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Pest Analysis Essay

3. (a) Training program Companies who work hard to meet the needs of their employees can cultivate a work atmosphere conducive to productivity. Being able to plan for the needs of employees by thinking ahead can help to improve the rate of skilled employees who chose to remain working for a company. Improving the employee retention rate can reduce the money companies spend on finding and training new employees. It is important to consider employees may want or need and what the company can reasonably supply.

Providing specialized on-site training, even if provided by senior members of the company, and offering one-on-one assessment and coaching sessions, can help employees reach peak performance rates. After being hired on, a strong training and mentoring program can help a new member of the staff get up to speed on company policies and any current or ongoing projects they will be working on. To help employees perform at their best, a company can follow up with continual training programs, coaching, and regular assessment. Investing in the development of its employees can allow a company to turn out more consistent products. Incentive system

An incentive program represents a substantial investment to most organizations. Engaging all employees to participate in the program will help them receive a sufficient return on their investment. Based on the concept of quality performance, incentive programs will increase an employee’s perception of themselves in achieving their program goals. In order to properly motivate, programs must be designed to offer a variety of products and services to employees based on their interests and needs. The programs need to have carefully determined their rewards methodology in order to maintain an employee’s motivation. In addition, successful campaigns require clearly defined rules, aligned rewards, efficient communication strategies and measurable success metrics.

By combining each of these elements into the program, companies are better able to engage program participants and enhance the overall program effectiveness. In order to create an effective incentive program, an organization must keep the overall objective in mind when considering program design and implementation. Objectives should be clearly defined based on the company’s goals and need to be specific so employees understand their expectations. Objectives can vary depending on the needs of each organization and they should be challenging, yet achievable. If objectives are viewed as unattainable, the program will not be successful. Once the program goals have been defined, all aspects of the program should be measured against this goal in order to ensure the program’s success.

3.(b) communication network Communication is the exchange of useful information between and among people and organizations to support decisions and coordinate activities. Within an organization, information should be communicated to management and other employees who need it in a form and within a time frame that helps them to carry out their responsibilities. Communication also takes place with outside parties such as customers, suppliers and regulators. Management should ensure that there are open lines of communication for both staff and management to use. Open communication fosters reporting of both positive and negative results to the appropriate level of management without the fear of reprisal. Management should ensure that it takes the proper actions to address these results. For example, management may decide to: establish new goals and objectives to take advantage of newly identified opportunities; counsel and retrain staff to correct procedural errors; or adjust control activities to minimize a change in risk. Hierarchy of objective

Objectives are the organization’s desired outcomes. They are a product of the planning process and are necessary for coordinating efforts within an organization. Without clearly defined objectives, employees could be working in conflicting directions. Objectives can be organizational or operational. Management derives organizational objectives from the mission and often develops them during the strategic planning process. They are long-range, broad statements, which define the desired outcomes of the organization as a whole. Good organizational objectives can serve as starting points for more specific and detailed objectives within the subunits (i.e., divisions, departments, bureaus and assessable units) of the organization.

They also serve as standards for evaluating overall organizational performance. Management derives operational objectives from the broad organizational objectives. Operational objectives are shorter-range, more specific and define the desired outcomes of each of the organization’s subunits. They should be structured in a hierarchy so that each subunit’s accomplishment of its operational objectives helps the next higher level achieve its operational objectives, all of which helps management meet its organizational objectives. All objectives should be in writing. Management should provide employees with written organizational and operational objectives along with the mission statement.

Management should ensure that employees understand the objectives and how their work helps to achieve them. Finally, just as changes in the environment can affect the adequacy and relevancy of the mission statement, these same factors also affect an organization’s objectives. For an organization to function effectively and grow, it should periodically reassess its organizational and operational objectives.

Company’s name: De vest Fashion Berhad Industry: Fashion Industry

3.1 Political Factors To improve consumers spending in the clothing industry, the Malaysian government has implemented the “Mega Carnival Sale” which is to be held 3 times a year. Its main purpose is to promote Malaysia as a “value for money shopping destination”. This aggressive approach calls on to the tourist to shop at the local malls, which in turn would increase foreign tourist spending and thus increase the country’s foreign exchange earnings. Furthermore, this approach would encourage the Malaysians to shop locally, which would benefit Elba Holdings Bhd in terms of their sales. Malaysia is a member of the ASEAN Free Trade Area (AFTA), which aims to reduce trade barriers between the member countries Malaysia, Indonesia, Singapore, Thailand, the Philippines, Brunei, Vietnam, Laos and Myanmar.

This has created an opportunity for the domestic companies, like Elba Holdings Bhd to venture into the overseas market, such as Vietnam, where by the retail market there is lucrative for foreign investors. However, with AFTA, foreign investors would be interested in the Malaysian market, and with new foreign entrants, competition becomes fierce for Elba Holdings Bhd. In addition to this, the Malaysian government attempted to stabilize the retail industry after its slump in the 97′ crisis by reducing inflationary pressures in the form of tariffs reductions, so that foreign investors would invest in the domestic market.

The result of this would transform the retail industry into a competitive market, making it difficult for Elba Holdings Bhd to be a dominant player in the clothing sector as well as a market leader. Under the Eighth Malaysian Plan covering 2001-2005, the retail industry is expected to play a more pressures prominent role in the growth of the economy, due to a sustained economic growth and expansion of the tourism industry. A fair trade policy and law will be formulated to prevent collusion, cartel price fixing, market allocation and the abuse of market power. New distribution modes will be developed such as franchises, direct sales, factory outlets, and e-commerce, to provide the consumers with a variety of choice. 3.2 Economic Factors

Malaysia’s economic growth is to be maintained at 4.5% in 2003 and expand further to 5.5% or 6.0% in 2004, taking into account the external demand conditions and the economic impact of the Severe Acute Respiratory Syndrome (SARS) in the first half of 2003. The economic growth is expected to be due to the domestic market with growth in the private sector. The private sector makes up the bulk of the Malaysian economy, with private consumption accounting for nearly 44% of GDP. Despite the recovery in the household consumption over the last few years, inflation has remained unchanged. The overall inflation rate is expected to be at 1.5% in 2003 mainly due to mild deflationary from major global economies. Looking at the earlier years, total retail sales in Malaysia amounted to RM46.9 billion in 2001, with a 3.7% increase over2000.

Having experienced healthy growth per annum from 1990, the Asian crisis caused total retail sales to plummet by21.2% in 1998. Reduced consumption and increased savings were some of the major causes of the significant decline. Apart from challenging economic conditions, 2001 also had unexceptional events that threatened to have a major impact on retail businesses. The recovery of the retail industry in Malaysia has been gradual, having yet to return to a pre-crisis level. The first quarter of 2001 had a slowdown of the retail industry as a result of the economic crisis in the United States. The September 11, 2001 terrorist attacks on the United States had further dampen the potential of economic recovery in the country. Nevertheless, the industry managed to have an overall growth rate of 3.7% in 2001. Retail industry growth rate was above GDP growth rate for the entire year. The fall in consumer confidence resulted in reduced consumption and increased savings.

The government subsequently launched a national campaign on wise spending, with the aim to educate consumers on the importance of domestic demand on the GDP growth and economic recovery as a whole. The “Love Malaysia, Buy Malaysia” campaign was also launched to get Malaysians to buy local products and take local holidays. This effort proved successful. The implications of these economic events had affected the growth of Elba Holdings Bhd, due to a fall in the tourism industry as well as the reduction in consumers spending. The company was adversely affected in terms of its financial position, and it was impossible to have a complete recovery due to unfavourable economic events reoccurring, for instance SARS.

3.3.Social Factors Malaysian is classified as an upper middle-income country, and considered as one of the most developed of developing countries. Middle income households defined as those earning between RM1, 500 and RM3, 500 per month, and has increased from 32.3% of total household population in 1995 to 37% in 1999. The low-income group, categorized by household income of up to RM1, 500 per month, spend a proportion of this amount on food. Meanwhile, the high and middle income households spend most of their money at hypermarkets. A small percentage of about 3.4% of their income is spent on clothing and foot wear.

There has been a decrease in consumers spending since 2000, because consumers have begun to realise the values of money especially since the 97’crisis took place. It is now slowly picking up in 2003.Malaysia’s consumers’ lifestyle has been changing to rising affluence and education levels. High profile retailers as well we global mass media have shaped consumers buying behaviour, resulting in the Malaysians being more westernised. The Malaysian’s life leisure life revolves around trendy shopping malls, such as one utama, mega mall, and klcc. Thus Elba Holdings Bhd has to me more update and kept abreast with the latest trends. They have to advertise and keep the consumers informed and reminded that they still exist and produce clothing with style and quality.

3.4 Technological Factor With the Internet and e-commerce, retailers can now sell their products on line and deliver it to customers on their door-step. It can make customers’ life a lot easier as they need to have to go to the city to make a purchase. Furthermore, retailers can also sell their products to the overseas market without the need to physically enter the foreign country. Microsoft (Malaysia) Sdn Bhd and Tradenex.com Sdn Bhd, a subsidiary of the Federation of Malaysian Manufacturers(FMM), signed a memorandum of understanding to develop and operate a supply-chain hub for the retail sector, known as the Malaysian Retail Exchange.

The Malaysian Retail Exchange is part of FMM’s broad e-commerce initiative to assist manufacturers transact electronically with their trading partners as a community. The Exchange will provide the infrastructure and technology to connect manufacturers, distributors and retailers to adopt electronic trading in order to improve speed of communication, reduce transaction costs, better synchronization of supply with consumer demand and significantly improve inventory management.

FMM’s initiative is in line with the government’s call to Malaysian businesses to be empowered with the tools of emerging technologies to improve operational efficiency and hence, competitiveness in amore open economy. The result of this would bring closer ties to the entire retailer in the retail industry, however in the case of Elba Holdings Bhd, the company stills practice the orthodox methods of getting to the consumers, and this has caused them to be laid back with other competitors such as Padini Holdings Bhd.


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