Anglia Ruskin University
Business Environment (MOD003353)
Word count: 3013
PART 1: Organization Structure
The structure of the business will determine the way the business will be managed. The organizational structure stipulates who owns the business; and how profits are to be distributed and which bosses manages what department. It can also help on how information is communicated from the top to those on the field. The structure of the business depends on the size and nature of the field of operation of the company.
The company, Tuffstuff Limited is a global business, in cement industries with an international reputation that has stood the test of time. It is built on its management structure from the factory worker to managing director (MD).
The best way to operate in Rwanda is to reduce the number of management structure so as to reduce the level of bureaucracy; the structure should be about six to seven layers except if Tuffstuff would want to incorporate in Rwanda. The structure, which will be used to determine how the company will be administered, will start from the top with the Managing Director to General Manager, who will have directly under him three departments of:
• Business Coordination and development department
• Financial department
• Production department
Though the MD is the head of the company and the most senior corporate personnel or administrator in charge of managing of the company, he's in turn responsible to the parent company and its shareholders. His role also includes making sure the company operates smoothly both internally and externally. The CEO of a corporation or company typically reports to the board of directors and is charged with maximizing the value of the entity. The titles can also be given to the holder of the Chief Executive Officer (CEO); this could include the president and chief executive of the company.
Directly under the managing director is the General Manager (GM), who acts as a bridge between the Managing Director and other departmental managers. The GM is part of day to day working of the business. Each department under the GM will be controlled by a manager who in turn will have various sub-departments that will be answerable to them.
The GM work encompasses all areas of an organization, and he is traditionally not an expert in any particular field, but has a working knowledge of all facets of the company's activities, and administers all operation. In big businesses, professional managers with expert understanding may control departments, while a General Manager provides unifying management from the top. (Qfinance. 2016)
Under Business Coordination and Development Department, you will have marketing and sale department with their own respective mangers. These departments will manage how the company deals with other companies and individuals as well as the government. It will in charge of developing new ideas and business structures that will facilitate the company's expansion and reputation. Sales and marketing department will have its own managers to cater for the day to day affairs.
The next department is the financial department; it will be in charge of how finances are managed within the company and any other remuneration to the parent company. This department makes sure all the various departments stays within the allocated budgets. These roles include budgeting, salaries and any dealings with outside financial institutions. It will also have sub-departments of store keeping and accountant, each with its own mangers.
The heart of the business is the Production Department. This section will have project manager, site engineer, site/line supervisors and the factory workers. The head of this department is in charge of the production workers and their various supervisors, and departments. He reports directly to the MD; and passes the production strategy of the company to the various production teams. The site supervisor is the link between the workers and the management. Though the production manager is responsible for entire production the line/site supervisor is responsible for a particular section of the production department.
PART 2: Analytical Tools
When embarking on a new business venture it is advisable to try and understand the importance of both internal and external factors that will affect the business; such factors could decide the success or failure of the business. There are many business analytical tools but the two most commonly used analytical tools are P.E.S.T. (Political, Economic, Social and Technology) and SWOT (Strength Weakness, Opportunity and Threats). These analytical tools help in strategizing what focus the business will take, and play, in its immediate environment as well as to interact with the target audience.
PEST is used in analysing the external factors that are beneficial in doing research before starting a new project or to help conduct market research. The acronym stands as follow:
• Political – this are legislations and regulations that will have effect on the business; global and local issues can have impact on the business operation. Political structure or stability of the region in question can also play a big influence on business planning strategy. This factors may also include goods and services which the state aims to provide or be provided with; and those that they don't want to be delivered. Businesses have to abide by this regulation due to the fact that the governments have a high influence on the health, education, and infrastructure of the country in question.
• Economic – market stability can also play a role just as taxation, interest rates, inflation, the stock markets and consumer confidence all play a part on what strategy the business will take. This aspect outlined the value the company will place on its investment base on the interest rate and other economic factors.
• Social – factors include the cultural traits and health awareness, population distribution, workforce and security. Great movements in social factors affect the demand for certain products and how best the business operates. Additionally, businesses may change numerous management policies to adapt to social trends caused from the prevailing social trends. The social activities of the targeted audience also has a part to play on what the investment level of the company might be. This activities could include the buying power and way of life of the target audience. Understanding the cultural prohibitions of the people is an added advantage.
• Technological – this includes emerging technologies; and could range from communication facility, advance in and access to technology to research, patent ownership. Lack of it or low technological advances can affect the level of investment. This can determine barriers to entry, minimum efficient production level and influence the outsourcing decisions. Furthermore, technological shifts would affect costs, quality, and lead to innovation. …... (Jim Makos. 2015)
SWOT analysis on the other hand focuses the internal and external factors that will affect the business. This analytical tool helps to focus on the strengths and identify where the best opportunities are. It helps spot danger and to improve weaknesses.to begin with the first part of SWOT (Strength and weakness) relates to the internal ability to the company, i.e. its internal environment; while second part (Opportunity and Threat) relates, mostly, to its external environment. The main purpose of SWOT analytical tools is to identify a particular business ideal strategies to follow; this ideals will best suit the business structure as it brings together the resources and capabilities to the necessities of the environment in which the firm will operates in. (Morrison, J. 2011)
• Strength – this what the company have that others don't have; this could be anything from its finances to its good its record in dealing with its audiences, both internal and external. The strength can also be measured in the business ability to keep is employees happy and motivated. To be able to attract investments is another advantage. To determine this the following question has to be asked:
o What advantages does your organization have?
o What do you do better than anyone else?
o What unique or lowest-cost resources can you draw upon that others can't?
o What do people in your market see as your strengths?
o What factors will lead to getting the sale?
o What is the organization's selling point?
It's best to ponder the strengths of the company from both an internal and external standpoints, and from the point of view of the market audience.
• Weakness – these are the issues that are likely to prevent the company from fully optimising its potentials. This could be its inability to conduct proper research, poor management, lack of equipment, financial incapability to sustain itself against other competitors. This is the internal issues that will determine if the company is capable of climbing the barrier of entry. Do other people seem to perceive weaknesses that you don't see? Consider if your competitors are doing anything better than you are doing? In this area businesses need to ask and answer the following question:
o What area can you improve on?
o What should you not do?
o What are your audience likely to see as weaknesses?
o What factors lose you sales?
When posing this questions it has to be viewed from both internal and external points of view.
• Opportunity – are presented by the environment within which businesses operates. These arises when an organization can take advantage of conditions that presents itself in regard to the firm's business strategies which will contribute to its profitability. They can do so by being able to identify the opportunity. Though it should be noted that Opportunities may arise from market, competition, industry/government and technology. Organizations can gain competitive advantage by making use of opportunities. Organization should be careful and recognize the opportunities and grasp them whenever they arise.
• Threat – this is the problems the company is likely to face within the general public, both from other competitors and government. These issues can be in any form. The level of threat or its source varies and its dependant on the environment. Threat could come from competitors, government/regulators, price differentiation in the market. The threat question to consider are as follow:
o What difficulties are you likely to face?
o What are your opponents doing?
o What sort of dynamism is affecting your business?
o Is your position in the market being affected by change in technology?
o Do you have financial problems?
o Could any short comings seriously affect your business? (Mindtools.com. 2015)
Once businesses are able to understand and implement this analytical tools into their business strategy then a proper foundation has been laid for the success of the company, as they are able to differentiate where it can make good capital investment and where it need to improve on.
PART 3: Business Report
A business analysis of Tuffstuff, producer and seller of cement, is provided, with focus on its Political, Economic, Social and Technological (PEST) the company is likely to face as it goes into a new venture in sub-Sahara Rwanda.
Tuffstuff strength includes its position in global cement market across all business segments. It is an organisation that has invested intensively on in the UK and Europe market. And it's looking to expanding to new adventure beyond its current market scopes in Europe. With its extensive knowledge on cement manufacturing and distribution, it has decided to venture into cement industry in sub-Sahara Africa with emphasis in Rwanda, an emerging African economy.
Rwanda is a landlocked African country with population of 10.2 million people (2012 census) and shares borders with Tanzania, Burundi and Uganda.
The current political climate in Rwanda has been improving, after its genocidal war of the late 1994 and some decisions has been made by the government in liberalising the cement industries which has been under its control and subsidies. Currently there is a cement manufacturing company, called Ciments Du Rwanda Limited (CIMERWA), with production capacity of 100,000 to 270,000 tonnes per year, and has monopoly of cement, from production to distribution, in that part of Africa. This company is partially owned by the Rwandan government (ten percent) while China and members of the public owns the remaining ninety percent. This firm has been expanding its global outreach with more emphasis in conquering the regional market.
To invest in Rwanda, as a Multi-National Enterprise (MNE), Tuffstuff should consider using FDI (Foreign Direct Investment) and the option of “greenfield investment” in order to maximise its revenue. This will give it absolute control of its business interests in the industry as well as gaining a better foothold in the region. In so doing the structure has to be designed to will take into account local entrepreneurship.
The present political climate has had some negative impact on international scene for Rwanda, but analyst has predicated some stability after the election which will determine the next president of the country. There is currently political tug of war among politicians and how much effect that situation will affect the economy is still uncertain.
After the genocidal war of 1994 the country has gradually been growing, with sound economic policies with approval from IMF. It recently implemented a development programme with emphasis on reducing the level of poverty, (just like most part of Africa), large employment market with more young people who are willing to work. As an emerging economy, Rwanda's private sector which is still largely informal will have to play a bigger role in ensuring economic growth. Poor infrastructure and lack of access to electricity are some of the major constraints to private investment. (World Bank. 2015)
Socially, Rwanda is an ethnically divided nation with three tribes of Hutu, Tutsi and Twa which has generation of conflicts and mistrust. Only in recent years has there been some kind reconciliation among the three ethnic groups. But experts believe a lot still has to be done. The government of Rwanda has implemented some regulation outlawing some degrees of tribalism in the larger society and any investor in the country has to be seen not to favour any particular tribal group. The key strength in doing that is to understand each cultural need and differences each tribe. To achieve this, the target for employment should be the younger generation. (Ryan L. Brown, 2015).
Technologically, Rwandan government has focused its development policies on the economic infrastructure. The technological sector has seen a rapid increase as internet and mobile sectors has seen an increase in its subscription and usage. There has been an increase on mobile phone usage with a projected estimate for 2015 to be around 6million users of which will be the younger generation of Rwandans. This technological innovation is having effect, directly and in indirectly, on almost all aspect of life in Rwanda. (Masimba Tafirenyika, 2011)
What are the strengths, weaknesses, opportunities and threats Tuffstuff is likely to face as it ventures into sub-Sahara Rwanda cement industries? We will look at it on step by step basis.
Strength: what is Tuffstuff strength likely to be? The strength lays mostly on its proven track record in the cement industries, as well its financial and human management, in Europe. With its financial strength Tuffstuff is able to make sound investment in Rwanda, after the government liberalised the industries which has encouraged foreign investors.
Weakness: the cement industries are dependent on construction works for them to make profits hence Tuffstuff will likely not have such problem in Rwanda. This is as a result of rapid economic development which has is taking place in the country and the neighbouring countries. The company has to also look into making compensation for the lands it tends to acquire as natives tend to have cultural ties to their ancestral land. There is a land lease Rwanda which is subject to renewal every 49 years, except if the land is in Special Economic Zones, a foreigner (company) will be treated as a Rwandan national and may be granted a free hold title. (RWANDA NATURAL RESOURCE AUTHORITY, 2012)
Opportunities for investment in the cement industries in Rwanda have been presented by the environment within which the industry operates from with the liberalisation of the market by the government. Tuffstuff can take benefit of these conditions in Rwanda to plan and execute strategies that will enable it to become more profitable in that region. Tuffstuff can gain competitive advantage by making use of these opportunities. Tuffstuff should be careful and recognize the opportunities and grasp them whenever they arise in Rwanda.
Selecting the targets that will best serve the clients while getting desired results is a demanding task, prospects may arise from market, competition, businesses or government and technology. Increase in building demand, accompanied by deregulation of cement market in Rwanda, has presented a great opportunity for new firms to enter cement sector and compete with existing firms for revenue.
Though there are good opportunities to invest in Rwanda we should also bear in mind the threats Tuffstuff is likely to face as it steps into the sub-Sahara Rwanda. These threats come in different forms and sizes. Transparency International (2014) has rated Rwanda 55th position of least corrupt countries and territories in the world. Other threats include competitions from other manufacturers, such as CIMERWA and Dangote Cement which has along and good track record of investing in in African cement market.
Rwanda is a country ripe and ready for investment. Though a little country in term of its geography, it still offers large potential in term of investment opportunities for both foreign and local investors. This has resulted from the determination of the people, after the civil conflict of 1994 to move on with their lives. Though there are some fester of civil unrest, it should have a minimal effect on long time investment. The World Bank has estimated that from the year preceding 1994 genocide about one million people have been able to move away from extreme poverty. (Katrina Manson. 2015)
As the cement market expands due to growth in construction industries it will not be surprising that an upcoming economy like Rwanda will offer a good opportunity to investors with its present climate for investors, Tuffstuff stands to gain as there are little competitions from other manufacturers since there are lots of man power and a large market for the growth of the industry.
As a signatory to the just concluded conference in global warming, held in Paris France, Rwanda has shown commitments in preserving its natural and environment beauty for the future generations, and any company willing to invest will be well advised to show some level of commitment to her global warming ideals.
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