MANAGEMENT OF MEGA ENVIRONMENTAL FACTORS

QUESTION
Swinburne Online

Teaching Period 1 2012
SLTE100 Introduction to Management Assignment 1 essay

Word limit: 2000 words        Weighting:  20% Due date:  Monday 23rd April

Assignment 1 (A1) submission details
© Swinburne Online 2012

• All pages should include your name and student number in the document footer
• All references should be appropriately cited using the Harvard style
• Submit your essay as one PDF or Microsoft Word document
• Save your file as follows: [student numberA1.filetype] e.g. 1234567A1.pdf or 1234567A1.doc
• Submit your essay via the Blackboard link  > Assessment > Assignment 1
Assignment overview

The Assignment 1 essay is based on the case study below. You are to do an environmental analysis which
requires you to demonstrate your ability to identify and describe the key environmental challenges facing
a particular group of managers in a particular industry operating a business today.
Your task
In an essay, you will provide Harry, Jim,
and Melissa with an overview of the
current external environment in which
they will be operating their business.

Your essay should provide an overview of
the forces in either the mega or the task
environment.  Your analysis should focus
on and explain in-depth the specific
factors you feel are likely to significantly
impact the Quik Clips business.

Task notes:
1. Choose whether your essay will cover
all the mega-environmental factors or
all the task environmental factors.
2. An analysis of the mega-environment
should draw on the IBIS world report
1
CASE: QUIK CLIPS

Harry Comstock, Jim Chou, and Melissa Trifiletti identified an unfilled
niche in the hairdressing industry: providing haircuts at a low-cost,
quickly and efficiently. They propose to set up a business in Box Hill
or Northbridge (you choose which), run it for about a year and then
open several more shops before franchising across Australia. They
have named their business Quik Clips. They realise that to be
effective the operational aspects of the business, including
appointments, haircutting and payment, need to be well-managed.
To ensure the return business on which hairdressing businesses rely,
they also need to consider the quality of the customer service and
staff.
Knowing that you are studying management, Harry, Jim, and Melissa
have asked for advice on how to develop an efficient, low-cost yet
appealing haircutting service.
(Adapted from Campling et al. 2006, p.108)
.
3. A task environment analysis should draw on data from the Australian Bureau of Statistics and the relevant
local council website for Box Hill (City of Whitehorse)
2
or Northbridge (City of Perth)

4. Your essay should draw upon your weekly readings and other reputable sources.

1
2
3
https://login.ezproxy.lib.swin.edu.au/login?url=http://www.ibisworld.com.au/industry/default.aspx?indid=677
http://www.whitehorse.vic.gov.au/About-Whitehorse.html
http://profile.id.com.au/Default.aspx?id=284&pg=138&gid=120&type=enum
3
ABN  75 148 177 959

Swinburne Online

Teaching Period 1 2012
SLTE100 Introduction to Management Assignment 1 essay

Reference
Campling J, Poole D, Wiesner, R, & Schermerhorn JR 2006, Management 2
© Swinburne Online 2012

nd
Asia-Pacific Edition, John Wiley
& Sons Australia Ltd, Milton, Queensland.

Assessment criteria

Your essay structure should include:
• An introduction to Quik Clips, the business and what Harry, Jim and Melissa are trying to do
• An overview of the analysis tools used
• An overview of all the external environment factors on the mega forces, the other on task
• A conclusion summarising your analysis.

You are expected to develop your ability to critically review the value of the material you read in the light of
its source and your client’s requirements. The source of material defines the intellectual and evidentiary rigor
applied and the level of reliability and validity of the material being provided.

The strength of an argument is judged on how it is constructed and the evidence used to support it.

High marks will come from a demonstrated ability to construct a persuasive argument which is adequately
researched, constructed and referenced.

While the web is a good starting point for your research, only reputable sources should be referenced and
quoted in your final essay.

Web-based information must come from refereed journals and/or reputable business magazines not just
notes put on the web by enthusiastic individuals e.g. Netmba, Wikipedia, Businessballs, blogs, etc.

Do not copy word for word from the web or texts:  write in your own words and reference correctly, otherwise
you are plagiarising. Copying long pieces of information demonstrates limited understanding, poor academic
skill and will receive minimum marks.
Do not use bullet points or lists in your academic writing.
The essay should be edited to achieve consistency of grammar, style and flow of argument.

SOLUTION

Executive Summary:

In today’s generation a large number of organizations enter into the market on a regular basis. With modernization in every sector like education, industrialization, society etc people are developing lot of innovative ideas and promoting it as a business opportunity. Because of this reason there are a large number of organizations in every segment and for a particular product or service many organizations enter into the market. Even though this increases lot of choice for the customers but it becomes a threat for the organization due to increase in the competition. Every organization tries to compete with others and maintain its position in the market. In order to do so the organizations always changes their marketing strategies and introduce various new strategies that can attract the customers. In this way they maintain their integrity. An organization is affected by various external and internal factors and based on these factors the organizations prepare their strategies. It is thus very important for the organization to keep upgrading their strategies because the external and internal environment can be highly fluctuating. External environment are described under two categories called Mega environment and Task Environment. In this paper a case study of hair dressing salon is taken and external analysis is done especially the mega environmental factors that affects the Salon. Based on it further recommendations are also made for the successful working of the Salon.

Introduction:

Quik Clips is one of the business venture that is planned by three hair stylist to establish at Northbridge. The main service of Quik Clips would be to provide a wide range of hair cutting at a comparatively lower price. The founder believes that they will start the business at Northbridge and then will slowly spread it to all over the Australia by the system of Franchising. The business is planned to be named Quik Clips because the founder believes that their main aim would be to provide the customer a quick and stylish hair cut at a comparatively low price. They also believe that the name Quik Clips will attract a large number of customers. The main strategy of the business would be to plan and manage the three most important things which are taking the appointment, providing hair cutting and the payments. The business of hair dressing completely depends of the service and proper service will make the customer satisfied and the organization will get proper return. In order to do so it thus would required a very efficient team of staffs. The staffs should not only be efficient in providing good hair cuttings but at the same time need to be friendly and appealing as the main success for this organization would come from happy customers. The main marketing criteria would be advertisements and word of mouth. So it is important that initially when the business starts every service should be provided in a perfect manner. This would make the customer satisfied and the word of mouth marketing will be fruitful.

The founder now prepared to start their business need suggestions and advices. In order to begin a good business it is essential to first analyze the external factors that would affect the business. A lot of analysis tools are being designed to analyze the external environment affecting a business. In this case the Mega Environmental Factors would be taken into consideration and then the Quik Clips will be analyzed based on it. Accordingly the suggestions would be made on the ways to begin the business and run it in a successful manner.

Mega Environmental Factors (Explanation of Analysis Tools):

Mega environment is also known as general environment and it is described as a part of the external environment which constitutes some wide factors of the society which influences the working of an organization (Doole & Lowe, 2008). There are two main elements of the Mega Environmental Factors and they are the technological factor and the economic factor. Mega Factors also include the culture of the society.

Technological Factor: The main reason behind the rise of industrialization is technology. Technology largely affects the life of every people. Every organization one of the success factor is the proper use of technologies. In a way the technology changed the structure and function of every organization. Technology solved a lot of problems of the organization because of which many organizations were not being able to fulfil their goals. Today every organization depends on some sort of technologies. Some of the reasons for which the technologies have changed the organization way of working are (Doolin, 2003):

a)     With the help of technologies the work is getting faster and at much easier rate. Some advanced machines used in production and manufacturing units are producing larger number of products at lesser time.

b)     Technologies also make it easier for the companies to make their organization global because through technology like internet organization can brand and market it products all over the world (Langlois, 2002).

Thus, with these and lot of other instances it cannot be wrong to say that technology brought revolution in industries and moved it in a new path.

Economic Factor: Any kind of business or organization is largely affected by the economy of the country. Economy is defined as a process of acquiring wealth, distributing the wealth and finally consuming the wealth. The various economic factors that can influence the organization operations are like rate of interests, growth of the economy, rate of inflation and the exchange rates (Baker, 2008). An organization in order to began a business might require loans and so the rate of interest is one issue that can affect the organization and similarly all the other factors have importance of the organization functioning. The economy is also influenced by various rules and regulation that is set by the government of the country. Hence economy has a big influence on the working of the organizations. It also includes all the various legal issues and factors which the organization needs to follow in order to function efficiently in the country. An organization also needs to study the economy of the other countries when it plans to make the business global (Brassington & Pettitt, 2000).  Economy also gets affected when there is change in the government and some major issues like war or any other disaster in the country. So based on all these economic factors the organization need to develop strategic plans in order to successfully survive under the stress of the economic rules and regulations.

Socio Cultural Factors: A business consists of either product or service and the ultimate aim of every organization is to fulfil the need of the customers either by providing a product or a service. Organization based on the society, its culture, status and values, should decide which products should be sold at which places. Like if an organization is producing toys then it should target residential areas, schools and other such segments (Porter & Kramer, 2006). There won’t be any profit if they do marketing at pubs or colleges because their target segment usually never visits such places. And the people at such places won’t ever be interested for their products. So an organization needs to keep this thing in mind that which segments they need to target and have a complete study on that particular segments ideas and values. Status even matters a lot as based on that the organization plans it profit. So socio cultural factor is also included under mega factors that can have great impact on the working of the organizations.

Based on all these factors the business planning for Quik Clips is needed to be done.

Mega Factors on Quik Clips:

In order to make a business planning for Quik Clips it is necessary to put it under the analysis tools and discuss how various factors of the analysis tools will affect the business of Quik Clips.

a)     Technology: This is one of the major elements of Mega Factor. Being a modern hair dressing Salon the Quik Clip cannot just function with a pair of scissors. As compared to other salons the organization needs to include some extra factors that can attract customers towards it and so it needs to introduce some technological stuff. Technology does not mean just introducing some machinery (Doyle, 1998). Although they also run on technology but still the planning needs to be cost effective and too much machineries can affect the cost of the organization. Technology like computer, internet can have positive effect on the organization as it can create database to manage the appointments and payments. In order to carry out marketing the organization can use internet for online marketing. Some machinery like advance hair cutting instruments can be used in order to have a competitive advantage over others. The machineries should not be purchased together rather after proper working of the organization the machineries and the technology should be upgraded (Kotter & Schlesinger, 1991).

b)     Economy: The Quik Clips will be definitely affected by the economy of the country. At one point Australia is economically strong and so any kind of business venture can have bright future. In order to properly understand the economic factor the data collected from the IBIS world would be helpful. According to the IBIS world data the Hair Salon basically comes under household disposable business. As such the revenue of the hair dressing and beauty industries of Australia has been quite constant in the five years (2005-2010) with just a rise of 0.9% annually. The marketers believe that it can increase to 2.3% in the year 2011-2012. The total share the hair dressing industry in the Australia market is quite low (www.ibisworld.com, 2012). As the organization is highly fragmented with some as small as household business and some quite big organizations, the competition rate is also very high. Thus according to the report the exit and entry level is also more in hair dressing industry. The researchers believe that it is mostly the operators based on whom the organization success can depend. Because of low profits in the past 5 years the industries registered a very few number of hair dressing companies. The researchers again believe that even though the competition is high in this segment but it is the tactics of the operator that can protect the profit margin of the organization.  According to the IBIS world the trends of the societies are changing and in next five years Australia will have a favourable condition for hair dressing market and so it can be a good investment venture (www.ibisworld.com, 2012). Based on this the Quik Clips industries need to focus on its operators and try to maintain a constant high quality service for long terms. After it has gain sufficient popularity it should move along with its franchise plans so that the people at other places immediately get attracted towards the organization. In this manner the organization can maintain its profit margin.

c)     Socio Culture: The organization is highly affected by the society because ultimately it is the culture of the society that will decide the fate of the Quik Clips.  The organization has planned to start its venture at Norhbridge. The people of the Northbridge are modern and belong to good status. The people are also stylish and love to enjoy their life (Mc Donald, 1992). As a result it is bound that they will definitely opt for good hair styles. This factor has a good effect on the organization. Even other parts of Australia also have standard and high status people. Australia also attracts a large number of tourists. The people are stylish and love to be presentable. Because of this in future also the plan of Quik Clips of having franchise all over Australia can also fetch them good market and good profits.

Conclusion:

So the overall recommendation would be that the founder of Quick Clips should start with a proper hair dressing salon at Northbridge where they should mainly hire some efficient operators and train them properly. The organization should include some minimum and highly required machines and with the rise in customer it can upgrade it technologies. After it establishes itself properly at Northbridge and have gain enough popularity it should move on with its expansion plans in Australia (Kotter & Schlesinger, 1991). The organization should save cost in marketing by opting cost effective marketing strategies like word of mouth and social networking.

So, the above discussion clearly explains the mega factors environment and the way by which Quik Clips can plan its strategy and survive in the market for a longer period. Only by proper services the organization can ensure maximum success.

References:

1. Baker, M.J. (2008). “Critical Success Factors in Destination Marketing”. Tourism and Hospitality Research, Vol 8, 2, pp; 79-97.
2. Brassington, F, Pettitt, S. (2000). “Principles of Marketing”. (2^nd Edition) (Essex,Pearson Education Limited: 2000)
3. Doole, I. and Lowe, R. (2008). “International Marketing Strategy”. Cengage Learning EMEA.
4. Doolin, B. 2003. “Narratives of Change: Discourse, Technology and Organization”. Sage Journals, Vol 10, 4, pp; 751-770.
5. Doyle, P. (1998). “Marketing Management and Strategy”. (2^nd Edition)(Hemel Hempstead, Prentice Hall: 1998).
6. Kotter, J. and Schlesinger, L. (1991). “Choosing strategies for change”. Harvard Business Review, pp.24-29.
7. Langlois, R.N. 2002. “Modularity in Technology and Organization”. Journal of Economic Behaviour and Organization, Vol 29, 1, pp 19-37.
8. McDonald, M. H. B. (1992). “Strategic Marketing Planning: A State-of-the-Art Review”. Marketing Intelligence and Planning, Vol.10 No. 4, pp; 4-22.
9. Porter, M.E. & Kramer, M.R. (2006) “Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility“, Harvard Business Review, pp.78-92.
10. www.ibisworld.com

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