Organisation Interactions With Its Organisational Environment Business Essay Example

market demand and prices. Buyer power represents purchasers' bargaining power influencing product costs. In a monopsony market, buyer bargaining power is higher for obtaining lower raw material prices. Supplier power reflects providers' bargaining power affecting product costs. In a monopolistic market, suppliers have higher bargaining power for increasing raw material prices.Barriers to entry can have an impact on competition when new players enter the industry, potentially reducing net incomes. The assessment of an administration's internal environment involves evaluating its strengths and weaknesses, as well as improving the value chain and its relationship with the organizational environment. There are various models and factors that can be used to evaluate an administration's internal environment, such as the product life cycle model, value chain analysis, core competencies, and organizational culture.

The product life cycle model illustrates how a product evolves through introduction, growth, maturity, and decline stages in the market. This progression has an impact on its gross and revenues, allowing organizations to make decisions that adapt to their organizational environment. Value chain analysis entails a series of activities within an industry where an organization operates. It adds value at each step for a new product design and management internally (Figure 2.2.2).

Core competency refers to the most significant skills that create value for an administration. It is crucial for long-term growth as it enables the development of new products and technologies that meet organizational needs. This benefits consumers and allows expansion into new markets (Probst & Buchel, 1997). Disruptive innovation focuses on business and technology strategies for product development within an administration.Sustainable innovation is important for developing strategies that cater to different customers' needs and facilitate interaction with the

organizational environment. Disruptive innovation involves introducing new product designs to the market, which may not initially be accepted by traditional customers. However, they offer lower costs, simplicity, and potentially lower quality compared to existing products. These innovations also create opportunities for new markets with high profit margins, particularly advantageous for low-end products due to their lower costs and shorter product life cycle (Yu & Qi, 2004).

On the other hand, sustainable invention focuses on improving the performance of existing products to maintain customer satisfaction. While these types of products may have lower market growth and profit margins compared to disruptive inventions, they tend to have a higher market share (Christensen & Lundvall, 2004). The process of disruptive and sustainable invention occurs over time as shown in Figure 2.3.2.

The technology strategy plays a crucial role in implementing the overall organizational strategy by controlling the flow of information within the organization. This includes market data through establishing key deliverables and principles that are shared across different departments. The Technology Strategy Framework is illustrated in Figure 2.4Continuous improvement is crucial for establishing a strong relationship between an organization and its environment. The efforts made to improve encompass products, services, and processes with the ultimate goal of ensuring customer satisfaction (Marsh, 1998).

Procter & Gamble's Innovation and IT Aspects

Procter & Gamble's household care products have gained significant popularity (P, 2010). The company has introduced innovations in product packaging to enhance the efficiency of its supply chain. Different types of packaging options such as bottles, boxes, or stand-up pouches are utilized for most household care products. The type of packaging used can impact the space required for padding.

Bottle and box packaging necessitate more space compared to stand-up pouches which can be folded to optimize storage capacity. Additionally, smaller packaging sizes contribute to increased transportation capacity which helps in reducing instances of items being out of stock. Furthermore, P has also implemented IT innovations alongside packaging advancements to streamline the flow within the supply chain.Previously, retail stores frequently experienced a lack of availability in household products, particularly during price cuts and promotions. This issue arose because large quantities were delivered to retailers well in advance and stored in warehouses, which led to increased costs if the products remained unsold. The root cause was P's utilization of a "push" system for forecasting and deducting sold items in retail stores. To address this problem, P&G implemented an innovative supply chain solution using the SAP system.

This solution involved the introduction of a demand "pull" system and vendor-managed inventory (VMI) to ensure efficient and accurate distribution of household products to retailers. The main objective was to integrate retail shops and providers into the planning and ordering process for goods. When consumers purchased family attention merchandise, it triggered a signal that was transmitted to distribution centers, suppliers, and P&G's supply chain staff. Based on this signal data, sales reports were generated which enabled P to predict increases in demand and adjust production and delivery accordingly.

Wal-Mart is one example of a retailer that successfully adopted this new system. Following 12 months of implementing the demand pull system, P achieved significant results. Stockouts reduced by 50% within the company itself, while retail shops that experimented with the new system also saw their stockouts decrease from 10% to no more than

5%. As a result of these improvements, P saved between $50 million to $100 million.In addition, there was a 7.8% increase in sales volume compared to the previous year, reaching $43 billion in 2003. Moreover, net profits experienced a significant rise of 19%, totaling $5.2 billion.

Figure 3.2 showcases the flow of information and materials within the Pull System, while Figure 3.3 (a) displays the inventory level of retail merchants utilizing the PUSH system. Conversely, Figure 3.3 (b) visually represents how retail merchants' inventory levels change when they adopt the PULL system.

P&G implemented a demand pull system that involved retail shops and suppliers in the planning and ordering process for goods. When consumers purchased family attention merchandise, it triggered a signal sent to distribution centers, suppliers, and P&G's supply chain staff.

Sales reports from retail shops enabled P to anticipate increased demand and make necessary adjustments in production and delivery accordingly. This system was also adopted by Wal-Mart and other retailers, resulting in various improvements for both P and retail shops.

Stockouts were reduced by half due to this new system implementation, leading to substantial cost savings for all parties involved. Additionally, retailers using this system faced fewer stockouts which further contributed to their savings.

As a result of these changes, both P and retail shops observed an increase in sales volume as well as net profits. Figures 3.2 and 3.3 (a) and (b) provide an illustrative depiction of how information flows along with materials while representing different inventory levels of retail merchants depending on their chosen systemsP's supply chain management system has undergone significant advancements by transitioning from a push system to a pull system. This transition is

achieved through information sharing between supply chain partners such as retailers and distributors. By sharing information on Point of Sales (POS) data and inventory levels, manufacturers and retail stores are able to control order quantity and frequency themselves instead of relying solely on orders from retail stores.

The implementation of Vendor Managed Inventory (VMI) allows for this information sharing and enables manufacturers to place orders with themselves on behalf of the retailer. This process provides P&G with valuable inventory level information and ensures sufficient stock availability.

These changes in the supply chain system result in improved revenue performance, cost reduction, and faster stock replenishment time. The continuous replenishment process (CRP) helps reduce inventory, improve cargo planning efficiency, and decrease order cycle time for P&G.

A similar situation regarding stock availability was observed in Case II-1 by Brown, Tatikonda, and Vessey (2009), comparing P&A;G with NIBCO. Both companies faced challenges where they experienced out-of-stock situations on store shelves while having excess inventory in their warehouses during promotions or price cuts.Both P&A;G and NIBCO faced challenges in forecasting sales demand due to receiving periodic forecasts from divisional distribution centers. To overcome these issues, both companies implemented a demand pull system and Vendor Managed Inventory (VMI) method in their SAP supply chain systems. Under this system, consumer purchases trigger a "pull" signal to the distribution center (DC), which then places a replenishment order with either P&A;G or NIBCO. Delivery of products is arranged when there is sufficient stock, otherwise production is initiated upon receiving the "pull" signal from the DC.

The implementation of the pull system and VMI method focuses primarily on two areas for both companies: handling client orders for refill

and production, as well as triggers for merchandise movement. However, there are differences in how P&A;G and NIBCO handle these aspects.

For NIBCO, information input into the VMI system occurs differently. The retailer provides a daily electronic inventory level report, which NIBCO uses to monitor store inventory levels and replenish them weekly. This entire process is manual, with reports being manually generated every day and inputted into NIBCO's SAP system. Therefore, NIBCO also needs to manually monitor inventory levels at retail stores.
P;G has implemented an automatic pull system for stock deductions when consumers purchase household care products. This pull system serves as the starting point, sending a signal to distribution centers, manufacturers, and P & G to determine who should replenish the stock. Compared to NIBCO, P & G's VMI system is more advanced and prioritizes responding to demand rather than making forecasts. Therefore, the pull system and VMI in P & G surpass those in NIBCO.

In terms of innovation and IT aspects, Procter & Gamble (P & G) has made improvements compared to NIBCO. Innovation in merchandise packaging is crucial for P&G family care products due to its impact on transportation volume. Two improvements have been made: replacing old cardboard boxes with seal-tight plastic bags for bulk shipment of family care products and reducing package size through innovative merchandise such as concentrated laundry detergent that can wash double the amount of clothes using the same volume of detergent. These changes allow for 20% space savings during transportation and storage, ultimately enhancing overall supply chain efficiency. The smaller packaging for concentrated laundry detergent saves space on shelves, during transportation, and storage (Knolmayer, G., Mertens, P.,

& Zeier A., 2002).Figure 4.2 demonstrates the size difference between the new "2X" concentrated preparation product packaging and the current packaging. This change not only saves space, but also brings about manufacturing advantages. The use of natural materials in production is reduced, and the pull system procedure is shortened, resulting in decreased lead time (Knolmayer, G. & Mertens, P & Zeier, A., 2002). Consequently, P & G can maintain a smaller inventory of natural materials and enhance efficiency throughout the supply chain.

Additionally, IT innovation plays a vital role in this process. With the internet enabling faster information sharing, it becomes essential as consumer online commerce continues to evolve (Knolmayer,G.&Mertens,P&Zeier,A.,2002). To secure future market share growth, P & G must innovate their online store by seamlessly integrating its information with their supply chain system. By doing so, when customers purchase household care products from P & G's online store, real-time updates on inventory levels are enabled and nearby retail stores with stock for fast delivery are identified (Knolmayer,G.,P,A.,2002). The entire replenishment process in the supply chain system is initiated by signals from the online store. Moreover, by analyzing consumers' online purchasing habits, P & G can make better innovations for their household care products.According to Knolmayer, G. & Mertens, P & Zeier, A. (2002), comparing P&G's new online store innovation with that of competitors helps them remain competitive and meet consumer demands. The text provided from Case II-4 by Martin (2009) draws the following conclusions about P and the Cliptomania Web Store:

- P's existing supply chain system allows for easy integration of the online store faculty, enabling seamless data analysis and other functions with other faculties.
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Cliptomania only paid for the basic web shop infrastructure without a supply chain function. Its online store faculty serves as an interface between customers and Cliptomania.
- To prevent out-of-stock issues, P&G links its online store faculty with the supply chain system and replenishes stock based on calculations such as safety stock levels, reorder points, demand, and lead time.
- In contrast, Cliptomania relies mostly on back-to-back orders and does not keep stock. It faces potential stock availability issues from suppliers when placing orders upon receiving an order from the online store.
- Compared to Cliptomania, P&G has better control over stock levels.
- When it comes to packaging and delivery of online store orders, P&A;G can either request retail stores to handle it or outsource the service to another courier company.

Overall, understanding these differences in execution of their respective online stores helps P&G stay competitive in meeting consumer demands.Cliptomania, a limited capital household-based company, handles all packaging and delivery internally. However, their packaging and delivery methods are not as safe as professional companies like P&A;G. The use of seal tight plastic bags has resulted in damaged products during transit, leading to a decrease in overall supply and an inability to meet consumer demand. This problem has also increased the cost of goods compared to using carton boxes. To sell their products online, P&A;G must re-engineer their supply chain system and incorporate an online store module. However, there are barriers hindering this implementation process. Resistance from staff and retail shops towards learning the online shop functionality is one issue faced by administration. Staff prefer sticking to traditional methods instead of adopting the new system. Another challenge is maintaining data

quality for online shops due to P&A;G's wide range of household care products (Case II-4 by Martin, 2009; Dougherty, D., 1992).

Data Protection and Security Concerns in the Online Shop on the Internet

The online shop collects personal information such as credit card numbers, addresses, and contact details. Some consumers worry about unintentional disclosure of their personal information.

Perceptions of Internal and External Customers regarding the Online Shop

The implementation of the new supply chain system may not always fulfill the needs of both internal and external customers. Sometimes, manual work may be necessary if the new system cannot meet their requirements.

Budget for Software and Hardware Implementation

Financial resources are necessary for purchasing new hardware and integrating online shop functionality into the existing supply chain system. Obtaining sufficient funding for new development in an administration is challenging, making budget a significant concern for developing an online shop in P & G. This issue is similarly faced by Clarion School for Boys Inc.(Case IV-1 by Del-Iayes, 2009), where poor staff perception of the new system and budgeting are the main problems. These issues align with those encountered by P & G when implementing an online shop in their existing supply chain system.InsuraCorp's Data Governance case (Case I-4 by Brown, Khatri and Lockwood, 2009) provides another example of challenges faced in integrating and sharing data between different business units within an organization. Similar problems are also seen in P & G, including data quality issues. However, P & G expands its scope to include external clients such as consumers and retail shops. Therefore, finding solutions to these issues is crucial.

To overcome the barriers mentioned above, the following suggestions are

recommended:

1. Increasing the safety stock level: It is advised to increase the safety stock level of household care products in retail stores. Safety stock serves as a buffer to address potential damage during transit and prevent shortages on shelves. By using safety stock as a backup for any damaged items, unexpected increases in demand can also be met.

2. Improving protection with triangular boxes: To enhance the protection of bulk cargo, it is suggested to replace the current seal tight plastic bag with large triangular boxes. Triangular boxes evenly distribute force among all three sides, offering optimal defense for stored goods. Refer to Figure 6 for an illustration of the triangular wadding box.

Overall, implementing these solutions will help overcome the barriers discussed earlier in integrating and sharing data between different business units within organizations like InsuraCorp and P & G.
The significance of online shop training for staff and retail shops lies in effectively leveraging their capabilities. This entails knowledge on handling orders from online shops. P&A;G can incorporate vital concepts and processes into their training program using graphical images that simplify complex ideas. Additionally, the implementation of eLearning allows staff and retail shops to practice these procedures and gather valuable feedback.

Consumer training is crucial in educating them on purchasing household care products from online shops, aiming to encourage them to try out this method of shopping. A multimedia presentation providing a step-by-step guide for online purchasing proves to be an effective approach. Integrating this multimedia training into the website of an online store facilitates easy instruction-following and convenient purchases for shoppers.

Furthermore, managing data in an online store plays a significant role in ensuring its quality, protection,

and security. Accurate information is vital for consumers to make informed choices during product purchases, as incorrect data may result in wrong item deliveries. Therefore, maintaining data quality is highly important by assigning unique identifiers for each entity and offering clear descriptions of products without ambiguity.Data security is the protection of credit card and personal information from hackers. The IT department can monitor the online store, use digital signatures and encryption methods, and invest in software or solutions to enhance security measures. Internally, various measures like passwords, access control levels, data redundancy and backups, firewalls, and USB usage restrictions can strengthen data security within the organization's systems.

Survey on gathering perceptions from staff, retail shops, and online consumers

Conducting surveys provides valuable insights into the needs and perspectives of staff, retail shops, and online consumers who are not developers but can identify existing issues. Two separate surveys can be conducted: one before implementing the online shop to gather new ideas for development, and another after its launch to collect feedback similar to a public presentation analysis. This feedback can then be used for continuous improvement of the online shop.

Utilize the 7Cs Framework for online shop design

The 7Cs model is a design framework that takes into account seven elements of a customer interface: context, content, commercialism, community, connection, customization, and communication (Rayport J., & Jaworski B., 2001). By using this model in designing an online shop, it becomes possible to meet both internal and external customer needs.

Create a proposal before implementing the online shop

The purpose of creating a proposal is to allocate resources and estimate the total cost involved in implementing an online shop. It also includes risk

management measures aimed at anticipating potential issues during implementation such as changes in business processes or management uncertainties. The text provides a comprehensive overview of the implementation of an online shop for better management and budget acquisition. It compares the approach to system implementation of Clarion School for boys Inc.and P.

The Clarion School hired a consulting firm but faced issues with system usage and effectiveness, highlighting the importance of staff perception and training in implementation. These suggestions are also necessary for developing an online shop for P. In contrast, Schaeffer outsourced IT resources, recognizing the expertise and resources of an external company.

Moving on to the conclusion, P is described as a creative and innovative company focusing on sustainable products to boost sales.They are convinced that by investing in their products they can achieve higher sales, productivity, and decreased error rates. The implementation of packaging technology has enhanced the flow of supply chain and minimized confusion. Additionally, leveraging information technology and the internet to exchange information has been instrumental in P's annual sales growth. The online store serves as another avenue for expanding their customer base through unrestricted product sales. If P&G maintains its current strategy, it has the potential to become a frontrunner in retail goods marketing.