Paper 1; Case study: Skandvig Terra PLC Flashcards
What is the vision statement of Skandvig Terra PLC (SVT) ?
“Making the world a safer place”,
What is a vision statement?
A vision statement is a business document that describes an organization’s desired future state or goal. It inspires and motivates employees, stakeholders, and customers towards a common objective.
A company’s vision must align with its mission, strategic planning, culture, and core values. A vision statement is not only used in business, as nonprofits and government offices also use them to set strategic goals.
Vision statements are not necessarily unchangeable. They can be reviewed and revised as necessary, as companies adapt to their business environment. But the companies should try to draft a vision statement that lasts long without need to change. If they happen, any changes should be minimal.
A vision statement is a guideline for a company’s strategic plan.
Compare vision statement and mission statement
A vision statement describes an organization’s desired future state or goal. It inspires and motivates employees, stakeholders, and customers towards a common objective.
A mission statement, on the other hand, is a statement that defines an organization’s purpose, what it is already doing or intends to achieve, may include particular steps. It serves as a guide for decision-making by setting priorities, goals and aims.
In short, a vision statement outlines the desired future of an organization, while a mission statement outlines its purpose and priorities.
What is a monopoly?
A monopoly is a market structure in which a single firm is the sole producer and supplier of a good or service, and there are no close substitutes.
In a monopoly market, the monopolist has complete control over the price of the product and can restrict the quantity supplied, leading to high prices and reduced output compared to a competitive market.
Monopolies can arise due to various factors, including government regulation, network effects, and barriers to entry.
How can a monopoly restrict quantities on the market and what can be the result?
The monopolist can do this by limiting the amount of production, slowing down the manufacturing process, reducing the investment in production facilities, or by not expanding its capacity. By restricting the quantity supplied, the monopolist can ensure that demand remains high and the price remains elevated. This results in reduced output compared to a competitive market, which can have negative effects on consumers, such as reduced access to the product or increased prices.
What happens when a business expands its business by entering other sectors, to perform new activities and support their production?
Backwards vertical integration
What is a vertical integration?
Vertical integration is a business strategy where a company expands its operations to control multiple stages of production and distribution of a product or service. This involves the acquisition or creation of additional business units that are involved in earlier or later stages of the production process, from raw materials to final distribution to the customer. The goal of vertical integration is to increase control over the supply chain, reduce costs, and improve the quality and coordination of the production process.
What are the two types of vertical integration?
Forward integration, where a company expands into distribution or retail, and
backward integration, where a company expands into the production of raw materials or components.
Disadvantage of vertical integration?
Vertical integration can also lead to: increased costs and
decreased flexibility,
as the company may become locked into a particular set of suppliers, customers, or production processes (e.g. because they may be under common ownership of a parent which requires them to ensure sales of each other)
Advantage of vertical integration?
better control multiple stages of:
1. production and/or
2. distribution of a product or service.
What is a horizontal integration?
Horizontal integration is a business strategy where a company expands its operations by acquiring or merging with other companies that operate at the same stage of the production process and serve the same customer segments. Horizontal integration can involve the acquisition of companies that produce the same products, provide similar services, or operate in the same geographic regions.
What advantage is there from a horizontal integration?
The goal of horizontal integration is to increase market share, economies of scale, and bargaining power with suppliers and customers. By acquiring or merging with similar companies, a company can increase its market reach, reduce costs through the elimination of duplicated operations, and increase its ability to negotiate favorable terms with suppliers and customers.
Disadvantage of a horizontal integration?
Horizontal integration can also result in :
1. Increased competition in the sector, as there may be now more investment and production
2. Even a monopoly, the company may face additional govenrmental regulations and will have decreased incentives to invest in research and development.
Which type of integration has Skandvig Terra PLC (SVT) gone through?
Backwords vertical
What is an organisational structure?
Organizational structure refers to the formal system of authority, communications, roles, and relationships that determine how resources, tasks, and decision-making responsibilities are assigned and coordinated within an organization. It provides the framework for how work is divided and how authority is exercised in the pursuit of organizational goals.
What types of structure may a company have?
A Hierarchical structure, a pyramid-shaped (tall) structure that consists of multiple levels of management and subordinates, with clear lines of authority and communication.
A flat structure which has the opposite characteristics.
A tall or flat structure may be based on:
Function: A structure based on grouping similar activities or functions together, such as sales, marketing, or production.
Product: A structure based on grouping activities by product with each division operating as a separate entity within the organization, having own functions such as own production, sales etc (some functions may be still centralised)
Geography/region: A structure based on grouping activities by region with each division operating as a separate entity within the organization, having own functions such as own production, sales etc (some functions may be still centralised)
A flat structure may be also a:
Matrix/project structure: A combination of functional and divisional structures, where employees report to both functional managers and product managers. Teams may be built when there is a order and dissolved afterwards.
What factors should be considered when making decision about the organisational structure ?
There is no best structure. The choice of organizational structure depends on the size, complexity, and goals of the organization, and can have significant effects on communication, collaboration, and performance.
Company which produces simple products may choose to have less focus on products and more focus on marketing. Having a function based structure would mean in this case having people of similar activities working together. They may feel more motivated, growing professionally. e.g.
What type of structure does the company have?
Product-based
Which leadership styles enable quick decision-making?
Autocratic: In this style, the leader makes decisions unilaterally and expects subordinates to follow without question. This style can be effective in crisis situations or when rapid decision-making is necessary.
Paternalistic leadership is a style in which the leader takes on a supportive and caring role, similar to that of a father figure, while also exerting authority and making decisions. The leader may make decisions that prioritize the needs of the individual over the needs of the organization. This can be effective in creating a motivated workforce.
However, this style can also lead to dependency and a lack of initiative among subordinates, as they may become overly reliant on the leader to make decisions for them. Staff can even try to manipulate and benefit from this relations.
Laissez-faire: In this style, the leader provides little direction and delegates responsibility to subordinates. This can be effective in empowering subordinates to make decisions quickly without seeking approval.
In situational style, the leader assesses the development level of the subordinates and adjusts their leadership style to match their level of competence and commitment. For example, the leader may adopt a directive style with subordinates who are new to a task and need clear direction, but adopt a supportive style with subordinates who are more experienced and need less direction.
Where does the Fresh Water Division store the water?
The water is collected and stored in large manufactured reservoirs.
Who is Yannick Pedersen? the director of the Fresh Water Division
the director of the Fresh Water Division
How well did find Yannick Pedersen manage to find alternative sources of potable water?
He did it very quickly
Which leadership style does Yannick have?
situational
Who is Ariadne Johansen?
the director of the Engineering Division
Which leadership style does Ariadne Johansen have?
Autocratic
How successful is Ariadne’s leadership style ?
His division is one of the industry leaders in productivity per employee
What type of authority do the heads of these divisions have?
Operational and tactical authority. these refer to different levels of decision-making and responsibility within an organization.
Operational authority refers to the authority and responsibility to manage the day-to-day operations of the organization, including managing resources, executing processes, and delivering results. This level of authority typically resides with middle managers or operational leaders.
Tactical authority refers to the authority and responsibility to make short to medium-term decisions and take actions to support the achievement of the organization’s goals. This level of authority typically resides with front-line managers or supervisors who are responsible for implementing the operational plans and ensuring that work is carried out effectively.
Allocation of authority between these levels will vary depending on the size, complexity, and goals of the organization. In some cases, operational and tactical authority may be combined into a single role, while in other cases, they may be separated into distinct positions.
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What was caused by the climate change in the case study?
shortages of potable water in some countries
What is the productivity per employee
Productivity per employee, also known as labor productivity, is a measure of the output of goods and services generated by an average worker in a specific time period.
It is calculated by dividing the total output of an organization by the number of employees.
It can provide insights into how effectively the organization is utilizing its resources.
It’s important to note that productivity per employee is just one of many measures of productivity and that organizations should consider a range of metrics to gain a comprehensive understanding of their performance. Additionally, factors such as technology, equipment, and processes can also impact productivity and should be considered when evaluating labor productivity.
Limitation of productivity per employee measure?
Reliance on input measures: Productivity per employee is calculated based on the number of employees, which may not accurately reflect the input required to produce a given output. For example, the productivity of a worker using advanced technology may be higher than that of a worker using older technology, even though both workers are counted as one employee.
Lack of differentiation: Productivity per employee does not differentiate between workers with different levels of experience, skill, or motivation, which can impact the accuracy of the measure.
Does not reflect quality: The measure of productivity per employee is based on output, which may not accurately reflect the quality of the goods and services produced. A higher level of output does not necessarily indicate a higher level of quality.
Ignores external factors: The measure of productivity per employee does not take into account external factors that may impact the efficiency and effectiveness of the workforce, such as the state of the economy, changes in laws and regulations, or advances in technology.
The directors of which divisions had a clash and over what?
Heads of Fresh Water Division and Engineering Division over a machinery needed to update water treatment plants
What priorities of Engineering Division are visible?
Seemingly - Lowering costs (having best productivity per employee rates in the industry)
Internal vs external growth strategies
Internal and external growth strategies are two different approaches that organizations use to expand their business and increase their market share.
Internal growth strategies focus on developing and utilizing the resources and capabilities of the organization to generate new opportunities for growth. This can include expanding existing product lines, improving processes, increasing marketing efforts, and investing in research and development.
External growth strategies, on the other hand, focus on acquiring or merging with other organizations to expand the organization’s reach and capabilities. This can include acquiring companies, entering into joint ventures, or pursuing mergers and acquisitions.
Both internal and external growth strategies have their own benefits and risks. Internal growth strategies allow organizations to maintain control over their operations and processes, but they also require significant investments of time and resources. External growth strategies can provide organizations with access to new markets and resources, but they also come with the risk of cultural clashes and the potential for loss of control over operations.
Organizations often pursue a combination of internal and external growth strategies in order to balance the benefits and risks of each approach. The choice of strategy will depend on the organization’s goals, resources, and the market conditions.
What type of company is the Geng PLC
A major water supplier in the United Kingdom (UK). It was acquired to complement the Fresh Water Division
What type of growth is the acquisition of Geng PLC
External
What are the two main activities of the Desalination Division providing 2 income streams?
- Manufacturing and
- operation of desalination plants
