Business organisations are those that carry out activities which helps them to earn profit. In any business, there are various internal and external factors that directly influence the functioning of the company either in a positive or in a negative way. This impact must be assessed so that strategies can be planned by the company in an effective manner.
Prepare a report on “Business Organisations and Environments in a Global Context” taking “Ryman The Stationer Ltd” which is a retail industry situated in UK which is a retail company UK. For this, you need to answer the following questions.
- Detailed information of the organisation selected.
- Discuss the allocated environment of the business.
Business organisations and environment emphasise on the concepts of managerial theories and carries mission, vision and goals with them. In this report, there is focus on Ryman The Stationer Ltd which is a retail company UK and wants to expand its operations in Poland. There are various issues including internal and external factors which it has to face while expanding its branches in Poland. Its business environment including customers, employee’s supply and demand as well as regulations would get affected according to its structure and country's rules, regulations will also affect its operations (Halemba-Pawlik, 2017). Ryman The Stationer Ltd while expanding its business in Poland gets affected by economic conditions, fiscal performance of country, change in interest rates, cash and debts, business and operational risks, etc. In this report, there is complete discussion on foreign direct investment, external forces, types and sizes of organisation with major factors affecting business environment.
Ryman wants to expand in Poland because it has opportunities related to foreign direct investment in that market. Therefore, it wants to explore and capture market related to retail sector and wants to make its position in other country. In order to determine threats and opportunities, PESTLE analysis or Porter's five forces model can be taken into consideration so that organisation can analyse upcoming threats and sustain itself in the market. Ryman has to consider specific operational aspects while expanding it in Poland (Sitányiová and Masarovicová, 2016). FDI dynamics in Poland boosted up after recession. Poland has found Polish Investment and Trade Agency (PAIH) to overcome situations of FDI. This would further attract companies to invest there and expand globally.
1. Background information of company
Ryman The Stationer Ltd is a stationery retail company in UK and wants to expand its branches in Poland. It provides stores and office supplies for businesses and generates revenue of 12.82 crores (Stefańczyk and et.al., 2016). Currently, 100-249 employees are working and it has 220 outlets nationwide in the UK.
Structure of company
Structure of Ryman is organisational which can be defined as hierarchy in which function, and each and every job is reported to the organisation. Ryman developed this structure so that it can assist and operate properly and achieve its goal for future growth. This organisational structure allows employees' growth and development of the company. Employee retention and recruitment are major aspects for successful operations. Employees in Ryman have promotional opportunities and job security which reduces recruitment costs (Doménech-Carbó, and et.al., 2017). If it would expand in Poland, then its organisational structure would permit growing its room there too. Several functions would expand, new divisions would grow and there would be additional functions in the management. Salaries of employees would be edited after expansion and structure would definitely get reorganized.
Nature of company
Ryman has separate legal entity and has its own seal and name. It is capable of borrowing money, incurring debt and entering into contracts with other companies. Members of the company has limited liability towards contribution of assets of the company. Thus, it is liable to pay uncalled sum of money even if the company exceeds its assets. Shares of the company are subjected to certain conditions and are freely transferable so that no shareholder is permanently adhered to company.
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International Operations: Foreign Direct Investment in Poland
According to UNCTAD 2017 World Investment Report inflow of FDI declined at USD 11.4 billion (Tang and et.al., 2015). It mainly focussed on professional and technical activities, information, communication activities, real estate and manufacturing industry. Poland has some special Economic zone. Ryman can expand in Poland because Polish economy has some benefits such as:
- It makes efficient use of European Structural Fund.
- It has an elastic banking system and strong domestic demand
- Ryman should invest in Poland because it is multilingual and has skilled workforce which provides cheap labour cost and thus increases productivity.
Financial performance: Ryman Stationery has been successful doing good as the focus of firm is on maintaining cost effectiveness in products and services. However, the organisation focused on maintaining optimum utilisation of resource and minimizing waste (Bednarz and Markiewicz, 2015). This strategy of business assists management in maintaining effectiveness in funds and budget plans.
It has reported growth and increased EBITDA of £2.4m (2016:£1.5m).
2. Background of Business Environment
Business Environment of Ryman can be determined through PESTLE analysis and Porter's Five forces:
Political Factor: Poland has some differences between coalition partners which is a reason of concern but has a very strong foreign policy. This is a positive factor Ryman to expand its branches. It has good relations with US, France, great Britain. Some economic proposals were also blocked by finance minister which is a controversial matter (Grondys and Dragolea, 2016). Thus, there can be some problems for business environment of Ryman. Political stability is strong in UK but Brexit is creating chaos here. It has leads to political debates and uncertainties. There is risk of currency fluctuations during process of negotiations that may influence retailers' performance. UK retailers have to confirm EU standards and trade regulations and policies while selling products to them. If there would be difference between policies and standards of UK and EU then retailers will get affected. Brexit checklist involves ensuring right financial investment strategies and monitoring legislative programmes. It will mitigate tax risks it will engage all external and internal stakeholders from all platforms. Thus, Ryman would be having long reaching impact on the ease of running business.
Economic Factor: There is close interconnection of the country with Eurozone which makes it compromising in all aspects and Polish economy is resilient in nature. Ryman can take advantage of strong banking sector because it is supported by flexible currency and its economy has been raised up to 3.91% in 2010 and 4.28% in 2011. There are many linkages of cross-border supply chains with other Euro countries which clearly means that there are chances of fluctuations externally in other European countries (Chromińska and Strojny, 2016). According to IMF, 75% of total FDI liabilities is dependent on European counterparts for investment and there is regular increase in investment by foreign delegates in government bond holdings which is a cause of concern. E-commerce is growing widely in the country.
Social Factor: There can be effect on activities of Ryman due unfavourable demographic changes in Poland but it is strong in terms of human development indicators. It has a ageing society and declining birth rate. Working age population as compared to total population declined from 71.3% in 2010 to 53.4%. Thus, Ryman can face low participation of youth in terms of employment.
Technological factor: Ryman can take advantage of Poland's emerging business process outsourcing hub but its innovation process can get hindered by low research and development expenditure. There are many Polish cities like Warsaw and Wroclow which have to outsourcing destinations (Cieslik, 2017). Major factor is that there is presence of qualified and educated labour force.. Therefore, Ryman won't face any problem regarding selection of qualified staff.
Visit this sample: Principle of Deontology
Environmental factor: Poland has endured environmental laws and its protection and development which has to be followed by each and every organisation. Country is in a process of developing new waste management policies and implementing Green Technology Accelerator project that focuses on innovative technologies of environmental protection.
Legal factor: Poland's government remain balanced among judicial, executive and legislative authorities (Maciejewska, Mrozowicki and Piasna, 2016). It has parliamentary system and a legal republic. Currently it is ranked poor in business environment which is a negative sign for establishing any business in Poland. Country demands six procedures and 32 days to start any new organisation which is a tough procedure. Therefore, Ryman has to go through various process and it would take time to establish business.
Porter's Five forces:
Buying Power of Customers: Buying power is moderate and it is due to losing individual consumers, its buying power will diminish. In Poland customers' demand keep fluctuating and they shop for best deal. Therefore, Ryman has to focus on customers. Buying power is also diminished due to existence of switching cost and leads to surrendering of policy which may be payable.
Supplying Power: Suppliers have their own patented and unique system and mainly includes software houses and ICT manufacturers. There is high level of competition among suppliers that reduce prices to producers which is a positive sign for Ryman.
Threat of Substitutes: Customers are not interested to switch from one market to another product or service (Gorynia and et.al., 2015). This clearly means that substitute products are inferior and could create much impact on Poland's market. This is would further result low costs. Customers compare less when products are different which is positive sign for Ryman.
Threat of new competitors: Ryman would definitely need resources, money and times to build its brand in Poland and compete with other industries. New competitors have to improve their brand value to compete efficiently if strong brands are critical to compete. It also has strong distribution network which satisfies customer demands on time.
Intensity of existing Rivalry: There is strong rivalry in the market as large companies like to merge with other instead of spending money and advertising among people.
Therefore, through PESTLE and Porter's five forces company's business environment can be examined in Poland.
3. Analysis of Business opportunities:
According to analytical approaches there are various business opportunities. Company experiences little financial risk and rapid growth. Managers and owners are much responsible for the success of their outlets so they would surely make efforts to rum their business smoothly. There is low start-up cost and qualified labour can be employees (Kosztowniak, 2015). Money invested on technology can be returned because it has good distribution network. Moreover, its business opportunities can be identified using Ansoff matrix Model:
Market penetration: it is act of promoting a new product through various strategies like advertising, lower prices etc. As discussed above, E-commerce is playing vital role in market penetration and has contributed 3.3% share which is less than European average. There is high Internet and mobile Internet Penetration and top products are sold online. Almost 40m customers shop online in Poland. Ryman can connect with customers and create customer relationship.
Market development: market development means identifying and developing new market for existing products (Wach and Wojciechowski, 2016.). It mainly focuses on non-buying customers. Poland is the largest recipient of investment and EU structural funds with 104 billion decided budget from 2014-20120. These funds would be further used in improvement of internet access, infrastructure facilities and empower industries to improve their research and development. It is also modernizing electricity generation and distribution management system and diversifying energy resources. Foreign direct investment is continuously flowing up with the total of €176 billion FDI. This has resulted in stable banking system with growth and innovation.
Product development:Product development means modifying existing products and formulating it into new one so that it satisfies consumer demands. Management team in Poland always meet customer requirements and have ability to develop personalised products with new designs which are aligned with markets and follow regulatory requirements. They develop and innovate new technologies, products with high range of approaches. Ryman, could work with its clients and analyse product modules and achieve outstanding results (Bednarz and Markiewicz, 2015). This includes reduction in cost drivers and recognizing optimal cost supply. Quality wise products are addressed and claims are limited due to fraudulent behaviour of dealership. Profit is drained if product designed is not managed properly and so pricing have to be compromised.. core competencies are defined which creates product development in Poland. Poland offers wide variety of investment incentives and open for business which is a positive sign for Ryman. Tax relief, government grants and access to European funds are equally available to terms and conditions to Polish and foreign investors. Ryman can find business friendly environment in Poland.
Diversification: Diversification means varying or enlarging of products in existing market. It is an attempt to provide regions with sufficient variety of industries. Poland industries are environment friendly and it has moved from renewable to liquefied natural gas. It is less reliable on geopolitical issues because of fluid delivery options (Chromińska and Strojny, 2016). It has diversified market for medium and small scale industries. It has developed economic diversification strategies initiating from small pilot actions to large changes in industrial base. Thus, Ryman can diversify its products following environmental and green strategy and take use renewable resources.
Finally, it is concluded that Ryman which is a retail company should plan some strategies and focus on Ansoff matrix model according to which every aspect is has its own significance. It should also analyse Pestle and examine political, economic, social, technological and environmental factors deeply. This report highlights that there are various challenges and drivers that can influence investment decisions of Ryman in the economy. Country's supportive government and strategic location strengthens its industrial activities. It has diminishing Current account Deficit, and trade deficit but high foreign reserves which is useful for market development and penetration. Whereas, it is also facing some social challenges like ageing population that could lead to increase in dependency ratio. But its diversification towards mobile penetartion and E-commerce is making market more diversified and outstanding (Cieslik, 2017). As discussed in the report, it has highly educated and qualified workforce so Ryman cannot face any problem regarding employees. Poland is the single country and EU economy which has showed positive GDP growth when all other countries were facing recession.
Further it can be said that while establishing a new business like Ryman has to go through some legal formalities which take time from Poland's Government side. There are some parameters included in the law which has to be completed like paying taxes, securing electricity, construction permits, registering policy, trading across borders, resolving insolvency and enforcing contracts (Gorynia and et.al., 2015). All these legal formalities take much time without which business cannot expand properly and take use of all possible resources. Rules and regulations are much higher in Poland as compared to OECD standards.
After analysing Porter's five forces it can be said that new competitors must study the market before entering into it and when the learning curve is high. It needs more money and time before they effectively compete with others. Poland has ranked among the moderate innovators and has weak research systems, entrepreneurship and linkages and intellectual assets which resulted declination in the collaboration of small and medium scale enterprises. There are trade unions which are main hurdle in way of restructuring of business and its privatisation. But it has developed stable and strong banking sector. Poland's bureaucratic and political system is considered to be corrupt so it is hindrance to foreign investment. Ryman can build a sustainable differentiation so that it can compete better and more appropriately. It should be service oriented instead of product oriented (Sitányiová and Masarovicová, 2016). Then, it should focus on the needs of customers rather just looking at them what type of product they are buying. It should collaborate with competitors to increase its market size. By analysing five competitive forces on Ryman strategies applied in Poland can gain profitability and competitive advantage through game changing trends and swiftly respond to emerging opportunities. Thus, Ryman can capture market of Poland with new strategies and plans.