Organisations Purpose, Aims and Objectives
Organisations need to have aims and objectives to be able to focus on the clear direction needed for success in the modern business world. The aim is the overarching goal for the organisation, which can be broken down into a subset of objectives to achieve the aim. Business organisations' aims usually relate to profit, market share, return on capital employed, sales, growth, levels of service and customer/user perception. In the case of both Vauxhall Motors and JD Wetherspoon this is no different.
Vauxhall Motors - In 2000 reported that the main economic challenge for Vauxhall was returning to profitability. Although economic performance in 2001 went some way to reversing the losses witnessed in 2000, a return to profitability remains the overriding economic challenge for the company. Following the launch of a record four new products in 2000, a further four new vehicles were launched in 2001 (Vivaro, Combo, Corsavan and Astra convertible) assisting sales through the year, and with the launch of New Vectra in 2002 and extensive cost saving and revenue building programmes in place, Vauxhall aims to break even in 2002 and return to sustained profitability in 2003. So using initiative and new ideas is an objective of Vauxhall to get back to profitability. But essential Vauxhall have much the same objectives as of any other company.
JD Wetherspoon - The organisation owns and operates pubs throughout the UK. Without the 'gimmies' of profit, market share etc. The company aims to provide customers with good-quality food and drink, served by well-trained and friendly staff, at reasonable prices (See appendix E). The pubs are individually designed and excellently maintained. This has been an underpinning aim of JD Wetherspoon as they look to such areas of customer loyalty as a method of increasing profits. Some companies, especially pubs, have not had this in mine and there is not enough emphasis on customer service.
JD Wetherspoon is said to be always committed to quality, choice and value. JD Wetherspoon has taken a simple idea - that people go to pubs for good beer, food and service, in a clean and friendly environment - and turned it into a major success story; one which is growing by two new openings each week. JD Wetherspoon is said to give as much back to our people as possible and have one of the best benefits packages in the business. The other major aim is to continue its rapid growth this is proving the country with jobs.
Essential Vauxhall are trying to claw its way back where as JD Wetherspoon is onwards and upwards with its aims and objectives.
Responsibilities
Organisations have a range of responsibilities to their stakeholders. Both these organisations have many responsibilities.
Social - During 2001 Vauxhall developed an umbrella social policy, which summarises a number of existing policies into a single document. The aim of the policy is to communicate better with employees and the wider public on key issues to Vauxhall, including health and safety, human rights, equal opportunities, community involvement and supplier conduct. A look at the Vauxhall's social highlight and challenge can be seen in appendices F and G.
Environmental - Responsibility for environmental issues is delegated throughout the company, from the Managing Director, who is the main board environmental champion, to the shop floor. Corporate issues are discussed and agreed by the Environmental Issues Team, which comprises individuals with environmental responsibilities from various parts of the company. So essentially Vauxhall are meeting their responsibilities in designing schemes and methods to measure this. Vauxhall have also won many awards in this area (See appendix H).A look at the Vauxhall's environmental challenge can be seen in appendix I.
JD Wetherspoon has more social responsibilities due to the area of the pub business. This is in the sense of the area of alcohol, which is not socially responsible in the first place. JD Wetherspoon is meeting its responsibilities by been profitable and providing excellent quality of service.
Stakeholders
Vauxhall’s stakeholders, defined as “anyone who influences or is influenced by the company”, have been placed under the following general categories:
Stakeholder Group
Allied industries
Competitors
Dealers
Educational institutions
Employees & pensioners
Fleet customers
General Motors/General Motors Europe
General public
Industry associations & professional bodies
Insurers & financial community
Legislators & regulators
Local community
Media
Pressure groups & non-government organisations
Private customers
Suppliers
Trade unions
Vauxhall apply a stakeholder ranking system this indicates the issues that Vauxhall stakeholders feel are most important for automotive companies, such as Vauxhall, to be addressing and reporting on. (See appendix J)
JD Wetherspoon essentially have the same Stakeholders except obviously the ones specific to Motoring. In business you can never satisfy all your stakeholders but by trying to satisfy your main stakeholders is a system Vauxhall have adopted.
Market Conditions
Markets come in many different types and arise when buyers meet with sellers. Some markets are in a specific place, such as one in your local town or city, whilst others do not have a visible meeting place. Whatever type of market you look at they will meet in some way to exchange something for an agreed price. It is assumed that both parties gain from the transaction. The more sellers in a market the more competition exits within that market. Competition normally means that consumers or buyers will get better value for their money. In reverse a few sellers normally means less opportunity to drive down consumer prices.
Having markets that work well brings buyers into contact with sellers and allows exchange to take place. In that way we are supposed to benefit and living standards will increase. In the cases of Vauxhall and JD Wetherspoon there are many factors to which how well they do. With the costs of living increasing all the time maybe people will be putting less emphasise of buying new cars. Also with the stresses of modern day life, going to the pub may become more and more attractive as an escape method. But with the costs of living increasing where would you go? The cheapest pub, and what's the cheapest pub around, yes you have guessed it JD Wetherspoon.
Competitive Advantage
Most of us find ourselves in competition with others who produce something similar to our output. We are therefore in competition with others. It is normally accepted that through competition so consumers get choice and probably lower prices. Those who make and supply goods will try to sell at a price above what it cost them to make or buy an item. If a supplier or producer can bring a product to market for a price that covers costs and allows for an acceptable profit then a supply will be created.
A company such as Vauxhall they need envisage a different world of mobility in the future: one where transport choices are wider, and where car and public transport are fully integrated. They need to show a greater focus on responsible car use, with people better able to choose the most appropriate method for their journey. Vauxhall to gain a competitive advantage should look deeply into computer and communications technology. They are rapidly changing – and vehicles will become increasingly sophisticated.
Changing lifestyles will also impact the way we view the role of the car. Teleworking, leisure time and shifting societal demands and values will change vehicle usage patterns and the types of vehicles that customer's demand. A way Vauxhall could have a real edge over its competitors is to be environmentally friendlier. Emission free vehicles are something they could benefit from. If Vauxhall sees this New World as a challenge and an opportunity. The company therefore remains focused on sustainability as the approach to ensuring long-term business success, in greater harmony with people and the environment.
Where Vauxhall have much to look into on how to get an advantage I cannot see too many ways JD Wetherspoon can get an advantage. They have the lowest costs, are a recognised fantastic employer and have a great reputation in the pub world. They are expanding all the time and I think they need not to look at getting a competitive advantage currently because they already have it. But JD Wetherspoon better watch their back because in the world of business it could end in an instance.
The UK Economy
The UK Economy in which Vauxhall and JD Wetherspoon operate in is described as a 'mixed' economy. The UK economy is currently at an all time high performance; it hasn't performed as well as it currently is for several decades. There have been 33 consecutive quarters of positive growth of the economy and 19 months where inflation has been below the target of 2.5%. Unemployment in the UK was, as of the end of 2000, at a 25-year low and thus employment at a record high. This can only be good for both companies. Furthermore, earnings growth is remaining below the danger level set by the Bank of England. The official interest rates in the UK have been 6% since February 2000 and this was the longest period of stability of the interest rate in over 10 years. This indicates that there will be less borrowing in industry and would not bolster productivity. A negative for Vauxhall. Stability in the UK economy is expected to continue and a continuance of low inflation is forecast for the next two years at least. Furthermore, interest rates are expected to fall gradually from Q2 in 2001 onwards. Unfortunately, there is also a risk here to the consumer.
Inflation and unemployment both have a relative negative impact on the economy as a whole, if either factor is high. The costs can be further highlighted if unemployment or inflation are inaccurately forecast or anticipated. Both issues also have a negative impact on economic growth.
A continuing trend of the UK from primary industry towards secondary and tertiary industry is indicated by the fall in manufacturing output. Industrial production expanded at its slowest rate since June 1999. Recent problems for the primary industries in the UK, such as severe weather and fuel protests, have played a part in the poor performance but, nonetheless, it remains a weak sector of the economy. The tertiary sector is the complete opposite -- it is growing rapidly, particularly in November of last year despite higher costs in the tertiary industries. Consumer credit in the UK rose by 9.4% (£1.5 billion) in October. This, coupled with the falling prices on the high street, has resulted in the high retail sales and performance.
The excellent performance in the UK's tertiary sector has also had another effect on the economy. Due to the higher earnings in the private tertiary sector, the average earnings growth rose to 4.2% in the last quarter of 2000. This could have the unfortunate side effect of also increasing inflation due to the higher aggregate demand caused by the increase in consumer spending.
Unemployment is the existence of a section of the labour force that is willing and able to work, but cannot find work. The Goodman definition of unemployment sets three criteria, to be unemployed; the individual has to be registered as unemployed; the individual has to be in receipt of benefit; the individual has to be deemed to be actively seeking work. Unemployment is measured in the UK using two methods, the Claimant count, where all those seeking unemployment benefits are classed as unemployed, and the Survey, where market research techniques are used instead. JD Wetherspoon has been one of the leading new employees in recent years and is helping the UK Economy much with regard to employment.
In the UK, since the last re-basing of the retail prices index in 1987, prices have risen by over 70%. This general figure masks some vast differences in the various areas of spending. International competition appears to be key (very important to Vauxhall). Where it is strong, for instance in the market for 'white' goods. But where governments are able to 'shelter' industries from outside competition, price levels have continued to climb. This is also the case where the state adds to an industry's costs through taxation. The privatised utilities are good examples of the way all recent UK governments have tried to deny this shelter to ex state-owned monopolies in gas, electricity, telecommunications and water. Prices have fallen in all of these cases, with the exception of the water industry.
The cost of personal services to do with providing care for the teeth, eyes, and hair have also been at the forefront of large price rises, as have entertainment, alcohol, car tax and insurance costs and train fares. This has a major affect on Wetherspoon with alcohol increasing in price. This is a negative impact. Overall, the changes in the inflationary climate can be attributed generally to globalisation, technological change, competition and an anti-inflation attitude. This determination to 'beat' inflation was characterised by the decision of the incoming Labour Government in 1997 to hand control of monetary policy in the UK to the Bank of England.
Essentially the UK Economy working well will be good for both companies. Some negatives with higher prices on beer which will lead to the consumer disappearing, but with Wetherspoon having the lowest prices may benefit the company. The UK Economy may alter but Vauxhall current position would improve if car prices could match those in Europe. This again is a negative for Vauxhall. (Please see Vauxhall and JD Wetherspoons last 5 year performances in appendices K and L)
Local Economies
In the UK there is a considerable disparity in the economic fortunes of the different regions. Increasingly output and employment have moved towards the South East and East Anglia at the expense of regions such as the South West, North West and the North. But instead of looking at how local economy impact a company such as Vauxhall you can look at how a company such as Vauxhall can affect the local economy.
Vauxhall is the largest private employer in both Bedfordshire and Cheshire and makes a valuable contribution to the economic and social welfare of these areas. The future employment of these people, and the resulting prosperity of the two regions, heavily depends on Vauxhall's ability to compete both externally and internally with GM's European sister plants.
As mentioned earlier with 2,000 jobs going at the Vauxhall plant in Luton, what repercussions can the Bedfordshire economy expect as a result of the scale-down? In terms of employment, the knock-on effect of the scale-down is expected to result in a further 800 job losses, as consumer and industry spending patterns adjust to the initial cutbacks. Output losses are expected to reach £130 million, four-fifths of which will arise directly in the automotive industry. The main industries that will suffer from these indirect effects are those in the Distribution, Hotels & Catering sector, particularly retail. A 'trigger report' identified current strengths and weaknesses in the local economy, and the opportunities and threats that we expect to occur. Major strengths were good transport networks and a strong service sector. Slow economic growth compared to the region, and the scale-down of Vauxhall, were identified as weaknesses. However, the scale-down in manufacturing generally has created the opportunity to re-deploy workers into more competitive markets and to develop new industrial clusters in such markets. Skills levels in the area are under threat if the training site at Vauxhall is closed down, and the remaining manufacturing firms in the area are at risk from continued foreign competition. A similar investigation is underway into the effects of the scale-down at Ford in Dagenham on the Essex economy. Impact studies and trigger reports can be carried out for any area where a positive or negative change is anticipated for the local economy. This look at Vauxhall impact on local economy can help with the development of an effective response to change, and contribute to future economic strategies.
JD Wetherspoon on the other hand has is now a nation-wide company and all local economies with the UK affect the business. One case was in Northern Ireland where in the past two years they opened a number of pubs. There had some bad publicity; it was believed that the Irish felt that the pub chains were far from the "perfect blend of pub". There were many problems with employment and heritage issues. This is a less than publicised example of how local economics can affect such expanding organisations such as JD Wetherspoon.
Both companies have to deal with the local economies as much as each other. But both these two companies have a major impact on the local economies of the areas they operate.
European Union and Eastern European Economics
EU Economies have been affecting car manufacturers such as Vauxhall much in recent times. There is over capacity, a decline in demand and a problem with the exchange rate of the pound sterling. The pound, supported by high real interest rates, has continued to increase in value against the recently launched Euro. This has meant that car exports to mainland Europe have suffered from appearing to be highly priced. As mentioned so many times earlier Vauxhall decided to close actual assembly in some of its UK plants and concentrate on specialisation on a country by country basis. So, pressure is on for cost bases to be as competitive as possible. The cost of imported parts are priced in Euros and then converted to pounds. As such they appear to be cheaper than they once were. It has not gone unnoticed by some commentators that many car manufacturers based in the UK import parts prior to assembly.
A look at the US dollar sees the pound at a low or at least realistic exchange rate. This is making UK produced goods look competitive in the prosperous market of the USA. However, what might happen if the US economy slipped into a recession and the Euro strengthened against the pound? Currently the EU is affecting Vauxhall for the worse. JD Wetherspoon currently is not affected as much by EU and Eastern Economics but will need to look into this area when it will become more and more of emphasis to the company.
Joining the EMU
EMU refers to that section of the Maastricht Treaty, which provides the creation of a 'monetary union' between EU members. Individual currencies such as the pound, franc and the mark would, in effect, cease to exist and would be replaced by a single currency, known as the Euro. What would this mean for Vauxhall and JD Wetherspoon? Well essentially this would be good news for Vauxhall and not as good for JD Wetherspoon.
Vauxhall's future investment could be at risk if Britain does not join the single currency soon. Vauxhall would want the government to accelerate its efforts to ensure that economic conditions were right to allow Britain to join because investors looking at Europe from the outside will see Britain as very much outside Europe if the UK is not in EMU. It is also believed that conditions in the car industry are going to get tougher, with over-capacity in Europe of around 20-25%. When you get that situation, you have got to expect mergers or closures. This would be extremely bad for Vauxhall after Luton.
The business reasons for Vauxhall joining are derived from the potential cost savings and the increase in competitiveness that joining the Euro would achieve for Vauxhall and for other companies operating in the international market place. It has much to do with the structure of Vauxhall operations across Europe and the way in which manufacturing and investment decisions are reached.
Entry into the EMU for Vauxhall provides for planning stability and can eliminate some very significant transaction costs. Moreover, the eurozone will also provide them with greater access to larger financial markets and this will mean lower interest rates and consequently lower costs for building infrastructure. Britain remaining outside EMU for the longer term adds an unwelcome risk.
JD Wetherspoon are quite publicly against the Euro. The argument resides around "Why would we want to give away control over our economy?" JD Wetherspoon believe that the UK is doing fine outside the Euro. The UK economy is due to grow more quickly than the major eurozone economies, the UK gets more investment than France and Germany combined and our unemployment is half the eurozone level. But the point is that most people in Britain want to see the government dealing with the issues it was elected to tackle rather than wasting time and money trying to persuade us to lock into an economic union with countries suffering huge unemployment problems. Joining the EMU does not have the same benefits for JD Wetherspoon as it does for Vauxhall. The bottom line is Vauxhall is in decline and changes that would make it more competitive is only going to benefit the company but JD Wetherspoon who are growing rapidly do not want things to change at all.
European Union Enlargement
After successfully growing from 6 to 15 members, the European Union is now preparing for its biggest enlargement ever in terms of scope and diversity. 13 countries have applied to become new members: 10 countries in central and eastern Europe - Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, the Slovak Republic, Slovenia – and Malta, Cyprus and Turkey.
What impact will enlargement have on the EU’s economy? Enlargement will have a major direct effect on growth in the new member states, where it is anticipated GDP will grow by an additional5- 9% over the 10 years following accession. Current member states are set to increase growth by 1.5 % in the enlarged EU single market. This market will give competitive European companies greater business opportunities, improve employment prospects and provide greater tax revenues for governments to fund their priorities. The experience of Ireland, Portugal and Spain shows how accession can stimulate dynamic long-term growth in previously weaker economies. What will be the impact on employment? There may be a small negative effect on employment in some new member states as they complete their economic restructuring, but increased EU- funded training, and improvements in competitiveness will boost employment (this a real benefit for Vauxhall). Remaining differences in wage and employment levels may lead to small movements of people, who may help fill any resulting gaps in essential skills. Moreover current Member States will have up to seven years before full freedom of movement to workers from the new Member States is granted.
What will be the impact on business? For businesses in Central and Eastern Europe, the enlargement of the European Union is already a fact of life. These countries have already benefited from a wave of investment by EU companies in the automotive industry, the high- tech, sector, retailing, banking, insurance, and the energy and telecommunications sectors. The combined injection of new technologies, know- how and financial investment has led to massive leaps in productivity, as old industries have been restructured, giving way to modern economies with larger service sectors. Business in the enlarged EU will also benefit from improvements in the legal and regulatory environment in the new member states, such as improved protection of industrial and intellectual property rights, and more transparent public procurement procedures. The removal of the non- tariff barriers that remain between current and future member states will increase the size of the EU single market, by over 100 million new consumers. The resulting economies of scale will stimulate trade, and improve the competitive position of business in the enlarged EU.
Vauxhall will become more competitive and there is a real chance for JD Wetherspoon to expand throughout Europe. Enlargement could bring new investment into both companies that previously was not there. Basically there will be much change and both Vauxhall and JD Wetherspoon will need to stay alert to all this change to stay competitive.
CONCLUSION
This fascinating look into how local, national and European economy impact on Vauxhall and JD Wetherspoon can prove beneficial for such companies to understand their full roles in the world of business. Economics affect everybody daily lives and in the business world it is essential to know what is going on 24/7. It is interesting to look at how much different places, times and situations affect such companies. The insight of how Vauxhall and JD Wetherspoon react, cope and move forward to so much change is of much interest. What is clear is that the economic fortunes of this country, its businesses and its people, are tied with the fortunes of our neighbours in an unparalleled way. UK Businesses have to comply in all sorts of ways and a whole raft of other requirements. The challenge of Vauxhall and JD Wetherspoon is to anticipate future changes and to make appropriate responses in terms of business policy and practice.
The saying in football "never change a winning team" is appropriate in the case of JD Wetherspoon. This company is in a great position and has a positive outlook. Vauxhall although currently in a decline look to the future in a different way. Hoping for the Euro to come ASAP, which will booster their business much. If your to look at the two companies as Premiership football teams you would see JD Wetherspoon at top of the table with Vauxhall dwindling around near the bottom but it is only Christmas, and there's always a chance of Europe. (See appendix M)
