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Impact of External Environment on Business organization: Amway

University : Anglia Ruskin University

Module Code: MOD003353

Module Title: Business Environment


Assignment Scenario/case study
Prepare a management report on one organization of the following industry-sectors:
- Oil and Gas
- Aerospace
- Sports apparel and footwear
- Fast moving consumer goods (FMCG)
- Computer chip manufacturing
- Tobacco
This report should assess the impact of external business environmental factors on the organisation and evaluate the organisation’s position and responses. In the case of a large, diversified organisation it is permissible to confine your report to part of the organisation. An organisation’s activities may range beyond the designated industrial sector in which case the focus of your report must be on the organisation’s activities within the designated sector.

ASSESSMENT TASKS
Selecting any three of the following five themes:
1. Employee Health, safety and Well-Being .
2. Corporate Governance and Managing Ethically.
3. Environmentally Friendly Products and Services .
4. Information and Communications Technology (ICT).
5. Supplier Relationships.
In relation to any three of the above themes complete the following tasks:

a) Explain each theme in detail and analyse its impact on your chosen industry sector.
b) In relation to your chosen organisation, analyse the impact the theme has had on the functions of this business (e.g Operations, Human Resources, Design, Management, etc). One function per theme will suffice in this regard.
c) Evaluate the effectiveness of the organisation’s response to this theme and where possible, demonstrate some areas for improvement in the response of the organisation to these external challenges.

Answer

Introduction

It is of prime importance to analyse the impact of business environment related factors on the organisation so that the business related risks can be minimised and increment in the financial profitability can be increased (Saenko et al. 2016). It is also important to make the effective evaluation of the organisation’s position and responses so that the effective strategy can be formulated for gaining competitive advantages of the industrial rivals. In this report, the earnest endeavour will be made in discussing the impact of business environment related factors with respect to the UK-based organisation Amway UK Limited, one of the leading entities dealing with FMCG products. The entire report will be made based on the discourse on the certain themes, such as employee health and safety, environmentally friendly products and services, relationship with the supplier. While discussing the theme, the bright light will be shed upon the discussion pertinent to their impact on industry and business functions. In this context, the effectiveness of the organisation's response will be discussed and recommendations will be given for improvement. In this way, this report will make an effective assessment of the different facets of the business environment with respect to the organisation Amway UK Limited.


a) Selection of themes

1. Employee Health, Safety and Well-being

Most of the FMCG companies of UK work with several business wings and domains in a coordinated manner. Just because the company manufactures various kinds of consumer goods, it is essential to give special attention to the health and hygiene of the working employee. In order to to ensure employee health safety and well-being, Amway UK limited takes certain measures in the work environment (Cometto et al. 2016). Other than profit making and customer satisfaction, employee healthcare is also equal concern for the company. The employees are given medical facility of free health checkups every year. Other than this company has appointed a doctor in the company who visits company two days in a week and any employees may visit them at free of cost. Employees who work at the factory manufacturing cosmetics or work in laboratory designing pharmaceutical products are made to take special care. As for example, the factory is equipped with advanced technology such that there is less chance of risks of any kind of occupational hazards. 


For high-risk working, employees are provided with special kind of masks or special chamber to work in separate manner such that any particular worker does not affect general employees. Especially the employees who work in the quality control sector engaged to design medicine or medicinal products such as health supplements and toothpastes, follow very aseptic conditions. Laboratory is equipped with all the latest technology and instruments. Chemists are provided with such an environment that they be saved from much fire and acid exposure. The company do not compromise in terms of any monetary shortage with employee health. For emergency purpose, the company has set up a healthcare home within the office premises. To promote well being of the employees, organisation has also set up a gym and mini swimming pool inside the premises to refresh them from daily boredom. The major agenda of the organisation is to promote flexible working environment to its employees so that they feel homely atmosphere while working at office.


2. Environmentally Friendly Products and Services

One of the major objectives of Amway UK Limited is to satisfy its customers. The company or the organisation is very much customer oriented (Mateescu et al. 2016). The principle of the CEO of the organisation is that the company will try every best way to meet customer requirements and focus is to deliver customer with original services and products. Market survey has revealed a small fraction of its primary consumers have a complaint regarding the product price to be little bit higher than the other FMCG companies do. The company assures its valuable consumers about the originality of the service. To achieve its goal as for example it manufactures dietary supplements, which is herbal product entirely without use of any synthetic ingredients (Tibon and Edralin, 2016). 


Therefore, it is obvious costing rises to bit higher side as price is segregated in transportation, manufacturing, import cost and so on. The products manufactured are purely organic and herbal so that by any chance consumer’s health is not negatively affected. In addition, the products are biodegradable so that if by any chance any product comes in contact with the environment, it will not make any negative impact equally is degraded by action of nature. Organisation does not take such action in order to make huge profit such that manufacturing products and cosmetics at a low price by using harmful components such as using paraben in cosmetics. Organisation ensures quality product with little high price to maintain the balance sheet from both sides.


3. Supplier Relationships

For every business organisation, it is very essential to maintain healthy supplier relationship to ensure consistent business flow. If good communication and interaction with the suppliers are not maintained they prolonged continuous workflow may be interrupted due to limited supply and raw material shortage. Every organisation generally place order before considerable time in hand so that the orders are supplied before the initials are very exhausted (Tibon and Edralin, 2016). With good relationship with the suppliers, a bulk number of orders can be purchased with good discounts. In addition to with some fixed suppliers it often happens that when there is urgent need of any product then the supplier delivers company as soon as possible before other deliveries. Therefore, it is very essential to maintain good relationship with the suppliers. Running of an industry and organisation is entirely dependent on the suppliers. Based on their raw materials and basic protocol, the final finished product is manufactured. 


Therefore, it is very necessary that the base products should be of good quality because based upon that the product sales depend. If there raise any conflict with the suppliers then they may deliver poor quality product or delay unnecessary to deliver raw materials. Other case may happen that due to not paying them on time, the supplier representative becomes annoyed and do not want to continue business further for long time. So it can be said that it is very essential to pay the suppliers on time and with the correct amount. Suppliers deal with many companies and they have a very clear idea of market price. Therefore, unnecessary bargaining may create negative impact on the supplier about the organisation. In the end, it may hamper the good image of the company in market. So a reputed organisation like Amway UK limited is expected to maintain good relation with its suppliers, placing orders at right time, and clear all the payments.


b) Impact of Themes on Organisational Functions

1. Employee Health, Safety and Wellbeing

From the previously discussed chapters it is evident that the company has come up with new ideas and approaches in order to take care of health, safety and wellbeing of every working employees starting from a basic level post to topmost hierarchy. Because of this, the employee’s feels highly motivated to work in the organisation (Gurkov, 2016). In addition, annual reports reveal that there is minimum turnover of employees compared with other similar organisation. The working employees are highly satisfied to work here with so many facilities. Employees working here have no issues or complaints regarding health and safety assured by the organisation. They do not face the work pressure as they can work flexible environment. Even the employees do not have to make out time for health and fitness club when they have gym and swimming pool inside office premises at free of cost. 


This also saves a lot of time and equally economical for the employees. Due to all this facilities the company receive, they are highly encouraged, give their full effort to the organisation, and work with complete devotion. This results finally with enormous sales and huge profit. As stated in the previous chapters as per the statement of CEO Company will automatically bring profit if customers and employees are valued most and equally reciprocated to their requirements and complaints. Therefore, from these viewpoints it can be concluded that to meet abundant profit it is equally essential to concern about health and wellbeing of employees as much as hiring of employees. Therefore, a business profit depends on work effort and devotion of employee to the job.


2. Environmentally Friendly Products and Services

The introduction of environment-friendly products and services has been helping Amway UK Limited in gaining goodwill in the market. The environmentally friendly products of Amway UK Limited like Nutrilite, Artistry etc. have been attracting the customers. Because of that, the management function of the organisation has been able to create brand loyalty in the minds of the customers. As the volume of the sales has been increasing, Amway UK Limited’s management has been able to ensure the acceleration of the growth in market share. The introduction of the environmentally friendly products has helped the management of Amway UK Limited in creating the brand image in the FMCG sector thereby making it one of the leading FMCG entities in the United Kingdom. The management has been focusing on formulating effectual product design strategy for ensuring the maintenance of quality. Moreover, the organisation has been laying emphasis on the research and development activities for increasing the level of quality of its environmentally friendly products. For ensuring the continuous improvement in the quality of the environmentally friendly products, the management has also hired some of the quality experts and consultants. In addition, Amway UK Limited’s management has been focusing on the performance of some of the activities, as if reduction in the use of harmful chemicals, purchasing recycled products etc (Van den Broeck et al. 2016).


The management of the Amway UK Limited has not only been focusing on the design and maintenance of the quality of the products. It has also been working on increasing the effectiveness of the service after sales. In this way, the management has been able to ensure the good relationship with the consumers thereby resulting in improving the service quality. For ensuring the continuous improvement in the service, Amway UK Limited’s management has hired effective customer service professionals. The effective service quality has helped the management in ensuring the financial profitability and business development. 

In this way, the environmentally products and services has been able to made impact on the effectiveness of the organisational functions.


3. Supplier Relationships

As far as the relationship with the suppliers is concerned, it can be said the management of Amway UK Limited has been able to maintain good relationship with the suppliers, with the help of the maintenance of good relationship with the suppliers. The management of Amway UK Limited has been able to ensure the growth in business with long-term and short-term orientation. The management of Amway UK Limited has been focusing on collaborating with the suppliers with the objective of providing high quality environmentally friendly products to the consumers. Moreover, the good relationship with the suppliers has helped the management in focusing on the supplier quality development with the objective of making improvement in the manufacturing capabilities. Amway UK Limited’s management has developed portal for suppliers for keeping them updated about the business requirements. 


With the help of the effective management of relationship with the suppliers, the management has been able to ensure the achievement of supply chain excellence. In this way, the management has been able to ensure the satisfaction of the consumers. The management has make effective segmentation amongst the suppliers, such as mandated suppliers, mandated suppliers, probationary suppliers, global preferred suppliers etc. The management has been able to increase the effectiveness of the supply chain process through maintaining the good relationship with the suppliers. Because of the management’s excellent performance in the context of global supply chain management, Amway UK Limited has been able to secure Supply Chain Council Award in the year 2006 (www.amway.co.uk, 2017). In this way, good relationship with the suppliers has helped Amway UK Limited in achieving its business goals.


c) Effectiveness of the organisation’s response to the themes and Areas of Improvement

1. Employee Health, Safety and Well-being

Amway UK Limited has been focusing on ensuring the health and safety in the workplace for ensuring the satisfaction of the consumers. Amway UK Limited has been showing the utmost level of commitment when it comes to the matter of ensuring the well-being of the employees. With the help of the effective health and safety policies, the organisation has been able to create the brand image in the minds of the employers. In this way, Amway UK Limited has been able to ensure the employee retention in the organisation. Amway UK Limited has been ensuring the effective implementation of Health and Safety at Work Act of 1974 for ensuring the safety and health in the workplace. In this way, the organisation has been able to ensure the maintenance corporate social responsible image in the FMCG industry of the United Kingdom. 


The organisation has made health and safety policy where it has been mentioned how health and safety related issues would be managed. In this way, the organisation has been able to convince about its utmost level of commitment towards the maintenance of health and safety along with the well-being of the organisational members. With the adoption of effective health and safety related policies, Amway UK Limited has been able to make the reduction in the sick leave. Moreover, the absenteeism rate has been decreased. The maintenance of employee health and safety has helped the organisation in reducing the cost of an insurance premium (Saenko et al. 2016). The organisational productivity has been increased with the help of the introduction of effectual health and safety policy.


For ensuring the improvement in the effectiveness of the organisation's response to the employee health and safety, it is important for management to consider appoint health representative in the workplace. The production equipment is to be kept in safe place so that the employees can prevent themselves from being the victims of the accidents. In this way, the health and safety related issues could be dealt in an effective manner. In addition, Amway UK Limited ought to increase the coverage of the health insurance for ensuring the well-being of the employees.


2. Environmentally Friendly Products and Services

The organisation has been able to ensure the effectiveness in the context of increasing product quality. With the help of the maintenance of the quality of the environmentally friendly product and service quality, Amway UK Limited has been able to increase the sales. Moreover, the organisation has been ensuring the revenue generation. With the increment in the sales volume of environmental friendly products, Amway UK Limited has been able to ensure its maintenance of leading position in the market. In this way, the organisation has been able to increase its market share. The profitability of the organisation has been increased as the demand for the environmentally friendly products has been increasing (Van den Broeck et al. 2016).


It is important to devise the effective marketing strategy for ensuring marketing of the environmentally friendly products. Moreover, it is of great importance to ensure the continuous maintenance of the quality of the products with special emphasis on the research and development related activities. In this way, Amway UK Limited will be able to ensure the continuous growth in business. The management must focus on increasing the manufacturing capabilities so that the organisation can be able to cope up with increasing trend in the consumer demand. With the help of the formulation of effective marketing strategy, the promotion of the environmentally friendly products can be ensured. In addition, the organisation ought to increase its product portfolio for expanding business.


3. Supplier Relationships

Amway UK Limited has been able to ensure the achievement of the business goals with the help of the maintenance of the good level of relationship with the suppliers. Because of maintenance of a good relationship with the suppliers, Amway UK Limited has been given top priority by the suppliers. In this way, the deliverance of the products on time has been ensured. Amway UK Limited has been able to ensure the deliverance of the service and products to the end-users because of the relationship with the suppliers. In this way, the organisation has been able to ensure that the customers are satisfied with the deliverance of the services and products on time. Amway UK Limited has been able to ensure the production of quality products because of the delivery of the quality materials to the customers (Vojtovic et al. 2016).


It is important for the Amway UK Limited to ensure that strategic relationship management are to be utilised in a proper manner. With the proper utilisation of the strategic relationship management, Amway UK Limited will be able to ensure the development of mutual awareness with the suppliers. In this way, the communication process will be improved.


Conclusion 

It can be concluded that the success of an organisation lies equally in all the discussed themes. In order to increase employee retention, employee’s health and safety should be concerned. Too much of work pressure with no health facility may result in large turnover of employees, while appointment of employees to any risky post such as chemists the bio safety rules should be followed strictly so that the employees do not have to worry about any occupational hazard in working place. Similarly, company manufactures limited products but with high quality, so that there is limited post sales service and lesser number of complaints arose. Customers are satisfied with the outcome of the organic products manufactured and as a result, the sales have increased to 3% than the previous years. Last of all to continue the workflow, smoothly it is very important to maintain good supplier relation as entire process gets started after delivery of all the required raw materials.



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