University: Bucks New University
Introduction to Enterprise Enterprises thrive due to many factors; desirable products, effective marketing, blindly optimistic and wealthy investors, dynamic working cultures and, of course...good leadership and motivated employees. Nevertheless, in all likelihood, a business can truly only survive in the longer-term by remaining vigilant and insightful of – and adaptive to - its operating environment. This includes keeping a careful and respectful eye on similar organisations within it. The security sector is perhaps more fragile than others. Services and consultancies are in many cases contracted, licensed or regulated by Governments and public authorities.
Perversely, this means projects or administrative regimes can be uprooted or radically changed at short notice, possibly due to public pressure or changes in ministerial personnel. Moreover, commercial security and risk services are often, by their very nature, focused around delivery into higher-risk (and therefore, potentially, higher profile) domains.
Experience tells us, that, either to avert, or following a major crisis, Governments will often insist that direct control of a scenario or problematic sector needs to be established. Such inconsistencies within the operating environment in addition to the routine challenges around finance and management, vex security enterprises in all theatres of the world. Sudden changes within the operating environment can thus cause damaging impacts to security enterprises and their clients. Equally, such situational and market volatility does also provide the most fantastic range of opportunities for security enterprises to excel, engage and expand in all theatres of the globe.
Examples of changes in the strategic political or local operating environment that may either slowly, or more immediately, impact security enterprises – or give the initial impression that they may do so - are manifold. I will begin by citing FOUR very random examples of what might be dubbed strategic (and operational) ‘gamechangers’ within a commercial environment for any security consultancy:
1. The introduction of British troops into Northern Ireland in 1969 to separate warring factions, and provide protection for civilians, following the escalation of sectarian and terrorist violence in Northern Ireland, and concerns at the neutrality of some public services
2. The shooting and killing of several citizens in Iraq by a handful of employees working for Blackwater in 2007. This led to the ejection of that company from Iraq by the government, a clamp down on foreign private security contractors in country. It also acted as a catalyst for the ‘Montreux Document’: International Code of Conduct (ICoC) for Private Security Service Providers which was codified into an auditable guidance system by ASIS: Management System for the Quality of Private Security Company Operations (ANSI/ASIS PSC 2012)
3. The establishment of the Afghan Public Protection Force (APPF) by President Hamid Karzai’s administration following his declaration in 2010 that all Private Security Contractors will be disbanded and services provided direct by the APPF.
4. The last-minute decision by the UK government to deploy several thousand armed forces personnel to guard the London 2012 Olympics; the British Security Industry Authority had warned about significant potential shortfalls more than two years beforehand.
How can we effectively and professionally illustrate the Operating Environment?
Your answers to the above ‘reflective exercise’ might emanate from your own models and methods of evaluating an operating environment. But, for all of us, as we begin this module it is worth familiarising ourselves with the core business environment analysis models:
-Porters Five Forces: Developed by Michael Porter. The five competitive forces in an industry… entry costs, potential new entrants, bargaining power of buyers, bargaining power of suppliers, rivalry among current competitors (Porter: 1980: 4).
Companies and other organisations often also utilise the Strengths, Weaknesses, Opportunities and Threats (SWOT) and Political, Economic, Sociological, Technological,`Legal and Environmental (PESTLE) models in an attempt to utilise intelligence and present sometimes complex risks within the framework of a universal methodology that the businesses can easily absorb and assimilate.
SWOT analysis is credited to Albert Humphrey and has been in use for almost fifty years. In particular, it uses opportunities and threats to examine external factors and it is these external factors that are important here. PESTLE is credited to Francis Aguilar’s 1967 model. It is effectively used to consider the macro environmental influences that affect an organisation. Therefore, these management models can be considered effective and wellknown to represent and coherently structure a broad suite of intelligence findings to an organisation. Such information could, for instance, presented quarterly at business unit updates and planning sessions where it is offered to chief executives and C-suite decisionmakers.
These analytical models are widely established. But often, because we feel we are familiar with them, we don’t carry out the analysis in the systematic manner required for them to work. The psychology model of learning takes us ‘experts’ to stage four: ‘unconscious competence’! This is where we feel we can act almost on ‘autopilot’ and our actions become intuitive rather than reflective and analytical. This is perhaps the most dangerous mind-set that an entrepreneur can move into. Therefore, even if you are familiar with the business analysis models above, we urge you to spend a little time refreshing your knowledge by reading about them on any good business or industry website (eg, mindtools.com or businessballs.com).
You are establishing a consultancy leading on the provision of Security and Emergency Planning services in any major city of your choice in the world.
-Staying within the short-to-medium term, identify the key political and legal/regulatory factors which could realistically change in your chosen city.
-What are/were the key research methods that enabled you to establish what changes might occur and how likely they may be?
“Competitive Intelligence is not an invention of the 20th century. CI has been around as long as business itself. It may have operated under a different name or under no name at all, but it was always present. Just review the story surrounding 19th century British financier Nathan Rothschild, who managed to corner the market on British government securities by receiving early warning of Napoleon's defeat at Waterloo. He used carrier pigeons, the Email of his day. He knew the information to watch and how to make sense of it; in the end, he used this intelligence to make a killing in the market.” (Leonard Fuld, What is Competitive Intelligence? 2013) CI has alternately been known as ‘competitor intelligence’ (although this is just one subdiscipline) and gained a grounding in American business journals half a century ago. The overall purpose can plausibly be summed as a various set of sub-systems woven together – to a greater or lesser extent – within a corporate body in order to provide an organisation with ‘competitive advantage’ over others in the field.
Lots of content exists from management journals and institutes to help us establish more precisely what CI physically is not, and we will reflect upon some core work in this sphere later.
“Customers, suppliers, substitutes and potential entrants are all “competitors” to firms in the industry and may be more or less prominent depending on the circumstances. Competition in this broader sense might be termed extended rivalry.”
An important document emerged in 2008 that attempted to pull together the range of definitions and parameters set by CI practitioners and academics. The Society of Competitive Intelligence Professionals published a definition in its Journal:
“… a necessary, ethical business discipline for decision making based on understanding the competitive environment.” The Journal’s former editor, Stephen Miller (2001), also describes CI as a positive corporate
“CI enables managers in companies of all sizes to make decisions about everything from marketing, R&D, and investing tactics to long term business strategies”. Perhaps we can conclude the following meanings about the term Competitive Intelligence:
-That its focus is on the external business environment
-That there is some form of process involved, or established business function/s, whereby information and knowledge is gathered and processed into an ‘intelligence product’.
-The provision of an Early Warning System to upcoming major market changes or incidents One very prominent thought-leader within the CI field is Leonard Fuld who has been a driving force behind pushing CI into established industry and academic practice. Fuld produced a widely read book in 2006 - The Secret Language of Competitive Intelligence -
which underscored his primacy in this sphere. In his 2013 article ‘What is Competitive Intelligence? Fuld firmly established ten principles of what competitive intelligence is, and is not. Fuld maintains that CI is:
-Competitive Intelligence is Information that has been analyzed to the point where you can make a decision.
-Competitive Intelligence is a tool to alert management to early warning of both threats and opportunities.
-Competitive Intelligence is a means to deliver reasonable assessments.
-Competitive Intelligence comes in many flavors [sic]
-Competitive Intelligence is a way for companies to improve their bottom line.
-Competitive Intelligence is a way of life, a process.
-Competitive Intelligence is part of all best-in-class companies
-Competitive Intelligence is directed from the executive suite
-Competitive Intelligence is seeing outside yourself
-Competitive Intelligence is both short- and long-term
In a survey of life science executives, Fuld introduced his White Paper findings pertinently:
“Many of today’s companies and their executives strikingly resemble the boiling frog. They remain comfortable though the surrounding environment is changing, sometimes fatally, for their enterprises. Business history is littered with disruptions that upend or bankrupt many key players.”
In the digital era, with global interconnectedness, and greater commercial pressures for transparency and anatomical information, Open Source Intelligence gathering (OSINT) has become big business. Unfortunately, the line between legitimate intelligence activities and economic espionage is sometimes crossed. This is discussed in the Protection of Assets (PoA) Manual, (Allison, 2008), ‘As Michael D. Moberly, former chairman of the ASIS
International Information Asset Protection Council notes (2006):
“An unfortunate reality of international business transactions is that the probability that a company will…experience some form…of infringement, misappropriation, counterfeiting, or product piracy is growing.”
It goes on to site numerous historical examples, including the Egyptian Pharaoh Rameses, the Chinese military strategist Sun Tzu and the Byzantine Emperor Justinian amongst others, of breaches of what is referred to as ‘Information Asset Protection’ (IAP). (Allison, 2008), The PoA continues by recommending the adoption of a risk management approach which starts with identifying assets to be protected.
Case study: Hewlett Packard; the company where competitive intelligence went too far
A company that is a prime example of how intelligence gathering activities can cross the boundary of what is legal and permissible is the IT hardware manufacturer, Hewlett-Packard (HP).
HP, based in Palo Alto, Calif., was founded in 1939 by Bill Hewlett and Dave Packard …Today HP operates in more than 170 countries and is ranked…on Fortune magazine’s Fortune 500. Before the spy scandal came to light, the
company also was known in the industry for its integrity.’ (Society of American Business Editors and Writers [SABEW], 2007).
Ironically, the issue I will discuss here arose after a series of anonymous security breaches from one of its directors, George Keyworth. In 2005-‘6 the then non-executive Chairwoman, Patricia Dunn is said to have been upset at relatively minor boardroom leaks to the Wall Street Journal, News.com and others after a ‘CNET report where a director revealed he was tired after a planning session and admitted in January that HP hoped to sell a lot of
computers based on AMD's chips.’ (Vance, 2006) Whilst minor, this breach showed disunity between board members and lack of control of the board by the Chairwoman.
As a result of this Dunn contracted a third party firm of private investigators, Security Outsourcing Solutions, who, in turn, contracted the services of another…firm that employed a technique known as pretexting to gain access to the personal phone logs of both HP's directors and reporters. The firm's staff used personal information such as the directors' and reporters' Social Security numbers to trick phone companies into releasing the phone records (Vance, 2006). Investigators also trailed some reporters, including during a family trip to Disney Land (Goodin, 2007).
In September 2006 the story broke that, ‘Chairman Patricia Dunn okayed the internal investigation,’ with HP maintaining that, ‘it told partners not to do anything illegal as part of the probe.’ (Vance, 2006). In October that year, Dunn and HP ethics chief Kevin Hunsaker, private investigators Ronald DeLia and Matthew DePant were reportedly charged with ‘fraudulent use of wire, radio or television transmissions; taking, copying, and using
computer data without authorization; identity theft; and conspiracy for impersonating board members and reporters in order to obtain their phone records.
The fall out showed that internally, the situation was toxic, with one board member, Tom Perkins revealing that he quit in disgust after having learned of what had taken place. To make things even worse, HP refused to comment on whether it had tapped the phone records of its CEO, Mark Hurd. This ‘tarnished the company's reputation in the wake of solid recent financial reports.’ (Vance, 2006) Externally, writes Alex Koritz, public relations director for Sprout Marketing commenting in Society of American Business Editors and Writers [SABEW: 2007):
“HP also was quite delayed in their response, which breaks the No. 1 rule of crises management, get information out fast and accurately so you can help “guide” the story.”
HP has subsequently had to pay a $14.5 million fine and finance a fund to fight violations of privacy and intellectual-property rights. California’s Attorney General, Bill Lockyer said at the time, “Fortunately, Hewlett-Packard is not Enron… I commend the firm for cooperating instead of stonewalling, for taking instead of shirking responsibility, and for working with my office to expeditiously craft a creative resolution (Fried, 2006).” Subsequently, charges were dropped against the defendants, although Dunn resigned her Chair. The final case against one of the investigators involved was not heard until December 2012 when he was sentenced to three months in prison. The Fuld Gilad Herring Academy of Competitive Intelligence runs the Competitive Intelligence Certification Program (CIP). Its President, Dr Ben Gilad, says: “If more companies took care to thoroughly train their managers and executives in how to produce and how to use intelligence in all levels of the organization, fiascos such as those at HP…would be much less likely to occur.” (Academy of Competitive Intelligence, 2006).
A new financial company named ‘The Financial Security Services’ is going to be launched in capital city of Saudi Arabia owned by me. I have worked as a security consultant for few years in one of financial services provider companies. Now, he is willing to open his own consultancy company. It will be a private limited company and will work under surveillance of ASIS. The ASIS provides guidelines to the companies to maintain quality in their work. It encourages the security companies and motivates them to work ethically by maintaining the higher standards. The security of security businesses are highly risky to maintain. Prevention and protection of the data is the main task of the security companies. As they provide the internal services to firm, which is highly influential therefore, it is their responsibility to keep the information secure and safe. I am willing to consult an international investment banker for the funding in the business. It will sign a contract with the financial institutes and local government for the funding.
The report is a business plan for me and I am working as the security consultant who is willing to open a security consultancy. The business plan covers all the aspects of a business plan from the funding to expenses. The business plan contains the management of operations, marketing analysis, marketing plan and financial projections of cost that is to be incurred. I have provided with a brief background of the business plan and it is in the initial stage. It is a consultancy company that will provides financial services to the other companies. In order to analyse the market condition of Saudi Arabia, the market analysis has been done. A different marketing tool has been used to assess the strength and viability of company. Therefore, the financial projection has been estimated to realise the cost, expenses and income of the proposed business. The legal documentation and permission from the authorities is important while starting a business. In addition to that, the company must follow all the company’s regulations and policies to maintain an ethical workplace.
The company is a new start-up company and I have worked as security advisor and have sufficient experience and knowledge to start a business. The business is mainly focused on the security systems that provides financial and security services to the clients. It will provide its services to the retail businesses, railways, airports, public limited companies and at special events. The business is located at capital city of Saudi Arabia, where there will be large scope for growth. The company has to establish itself in the market with very efficiently manner.
Vision and Mission
The vision of the ‘The financial Security Services’ is to provide the best financial services using advanced tools and technology and to provide protection to the enterprises assets and become one of the best global security company.
The mission of the company is:
The company will provide its services to every kind of clients and businesses like industrial factories, webinars etc. The key elements include:
The objectives of the company are:
I am the owner and CEO of The Financial Security Services and own 75% of the business. The remaining 25% is of shares raises with the help of investors. Therefore, shareholders will play an important role in the company’s profitability.
Physical protection Plan
The operation management is the management of activities in such a way that it minimizes the cost and maximizes the profitability. It is a business practice that helps to create a higher level of efficiency in the organization. The security business has to maintain the integrity in its work. Therefore, it is very important to monitor the security activities using operational management. The operation management has to be controlled and maintained by an efficient team or an experienced operational manager (Allison, McKenny & Short, 2014). The manager will organize the activities of the firm and set a standard on which it has to work. The operational manager will do any amendment in the firm activity or change or replacement. The physical protection plan is a part of the operational management. It is performed before the launch of security measurement plan (Barringer, 2012). There, the physical protection of the premises has been estimated and planned. The floor plan, maps, utility layouts and evacuation plan has to be formed. The entrance gate, parking lot, visiting area etc, has planned at this stage.
Planning for security of intelligence
Security Operation Plan
The security maintenance is one of the important aspects for an enterprise. The security of intelligence has to be operated by the firms in order to maintain the security of the office premises, office staffs and managers, assets and more importantly information’s (Blank, 2013). I will coordinate with government to maintain the successful security plan. The planning will involve data protection and crisis management. The planning will be as follows:
The security guards have to be appointed at the workplace and entrance gates to keep an eye on the visiting people. Along with that the CCTV are also an option for the companies. It is reduces the risk of frauds and thefts at the office premises (Brooks, Heffner & Henderson, 2014). Since, it is a security consultancy; the company has the confidential information’s of the clients. In that case, it is legal responsibility for them to them to fix a security of intelligence at higher level.
Before launching the business at a particular place, it is very important to analyse the market. The market analysis will let me know about the scope and opportunities of the business at that particular business (Buttars, 2014). Since it is the capital city, it is analysed that the consultants will have the great opportunity to serve to its client. The market analysis reveals that within three years, the company will be able to reach most of the clients and there will be good growth in the business (Chiţu & Tecău, 2012).
Apart from the market analysis, the company analysis is also very important. Once the market analysis has been done, it is important to realise that whether the respective company will be suitable for that market or not. The analysis has been done using marketing tools like SWOT and porter’s five force model to analyse the company’s existence power in the market.
The SWOT analysis of the Financial Security Services is as follows:
Table 1: SWOT Analysis
Table 1: SWOT Analysis
(Source: Created by Author)
PORTER’s FIVE FORCE MODEL
The analysis of Porter’s Five Force Model for the start-up company:
|Bargaining power of buyer / clients||The bargaining power of buyer is the kind of measurement to estimate the degree of bargaining by the client. The consultancy charges fees for their services. Therefore, it is obvious that clients will bargain while paying the fees. Therefore, the firm should fix a level of price where bargaining will not affect the profitability much.|
|Bargaining power of supplier||There the firm needs to list the number of substitutes of suppliers that it can have. When the company will have the substitute, it can bargain the service price and it will not be bound to pay the prices.|
|Threat to new entrants||It is related to the barrier of entry in the industry by the market. The bunch of new entrants has the power to influence the market. With the entry of new entrants, the market competition increases.|
|Threat of substitute products / services||The threat from substitute is arises from the companies which are offering same kind of products and services. It is the consumer or clients to choose from the alternative companies. It is somewhere related to the threat of new entrants. As the new entrants are offering same kind of products or services, it will be the threat of substitute services (Woodard et al. 2012).|
|Competitive rivalry||It is the competition within the market and between the companies. The rivalry could be with the substitute companies or any other. It depends on the company’s goals and mission.|
Table 2: Porter’s Five-Force Model
(Source: Created by author)
The competitor analysis is an essential thing for the emerging companies. The competition in the market is growing at rapid speed. The companies have to realise whether there is no competition or too much competition. The owner of Financial Security Services has to perform the competitive analysis. It is basically analysing the environment in which company is going to operate, the involved partners and the companies against which it stands for. The strength and weakness of market and competitors is the important activity to perform (Conti, Thursby & Thursby, 2013). The suppliers and partners planning of the company is to be clearly defined. The market analysis will define the micro and macro business environment, political, social and economic trends affecting the company will help to prepare an efficient plan for the company (Fairlie, 2012). In addition to that, regulations and legislations on the company and market have to be clearly explained to the clients, members and employees.
The success of start-up depends upon the approach of marketing that company adopts. A proper marketing plan is very essential for the company in order to assure the success of launch (Susanto & Almunawar, 2012). Since the company is new in the market, it has to adopt aggressive marketing strategies to be noticed in the market. The marketing plan for the Financial Security Services is as follows:
Nature of the proposed firm
The financial Security Services is a consultancy firm, which will provide its services to the different clients and companies. The firm will basically engage in the risk evaluation of the other companies. Since I am going to start the consultancy business by own without partnership, therefore, the business will be sole proprietorship. I will provide security services to its clients and help them to mitigate risk.
The Financial Security Services started by me will provide many services to its clients. The services will be related to mitigate the risks, protect the assets and provides investment guidelines. The agreements will be signed between the client and me to protect the firm’s assets and investments from every kind of risks. The other services could be:
Legal process of firm
While setting up a business, it is very important that it has complied all the rules and regulation of the local government. The corporate law, fair work law etc. has to be adopted by the firm in order to set the business with legal procedures (Mullins, 2012). The legal documentation is essential while starting the business. I worked as security consultant is going to set up the security business. He must be aware of all the legal processes that it has to follow. The legal process is discussed below:
IPR and Registration
The first important thing that I need to do is registering the firm under Intellectual Property Rights. The intellectual property rights provide the right to the firms to deal with the other companies (Robb & Robinson, 2012). Since it is a service provider company, it must have to comply with it. The registration of the firm is considered to be valid in sole proprietorship, when the firm is fully owner of firm and the profit is not distributed with anyone. Meanwhile, I can keep 100% profit. The required documents that I nee to submit are as follows:
Start up cost
The start-up business requires a huge amount of investment at the beginning. Likewise, The Financial Security Services has to spend and the cost is as follows:
|Start-up expenses: |
|Total start-up expenses||71900|
Table 3: Start-up Expenses
(Source: Created by author)
The start-up assets and liabilities of the firm are as follows:
|Additional cash withdrawn||0|
|Long term liabilities||0|
|International investment bank||70000|
|Total planned investment||1109000|
|Less: Start-up expenses||71900|
|Total capital and liabilities||47000|
Table 4: Start-up Assets and Liabilities
(Source: Created by Author)
The estimated income statement of the company is as follows:
|year 1||year 2|
|direct cost of sale||35000||50000|
|total cost of sale||47500||75500|
|marketing and promotion||30000||25000|
|license and permits||20000||15000|
|total operating expenses||265600||317300|
|profit before interest and taxes||6900||57200|
Table 5: Income Statement of ‘The Financial Security Services’
(Source: Created by author)
Cash flow statement
|CASH FLOW STATEMENT|
|year 1||year 2|
|cash from operations|
|cash from receivables||402000||605000|
|additional cash received|
|net current borrowing||12000||50000|
|sale of current assets||0||0|
|amount spent in cash||120000||180000|
|payments of bill||150000||180000|
|taxes paid out||65000||120000|
|repayment on borrowings||2800||3500|
|long term liabilities repayments||0||15000|
|purchase of current assets||0||20000|
|purchase of long term assets||2500||25000|
|net cash flow||353700||541500|
Table 6: Cash Flow Statement of ‘The Financial Security Services’
(Source: Created by author)
|year 1||year 2|
|Other current assets||0||15000|
|Total current assets||225000||289500|
|long term assets||5000||8000|
|total long term assets||5000||8000|
|other current liabilities||0||0|
|long term liabilities||4900||25000|
|paid in capital||85000||65000|
|total liabilities and equity||230000||297500|
Table 7: Balance Sheet of ‘The Financial Security Services’
(Source: Created by author)
The above discussion will help me to establish its business in the capital city of Saudi Arabia. The business plan consists of all the elements that requires for setting-up the business. The plan will guide me to successfully run the business and create the desired profit. It is the service provider firms hence the likelihood for the success of business is very high. The business plan includes the services, ownership and objectives of the company. Apart from that, market analysis of Saudi Arabia has been done to check the growth and scope of company in that particular area. The SWOT analysis, Porter’s Five Force Model and Competitive analysis of the business will let me to decide its firm position in the market. A proper marketing plan is important to promote and advertise the company; and social media is the nest medium in today’s scenario. The start-up cost, assets and liabilities has been estimated in the business plan. The financial projections for the start-up companies are an essential part because a company cannot run without it. Therefore, the income statement, cash flow statement and balance sheet of the firm is estimated and explained in the business plan.