Strategic Management Overview of FirstGroup plc - Essay Example

Business Report for First Group PLC The C.E.O, First Group PLC Type Here, Marketing Manager Strategic Management Overview! First Group PLC is one of the leading operators in the transport industry in the UK and North America. It prides itself in providing services to almost 2.5 Billion passengers each year. First Group PLC is known for providing excellent services in Student Transportation, Public Transport, and Ancillary Services to Transportation Companies. This group is also known for providing excellent intercity transportation facilities for goods and passengers. Under the dynamic leadership of Mr. Martin Gilbert, the group is going from strength to strength and has been able to achieve considerable growth in both, revenues and market shares. As of 2009, the group earned the annualized net profit of around 6 billion pounds, which is a growth of around 31.4% from what the company earned last year. Similarly, this group has remained unaffected by current global economic backdrop, which is an amazing achievement by the company. In the future, the group also wants to maintain its market leader position and wants to expand its operation to the global market. The company wants to develop a new business plan which should not in any way ignore the aspiration of stakeholders. Stakeholders can be any group or an individual that has a stake in the organization's performance. In simple words, any one within or outside the organization who is affected by the decision taken by the business is known as stakeholder. First Group's stakeholders are its shareholders, employees, government, customers and its board of directors. According to Richard Daft, shareholders are those people who own the business and have invested the money in the business. So they would like the business to make decisions which are going to increase its profitability and lead to rapid growth of the business. Similarly, First Group's decisions are also going to affect its employees, in some way or the other. First Group PLC's decision to downsize can result in loss of job for some of these employees. First Group PLC's working policies and pay-rate is another factor that is going to affect the employees. Government might be interest in the decision taken by First Group PLC because if it earns good profit, it will result in revenue for the government in the form of taxes. Similarly, government will want First Group PLC to flourish not only because it will result in revenue collection for the government, but also because it will provide employment opportunities in the economy. Customer will affected by the pricing decisions of First Group PLC. Board of Director will be interested in growth decision of the business because their salaries may be dependent on the size of the business. So they would like the owners to plough back earned profit back into the business for the purpose of expansion and this could lead to conflict of interest between various groups of Stakeholders. (Daft, 1997) Business aim is the future-vision of the business, which can be anything that the business wants to achieve in the future or the reason behind its existence. The major aim of First Group PLC is the transforming the way people travel and changing their perception about the public transport by providing people with safety and luxury and in doing so becoming the leading company of the world. In general terms, Business objective is a business strategic position that it is trying to achieve through its activities and policies. If we look at the business objective of First Group plc, we can say that it is aiming toward higher market share by offering distinct services like safety travel and other features which are not present in conventional transport companies. Another business objective of First Group PLC is rapid growth and in doing so, it is increasing the value of investments of its shareholder by increasing the market-price of the company's stock. Many businesses carry out SWOT analysis to focus on the internal strengths and weaknesses of the businesses and how they affect the business when combined with outside factors i-e Opportunities and Threats. If we apply this technique to First Group PLC, we will get following results. STRENGTHS: Leader in transportation industry in the UK and North America. Excellent leadership provided by dynamic leadership of Martin Gilbert Flexible operating model, can quickly match supply to any changing demand Weaknesses: Organization has become very large and diseconomies of scale may set in the future Operations management is not highly computerized and this sometimes results in wastage of time. OPPORTUNITIES: Increased demand for public-transport industry due to hike in oil-prices Government spending in the sector to develop better road and bus networks THREATS: Increased awareness and calls for environmental friendly buses may raise the expenditure for the firms in this sector This industry is becoming highly competitive and many firms in this sector are exposed to intense competition PESTEL Analysis are carried out to identify the environment influence on the business of various factors which affect the businesses in someway or the other. For First Group PLC, the political situation does not affect the business much. However, recently the newly elected political government of the UK has decided to invest in the sector. This investment is going to be very useful in the development of this sector and is going to affect the firm positively. So one can easily, conclude that this sector is benefiting from the current political environment. If we look at the current economic scenario, the business might not fare well due to prolonged recession in the market. However, the firm is not badly affected by current economic crisis and this factor is not affecting the firm negatively and it is continuing to grow at a $fast rate. The social environment is also benefiting the company well. The increased demand for public transport due to price hike has resulted in growth for the company. Also the increase in the company's investment in school buses fleet is going to be a wise investment because of increased awareness among masses for education and the use of these buses is going to increase and the firm's profit will increase over time. We can combine the current technological and environmental pressures on the company and can look at it from one lens. A technological advance has made it possible for these companies to develop environment friendly and efficient buses. This has also increased the demand for public transport due to low-fare of these buses. If we look at the legal environment, we can see that there are far more restraints levied on the companies operating in this sector. There are fines on the companies who are not punctual or emitting more fossil fuels in the environment. Similarly, it is mandatory on theses buses to pass a fitness test and these restrictions are going to affect the firms in a negative way but it would protect the public interest and in the future may make these service more reliable and could possibly increase the customer turnout, which is going to be beneficial for the company in long-run. Generally defined, strategies are the plans for action that the firms take to attain their objectives and to counter their weaknesses and threats. The two most viable strategies that First Group PLC can take are that it can increase its profits by eliminating diseconomies of scales. This can be eliminated by the strategy of keeping check and balance on the operation of the company and eliminating any in efficiency. Another strategy that First Group PLC could use to achieve its objective of increasing their market share is by differentiating their services from those of their competitors. They can do this by providing security in their buses as they are planning to do. Customers value safety and security and this could take the firm to new heights. In the light of above discussion, we can safely conclude that First Group PLC is undoubtedly the market leader in the transportation industry of the UK and North America. It is also focusing on new strategies to grow even further. Looking at the internal and external environment, we can identify some weakness and threat that may stunt the company's growth in the future. First Group PLC can easily counter these weaknesses by implement proper strategies and eliminating them from the root. This may require hectic effort by the management and the employees of First Group PLC, but it will also result in a future growth for the business and it will further fortify their position in the industry. Reference: Richard L. Daft. Management, 4th Edition. The Dryden Publications (1997) Read More