New to AS Business ( BUSS1/BUSS2) | Step Up to A2 Business (BUSS3 / BUSS4)
Business response to the economic environment: zero hours contracts
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Co Op Bank’s USP vanishing trick
One of the strengths and a key component in the Co-Op Bank's USP after recent banking problems - sub-prime lending, collapse of Northern Rock and LIBOR rate fixing, was its emphasis of ethical banking.
http://www.co-operativebank.co.uk/
Ethics, supply chains and consumer responsibility
The horrific Bangladesh factory disaster has highlighted a number of business issues and proved a stark reminder of the global effects our purchasing decisions may or may not have on people halfway around the world. Tom White has already put up a blog with some initial thoughts; I thought I’d pose some further questions and examine some of the issues raised in that post.
A great starting point would be to listen to the ever-reliable Business Daily, from the BBC World Service. Their programme In the Balance invites guests to debate a topical business issue, and this week, the Rana Plaza disaster was under discussion.
One of the first questions to ask is to examine the extent to which firms which are supplied by such factories are responsible. There were more immediate causes, of course, such as the owner’s actions and the culpability of local regulation and enforcement (or lack of). But this is not the first time there have been such disasters, nor are the poor conditions in such factories surprising. So is it right that chains such as Primark continue to use such suppliers? Isn’t it their fault, with their demands for low prices and increased flexibility to meet the needs of the fast fashion market? Do they have a responsibility to ensure fair and safe working practices in factories they don’t own and which they are merely customers of? A lot of people would argue that yes, they do. But isn’t that the same as arguing we as consumers should audit the supply chains of the shops which we buy from? Primark is as much a customer as we are.
Reflections on the Bangladesh factory disaster
You may not want to dwell on this topic, which is so terrible that I am sure your first reaction to what has happened will have been highly emotionally charged. The scale of the tragedy only seems to grow, with the situation perhaps made worse by the realisation that these events are very typical of working conditions in many countries.
I've been putting together some links to encourage a bit of reflection on what, if anything, we can learn.
read more...»Political Risk: Global location and PEST analysis
Sometimes students get a bit stuck on the politics part of PEST analysis. How are businesses affected by politics? Lots of examples come up on the T2U Business blog. Firstly, politics is the law, and business legislation has a dramatic impact on firms. Then comes a bewildering array of regulations and tax implications. If you think that's complicated, consider the difficulties of making international location decisions. (I was wondering what might have brought BMW to the UK last year).
read more...»Findus hurdles to uncertainty
If you had lasagne last night you might be wondering if it was the last remains of the non-running hurdler "100% Pure Beef". Findus have a major problem to resolve after tests showed that their lasagne had been made from horsemeat.
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Virgin Mary crisps withdrawn by Pret.
After complaints from members of Protect The Pope, a Roman Catholic presure group; Pret A Manger’s CEO Clive Schlee removed the product from sale and apologised to The Church, he announced that the unsold packets of crisps will be offered to the homeless. Although no laws were broken, and no politician had expressed concern, it highlights difficulties associated with a firm's ethical behaviour - whose ethics, whose values drive what is acceptable to society.
The new product drew attention to the brand, but it
illustrates the importance of PEST analysis and Delphi techniques before a
product is launched, it also indicates the influence of new media and blogs used by pressure groups to influence opinion and commercial decisions.
Planet Money
My students know that I love the radio. Many a spare half an hour can be whiled away with a podcast of The Bottom Line (which returns on Thursday/Saturday this week), or More or Less, or Peter Day’s World of Business. And the great thing about this form of learning is that it can overlap with other tasks – there’s no opportunity cost! Listen to a business/economics podcast whilst at the gym, going for a run, doing the washing-up, whatever…
But whilst Radio 4 is well-scouted territory, but one students might not be so familiar with is NPR’s Planet Money. This show, from America’s public radio, is quite close in style to R4’s More or Less with a more of a business focus. 2 fifteen minute shows are podcasted a week.
This edition is a great place to start.
Stakeholder conflict - the battle over rewards of work
Investors vs Managers vs Employees - a classic example of stakeholder
conflict - is to be examined in a 30-minute radio programme on Monday
evening, spotted by my colleague David Wright and of potential value to teaching Business Studies as well as Economics. Radio 4’s Analysis series will be
looking at “...how the relative power of executives has grown and is now
reflected in their own
much higher financial rewards and enhanced esteem. And if both workers
and investors want to increase their influence and their share of the
rewards how might they go about it?”.
The programme will also look at the power that trades unions held in the 1960’s and 70’s, and how that power was lost. Looks like a useful half hour: BBC Radio 4 on Monday 21st January at 8.30pm.
Dreamliner or nightmare
A directive from The US Federal Aviation Administration has stopped flights of the Boeing 787 Dreamliner, until the plane maker has satisfied the regulator that it has resolved problems with the aircraft’s battery systems. Boeing’s shares had dropped by 2% $72.80 (£45.50) after the announcement. The share price of GS Yuasa the Japanese battery maker had fallen 11% since 7 January when an electrical fire broke out on a JAL 787 at Logan International Airport in Boston.
BUSS4 Culture and Leadership: Walsh vs Branson - again
Looking ahead a little to teaching BUSS4 topics next term, the ongoing spats between BA and Virgin Atlantic provide a consistently rich seam of resources for exploring the themes of business culture and leadership. And in the last few weeks, they have done it again. Willie Walsh and Sir Richard Branson have been sniping at each other in an entertaining and characteristic manner.
It started with reports that Branson might sell some of his 51% share of Virgin Atlantic. Walsh suggested that Virgin would not be around as a brand in five years time. Branson was in conciliatory mood; he responded that he would not bother to sue Walsh for his comments on this occasion but instead he would put up £1m, to be distributed to BA staff should Virgin Atlantic cease to exist, if BA agreed to pay Virgin Atlantic staff the same amount should the brand still exist in five years. Rather more aggressively, Walsh's counter-offer is a knee in the groin, on the basis that he considered the loss of £1m would not hurt Branson's personal fortune, whereas the physical assault would be equally painful for either recipient.
Some more background to the altercation is needed for any student wanting to use this example as evidence in an essay; it will only count as anecdote without accompanying analysis. This article will offer that background, along with a brief history of previous bickering and legal challenges between the two airlines - essential detail to strengthen student analysis.
Possible industrial espionage reveals the value of Dyson’s innovation
Many Business students get round to considering the importance of research and development (R+D) and innovation to firms. To many, it’s seen as a crucial component to business success. Firms often keep all kinds of secrets and guard them jealously. Now a story has emerged of a possible spy at Dyson, long seen as a key UK-based innovator.
read more...»Crash and burn BAE EADS merger collapses
According to Robert Peston of the BBC the BAE EADS merger proposal has failed. Analysts, shareholders, staff and suppliers amongst others expect BAE's board to find a new strategy.
read more...»Deal or No Deal
As the October 10th deadline approaches, the board of BAE face significant difficulties to
complete the proposed merger with EADS.
The Collaborators
Rather than merge with a rival, car firms may form alliances in the development of new products.
BAE EADS - Will the merger stall or take off?
The BAE EADS merger proposal ought to help pupils attempt develop analytical skills using PESTLE, SWOT or stakeholder models. Can you use these management tools to develop your analysis and evaluation and go beyond application and understanding?
Up Up and Away
British Aerospace (BAE Systems) and EADS announced that they are discussing a merger.
Legal environment: health and safety in the workplace
Often students are looking around to see how firms are affected by the legal environment that they operate in. All UK firms, big and small, are influenced by health and safety regulations, which might be starting to change.
read more...»The buck stops here or here or here.
The allegations of price fixing of Barclay’s LIBOR rates have led to the resignation of The Chairman Marcus Aegis on Sunday night, politicians, and journalists wondered if Bob Diamond, The Chief Executive ought to be on his way out instead.
read more...»Libor Isn’t Working
Barclays have been fined for fixing prices or interest rates. The London Interbank Offered Rate (Libor) interest rate is used to price loans and savings rates.
Savers might have received lower interest on their deposits from 2005, and borrowers may have been forced to pay more on their loans.
read more...»Retrenchment in Greece - Carrefour sells out for one euro
The Greek economy contracted 6.5% in the first quarter of 2012. Carrefour, the massive french supermarket which is the world’s second largest retailer, has been operating in Greece in a joint venture with local partner Marinopoulos since 1999 and had 41 hypermarkets, 287 supermarkets and 479 convenience stores in Greece and Cyprus. They made 2.2 billion euros of sales there last year, but are thought to have made a loss of 440 million euros on that revenue.
A fall in sales of a further 16% in the first quarter of this year has now convinced Georges Plassat (a new CEO who took up his post last month) that it is worth taking a loss of 220 million euros to get rid of the business by selling it to the Joint Venture partner for just one euro, and the stock market clearly agrees with him as shares in Carrefour rose by 2.8% in Paris. Here is an example of a new CEO quickly making a decision to mark a change in strategy. Reuters quotes an un-named analyst who implies that the company needs to focus on its core business: “Greece was a market which had been dragging on them. They have their hands full with other projects. It’s better for them to concentrate on saving their French operations.”
M&S took a similar decision last month when they took a 44.9 million pound write-off on their Greek business. French bank Credit Agricole is transferring assets to France from its Greek subsidiary Emporiki bank. Given the deep uncertainty about what will happen to the Greek economy, a business strategy of retrenchment is looking like one which may gain momentum amongst overseas investors.
Revision Presentation - Government Intervention in Takeovers and Mergers
This revision presentation outlines the reasons why governments might support or intervene in takeovers and mergers
read more...»Contingency planning and the break-up of the Euro
The textbooks often find it hard to come up with a topical example of contingency planning which has widespread application - but I suspect that the possible break-up of the Euro zone is a good one. In fact I think this has to be the best example of a possible future event which is of such significance that almost every sizeable business needs to consider contingency planning.
With that in mind, this pdf document from accountants Deloitte provides some useful evidence of how contingency planning works. Its a detailed document and certainly not worth printing or reading in full. I have jotted down some examples from the document further below to illustrate the role that contingency planning plays for this potentially significant risk.
The key for students is to use examples like this to help develop the depth of their analysis. By using the Euro crisis, they are also able to demonstrate the use of relevant, independent research in their answers.
Let’s take a look…
read more...»The decline of the PLC?
For most teachers and students, the Public Limited Company is seen to be the dominant type of private sector firm in the economy. But could that cease to be true? It’s not just the disappointing launch of Facebook as a PLC that has dented enthusiasm for this form of legal structure. A recent Economist article argues that the PLC may already be some way into a long term decline.
read more...»Shareholder conflict: the story so far – and its relevance to evaluation
Two themes wrapped up together here.
Firstly, you will be sure to have noticed references to a ‘Shareholder Spring’ in which normally quiet and docile shareholders have been increasingly resistant to executives’ claims for ever higher rewards. There’s a link to a very handy summary below.
Secondly, this serves as a reminder of one of the several ways in which you can boost the evaluative component of your answers.
A detailed look inside Apple’s Foxconn factory
A fascinating and detailed look here at working conditions at Apple’s main supplier in China. This 15 minute video raises a lot of issues which students can develop; particularly useful for any discussion around CSR, but also excellent for operations and HRM. In the video, ABC News Nightline goes behind the scenes of the FoxConn factory - the operation which makes iPads and iPhones.
read more...»Revision Presentation - Business Legislation
This comprehensive study presentation guides students through the relationship between business and legislation (the “L” in PESTEL” analysis). It outlines the main purposes of legislation in the business environment, including consumer protection, environmental laws, competition policy and health & safety. It also provides some recent case studies of firms and industries affected by changes in legislation.
read more...»UK manufacturing - GlaxoSmithKline invests in 1,000 new jobs
The relationship between business and the government - one important element of this is government support for business investment through fiscal policy (taxation), regulation and legislation. Yesterday Glaxo announced that they were investing £500mn in a new factory in Cumbria which will provide 1,000 much needed jobs. And this extract from the BBC article about this shows how government has helped to bring this about:
Glaxo said it was motivated specifically by Chancellor George Osborne’s confirmation in the Budget on Wednesday that the government would introduce so-called patent boxes.
These allow corporations to pay a lower rate of tax on profits generated from UK-owned intellectual property.
“The introduction of the patent box has transformed the way in which we view the UK as a location for new investments, ensuring that the medicines of the future will not only be discovered, but can also continue to be made here in Britain,” said Glaxo chief executive Sir Andrew Witty.
“Consequently, we can confirm that we will build GSK’s first new UK factory for almost 40 years.”
A useful little piece of evidence to use if writing BUSS4 essays on this topic.
Legislation forces Coke and Pepsi to change their recipe
Coke and Pepsi are estimated to have a 90% share of the global market for fizzy drinks between them and both fiercely guard the ‘secret recipes’ which protect their strength in the market. However, the state of California has added the chemical 4-methylimidazol to its list of carcinogens, and both companies use this ingredient to add chemical colouring to their drinks. If they continue to use it, they would need to add a cancer warning label to their cans and bottles, to comply with California laws - and neither want to do that.
read more...»Business legislation - the cost to businesses
AQA BUSS4 students are likely to be covering Business Legislation and Business and the EU about now. News over the weekend about new regulations giving workers a legal right to extra time off work if they become ill while on holiday give a useful case study combining both areas, as the regulations are due to changes to the European Working Time Directive, and state that time taken off work for sickness, maternity and paternity leave must be given to workers in addition to their legal right to annual leave.
read more...»Pub landlady wins TV football court case: a crucial insight into EU law
You might reasonably believe that a legal squabble about screening Sky football matches in the pub had little to do with Business Studies. But in fact the recent ruling sheds a clear light on the single most important feature of the European Union to UK businesses.
read more...»Bullet point 5 and stakeholders again
Competitors and customers are both stakeholders, and can both be significantly impacted by a takeover or merger. Sir Richard Branson can always be relied upon to have a comment to make about anything that British Airways do, and he doesn’t let us down here as Virgin Atlantic have lodged a formal complaint on the proposed merger between IAG (owners of BA) and BMI to the European Commission.
Virgin has said passengers would be left with a “choice of one” on flights between Aberdeen and Edinburgh and Heathrow. There is some great data in this article about the complaint from both sides, about Virgin’s claims of reduction in services and increase in prices for passengers which are likely to result from the merger, and BA’s counter-claims about increases in viability of services between Heathrow and Scotland. There is clear reference here to bullet point 6 - the reasons why governments might support or intervene in takeovers and mergers - as well as Sir Richard calls on “regulatory authorities, in the UK as well as in Europe, give this merger the fullest possible scrutiny and ensure it is stopped.” Definitely one to add to the BUSS4 resources!
Vestas – has the wind gone out of their sales.
Last Wednesday, Vestas the leading supplier of wind turbines posted a substantial operating loss of €166m on its operations. This has led to the resignation of the Chief Financial Officer Henrik Norremark, and the Chairman Bent Carlsen and two other main board directors. Norremark was about to be promoted to Chief Operating Officer, in control of the firm’s manufacturing operations.
read more...»Glenstrata - Glencore proposes merger with Xstrata
Yesterday morning’s business news has been dominated by the proposed merger of Glencore and Xstrata. Glencore’s 34% holding of Xstrata shares had made a third party approach for Xstrata very difficult if not impossible.
read more...»PEST - IAG and BMI acquisition
International Airlines Group or BA and Iberia are trying to acquire BMI from Lufthansa.
A move which would allow IAG would gain c. 56 additional take-off and landing slots at Heathrow. Lufthansa had bought up most of BMI’s shares in 2008 but has failed to prevent the group losing money.
Integration, integration, integration
HP is an example of a firm which is struggling to integrate acquisitions, and the perils of diversification.
German works councils enforce VW’s work-life balance!
Germany has long been noted for the strength of its trade unions, and the power of the works councils in manufacturing industries. Concerned about the blurring of the divide between work and home life, Volkswagen’s powerful works council has struck an agreement with management that most employees who use a company BlackBerry will be subject to new email restrictions. The company’s email server will cease routing messages 30 minutes after the end of an employee’s shift and will only begin sending mails again half an hour before the next working day begins.
read more...»Great product, bad management?
At first glance, Olympus is a market leader in the endoscope market, miniature cameras used in micro surgery and engineering inspections.
CGI modelling gauze and effect
Photographs of flawless models with tiny waists, perfect bums and endless legs, may hold the attention of consumers, but is it ethical to use computer generated images to promote a firm’s clothing ranges?
The Boston Matrix, whisky and booming exports
Don’t know why I keep using alcoholic beverages as examples in my lessons, but a recent discussion of the famous Boston Matrix got us all thinking which drinks belong in which Boston Box category. We decided that Guinness probably represents a cash cow for its producer, Diageo. In Europe, the market for beers is stable, or shrinking. But Guinness is a popular brand, with a large market share. It’s a good earner for the drinks giant.
But the Boston Matrix hints that there are better marketing opportunities out there: like grabbing a large share of fast growing markets – and developing star products. And that’s what Diageo have done, with whisky exports to China of popular brands like Johnnie Walker rising so fast the industry is struggling to meet demand.
read more...»Stakeholders argue over executive pay
It seems that this debate isn’t going to go away, which will surprise few of you. At a time when the economy is struggling, unemployment is rising and living standards are stagnant, why is one group in society getting so much wealthier? One pressure group, calling itself the ‘High Pay Commission’ (they are obviously trying to draw parallels with the government’s own Low Pay Commission) is in the news for publishing a report describing high executive pay as ‘corrosive’.
read more...»Olympus Epic Fail
The scale of the failings in corporate governance at Olympus is breathtaking. The company has misled, shareholders, banks, auditors, stock markets, Japan’s government, and staff about the true state of its finances over a 20 year period. It is Corporate Social Irresponsibility on the grandest of scales.
read more...»Corporate Irresponsibility at Olympus
Recent problems at Japan’s Olympus Corporation highlight the importance of corporate culture, ethics, Corporate Social Responsibility and management responsibility to shareholders and other stakeholders.
Problem for Pupil - PEST Solution
Entrepreneurs are risk takers, they spot gaps in a market where customers’ needs are left unfulfilled. They have to balance cash flow management against overstocking, anticipate the likely responses of intelligent rivals and the capricious behaviour of external regulators or governments.
read more...»A level playing field for football on TV
Pubs and clubs that want to show live football, cricket or rugby on Sky TV have to be extremely confident that it will raise their profits - the monthly cost of subscription runs to over £500 per month. For many, showing live sport is a way to keep customers coming to the pub rather than drinking at home, so may be the only strategy available to stay in business.You can easily see the benefit of finding a cheaper source of satellite broadcasts if possible, and this is the background to the well-publicised case in which Karen Murphy, landlady of a pub in Portsmouth, was taken to court by Sky and the Premier League for using a cheaper Greek decoder to bypass controls over match screening. The European Court of Justice has ruled that national laws which prohibit the import, sale or use of foreign decoder cards are contrary to the freedom to provide services.
read more...»Stakeholders gripped by the bad news coming from BAE Systems
Bad news this week from Britain’s second biggest manufacturing employer (the biggest is here), BAE Systems (formerly British Aerospace). The company is threatening to cut 3,000 jobs, many of them in highly skilled and technical roles making aircraft.
The reasons for this are interesting enough, but I was drawn to an article because I’d been thinking about business stakeholders. Bad business news – on this scale – reveals just how many people have a stake in the business.
Samsung seeks a ban on Apple products
Samsung and Apple are the world’s two biggest manufacturers of smartphones, and Samsung’s Galaxy Tab has become a huge-selling rival to the iPad, which has dominated the growing market for the touchscreen devices. Rather than focus on competing with each other on price or promotion, the two are focusing on features of their products and at each other’s throats at the moment over allegations of breach of patent. In the current round of claim and counter claim, Apple started it in April by accusing Samsung of copying its smartphones and tablet computers. Apple claimed that the Galaxy phones and tablets ‘slavishly’ copied its own designs for icons and other design features, while Samsung said that the look of their products was the results of market research and not copying. Later in April Samsung responded with their own claim that Apple was copying Samsung features in the area of wireless communications standards and mobile device user interface, and breaking patent legislation in five countries. The escalation has now reached the stage at which Samsung has asked the US International Trade Commission to ban the import of Apple products into the United States.
read more...»The Irresistible (?) Rise of the Super Rich
I wasn’t surprised to pick up on the news that the world’s wealthiest people are now richer than before the credit crunch. A striking feature of the last thirty years has been the emergence of a tiny group of people capturing a relatively enormous slice of national income. You may be astonished to learn that in the UK, the wealthiest 1000 people have assets worth more than £330 billion (that figure alone represents a sum equivalent to almost 40% of the entire debts of the UK government).
This raises a number of issues in Business. Firstly, you might focus on the marketing opportunities this offers to some firms. Equally, you might reflect on the CSR and ethical implications of this state of affairs. And finally: will it last? Might the tide be turning, with the next thirty years seeing attitudes change and tolerance for this situation coming under attack from electorates and their governments?
read more...»A2 Business: Six key global trends that are shaping business strategy
Students who can point to some overriding trends which help shape strategic direction and choices are much more likely to write interesting, persuasive and evaluative essays. This new report by consultants Ernst & Young is a pinch of gold dust for such students, as it examines in a reasonably accessible way six broad, long-term developments which shape business around the globe.
read more...»Economic environment: Emerging Markets
We’ve lived through an extraordinary period in world economic history. Sustained economic growth outside the areas once seen as the ‘rich world’ - primarily Western Europe, the US and Japan – is reordering the global balance of economic power.
The ‘emerging markets’ is a term used by commentators to group together some of these awakening giants. You may have heard of the BRIC economies - Brazil, Russia, India and China - a label that serves as a handy acronym to remind you of some of the key players. But there are plenty more. What does this mean for business?
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