Seagate Technology Plc. (STX) Company Analysis Essay

Seagate Technology Plc. (STX) Company Analysis - Essay Example In the next section, a more comprehensive analysis is rendered considering the whole economy, with both an industry analysis and company analysis as part of the overall analysis of this paper. It included both qualitative and quantitative assessments of the company to have an idea of the various threats and challenges it is currently facing as well as the opportunities in the market. The third section is the conclusion portion of this paper and summarizes what has been stated in previous sections. It also reiterates the important points raised by the company analysis so that a potential investor can make an informed judgment on the company based on facts the paper has presented so far. The fourth and last section is the recommendation which suggests a buy position for the company but only for the medium term investment horizon and further subject to a periodic quarterly review. This is because the very nature of the computer industry is that of rapid technological change and short pr oduct life cycles that can render even market leaders with an uncertain viability in a â€Å"nightmare moment† (strategic inflection point). Keywords: buybacks, data storage devices, flash memory, hard disks, hard drives, Seagate Table of Contents Section Page Number Executive Summary..†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.......1 A. ... ..†¦Ã¢â‚¬ ¦..................... 4 B.1 Economic Analysis†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦...†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦... 4 B.2. Industry Analysis..†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦................................................†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦5 B.3. Company Analysis†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦................................................................................6 B.3.1 History and Other Information.†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..........................................†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦7 B.3.2 Qualitative Fundamentals†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦...8 B.3.2.1 Management Team†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦8 B.3.2.2 Business Model†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.8 B.3.2.3 Competitive Advantage†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.8 B.3.2.4 Board of Directors†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..9 B.3.2.5 Negative Factors†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.9 B.3.2.6 Share Buyback Program†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦...†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦10 B.3.3 Quantitative Fundamentals.........................................†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦...†¦Ã¢â‚¬ ¦....10 B.3.3.1 Balance Sheet (3-year trend)...................................................................11 B.3.3.2 Income Statement (3-year trend ).................†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦....12 C. Conclusion.................................................................................................................13 D. Recommendation.......................................................................................................13 E. Bibliography..........................................................................................................14-16 A. Introduction This paper is a research report on the

E-Logistics and International Supply Chain Management Essay

E-Logistics and International Supply Chain Management - Essay Example This report stresses that the service management activities of a company aptly use the internet and other information and communication technologies. This is because it is the only source of information for the customers of the business. The use of internet is done to provide real time data to the customers, especially related to the interfaces with the functions of the operations and logistics departments. The internet has major impacts ion these processes in both the downstream activities and the internal parts of the supply chain. The internet is used for the recognition of events and understanding the opinion of the customers and is also used to communicate effectively with the customers regarding their needs and the responses of the company. This paper makes a conclusion that the impact of the internet is a major area of focus in the supply chain management process. The development of e-SCM is only a step forward to integrate internet effectively in the supply chain and logistic processes. The main impact of internet is that it allows the sharing of real time data which is very useful for the smooth functioning of the supply chain management system. The use of internet can lead to several benefits like there reduction in the costs, maintenance of optimal inventory levels, proper allocation of stocks, advanced planning and proper forecasting of the demands and quick response to the anticipated market demands.

The Criticality Of Retaining Skilled Employees Management Essay

The Criticality Of Retaining Skilled Employees Management Essay Introduction: Purpose of the report: The report is intended to analyse the key factors involved in employee retention and also focus of the measures to be taken up by the employer for reducing the attrition rate of skilled workers. The solutions discussed suggested in the report could be possibly applied in the case of Keeping Suzanne Chalmers. The commentary also aims to discuss further the reasons of the employee leaving the company. Scope: The information in the report ranges from examining the factors for Suzanne Chalmers quitting the job to the measures taken by Thomas Chan to stop the attrition. Further the analysis in the commentary will discuss in general the reasons responsible for such situations in organisations. Background: The credentials of the report would be the case study of Suzanne Chalmers a top talent in the area of internet protocol working at API who decided to quit the organisation even though was offered options like higher salary, larger working space, unpaid leave for two or three months complete with paid benefits and increase in share options. Limitations: The report revolves around the employee retention of Suzanne Chalmers and the tactics tried by the employer Thomas Chan and is limited for being offered only a few number of reasons to stay back in the employment. The analysis of the case is based and compared on the theories of four drive and the theory of expectancy. Summary of the issue: The case of Suzanne Chalmers working at Advanced Photonics Inc. as a software engineer in internet protocol is a typical example of the issue faced by many employers in the current market were in employees who are talented for the job and hold key position in the company after earning many accolades for outstanding performance over years and responsible for finishing projects contributing a fortune to the company deciding to leave the company on a very short notice without proper reasons. The summary of the report discusses about the means and ways the employer can practice to hold the employee back at work and other reasons accounting for the employee to decide to leave the job and possible solutions around the issue. It also confers about the resolutions tried by the employee in the case of Suzanne further converses about the employee behavior in general towards their job and the responsibilities entrusted onto them by the employer. The expectations of the employee and employer in general have also been mentioned in the report. In the case of Suzanne Chalmers the employee quits the organisation at a stage of her career were she is under the age of 40 years just like many other employees who quit the company. It is also noted that the reason is not stress or long hours. The vice president of Advanced Photonics Inc thought that the reason was more money. The generous share options which had skyrocketed on the stock market giving many employees more money than they can make use off. It has been observed that their finance independence gave them less reason to remain with the organisation. It was noted that the employee after quitting the organisation and taking a break returned back to market and joined a start-up software firm in the same locality. The meeting between the vice president and the employee is discussed further moving to the solutions for retaining employees in general. The motivation factors for the employees in an organisation have been elaborated in the report. The report would also discuss emotions of the workforce as well as values and attitudes of management. Importance of employee turnover: Abbasi and Hollman (2000) sought to determine the impact of employee turnover on organizations and found that excessive employee turnover often engenders far-reaching consequences and, at the extreme, may jeopardize efforts to attain organizational objectives. In addition, Abbasi and Hollman (2000) indicated that when an organization loses a critical employee, there is negative impact on innovation, consistency in providing service to guests may be jeopardized, and major delays in the delivery of services to customers may occur. The study also showed that a decline in the standard of service provided to guests could also adversely affect the satisfaction of internal and external customers and consequently, the profitability of the organization. As part of the process of developing and implementing strategies to maintain and increase competitiveness, organizations face the challenge of retaining their best employees. As such, this research was designed to analyze and determine the most effective ways for one employer to retain its critical employees. The company in this study has been successful at maintaining a relatively low turnover ratio, but the employees who left the organization have been critical employees, thus presenting a significant challenge. The results of this research effort potentially could be used as a framework for guiding employee retention in other large, complex organizations. Criticality of Retaining Skilled Employees: Fitz-enz (2002) stated that the average company loses approximately $1 million with every 10 managerial and professional employees who leave the organization. As mentioned previously, the combined direct and indirect costs associated with one employee ranges from a minimum of one years pay and benefits to a maximum of two years pay and benefits. Thus, there is significant economic impact when an organization loses any of its critical employees, especially given the knowledge that is lost with the employees departure. It will become significantly more important in the years ahead to recognize the commitment of individuals to an organization, as well as the organizations need to create an environment in which one would be willing to stay (Harris, 2000). Organizations will need to either create an intellectual capital environment where the transmission of knowledge takes place throughout the structure, or continue to lose important individual knowledge that has been developed during the length of service (Harris, 2000). This deep knowledge is what many believe will help to meet the needs and expectations of the customers and to create and sustain a competitive advantage within the global economy in which organizations are competing in today. The critical factors derived out of eminent motivation theories and the implications for developing and implementing employee retention practices can be described as follows: Needs of the Employee Employees have multiple needs based on their individual, family, and cultural values. In addition, these needs depend on the current and desired economic, political, and social status; career aspiration; the need to balance career, family, education, community, religion and other factors; and a general feeling of ones satisfaction with the current and desired state of being. Work Environment Employees want to work in an environment that is productive, respectful, provides a feeling of inclusiveness, and offers friendly setting. Responsibilities Given that one feels competent to perform in a more challenging capacity and has previously demonstrated such competencies, an employee may feel a need to seek additional responsibilities and be rewarded in a fair and equitable manner. Supervision Managers and other leaders more frequently than others feel a need to teach, coach, and develop others. In addition, these individuals would seek to influence the organizations goals, objectives and the strategies designed to achieve the mission of the organisation. Fairness and Equity Employees want to be treated and regarded in a fair and equitable manner regardless of age, gender, ethnicity, disability, sexual orientation, geographic location, or other similarly defined categories, With increased effort and higher performances employees also expect to be regarded more significantly than counterparts who provide output at or below the norm. The employees effort and performance at a particular level is influenced by their individual goals and objectives and which would vary by each individual. An outcome or reward that is perceived to be highly significant and important can result in a higher level of effort and performance by the individual employee. Effort Even though employees may exert higher levels of effort into a position based on a perceived significant reward, this could be a short-term success if the task itself does not challenge or provides satisfaction to the employee. Employee Development Employees prefer to function in environments that provide a challenge, offers new learning opportunities, significantly contributes to the organisations success, offers opportunities for advancement and personal development based on success and demonstrated interest in a particular area. Feedback Individuals prefer to have timely and open feedback from their supervisors. This feedback should be an ongoing process during the year and not limited to formal performance reviews once or twice per year. In addition, the feedback should be from both the employee and the supervisor. Employee Retention at Advanced Photonics Inc : As implicated in the case study Thomas Chan the vice president at the organisation has observed that employees even though were under 40 years, which is too early to retire quitting the job at API. It has also been witnessed that it is not for reasons like stress or long hours but the organisations share options that skyrocketed on the stock market which left many employees at API with more money than they could possibly spend. It has also left the employees to be millionaires giving them financial independence leaving fewer reasons to stay in employed at API. In this particular case Thomas was approached by Suzanne Chalmers who has been employed at API for four years in the field of internet protocol as a software engineer supporting the software that directed fibre optic light through APIs routers. It is also mentioned that internet protocol is a very specialized work and Chalmers was one of the top talents in that area. Theory of Expectancy and Four Drive Theory: Four Drive Theory: As it is known that emotions play a significant role in employee motivation which is not supported by many theories and researchers. But, the four drive theory emphasizes the concept and relevance of emotions in employee motivation. The theory was developed by Harvard Business School professors Paul Lawrence and Nitin Nohria. According to Steven M, Mara O, Tony T (P. 178, 2009), a motivation theory that is based on the innate drives to acquire, bond, learn and defend, and that incorporates both emotions and rationality. It has been derived that employees with higher emotional intelligence are more sensitive to competing demands from the four drives, and are better able to avoid impulsive behaviour from those drives, and can judge the best way to act to fulfill those drive demands in a social context. Recommendations of the practical implications of the theory are explained in two parts. First being that best workplaces for employee motivation and wellbeing offer co nditions that help employees fulfill all four drives. Employees continually seek fulfillment of their innate drives, so successful companies provide sufficient rewards, learning opportunities, social interaction and so forth for all employees. The second recommendation is that fulfillment of the four drives must be kept in balance; that is, organisations should avoid too much or too little opportunity to fulfill each drive. The reason for this recommendation is that the four drives compensate each other. Expectancy Theory of Motivation: This theory offers an elegant model based on rational logic to predict the chosen direction, level and persistence of motivation. According to Steven M, Mara O, Tony T (P. 178, 2009), expectancy theory is a motivation theory based on the idea that work effort is directed toward behaviors that people believe will lead to desired outcomes. The concept also says that work effort is directed toward behaviors that people believe will lead to desired outcomes. One of the appealing characteristics of expectancy theory is that it provides clear guidelines for increasing employee motivation. The Expectancy Theory of Motivation was developed, by Victor Vroom of the Yale School of Management, in the year 1964. He was of the opinion that people made a conscious choice while deciding whether or not to perform at the workplace. However the choice that was made by the employee depended entirely on the employees level of motivation which in turn was a function of th ree factors which are effort, performance and outcome. Current trend of Employee job satisfaction and Suzanne Chalmers: In the current generation employee is not completely satisfied with higher salary packages but is looking for more than that and stressing on innovative ways of retaining the employee. The reasons for choosing an organisation for employment can be categorized as location of company, compensation, the job, company reputation, career development, career path, job security, organisational culture, challenge, training and development, empowerment and attractive benefits. Like wise potential reasons for employee to leave the organisation can be classified as salary, lack of challenge and opportunity, lack of career advancement opportunities, ineffective leadership, inadequate emphasis on teamwork, not having the opportunity for a flexible work schedule, too long of a commute, lack of trust in senior management, inadequate opportunity for training and development and low overall job satisfaction. The case of Suzanne Chalmers can be listed for lack of challenge and opportunity and lack of c areer advancement. The employer took care of everything but lacked on the above mentioned factors leaving the employee with no other choice but to quit the job. Conclusion: If the organisations take up better employee retention plans and offer employees with more valued reasons to stay back with the organisation. The firms can possibly come up with innovative employee retention programs by offering the employees with better location of the company or the branch which is closer to their living place, compensation, better job matching their qualification, career development, career path, job security, organisational culture, challenge in job, training and development, empowerment and attractive benefits. Applying the thoughts of Four Drive theory has been proved to be very important in the current situation as emotions play a major role in motivation of employees.

Research Paper on Gregory Rasputin -- Biography biographies bio

Grigori Rasputin was not a very great person in history. A great person in history does good and important things for his people, country and the world. Early Life and Family: Grigori Efimovich Rasputin was born on January 10, between 1864-1872, along the Tura River in the village of Pokrovskoye. Rasputin was married to Praskovia Fyodorovna in 1889. His mother was Anna Egrovna and his father was Efim Rasputin. Grigori had three children with Praskovia, named Varya, Maria and Dmitry. Because of his constant drunkenness and "sexual appetite," the people of Pokrovskoye resented Rasputin. He grew tired of peasant life and in 1901, left behind his family and home in Siberia as a pilgrim. During his travels, Rasputin visited Greece and Jerusalem and, in 1903, Rasputin arrived in St. Petersburg where he claimed to be a holy man with healing powers. In St. Petersburg, Rasputin was able to catch the attention of St. Petersburg's religious leaders with his stories and beliefs. Years as a Monk: At the age of 18, Rasputin spent three months at the Verkhoturye Monastery. Because of his exceptional physical endurance and perseverance, Rasputin was successful at Verkhoturye. During his time at Verkhoturye Monastery, Rasputin became fascinated with the Orthodox faith known as the Skopsty. Followers of this faith believed that, in order to reach godliness, you had to sin. This religious attitude explained Rasputin?s controversial personal life of drinking and sleeping with women. Rasputin left the monastery and traveled throughout Russia and the holy land as a holy man and healer. During his travels, Rasputin caught the attention of the Russian church with his knowledge of peasants and religious teachings. In 1905... ... disturbed by a group of Petrograd workers, after the February Revolution. They carried Rasputin?s body to a nearby forest and burned it. In Rasputin?s last days, he became suspicious and wrote a prophetic letter describing his death. In the letter, Rasputin wrote that if he were to be murdered by a noble, that noble would be cursed for twenty-five years and Russia would fall into chaos. Bibliography Arnold, Phyllis. The Soviet Union. Edmonton AB: Westweb Press, Canadian Social Sciences Services Ltd., 1984. Beeche, Arturo. The Evil Monk. www.eurohistory.com/rasputin.html, 2006. Fuhrmann, Joseph. World Book: Rasputin. Chicago IL: World Book, Inc., 2001. ________. Grigori Rasputin. en.wikipedia.org/wiki/Rasputin: Wikipedia Inc., 2006. Moynahan, Brian. Rasputin: The Saint Who Sinned. New York: Perseus Books Group, 1999.

The Growing Dependence On Computers

Computers have been very helpful to society over the last few decades. Nowadays laptop and desktop computers are used in almost any place, at home, at work, at school, in a car and even in the kitchen. Computers help us in our everyday tasks; they let us socialize with friends from around the world, work from home and even allow us to relax watching a movie or playing a game. However the reliance on them has grown greatly in the last couple of years, as statistics show that the percentage of households with internet and desktops or laptops has increased almost 80% over the last twelve years, which begs the question: is dependence on computers a good habit or should we be more serious about its consequences? Computers make our lives easier and give us the possibility to connect to the Internet and learn new things. They make it possible for us to keep in touch with our friends, shop online or even receive classes online. Machines nowadays make it simpler than ever to organize digital media with only one click, instead of organizing physical discs, which is more time consuming and frequently get damaged. This gives us more time to do more creative or productive things in our life. Additionally, the modern communication system is fully based on computers; we cannot imagine any of this electronic communication without them, for example cell phone networks. This is essential to most of us, since we are always online in chat rooms interacting with our friends or downloading music on the go. So, as computers get better and better, communication and download speeds will increase to enhance our lives. In addition, science and medical research is fully dependent on computers, which help process mathematical calculations quicker and more precisely, for instance cures for HIV and cancer are now being calculated by hundreds of computer so one day there exists a successful treatment for these diseases. Moreover, science experiments like the building of spaceships will be improved because computers will be able, in the future, to compute better ways of building space rockets, which can go farther and quicker to planet like mars which therefore can be tested by astronauts to see if life can continue on that planet. Science and medical research will be more developed as computers become more intelligent and faster. However, on the other hand, there are several arguments against computers. For example, when someone has become addicted or obsessed with a computer. If a person spends too much time in the cyber-world they can become lazy, develop anti-social tendencies and sometimes experience a negative change in behavior, and in severe cases the person will no longer be able to function properly without it. It is common to see the side effects of someone who has spent a long time in front of a screen; they might develop weight gain, strained eyes and headaches, along with other unpleasant effects. Although, it can be argued that it is the fault of the person, rather than of the computer. Nevertheless, most importantly is the safety issue. Social communities like Facebook that allow people to post personal information and photos to the internet can be really dangerous, since anyone with a basic knowledge of computers can see your photos and information. However, probably the most important issue is that our comfort level with computers grows, so everyday we do more things like buying online with a credit card, which again can be accessed by a smart hacker and then use all your money. Yet, these are just a few common examples of issues with computers, which are not harmful or threatening to our own life. In a few decades, however, cars will be driven by themselves, obviously controlled by computers, and what if something goes wrong inside the chip of our car at a high speed? This would be a deadly mistake caused by a computer. Thus, why do we rely so much on computers, which still after many years in the market have still got errors in programming, bugs and threats to new viruses? In my opinion, computers do indeed make our lives easier more often than making it harder, but as we depend more on them it puts ourselves at risk because of the evilness of others. Nowadays, we should only rely on computers when our life is not in danger, since both computers and malicious people can be a threat for any human being, now and probably in the future as well.

Organisational Environment

2 2. 1 The General Environment The General Environment 2. 2 Scanning, Monitoring, and Forecasting Changes in the Environment Key Work Strategic decision making under conditions of uncertainty 2. 3 Scenario Planning Key Work Strategic inflection points and their impact on strategy Tools and Techniques Undertaking scenario planning 2. 4 PEST Analysis 2. 5 SWOT Analysis 2. 6 The General and the Competitive Environments Tools and Techniques Writing a PEST analysis ? Main Reference Schoemaker, P. J. H. (1995). Scenario planning: a tool for strategic hinking. Sloan Management Review, 36(2), 25. Learning Objectives After completing this chapter you should be able to: †¢ Define what constitutes the general environment †¢ Evaluate the role of scanning and monitoring in detecting environmental trends †¢ Apply scenario planning to decision making in uncertain environments †¢ Evaluate PEST as a framework for analysing the macro-environment †¢ Explain the use of SWOT anal ysis †¢ Evaluate the relationship between the general and the competitive environment 9780199581610_035_063_CH02. indd 36 2/1/11 11:03:51 AM 7 Introduction 2 In the previous chapter we looked at what strategy is and introduced a number of different perspectives on strategy formulation. We addressed the importance of values in determining why an organization exists, and looked at how an organization’s values, its vision, and its mission guide individuals’ behaviour by signposting what is important to the organization. We explained the importance of an organization being willing to change the assumptions that underpin its theory of the business if it is to adapt to changes in its environment.We also introduced a strategic management process which involves strategy analysis, strategy formulation, and strategy implementation. We noted that this essentially linear approach is useful for exposition but may not always accurately replicate decisions in the business world. With this caveat in mind we can start to evaluate some tools of analysis that can be used for strategy analysis. What happens in the general environment is important to an organization. This is because changes that take place in the general environment may point to trends that can substantially impact upon an organization’s competitive environment.These changes, sometimes called discontinuities, fractures, or tipping points, that fundamentally impact on the competitive environment will be considered in this chapter. The tools of analysis an organization can use to discern changes in its general environment will also be considered. This includes scenario planning, which will be assessed as an aid to organizational decision making in uncertain environments. The benefits and limitations of a PEST framework, which includes political, economic, social, and technological factors, will be addressed.A SWOT analysis and its links with scenario planning and PEST analysis will be brief ly discussed before being taken up in detail in a later chapter. The aim of the chapter is not simply to apply these techniques but, importantly, to understand their limitations. The chapter ends with a discussion of the links between the general and competitive environment. †¢ Section 2. 1 defines the general environment and explains its importance to the competitive environment. †¢ Section 2. evaluates the role of scanning and monitoring the general environment to try to discern discontinuities that have the potential to disrupt an organization’s competitive environment. †¢ In Section 2. 3 we assess the role of scenario planning in helping organizations to deal with uncertainty in their environment. This section also includes how to undertake scenario planning. †¢ Section 2. 4 evaluates PEST analysis as a tool for analysing the macro-environment. It shows how an organization can detect and monitor weak signals in the hope of recognizing the discontinuiti es or trends that shape the environment. †¢ In Section 2. we explain the use of SWOT analysis with reference to the general and competitive environment. †¢ The chapter concludes in Section 2. 6 with an evaluation of the relationship between the general and competitive environments. 9780199581610_035_063_CH02. indd 37 2/1/11 11:03:52 AM 38 part 2 Strategic Analysis 2. 1 The General Environment 2 The external environment facing the organization consists of both a general environment and a competitive environment. The competitive environment consists of the industry and markets in which an organization competes. The competitive environment is analysed in detail in Chapter 3.The general environment, in contrast, is often referred to as the macro-environment. This is because changes that occur here will have an effect that transcends firms and specific industries. Figure 2. 1 shows the relationship between the general environment, the competitive environment, and the organizati on. It should be noted that, other things being equal, it is the competitive environment that has the most direct and immediate impact on the organization. The General Environment Political Economic The Competitive Environment Potential Entrants Power of Buyers The Organization Power of Suppliers Competitive RivalrySubstitute Products/Services Social Technological figure 2. 1 The organization and its external environment That said, organizations must continually scan and monitor their general environment for signals, often weak or barely perceptible, which might indicate a change in their competitive environment. For example, firms in the industry that produced typewriters would have been unwise not to scan the general environment for signs of change, in this case technological change. The advent of micro-technologies was a 9780199581610_035_063_CH02. indd 9780199581610_035_063_CH02. indd 38 2/1/11 11:03:52 AM the general environment 2 lear threat to the typewriter industry, usherin g in as it did the era of the word processor. It is easy to forget that individuals who relied upon the use of the typewriter were initially sceptical about learning how to use the new technology. Nowadays one is hard pushed to see typewriters in use. In order to scan and monitor their environment, firms require tools of analysis or models that will allow them to factor in the changes in the general environment and evaluate their impact. One such approach involves scanning the environment to detect signals that will act as a signpost for future changes in the organization’s industry.In addition, an organization must monitor its environment to discern patterns and trends that are beginning to form and try to forecast the future direction of these trends. Ginter and Duncan (1990) argue that macro-environmental analysis can act as an early-warning system by giving organizations time to anticipate opportunities and threats and develop appropriate responses. Therefore, the aim of macro-environmental analysis is to aid the organization in discerning trends in the general environment which might impact upon its industry and markets.The organization is then able to formulate a strategy and use its internal resources and capabilities to position itself to exploit opportunities as they arise. At the same time the strategy will be acting to mitigate the effects of any threats. However, as we shall see in Chapter 3, there is a belief that the pace of change in the macro-environment is increasing, and is becoming more turbulent and unpredictable. This uncertainty effectively shortens the lead time an organization has to anticipate and respond to changes in its environment. 39 2. Scanning, Monitoring, and Forecasting Changes in the Environment The purpose of scanning and monitoring the general environment is to try to discern changes, however small, that have the potential to disrupt an organization’s competitive environment. Once these changes are discerned, it is up to the organization to monitor them and see if they might become a trend that can affect its industry. Clearly, experience and intuition will be involved in trying to forecast where these changes will eventually manifest themselves, or indeed if they will have any impact at all.We look at scanning, monitoring, and forecasting changes in the general environment below. 2. 2. 1 Scanning the Environment It is often said that there are two certainties in life: death and taxes. However, a third certainty can be added: change. If the external environment facing organizations was 9780199581610_035_063_CH02. indd 9780199581610_035_063_CH02. indd 39 2/1/11 11:03:52 AM 2 40 discontinuities threats faced by organizations that have the potential to undermine the way they do business weak signals barely perceptible changes in the external environment whose impact has yet to be felt 780199581610_035_063_CH02. indd 40 part 2 Strategic Analysis stable and simple to understand, then firms wo uld be faced with an enviable situation of having relatively little change or, if change occurs, it would be easy to forecast based on historic trends. Some commodity markets exhibit a relative degree of stability, making predictions or extrapolations based on past data quite reliable. However, most environmental conditions facing organizations are complex, uncertain, and prone to change. They are complex because of the sheer volume of data that exists in the environment.Therefore any analytical tool or framework can only extract and simplify a tiny proportion of this data. At the same time, any given source of data, for example economic data on the well-being of the economy, is ambiguous as it can be interpreted in a number of different ways. If past performance is no guarantee of what will occur in the future because of uneven changes and discontinuities then attempts at forecasting the future are fraught with uncertainty. Discontinuities refer to the threats faced by organization s and industries that have the potential to undermine the way they do business.We have already mentioned the typewriter industry; other examples include Amazon. com and Dell, which have both taken advantage of the Internet to change the way established products are customized and delivered to end consumers. Fahey and Narayanan (1986, quoted by Mercer 1998) suggest three goals for an analysis of the general environment. First, the analysis should provide an understanding of current and potential changes taking place in the environment. Second, it should provide important intelligence for strategic decision makers.Third, environmental analysis should facilitate and foster strategic thinking in organizations. For Fahey and Narayanan, scanning may reveal ‘actual or imminent environmental change because it explicitly focuses on areas that the organization may have previously neglected’ (see Mercer 1998). Scanning the environment as a general activity has been made far more c ost effective with the advent of the Internet. Prior to the Internet, the view was that scanning was a costly activity which could only take account of a fraction of the information that existed in an organization’s environment.By redefining search costs, the Internet has changed the economics of undertaking scanning. At the same time it has provided an opportunity to access a wealth of data which requires time and effort to structure properly. Scanning, therefore, is an opportunity for the organization to detect weak signals in the general environment before these have coalesced into a discernible pattern which might affect its competitive environment. Weak signals refer to minor changes in the external environment that an organization’s scanning of the environment may barely register. This is because their impact has yet to be felt.The key for organizations is to be able to read these signals correctly and monitor them until they coalesce into a more clearly discerni ble pattern. However, there are errors that can follow when looking for patterns. The first is that the organization may fail to identify these signals. The second is that the organization may discern a pattern that is not there but is based on the assumptions and mental models that managers carry in their heads. We saw in Chapter 1 how senior management’s reliance on its existing theory of the business can affect the success of the organization by blindsiding them to changes /1/11 11:03:52 AM the general environment 41 taking place in the environment. Ansoff (1984) makes the point that the detection of weak signals requires senior management commitment and sensitivity on the part of the observers. This means that the organization must be diligent in continually scanning its macro-environment for weak signals. When it believes that it has discerned something significant occurring in its general environment, this broad scanning can turn into a more focused monitoring. 2 2. 2. 2 Monitoring the EnvironmentWhile scanning the environment may make organizations aware of weak signals, unless these are carefully monitored the resulting patterns will be missed. Monitoring can be seen as the activity that follows these initially disparate signals and tracks them as they grow into more clearly discernible patterns. Monitoring allows an organization to see how these general environment trends will impact on its competitive environment. Whereas scanning is a more broad-brush approach, monitoring uses a finer brush stroke.However, the two are inseparable, since without an identification of weak signals in the general environment there is no focus for an organization’s monitoring activities. One way in which an organization might monitor weak signals is to set thresholds such that any activity which occurs above the threshold will be monitored. This might include, for example, when an interest is shown by a major competitor in a particular social or technologic al change. This interest then becomes the threshold at which the organization itself starts to take an interest. 2. 2. 3 Forecasting Changes in the EnvironmentThe purpose of scanning and monitoring the general environment is to aid the organization in developing viable forecasts of future trends before they become an unmitigated threat. This is particularly useful when dealing with discontinuities which themselves will usually evolve from weak signals that exist in the environment. The objective is to use this information to develop robust strategies that ensure a degree of competitive advantage. Van der Heijden (1996) identifies three main types of uncertainty. 1. Risks. This is where past performance of similar events allows us to estimate the probabilities of future outcomes. . Structural uncertainties. This is where an event is unique enough not to offer evidence of such probabilities. 3. Unknowables. This is where we cannot even imagine the event. Most managers are capable of d ealing with the type of uncertainty that appears in the form of risks. Also, what is unknowable cannot, by definition, be forecast and 9780199581610_035_063_CH02. indd 9780199581610_035_063_CH02. indd 41 2/1/11 11:03:52 AM 42 structural uncertainties where no probable pattern of outcomes can be derived from previous experience part 2 Strategic Analysis herefore the organization must wait for the event to occur before it can react to it. This leaves structural uncertainties where no probable pattern of outcomes can be derived from previous experience. In such a situation, van der Heijden suggests scenario planning as a useful tool of analysis to help the organization make sense of an uncertain and dynamic environment that has little in the way of clear road maps. 2 For information on strategic decision making under conditions of uncertainty go to the Online Resource Centre and see the Key Work feature. www. oxfordtextbooks. co. uk/orc/henry2e/ . 3 Scenario Planning Schoemaker (1995) states that ‘scenario planning is a disciplined method for imagining possible futures’. It is ‘an internally consistent view of what the future might turn out to be’ (Porter 1985, p. 446). The oil multinational Royal Dutch Shell has used scenario planning since the 1970s to help it generate and evaluate its strategic options. Scenario planning has given Shell a better success rate in its oil forecasts than its competitors, and it was the first oil company to see overcapacity in the tanker business and Europe’s petrochemicals (Schoemaker 1995).Kahane (1992) reminds us that: In the oil industry, experts have sometimes been able to suggest, but rarely to predict, the key turning points in crude oil prices . . . The Shell approach to strategic planning is, instead of forecasts, to use scenarios, a set of stories about alternative futures. scenario a challenging, plausible, and internally consistent view of what the future might turn out to be tipping poi nt an unexpected and unpredictable event that has a major impact on an organization’s environment 9780199581610_035_063_CH02. ndd 42 These stories promote a discussion of possibilities beyond the most likely one and encourage the organization to consider ‘what if’ questions. Therefore, a scenario can be seen as a challenging, plausible, and internally consistent view of what the future might turn out to be. They are not forecasts in the sense that one is able to extrapolate using past data. However, they do deal with the future and provide a tool of analysis for the organization to structure the surfeit of information that is contained in the present.In particular, scenarios help organizations recognize the weak signals that signpost changes in its environment. It is these weak signals which precede environmental discontinuities, fractures, or strategic inflection points that help shape the competitive environment (Morgan 1988; Grove 1996). If an organization is to remain proactive in its competitive environment it must not allow the rules of the game to be changed to its detriment, that is, it must be capable of dealing with a tipping point (Gladwell 2000), an unexpected and unpredictable event that has a major impact on an organization’s environment. /1/11 11:03:53 AM the general environment 43 For a discussion of strategic inflection points and their impact on strategy go to the Online Resource Centre and see the Key Work feature. www. oxfordtextbooks. co. uk/orc/henry2e/ 2 Strategic decisions are almost always fraught with ambiguity and uncertainty which create complexity for decision makers. As human beings we are subject to biases and imperfect reasoning about uncertainty, that is, as individuals we will tend to misread events that are unlikely and either ignore or overemphasize unlikely but significant events.In an attempt to resolve these shortcomings, most companies will use some form of discounted cash flow coupled with sen sitivity analysis when analysing risky strategic decisions (Gertner 2000). The problem with these quantitative approaches is that they imbue the decision making with a false sense of objectivity and can be misleading. For example, sensitivity analysis is seen as overly simplistic in that by varying one parameter at a time it fails to incorporate any links or correlations between them.Scenario planning is an approach to decision making under conditions of uncertainty that helps to overcome many of the shortcomings of traditional decisionmaking methods; that is, scenario planning allows organizations to change several variables at the same time without keeping other variables constant. Crucially, scenario planning helps to overcome some of the biases and imperfect reasoning that human beings make under conditions of uncertainty. Scenarios are a tool of analysis to help improve the decision-making process set against the background of a number of possible future environments.They benef it the organization by readily helping managers think in a more systematic way. This allows individuals to more readily recognize change in their business environment instead of ignoring or rejecting it. Van der Heijden (1996), a former head of scenario planning at Shell, states that the benefits of scenario planning for Shell have been: †¢ More robust strategic decisions. †¢ Better thinking about the future by a ‘stretching mental model’. †¢ Enhancing corporate perception and recognizing events as a pattern (the recognition and monitoring of weak signals until they coalesce into a pattern is clearly important here). Improving communication throughout the company by providing a context for decisions. †¢ A means to provide leadership to the organization. The process of scenario planning should have the objective of positively influencing the strategy of the organization. This requires that the scenarios devised should stretch the imagination of manage ment while also remaining plausible. In order to achieve this, organizations must be prepared to invest resources in educating managers to help them make the best use of scenarios.They need to recognize that developing scenarios takes time and is most effective when managers from different 9780199581610_035_063_CH02. indd 9780199581610_035_063_CH02. indd 43 2/1/11 11:03:53 AM 44 part 2 Strategic Analysis 2 parts of the business interact. By constructing multiple scenarios, an organization can explore the consequences of uncertainty for its choice of strategies. Furthermore, an organization can formulate strategies knowing that the assumptions on which it competes, what Drucker (1995) refers to as its theory of the business, are surfaced and adequately assessed. See Case Study: Novacroft which highlights some of the difficulties of taking account of a changing environment). case study 2. 1 Novacroft—Dealing with change Over the past five years Novacroft, which designs, develop s and manages smartcards for travel and leisure-service providers, such as Transport for London, has enjoyed strong demand thanks to policies promoting public transport and Oyster-style integrated ticketing systems. But proposed public spending cuts and tough trading conditions in the travel industry make future investments more doubtful, according to Novacroft’s managing director Debra Charles. Our market should be both emerging and growing, but there are economic barriers,’ she admits. ‘Organisations, especially in the public sector, have to make savings. Our competitors are financially stretched so they are selling cheap. We must innovate to find new clients as well as saving our existing customers money. ’ Charles, who has a background in both technology and marketing, launched Novacroft in 1998 with money inherited from her parents. As the company’s name suggests, she was inspired to start a firm that would use the web to develop new ways of wo rking. I thought it would be great to create a transparent online database so that organisations could see what was happening with their money and their clients,’ she remembers. Now, the Northampton-based firm manages more than 1m customer records for clients that issue pre-paid travel tickets and other smart cards. Staff verify and process paper or online applications before loading the information onto a chip, producing plastic cards, processing payments and providing a help centre that answers cardholders’ queries. Novacroft can also analyse records ranging from call notes to scanned documents to help clients understand their customers’ habits.One of Novacroft’s highest profile contracts is to manage the concessionary Oyster cards for students, children and 16- and 17-year olds on behalf of Transport for London. As well as checking that applicants have given correct information about their age, address and place of education, the company’s helpl ine deals with questions such as how to replace lost or stolen cards. The company also manages concessionary travel cards on behalf of the Scottish government and handles online applications for Young Persons, Family and Senior Railcards for the Association of Train Operating Companies. 780199581610_035_063_CH02. indd 44 2/1/11 11:03:53 AM the general environment 2 ‘In the past, clients might have used several different firms to produce cards, provide databases and integrate systems, but we have all that under one roof,’ explains Charles, whose chief rivals are major systems integrators such as Accenture and Logica. ‘We have been successful in getting big companies on board through the tender process because we have invested in hiring and training the right people and really thinking about what the customer needs. We even self-impose penalty clauses. ’As a result, Novacroft made a substantial profit last year on a turnover of ? 6m, up from ? 4. 9m in 2007. The company has 96 employees, which rises to approximately 200 when extra staff are brought in to the call centre during the busy start to the academic year. Finding new clients by maximizing the range and quality of service is a key challenge for Novacroft. As Charles points out, in the aftermath of the bank bail-outs, pledges such as transport secretary Lord Adonis’s promise to consider incentives for train operating companies that introduce smart ticketing look far from secure. Can we really assume that these statements are facts or that money is ringfenced? ’ she says. ‘The real certainty is that the government and train operating companies have to save money. ’ In recent months Novacroft has worked on scenario planning to consider how the company might react to changing demand. The company prides itself on a ‘foxy’ approach to market conditions, moving nimbly and using all its available tools to tackle future trends. ‘We spent 14 ho urs in a hotel room thinking about what we know, what we don’t know and studying the rules of the game and our competition. Understandably, Charles is reluctant to reveal her conclusions, but she is very confident that the exercise was worthwhile. ‘We have created a massive opportunity that’s totally outside what our competitors are thinking about. ’ Some diversification into products such as money cards is likely, while building databases that clients can outsource to India is another possibility. Improving efficiency to keep prices competitive for cash-strapped public sector organisations is another priority. Since March, Charles has introduced a series of lean management techniques that have cut osts by more than ? 80,000 while maintaining service standards. For example, a study of customer service queries revealed that the number of calls processed by the help centre could be cut by improving online information. The company is also reaping the benefits of investing around ? 40,000 in staff leadership training over the past three months, she says. Charles believes that, despite the slowdown, Novacroft could achieve a turnover of up to ? 20m within the next five years. ‘We stand for innovation, service delivery and value for money—and that’s always attractive. ’ 45Source: ‘Smart ticketing business Novacroft is looking to play its cards right’ Daily Telegraph, 14 August 2009 9780199581610_035_063_CH02. indd 45 2/1/11 11:03:53 AM 46 part 2 Strategic Analysis Questions 1. In what ways might scenario planning help Novacroft to remain competitive? 2. What remedies might Novacroft pursue to reduce its reliance on public sector finance? 2 3. Comment on Debra Charles’s confidence in Novacroft’s business model. 2. 3. 1 Undertaking Scenario Planning1 Scenario planning is relevant to almost any situation in which a decision maker needs to understand how the future of his or her industry or strategic usiness unit might develop. It divides our knowledge into two areas: (1) things we think we know something about, and (2) things we consider uncertain or unknowable. The first area is based on the past and continuity. For example, an organization can make fairly safe assumptions about the direction of a country’s demographic profile. The uncertain elements include such things as future oil prices, interest rates, and the outcomes of political elections. Even here it is not necessary to account for every possible outcome, since simplifying the outcome is fine for scenario planning.Therefore, an organization might simply categorize future interest rates as high, medium, or low, rather than trying to work out every possible permutation. Also, as scenarios highlight possible futures but not specific strategy formulations, outside opinions such as those of consultants can be included in the process. A process for developing scenarios is as follows. 1. Define the scope. This involves setting the time frame and the scope of analysis. The time frame can be determined by factors such as product life cycles and rate of technological change. The scope of analysis may include products, markets, and geographical areas.Once the time frame is set, the question becomes: What knowledge would the organization benefit most from in that timescale? 2. Identify the major stakeholders. Those who can affect and are affected by the organization’s decisions. The organization needs to know their current levels of interests and power, and how these have changed over time. 3. Identify basic trends. Which political, economic, social, technological, and industry factors will have the most impact on the issues identified in Step 1? The impact of these trends on current strategy can be listed as positive, negative, or uncertain. . Identify key uncertainties. Which events that have an uncertain outcome will most affect the issues the organization is concerned with? Her e again the 9780199581610_035_063_CH02. indd 46 2/1/11 11:03:53 AM the general environment 47 organization might consider political, economic, social, and technological factors, in addition to industry factors. For example, what will characterize future consumer trends? An organization should develop possible outcomes for each of these uncertainties. These should be limited to keep the analysis simple. 2 5. Construct initial scenario themes.Once trends and uncertainties are developed, the organization has the basic building blocks for scenario planning. It can then identify extreme world views by juxtaposing all positive elements in one scenario and the negative elements in another broad scenario. 6. Check for consistency and plausibility. This involves checking to see if the trends identified are compatible with the chosen time frame. If they are not, then remove all the trends that do not fit the time frame. Do the scenarios combine outcomes of uncertainty that actually go togethe r?In other words, ensure that inconsistent outcomes are not put in a scenario, such as having full employment and zero inflation together. Lastly, have major stakeholders been placed in a position they will not tolerate or cannot change? In this case, the scenario described will probably change into another one. The key then is to identify this ultimate scenario. 7. Develop learning scenarios. Here the role is to develop relevant themes for the organization around which possible outcomes and trends can be organized. The scenarios can be given a name or title to reflect that they tell a story.This also helps individuals to remember the scenarios. At this stage the scenarios are useful for research and further learning within the organization rather than decision making. 8. Identify research needs. At this stage, further research may be required to understand uncertainties and trends more fully. This is because organizations are knowledgeable about their own competitive environment bu t less knowledgeable about other industries. Therefore, the organization may need to study changes, in technology for instance, which have yet to impact its industry but may ultimately do so. . Develop quantitative models. Once further research has been gained, the organization may wish to revisit the internal consistency of the scenarios and decide whether it might benefit from formalizing some interactions in a quantitative model. 10. Evolve towards decision scenarios. The ultimate aim of this process is to move the organization towards scenarios that can be used to test its strategy formulation and help it generate new ideas. At this point it is helpful to double check Steps 1–8 to see if the scenarios take account of the issues facing the organization.If the scenarios are useful to the organization, they might have the following characteristics: (1) they address the concerns of individuals in the organization; (2) the scenarios are internally consistent; (3) they describe fundamentally different futures 9780199581610_035_063_CH02. indd 9780199581610_035_063_CH02. indd 47 2/1/11 11:03:54 AM 48 part 2 Strategic Analysis 2 as opposed to being variations on a particular theme; and (4) each scenario describes an equilibrium state that can exist for a considerable period of time as opposed to being merely short-lived.In summary: scenario planning attempts to capture the richness and range of possibilities, stimulating decision makers to consider changes they would otherwise ignore . . . organizing . . . into narratives that are easier to grasp and use than great volumes of data. Above all . . . scenarios are aimed at challenging the prevailing mind-set. (Schoemaker 1995, p. 27) It is perhaps worth reiterating that scenarios are not intended to predict the future. They are designed to help managers deal with a highly uncertain and dynamic environment.They may be aimed at the general or competitive environment (for a discussion of why scenario analysis shou ld be applied at the industry level see Porter (1985)). Porter, whilst recognizing the value of multiple scenarios for an organization’s choice of strategy when considering scenario planning at the macro-level, argues, ‘Macroscenarios, despite their relevance, are too general to be sufficient for developing strategy in a particular industry’ (Porter 1985, p. 447). Whether this statement is accepted may depend more on the industry being addressed rather than scenario planning per se.Scenarios encourage management to ‘think the unthinkable’, to question and surface assumptions they hold about the environment, and to be prepared to view events from a radically different perspective. Scenarios are a tool of analysis that examines the impact of uncertainty on organizations and industries by explicitly identifying some of the key uncertainties—the scenario variables. For scenarios to be effective, they must encourage the creation of robust strategie s that match the organization’s limited resources with the endless challenges in the external environment.To do this, scenario planning must ensure that as many as possible of the long-term opportunities and threats facing the organization are identified and addressed. For more information on how to undertake scenario planning go to the Online Resource Centre and see the Tools and Techniques feature. www. oxfordtextbooks. co. uk/orc/henry2e/ 2. 4 PEST Analysis A useful tool when scanning the general environment is PEST analysis. This refers to political, economic, social, and technological factors. It is worth noting that some commentators include legal and environmental factors separately, preferring to extend the acronym to PESTLE.However, the legal element of the acronym can be 9780199581610_035_063_CH02. indd 48 2/1/11 11:03:54 AM the general environment 2 subsumed within the political factor. In addition, the use of the last E (which refers to environmental factors) is o ften meant to signify the effects of our lifestyles on our environment, such as the use of fossil fuels and their impact upon climate change. In this respect it can be captured within the ‘social’ factor, or indeed within all four factors in one form or another.Therefore, it is not important whether we use PEST (or STEP) or PESTLE, but to understand how this framework can be used and to be aware of its limitations. As long as the choice of acronym is clearly defined we have a consistent approach. What will PEST do for the organization? PEST analysis is simply another tool to help the organization detect and monitor those weak signals in the hope of recognizing the discontinuities or fractures shaping the environment. PEST analysis can be used to help detect trends in the external environment that will ultimately find their way into the competitive environment.It provides a link between the general and competitive environments in that weak signals in the general environm ent can become key forces for change in the competitive environment. Although we will deal with each factor in turn, it should be noted that interrelationships between the factors exist. For example, a social trend of healthier eating and consumers’ increasing distaste for factory farming (the crowding of animals and fowl in confined spaces prior to their sale for human consumption) may signal to supermarkets a change in consumer behaviour and spending patterns. 9 2. 4. 1 Political Factors The political factor of PEST deals with the effects of government policy. Inasmuch as government policy is worked out through legislation, it encompasses all legal elements of this analysis. This includes items such as government stability, taxation policy, and government regulation. Government stability is not a major issue in Western economies. However, where multinational corporations operate across international borders, the stability of governments and political systems in those countr ies needs to be taken into account.These corporations need to be assured that there will not be any sudden and detrimental changes that might jeopardize the substantial investments they will have made. The safety of their personnel operating in these countries will be paramount, as will the existence of an infrastructure which allows the efficient transfer of goods and services as well as financial assets. For instance, a government policy of deregulation or privatization has the effect of opening up markets to competition.Previously comfortable industries feel the chill wind of change, and organizations within the industry are forced to innovate and cut costs to remain competitive. This is because new entrants will often enter a market with lower cost curves and more innovative products and services owing to a better use of technology and a clearer understanding of consumer needs. To avoid being surprised, companies need to be scanning their environment for signs of change in gover nment policy which might impact on their industry. 9780199581610_035_063_CH02. indd 49 2/1/11 11:03:54 AM 2 50 corporate social responsibility ecognition that organizations need to take account of the social and ethical impact of their business decisions on the wider environment in which they compete part 2 Strategic Analysis An air or sea disaster which costs human lives may prompt tighter government regulations in the areas of health and safety, particularly where an investigation shows that the disaster could have been avoided. Companies operating within these industries should not be waiting to react to the outcome but should have worked out the ramifications of government involvement and be positioning themselves to take advantage of government regulation.The reduction in carbon dioxide emissions and new fuel consumption standards for cars came about as a result of intergovernmental regulations. This, in turn, was a result of widespread concern by consumers and environmental gr oups about climate change due to increased levels of ‘greenhouse gases’ in the atmosphere. This highlights the links between social trends and political change. Government regulation need not be something for companies to fear.Porter and van der Linde (1995) point out that environmental regulations, such as reducing pollution, may act to spur competitive companies on to innovate and reduce costs to counter the increased costs of regulation. While the US car makers fought new fuel consumption standards in the vain hope that they would go away, the Japanese and German car makers developed lighter and more fuel-efficient cars. The companies that reap the competitive benefits will be the early movers: ‘the companies that see the opportunity first and embrace innovation-based solutions’ (Porter and van der Linde 1995).To do this, managers need to develop a new mindset which recognizes environmental improvement as a competitive opportunity rather than a threat. T here is evidence across the Anglo-American economies of the UK and the US that some organizations are beginning to recognize that good business can involve corporate social responsibility (CSR). For example, the world’s leading media company, Time Warner, produced its first comprehensive report on its corporate social responsibility activities in 2006. It states: Corporate social responsibility is not an afterthought at our company. It is central to what we do.That’s because Time Warner cannot be a great company unless we are a good company . . . It’s simply good business to do so. (Time Warner 2006) In the US the Sarbanes–Oxley Act 2002 resulted from the corporate collapse of Enron, WorldCom, and Tyco. There was widespread concern that boardroom executives (including non-executives) and the accountancy profession had failed to safeguard shareholders’ interest, and in the case of Enron had actively operated to pervert that interest. Internal audito rs were seen as ineffectual and often completely unaware of what powerful executives were doing.This legislation can work to the advantage of companies that are proactive in their response to it. For example, shareholders will be more confident in investing in a company which can show that it already has stringent ethical guidelines in place and that any breach of those guidelines will be taken seriously. The Building Society Act 1986 allowed building societies in the UK to offer current accounts and financial services that were previously the preserve of banks. This had 9780199581610_035_063_CH02. indd 50 2/1/11 11:03:54 AM the general environment 51 ar-reaching effects on the financial services sector, intensifying competition for customers and leading to consolidation within the industry. A player within the industry would have been wise to conduct some form of PEST analysis in order to determine the effects of these politically driven changes within the industry and on their org anization. 2. 4. 2 Economic Factors 2 Key economic indicators include interest rates, disposable income, unemployment rates, retail price index (inflation), gross domestic product (GDP), and exchange rates. However, economic data can be notoriously fickle and ambiguous.In addition, an economic indicator can never provide a complete picture (even of the subset of data it purports to track), but rather provides a snapshot and simplification of complex economic phenomena. This makes scanning and monitoring the general environment for signs of economic shifts which might impact an organization’s industry a little difficult. The strengthening of an economy will generally benefit industries, but the extent of its effect will vary according to which economic factors are most affected. For example, the construction industry and manufacturing are most susceptible to increases in the rate of interest.Manufacturing organizations which export goods abroad will be scanning the general env ironment for signs of an appreciation in exchange rates, the effect of which will be to make it harder for them to sell their goods abroad but relatively easier for importers to sell their goods in the domestic market. In order to remain competitive, manufacturers exporting abroad will need to make efficiency gains and innovate so that they can offset the unfavourable exchange rate with a reduction in price or increase in quality. strategy focus PEST Analysis— The Construction IndustryThe construction industry worldwide is renowned for operating on narrow profit margins. Any sudden and prolonged rises in interest rates can have a profound effect on industry profitability. The key for players in this industry is to borrow funds at an interest rate which allows building projects to be completed successfully, on budget, and on time. Where there is slippage of large-scale construction projects, as was seen with the Channel Tunnel, this immediately brings into doubt their financia l viability. Any delay inevitably increases the final project cost.Investors will be acutely aware that their investment in a project has an opportunity cost, that is, their money might be better invested elsewhere. If interest rates begin to climb this 9780199581610_035_063_CH02. indd 9780199581610_035_063_CH02. indd 51 2/1/11 11:03:54 AM part 2 Strategic Analysis Construction firms already scanning and monitoring their environment can anticipate economic trends and prepare for them.  © iStockphoto. com/David Newton 2 52 exacerbates the situation, as investors will demand a greater return. The consortium of banks financing loans will want to rearrange the interest ates on offer to reflect the increased risk and changing economic conditions. UK and US banks are known for their preference for short-term financing and unwillingness to invest in the equity of construction projects, in contrast with their Japanese counterparts. This makes the monitoring of data and detecting any chang es in the environment of great importance. Investment banks will readily pick up any adverse change in the economic fundamentals of a project. Therefore, the organization must not only be aware of these changes but also have contingent plans in place for dealing with them.It also helps if the organization is aware of the interrelationships between economic variables—that a rise in inflation will probably cause the monetary authorities to consider increasing interest rates. They can then work through the ramifications of such changes on their projects. If one of the government’s political priorities is to manage the economy, we can see a relationship between economic and political factors. Construction firms already scanning and monitoring their environment will be expecting these trends and therefore be prepared.Central bankers, such as the chairman of the US Federal Reserve Bank and the Governor of the Bank of England, are faced with a number of dilemmas. For instance , the economic data they will be tracking and monitoring will contain conflicting views. This forces them to use their judgement to look for similar patterns that have occurred in the past as a basis on which they can make decisions. This is not all that they have to contend with. The balance of economic data being monitored may lead them to believe that the economy is overheating. Their response may be a quarter-point increase in interest rates.However, the time it takes to implement the interest rate rise and for this to impact on the economy may take a further six months. In that time it is conceivable that more recent economic data will point to the economy actually slowing down. Therefore, the effect of the rise in interest rates will be to accelerate 9780199581610_035_063_CH02. indd 52 2/1/11 11:03:55 AM the general environment 53 the likelihood of an economic downturn. This reinforces the need for sombre and intelligent judgement when using PEST analysis. 2. 4. 3 Social Facto rs 2Social factors include cultural changes within the environment and are often referred to as socio-cultural. In the UK, increasing consumer concern with genetically modified food (GMF) and lobbying from consumer groups forced the government to scale down its introduction of genetically modified crops. Clearly, such social trends are of great importance to companies which research and produce genetically modified products. Many have been caught unawares by the strength of consumer response and find that they must first allay consumer fears if their products are to be fully accepted.Indeed, the frozen food retailer Iceland was one of the first retailers to state emphatically that none of the food products it stocks contains genetically modified ingredients. In doing so Iceland had accurately read a change in social trends and recognized that it would influence consumer spending patterns. Other supermarkets were quick to follow. strategy focus Demographic Changes Courtesy of Johnson & Johnson The US and Western Europe face an ageing population with attendant problems for pension fund provisions. As the base of the working population continues o shrink, while advances in medical science and healthier eating ensure that people continue to live longer, companies are faced with shortfalls in the pension fund provisions they make for employee retirement. One solution is to encourage employees to take out personal pension plans that will supplement any state provision. Another solution being considered by governments is for employees to consider working for longer. In this way they can build up their pension fund to an acceptable level and avoid any shortfall. In response to a falling birth rate, companies like Johnson & Johnson, involved with the provision of baby-care products,In response to a falling birth rate, companies have effectively targeted these like Johnson & Johnson have targeted their products at an adult female baby products at an adult female audienc e. 9780199581610_035_063_CH02. indd 53 2/1/11 11:03:56 AM 54 part 2 Strategic Analysis 2 audience. For example, their baby lotion is now marketed as being kind and gentle to women’s skin, as well as that of babies. This represents a response to changes in the general environment that directly affect their industry. Retail organizations in the US and Europe are increasingly responding to the changing demographics of an ageing population by employing lder personnel. They recognize that retired employees possess a wealth of experience and respect for others that can be used to add value when serving customers. 2. 4. 4 Technological Factors Without doubt some of the major changes taking place in the general environment that are impacting the competitive environment are technological. One merely has to think about how Amazon and Dell have used the Internet to change traditional retailing within their respective industries. For instance, for a small retailer operating in a remote l ocation, the financial outlay of marketing its product to customers nationwide would prove prohibitive.However, with the advent of the Internet, a retailer can access these consumers with a basic web page advertising its wares worldwide. It is interesting to note that small family businesses find their goods being demanded far outside their national borders because of awareness of their products through the Internet. Technological factors include the rates of obsolescence, that is, the speed with which new technological discoveries supersede established technologies. The rate of change in technology and innovations has the effect of causing new industries to emerge and also changes the ways in which existing industries compete.Technological advances include the Internet, the use of sophisticated software (increasingly being used in the design and testing of automobiles), genetic engineering (see Section 2. 4. 3), and nanotechnology. The rapid rate of change of technology has changed the dynamics of industries such as newspaper publishing, banking, financial services, and insurance. This has allowed new entrants to enter the market at a lower cost base than incumbents, thereby offering more competitively priced products and services and gaining market share in the process.Direct Line insurance in the UK cuts out the insurance broker (intermediate) by providing insurance quotations direct to the consumer over the telephone. This allowed it to gain rapid market share and eventually become the marker leader. It changed the rules of the insurance industry, forcing incumbent players to follow suit or face a loss in market share. As the insurance industry becomes increasingly commoditized, differentiation becomes harder to achieve as organizations compete on price. Direct Line’s first-mover advantage is being eroded, as competing firms such as Norwich Union prove capable of competing on a price basis. 780199581610_035_063_CH02. indd 54 2/1/11 11:03:57 AM the g eneral environment 2 First Direct, a subsidiary of HSBC, pioneered the use of telephone banking in the UK. At the time competitors were slow to follow suit, but, once it was established, all players offered a telephone banking option. The same is true of Internet banking. Telephone and Internet banking provide obvious consumer benefits as the financial cost of undertaking transactions within a bank branch is far in excess of the same transaction undertaken by telephone or online.In fact, when the transaction is undertaken online the cost falls substantially. Therefore, organizations must be prepared to innovate and adopt new technologies if they wish to remain competitive. The Internet has been compared to the Industrial Revolution in terms of the changes it has brought about. The pace of change of technology is increasing. Its unpredictability is increasing. Markets are becoming increasingly turbulent. This makes it important to try to detect the weak signals which grow into discer nible patterns that have the potential to change how industries operate.Moreover, if tipping points are unexpected, we need to change our thinking via the use of scenario planning to expect the unexpected. Organizations may not be able to predict these events but they will be in a stronger competitive position to respond to them once they have occurred. While the impact of technological change and changing consumer preferences continues to challenge the business model of traditional high street retailers such as the UK’s WH Smith, such changes are not exclusively the preserve of the private sector.Organizations in the public sector also face changes, often socio-political in nature, and here too an understanding of PEST analysis can benefit the organization. (See Case Study: Radical Change in the NHS, which highlights some of the important factors driving change within the National Health Service). 55 case study 2. 2 Radical Change in the NHS Senior officials have set ‘ aggressive’ targets to reduce the number of patients referred to specialists, or treated in Accident and Emergency departments, while GPs will be asked to cut down on the amount of time spent in consultations.The plans are being issued as senior managers warned that the NHS is about to face the greatest financial pressures since its inception. They fear that when the current spending round ends in 2011, the impact of an anticipated real-terms freeze or cuts—coming as the demands on the NHS of an ageing population increase— will be devastating. The NHS Confederation, which represents NHS managers, will tell this week’s Labour Party conference that the impending challenge is so great that hospital closures and job cuts must be enforced across the country. 9780199581610_035_063_CH02. indd 55 2/1/11 11:03:57 AM iStockphoto. com/Sturti part 2 Strategic Analysis 2 56 The National Health Service It comes as two leading think tanks predict a future funding gap of between ? 20bn and ? 40bn within six years of 2011. Regional health authorities have ordered hospitals and primary care trusts to draw up plans for cuts worth billions. In London, NHS trusts have been told to divert more than half of A&E patients, and those seeing specialists, to cheaper ‘polyclinics’ run by groups of GPs. Meanwhile, family doctors will be asked to speed up their consultations, reducing the average time per patient from 12 minutes to eight.The instructions drawn up by NHS London, and seen by The Sunday Telegraph, order trusts to demonstrate that they can deliver an ‘aggressive scenario’ in response to funding pressures. Under its ‘affordability assumptions’, already-controversial plans to reduce the number of patients treated in hospital are given more demanding targets in an attempt to cut costs. Sixty per cent of activity which now takes place in A&E departments should happen in community clinics within five years, the docum ent says, along with 55 per cent of outpatient treatment.Thirty per cent of outpatient appointments will be stopped altogether. Managers say not all appointments are necessary, though many doctors argue it is impossible to know in advance which patients do not need to be seen. The number of diagnostic tests carried out will be cut by 15 per cent, while the amount of surgery will be reduced by seven per cent. Although the ‘polyclinic’ model, to reduce demand on hospitals, is supposed to shift more treatment into the community, GPs will be told to reduce their average appointment time by one third, from 12 minutes to eight.Senior managers in other regions, who will draw up their own plans later this year, said rural communities faced particular pressures, with small maternity and district general hospitals likely to struggle in the funding crisis. In a speech tonight to the Labour Party conference in Brighton, the NHS Confederation will warn that the service across the co untry faces unprecedented difficulties, which require ‘bold and decisive measures’. Its policy director Nigel Edwards told The Sunday Telegraph: ‘The NHS has never experienced a financial challenge of this magnitude or duration in its history. 9780199581610_035_063_CH02. indd 56 2/1/11 11:03:57 AM the general environment 9780199581610_035_063_CH02. indd 57 2 He said improving the operation of the NHS, and treating more patients earlier in primary care, would not be enough to balance the books. Delegates will be told: ‘Savings only start to become available when we can shut entire buildings, sites and reduce staffing numbers. ’ The organisation, which represents NHS managers, will also call for ‘uncomfortable decisions’ to be made to limit staff pay. Under a three-year deal already agreed, nurses will receive a rise of 2. 5 per cent in April. Sir Robert Naylor, chief executive of University College Hospital in London, said pay should be fr ozen for NHS staff after that point. If it was not, every one per cent pay rise could cost 10,000 job cuts, he said. The chief executive said that while he supported plans to treat more patients in the community, he was concerned that PCTs were planning to cut back on hospital services before alternatives were put in place. ‘The investment in those services has to come first or where do the patients go? he said, criticising ‘oversimplified’ analyses which failed to take account of increasing public demand. Dr Laurence Buckman, chairman of the British Medical Association’s GP committee, described the plans as ‘desperate and inadequately thought through’. Dr Buckman, who works as a GP in London, said targets to reduce outpatient appointments by 30 per cent would put patients at particular risk. He said: ‘All this means is that those people who are refused a referral to a specialist will be forced to go privately, or go nowhere. This will be difficult for doctors, but patients will be the real victims. While some specialist referrals turn out to be unnecessary, GPs only asked for a specialist opinion when they needed it, Dr Buckman said. A study by the King’s Fund and the Institute for Fiscal Studies forecasts a funding gap of between ? 20bn and ? 40bn by 2017, if funding for the NHS receives no increase, or gets a real-terms freeze which only keeps pace with inflation. Sue Slipman, director of the Foundation Trust Network, which represents the best hospitals, warned of an ‘Armageddon scenario’ which could unfold without decisive action on pay, and terms and conditions.She said: ‘There is a trade-off between saving jobs, and pay increases, and in the current climate, protecting jobs needs to be a priority. ’ Katherine Murphy, from the Patients Association, accused NHS managers of wasting billions on management and repeated organisational restructuring during the boom years of record inv estment. She said there was no evidence that plans to shift patients into the community would provide safe care. ‘Elderly patients often require intensive support which often means lots of staff, in hospitals. The need is only going to get greater—these plans look like madness,’ she said.A spokesman for NHS London said its documents provided planning scenarios, rather than forecasts, to cope with a changing economic environment. He said 57 2/1/11 11:03:58 AM 58 part 2 Strategic Analysis the NHS was investing heavily to ensure care was provided in the most appropriate setting. Source: ‘Plans for swingeing hospital cuts as NHS on brink of Armageddon’ Sunday Telegraph, 26 Sep 2009 2 Questions 1. Outline the PEST factors driving change within the NHS. 2. Which PEST factors do you consider to be the most important, and why? 3.How can an analysis of PEST factors help the government and NHS chief executives to resolve the crisis in the health service? 2. 4. 5 Limitations of PEST Analysis The economic example illustrates some of the limitations of dealing with macroenvironmental analysis. First, PEST analysis is not simply writing a ‘shopping list’—the use of disparate bullet points without any consideration of their wider ramifications. In listing the economic factors, for example, one must clearly draw out the implications of each factor on the organization’s environment.In addition, the rate of change of PEST factors in the general environment and their increasing unpredictability act to limit the use of PEST analysis. Some have argued that the competitive environment is the only true arena for the organization to analyse since it is the competitive environment that has the greatest impact on a firm’s markets and products (Porter 1985, particularly Chapter 13). Whilst there is agreement that the competitive environment has the greatest effect on an organization’s ability to achieve competitiv e advantage, it would be unwise to refrain from analysing the general environment.For information on how to write a PEST analysis go to the Online Resource Centre and see the Tools and Techniques feature. www. oxfordtextbooks. co. uk/orc/henry2e/ 2. 5 SWOT Analysis SWOT analysis refers to strengths, weaknesses, opportunities, and threats. Strengths and weaknesses refer to the organization’s internal environment over which the firm has control. Strengths are areas where the organization excels in comparison with its 9780199581610_035_063_CH02. indd 58 2/1/11 11:03:58 AM the general environment 2 competitors, while weaknesses are areas where the orga

Bioreactor landfills Essay Example

Bioreactor landfills Essay Example Bioreactor landfills Paper Bioreactor landfills Paper Introduction – Waste management has been one of the most important problems of the 20th century world. As the population grows, so does the waste (domestic and industrial) that goes along with it. With every used commodity there is a resulting trash that needs to be dumped in a place that is designed to process these wastes properly. The world has gone a long way, from the North American dumpsites during 6500 BC to the creation of Destructor in 1847, from efforts to recycle and to incinerate; in every turn of the year or century, people keep finding solutions as the world keep finding new problems stemming from waste management. In the age of landfills, the bioreactor landfill appears to some as the next best things since the popularization of the Three Rs, while to some, it is just another effort that will not directly answer the problems of waste management and add to the growing danger posed on public health and environmental sustainability. What is a bioreactor landfill? – The term bioreactor landfill may sound overly technical and highly scientific to an average individual, but the truth is a bioreactor landfill is simply an area where trash and other waste materials are dumped. The only difference it has from an ordinary dumpsite is that inside a bioreactor landfill, the trash and waste dumped there still undergoes scientific processes that   transforms it into something that humans can use again, in the processes keeping the earth from ending up as one big dumpsite and maximizing the potentials found in garbage and trash. There are bioreactor landfills that are aerobic – meaning they rely on the presence of air to assist the process of decomposition. There are also anaerobic bioreactor landfills, which is characterized by the absence of the role of air in the process of biodegradation. Hybrid bioreactor landfills utilize both aerobic and anaerobic methods. The idea of a bioreactor landfill was designed specifically to perform a specific task and a set of operation. Despite the fact that there are different types of configurations that characterizes a particular bioreactor landfill, the bioreactor landfill in general accomplishes similar functions and performs a similar role in the society regardless of its current location. But the differences in configuration among the different bioreactor landfill allows for a little diversification on the details of its performance and operation, which will be discussed in detail as the paper progresses, focusing on one particular configuration type of a bioreactor landfill to the next. How they work – The operation of a bioreactor landfill involves the use of two important elements water and air to allow for the acceleration of the decomposition of both domestic and industrial waste that is dumped in a bioreactor landfill. It is important that the decomposition process is accelerated so that the waste materials are processed faster and the usable byproduct of this decomposition biogas as well as compost is produced faster and is immediately utilized, particularly for energy-generating activities. The biogas that is produced enters specialized pipelines that lead this gas towards where it can be burned and transformed into electricity. The compost material, on the other hand, is also created after biodegradable materials undergo decomposition stages and becomes ready as alternative fertilizer as well as a very suitable soil conditioner used by individuals who have gardens and plantations. Bioreactor landfills operating in US The website Bioreactors.org lists 13 different bioreactor landfills operating (save one, which is in development as indicated in the website). The most number of bioreactor landfills is found in Florida, which has four different bioreactor landfills the Alachua County Southeast Landfill, the Highlands County, the New River Regional Landfill found in Raiford and the Polk County Landfill which is found in Lakeland. Virginia is the other place with more than one bioreactor landfill site, and these are the Maplewood Landfill and King George County Landfills and the Virginia Landfill Project XL Demonstration Project. The rest features just one bioreactor landfill location; California has the Yolo County bioreactor landfill while Kentucky has the Outer Loop Landfill. In Michigan, a bioreactor landfill is found in Clare County while the Mississippi features the Plantation Oaks Bioreactor Demonstration Project, Sibley. The ACUAs Haneman Environmental Park, Egg Harbor Township is found in New Jersey while the Buncombe County Landfill Project is found in North Carolina, while the Columbia bioreactor landfill is currently under development in Missouri. The bioreactor landfill and human health One of the main issues that bioreactor landfills face is the debate over its impact on health. Those who are pushing for the use of a bioreactor landfill claims that this is particularly designed to protect the health of the people, while those who protest the creation of such technology points to the impending health risk to the public once bioreactor landfills become fully operational. Tolaymat et al (2004) noted in an article about how the bioreactor landfills contribute to the safety of the people and how these landfills protect the health of the people, pointing out to the parameters which if observed properly, will collectively ensure (that) the optimal operation of bioreactor landfills will pose minimized risk to human health and the environment (p 5). Sally Gutierrez, in a foreword note in Tolaymat et als study, noted how the EPA is geared in developing a balance between human health and the creation of technologies that can help sustain life. Gutierrez said that the office is cognizant about how pollutants affect human health and that in the minimizing of these pollutants through the use of bioreactor landfills it is contributing towards the protection of public health (p ii). The Kulangoor Anti-Dump Action Group, Incorporated (KADAG) is one of the different groups that voices opposition versus the bioreactor landfill technology and one of the reasons why they do not support such technology is because of the health risk that goes along with the creation of a bioreactor landfill. According to the group in an article posted in its website, the bioreactor landfill will cause (1) the presence of gases in the atmosphere that will adversely effect human health, from volatile organic compounds to organic sulphides to metals and (2) health risks that includes eye irritation, physical discomfort and illness due to the smell and odor, breathing problems, the presence of cancer-stimulating carcinogens, the presence of possible cases of birth defects associated with women exposed close to bioreactor landfills and the threat of a person losing his/her sense of smell over time due to the exposure of hydrogen sulphide (par 4) KADAG defining the health effect as ranging from slightly annoying to potentially fatal'(par 3). In a slide presentation, Jack Taylor added his own thoughts on the perceived health impact of bioreactor landfills (p11), citing hepatitis A and B, respiratory diseases, as well as the presence of other types of bacteria as a threat to health resulting the presence and operation of a bioreactor landfill. Taylor also identified other things that will be a threat to health, including fires and explosions resulting to burns and even fatalities, release of airborne irritants and smoke. How they benefit the environment The most important benefit the environment can get from the use of a bioreactor landfill is the lessening of the impact of waste management to the environment, especially in the age where population has grown and the density is close to reaching the level that every land area is close in proximity to human beings that the government should secure the land area for safety. In the past, waste management is not given a very serious attention because the people are situated far away from dumpsites and they cannot smell the odor of wastes and garbage and they are hardly in a position to be threatened health-wise by the manner by which the waste management is being handled by the local government. Because of this reality, the consideration for the treatment to the environment was not as focused as it is today. Simply said, the people back then hardly cares about the impact of the existing waste management to the environment; but now that people are realizing how environmental impacts are closely tied to impacts to humans, humans have started devising ways to protect the environment so that they can protect themselves in the long run. The creation of a bioreactor landfill was designed to protect both the environment and the people from the effects of waste management. It protects the environment by providing features that guarantee that harmful elements like leachate and harmful gases are trapped by the site or is manufactured and processed to make it less and less harmful and more and more useful. Bioreactor landfills protect the environment by making sure that unlike in the past, the byproducts that form inside dumpsites are contained and not allowed to be released and harm the rest of the environment. Through the use of bioreactor landfills, the environment is not in the risk of having to experience the level of environmental assault that it experienced during the pre-bioreactor landfill era. The stopping or the slowing down of the terrorizing of the environment due to waste and dump management allows the environment to recover from its previous trauma and allows it to heal itself and make the world a better place to live for the different life forms the existence of which depends on the state and health of the environment, and that includes humans. Reinhart and Townsend, in the book entitled Landfill Bioreactor Design and Operation, mentioned about how bioreactor landfills are created to minimize environmental impact (p1) that goes along with waste management and decomposition and degradation processes. But are bioreactor landfills indeed are capable of minimal environmental impact or are they contributing to the deterioration of the environment through the effect and impact of its operation? Reinhart and Townsend explains that because of the design of the bioreactor landfill that enables it to accomplish its purpose, it automatically provides additional protection of the environment (p1) how? First, by making the area quickly available for more and more trash and dump because it processes waste faster than ordinary landfills and dumpsites, and second, by   providing a treatment system that makes trash usable and at the same time allows for the segregation and separation of chemicals that results from the process which can harm the environment. In laymans terms, the trash of man that enters in a bioreactor landfill is processes to become something usable for man to use, and for those that is more destructive than utilitarian, the bioreactor landfill holds inside and continuously process until it is either usable or safe, or both. Bioreactor landfills and the United States Environmental Protection Agency (EPA) The United States Environmental Protection Agency or US EPA was created in 1970 as the governments way of putting a front office that will handle all problems involving the environment. Since its creation and until today, the US EPA have shown intensive effort in providing the latest, newest and safest knowledge and technology possible so that the country can maintain the sustainability of its everyday life without doing too much damage on the environment. The US EPA is the main agency involved in the drive to make bioreactor landfills a technology that is understood and accepted by many different US communities, a tasked which the US EPA know is not easy since there are many people and groups who are against the initiatives of US EPA in the past, and there are those who are voicing strong opposition versus the implementation of the use of bioreactor landfills in the country. Because of its role in the propagation of the use of bioreactor landfills and the agency’s role in the continued development of this technology, the US EPA is the point agency that handles every detail of the work involved in bioreactor propagation and development recommendations, studies, frameworks, trainings and other activities directed to the bioreactor landfill projects. It is the US EPA’s responsibility to determine the level of safety that this new technology brings to the people and to the employees that will work directly on the site; the agency is responsible in making sure the people are well informed and well trained, and that there are continued studies that are geared at determining important information that it can use to further improve the growth of bioreactor landfill technology. Because of the costs that come along with the entry of bioreactor technology in place previously existing technology that manages waste disposal, many other individuals outside of US EPA are also taking a very serious inquiry about the real economic and social impact of the use of a bioreactor landfill. Generally, the advantages of old technology is the minimal cost of operation, something that poorer communities can manage even at the risk of being incapable in the long term t manage waste disposal effectively, as for the bioreactor landfill, the higher cost is expected to be balanced by the prospect of income-generation through the sell of methane as a fuel source, and the prospect of a much safer environment and much safer state of life of the people around it. In a study made by Xu et al, the group manifested the interest in determining the actual costs for the use of bioreactor landfill and sanitary landfill to determine which is more practical and more cost efficient. Xu pointed out that there is a challenge to the overall economic advantage that the new technology must prove under local conditions (p381) and this can only be done if there is a substantial study from which information and conclusion can be derived from.