This report attempts to assess the impact of external business environment on DHL along with evaluation of its position and responses. The major tasks which will be covered under this report are as follows:
- Provide an overview of external influences to DHL and stating the importance of each external factor towards the organisation.
- Analysis of how corporate social responsibility and sustainability is relevant to DHL along with determination of manner through which it influences policies and decision making within business.
Contemporary development of business is essential as it is related to ethical and responsible practices of firm. The report will evaluate business environment of DHL logistic firm which shares global presence. Further, report will outline about Corporate social responsibility and sustainable practices which helps the firm in maintaining stable functions. Besides, it will discover its effectiveness with regards to courier services and policies and procedures of company. Thus, it will identify relevancy recommendation to maintain CSR and sustainable practices in DHL.
DHL is known as the German Logistic Company which provides parcel, courier and express mail services in all over the world. It is the only firm which provide overnight services to its customers. There are few major competitors of DHL express in overnight markets that are known as Federal express etc. DHL started its business 40 years ago; it went from small company who ships paper through airplane from San Francisco to Honolulu. At present, the firm is delivering from air, sea and road in all over the world. Along with this, it has one of the large networks in 220 countries worldwide and territories. Employees turnover is above 300000 in all the countries in which they are providing services. It provides wide range of easy accessible services and solution for their customers. Its services include transport of letters, parcels and goods. It is considered as number one firm in Europe who hold at least 25% of market share. All the activities of the firm are carried out legally. DHL express is focusing on providing standardise services and products locally as well as international. Its services are classified into four parts that are as follows:
Same day service: In this immediate of pick up of a shipment by a dedicated courier, with an emerging delivering within the same day through a dedicated network.
Time definite service:
In this door-to-door delivery by a provided time and next possible business day basis.
Day definite service:
Consistent door-to-door delivery in a provided number of days
Overview of the primary external influence
Courier express and parcel company is existing in many countries in all over the world. Therefore, it can be stated that it is not region or nation specific industry. There are large numbers of companies who are operating in logistic industry, both internationally and locally worldwide.
Pestle analysis is known as the view of the external environment in which firm operates its business. There are total seven external factors that can influence firms that area as follows:
Political factors: Political factors lead to play important role in order to identify factors that can positively and negatively impact the firm (PilinkienÃ„”, DeltuvaitÃ„” and Gaidelys, 2017). DHL express firm is carrying out an air delivery and freight services in various nations and expose itself from various political risk. Primary political factors which can affect the firm are known as government rules and regulation. DHL is an international company; therefore, it interacts with different countries around the world and do not enforce tough trade regulations. DHL accomplishes success while delivering services in different courtiers because it follows all the laws and regulation strictly.
Economic factors: Economic factors that can affect the business are exchange rate, interest rate, inflation etc. They have power to distress customers which can impact the sales and profit of the DHL Company. In respect to respond the various economic factors DHL should be flexible with its charges based on the economic status of each country. The crisis can negatively impact the profit of the firm (Leviäkangas, 2016). It is essential for DHL company to change its investment plan as per the but do not stop them.
Social factors: Society, culture and way to complete things lead to impact the culture of the firm in an environment. Some of the social factors which can impact the firm are population and educational perspective of global and macro environment society (Blanco and Cohen, 2017). Countries in which population is high put positive impct on DHL it is because there are many customers who required their courier services. Along with this, DHL is also dependent on the literacy rate. If people are highly educated then they will demand more DHL services. However, the firm is emphasised in providing best services to customers.
Technological factors: DHL has already implemented new technological concept that is to track the courier and keep a proper track of product from picking schedule till delivery to the right customers. Due to enhance in trends of online shopping it has provide ultimate opportunities to increase home deliveries (Kew and Stredwick, 2016). For company’s advancement of new technology has made easier keep track of services and interact with customers directly regarding issues, feedback etc. Apart from this, DHL took advantage of expansion internet in order to provide electronic services in all over the world. Customers can easily check status of their transactions with one click.
Legal factors: DHL firm strictly follow all the rules and regulations while operating business in all over the world. Along with this DHL also follow ISO 14001 certification related to the environment and also follow other rules and regulation.
Environmental factors: One of the major impacts on DHL is related to the climate change, which can directly affect the air transportation and delay in delivery process. However, firm took many actions in order to reduce the environmental impact (O'Loughlin and Coenders, 200). It also hired an environment sustainability leader who is answerable to the firm. The firm also focused on keeping environment neat and healthy. There are many companies who have started implementing new projects which assist in minimizing the pollutions and compliant with issued legislation.
Porters five forces analysis
Porter’s five analyses is known as the framework for analysing the level of competition in the industry which are as follows:
Threat of new entrant: DHL is known as the well-established company which deliver courier and logistic management services globally. The postal and courtier industry is large and very mostly preferable business in all over the world (Chan, Chan. and Ip.2006). It is because everyone wants to deliver some courier or parcel. In this industry, threat of new entrant is low because of the factors that are barriers in entry, huge capital requirement etc. For capital requirements, DHL express has the benefits in international market as there required large networks of aircraft carriers, ships and also ground transportation. However new firms who ener in market need to work hard in order to give tough competition to DHL and other competitors.
Threat of substitute of products and services
There are major courier services providers such as DHL, FedEx etc. Threats of substitute are high and there are huge issues which companies required to be faced in market. Every consumer has a choice related to products and services which they want to buy. However, substitute products and services lead to create ceiling on the price. Customers needs, wants can be satisfied, and decision is their own related to make purchase from any company. Dobbs, 2014). In Courier and parcel industry, threat of substitute is high because of range of similar product and difference in price. Customer has an option to turn and goes with the competitor for making purchase. In order to accomplish success in a competitive environment, it is important to understand the competitors and the way they provide services in the market. On the basis of such information, any firm can easily protect themselves from the threat.
Bargaining power of customers is high
Courier and parcel industry market is known as the highly competitive and there are many firms who provide similar products and services. It leads to provide power to customers to make decision that they want to pay high price or low for services. Apart from this, mostly customers are very sensitive toward the price and they are ready to switch to other firm. If customer does negotiation then it means that profit is reduced (Yunna and Yisheng, 2014). Hence it is essential for the firm to differentiate and offer something different in order to lower the bargaining power of customers.
Bargaining power of supplier
In logistic industry, technological factor plays an important role while focusing on bargaining power of supplier. It is essential for companies to invest in information technologies in order to be on top (Mathooko and Ogutu, 2015). Mainly global companies lean towards to get supply from its existing suppliers. It provides advantage to both firm as well as supplier. Therefore, both the supplier and company have buying power in order to make development in their sectors.
In logistic industry, there is a high level of competition in competitors. There are many middle companies who are dangerous for the firm. It is important for DHL to come up with new ideas and hired highly skilled employees to remain on top in a competitive market (Porter and Heppelmann, 2014).
Based on the Porter’s five Forces analysis, there are various types of threats and opportunities which can be consider by DHL Various strategies can be formulated by the firm so that they can easily overcome threats of buyer, supplier etc.
I) Relevancy of Corporate social responsibility and sustainability and its influence on policies and decision making of DHL
Corporate social responsibility plays an important role in managing business operational it helps the firm in maintaining ethics of business functions. Implementing safe practices assist enterprises in gaining buyers trust and loyalty. It is important for the organisation to formulate policies and procedures with regard to safer and environment friendly practices, because it is the strategy which assist in serving consumer satisfactory services (Ameer and Othman, 2012). However, implements ethics in business practices on the basis of shared goals and interest is the plan of action that aid in managing sustainability of organisational functions. Both the terms are related to implementation of safe and secure practices in order to protect environment interest of stakeholders. Courier and postal services are directly related to customers and therefore it I essential for the firm to comply with CSR practices. The corporate strategy of and objectives of DHL are focused on its investment and action plan which is described under:
Focus: the firm is focusing on earning global leadership by setting benchmark for responsible practices. In this, the focus of company is to deliver first class services to its customers by analysing their requirement. In addition, the staff is regularly trained to meet designing and product offering plans of DHL. The services of firm are enhanced in accordance to improvised market and goals.
Connect: The firm has implemented CSR practices in order to create value of its services for key stakeholders. Like the company is focusing on development environment friendly solutions and initiatives. Apart from customers, the organisation has now planned activities for employees motivation and interaction.
Grow: E-commerce is emerging market and therefore the another foremost corporate objective of DHL is to expand services on E commerce segment. In this, the focus on firm is to expand business with regard to long term growth and development.
However, responsibility practices of DHL has assisted the firm in managing in operating in ethical environment where the enterprise has complied with all the legislation which helps in maintaining effective of customers services as well are based on occupational health and safety. The improvement in logistic services is in accordance to benefits to environment in society. Further, the effectiveness of CSR practices is also reflected in its employees practices where staff is involved in volunteer work to support people who have suffered due to natural calamities. Similarly, the courier organisation in 2016 offered language and job skills to refugees in Germany (Carfagna, Dubois and Laidley, 2014). Moreover, the go green practices aid the firm in managing sustainability of business operations. The firm has accomplished its plan of climate protection where the company organised Gogreen programme where the all the services and employee practices in organisation were targeting environment and use of eco friendly resources. This plan assisted the entity in accomplishing various business opportunities of global market. The enterprise has set of protecting environment on the basis of which management regularly monitors Carbon efficiency index. In 2016, DHL direct Scope 1 and indirect Scope 2 for green house gas emission was recorded 6.05 million tonnes. However, the indirect greenhouse gas emissions (Scope 3) of DHL transport subcontractors measured to 20.87 million tonnes of CO2e. On the other hand, to maintain sustainability of business activities the firm has implemented occupation health and safety in which the focus of firm was to reduce accidents of workers when working. In 2015 working days lost per accident was 15.6 and in 2016 after implementing occupation health and safety the figured turned to 14.8.Thus, in accordance to analysis, it can be said the implement safety at workplace assist the organisation in reducing accidents and increasing business productivity (Annual Report, 2017).
Benefits of Corporate social responsibility practices in DHL
Implementing CSR practices on couriers business will be advantageous for company to manage its successful business operation in several ways which are described under:
- The changes in policies and practices as per corporate objectives helps DHL in establishing strategy to overcome competition.
- Compliance with CSR practices assist the organisation in creating value of its services and increasing consumer satisfaction (El Ghoul, Guedhami and Mishra, 2011).
- Implementing CSR approach assist the company in reducing hindrance from government practices and plans.
- It is approach that aid in promoting business operations and encouraging effective public relation.
- CSR offers ethical approach of managing environmental practices. Moreover, with the help of theses practices, the company is able to alter business policies and plans as per environment friendly resources.
- It assists the firm in minimizing consumption of natural resources in order to preserve environment.
- Compliance with these practices assist the firm in determining potential consumers and innovating existing pattern of delivering services (Ford and Richardson, 2013).
Thus, it can be said that implementing and following Corporate social responsibility assist the firm in managing smooth flow of business functions. It helps the organisation in overcoming hindrance of external environment. Similarly, it is implemented by DHL to ensure safe environmental practices and working conditions. The changes in business plans helped the courier enterprise in motivating employees increasing consumer based and also assisted in establishing innovating in services (Goncharuk, 2016). Hence, as per CSR plans, the firm is able to make effective investment decision and also established viable HR policies in order to control work environment.
Advantages of managing sustainability in DHS
Sustainable practices of DHL are also concerned with green environmental practices, climate protection, preserving natural resources, recycling, waste reduction etc. Following safe practices is the plan which effective for DHL, as it assist in detailing business process, specializing services, creating value of consumers, developing safe and secure environment, setting long term success boundaries and also helps the firm in contributing to environment (Goss and Roberts, 2011).
- Implementing sustainable practices assisted DHL in reducing accidents at workplace.
- It assisted the organisation in attaining competitive advantage.
- Sustainability is also related to ethical business functional which helps in maintaining positive work environment.
- Sustainable practices are related to productivity and profits of business.
Thus, the sustainable efforts of firm are focused on motivating employees and setting safe working environment for workers. Apart from this, as per DHL sustainable practices own the characteristic of sustainable innovator and with the help of this the firm own desires of changing working patterns. According to annual report 2015, it has been determined that, it helps the organisation in managing working of employees.
ii) Effectiveness of business operations with regard to CSR and sustainable practices
It is the foremost responsibility of organisation to ensure safe business practices with regard to stakeholders. Stakeholders are the key driver of organisation and its succe