Free Changes In The Business Environment Report Sample
Summary: Three Articles
According to the revealed news of Kraft and Cadbury, it is found that the merger which was taken between both of these companies was a Horizontal merger in which both of the companies related to the same industry. According to the news, the merger was a significant one from the standpoint of financial as well as strategic functions of both of these companies, and assisted them increase improve their working within the market place.
The second article was about the increment of Mortgage interest rate and its major and direct impact over the financial position of the Royal bank of Scotland. The article revealed that the recent increment of Mortgage Interest rate in the region of the United Kingdom (UK) increased the level of cost of operations of RBS and other relevant banks operating in the region. It is found from the article that these hikes in the interest rate will affect over the relationship among the banks and the clients of the banks.
The third article which has been selected for this assignment is belonging to one of the largest cloth retailers of the United Kingdom (Marks and Spencer). The retailer is having a real time to maintain their competitive position in the market because of their ineffective promotional activities, while the other companies are still doing a better job than M&S to maintain their position in the market. This problem can become a real gangrene for M&S in their future based activities.
Explanation and Analysis: Three Stories
The entire field of finance is very broad as it has some dominating and powerful concepts to gain the attentiveness of a market. Among so many concepts that come under the field of finance, there is a name of Merger and Acquisition (M&S) as well. Merger and Acquisition is basically a situation in which two companies either have identical business or non-identical business merged each other to expand their operations together. Most of the time, a financially stable company takeover the financially disturb company to maintain the effectiveness of the companies particularly. M&A is one of the most important forms of the financial based operations.
During the current economic crisis, there were numerous amount of mergers have been taken place in the entirely world, and particularly in the United Kingdom (UK) as well. One of the phenomenal M&A took place at the time of current economic collapse was Cadbury and Kraft Foods Inc. The merger between Cadbury and Kraft Foods was the Horizontal Takeover, because both of the companies relate to the same industry or business operations. Theoretically, the business operations of two companies which are identical to each other will be referred as Horizontal takeover, and it was initiated between Kraft Foods and Cadbury in the financial year 2010 (Kollewe, 2015).
The takeover of Cadbury by the United States (US) based Kraft in the financial year 2010 proved to be a real refurbished of the governing based rules and regulations to check how foreign companies buy the firms in the United Kingdom (UK) region. Broadly speaking, it is very easy for the foreign companies to enter in the region of the United Kingdom (UK) and merged a domestic company there because the level of merger scenario is very low within the country (Kollewe, 2015). It was a perfect and powerful merger that took place within the time period. Cadbury was in severe financial distress at the time of merger took place, but the merger had taken them out from the economic distress and issue. According to the BBC report published in the consequences of that merger found that the merger actually strengthened the hands of the target markets of both of these entities and demanded more and complete information from the bidders about their core intentions after the purchase. The merger took place between these two big companies were essential and become perfect for both of them to expand their network in a more productive and effective manner. The deal got final in £ 11.5 billion, and it went in the favor of both of these companies. The article shows that the financial power get effective after the merger, however Cadbury cut off 250 jobs from their workplace (Kollewe, 2015).
Economics is the name of earning and utilizing the money at a best possible manner for an economic function. There are two important forms of Economics known as Macroeconomic and Microeconomics. Microeconomics is the branch of economics that specifically associated with the field of economics associated with the individual piece of earning and consuming the money, while macroeconomics is the branch of economics that attains with the influence on the economy as a whole. Some of the major types of macroeconomics indicators are Interest Rates, Foreign Direct Investment (FDI) and others. All of the macroeconomic indicators have a definite impact over the financial and strategic position of an organization. The same idea is likely to apply and analyzed on a real specific scenario. Royal Bank of Scotland (RBS) is the company which affected heavily due to the incremental interest rate on their functions.
The Chief Executive Officer (CEO) of Royal Bank of Scotland (RBS) sounds mortgage based alarm on the recent hike in the interest rate in the United Kingdom (UK) (Titcomb, 2014). The CEO of the bank has unfolded his statement and revealed that the recent increment in the interest rate will certainly challenge the sovereignty of the company and will also devastated the entire relationship among the banks and the customers. According to the story, the interest rate hiking already threatened the relationship of the bank and the customers heavily from last few months, and after the increment it may affect over the amount of mortgage amount as well. RBS have a clientele portfolio comprises on 1.5 million homeowners in the Mortgage facility in the entire UK market, and they had never experienced any interest rate hike (Titcomb, 2014). This particular interest rate increment will directly impact over the mortgage cost of the company that will impact over the net income belongings of the company. Interest Rate hiking is one of the most important decisions of macroeconomics that stride under the strategic model of PESTLE analysis. It is an element of Economic influence. In order to overcome on this particular problem, the CEO of the bank has to talk to their clients and tell them about the changing in the governmental policy in terms of interest rate hiking and its impact over the position of the balance sheet of the bank. However, still the bank has to bear some sort of loss in order to retain their client for a certain time period.
Competition is known as the real beauty of industrialization, and no organization can attain effectiveness in the market without maintain their competitive position perfectly. In the end of the day, only those companies which are competitive enough in their operations are the one who become economically as well as strategically competitive (Telegraph.co.uk, 2015). Study also revealed that, if the competition stance of a company is high and effective, then there is a possibility lies for the company to have strong significance in the market with zeal. Marks and Spencer (M&S), one of the largest clothing retail stores in the region of the United Kingdom (UK), which were known as the largest clothing store of the region, is now having severe and intense competition from different domestic and international players of the market. The article that written by Alan, Oscroft on 20th May 2014 revealed that high amount of promotional activities is one of the major reasons due to which the sales graph of M&S decreased heavily as compared to other organizations operate in the same line of business.
Marks and Spencer (M&S), who had very position in the entire retailing industry of the United Kingdom (UK) is now only one step ahead of the ASOS retail market in the current scenario. However, the level of competition in the trade and maintaining the effectiveness among the operations in the retail industry of the UK is increasing. Companies like Next Plc, Debenhams Plc and H&M are having a much greater place than that of M&S because of their quality products and services and powerful promotional activities in the market (Telegraph.co.uk, 2015).
Promotional activities is one of the most important element of the marketing activities that needed to be analyzed by the companies to promote their functionality is very significant for M&S as well, but unfortunately, the company is not completely and effectively complying with these matters. M&S is still operating on the same outdated functions and promotional activities and it is important for the management to change the entire criteria of promoting their products in a more powerful and effective manner. It is very important for the company to become proactive in their operational capability to get an upper hand over some of their major competitors like Next, H&M, ASOS and Debenhams.
The second selected article relates to the changing in the Macroeconomic function in a country and its major impact over the financial position of the respective companies. Royal bank of Scotland (RBS) have seen real time effects of the recent increment in the mortgage interest rate that increased the level of cost of the company.
The third article is about changing in the stance of competition of Marks and Spencer (M&S) in the retail cloth market of the United Kingdom (UK), but unfortunately, the company is not having enough preparation to combat with these competitions, and it may endanger their future position in the market. All the companies discussed in this particular analysis are perfect and have a detailed figuring out over the analytical aspects.
Kollewe, J. (2015). Cadbury cuts 250 jobs in Birmingham. [online] the Guardian. Available at: http://www.theguardian.com/business/2015/jan/15/cadbury-cuts-250-jobs-birmingham [Accessed 7 Mar. 2015].
Telegraph.co.uk, (2015). Marks & Spencers - Latest news about the Marks and Spencer Group, stocks and shares prices - Telegraph. [online] Available at: http://www.telegraph.co.uk/finance/newsbysector/epic/mks/ [Accessed 27 Feb. 2015].
Titcomb, J. (2014). RBS boss sounds mortgage alarm on interest rate rise - Telegraph. [online] Telegraph.co.uk. Available at: http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11167130/RBS-boss-sounds-mortgage-alarm-on-interest-rate-rise.html [Accessed 27 Feb. 2015].
Telegraph.co.uk,. (2011). Cadbury-Kraft takeover timeline. Retrieved 6 March 2015, from http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/8531023/Cadbury-Kraft-takeover-timeline.html