Environmental issues: The environment has become a major issue. These businesses need to show that they are aware of any issues if they are to keep various stakeholder groups happy, including:
Employees: who may not to work for a company with a poor environmental record
Customers: who may want to buy some products that need them
Pressure groups: Like friends of the Earth and Greenpeace.
Fraud: There is an increased amount of fraud which takes place as a result of cybercriminals hacking into Microsoft company databases, the majority of fraud takes place within companies, and much of this fraud may take place with the collusion of senior managers and members of Boards of directors. Examples of company fraud include:
Stealing company assets
Stealing cash and equipment
Forging signatures on company cheques
Employees and suppliers altering invoices, e.g. adding goods bought for private consumption to a company invoice.
Government: Government actions have a direct impact on both businesses. Each week the government can create new regulations about health and safety at work, employment rights, consumer protection, fraud, e-commerce and many other areas of business life. Another most important area of government activity comes in the form of taxes and subsidies. The government uses taxes for various purposes such as:
To raise revenue for government spending
To discourage certain activities such as the creation of pollution.
Cost of credit: Some business activity is funded by credit. E.g. Microsoft business often purchases machinery and equipment through some form of borrowing arrangement. Business buys supplies and raw materials on credit terms. Both businesses must be careful not to borrow more than they can afford because interest repayments can rise, causing a drain on the business.
Competitive pressures: In Microsoft the competition is one of the biggest influences on business. Business competes through:
Differentiating their product
Price: higher or lower than rivals
There are various ways to beat the competition. One of the current trends in competitive strategy is to be the greenest in the business.
Globalisation: The creation of Microsoft global goods and global marketing. The same products and marketing and advertising campaigns can be used worldwide. This significantly lowers costs. For example, Christmas advert for Microsoft can be shown on television in hundreds of countries. The creation of global brands and people around the world instantly recognise global brands like Microsoft Window Vista and Office 2007.
Labour/supply and demand: There is more and more emphasis on intellectual intelligence and new knowledge workers, such as working in Microsoft IT, can receive high salaries. It can be argued that emotional intelligence is in short supply. Emotional intelligence includes the ability to get on with customers directly, for example service and telesales workers.
Labour and their wages are likely to rise. In difference of there are more people looking for jobs than there are jobs available then wages will fall. The number of workers in the UK earning above average salaries has been increasing.
Energy prices: The energy costs are important costs for Microsoft. It is particularly true of manufacturing companies where power is needed to run machinery and computers. However, it is also necessary for service industries, like insurance, which rely on computer networks and in which heating and lighting costs for the offices in which employees work can be a considerable cost.
New organisations: Gaps in the market provide an opportunity for new organisations to set up. For example, because of environmental legislation a variety of new organisations have been created which clear up pollution and process waste for other businesses.
Teenagers have a particularly important role in the success of new goods. Many teenagers are knowledgeable about new technologies. They can be easily convinced by the advertising hype that is associated with new goods. But it will be interested in word of mouth and what teenagers say about products. For example, this has led to the success of new products such as Microsoft future gaming software’s.
Winding up of existing organisations: Environmental factors can lead to businesses running into difficulty. In the legal and social environment has led to a number of, for example nightclubs and Disco clubs winding up. This is where a business has to close down and often has its assets sold off to pay its debts.
Revision of strategic plans: These businesses repeatedly change its plans. It is important to repeatedly keep in tune with what is happening in their company environment and to alter their plans to keep in touch with what is happening in the wider environment.
Impact on stakeholders: The stakeholders are affected by external changes, and so what they expect of their Oxfam has changed. They might see this, E.g., in growing environmental awareness and health awareness.
- The government is more of its responsibility for the environment and the health of the nation and therefore exerts pressure on business through regulation.
- The employees are likely to work for Oxfam with excellent environmental and health records.
Functional activity changes: In the recent these two businesses functions have become particularly important:
- Marketing: To discover what customers want.
- Customer service: Because of the recognition of the necessary of customers
- Information and communications technology: Microsoft because of the growth of the Internet, broadband and associated technologies.
- Call centres: as a means of outsourcing work.
- Human resources: In both companies people who work for them need to feel that they are valued if they are to be motivated. Human resource management has thus grown in importance.
Flow of work: Controlling the flow of work between the functions of a company is necessary. For example, in Microsoft an advertising campaign for new product, specialist input may need to come from various sources. Production may need to explain how the goods works and what key features have been built into it.
Interdependencies: This is often achieved by arranging employees into cross functional teams in Oxfam. It is approach broadly used in managing projects. E.g. when doing research and bringing out a new product it makes sense to have a team consisting of:
✓ Financial specialists who is carrying out costing and set out the financial implications of a particular project.
✓ The quality specialists who emphasis quality related issues.
Outsourcing of functions: These organisations have two main kinds of activities. Examples of activities that businesses outsource today include call centres, administration, delivery and production.
∙ Call centres: Microsoft outsource call centre work to private call centres. The business would establish the routines and patterns of work that it wants the call centre to do for it and will establish minimum standards for the call centre to meet. The centres have many duties handling the work on behalf of the company and also handling consumer complaints to selling products.
∙ Administration: The administration is also outsourced. E.g. Microsoft might outsource work including the photocopying of materials, the word processing of documents, the maintenance of databases, etc and can also outsource work including the setting up and maintaining of websites.
∙ Delivery: The business can outsource work which includes the delivery of company goods, or packaging and storing products. It is rather than a business having the problems and duties of owing Lorries or vans itself but it can cut its costs by outsourcing. Which are cut involve the costs of obtaining, insuring and maintaining vehicles.
∙ Production: The Microsoft outsources the production of their products. Then they can concentrate on core activities such as selling, advertising and marketing goods. For example, the Microsoft sold their software’s on PC world or other software stores and is typically produced by firms who are contracted to work either for own or other retailers
