Business_Environment

Task 1.1 A mission statement, values and objectives simply is a statement of intent, an outline of the purpose of the organisation. The written statements provide employees and other stakeholders with an indication of what the organisation is attempting to achieve. Kone has a vision and strategy statement which is there equivalent of a mission statement. ‘Kone delivers solutions that enable people to move smoothly, safely, comfortably and without waiting from one place to another’ (Kone.com) Kone believes their values guide the behaviour of their personnel towards achieving its goals. Kones values are: Delighting the customer By working hard for and with them to identify and deliver solutions that exceed expectations. Energy for renewal Kone are committed and energised by the drive for continuous improvement by adapting and anticipating changing requirements and always looking for smarter ways to work. Passion for performance Drive new ideas to realisation with speed and an obsession to produce customer driven quality. Kone has an objective statement taken from their website. ‘Kone’s objective is to offer the best people flow experience by developing and delivering solutions that enable people to move smoothly, safely, comfortably and without waiting in building in an increasingly urbanising environment’. Task 1.1 Continued The expectations of stakeholders may influence how an organisation seeks to achieve its objectives. Employees and customers will influence the running of Kone. Builders for example will influence what is manufactured at Kone depending on the customers needs. The local community may have an influence to say further expansion, if Kone expanded to create more jobs for the local community but at the same time it was going to create more noise and pollution the local community will lobby and try to block planning permission. It is important to note that few stakeholders are likely to hold enough power to influence the actions of an organisation on their own, influence is more likely to come from stakeholders getting together to form coalitions, a united view to gain more power and influence. Task 1.2 A stakeholder is an individual or group of people with a direct interest in the organisation. A business has to always put the interests of the stakeholder at the forefront of their decisions especially those stakeholders that are powerful and influential. Kone’s key stakeholders are builders, building owners, facility managers and property developers and of course employees, government, educational institution, local community all play a part or have some influence on the organisation. The first stakeholder I want to discuss is educational institutions. Kone achieves the objectives of educational institutions by working closely with students and offering them interesting challenges in a real work setting. Kone has an International Trainee Program (ITP) which enables educational institution to send their best students on the program, giving them a chance to work at Kone on a training program and developing a future career. There are various case studies on Kone.com that illustrate stories of students that have gained through the International Training Program, one case is of a student call Nithil, he did an engineering degree and went onto become a highly qualified technician at the Keighley branch. By giving students a chance for either work experience or entry level jobs, Kone has fulfilled the objectives of one of their stakeholders. The next stakeholder I want to discuss is one of the main fundamental stakeholders who have the largest contribution to the success of an organisation, the customer. I consider myself to be a customer of Kone, as I work for the NHS as a Maintenance Coordinator. We have several contracts with Kone to service and install Kone lifts. Kone achieve our objective in the NHS by providing an excellent service. They have an excellent customer service centre that logs our breakdown calls, provide updates when necessary. As a customer we expect a good, honest, reliable and efficient service and Kone achieve our objectives. Kone provide clear service report sheets, with clear instructions. Task 1.2 continued…. Finally I looked into how Kone achieve the objectives of its employees. An employees expects good working conditions, chance to progress, fulfil ambitions and all employees expect an honest days pay for an honest days work. Kone believe in sharing best practice with its employees. Kone regularly communicates progress in development programs and future plans in letters from the CEO. Kone also publish internal personnel magazine, have an intranet and electronic newsletters, and hold regular meetings to stay in close contact with its employees. Kone regularly tracks employee satisfaction with Kone as a workplace. Kone strives to create a healthy workplace in terms of Health & Safety as all employees expect good working conditions. To create job satisfaction and offer chances of development, Kone runs a performance management process. The meeting is to agree individual goals, evaluate achievement and to set up a plan for future development. Kone believes strongly in engagement, motivation, satisfaction and commitment so the employee achieves its objectives. Task 1.3 Kone have a Corporate Responsibility Report published in 2008 outlining its responsibilities and the strategies employed to meet them. Kone is has a long tradition of taking an active role in improving communities in which their workforce live and work. One example of Kone taking a social responsibility is the Kone global youth camp for the children of Kone employees worldwide. It is one way of looking after the local community, although held in Finland, employees from around the world meet up and employees gets a chance to raise awareness about the local challenges they face. Although Kone do take on a lot of social responsibility it can be argued is it up to businesses to be responsible for social matter, surely that’s the governments role but according to Jewell (1990) ‘The belief that business organisations should act in a socially responsible way comes from those who believe that with economic power comes economic and social responsibility’ The action of particularly large firms has an impact on society and factors in their decision making especially when it comes to local needs. According to Jewell (1990) the main factors that large firms are expected to have a social responsibility towards are: • The Environment • Treatment of employees • Treatment of customers • Relationship with other firms • Ethical issues • Economic responsibility Task 1.3 Continued…. For the purpose of this report, I have looked at Kones economic responsibility. Kone have outlined in their Corporate Responsibility Report that they are committed to creating added value and an economic edge for its shareholders, customers, employees, supplies and all other associated stakeholders. Kone publish regular reports highlighting their economic responsibilities to their shareholders in financial statements. Kone recognises it environmental responsibility in their report. They have targets in place such as cutting energy consumption of their total products by 50% in 2010. Kone are constantly looking at more efficient use of resources and ways of cutting costs, by improving the eco-efficiency of the products. Kone believe they can reduce environmental impact but also contribute to the overall business performance by having a social responsibility towards environmental needs. Kone is working towards energy saving solutions, to give one example is the standby solution where lift lights, fans and the elevator drives are turned off and signals are dimmed when the lift/elevator is not in use. There are many other social responsibilities discussed in Kone’s CRR such as identifying customer’s needs, treatment of employees, creating job opportunities for the local community. Task 2.1 This section will look at Economic systems and how they allocate resources. The UK economy like other countries around the world faces the same problem – Scarcity. The economy is limited by resources, main factors are land, labour and capital and enterprise. Due to a lack of resources and because humans needs and wants are extensive, decisions have to be made about how best to use resources in the best way. Questions have to be asked about what to produce, how to produce and for whom to produce, for example how are the goods and services allocated amongst customers. Different economic systems solve the problems in different ways. In a free market economy, government intervention is kept to a minimum while supply and demand and the ability to pay influence decision making. Most decisions are based on market mechanism. Other benefits are that the profit motive provides an incentive to reduce costs and be innovative. In this type of economy the government is limited to providing a good police force, armed forces and creating justice systems. The government takes the main role of controlling the money supply to reduce inflation and looking at ways to minimise firms getting too big and influencing decisions such as monopolies. The other type of economic system used to allocate resources is the planned economy. This type of economy is used in communist political systems such as Cuba and N Korea. The main theme is that the government control/own most of the economic resources. They decide what should be produced and how it should be distributed amongst the people it affects. The main advantage of this system is that the government can influence the distribution of income to make it more equal. The disadvantage of course is that there is no choice for the consumer. There is no freedom for individuals to choose what they produce and what they consume. In the UK and most developed countries have a mixed economy. This means that some decisions are made by the government and some by market forces. Task 2.1 Continued…. The proportion of each contribution may vary. For example, in some Scandinavian countries, the state provides a very high level of social benefits but charges high taxes. In the USA, public benefits such as free health are minimal. The UK position is somewhere in between. (www.thetimes100.co.uk) Many products produced in the mixed economy are provided by private businesses and essential services such as police, ambulance and fire service are left to the government to organise. One example of a state run facility that became private is BT, which is now privately owned. Task 2.2 ‘Policies concerning the distribution of income and employment between different geographical regions of a country, or in some cases the European Union….Regional Policies seek to bring regions with low capita incomes up towards the national average and to lower the unemployment of regions with exceptionally high unemployment’ Black (2003 p395) Regional or social welfare policy was introduced to improve the living standards, income and employment levels of area that have seen the demise of traditional manufacturing sectors (coal mining, ship building etc), rural areas that have a surplus of labour through the lack of agriculture and regions of high unemployment and low income. The government will provide a number of incentives for businesses to start up or re-locate in certain areas. Regional policy includes: • Tax incentives for investment in certain areas • Relaxed planning restrictions to enable industrial development • Development of infrastructure (roads, rail, airports etc) • The contracting out of work to businesses in under developed areas. The government are tasked with a number or initiatives to assist regional areas. These tasks include: • The identification of problem areas • How to allocate responsibility for regional policies; i.e. local government or EU assistance. • Where the support should be focused – attract foreign investment, to generate indigenous investment or the development of the infrastructure Regional policy provides financial assistance and expert help to new businesses and enhances the prospect of businesses relocating to certain areas thus creating further employment opportunities in under-developed areas. A free market is believed to be the way to combat the North/South divide but there are many failures in this approach as its all about supply and demand. Market forces can widen the economic gap between regions. It is important to get social welfare and regional policies right to create a vibrant economy. Task 2.2 Continued…. The cost of unemployment is massive to the government in terms of lost tax, lost output and cost of general welfare for example benefits. Policies can be put in place to balance the north south divide, a few suggestions: Subsides or offer tax concessions in depressed regions Provide better facilities and create government/civil service jobs in those areas Restrict large firms in operating in already established prosperous regions One example is to restrict planning permission for Tesco to build a new supermarket in an already populated, affluent area. Social welfare policies have had an affect at Kone, initially it was cost effective to set up in the north due to good transport links and the skills available from the local community. It also helped the wider community in terms of offering employment to local suppliers and people. The recession has not helped the north south divide in fact it’s got bigger, in particular the south are doing well with corporate and city jobs doing well. The manufacturing has declined as it’s cheaper to go abroad. This has resulted in more job losses in the north, a very recent example is the headline: ‘Anger has greeted KONE’s plans to move escalator production from Keighley to China’ (http://www.keighleynews.co.uk/contactus/aboutkeighley/4656880.Job_losses_escalate_with_move_to_china/ , October, 2009) Local staff will be made redundant as Chinese workers take over manufacture of escalator parts. This will have huge implications to the skilled workers and the wider community. Task 2.3 Macro-economic policies are in place to achieve certain policy objectives and to improve the overall performance of the whole economy. Main Government Economic Policy: Sustained economic growth This is the annual increase in percentage of the UK’s or any other countries output, know as the Growth Domestic Product or GDP Stable Inflation The rate at which consumer prices increase each year High level of employment To reduce unemployment figures and reduce social welfare Balance of payments This is to keep a balance on import and export of goods bought and sold from other countries Stability in the exchange rate To keep the current exchange rate competitive with other nations The government uses various policies to try to achieve its aims and objectives, mainly fiscal policy and monetary policies. Kone and its stakeholders would be affected by a government’s fiscal or tax policy. The levels of taxation and the way they were collected would affect the overall business. The taxes on people would reduce the stakeholders of Kone ability to spend on certain kinds of good over others, their disposable income would be affected if higher taxes come in place. Also it would cost Kone more money to employ workers if the National Insurance Contributions went up. This will come into affect in Alistair Darling’s latest budget report of December 2009. The VAT rate going back to 17.5% in January 2010 will have a direct affect on Kone who will have to pay a higher rate of VAT on products bought. This is turn will affect consumers of Kone who will have to pay an extra 2.5% VAT on purchased goods. All taxes have an impact on all stakeholders and the organisation one form or another, either it will affect goods purchased, higher employment taxes or just lower disposable income for employees. Task 2.3 Continued….. The other policy to discuss is the monetary policy. This policy involves the use of interest rates to control the level or supply of money in the economy. ‘Interest rates are set in line with prevailing economic conditions’ (Needham, 1999) If the government lowers interest rates it will help stakeholders or shareholders to invest more into Kone, this will prompt further production and help the economy to grow with higher turnover so therefore more taxes paid back to the government. Other factors as improving people’s chances of buying their first house or ability to borrow more with lower interest rates will ease common burdens on stakeholders. Stakeholders will be able to gain more on their saving, build more money for a rainy day if the monetary policy focused on lower interest rates. Word Count: 2,814 Resources and Bibliography The following books and websites have been reviewed and researched during this assignment • Black, J. Oxford Dictionary of Economics (Oxford University Press-Second Edition) • BTEC HNC & HND Business, Core Module Two, Operating Environment (BPP Publishing, 1996) • Jewell, B. An Integrated Approach to Business Studies (Pitman Publishing, 1990) • Hammond, S. Business Studies, Third Edition (Longman Publishing, Year unknown) • Horny, W. Gammie, B. Wall, S. - Business Economics -Second Edition (Prentice Hall, 2001) • Needham, D. Dransfield, Harris, R. Coles, M, - Business for Higher Awards (Heinemann Publishers, 1995) • http://www.keighleynews.co.uk/contactus/aboutkeighley/4656880.Job_losses_escalate_with_move_to_china • www.kone.com • www.thetimess100.com