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Managerial Environment - Ryan office products.

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BLACKBURN BUSINESS SCHOOL DMS MANAGERIAL ENVIRONMENT YEAR 1 ASSINGMENT RYAN OFFICE PRODUCTS Issue One Bracken Ltd is threatening Ryan office products with legal action due to a delivery date not being met. This problem was due to strike action at Ryan's French suppliers. Bracken was forced to source elsewhere at short notice and at considerable expense. Bracken are claiming they are entitled to compensation for the extra cost. The contract was on Ryan's terms and conditions of trade. In the terms and conditions (Ryan office products,2002) there is a force majeure clause, that reads: 14. The performance of all contracts is subject to any act of God, War, Strike, Lock-out, Fire, Flood, Drought, Tempest or any other cause beyond the control of the Firm and the Firm shall not be held responsible for failure to deliver or comply with a contract due to any such contingency. If there is a problem outside the control of either party then this may cause frustration. Frustration is one of those legal "patches" that has evolved over the years in attempts by the courts to ensure that the framework of contract law remains adequate to satisfy that framework's commercial reason for existing. A contract that becomes illegal to perform will be frustrated; also delays outside the control of the parties may cause frustration, if as a result performance then becomes radically different, or if the contract is deprived of its commercial purpose. A contract will not be regarded as frustrated if it simply becomes more difficult or expensive to perform; or if there is already an express term in the contract covering the contingency which has occurred; or where the event was a foreseeable part of the normal risk that party would expect to carry; or if the event was self-induced by the party seeking to rely on it. So, what actually is a "force majeure" clause and where does it fit in when a contract becomes frustrated? Force majeure is a term borrowed from French law. ...read more.


This would therefore be prohibited and Ryan could face fines of up to 10% of their previous year's turnover or even 10% of their previous year's worldwide turnover. Although in some cases the European Court of Justice has said that such agreements must have an appreciable effect on trade between member states. This has lead to the commission issuing a notice that agreements that cover less than 10% of the relevant market will be ignored. Although severe anti-competitive behaviour e.g. price fixing may still be prohibited under Article 81 where the market share is between 1% and 10%. Issue Three Expanding into European markets can be a great benefit for a UK firm. There are many advantages of trading in the Single European Market and dealing with the Euro. The four main aims of the Single European Market was to ensure the "four freedoms", these being the free movement of goods, services, people and capital. The Single Market is a wider market for UK goods comprising of nearly 380 million consumers, making up 40% of world trade and in 1999 was the destination for 54% of all UK exports, worth some �120 billion. It includes the fifteen Member States of the European Union. The advantages for business have been huge (Action Single Market, 2002). Under the principle of mutual recognition the Single Market has created the free movement of goods by eliminating trade tariffs and customs barriers to give British companies a wider market for UK goods. It's principle of mutual recognition of standards reduces export bureaucracy and established common product and safety standards so that manufacturers can sell their products all over Europe without lengthy and expensive re-testing in every country. The Single Market is in effect a domestic market for European business. The Single Market has opened up the European labour market through mutual recognition of skills and qualifications. The general system is founded upon the presumption that an individual qualified in one Member state to exercise a specific profession should be regarded in principle as qualified to exercise that same profession in another Member state without having to re-qualify from scratch. ...read more.


(3) UK Buying Offices: advantages of this are saves on time, prompt acceptance of orders and low promotion costs. The next level of market entry is direct exporting, whereby the company exports through intermediaries located in the foreign market. All background work is done in house. The most popular forms are through agents, distributors and branch offices. Advantages of this are little or no investment and greater control of operations. Disadvantages of this are commitment or capital and number of fixed expenses. Another option to market entry is franchising, whereby Ryan would provide the product, also marketing it, and the franchisee would provide the capital, market knowledge and personal involvement. Moving up to a higher level of control, but also higher risk of market entry is a joint venture. An arrangement whereby two firms in different countries join forces for manufacturing, financial and marketing purposes and where each has a share in equity and management of the business. Advantages of this are governments encourage Joint Ventures, there are smaller capital outlays, better coverage on limited funds, reduces risk of expropriation, closer control and good feedback of local knowledge. One disadvantage of this can be that there may be conflict of interests between the two businesses. The highest level of entry into a foreign market would be wholly owned foreign production, although there would need to be a greater commitment than any other market entry. There are different ways to do this. One would be to acquire an existing company, by buying out accompany that may be in debt, thus gaining immediate market entry and earnings. Another option would be to create a new company; the advantage of this would be that Ryan could develop the new company the way they want. Disadvantages to this are the risk of expropriation and government hospitality. Before making the decision Ryan must realise the trade offs with the different types of market entry. Depending on the level of control they desire, they must realise the higher the level, then the greater degree of financial risk to the business. ...read more.

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