External environment of Singh’s Auto Rentals Company Limited Essay

Assignment occur an display case of strategical management in an organisation in your country or region, from your own get a line or from your reading. The example croupe relate to either a big or sm only concern, or even to a public sector organisation.Which aspects of the example do you consider to be mature or bad examples of some aspects of strategic management, employ the principles covered in this subject as your guide? For example, you efficiency discuss the good and bad examples in matchless or more of these areas handling stakeholder expectations communicating organisational purposes remote surround (PESTEL framework, five forces, opportunities and threats) strategic capability (value chain and value network, skills and weaknesses)SWOT psychoanalysisformulating a task strategy (bases of competitive favor) implementing a task strategy (structural types, managing people) and/or incorporate strategy (the two chief(prenominal) portfolio approaches and extent of corporate diversity).THIS PAGE IS INTENTIONALLY BLANKExecutive summarySinghs Auto Rentals fraternity Limited (Singhs) was established in 1972 with a small fleet of only five (5) vehicles for rental. Singhs interbreeding corporate strategy embraces cost and differentiation in a merchandiseplace that is highly competitive, having expanded its node base to incorporate the corporate society, the international sector and the community sector. The ph geniusr has grown and is now one of the preferred clients of the Ministry of National Security of Trinidad and Tobago, offering a wide score of high-end vehicles and SUVs for rental, buses for tours and retreats, executive cars with drivers for man and wife parties and seven (7) seater vehicles for the family oriented customer.Business level challenges catch over the years forced Singhs to refocus their objectives on their MOST, with intense market festering and penetration orientation, in an aggressive attempt to win market share, subjoin volume gains and build position quickly. In this assignment the external environment encompassing doormans 5 Forces and PESTEL are examined a foresighted with its impact and influence on Singhs SWOT and stakeholders expectation. Examples of the good and bad of the external environment testament also be highlighted to describe how the company bottom increase their competitive advantage and profitability.Table of Contents1.IntroductionThe supreme art of war is to sub ascribable the enemy without fighting. temperateness Tzu, The Art of WarIn discussing the positive and negative aspects of the external environment, the PESTEL, the SWOT and porters 5 forces will be utilize to analyse where Singhs Auto Rentals is at in the fabrication and where the company can hope to be in the bordering five (5) years.The car rental industry is a competitive industry and Singhs competencies and capabilities will definitely keep them in the market and make them into leaders once they fo llow their objectives and tactics.All men can see these tactics whereby I conquer, save what none can see is the strategy out of which victory is evolved. Sun Tzu, The Art of War2.Company overview Singhs2.1 mintWe aspire to nonplus the leading light in the Auto Rentals industry through continuous good innovation and the expansion of our distribution networks.2.2 MissionUtilizing our groups strengths we aim to become a study force in the Car Rentals industry by offering innovative products, inwardnessive processes, extensive networks, and the enlisting of the brightest talent, we strive to achieve impressive profitability.2.3 ObjectivesFrom the vision/mission statements given, it would seem that the objective of Singhs Auto Rentals is to become leaders in the industry. It can also be derived that this company seeks to achieve the following objectivesTo increase market shareRemain close to its competitorsIncrease clienteleIncrease the fleet of vehiclesTo establish leadership in the market2.4 StrategiesSinghs strategy for achieving these objectives might be a business strategy. Business strategy is implicated with deciding which markets and activitiesthe business should be involved in where it wants to be and how it is going to get there. Singhs strategies may include Satisfying customers (meeting customer needs)Running the business (organising resources in the most efficient and effective way) crush the competition (strategies and tactics to gain competitive advantage) Achieving corporate objectives2.5 TacticsMethods this company uses to achieve strategies, as write in the mission, are the introduction of support and complimentary function they provide namely24 hr FREE Roadside assistanceGuarantee competitive rates and seasonal discountsA wide range of vehicles to choose from including the economy and SUV range.Free victuals on all vehiclesAir conditioned comfort3. PESTEL analysis of SinghsAwareness of the external environment and how they impact on the company can be summarised using the PESTEL framework. The PESTEL can define the key drivers of change. These key drivers of change have differential impacts on industries, markets and organisations.3.1 PoliticalSinghs is a clubbyly owned company but because the company buys and rents vehicles they would be involved with few policy-making organizations for unlike purposes.Ministry of Transportfor licensing of naked as a jaybird vehiclesFor vehicle transfersMinistry of FinanceTo approve any tariffsDuties or charges for purchasesTaxes (including staff salaries) springer and ExciseImporting, duties and clearance of all vehiclesMinistry of Legal AffairsTo register the company legallyTo ensure all licenses to operate as a limited liability company 3.2 EconomicalAs a private owned company, Singhs has to watch for what affect his company financially from the external environment. Key factors can be Fuel rates have rates gone increased or decreased, this would de statusine how to harm the rentals. deputise rates for foreign currency.Salary negotiations in the country- would the employees demand high wages as a end of salary negotiations for government workers. Available and accepted methods of payment cheque, cash, VISA, MasterCard. Unemployment rates in the country .3.3 SocialThese influences the aloofness of time a vehicle would be rented for. Singhs offers long barrier rentals (6 months to 3 years) and short term rentals (1 day to 6 months). Social factors include Changing cultures peak periods for local rentals (wedding and carnival) and peak periods for foreign rentals (tourists are drawn to the Caribbean during winter and summer). Demographics age groups of drivers.Community interests lobby groups, charitable organisations etc3.4 TechnologicalIn a business such as Singhs one would encourage technology to play a role in the data collection, storage and distribution of the companys fleet of vehicles. Technological factors include Computerised sc anning of vehicles downstairs aid.Computerised database systems used for documentation, data collection, billing, accounting and ordering. Communication methods have to be of the highest quality in order to fall out to customers (the business to customer approach). Updated websites, facebook pages or other social search engines used to advertise the company.3.5 environmentalInfluences from the direct environment that may affect Singhs might be Waste disposal for counteract disposal from the garage (oil, parts etc) Energy consumption the amount of energy or originator used in a process or system. Weather conditions- may only affect the infrastructural aspect of Singhs in terms of weathering on vehicles which are not kept covered over a long period.3.6 LegalThe legal aspects of the company and how it influences the strategies and objectives. Governmental laws a law might state that no one under the age of 18 is conquered to drive. Policies policies put in place by the board o f directors and the key shareholders to determine how the business is going to operate. Rental contracts have to be done up and signed by to each one party for every transaction. Insurance companies vying to insure the fleet of vehicles.4. StakeholdersStakeholders can exist both internally and externally. In an industry such as the vehicle rental industry the stakeholders are very important. The expectations of the stakeholders are as important to the development of Singhs (see appendix III)4.1 InternalBoard Of Directors or ManagementInvestors/ ShareholdersEmployeesSuppliers-contractorsService providers maintenance crews, specialist garage crew4.2 ExternalBusiness to business ClientsDomestic ClientsInternational ClientsGovernment and regulatory industriesIndustry AssociationsLocal Communities5. SWOT (Internal / External Analysis of Singhs)In an effort to ascertain its competitive environment a SWOT analysis of Singhs can assist to devise a sound strategic plan. The intent is to exploit and maximize the strengths and opportunities avert threatening circumstances through tactical responses and provide institutional upgrade to lessen weaknesses all these towards a position of profitability and value creation.As defined by (Alzoubi 2004) SWOT Analysis (strengths, weaknesses, opportunities and threats) is a general framework for directing and assisting strategic planners to depict the appropriate organizational strategies to achieve their goals. Managers look at SWOT analysis as a technique to help managers to identify and plan the business goals, and draw the strategies to achieve them (Alzoubi 2013 p.126).Internal AnalysisStrengthsFocused management and staff arrangement advantageEfficient customer serviceSkilled car care specialist and technicians.WeaknessesLack of charitable Resource best practicesNo clear strategic directionLack of continuous training and development for staffPoor marketing skillsExternal AnalysisOpportunitiesTo gain outstanding profit sTo be a house hold name in the car rental businessTo serve a large customer groupPotential for impudently services or products to be offeredThreatsCompanies offering akin(predicate) services coming on streamTurnover due to other companies offering better packagesLoss of customers due poor service experiencenew and existing regulationsnew and existing competitorsnew technologiesunstable political and legal systems in foreign marketsExternal opportunities and threats can work both ways for the organisation for example new technologies can make one aspect of the company obsolete but enhance another(prenominal) aspect of the company all at the same time.6. Singhs Strategic Based Units (SBUs)SBUs allow large corporations such as Singhs and SSS to vary their strategies according to the different needs of the various external markets they serve. For example-Corporate Leasing leasing to companies on a special contract Short term and long term rental to both corporate clients and immedi ate clients Executive driver services airport to hotel and sound reflection, weddings, seminars Pre-owned vehicle sales- new to the company but very effective and brings in more profits Bus and driver tours for tourists7. The effect of Porters 5 Forces on SinghsPorters 5 forces analysis can be applied to Singhs as a tool to analyse the competitive advantages of the company. According to Porter (1980), rivalry (competition) on the market is result of the five variables or main forces rivalry level, bargaining power of customers and that of suppliers, the threat from new starter motors and successor products. The following was deduced from the analysis of the five forces7.1. Threat of New Entry payable to lack of policies to prevent new entry, the market is open for new entrants. Singhs will now have to develop and maintain a cost advantage and differentiation of its services, to gain sustainable competitive advantage. Economies of home plate it would be expensive to for new ent rants to match Singhs because of the level the company has reached in the industry, it would be troublesome for new entrants to match them. Experience new entrants would be inexperienced in most of the know how of this industry and that lack of experience can give Singhs the advantage over a new entrant (See Appendix II).7.2. Threat of SubstitutionSubstitutes can come not only from within the industry but also from outside. Managers often focus on their own industry and neglect the threat posed by substitutes for the product or service. The price/performance ratio is critical. Even if the substitute is more expensive the substitute is still effective (see appendix II).7.3. Buyer PowerSinghs needs to pay attention to the customers and the price they pay for the service. If the price is too high customers may seek to do business elsewhere which will force the company to drop prices, thus losing revenue (see appendix II).7.4 Suppliers Power-It was recognised that the business can be adversely affected if suppliers drive up their prices, then the concept of low cost to gain competitive advantage will be affected (see appendix I1)7.5 Competitive Rivalry-From the analysis it was evident that the company had rivals playing a similar service. To prevent customers from moving from Singhs to the competitors, the company will need to provide unique services to its customers (see appendix II).8. CompetitorsSinghs entered the market as an entrepreneur in 1972, competitors from then to now would be companies established around or before that time penetrating the same market with similar objectives. nonpareil such example would be Southern Sales and Service Company Limited (SSS). Both companies entered the corporate market to try to gain market share. SSS has a larger vehicle fleet than Singhs but SSS does not provide some of the tour guide services or 25 seat bus retreat services that Singhs caters for. Even though they are in similar industries, they each cater to a d ifferent sector within the market. Refer to Appendix III for a visual on how competitive advantage works in an industry as Singhs.9. Competitive advantage Singhs has over SSSSSSCaters for company rentals and corporate rentalsProvides car and driver servicesProvides maintenance for some vehicles and outsources the rest Cost- mostly high priced unit rentalEnergy consumption is highSinghsCaters for tour groups and tourist transportationProvides car and driver servicesProvides transportation services from airport to hotel and returnProvides rental packages for weddings with a driverPrices are relatively low and are negotiableVarious branches passim the country so customers can do business from any branchCustomer service is class-conscious very high10. ConclusionA strong networking capability (Strength) has lead to an expansion in the business activities of Singhs (luck) and this has resulted in increased profits due to long term leasing by various ministries (strength). The strength o f networking was cultivated over a period of time and once established, it can sustain Singhs for the next five (5) years. Singhsexternal environment has room for new entrants and a lot of possible threats and opportunities that can arise, however, with proper strategic management and well trained staff this company can continue to agitate forward in this market and even make a breakthrough in a new one.RecommendationsContinue to evaluate Singhs regularly.Always know where the company is in relation to its competitors.Capitalise on new technologies and trade in old techniques.Monitor staff and their talents, do regular training to update them on the current techniques being used by competitors so that they can be brought up to travel rapidly or even one step ahead.Increase profitability by looking into marketing and advertise to the larger companies such as energy companies (BPTT and Atlantic LNG) to try to gain greater market share, this is an opportunity within their SWOT analy sis.Consider upgrading the fleet and maybe adding some luxury type vehicles, look at the threat of buyers and see what the customers are asking for. Customers may be willing to spend their money on luxury cars from a rental company they trust.ReferencesJohnson, G, Whittington, R and Scholes, K 2011, Exploring Corporate Strategy, 9th edn, Pearson Education, London.Alzoubi, majed R. 2004, Strategic planning and expression innovative organizations. Unpublished, PhD thesis, Amman Arab University for Graduate Studies, Jordan.Alzoubi, majed R. 2013, The Impact of Intellectual Capital or SWOT Analysis among Jordanian Banking Industry Empirical Study International Journal of Business and Social Science, Vol. 4 No. 2 pp. 123-137.Singhs auto rental company limited, viewed 7 July 2014, http//www.singhs.com/ more or less.htmlSouthern Sales and Service Company Limited, about us, viewed on 7 July 2014, http//www.southernsalestt.com/corp_history.phpTutor2U, viewed on 9july 2014,http//www.tutor2u .net/business/strategy/corporate_objectives_strategy.htmlSlideshare.com, http//www.slideshare.net/milesweaver/analysing-the-external-environment-of-business-ie-general-competitive, viewed on 12 July 2014