed, the company would draw a voting rights plan. Borer & Hohn (2000) illustrate that the voting rights plan involves barring of stakeholders who own more than 20% of the company’s stock from voting on matters of takeovers. This is due to the fact that stakeholders who have large percentage of company ownership normally form alliance to the company which plans to takeover. Additionally, the stakeholders with large percentage ownership would be subsidiaries of the company which wants to make the takeover (Kale, Kini & Ryan, Harley, 2003). Through this takeover defense strategy, the major stakeholders would be prevented from demonstrating their support for the acceptance of the takeover bid. Hanly (1992) further reveals that the voting rights plan is designed to ensure that it is the majority stakeholder vote which accounts towards the acceptance or rejection of the takeover bid. If stakeholders of the smaller company are opposed to the takeover by a larger company, the voting rights plan will play a vital role of preventing the larger company from taking control or complete ownership of the business and resources of the smaller company (Weld & Price, 1998). Increasing the bid for takeover to unmanageable amount is one of the strategies which the management of a company can use to prevent takeover by a larger company. Kale, Kini & Ryan,Harley (2003) explain that this strategy or takeover defense is most appropriate when the stakeholders of the company are opposed to the takeover of the company by a larger company. A larger bid will mean that the larger company will be discouraged from its plans of taking over the resources and business activities of the smaller company. In this regard the management will enable the stakeholders of the company to meet their needs for retained control of the business operations of the company. The bidding companies for the takeover will make a financial evaluation of the financial viability and since the bid is exaggerated, they are most likely to decide not to proceed with the takeover and thus fail to pay for the takeover. Conclusion The opposition that stakeholders demonstrate to possible takeover of the company by a larger company is usually motivated by their need to safeguard their interests in the company. These interests include security of their investments, the need to retain the assets and resources of the company, social cultural benefits and the need for control of the operations of the company (Borer & Hohn, 2000). As a result of the opposition that stakeholders have for the takeovers that a larger company plans to achieve over the smaller company various takeover defenses are employed. These are the strategies which are taken to prevent the takeover and the most commonly used measures include designing a stakeholder’s rights plan, drafting a voting rights plan and exaggerating the takeover bid. Through these measures the stakeholders of the company are allowed to retain their ownership and control of the company’s resources and assets in addition to the social and economic benefits which they accrue from the company. Question 3 Introduction Corporate silos refer to creation of communication barriers within an organization which prevents of information and sharing of ideas between individuals and departments. As a result of these corporate silos, an organization and its functional areas and resources are prevented from working towards the achievement of a common goal. Britt (2005) shows that the disadvantages which are associated with corporate silos such as information silos include reduced efficiency, effectiveness and the overall productivity of an organization. Therefore, organizations have implemented various measures which would be effective in the breaking of the corporate silos which are formed within the organization with an intention of increasing efficiency in communication and collaboration of individuals and business functionalities. This section of the paper presents a critical analysis and presentation of the possible causes of business silos within companies and organizations and the solutions which can be implemented to prevent the negative effects of the formation of corporate silos. According to Renda (2006), barriers of collaborations within an organization are the most causes of the development of corporate silos within companies or organizations. Such barriers emanate from ineffective leadership approaches which are less supportive to a collaborative strategy of conducting business activities. Lack of collaboration within an organization leads to failure of individuals to share ideas. This causes reduced creativity and innovativeness within the business activities such as production and service delivery (Reynes, 1999). In order to achieve increased collaboration within a company, it is recommended that collaborative endeavors are rewarded by the management. Renda (2006) adds that teamwork and an appropriate people centered leadership approaches are effective strategies of increasing collaboration within a company. This would thus prevent the development of corporate silos within the company’s operations. Sparrow (2006) points out that lack of transparency in communication and decision making is another major factor which leads to the development of corporate silos within a company. It is in the light of this assertion that it is evident that the failed communicability within an organization is the cause of the reduced motivation among employees which leads to reduced performance in work activities and thus reduced productivity. When decisions are made without transparence and proper justification through an enhanced communication process, then it becomes hard for individuals and departments to collaborate in the achievement of a common goal. To prevent such silos from developing within an organization or company, it is recommended that communication is enhanced within a company through implantation of information and communication technologies. Renda (2006) further recommends that the management team must be more transparent in making decisions in addition to encouragement of a two way communication with the employees. As a result of the application of such measure corporate silos will be broken down or prevented from developing within a company. Sparrow (2006) demonstrates that diverted focus within an organization such as reduced customer focus and innovativeness in production and service delivery leads to development of corporate silos within an organization. If organizational focus is towards the fulfillment of the needs of the customer, it is more likely that the organization will collaborate in the achievement of the need of the consumers. In return corporate silos will be avoided. Additionally a focus on innovativeness for increased quality of production and service delivery would lead to an enhancement of communication and collaboration within a company to achieve objectives and the needs of the customers (Sparrow, 2006). It is thus recommended that innovativeness of employees is rewarded and their focus developed towards the achievement of the needs of the customers. Through this approach, it would be possible to prevent corporate silos from developing and breaking them down in case they have already developed. Conclusion In the light of the above discussion and illustration, it is conclusive that corporate silos and the related negative implications which they have for the business success can be prevented by a company. Corporate silos develop when there is lack of collaboration and communication within a company. Additionally when they is no transparency in decision making in addition to reduce focus on the customer and innovativeness, corporate silos are likely to develop within a company. It is the reduced productivity, innovativeness and quality of service provision which emanate from the development of corporate silos that companies must endeavor at preventing them from occurring. It is thus recommended for organizations or companies to employ appropriate strategies such as reward system for collaboration and innovativeness and effective leadership approaches which encourage team work and collaborative decisions making that corporate silo can be avoided in a company. Question 4 Introduction Even though majority of company mergers and acquisitions have been shown to fail, it is notable that many companies and organizations are engaging in this business strategy as the most appropriate approach for business growth. Mody and Negishi (2001) explain that the benefits that companies achieve through mergers and acquisitions are the motivators for the adoption and implementation of this strategy regardless of the possible chances of failure. Through mergers and acquisitions many companies have achieved business growth and success within the competitive environment. This part of the paper gives a critical evaluation, analysis and discussion of mergers and acquisitions as a business strategy for business growth with a view of illustrating the reasons why companies engage in this strategy despite the possible chances of failure. Nogeste (2010) shows that companies employ mergers and acquisitions as the most effective business strategies for growth in the market. Strategic plans of companies include strategies of growth and this includes the need to enhance and increase the share that the business has within the market of its products and services. When two companies merge their businesses through a partnership process, they share their respective markets and as a result each of the companies enjoys an increased market share. In the same line of illustration, acquisitions enable a company to achieve a larger share within the market. Regardless of the industry of operation, when a company acquires another company either through a wholly or partially acquisition, this leads to an increase of the market share. This means that the motivation of acquisitions and mergers as a strategic approach to growth is motivated by the need for increasing the customer base by a company. This is achieved by the taking over the market for products and services of an acquired company. Moreover, mergers enable a company to achieve a strategic growth of the market through having a share of the market which is enjoyed by the company with which a merger is achieved (Nogeste, 2010). More importantly, when a company needs to enter into a new market, it engages in an acquisition or a merger and thus enabled to meet its strategic plan as demonstrated by Collier (1993). All companies and business organizations endeavor to achieve a competitive advantage in the market. Steynberg and Veldsman (2011) illustrate that it is through mergers or acquisitions as a business strategy that companies are enabled to have an increased competitiveness in the market environment. This is illustrated that the acquisition of another company’s business resources is an opportunity for achievement of ability to compete favorably in the market through increased production. The growth which is brought about by a merger or an acquisition corporate strategy enables a company to compete favorable in the market (Mody and Negishi, 2001). Additionally, the acquisition of expertise of another company through an acquisition strategy means that quality and increased productivity is achieved leading to an increased competitiveness in the market. Furthermore, when a company forms a merger with another company, it shares the experience and skills of employees which leads to increased innovativeness and creativity. These are the processes which motivate companies to enter into acquisitions and mergers as a way of growing their ability to compete favorably in the business environment. Growth of companies is normally achieved through the introduction of new products and services into the market. This is motivated by the desire to meet the demand in the market and grow in terms of sales and return in investment. Collier (1993) elaborates that it is through mergers and acquisitions that companies are enabled to introduce new services and products to the market and thus expand their business activities which demonstrates a process of expansion or growth. Steynberg and Veldsman (2011) further illustrate that when a company acquires another company, it is enabled to take over the production process and thus introduce new products and services to the market in the most effective and efficient manner. Mergers are also a speedy way through which a company would introduce new products to the market. This is advantageous as compared to the installation of new production processes which would take a lot of time. In the light of these arguments, the processes of acquisition and mergers as a growth strategy of companies is justified regardless of the risk of failure which characterize these strategic plans for business expansion or growth (Dong and Hu, 1995). The modern business environment is characterized by the application of information and communication technology for business effectiveness and efficiency. The processes of adoption and acquisition of technological tools and applications is usually long and costly. Nogeste (2010) points out that regardless of the risk that mergers and acquisitions would result into, many companies enter into these strategic business growth approaches as a way of achieving a technological advantage. A company thus could acquire the technology of another company so that it could benefit from the advantage of operation efficiency and effectiveness which is made possible through the application of technological tools. Moreover, companies enter into mergers so that they would form partnerships which would enhance the achievement of technological advantage in the business environment. Through technology and its applications, information systems are acquired by companies which increase coordination and communication and thus improve the speed of business growth. Furthermore the acquisition of information systems and their implementation in the process of business management enhances the growth of the business through coordinated and effective supervision of the production and service delivery and thus increased productivity. More importantly technology promotes the speed and quality at which products and services are delivered to the consumers and thus increased positive growth of the company or organization. In accordance to Mody and Negishi (2001), companies enter into mergers and acquisitions irrespective of the possible failure because they are motivated by the improved profitability and financial leveraging which comes with such corporate strategies. The combination of the revenues of two companies which enter into a merger partnership means that the profitability of the companies is increased. This is due to the fact that the return of investment as demonstrated by the sales revenue of the combining efforts is increased. Collier (1993) adds that companies are motivated to acquire others so that they would increase their profitability. This is achieved by the acquisition of the sales of a company and thus increased revenue on the sale of various products and services. Through an increased market share, the companies which enter into mergers and acquisitions are enabled to make more sales and thus increase their productivity. It is in the light of these arguments that it is demonstrated that companies are made to have an enhanced financial leveraging through engagement in acquisitions or mergers as the most suitable business strategies for growth. Dong and Hu (1995) demonstrates that through mergers and acquisitions companies are able to grow in terms of financial returns in investments. Conclusion The benefits which companies accrue from mergers and acquisitions as strategic corporate plans for growth are the motivators of the implementation of these strategies for business growth. Through mergers and acquisitions, companies are enabled to grow their share in the market and thus increase their customer base. Furthermore, the justification for mergers and acquisitions as a corporate strategy for growth is demonstrated by the benefit of improved financial leveraging through increased sales and thus growth in the sales revenue. More importantly, the need for adoption and implementation of information and communication technologies in business activities is a major motivation to entry of companies into mergers and acquisitions. Through such mergers or acquisitions companies are thus enabled to benefit for the efficiency and speed which is achieved through the use of technology. A competitive advantage is also achieved through mergers and acquisition. This is through quality of products and services which is achieved through mergers or acquisition of skills and experience of company expertise or employees who are innovative and creative. It Is in the light of the above explanations and illustrations that it is conclusive that companies are persuaded to enter into mergers and acquisitions for growth despite the related risk of failure of such corporate strategies. 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