L4.3 Examine the impact of the private sector on procurement or supply chain activities

Question 1

4 objectives of private sector organisations

*income eg. sales of products/services, govt subsidies, interest received and investment income generated
*expenditure eg. utility bills, salaries, rent, loan repayments, capital asset purchases (machinery, land…), direct purchases (raw materials…)

Case study: Indian Ministry of Tourism initiated a CSR scheme to protect and promote its heritage and historical sites, by moving the operation and mgmt of these sites from the public sector to the private sector
- co.s involved derive no financial benefit, but will use their CSR funds for the promotion and upkeep of each site

Answer 1

1. Economic viability
   - main aim: making a PROFIT
   - not reliant on govt funding nor public accountability, but still subject to public scrutiny and accountable to their shareholders
   - GROSS PROFIT = sales revenue - cost of sales
   - NET PROFIT = gross profit - expenses, used to…
   » pay to the owners
   » invest into growing the biz
   » acquire other co.s to increase market share and REDUCE COMPETITION -> increase profitability
2. Increase market share
   !! Market share is the amount of OWNERSHIP or CONTROL an org. has over a particular area of the market through VOLUME OF SALES or VALUE OF SALES.
   - can increase through good reputation, eg. best price, good customer service, reliability, strong ethics policy, sustainability
   !! A monopoly has the MAJORITY share of the market.
3. Increase shareholder value
   - shareholders have RIGHTS within the org, eg. voting in decision-making, share in company’s profits, take legal action against the org. if it commits wrongful acts
   - growth in org. performance -> share price increases -> shareholder value increases
4. Environmental, social and governance (ESG) responsibility
   - ESG = a measurable sustainability assessment, similar to CSR but MORE MEASURABLE. Financial performance remains key and so can create a sustainable credit rating for the org. and investors
   - CSR refers to the overall big picture of organisational values and goals
   eg. using sustainable suppliers, donating a % of profits to a local charity, contributing towards a community project

Question 1

Regulations that impact on proc. and supply chain operations
1. 7 criteria that internal regulations are likely to be based around
2. 6 generic regulations and standards that the private sector must comply with

Answer 1

Internal regulations are likely to be based around…
1.CIPS Code of Conduct
2. Code of ethics
3. Anti-bribery policy
4. Sustainability policy
5. Environmental awareness
6. Transparency {in processes and in supply chains, eg. modern slavery?}
7. Accountability {think regular reporting?}

Generic regulations and standards
1. International Labour Organisation (ILO)
2. International Organisation for Standardisation (ISO)
3. Bribery Act
- legislation making it a CRIMINAL OFFENCE for biz to fail to prevent bribery intended to get biz advantage
4. GDPR (General Data Protection Regulation), or other privacy laws
- safeguarding and not sharing suppliers’ or customers’ information w/o their CONSENT
5. Health and Safety Regulations
- ensuring SAFE WORKING ENVIRONMENTS for employees, customers and suppliers
6. Equality Act 2010
- legislation that aims to eliminate DISCRIMINATION, and promote equality and FAIRNESS for ppl including in the WORKPLACE

Question 2

7 main differences between the public sector and the private sector

Answer 2

1. Flexibility - less vs more
2. Contracts - often pre-written or can be bespoke vs can be bespoke
3. Mgmt of suppliers - according to processes vs as required as long as anti-bribery, coercion, unethical conduct etc. don’t occur
4. Negotiation- limited vs freedom to negotiate
5. Scope of suppliers for bidding - Details of proposed work have to be published to allow all interested suppliers to bid vs Buyers can invite who they want to bid and disregard anyone they choose not to work with
6. Relationships - harder to manage due to RESTRICTIONS in policies vs often more personal and LESS REGULATED & easier to have dialogue with suppliers which may promote innovative solutions
7. Branding and image - less significant vs more significant in private sector

Question 3

The importance and role of an org’s BRANDING in proc. and supply activities
1. Functions of a brand + 8 elements of a brand
2. Concept of branding + branding vs marketing + 7 things that can be branded

Answer 3

Functions of a brand: inform consumers of…
1. what the product IS
2. what the product CAN DO
3 why the product is the DESIRED CHOICE
- to attract suppliers and customers to work with/buy from an org.
- can incur reputational damage if org.s associate with unethical businesses
- 8 elements: advertising, marketing, trust, identity, value, design, logo, strategy

Concept of branding
- relates to telling consumers WHICH PRODUCTS / ORG.S TO VALUE and the reasons WHY
- vs marketing: telling consumers WHERE they can access the brand
- w/o a brand, a product becomes a COMMODITY and is valued only at its net worth, w/o any reputation, brand awareness or loyalty
eg. water vs Evian = resource vs brand; petrol vs Shell = commodity vs brand

Things that can be branded
1. Goods eg. Heinz beans, Coca-Cola
2. Services eg. DHL, Specsavers
3. Retail outlets eg. Walmart, Next
4. People eg. Bill Gates, Queen Elizabeth II
5. Destinations eg. London, New York
6. Companies
7. Concepts, eg. smartphones, electric vehicles

Question 4

The importance and role of an org’s BRANDING in proc. and supply activities
3. Effective branding (8 ways to create of positive branding) + 3 benefits + rebranding

Case study: New Volkswagen - new logo and brand design in Sep 2019 as they launch a new electric car and move towards an electric future; aims to be the world’s most sustainable volume automobile brand

Answer 4

Positive branding is created through…
1. Convincing customers they need the product/service
2. Displaying a strong image
3. Having values consumers can relate to
4. Empathy with consumer needs
5. Being future oriented
6. Offering sustainable solutions
7. Creating environmental change
8. Demonstrating value for money

Benefits to on org. of effective branding
1. Increased awareness
2. Increased profitability
3. Increased loyalty

REBRANDING
- to ensure organisational CONTINUITY and PROFITABILITY, if an org/product is declining or its workforce is lacking engagement
- by RELAUNCHING the org/product, renewing strategies and DIFFERENTIATING FROM COMPETITORS to remind existing, future and potential consumers/employees of its IDENTITY and vision