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Sharpest Communications which ranks among the largest global public relations agencies wants to venture into the fashion and lifestyle area by acquiring a UK based Company. This report will serve to explain the economic conditions in UK and the problems this company is likely to experience. Also included is the competitiveness of the marketing consultancies as well as the media in general. Recommendations are then offered at the end report.
This report has taken an in depth look at the conditions being faced by the fashion industry in the United Kingdom. It has highlighted the challenges and offered a comprehensive recommendation for Sharpest Communications. The recommendations, I believe, will go a long way in shaping the course of action that will be taken by this company.
The fashion industry in the United Kingdom has been growing steadily over the years. The industry which employees close to 900,000 thousand people is ranked 15th Largest in the UK (Mintel International Feb 2010). The growth in this industry has been driven by influence of UK's top end designers on high street retailers and supermarkets and the expansion of fashion brands into accessories, perfume and home ware.
The political environment in the UK has been stable for many years, hence building confidence in investors and consumers alike
Fairly stable and projection shows indicate that more growth is expected in the future
The decreased employment opportunity due to increased use of technology. The continuous decrease in employment opportunities lowers purchasing power of the people
The increased use of technology in production, sales and marketing will help the company increase its network of sales and production
The extremely cold weather in winter will limit the variety of goods to be produced due high demand for heavy cloths
Economic Climate in fashion
The current economic climate of fashion is fairly stable. According to a research carried out by Prologic (Dec 2008), most fashion companies say that their sales are actually increasing. In fact, 30% of the companies said their sales were increasing while 22% said that they were experiencing decreased sales (p.4). These companies further expressed optimism that sales were likely to increase in the coming year.
The cost of raw materials and taxation on the finished products are rapidly increasing in the UK. This will have to be passed on to the consumers in form of increased prices. This will most likely reduce the purchasing power of the consumers. Consequently, it will affect the companies selling premium goods as most people will opt for the cheaper ones. The companies dealing with low priced fashion will definitely experience increased sales.
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Many fashion oriented companies are striving to operate with as few employees as possible. According to the report by Prologic (2008) 25% of companies interviewed felt that there was going to be a decline in recruitment levels. In fact the average decline in recruitment levels was being predicted at 6.0% for 2010 (Prologic 2008: 5).
The fashion industry in UK is very large. The major players are claiming government support as their growth will have a positive impact on the Country's economy. In an interview by Sky news, Harold Tillman said the sector ought to be recognized for the boosts it gives the economy. According to him the fashion industry can be equated to the food and beverages sector in terms of size and turnover. If this plea is taken into consideration then the sector is likely to grow and hence the major players stand a chance to make enormous profits.
Media and Fashion
About twenty three million people in UK claim to be uninfluenced by marketing activity such as advertising, magazines and websites. This is according to a research by Mintel International (2010) Promotional discount vouchers however, remain the most popular enticement appealing to almost 7 million people. Content relating to fashion found in celebrity, fashion or lifestyle media has been found to be a great influence on the shopping trends in fashion. This however, mostly affects women. With the increasing use of social media in business, fashion companies are turning to social websites like Facebook and twitter to find out what young people want in terms of fashion. The aim of doing this is to capture the potential market when they are relaxed, and thus be able to provide information on their brands and indirectly lure them to buying their products.
Many brands of fashion are available in the UK. This has necessitated the use of marketing consultants who have to point out the difference in a particular brand and then communicate it to potential customers. The marketing companies are trying all the possible methods to market themselves. Most of these companies are using entertainment channels, music, social media and travel to reach out to potential Customers. This has increased competition among these firms. In fact some of them are even venturing into scientific methods of promoting products.
Task 2: Analysis of the accounts of Paula Rich's Public Relations
Currently in Britain, Paula Rich Public Relations (PRPR) is now one of the fastest growing PR consultancies with a client base mainly drawn from the fashion and entertainment industry. Paula Rich, the founder of the firm started in PR immediately after leaving art school in the 1990s with her first job being making tea at a very famous agency in the country.
The company has had substantial growth in its financial base, especially the asset base. In the meanwhile, the liabilities have continued to sore due to unnecessary expenditure from the management. The company's both fixed and current assets sharply increased in 2008, followed by a slight decline in 2009. Both long-term and short-term liabilities on the other hand have been on steady rise, ostensibly due to unnecessary cost of operations. Retained profit has dominated the source of company funds every year, while ordinary shareholders have been providing constant amount of finance for the company.
Competitor Analysis (Asset Base)
The table below highlights the position of top-ten PR companies in the UK (Source: The Independent Online)
23 million pounds
Lowe Bell Communications
12 million pounds
Hill & Knowlton
10 million pounds
9 million pounds
8 million pounds
6 million pounds
6 million pounds
5 million pounds
4 million pounds
4 million pounds
Paula made the very important decision to go and start her own consultancy firm from her kitchen table in Notting Hill after successfully assisting in developing the client base in the agency. Since then, the business has picked up dramatically going from strength to strength even though Paula herself has no formal education in business. It is important to note that currently the business is being run from a trendy office in Soho and brings in enough revenue to finance Paula's needs such as travelling and even fund her lifestyle. The number of clients have continually increased with bills being paid prominently making Paula not to even stress herself considering questions about new initiatives that would get the company out of its comfort zone.
Paula Rich Public Relations is evidence of the fact that the public relations industry has a great potential and is therefore a very viable business idea to venture in. Many organizations today are witnesses of this fact airing out a wide range of benefits that they have accrued from such consultancy firms. Many organizations today can agree that public relations can for real mean the difference between life and death for any business institution. It has proved to be a mechanism that is very essential to maintain ongoing, beneficial relationships, to systematically listen to and understand the concerns of publics (Oliver 2001: 19). The public in most instances includes the internal publics and the labor unions as well as the external public. There are public relations initiatives such as the strategic issues management that is very useful in addressing internal publics and labor unions conflict hence opening up more space for better business practices that would therefore enhance business growth (Oliver 2001: 67). It also can provide channels through which organizations can recover its footing and repair its reputation and relationships once it acknowledges its mistakes and commits to changing course.
It is important to mention at this point that studies show that public relations is more about those things that an organization does that affects the opinions and perceptions of its various public towards it (Naidu 1996:116). An effective public relations process requires an organization to analyze the needs and desires of all interested parties to be able to conduct itself in a more responsive manner towards them. Properly organized good public relations would, no doubt, assist in improving an organization's image (Naidu 1996:116).
In spite of all this, it is also important to note that a good public relations system is no substitute for better performance in offering efficient and reliable services and products to an organization's clients. For this reason it is very important to contact public relations agencies and personnel with high performing capabilities and at the same time with the relevant capabilities of monitoring results based service execution processes.
With all this in mind, one can easily acknowledge the fact that the public relations industry is one of those areas that business organizations take very seriously in their quest towards meeting their business needs (Steingold 2007: 88). This is evidence to the fact that the industry attracts a wide client base and the continuous growth Paula Rich Public Relations is also evidence to the fact that the industry's client base still has some untapped potential. The agency's various departments are not properly managed and at the same time the employees working environment is also still not very conducive hence leading to the departure of a number of the firm's staff. Even though, the firm has continued to record commendable growth in terms of their client base as well as in terms of the monetary gains. I believe that, with the implementation of more appropriate strategic management mechanisms Paula Rich Public Relations has the potential to record an even much greater success with the very shortest time frame possible.
The organization's current structure consists of an office manager who organizes the day to day running of the office as well as a finance manager who manages the financial details of the firm. This is quite appropriate and from what it looks like these two offices has been in a way quite effective in performing their duties as required. A major challenge that hinders the agency from attaining their full potential is the luck of a human resource department or personnel. For this reason it is the prerogative of Paula Rich to hire and fire and at this agency things are normally done her way. As a self made business person, Paula normally feels like she knows best and therefore expects all the other staff to follow after her. This is a situation that has led to the departure of some staff who is not amused by her management methods. Some of these staff usually ends up a setting up their own rival consultancies that may end up providing some serious competition to Paula Rich Public Relations. With competition, Paula's agency is likely to loose some of its client and this may detrimental to the growth of the firm.
Another notable problem is whereby the more experienced PR personnel within the organization feel as though they are badly treated and given more attention by their clients than even their own boss. Another challenge that the organization faces is the competition between divisions and individuals, poaching of clients and the luck of team work. Even though a lot of people desire and love to work in the public relations industry, the organization does very little to motivate them hence compromising on their performance level.
It is therefore no doubt that Paula Rich Public Relations is a very viable business opportunity with a dynamic business environment that has the potential to grow even more rapidly if the issues that I have raised above can be addressed appropriately.
Business mission is what one or an organization wants to attain by establishing the business while business vision is what keeps the business moving ahead despite the disappointing or hopeless chances (Sashkin and Sashkin 1994: 211). The Paula Rich Public Relations' mission and vision does not accord with the business theory and behavior models in entirety. The mission and interest of the founder (Paula) is just to make money, take trips and support her standard of living. The founder neglects the needs and interests of the employees. It is known that employees form the backbone of every organization.
Paula has not actually given any idea to what the future strategy of the business should be. Vision is the most influential motivator in the business, and should be able to agree with the originator's aims for the company (Zetlin 1996: 21). This is not taken into consideration by the Paula Rich Public Relations. The vision helps to explain what the originator finally foresees how the business should be in such conditions as principles, expansion, workers, the like and the involvement in the community (Sashkin and Sashkin 1994: 214). For an effective business vision to be expanded, Paula needs to establish personal reflection.
The Paula Rich Public Relations neglects the fact that business mission should define the general point of the business in terms of what the business does, its purpose, and how and the reason it does it is operational. It puts limits on the business' existing activities. Paula needs to assess and focus on the business mission in order to take the company back to the essentials and assist it stay active. This is important as it will help the company to meet the requirements of other stakeholders and not their real customers. As a founder, Paula needs to identify her vision for her to start expanding strategies for moving the business toward that vision. It also involves the growth of the business, mission.
Organizational structure and culture involves the arrangement of responsibilities used for the work to be done in the business (Zenger, Musselwhite, Hurson and Perrin 1992: 28). The organizational structure and culture at the Paula Rich Public Relations is quite biased and disorganized as it does not consider standardization, formalization, vertical span and specialization. There is no formal selection and hiring of the staff to work in the company as they are not even interviewed before they are assigned to work. There is no consideration of specialization and division of labor among the employees. They are not hired basing on their trained skills to perform specific assignments and official tasks. It is clear that there is no standardization since the events that happen frequently are not legitimized by the company and it has no rules that consistently relate and govern situations. The PRPR has no formalization because the laws, measures, instructions and communications are not written. The line of control of work within the company is not pleasing and does not follow any formal career structure as various departments are headed by unqualified personalities. For instance, there are no assistant Public Relation heads.
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Head of PR(Fashion)
Head of PR (Events)
Head of PR (Entertainment)
Head of PR (Music)
The table illustrates a bureaucratic style of management where Puala manages every aspect of the company with ceremonial heads of departments for each of their four departments. Human resource department is conspicuously missing in the company. Paula's personality management and leadership style is selfish and inconsiderate. She runs the business for her own benefits without considering other parties. Her leadership style can be categorized as autocratic leadership because she has total power over her workers and teams. Since she is a self-made business lady, she expects the staff to accept the fact that all the activities have to be done her own way.
The employees in the business have minimal chances to give opinions even in the case where it benefits the company or the teams. For instance, the most skilled PR heads always feel to be unfairly treated by their boss within the company. The business has no Human Resource Manager because Paula hires and fires anytime she feels. Her leadership is also discriminative and informal since she hires someone only if she likes him or her and not basing on one's career qualifications. She does not posses the qualities of leadership and management since she lacks integrity and support. She does not locate clear goals, does not clearly communicate her vision, she is not a role model, discourages the workers and she does not recognize the good work as well as employees. Her style of leadership only works because the advantages of management dominate the disadvantages.
The groups and teams within the business at the PRPR are handled and treated differently. Their running is not well organized since they are joined through informal and unplanned methods and they are mostly unsuitable for circumstances. They are managed by irrelevant managers which lead to poor delegation of duties. There is failure among company's teams due to internal competition like poaching of customers. The business also fails to recognize the team performance. There is also no respect among the teams and individuals. Paula Rich also fails as the leader to set understandable goals or common cause. The business teams needs to be encouraged to work through persons towards a common objective and not to compete with individuals.
The staff motivation within the Paula Rich Public Relations is very poor since the employees are not motivated. The company does not show any form of encouraging despite the fact that most staff are pleased to work in the organization. The workplace environment is loaded and the salaries and benefit payments at the PRPR are so small. Even if the address is fashionable, the back office is dull and overcrowded. The more skilled qualified and experienced staff are not supported instead younger college trained staff are hired without even formal interview. This lack of motivation contributes to most employees to give up so easily and move on to open up more effective consultancies. The company needs to support the employees and provide them with stimulating work. It also needs to help staff to see beyond their self-interests and focus more on team interests and needs as well as inspiring them.
Conclusion and Recommendations
Paula Rich should sell the business instead of proceeding with her expansion plans because she does not posses the skills to run the business. The management of the business requires more qualified personnel in terms of trained skills and experience.
There exists an impressive market for fashion in the UK. However there are quite a number of challenges that must be overcome to ensure success. A lot of competition from similar companies exists and without the proper marketing strategies a company is likely to end up as unsuccessful. Most companies are reviewing their expenses and key processes especially marketing in order to simplify and reduce operating costs. This is aimed at increasing the profits. In order to survive therefore all companies are to become innovative in their marketing strategies.
Lack of capital though an issue, it does not influence business in the fashion industry to a great extend. Small businesses are able to make profits if they improve their marketing processes and if they are able to maximize all opportunities open to them. Increase in cost raw materials and the level of taxation are increasing the prices of clothing and fashion related items. This will lead to a decreased level of income to the sellers of such items since consumers tend to buy these items only when they need them.
In order for sharpest communications to be successful in this venture they need to consider all the conditions that are currently being experienced in the United Kingdom. The following recommendations are advised. They need to design and develop their product to be much more different and better than the existing ones. They ought to be creative and use technical skills to initiate new products or even improve on the existing ones in terms of quality. If possible they should have the lowest possible prices in order to outdo the competitors.
The management should be keen and manage the production process from the starting point to the end result. This will ensure that their products are flawless and hence they will be able to create a large customer base.
The management should try to employ one of the most successful agents to do the marketing for them i.e. marketing consultants who are well informed on the changing trends and tastes. They thus will be able to come up with the most innovative and profit making strategies.
Getting established in the industry is quite a tedious task. The company should be able to link to other high profile companies and learn their strategies. They thus will be able to come up with better ways of fighting the enormous competition that exists.