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BTEC EDEXCEL HND DIPLOMA IN (MANAGEMENT & HUMAN RESOURCE) OFFERED BY INTERNATIONAL COLLEGE OF BUSINESS AND TECHNOLOGY
F.K.Mohamed Firnaz BM K 23 ICBT Kandy Campus Assessor: Mrs.Lasanthi Gunasekara Submission: 08/08/2012
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Acknowledgement
I would like to thank Ancoombra Tea Factory Proprietor Mr.Ziyaudeen who helped me to complete the Assignment Successfully.
I would like to thank my lecturer Mrs.Lasanthi Gunasekara. Also I would like to thank all my friends and classmate who supported me in different way to complete the Assignment successfully.
Also I would like thanks all those who have support me to make this assignment to complete successfully.
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Executive Summary
The Ancoombra Tea Factory is a Private Limited Company which is owned by Mr.Meezan Hadjiyar. It was started in 1946 in a small town in Ankumbura which is located in the Central province of Sri Lanka. The important Stakeholders of the company are Owner, Employees, Supplier, Customer, Government and neighbors. All the stakeholders contribution to the organization is high. Ancoombra Tea Factory mainly considers on customer satisfaction of the products and won many awards. The main responsibility of the organizations is on Social, Environmental, Managerial, and Employee. There are three types of Economic systems, which are Command Economy, Free market Economy and Mixed Economy. The basic Economic Problem is What to Produce, How to Produce, To Whom to produce and how these basic economic problems are solved. The UK National Fiscal and Monetary Policy and the Key Forces, UK Budget Deficit, Inflation Rate and Interest rate. How Fiscal and monetary policy impact on the business. UK Competition Policy and pillars of it and the impact on Competition Policy on the Tea factory. International Trade and its impacts on the tea business in UK and how the European Union Policies effect the business.
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Contents
Introduction ................................................................................................................................................... 6 Section 1: ...................................................................................................................................................... 7 LO 1.1 ........................................................................................................................................................... 7 Types of Organizations Available in Sri Lanka ............................................................................................ 7 Characteristics ........................................................................................................................................... 7 Size............................................................................................................................................................ 9 Legal Form .............................................................................................................................................. 10 Ancoombra Tea factory .............................................................................................................................. 11 LO 1.2 ..................................................................................................................................................... 12 Stakeholder Map ......................................................................................................................................... 12 Needs of Employees ................................................................................................................................... 15 Customer Expectations and Satisfaction ..................................................................................................... 16 LO 3.2 ..................................................................................................................................................... 17 Demand and Supply Curve ..................................................................................................................... 17 Porters 5 Forces....................................................................................................................................... 17 Sales Figures of Ancoombra Tea Factory ............................................................................................... 18 LO 1.3 ......................................................................................................................................................... 19 Organization Responsibility........................................................................................................................ 19 Section 2 ..................................................................................................................................................... 20 LO 2.1 ..................................................................................................................................................... 20 Economic Problems .................................................................................................................................... 20 Solving Basic Economic Problems ............................................................................................................. 22 LO 2.2 ..................................................................................................................................................... 25 UK National Fiscal and Monetary Policy ................................................................................................... 25 Monetary Policy .......................................................................................................................................... 28 Monetary Policy is there to support Fiscal policy and to manage demand. ................................................ 28 LO 2.3 ......................................................................................................................................................... 29 UK Competition policy and Regulatory bodies .......................................................................................... 29
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Impact of Competition Policy of Selected organization ............................................................................. 30 Role of Regulatory Bodies ...................................................................................................................... 30 LO 4.1 ......................................................................................................................................................... 32 International Trade ...................................................................................................................................... 32 How UK Business is affected by International Trade ............................................................................. 32 LO 4.3 ......................................................................................................................................................... 33 Impact of Policies in European Union ........................................................................................................ 33 Impact of European Union in UK Business ............................................................................................ 33 Policies of EU ......................................................................................................................................... 33 Recommendations and Conclusion ............................................................................................................. 35 References ................................................................................................................................................... 36 Appendices.................................................................................................................................................. 37
Figures:
Page Number
Stakeholders Map Demand and Supply Curve UK Budget Dificit Inflation Rate UK Recent Interest Rate
12 16 23 23 24
Tables:
13 14
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Introduction
The Ancoombra Tea factory is located in the small town of Ankumbura, in the Central province. It was started in 1946 by the late Meezan Hadjiyar. The company has reputation as one of the largest and best mid grown Tea factories in the Central region. The factory is aided and abetted with the latest state of the art machinery and is one of the few factories nationwide that takes pride in having fully Automated Orthodox tea processing systems as well as the C.T.C (Cut, Twist & Curl) method of tea manufacture. The Ancoombra tea factory Produce black tea of the finest Aroma & flavor to cater to many different categories of consumers all over the island. Has won many prestigious awards such as. The 5S and 2 Star awards for best maintenance, the H.A.C.C.P health certification for maintaining the most hygienic standards of tea production and last but not least, the Entrepreneur of the year National award
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Section 1:
LO 1.1
Characteristics
1. According to Ownership 2. According to Control 3. According to Activity According to Ownership Private Sector Examples: Dialog, Etisalat, Airtel Public Sector Examples: Ceylon Electricity Board, Ceylon Water Board According to Control By the Owners Example: Sidhalepa By People Working Example: Nawaloka Hospitals PLC Indirectly by the Government Example: Golden Key, Sri Lanka Airlines, St/Anthonys College Directly by the Government
Example: Sri Lanka Postal Department, Sri Lanka Police, Sri Lanka Army, Sri Lanka Navy
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According to Activity Service Example: Bank of Ceylon, Seylan Bank, Peoples Bank, Sampath Bank etc. Product Example: Nestle, Keels
According to Profit & Non Profit Orientation Profit making Example: Private Organizations Non Profit Example: Rotary Club, Mawbima Lanka, Samadhi Community Development Foundation
According to Legal Status Limited Companies Example: Colombo Exchange Partnership Companies Example: Perera & Sons Sole Trade Example: Mangala Tax Public Company Example: Sri Lanka Insurance, Sri Lanka Airlines
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According to Size
Number of Staff Example: Sri Lanka telecom, CIC Holding Number of branches Example: National Saving bank, Sampath Bank Sales revenues each year Example: John keels Market Share Example: Unilever Sri Lanka, Hamas Holdings
Size
1. Small business Owns and Runs by one or a few Sell Goods and Services Locally Employee less than 50 People Example: Orchid
2. Medium Business Operates Locally or internationally Employee Between 50-250 People Example: Singer PLC 3. Large Business Has Household names, easily recognized logos Factories, offices & outlets are located in other locations More than 250 employees National & multinational Business Example: Singer PLC, Cargills PLC, Damro
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Legal Form
1. Sole Trader Single individuals Usually small Scale Baring the profit or losses Example: Wayamba Traders 2. Partnership Two or More persons associated One stage beyond the sole trader Each Partner Contributed an agreed amount of capital Agreed method of profit sharing, salaries & interest Must be dissolved whenever more than 50% of the partnership interest change hands Example: Apparel industry of Sri Lanka
3. Public Limited Company Listed in the Stock market & name should be include letters PLC Owned by a wide range of investors Example: John Keels, ODEL, Dialog
4. Private Limited Company Shares are only transferable directly No Privilege to sell shares in the stock market Name Should be included Ltd, or Limited Owned by Limited Number of investors Example: Atlas, MAS Holdings
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LO 1.2
Stakeholder Map
High Owner Government Bank Supplier
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Stakeholders
Owner
Objectives
Owner should have good relationship with the stakeholders. His expectations are future profit potential of investments, current financial performance and the stability and the strengths of the capital structure. He expects the profitability from the business.
Supplier
Government
Fulfill legal requirements and make way to produce best quality To Provide loans and get interest
Bank
Customer
Competitor
Employees
Neighbors
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Stakeholders
Owner
Government
To make sure that they follow all legal requirement which will not harm the consumers To Provide loans and get interest and make good financial status to the organization Build the satisfaction and make good relationship with them to attain good supplies.
Bank
Supplier
Customer
Competitor
Employees
Neighbors
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Needs of Employees
Respect Trust Open Communication Clear Communication Appreciation Chance to make own decision Opportunities to grow Free Health checkup once in a month Promotion Motivation Transfer
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Ancoombra tea factory was started in 1946 and till it growing and growing. Their green leaf processing capacity exceeds 52,000kg per day and it shows customers were satisfied if they are not satisfied they cant be in this field for more than 66 years.
Ancoombra tea factory won Prestigious 5 `S` Award (Given by Japan) 1. Seiri Organization 2. Seiton Orderliness 3. Seiso Cleanliness 4. Seiketsu Standardized cleanup 5. Shitsuke Discipline
5C is meant by 5 Pillars of an organization. This Award proves that Physical Environment in Ancoombra is tidy and very well organized. Ancoombra tea factory finds out it and produce high quality tea by plucking fresh tea from their fields and also manufacturing process carried out in the same company. So it enables to produce high quality tea with high technology machines with an affordable price. Suppliers sell to consumers at a low price than the competitor because Ancoombra sells at a very low cost to suppliers because their manufacturing charge and labour is very low. So it makes consumers to satisfactory because Customer expects tea for affordable price and the quality for the money they pay.
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In Ancoombra tea factory can see positive shift in Demand 1 and Demand 2 resulting increase in price also increase in quantity as well, this happens very rarely in any organization and this tells the quality and the trust of the consumers for the tea from this organization.
Porters 5 Forces 1. Threat of Suppliers Labour, Machinery, Transporters and Tea Plantations 2. Threat of Buyers Nature of Product, Initial Buyers and Final Buyers 3. Threat of Substitute Biggest threat to package industry is loose tea industry and Beverages 4. Entry and Exit Barriers Barriers for tea factories, plantation, distributors and packages and consumers 5. Degree of Rivalry There are varieties of tea available in market and almost all the same in quality wise so if another company reduces the price consumer will switch it to other substitute because switching cost is low.
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Sales for January 2012 Tea Kg Per day Tea for Month = 200 = 200kg x 30 days = 6000Kgs per Month
Sales for February 2012 Tea Kg Per day Tea for Month = 162 = 162kg x 30 days = 4860Kgs per Month
Sales for March 2012 Tea Kg Per day Tea for Month = 189 = 189kg x 30 days = 5670Kgs per Month
Sales for April 2012 Tea Kg Per day Tea for Month = 212 = 212kg x 30 days = 6360Kgs per Month
Sales for May 2012 Tea Kg Per day Tea for Month = 202 = 202kg x 30 days = 6060Kgs per Month
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Organization Responsibility
Social Social Responsibility means an act to benefit society to large extent. Ancoombra tea factory as proved that they values social responsibility and also they won H.A.C.C.P health certification for maintaining the most hygienic standards of tea production.
Environmental Environmental Responsibility means the way waste is treated and disposed properly. Ancoombra tea factory uses fully Automated Orthodox tea processing systems as well as the C.T.C (Cut, Twist & Curl) method of tea manufacture. There is an old saying seeing is believing and Ancoombra welcomes all to visit and witness wondrous process of manufacturing finest blend of tea.
Managerial They follow moral principles and values that govern of a group or person with respect right or wrong. Ancoombra tea factory has won Entrepreneur of the year National award in 2007 so it tells that best managerial activities carried out in the organization.
Employee Ancoombra tea factory gives equal opportunities to all employees without discriminating. Also take care or employees well-being. They make employees to work for minimum hours (8hours). They also give promotion to skillful employees and motivate new/training employees so they feel good to work. Also create a safe and healthy place for work with all necessary requirements applicable for safety and health situations.
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Section 2
LO 2.1
Economic Problems
1. Command Economy Fully owned and control by Government Collective Decision Making Government decides answer for all three economic problems Benefit goes to members only Central planning committees
2. Free Market Economy Called as Capitalism Owned by Private Sector Ability to pay, supply & demand influence the decision making Less Government intervention Countries which practice this system are United Kingdom, United States of America and Germany (but cant find 100% Free market Economy in the world)
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1. What to Produce: It is depend on what customer wants to buy and the affordability cost they can pay to own the product. Produce goods with the minimum resources available and making maximum output of it.
2. How to Produce: Using the most appropriate production method by considering what types of technologies needed to be use. Choice about who will produce & what mix of resources use. Depend on the cost of resources and efficiencies of resource utilization.
3. To whom to produce: Deciding on whom the product is produce and will be distributed. What type of Social class and groups targeted. Eg: SL and UK
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Free market economy is called as capitalism. For this free market government intervention is very low. All decisions are taken by the market mechanism. In this free market economy all firms are trying to maximize their profit. Customers are trying to buy goods with more benefits for least price and workers are trying to maximize their wages. What to produce? When firms are deciding what to produce they are trying to select products which help to earn highest profit. Firms are only trying to maximize their profit. This decision is mainly depending on this factor. How to produce? After selecting a product which helps to gain maximum profit firms is trying to decide the way they are going to produce it. To produce that product firms are trying to select the cheapest way. Because of this firms are used to select dense resources to produce that product. Not only are the dense resources firms trying to find workers who can hire cheaply. Whom to produce? Once a firm targets a market it has to select the product according to the same. Always the firms aim is to maximize their profits. Therefore the firms will mainly targets on the consumers who have more purchasing power & it helps when pricing the product.
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This economy is called as planned economy or Socialism. The command economy is totally controlled by the government and the decisions are taken by the central planning committee.
What to produce? When control planning committees are taking this decision they are trying to ensure the welfare of the society. So the central planning committees are trying to produce products which are not harmful to the society. How to produce? After selecting a product central planning committees are trying to select a process which is not harmful to the society. Therefore to take this decision central planning committees are concerning about factors such as, unemployment of the society, capital density and the welfare of the society. Central planning committees will help to reduce unemployment by taking decisions to use those people in production process. Whom to produce? After selecting a product the production process central planning committee will decide the targeted group. In this central planning committee will concern about the whole society as well as the equal distribution between the social classes.
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This market is a combination of the market economy and command economy. It will help to secure the social security and the competitiveness of the market. In this market there are enterprise sector, public ownership and welfare sector. In this market government intervention are in three types, Provision or prohibition. Subsidy or taxation. Regulations.
What to produce? In this market private sector is taking decisions to produce products which can give highest profit and which can meet customer needs and wants to fulfill their demand. But the production should follow government rules and regulations. Government is taking decisions to produce products which can secure the social welfare (mainly the service sector). How to produce? In this element private sector is taking the cheapest way to produce a product. Private sector is using dense resources and cheapest methods to produce a product to reduce the cost. Government is taking care of the social welfare and they will concern about the capital density and other social factors to decide the production process. Government will select the process which is help to secure the social the social welfare, reduce the unemployment and the environmental protection. Whom to produce? When selecting a target group private sector will select the higher income group of the society. Mostly private sector is only concerning about the highest profit. Government will select especially the service sector to ensure the social welfare. Therefore the government will target the whole society. When concerning about Sri Lanka and UK both countries have mixed economies where both government and private sectors producing products and services to the society.
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Key Forces of Fiscal Policy Government plan what it wants to spend How much need to raise in income or by borrowings What form and how much from taxes Done once a year
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Monetary Policy is referred to Central bank. They maintain value and supply of money. In order to control inflation, stabilize currency. Monetary Policy is one way that government can impact on the economy by impacting the effective cost of money, the Central Bank can affect the money that is spent by consumers and businesses.
Figure No.3 UK Budget Deficit This graph shows how the UK's budget deficit has fluctuated as a percentage of the country's economic output (GDP)
The inflation target is symmetrical because a rate of inflation above the target is considered as damaging as a rate of inflation above the target.
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Figure No.5 UK Recent Interest Rate In recent years. Interest rates have been adjusted to reflect changing inflationary pressure, and general macro-economic conditions.
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Impact on Business
Fiscal Policy Fiscal policy will impact on Taxation. Government main income revenue is by tax. This might put a block to the new investors as well as the old business organization. Tax is a main income for government and all the organizations should pay taxes on their revenues.
Increase Tax
Reduce Inflation
Monetary Policy Monetary Policy is there to support Fiscal policy and to manage demand.
Monetary Policy will affect the business in following ways: Control by money supply Control over credit Exchange rate Interest rate Business cycle Spending Employee
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Competition Policy Competition policy means the activities carried out two or more business in order to capture a certain market. Competition is must because it will help businesses to produce quality products and maximize the benefits to consumers. It will ensure following factors: Lower Prices New Innovation Improved Service Great Efficiency Great Quality
Pillars of Competition Policy Merger Control - Rule adopted to prevent anti-competitive behavior Market liberalization Enables new competitors and provide best for consumers State Aid Control - Is ensure government intervention do not affect the competition Cartels Formal agreement between competitive firms
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A competitive advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices.
Competitive Commission Its an independent body that makes healthy competition is carried out in the market by business firms. Also ensuring Business firms are benefited as well as consumers.
Government Government is the only body who has power of influencing and implementing regulations on Prices. On goods and services such as Water board but before implementing they should inform to the public through parliament Generalized system of preferences GSP is the system of preferential trading through which the European Union extends preferential access to its markets for imports from developing countries. The New GSP+", system allows duty-free access to the EU for approximately 7,200 products from small and vulnerable developing countries. Sri Lanka was accommodated under GSP+ as a special case to enable recovery of development of the economy after the Tsunami Disaster.
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Central bank of Sri Lanka CBSL is responsible for regulating financial system of the country, Their 2 main objectives are 1. Maintaining economic and price stability 2. Maintaining financial system stability CBSL handles Sri Lankas foreign exchange management functions on behalf of government
Staff regulatory body Consider about salary, age limit, leaves, EPT and ETF Benefits to employees
Health and safety regulatory bodies Promote health care programs for employees
Standard regulatory bodies The Standards will be given to the business such as ISO 14001 for Waste Management System, ISO 14001:2004 for environment management. And also some certificates such as SLS, CODEX.
Consumer based regulatory bodies This consider about packaging system by mentioning Expiry date, Manufacture date and Price.
Influence of Regulatory Bodies Regulatory bodies play a major role in a countries economic system. The regulations were implemented for the betterment for business organizations and consumers but it can go in either way. A firm should cross all the barriers come from external environment and should make use of the scarce resources.
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International Trade
Trading Between two or more countries is known as International Trade. Also known as trading transactions between people leaving in different countries Advantages A Country may import a product which is not available or cannot be produced Utilization of resources Benefits to Customer Utilization of surplus produce
Disadvantages Over Specialization Import of harmful goods It may lead to war One country gain other country loses
How UK Business is affected by International Trade The international trade, the economies will grow faster because of foreign investment. The companies can target lot customers by expand their business into other countries. International trade can bring new technologies into the country by having economies open. Country offers the most attractive investment opportunities. UK business organization if they dont involve in this international business they can only sell and trade their product and might loss customers from other countries. Because of the different geographic location all the countries are depend on other countries products. As a result the economic will be important. On the other hand they will be able to face more competitors there. And also the tax and rules and regulations are also can be a barrier for this organization when it is export business. And also the foreign exchange will also affect the business greatly.
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EU mainly include manufacturing sector to boost enterprises EU economy. Estimates show that smalland medium-sized enterprises (SMEs) have raised. 6% of the EU GDP.
Benefits
Euro It has reduced currency consideration faced by European Countries Harmonized standards technical and Safety Standards Movement of people UK Citizens have right to live and spend in any European Countries
Policies of EU Common Industrial Policy Common monetary Policy. Common agricultural Policy. Taxation. Foreign and Security Policy.
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This policy helps to encourage merging industries in UK such as BBC microcomputers. This policy helps to expand the businesses by adding low tax rates. Influences on trade agreements and giving subsidizing.
Common monetary Policy. Decisions regards the monetary policy is taken by the economic and Monetary Union. All countries in EU are using Euro (E) as the common currency. But UK is still not using Euro (E) as the common currency.UK is using sterling pound (E) as the currency. Because its not easy to convert pound to Euro.
Common agricultural Policy. Common agricultural policy is the single largest policy across the EU All the agricultural products which are exporting to other European countries and which are importing from other European countries should be high quality, safe and sufficient quantities. Taxation All members should follow the same rules when they are deciding the tax rates. EU is directly influencing to the VAT rates. To make a fair competitions.UK should consider these rules and regulations when deciding the tax rates. These rates will influences to the organization. Foreign and Security policy. Under This policy all European countries are getting together to speak and act as one in the world. All Nations are getting together to do the disarmament operations, Rescue tasks and to give military advice and assistance.EU is doing these things to support third countries in world to eliminate the terrorism. Should maintain a high standard of Environment care and animal welfare.
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References
1. Ancoombra Tea Factory Proprietor Mr.Ziyaudeen (Telephone Number : 066 2224254) 2. Lecture Notes 3. Meezans Group Sri Lanka (Online) (cited 24th June 2012) Available From <URL:
http://www.meezans.com/factory/index_anco.html >
4. Economies Online (Online) (cited 24th June 2012) Available From <URL: http://economicsonline.co.uk/ > 5. Inflation Rate (Online) (cited 24th June 2012) Available From <URL:
http://economicsonline.co.uk/Global_economics/Inflation.html>
6. Interest Rate (Online) (cited 24th June 2012) Available From <URL:
http://economicsonline.co.uk/Global_economics/Monetary_policy.html>
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Appendices
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