Microeconomic Environment Facing Herbert Chapman Look at Essay

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microeconomic environment facing Herbert Chapman (look at the main competition, costs pressures etc.)

Chapman's problems are not so surprising given the fact that starting from 2009 more Britons preferred to stay home during the vacation than travel abroad. It is surprising that Chapman's competitor in fact reported business. Were Chapman to have concentrated on local tourism instead, he may have noted greater profit for companies such as the Association of British Travel Agents remarked that tourism had increased in Britain during January 2009 and that companies that were focusing on British tourism (namely local tour operators) were actually reporting profit.

In fact, research by VisitBritain, the tourism authority, indicated that 74 per cent of people were in fact actively working towards methods of cutting their expense and finding their relaxation at home as opposed to abroad..

Given other reports indicating that other companies have caught onto this trend and are actively funneling their tourism money into domestic tourism (eg, BBC News (4 March 2009 ), it comes as no surprise that Chapman - focusing on international tourism has lost business. It is domestic tourism that is on the increase whilst international tourism has declined. The Northwest Regional Development Agency, in fact, in the summer of 2009 announced a £20m funding package for its tourism industry that would fund domestic tourism. The Yorkshire Tourist Board, the local competitor, promoted a "Get more Yorkshire for your money" in order to encourage local Britons to visit their area, whilst companies at the higher end of the spectrum, such as Blue Chip Vacations (presumably a major competitor of Chapman) which owns 500 luxury properties in the UK, reported its bookings to be up 72% during the recession (Shileds, R (Sunday 01 February 2009 ).

In fact, Chapman, as recommended too by Katsionas (2010), is advised to plan strategically and to see where the hot spots of tourism lie during the recession. The company too should consider that tourists during the recession seek experience and the "best value of their money."

Fulfilling these desires can help Chapman find some business.

The dip in UK tourism during the recession has been large according to official numbers. In 2009, for instance, it was down 15% to 58.53 million and subsequent years showed little improvement. Visits by Britons abroad in 2009 dipped by 9%; in 2010 they had dipped by 21%. Tourism companies themselves were also doing badly and, therefore, offering less destinations. The Office for National Statistics, for instance, reported that part of the decline was due to the number of holidays being sold with gaps in regards to destination such as Switzerland and Austria.

The UK dip, though, was rivaled by tourism on the macroeconomic scale that showed, according to the Office for National Statistics (ONS) that the number of visits made to the UK by overseas residents in 2009 fell to 29.57 million - a 7% decline when compared to 2008. (Etn (Feb 18, 2010 )

• the main macroeconomic challenges that the firm faces in the current economic environment

The years 2008- 2009, even wandering into 2010, experienced the steepest drops n tourism on a macroeconomic spectrum. Tourism rebounded somewhat in 2011 increasing 6.6% to a record 940 million travelers who spent more than $1 trillion according to the United Nations. France was the preferable tourist spot for tourists in 2010, followed by China, Spain, Britain and Italy. The Middle East, Asia, and Africa were also doing well, as was the U.S.A.

Tourism accounted for 5% of the 5% of the global gross domestic product in 2010 according to the UN. It followed fourth behind increase in fuels, chemicals and automotive products. (Bloomberg (Jun 29, 2011 ) . It seems that 2008-2010 were the worst years. If Chapman could only hold themselves through, they may still make it since the worst of the recession for tourism seems to be coming to a close (see also Times of Malta.com (September 21, 2011 ).

• The current fiscal and monetary policy of the government and the Bank of England and the impact of these policy responses on the business

As Joyce et qal (2011) reported:

In response to the intensification of the financial crisis in Autumn 2008, the Bank of England, in common with other central banks, loosened monetary policy using both conventional and unconventional policy measures. In the United Kingdom, the principal element of these unconventional measures was the policy of asset purchases financed by central bank money, so-called quantitative easing (QE). Over the period March 2009 to January 2010, £200 billion of assets were purchased, overwhelmingly made up of government securities, representing around 14% of annual GDP. (Joyce, M et al., (2011))

This and similar policies may actually have been helpful for business such as Chapman since they may have helped business ventures aside from encouraging the dribble of people seeking tourism.

Both the British government and the EU have also appropriated funds to help the country (business and people) through the crisis. Considerable fiscal and monetary policies have been created.

There are problems with some of these and with the way they are administered (Jackson, JK (2009) ), but they can be helpful for both Chapman and prospective clients.

Part B] Analyse and evaluate the following issues in the context of the case?

• Travel agents face increasing competitive pressure, so success requires innovative leadership and a committed workforce. In such an environment can you say that decisive, even autocratic leadership is called for and can be justified?

Despite various takeovers and mergers, the business still retains a sense of the traditional and family-based roots. The management style has been described as 'paternalistic' and 'consultative', and, over the years, they have prided themselves on having excellent employer-employee relations. Employees benefit from permanent contracts, shares allocated on the basis of length of service and a much envied profit sharing scheme.

Autocratic leadership should hardly if ever be used and when implemented done so with caution. In fact, the term' autocratic' seems to run counter to the term' leadership' since leadership implies taking one's team member into the equation and discussing all matters with them. The leader that fails to do so runs the risk of incurring demotivation and rebellion thereby resulting in business loss.

• A great deal of theory in OB stresses the need to maintain effective teamwork. To what extent can effective teamwork be achieved in an environment such as that experienced by Herbert Chapman?

The type of leadership that Chapman has perpetuated thus far is one of 'transactional leadership', or managerial leadership where one simply 'manages' an organization or leads the other in a certain way, so that employees achieve what the organization wishes them to. Managerial leadership draws on rewards and punishments to compel subordinates to act in a certain manner. A so-called transformational leader goes beyond that in that he or she actually transforms the follower: changes him, has an impact on his life, motivates him in an extraordinary way so that he work towards the good of meaningful and substantial goals of the organization in a passionate manner. This is the topmost level of leadership and the level that Chapman wishes to attain if he wishes to move his organization towards growth.

Periods of competitive pressure certainly demand innovative leadership and a committed workforce, but autocracy is not the way to go. On the contrary, it is a self and business destructive strategy.

The best leadership route that Chapman could employ would be to invest trust in his employees and involve them into his decision-makign. Transformational leadership - that based on shared autonomy and responsibility -- can be more effective than managerial leadership in motivating followers. This coheres with Maslow's model of motivation where he ranks creativity as the highest hierarchy on the pyramid. Workers are not only motivated by money. Many individuals are motivated as much and sometimes even more by acknowledgment, recognition, and their higher needs being met.

Real or perceived threats against autonomy are often a cause for loss of motivation. Motivation can be restored by the manager by his rejecting an authoritarian style of leadership and adopting a more democratic or laissez faire style where he involves his employees together as a team to work with him and make joint decision-making . This more democratic, laissez faire style often makes individuals feel more respected whilst catering to their need for creativity and fulfillment.

Effective teamwork, moreover, can only be achieved by empathy for subordinates and by including them in one's decisions. The leader has to respect and take his subordinates into account. Making them feel relevant and including them in his decision-making is the primordial act that shapes the leader. Leadership, therefore, (at least according to the Participative leadership theory) is not innate; it depends on others (Arvey et al., 2006).

• Many successful organisations have survived the recession by reducing the number of employees (or else reducing hours worked) to reduce costs, as Herbert Chapman may do. Explain what effect changes…

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