Porter Five Forces Analysis

Nowadays, the demand of vehicle is increasing in UK or even in the world. This news made me started interested on vehicle industry. After I learnt porter’s 5 forces analysis, I was thinking about is it possible to join into this market and what is the competition of this vehicle market. Here will mainly focus on Traditional Private Vehicle industry.

First of all, according to Porters theory, the 5 forces include the threat of new entry, the competitive rivalry, supplier power, buyer power and the threat of substitute. Each of them also directly affects the profitability of company, because it represents possibilities of increased competitor, substitute product and the prospects of future.

Firstly, the threat of new entrant will show the possibilities that the new entrants get in this market. Recently, for traditional private vehicle industry, even if there still some advantages to let the new entrants easier to join the market, they are still very hard to entry. Based on increased demand of British vehicle, vehicle industry has a good access of distribution of luxury vehicle such as China and Russia. However, the increased demand is only represent the requirement of luxury British brands. There is not good for the new entrant to get in and increase their market share.

Secondly, there is a high intensity of competitive rivalry, a large number of competitors in vehicle market. For instance, there are Bentley and Mini in UK. For the world, there are Toyota, BMW, Ferrari and other else. Even if there is a growth of industry, the low diversity of competitors and the low substitution switching cost, it still leads a negative representation of the competition. Moreover, because of the quality of the product of the old brand company, it leads a high customer loyalty, and makes new entrants harder to survive in this market.

Thirdly, a positive buyer power, there is an increased number of customers in the world. This means the growth of the industry will still continue. The buyer can very easily to get the information from the internet such as facebook, youtube, Google and online news. The convenient of internet makes buyer easier to get to find out their favorite product.  Also, the ability to substitute is not very strong, and the substitutions are including buses, trains and vans. According to BBC news, the production of commercial vehicle was felling last year while car was increased.  

Finally, a strong supplier power and a weak threat of substitute products or services, represent the market power is still strong in the world. There are high number of supplier with low cost changing, generally, companies can change they supplier. For threat of substitution, the biggest concern is the public transport also is some kind of substitution. When during some financial problem or the hard time of economic, people will change to use public transport for some reason such as saving money or cutting cost. Moreover, there are some country will provide a reduced tax for the driver if they purchase and drive a electric vehicle.

To sum up, based on the high demand of vehicle, there are still have profitability to entry this industry.  

Management Theory

Management theory is one of the most important parts of organizational management. Based on the objective and the type of the organization, manager can set up a plan and apply different management theory to help the whole organization achieve its objective. As we know, classical theory is really important in management area, it is not only influence the area in the past, also now. But, what is classical theory? Generally, there are three theory were classified as classical theory, which are Frederick Winslow Taylor, Henri Fayol and Lyndall Urwick.

Frederick Winslow Taylor was the first person who mentioned scientific management in the past. It is a management theory base on scientific method and standardization. This theory pursues to find out the best way to increase the efficiency and productivity of the company. The company or factory usually provide training to the workers, and then divide up working process and set a limited working time for the workers, the manager is responsible for the company and to make sure everything are on standard such as machines, tools, facilities and environment, and lead an increased productivity. Taylor theory mentioned the reward should base on the workers performance.

Fayol theory focuses on the specialization and the hierarchy of the company. Similar as scientific management, it classifies the working process to let people do. The main idea of Fayol theory is the 5 principles, which are plan, organize command, coordinated and control. Setting rules and discipline with centralization, to make sure processes are on the plan. It theory require a stable working environment, which means the company should avoid a high worker flowing. For the organization, all of the worker should be required working as a whole. The individual consideration should be far behind the company consideration.

Lyndall Urwick follows Taylor and Fayols theory, to combine and develop as his own theory. For Urwick, the cores of management are planning, organizing and control. Urwick theory is based on 8 main principles, which are the objective, harmony, explicit orders, workers have to follow orders, hierarchy with different level, narrow span of control, specialization, coordination. Some of them are really similar as Taylor and Fayols theory.

Foxconn, it is an electronic manufacturer in China with a higher ranking in the world. There are over 900,000 workers are working in Foxconn. For many years, Foxconn was the mainly partner (Supplier) of Apple, which is producing iPhone, iPad or other devices for Apple.Foxconn is using a part of Taylor and Fayol theory, which is setting up the rule and only focuses on the way to maximize the productivity. The weakness of Taylor and Fayol theory is being occurred from this case. Firstly, the organization does not have any informal structure, the relationship of the manager are all follow by the hierarchy. The employees can only follow the rules and gridline, and never have the chance to participate. Secondly, the workers as human machines or components in the company. As a part of organization, employees should be more likely as the soul of the company, because they performance are directly affect the company profit. This means the motivation and reward are really important to the employees.  

If want to know more about Foxconn, please click this website: http://sacom.hk/wp-content/uploads/2010/10/report-on-foxconn-workers-as-machines_sacom3.pdf

Organisational design and structure

There are many people argue that which structure is the best for the organization for their company. In fact, there is no answer for this question. There are so many organizational structures such as tall structures, flat structures and matrix structures. In reality, the situation is more complicate that these structure may not meet the requirement of the company, because each structure has their own features, advantages and disadvantages.

First thing first, this picture represents the relationship between the structure styles and the company details. For a large company, its structure must more complex than a small company. Then, how come the large company can be well organized with a complex structure? Different level of manager takes the responsibility of the company, and leads the company on a correct direction. Every structure also has managers to manage and organize the resources.

For a tall structure company, it represents hierarchy, long chain of command and constricted spans of control. The level between managers is very clear, such as the top manager (CEO), middle manager and first line manager. Generally, when the company grows, the structure should become more complex and taller, because the increased employee number, it require a tight control of the company, and set rules and guidelines for employee to make sure the company as a whole to achieve the goal of the company. Even if it leads an increased cost of hiring many managers, large company usually require a taller structure to manage their company. For example, British Gas, it is the biggest energy supplier in UK, one of the Big SIX. It is using tall structure with functional structure to divide products as electricity and gas, services and other functions. Moreover, The Salvation Army that I mentioned in last post, it is also using a tall structure as their organizational structure. But everything also has exception, Google normally using Flat structure to manage its company.

The management of flat structure only has few layers, and the span of control should be wide with a short chain of command. The advantage of flat structure is good for some innovative and creative company like Google. Google is such like an exception, because flat structure usually use in small organizations, which is easier communication between employee and manager. Based on size and shape of the company, flat structure provide the environment that really good for communication and decision making, which much faster than tall structure. The main benefit of this structure is, the company can base on the changing of their business market to set up a plan and quickly change their decision or strategy.

Matrix structure is a structure that the management style combining with product and functional. In fact, this structure can use both flat structure and tall structure. Because of the complexity, the top manager have to balance the chain of command, the subordinates usually are shared by different type of manager such as project managers and functional managers. This means the employee sometime needs to report to two managers. Nowadays, there are so many companies use matrix structure in their company. For instance, The Boeing Company, it is one of the largest global aircraft manufacturers in the world, its product line include fixed-wing aircraft, rotor craft and  rockets. They design  and manufactures their own products, and sell it. In fact, each of the department manager as a vice president in the company. They form as a team from different department and when the projects are completed, the member in the team will reform and work on other project.   

Introduction of Organization and Management

Everything can be organized. Can you imagine things without organized? Home will become messy, company will become unstructured and inefficiency. We cannot live without organized. The truth is, organizations are really important to the world, whatever it is for the past or now. What is the objective of organization? There are so many types of the organization, some of them for the demand of the goods of daily life, some of them provide the energy, and some of them provide entertainment or convenient device for people. In fact, organizations are made up from people, and it must have a structure and management in the organization. For the objective of the organization, the students who study business are usually answer organization are aim to make profit. The interesting thing is, whatever which type of the organization is, the financial problem always is the big concern. Organization needs money to continually run the business or complete their purposes. But money is the only concern for a company? How about other organizations such as charity organization?

Charity organizations have their own organizational society, the objective of them is to help the people who need to help. A little bit different between charity organization and business organization is the employee. Most of the worker of the charity organization is come from volunteer. There are so many volunteer, so that is why the charity organization also has to manage the people, set the structure and form the hierarchy in the organization, which is same as other company.   

The Salvation Army, this is the one of the biggest charity organizations which has over 1,650,000 members working in the world. They provide different services such as meals for the hungry, beds for the homeless and help people give up drugs. That is no way to manage the huge amount of worker and provide the service without organized.