Exploring the Business Environment Case Study

FDY3002

Exploring the Business Environment Case Study

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date of submission)

To,

Miriam

Owner of Bistro Café

Subject- Return email for professional advice

Respected Madam,

I beg to state that I am writing this return email to provide professional guidance for your business and improve its internal infrastructure to run the supply chain operations further.

Introduction

I have received your email and acknowledge your concern for the business to develop its existing situation and bring changes to tackle upcoming challenges. Besides, I would recommend you do not close your business and take some active initiatives immediately to improve its overall managerial performance. Thus, the business environment plays a crucial role in its operational growth and survival strategy in order to identify key opportunities or threats for higher efficiency levels (Newman et al., 2020). A brief outline will be provided to assess the potential impact of the current internal and external business environment with an overview of Bistro Café. Furthermore, I would also focus on ethical issues and provide some recommendations to enhance its internal functions for profit maximisation. Bistro Café is a small-sized business located in a bustling town centre and is surrounded by retail stores and cafes including high-rise office blocks (Taken from case study).

The impact of the current internal and external environment on Bistro Café

External factors:

From a business perspective, the macro environment can have a significant impact on internal functions to enhance technological advancements and create brand awareness to attain competitive growth. However, a negative impact of external factors on the organisation might also influence its operations to run successfully and fail to compete with other renowned brands. In the UK, the overall GP rate was recorded at about 4.25% in 2021, however, it suddenly decreased by 0.15% in 2023 (Statista, 2024). Therefore, the increasing cost of suppliers has a direct impact on its food sales growth to cause excessive pressure among employees in order to meet customer needs (Refer to case study). The overall unemployment rate was recorded at about 4.2% at the starting of 2024, though it was raised up to 4.4% by the middle of the year (Statista, 2024). In addition, immediately after the Brexit and Covid-19 pandemic, the coffee industry is facing major challenges of labour shortages and economic downstream to meet market demands (IBIS World, 2023). It shows a negative impact on Bistro Café to support local communities and was unable to provide competitive offerings for new candidates to enhance employability assets (Refer to case study).

Figure 1: GDP Rate in the UK

(Source: Statista, 2024)

Internal factors:

Bistro Café is facing major challenges due to the rising cost structure of suppliers and rigorous negotiation from workers to maintain a good profit margin. In addition, the current hike in cost structure is also a potential threat for the organisation to face staff shortages and operational issues to meet staff needs in the long run. Due to the sudden outbreak of the pandemic session, the overall production growth of Bistro Café has decreased to expand its supply chain distributions and failed to grab customers’ attention for better managerial functions. However, the business decided to change its store opening and closing times to attract customers and insist them to visit its shop in the hope of sales maximisation. Apart from these, the rising cost of living in the UK has made things quite challenging for the business to manage operational costs and control overspending to offer sufficient wages to its employees (BBC, 2024). Therefore, most of the workers are unhappy while working at Bistro Café as they are not able to support their mental or psychological needs and might fail to survive in the competitive business environment. Lastly, a low profit margin and limited resource availability also affected the company to promote its objectives online through social media advertisement and leads to a low engagement rate in future aspects.

Actions:

Assessing both the macro and micro business environment of Bistro Café, the company should take the necessary steps immediately to develop its internal structure and raise funding from external resources. It was analysed that the overall GDP rate in the UK suddenly decreased in recent years which can be tackled by raising money from foreign countries and collaborating with other renowned brands to manage its internal operations. Apart from these, the unemployment rate in the country is increasing due to the outburst of Covid-19 and the Brexit challenges to face staff shortages in the workplace. Thus, the company should improve its operational structure through effective resource allocations and hire talented candidates with high industrial knowledge to maintain consistency in future aspects (Sulaiman et al., 2021). It can be stated that you should conduct interactive sessions with workers and understand their actual demands to enhance employee well-being in society. In contrast, analysing the internal factors, it can be highlighted that the company should reframe its managerial structure to increase production growth and provide sufficient wages to increase consistency levels. Lastly, being the owner of Bistro Café, you should assist your employees and encourage them to work dedicatedly to survive in the competitive circumstances.

Opportunities:

In 2022, the British Coffee Association (BCA) signed the International Coffee Agreement on behalf of the UK government to contribute Billions of British pounds to the UK economic growth (British Coffee Association, 2022). In addition, the BCA is also considered as the representative of the coffee industry in the UK to foster a favourable business environment and its work culture to thrive in the future aspects (British Coffee Association, 2024). This would also help Bistro Café throughout the year to offer potential career opportunities and build a strong network to meet new contracts for higher productivity levels. Human Resources also plays a vital role in the business functions to manage its operations and enhance employability assets to increase job satisfaction rates. Bistro Café should acquire sufficient resources and financial support through marketing campaigns and bank loans to enter a new market segment with effective manufacturing levels. The company can also provide various training and development programmes for new workers to improve their professional abilities and enable them to face any challenges to gain competitive growth. However, it requires a huge investment for the overall set-up and offers additional staff benefits to grab the attention of local communities to establish long-term goals.

Bistro Café's key business functions

Identified issues regarding the effectiveness of the current key business functions

Finances

It can be depicted that the company is facing crucial issues in managing its cost structure as it fails to meet the basic needs of local suppliers which leads to a potential loss of 15% in recent years. Besides, the primary coffee supplier of Bistro Café is suffering from some health issues which results in high work stress. Therefore, the company can face allegations as it does not feel fair to negotiate with its suppliers and refuse to provide additional benefits. However, the following outbreak of Covid-19 also resulted in a string of downsizing initiatives and lead to the shrinking of the business size (IBIS World, 2023).

Operations

From a business perspective, the overall operational cost of your business has made things more difficult to support local communities and fails to control overspending to increase transparency levels. Moreover, staffing costs in the workplace have increased certainly as most of its workers are leaving the job at short notice which leads to high turnover rates. Bistro Café considers the overall operational cost as one of the biggest challenges to execute its operations further and is unable to enlarge its supply chain distributions. Thus, Just-in-time (JIT) is considered as a management approach or philosophy that mainly aims to produce and receive the exact product that is required to meet market requirements (HARCOURT and ALI, 2021). Bistro Café should improve its inventory management functions to receive quality goods from suppliers as per their needs to maintain transparency between workers and clients.

Marketing

In recent years, many of its loyal customers have stopped visiting the coffee shop and were unable to replace them with new customers in future aspects. Bistro Café claims to provide the cheapest coffee in the local areas as compared to other coffee brands, however, the company should invest more in its branding segments. The company should raise funding from external resources and expand its operations online through social media marketing and online advertisements. Besides, it can sign up with effective food delivery services and enter new online market segments to create social awareness in the long run.

People

After the outbreak of the pandemic session, a wider range of customers stopped visiting its physical stores due to a low income level and limited purchasing power. Moreover, it can be stated that most of the employees at Bistro Café are unhappy due to low wages and poor managerial operations which need to be considered to establish long-term strategic goals. Additionally, the company started to offer unpaid trial shifts and hire new candidates to tackle financial loss. Applying the Reinforcement theory would help the business to offer rewards and commissions in order to appreciate workers and meet their individual desires in the long run (Susanto et al., 2021). Bistro Café should also provide sufficient resources and additional benefits with exclusive offerings to draw the attention of customers for better revenue streams.

Improvement in functional areas

Miriam can make certain changes internally and bring innovative changes to adapt to the ongoing scenarios in the coffee industry. Being the owner of the company, you can also raise funding from various resources and hire talented employees to assist positive outcomes in the workplace. Using modern tools and techniques such as Artificial Intelligence (AI), Machine Learning and so on will be beneficial for the business to reduce excessive manpower for higher productivity growth (Kim and Bodie, 2020). You can take an active initiative to collaborate with other renowned companies and create a partnership with the UK government for resource and knowledge-sharing. Besides, you should improve the HR department to build a strong formation with workers and offer minimum wages to value the moral ethics in society. Implementing legal policies and ethical frameworks would help to abide by ethical considerations in order to maintain transparency within the workplace and generate better outcomes, Lastly, Bistro Café can enter into a new market segment and expand its operations online through social media marketing and advertisements to reach a wider range of local societies.

Ethical issues

It can be analysed that Bistro Café is facing certain ethical issues related to its payment system and an inappropriate organisational structure in the workplace Therefore, Bistro Café decided to increase about $2 per working hour as proposed by the National Minimum Wage (Taken from the case study). However, most of them are struggling to maintain their livelihood in the competitive business environment and fail to abide by ethical considerations. Besides, about 50% of staff tips are kept aside by the owner and are paid through debit cards due to the increasing operational costs in future aspects. It was stated that the minimum living wage rate has been recorded at about $6.40 in the UK which shows a positive impact on the business transformation (GOV.UK, 2024). This issue leads to low job satisfaction levels and fails to motivate workers to support their basic requirements.

Actions taken

It can be suggested that Miriam should follow the Employment Rights Act of 1996 to provide equal opportunities to employees and safeguard high business standards to maintain consistency levels (Chung et al., 2021). This particular legislation also tends to protect employees from unethical practices and eliminate biases to meet market needs.

Concluding remarks

It can be summarised that your company is in a dangerous state to run its operations further and compete with another popular coffee brand in the existing marketplace. Bistro Café is also facing potential challenges due to rising cost of living and low sales margin which needs to be considered to tackle external uncertainties. Additionally, some challenges were identified to analyse the current situation in the coffee industry and provide effective resources to meet market demands. It can be recommended that you abide by ethical legislation and implement new policies to maintain consistency in the workplace.

Reference list

BBC, (2024). UK inflation rate: How quickly are prices rising? [online]. London: BBC. Available from: https://www.bbc.com/news/business-12196322 [Accessed 20 September 2024].

British Coffee Association, (2022). UK Government signs 2022 International Coffee Agreement [online]. Cornbury Park: British Coffee Association. Available from: https://britishcoffeeassociation.org/uk-signs-international-coffee-agreement/#:~:text=The%20Rt%20Hon%20Mark%20Spencer,the%20UK%20economy%20each%20year. [Accessed 20 September 2024].

British Coffee Association, (2024). The British Coffee Association (BCA) is the representative organisation for the coffee industry and the voice of UK coffee [online]. Cornbury Park: British Coffee Association. Available from: https://britishcoffeeassociation.org/what-we-do-2/ [Accessed 20 September 2024].

Chung, H., Birkett, H., Forbes, S. and Seo, H., (2021). Covid-19, flexible working, and implications for gender equality in the United Kingdom. Gender & Society, 35(2), pp.218-232.

GOV.UK, (2024). National Minimum Wage and National Living Wage rates [online]. UK: GOV.UK. Available from: https://www.gov.uk/national-minimum-wage-rates [Accessed 20 September 2024].

HARCOURT, H. and ALI, F.O., (2021). Just-in-time inventory management imports on sales performance of paint manufacturing firms in rivers state, Nigeria. Nigerian Journal of Management Sciences Vol, 22(2).

IBIS World, (2023). Cafes & Coffee Shops in the UK [online]. Available from: https://locusbucket.s3.amazonaws.com/locustool/media/comments/comment/2024/02/06/KY-SP0.164_Cafes__Coffee_Shops_in_the_UK_Industry_Report.pdf [Accessed 20 September 2024].

Kim, P.T. and Bodie, M.T., (2020). Artificial intelligence and the challenges of workplace discrimination and privacy. ABAJ Lab. & Emp. L., 35, p.289.

Newman, C., Rand, J., Tarp, F. and Trifkovic, N., (2020). Corporate social responsibility in a competitive business environment. The Journal of Development Studies, 56(8), pp.1455-1472.

Statista, (2024). Gross domestic product (GDP) growth rate in the United Kingdom 2029 [online]. Germany: Statista. Available from: https://www.statista.com/statistics/263613/gross-domestic-product-gdp-growth-rate-in-the-united-kingdom/ [Accessed 20 September 2024].

Statista, (2024). Unemployment rate of the UK 1971-2024 [online]. Germany: Statista. Available from: https://www.statista.com/statistics/279898/unemployment-rate-in-the-united-kingdom-uk/ [Accessed 20 September 2024].

Sulaiman, N., Ismail, R., Saukani, N. and Lelchumanan, B., (2021). Skilled labour demand in the Malaysian construction sector. Journal of Sustainability Science and Management, 16(4), pp.236-252.

Susanto, S., Lim, B., Linda, T., Tarigan, S.A. and Wijaya, E., (2021). Antecedents Employee Performance: A Perspective Reinforcement Theory. Journal of Industrial Engineering & Management Research, 2(4), pp.1-14.