Classifying Organisations by Sector

In relation to sector, organisations can be classified as either public, voluntary/charitable, and private sector organisations. The public sector includes organisations which offer basic public services and are controlled by the government (Khan and Khandaker 2016). These organisations offer services to all members of the public and do not make profits out of offering public services (Weir et al. 2015). Examples of such organisations include the National Health Service (NHS), public schools, policing, and the armed forces among others. These organisations receive funding from taxation and national insurance. In the UK, the public sector spends the largest amount on social welfare activities (Khan and Khandaker 2016). If you are delving into the dynamics of all these sectors, you may find business dissertation help the most valuable resource.

The private sector includes individuals and organisations that offer goods and services with a primary aim of making profit (Khan and Khandaker 2016). The profits are distributed to shareholders and owners while some portion is reinvested. Examples of organisations in the private sector include John Lewis, McDonald’s, Tesco, and Royal Mail Plc among others. Many organisations in the private sector attempt to act in a socially responsible manner by providing their employees a good working environment, being a good citizen in the local community, and through supporting a clean environment so as to gain a competitive advantage (Weir et al. 2015). Additionally, firms in the private sector gain a competitive advantage through making sure their products and services are valued at a better price compared to those of their competitors (Jong 2016). As a result, they gain more customers which translates to higher profits.

Organisations in the voluntary sector are different from those in the public and the private sector as they are not controlled by the government and yet they do not aim at generating profits (Demirbag et al. 2017). The voluntary sector has a primary purpose of benefiting and enriching the society with little or no support from the government (Khan and Khandaker 2016). Unlike organisations in the private sector, the voluntary sector reinvests all the money it raises in order to ensure in helps even more people. The aim of individual voluntary organisations reflects the concerns and interests of its founders, which means that charities have tightly defined charitable purposes which reflect the intention of the founders and restricting what the charity exists to accomplish. For example, the charitable purpose of Cancer Research UK is to realise a cancer-free world thus all its resources are geared towards researching and developing new interventions to fight cancer. The organisation (Cancer Research UK) funds scientists, doctors and nurses to help beat cancer soon while providing cancer information to the public in order to create a more informed community (Cancer Research UK 2019). The organisation was co-founded by Nick James and Sally Tweddle with an intention of helping people living with cancer. Nick James is a cancer specialist at the Queen Elizabeth Hospital and a Professor of Oncology at the University of Birmingham Institute for Cancer Studies while Sally Tweddle had struggled finding cancer information and help when caring for her husband who was suffering from cancer (Cancer Research UK 2019). The two came together with an aim of making cancer information more accessible while developing more interventions for cancer patients so all people with cancer could find cure. Up-to date, Cancer Research UK reflects the intentions of Nick James and Sally Tweddle.

A stakeholder can be defined as a group or an individual who affects the ability of an organisation to achieve its objectives and who is affected by the achievements of an organisation (Bourne 2016). An organisation is responsible to stakeholders. Stakeholders can be grouped as primary or secondary stakeholders. Primary stakeholders are groups or individuals whose failure to participate in an organisation results in organisation’s failure to attain its objectives (McGrath and Whitty (2017). On the other hand, secondary stakeholders refer to groups or individuals who are not engaged in an organisation’s transactions yet they are affected by the achievements of an organisation (Matuleviciene & Stravinskiene 2015). Examples of primary stakeholders are customers, suppliers and employees while examples of secondary stakeholders include the competitors, the media, and support groups among others.

Shareholder own corporations but they do not always run them; they elect directors who in turn appoint managers to run corporations (Queen 2015). Shareholders give guidelines through which directors and managers should run the organisation which implies that corporations are ran in the best interests of shareholders (Queen 2015). Shareholders not only own corporations but also provide financing for public organisations (Bach and Metzger 2015). There are two types of shareholders namely common shareholders and preferred shareholders. The common shareholders own a corporation’s common stock and are the most common type of shareholders while the preferred shareholders own a share of an organisation’s preferred stock (Berezinets et al. 2014). These two types of shareholders see an increase in their value following positive performance but common shareholders have a higher capital gain.

Stakeholder analysis is a tool used by organisations to generate knowledge about actors in order to understand their intentions, behaviour, interests, and interrelations and for assessing the resources and influence they bring into decision-making and implementation processes (Missonier and Loufrani-Fedida 2014). Stakeholder analysis helps an organisation identify its primary, secondary and key stakeholders and determine the impact their interests have on organisational viability. Below is a demonstration of application of stakeholder analysis in identifying NHS stakeholder groups and evaluating their needs in the process of improving clinical coding systems.

In assessing the stakeholders, the above table considers the power, influence and the extent to which these stakeholders are affected by the change. To effectively implement the change, NHS should satisfy the needs of opinion formed who occupy the upper left part of the table. In addition, NHS should manage key stakeholder on the upper right part of the table through communication and consultation. Further, the organisation should monitor stakeholder in the lower left part of the table but their effect is insignificant to the success of the project thus could be ignored if resources and time are limited. Finally, NHS should inform stakeholders on the lower right part of the table but also make efforts in increasing their influence by empowering and consulting them.

The success of any organisation depends on its ability to adapt to the environment in which it functions. Cadle et al. (2014) note that there is a close and continuous interaction between an organisation and its environment which helps an organisation gain competitive advantage. By understanding the social, political, economic, legal, and environmental factors, Whitbread will benefit in the following ways. First, it will be able to identify opportunities and threats thus operate in a way that leverages its performance. Second, it will benefit with continuous learning which helps it skilfully deal with business challenges. Through environmental analysis, Whitbread will continuously update its knowledge, skills, and understanding to meet the projected changes in the business environment. Third, environmental analysis will help Whitbread build its image through showing sensitivity to the environment in which it operates.

PESTEL remains the dominant framework organisations adopt in conducting environmental analysis. The primary aim of the PESTEL analysis is to help organisations identify and analyse relevant macroeconomic variables including political, economic, social, technological, legal, and environmental. In this exercise, PESTEL framework is used to identify and explain five important microenvironmental factors that are currently affecting the operation of Whitbread.

The government has come up with tight regulations for selling alcoholic drinks in the leisure industry which has limited Whitbread’s product range. Following these regulations, Whitbread has to abandon the sale of some alcoholic beverages while developing its products to meet governmental requirements. Second, the government has increasingly invested in the leisure industry, which has attracted other businesses such as casinos, bingo, and bookmakers. This governmental investment has made the leisure industry more competitive forcing Whitbread to innovate and develop its products or it loses its customers to competitors and new entrants.

Additionally, the government is sponsoring leisure facilities which has resulted in some form of ownership; this has forced Whitbread to revisit its pricing strategy or else it loses its customers to the governmental sponsored leisure facilities.

Brexit has lowered the value of sterling, which according to Deloitte (2019), has resulted in a 3% decline in the amount consumers spend on leisure; this implies that Whitbread is incurring lower profits compared to pre-Brexit years. In addition, Edginton et al. (2014) note that lower inflation has increased consumers’ purchasing power, which implies that Whitbread is having higher profits in the post-recession period. Further, Edginton and Chen (2014) write that the UK leisure industry heavily relies on EU labour and given the negative effect of Brexit of free movement of people, Whitbread may find it hard to find replacements could the UK government place restrictions on EU citizens working in the UK.

A report by Deloitte (2019) reveals that consumers in the UK are increasingly looking for ways to enrich their lives through experiences with an aim of making their everyday life more memorable and enjoyable. As a result, leisure activities are no longer juts for special occasions. Following this shift in consumption, Whitbread is receiving more visitors resulting in an increase in revenue. On the other hand, Horner and Swarbrooke (2016) note that consumers in UK are looking for destinations to experience and socialise; this increase in leisure expenditure has attracted more revenue for Whitbread.

According to Deloitte (2019), technological changes and innovation have impacted most parts of the leisure industry while completely transforming some operations. For example, digital disruption has provided consumers with more information facilitating the decision-making process. Through organisational websites and social media, consumers can share experiences with their peers, which has shifted power from businesses to consumers. In response to this technological change, Whitbread is investing in good service and positive interaction while tailoring their products and services to the needs of consumers. Whitbread has remained active on social sites in order to attain this aim.

The quality of the environment is essential for organisations in the leisure industry and consumers are interested in non-polluted environments. In the recent past, the government has put a lot of emphasis of environmental conservation resulting in higher quality environment. In addition, consumers are more careful to manage waste, which has resulted in well-conserved tour sites. These well conserved and preserved sites have attracted more visitors resulting to an increase in Whitbread’s revenue.

The Anti-Trust law forbids business from forming monopolies and engaging in non-competitive practices resulting into a hyper competitive business environment. In compliance to this law, Whitbread has to set competitive prices, develop competitive products and services and view other firms in the leisure industry as rivals. As such, Whitbread must ensure all its actions leverage its performance.

The five forces as identified by Porter include threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitute products and services, and the rivalry among existing competitors (Dälken 2014). Many practitioners and scholars consider these five forces as a robust tool for analysing a firm’s competitiveness while helping balance power within a given industry (Rothaermel 2017). Porter’s five forces still remain relevant to firms seeking to gain and maintain a competitive advantage. First, the forces help an organisation identify and assess its strategic direction and options; the model posits that markets are stable and finding a position is adequate for organisations to survive (Ural 2014). Nonetheless, in the current hypercompetitive environment, surviving means that an organisation has to develop a competitive strategy to create long-term value for stakeholders and multiple ways of engaging customers, which is possible with Porter’s five forces (Dälken 2014). Second, Porter’s five forces helps organisations in the innovation process. According to Rothaermel (2017), addressing new market entrants helps an organisation identify and assess factors promoting the rise of new firms thus develop its products and services to fill the gap thus keeping off new entrants. Third, Porter’s five forces helps an organisation understand the factors influencing competition in the business environment thus adjust its strategies in order to remain competitive. this section consider how Whitbread is responding to competitive forces in the leisure industry in order to remain competitive.

The UK leisure industry is rapidly growing and the government is increasingly encouraging and facilitating the sector on priority basis resulting in a very high threat of new entrants. Whitbread is creating an entry barrier by developing its products and services while building its image in order to maintain a large customer base. In addition, Whitbread is relying on its technological power to make it easier to communicate and engage its customers, with an aim of realising more loyal customers. Further, Whitbread has maintained a database of its customers to send them messages regarding its new offers and promotions, which is further aimed at retaining its customer base. Through its interactive website, Whitbread hopes to shield its customers from new entrants.

The entry of substitute products and services in the leisure industry is very high given the ever-changing consumer needs and technological advancement and innovation. To ensure that it does not lose its customers to substitute products and services, Whitbread invests in differentiation and customising products and services to personal preferences (Whitbread PLC 2019). Through differentiation, Whitbread is able to offer a wide range of goods and services that matches the needs of different consumers. On the other hand, customising products and services ensures the needs of individuals are met, which further shields its customers from substitute products/services. Additionally, Whitbread maintains customer satisfaction and conform to create low room for substitutes. Further, Whitbread is committed in providing quality services and comfortable surroundings to shield its customers from substitute products and services.

The bargaining power of supplier is low in the leisure industry. Nonetheless, Whitbread has strong links and support aimed at maintaining a good bargaining power with suppliers. The company has different ways of engaging its suppliers including an annual Whitbread Supplier Conference aimed at strengthening the relationship with suppliers (Whitbread PLC 2019). The company also holds regular meetings with its suppliers in order to monitor performance, share information, and identify mutually beneficial opportunities. Whitbread also undertakes an ethical audit programme with its suppliers to ensure it remains responsible (Whitbread PLC 2019). Through these initiatives, Whitbread has been able to maintain its suppliers while proving high-quality products to its customers.

Given that the leisure industry falls in the service sector, buyers have very high bargaining power. To ensure that its customers do not keep changing brands, Whitbread prioritises the comfort of its customers while ensuring its products and services are of high quality. In addition, Whitbread banks on product differentiation to serve different needs of its customers in the most efficient way. Further, Whitbread offers its products and services are competitive prices while ensuring the highest quality (Whitbread PLC 2019). Even with a decline in the cost of a product or service, Whitbread ensures quality remains high given that it is the experience that influences repurchase decisions. Quality is the primary factor that Whitbread uses to minimise the bargaining power of customers.

The leisure industry is very competitive. Due to high competition, Whitbread keeps it price margin low. Internationally, countries have opened up their borders allowing people to tour their heritage sites. This implies that Whitbread not only risks losing its customer to local competitors but also to international leisure organisations. High quality services and innovation could help Whitbread remain competitive in this hypercompetitive industry.

Whitbread’s Key Performance Indicators (KPIs) are operational team retention, brand performance, and brand expansion. In relation to retention of operational team, the company hopes to retain its employees with an aim of providing better services to its customers while lowering the cost of recruitment and training. In the 2017/18 financial year, the retention rate was at 88.8% while in the 2018/19 financial year, the retention rate dropped to 88.4% (Whitbread PLC 2019). In 2018, the company has projected the operational team retention rate for 2019 to be at 90% but it failed it accomplishing this short-term goal (Whitbread PLC 2019). This implies that Whitbread requires to invest more in employee engagement and satisfaction in order to realise in long-term retention rates. Among the recommendable measures are open communication, regular training and development, and offering employees international experience.

In relation to brand performance, Whitbread has three categories namely Premier Inn, Restaurants, and Costa. Under Premier Inn, the company realised a performance decline margin of 1.3 points in the 2018/19 financial year. Under restaurants, Whitbread realised an increase in performance with 4 points while under Costa the company realised a performance decline of 2.7 points (Whitbread PLC 2019). In light of this information, Whitbread was only able to realise its brand performance short-term goals for Restaurants while failing for both Premier Inn and Costa. As such, it can be suggested that the company opens more restaurants as they are doing well. In addition, it is also recommendable that Whitbread conducts consumer surveys on brand recognition and preference and develop its Premier Inn and Costa brands based on the collected feedback.

In relation to brand expansion, Whitbread hopes to grow both locally and internationally to be the leading organisation in the global leisure industry. In the financial year 2018/19, the company closed down more than 100 branches resulting in failure to attain its short-term goals. In order to attain its long-term goals, Whitbread will have to rethink its expansion strategy in terms of what informs a strategic location and the preferences of the people to be served (Whitbread PLC 2019). It is also advisable that Whitbread expands to international markets where the demand of its products and services is high. The company should also consider serving the online market through developing online shops for its products and organising for deliveries, which will go a long way in ensuring its serves potential but busy or immobile customers.

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