A company produces large amounts of statistical and financial information every year; concerning their markets, competitors, suppliers, customers and staff. The need to understand these figures is vital, so that conclusions are drawn and objectives resolved. Executives and top managers can then asses this information, and use it to ensure the continued success of the organization. Staff should also maintain an interest in these statistics – business and financial strength indicates the stability of their employment. Ultimately, all organizations are eventually judged on their financial performance.
Furthermore, qualitative measures would have to be analysed. The Companies further capacity for innovation, the proportion of new products and services having the potential of becoming commercial triumphs, would also have to be investigated by the company to ensure their long term viability, and success. The efficiency and effectiveness of resource utilization, and how these figures can be directly associated to profit. Staff performance, their output per capita, motivation, and continuing content. Managerial performance, identifying areas of strengths and weaknesses, attitudes, behaviour, training and development.
(1) Easyjet
Easyjet’s first flight was in November 1995. The airline's shares were formally admitted to the London Stock Exchange on 22nd November 2000 at a price of 310 pence per ordinary share. The phenomenal growth of Easyjet was boosted by its merger with of Go-fly in August 2002, making the combined company ‘Europe's largest low cost airline’.
From the view of the company, specific performance measures would tend to be quantitative, with a large emphasis on Easyjet’s overall organisational reputation, its yearly profit margins and overall market standing and market position in relation to its competitors – other low cost airlines (e.g. Buzz, Ryan Air), and other airlines flying to similar destinations, although not offering solely the same service (e.g. British Airways, British Midland, KLM, Air France). However, profits in this industry may be misleading, so perhaps a better approach would be to focus on attaining more customers every year, in proportion to the total number of customers who fly on all airlines covering the same routes. Returns to investment and the costs and benefits of maintaining this position would need to be addressed.
There would also be a great emphasis to satisfying investors and shareholders, however, within the airline industry, solely wealth and profit margins are an unfair performance measure, as, for example, the events of 2001, led to a dramatic fall in travelling customers, through no fault of the organization.
(2) Renault Espace
In 1901 two sets of brothers, the Clelands in Edinburgh and the Renaults in Paris, arrived at a deal to import Renault cars into the UK. It has been a story of sustained growth ever since, emphasised by a global alliance with Nissan, formed in 1999.
The combined scheme utilises the respective strengths of both organisations; the key aim of the alliance being to reduce costs, accelerate profitable growth and increase the combined market share of the two partners.
Company performance measures would again tend to be quantitative, being an industrial organization, where profits equal success. The company’s performance measures would look at its market standing and position in relation to its competitors – other people-carrier car manufacturers (e.g. Ford, Toyota). The company would also have to focus on the capacity for innovation and creativity, and address the actual attitudes of the customers, and their needs, and the company’s overall public standing.
Brand image is no doubt the company's most precious asset. In a highly competitive world economy, only strong brands with an excellent public image can hope to stay in the running and in the public's heart over the long term. Brand image has a direct impact on the company's sales and performance.
(3) Madame Tussauds
Madame Tussauds has over 2 million visitors a year, and with over 200 years of history behind it, is famous throughout the world for its highly detailed wax portraits. Madame Tussauds is owned by The Tussauds Group, who claim to be Europe’s largest entertainment company.
In this case, it is more difficult to identify quantifiable statistics, other than turnover, that the company could use as a performance measure. The company’s market position would be essentially more difficult to determine, as the market for ‘entertainment’ within central London is so large and assorted, and direct competitors are difficult to determine. Qualitative performance measures would highlight the capacity for creativity, the expertise of staff, flexibility and responsiveness of the attitudes towards innovation. Managerial performance, and furthermore staff performance, would be difficult to measure in terms of profitability, other than in the reduction of costs, and rise in profit margins.
However, the company’s ability to attract customers may be distorted by external factors, beyond the organizations control. For example, 2001 saw the tourist industry slump in the UK due to the events of September 11th, and the deterrent of Foot and Mouth disease disconcerting many tourists.
(b) The Customers
A customer’s measures consider the organization's performance through the eyes of its consumers, so that the organization retains a careful focus on the customer’s needs and satisfaction. To achieve the best in business performance, organizations must incorporate customer needs and wants and respond to them as part of their performance planning. To do this, managers and employees must determine who their customers are and what those customers expect from them. For managers, customers may include a wide variety of public groups, other companies and governments.
(1) Easyjet
Customers of Easyjet will set their own qualitative performance measures. The respect and esteem of the company, within its market, community and staff, would be distinctly recognized and well publicised. Staff performance, their expertise and capability, the general efficiency, product and service quality and reputation, would be closely scrutinized by customers.
(2) Renault Espace
Indirectly, market standing will be one of the customer’s performance measures, as this will affect its public standing through respect, efficiency and confidence of reliability. Through suitable advertising, company creativity will also have a complimentary affect within this public standing, so this might also be a labelled as a customer performance measure. Staff performance, sales teams’ expertise and continuing development will be measured. People will buy a car on the basis that its manufacturer’s reputation is good, and will remain so. Resource utilization and wastage rates will be well publicised, and might have an adverse effect.
(3) Madame Tussauds
Being a tourist attraction within central London, customers will have to determine the public standing of the organization through its reputation from its previous visitors, and through advertisements. Creativity, innovation, and the expertise of the wax artists, are essential to preserve this reputation, so this might be a set performance indicator from the view of the customer.
(c) The Suppliers
Suppliers have a vested interest in the continuing success of the organization, in terms of continuity and profitability in supplying the organization, and also by gaining a greater, wider and improved reputation for the performance and reliability of their own company. The suppliers’ success is dependent on the achievement of the organization they are supplying. Additionally, an increase in demand for a supplied product would alter the demand from the supplier, so suppliers will be eager for the company to consistently outshine, through astute managerial and innovative performance.
(1) Easyjet
Suppliers of components and raw materials will all have an interest in the company, of building or keeping their reputation secure, through the continued and reliable supply of their products. An increase in customers would lead to a greater demand for supplies, be it raw materials (oil) or other components, and therefore more sales and an advantage for the suppliers.
(2) Renault Espace
Suppliers of raw materials for the building of the Renault Espace will maintain an interest in the companies’ security and profitability, as an increase demand and increase sales will secure their own profits and sales margins.
Suppliers will be keen for Renault to excel, putting their products to the best possible use. For example:
“Pechiney Automotive, believe that aluminium will gradually replace steel and cast-iron in car manufacture as the industry becomes more aware of the need for lighter vehicles in the fight against greenhouse gas emissions.
According to Pechiney Automotive's chairman, aluminium is likely to take the place of other metals very quickly in car-bonnet production, while the prospect of aluminium car bodies is more long-term. For 2002, Pechiney has an aluminium-bonnet production target of 1.5 million, for models such as the new Renault Espace.”
(3) Madame Tussauds
Suppliers of wax to Madame Tussauds will be setting their own performance measures as to the versatility of the staff, and the innovation of new, controversial, talked-about wax models, as only by retaining MT’s reputation as a main tourist attraction in London, can the company remain profitable, and wax demand increased.
(d) The Community
Communities’ measure progress against their own targets, and against the progress others are making. These targets expect the organisation to work within its context and environment, with special recognition of functions inside and outside the organization’s control. Charities, schools, and hospitals may approach the organization for sponsorship and support.
(1) Easyjet
The community may apply performance measures including resource utilization; assessing the balance of resources used in primary, support functions and wastage rates. Noise and harmful air pollution, will have unfavourable publicity, and therefore present a poor reputation and public standing.
(2) Renault Espace
Communities of the UK may emphasise environmental performance measures as of considerable significance to Renault. The manufacture of cars, their efficiency in cutting pollution rates, whilst in production and once on the road, and also their reliability and cleanness will be questioned. Pollution rates should therefore, with consideration, be kept to a minimum, both in production and once the car is on the road.
Public image is of huge importance to Renault, if it is to effectively apply its brand name with the finest results. Renault’s public relations policy must construct and develop an image that mirrors Renault’s identity and that will appeal to its target audiences, take advantage of product launches to convey the brand’s identity, assist the company in its industrial and commercial expansion on a global scale, and help increase the group’s competitiveness by rationalizing public relations activities, developing standards and performance-measurement tools.
(3) Madame Tussauds
A downturn in the tourist industry would leave the economy as a whole degenerated, and so communities will be eager for tourist industries to do well, attracting more customers to London, and consequently, ensuring the city and the local community long term success. Noise levels and large queues of visitors might disturb the local community.
3. Apply the measures identified to each of these products and services. Draw conclusions as to the extent to which each of these products and services may be considered successful or not, and from which points of view.
- Easyjet
“Easyjet soared to a 78% rise in underlying pre-tax profits in the year to the end of September, breaking past even the most optimistic of City forecasts”
Profits of Easyjet rose to £71.6m in 2002, compared with £40m in 2001, and exceeded all analysts' forecasts. The results came from a 55% surge in revenues, although the average internet fare fell from £48 per head to just £46. After the two rivals’ merger in August, the number of passengers carried by the combined Easyjet-Go organization has continued to grow by more than 40% a month, although the rate of growth is slowly beginning to drop slightly. However, much of Easyjet’s growth comes from the addition of new routes and services.
Shares in Easyjet soared by 150 pence during November, from its lowest point of 240 pence in October. Uncertainty overhanging the airline also ended in October, after founder Stelios Haji-Ioannou signed a multi-billion pound deal to build 120 new Airbus aircraft over the next five years. The bounce in Easyjet shares, which more than halved from an all-time high of 504 pence in March, sees the airline valued at around £1.5 billion. At this level, it approaches entry into the FTSE 100 index of blue-chip shares.
However, full service airlines like British Airways and British Midland are clawing back thousands of passengers a month, after their decision to fight back within the lower fares war.
After founding the airline 7 years ago, Stelios Haji-Ioannou, stood down on Tuesday 26th November 2002 as chairman. The Greek tycoon now concentrates on his privately held internet cafes, car rental and other ‘Easy’ branded ventures.
(a) The Company
In the last year Easyjet performed especially well, with large profits, and a rapid increase in the number passengers, at 40% per month. Share prices have been vivacious, although sometimes adversely, and this would please shareholders and investors. The company will be delighted with this.
However, with other airlines such as British Midland and British Airways entering in on the low-fares market, the attitude for the next year will have to incorporate further innovation, so that it can remain competitive; either by reducing to even lower fares, or by offering different services, and therefore attracting a further proportion of the regularly flying customers.
(b) The Customers
Customers will be pleased with the ever competitive market within which Easyjet now operates, lowering fares across the industry. They will also be particularly pleased with the extra routes now on offer. However, with the addition of close competitors, comes further expectation; if Easyjet is to maintain its identity of ‘the lowest fare flight operator in Europe’, it must excel in other areas, with, perhaps, better customer services, offers of a free meal during the flight, and the reservation of seats before boarding might calm the scramble for places. Customers might also benefit from assurances on their personal security during the flight.
(c) The Suppliers
The suppliers of Easyjet will be overjoyed with the announcement for further expansion, with the acquisition of a new fleet of 120 Airbus. Raw material supplies, such as additional oil, will be needed for the covering and of new routes, more passengers and consequently more flights per day.
(d) The Community
With the addition of new routes, more planes, and accordingly air traffic, Luton Borough Council was forced to support the expansion of Luton Airport, Easyjet’s main terminal in the UK. On the 19 November 2002, Luton Borough Council voted to suggest to the government that if they were to go ahead with the expansion, then the best way forward would be a re-aligned runway. A 3,000m realigned runway situated towards the north of the current runway, would extend over farmland and residential properties, costing £1.7 billion.
Although a great economic boost to Luton, with around 5,000 jobs created and new international companies locating in the town, there will be a loss of a large green belt of land. There will be further noise pollution, even though this, of all the options, would have least effect. Wigmore Valley and Century Park will be destroyed. This does not impress the local community.
(2) Renault Espace
“Revenues rose 2.2% in the first nine months of 2002 to €25,592 million. The rise was due to a favourable model and engine mix and an increase in dealer business in Europe. Furthermore, Renault's diesel vehicle sales continued to climb in Western Europe and Renault Samsung Motors posted buoyant growth. The depreciation of the Argentine peso and, to a lesser extent, the Brazilian real, however, had a negative impact on revenues.
As projected, third-quarter revenues in 2002 fell slightly on the year-earlier period due to the ongoing product range renewal – Mégane II and Espace IV went on sale between late September and early October 2002.
In the first nine months of 2002, the Renault group's worldwide sales were virtually stable at 1,818,116 vehicles, including 1,568,005 passenger cars and 250,111 light commercial vehicles. The group benefited from the 62.9% rise in Renault Samsung Motors sales, which came to 83,654 units. The 2.6% decline in sales under the Renault brand in Western Europe was lower than the reported 3.7% fall in total industry volume.”
(a) The Company
2002 was a difficult year for Renault, as it saw its market capacity fall by 4.8%. Yet Renault strengthened its overall market standing in relation to its competitors, with 10.9%, up 0.5% from 2001. Sales in Europe dropped by 2.6%, but this in comparison to the whole car industry’s slump of 3.7%, does not reflect badly. The Renault Espace IV also won pole position in the people passenger car market. Renault was the only European car manufacturer to report 1st half profits in 2002. The success of the all new dCi engine and the sales of the new Espace helped boost sales performance. The Espace remained the top seller in its respective market segment.
Whilst profit margins fell, it is important to identify that Renault’s market standing was further reinforced in the UK. External factors, such as an economic downturn could have been a cause for this drop in sales. Other factors might include high interest rates, or a high rate of inflation (e.g. The Argentinean Peso’s deterioration saw sales fall 12.7% in Latin America).
(b) The Customers
Renault built a public relations policy around three main themes for 2002: motor sport, road safety, creation and innovation. These three themes were chosen based on the results of a public opinion survey on the type of public relations expected of a car producer, and in line with its brand identity, with the aim of refocusing operations and optimal profits. It proved a success.
The addition of the all new ‘dCi’ engine to new car models, its reliability and efficiency in cutting pollution rates, would have pleased all prospective customers.
(c) The Suppliers
Suppliers of materials used in the construction of the Espace will be unhappy with the decline in demand for the new Renault Espace IV. Renault’s rank at the top of the market in their sector will ease their disappointment, as it would be seen that it is on external factors that this fall in demand can be blamed. Renault’s market position will reinforce their confidence.
(d) The Community
Renault is involved in actions on a local level within each market. Community-oriented activities bring the brand into closer contact with the public and are essential within a local context, to fortify their already strong brand name, committed, supposedly, to cutting pollution rates, safer cars etc. etc. etc.
(3) Madame Tussauds
“2001 was a crucial year for The Tussauds Group, with the introduction of new strategies designed to reduce dependence on customer volumes, and to generate profit by focusing on delivering a much better experience, and therefore significantly increased value to our customers. The result was a 12% uplift in turnover, and a 43% improvement in Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA).
Madame Tussauds London continued to demonstrate growth in 2001, with EBITDA up 5%. This is a very creditable performance taking into account the effect of the two major external factors in 2001(September 11th, Foot & Mouth), which had a negative impact on tourism in the UK. Attractions Worldwide had a healthy year with total revenues up 19%, converting into the strong profit growth of 43%. Of this growth, 20% arose from a growth in the organic Madame Tussauds businesses and 23% arose from the first full year’s trading at Madame Tussauds New York, which opened in November 2001.”
(a) The Company
The Tussauds Group will be pleased that, in the midst of a substantial decline in tourist volume to London after the influence of events in 2001, that Madame Tussauds continued to demonstrate a steady growth in profits and customer numbers.
For the year ending in December 2001, the groups’ earnings for the year were up 12%, from the previous year. However, it was recently reported that The Tussauds Group faced further difficulties with other central tourist attractions, including the London Eye:
“The partners behind the London Eye project - British Airways, The Tussauds Group and Marks Barfield Architects - are seeking to cut the cost of an estimated £88m loan to build the wheel that carries a 24% annual interest charge. Despite the success of the Eye, with more than 10m visitors, the terms of the loan make it almost impossible for it to make money. Reports suggest that one scenario could see BA selling its stake to Tussauds”
(b) The Customers
Customers will have been pleased to note that £28m was spent on converting Madame Tussauds to provide a better customer experience and ‘value for money’. The altering of pricing to the attraction included the introduction of ‘peak’ and ‘off-peak’ time-bands. Large groups visiting were given significant discounts.
The launching of new attractions would please customers. 2002 saw the acquisition of a World Cup attraction ‘Goal!’ in April, and the interactive attraction featuring Kylie Minogue, in July.
Notorious figures which provoke and attract and inspire public attention would tend to be preferred by the visitor:
“Conservative leader Iain Duncan Smith will not be immortalised in wax at London's Madame Tussauds because the museum thinks he is too uninspiring. Since the waxworks museum opened at its current site in 1884, it has made models of every major political leader, including Mr Duncan Smith's predecessor, William Hague.
A Madame Tussauds spokeswoman told The Times: "We want figures that will inspire strong emotions and provoke strong reactions. In our view, Mr Duncan Smith, who most people have never even heard of, is unlikely to achieve either of those feats. He is hardly in the news, nobody ever talks about him, and the people who do know who he is do not seem to care less about him either way. We have not got room for lifeless figures."
Each model costs around £40,000 to create and takes hundreds of measurements and countless photos to be perfected.”
(c) The Suppliers
Wax suppliers can be will be keen for Madame Tussauds to renew old stock and create newer models regularly. With each model costing £40,000 to construct, suppliers will be pleased with the new attractions, and Madame Tussauds enthusiasm to provide a better customer experience, as this accordingly relies on a larger supply of wax.
Suppliers of food and drink based within the attraction (bars, restaurants), would have been pleased with the increased quantity of customers over 2001.
(d) The Community
Domestic visits to the Madame Tussauds waxwork museum jumped by 20% in 2002, in a sign that the tourism downturn may have come to an end. The local community should be pleased. Large number of tourists might also bring with them criminals, as clearly tourists are an obvious target, and the community will need to be assured that Madame Tussauds tries to discourage this. The surge in visitors does not seem to have had a negative affect on the community, which is a positive sign.
Target Practice, M. Rose, People Management, 23 November 2000
Mein Kampf, A. Hitler, 1925
Maverick!, R. Semler, 1993
The Prince, N. Machiavelli, 1532
Les Echos – France, 1st October 2002
Financial Times, 26 November 2002
Renault Corporate Communications, 23rd October 2002
http://www.tussauds.com/cfm/about/chieffinance.cfm?areaID=2&subAreaID=7
The Guardian, 2nd Dec 2002.
http://news.bbc.co.uk/1/hi/uk_politics/1808667.stm