Business+Organisation+and+Environment

BUSINESS ORGANISATION AND ENVIRONMENT (Nature of business activity, types of organizations, organizational objectives, stakeholders, external environment, organizational planning tools, growth and evolution, change and management of change, globalization)  1) In 2004, Sophie converted Les Maisonnettes to a private limited company. Evaluate her decision in terms of appropriateness. (hints - ownership/control, stakeholders) (6) - A private limited company is a company that cannot raise share capital from the general public. Directors are able to maintain overall control of teh business hence many private companies are run as a family business like Les Maisonnette is. One mayor advantage is that the owners have greater control of the business, as their shares cannot be traded on the open stock exchange. However private companies find it hard to raise enough finance for the busines..

2) Analyse problems that start-up businesses like Les Maisonnettes face. (5)   -Lack of awareness amongst the market. This can be solved by extensive advertising. In Sophie's case, she could advertise Les Maisonnettes in travel magazines. -New businesses often experience very low profits when they first start up. This is because it usually takes awhile for them to gain back all the capital they spent on getting the business started up. New businesses need to be aware of any financial problems they may incur due to these low profits, by using Accounts and Finance tools, such as Cashflow Forecasts, BEP's and Balance Sheets etc. Sophie needs to make sure that she is spending the business' money wisely, and keep a close eye on all spending, since Les Maisonnettes will be in a very vulnerable state in its beginning stage. -Competition with existing businesses can prove to be a very big problem for Les Maisonnettes. These businesses have already been established in the area, and there will be a certain amount of customer loyalty to them. Sophie needs to be able to offer customers something unique (with a Unique Selling Point) e.g. her environmentally friendly business.

Start-up problems that are faced by businesses like Les Maisonettes include: lack of sufficient funds to invest into the business, lack of recognition from customers, lack of credentials, lack of experience in the industry and too much competition.
 * A more detailed answer could be:**

Lack of sufficient funds is seen to have been a problem for Sophie Lagarde as well, hence the reason why she took out a loan “with her local bank and Chamber of Commerce”. This problem usually arises with companies that are recently opening, e.g. Les Maisonnettes where the owners do not have enough financial backing either from previous companies or from lack of family funds. This is a problem because new businesses will be unable to remain competitive in the market for very long and they may find that other companies will outlast them.

New firms find that in the early years of operation few people will be aware of their existence: only when the firm has firmly established itself in the market will recognition be achieved. One way to gain recognition is by being differentiated from other similar companies, thus differentiating itself from competitors, e.g. having a unique selling point. Les Maisonnettes was seen to be an instant success through its method of advertising: “photographs of the building have been used by the regional tourist boarding a promotional brochure for the area”.

Lack of credentials is an issue faced by any new firm as no external party/organization has audited the company and given it any formal recognition/credentials. Other more established firms may have developed their products and received awards or critical acclaim, which is a unique selling point and may encourage repeat consumers to that more established firm. Les Maisonnettes received recognition because “Sophie is an active member of the Association Francaise d’Ecotourisme (AFE)”.

New owners also often lack sufficient experience in the industry if they have never owned/run a similar/any business previously. This means that they will be very inefficient and are more likely to make mistakes which will harm them and competitors will, to consumers at least, seem as a much better choice. Sophie’s success with Les Maisonnettes may be attributed to her previous experience in her parents’ grocery shop.

Too much competition can be a problem for new companies as this means that their chances of recognition in the market is reduced. Also, customers are likely to have brand loyalty developed over the years and thus are unlikely to accept the new business as willingly. Also, because there is more competition, the business has less opportunity to grow: they will have less market share and competitors are likely to establish monopolies or take-over the new business. Les Maisonnettes does not face this problem as ecotourism is fairly new and thus competition is scarce.



3) Discuss the impact of setting ethical objectives on the business? (hint – stakeholders) (6)

4) Analyse reasons why LM has chosen different strategies towards their social responsibilities. HL (5)  

5) Discuss why LM’s consumer attitudes towards social responsibility may change over time. (6) 

6) Prepare a PESTG analysis and use it to analyze the impact of the external environment on Les Maisonnettes. (10) 

7) Evaluate the impact of the external environment on the LM’s objectives. (6) 

8) Explain how opportunities and threats can impact the options that Sophie is considering (Lines 156 to 182) (8) 

9) In the light of Sophie’s plans for growth, describe the importance of information that could be detailed in a business plan (Line 92). (Hint: key stakeholders) (4) 

10a) Apply the Fishbone analysis (Ishikawa diagram) to the four options for Les Masionnette’s future direction. HL (6) 

10b) Discuss the value of fishbone analysis as a decision making tool. (4) 

11) Explain the impact on Les Maisonnettes of operating in a country that is a member of the European Union (hint – regional trading blocs) (4) 

12) Examine the relative importance of the driving and restraining forces for Les Maisonnettes future plans. HL (8) <span style="font-size: 110%; color: #1200ff; font-family: 'Arial','sans-serif';">

14) Apply the Ansoff matrix growth strategies to Les Maisonnette’s current situation. (6) <span style="font-size: 110%; color: #1200ff; font-family: 'Arial','sans-serif';">

15) Evaluate internal/ external growth strategies as methods of expansion for Les Maisonnettes (hint- can Michael Porter’s generic strategies or Ansoff’s growth strategies build competitive advantage?)