Case Study of Alliance Boots Plc

ALLIANCE BOOTS PLC: INTRODUCTIION: Alliance Boots is a leading international pharmacy-led health and beauty group serving a wide range of products and services to customers over 100 years in the UK. We are trying to identify how the Boots works internally and externally to reach its goal. We are also trying to find out how the Boots motivates its employees to be productive. We will also discuss its organizational structure and design to communicate each other function of the organization. We will discuss its appraisal system and organizational record keeping. We will also find out about its brand image to the stakeholder. Customers are at the heart of their business and they are devoted to providing extraordinary customers and patients care by offering innovative products ‘Only at Boots’ with exceptional values. People are their strength and tell us that Boots is a excellent place to work. They always aim to be the employers of choice by attracting and retaining the most talented and passionate people. BACK GROUND OF THE COMPANY: Boots had established its roots in the mid-19th century by John Boot, an agricultural worker, at Nottingham, in the UK. He opened a small herbalist store on Goose Gate in 1849. After John’s death in 1860, his widow, Mary, continued trading, with the help of her young son, Jesse, who became a full partner when he was 21. The store continued to thrive. In 1877, Jesse took sole control of the Boots. In 1920, he sold Boots to the United Drug Company of America. In 1933, the United Drug Company sold its holding in Boots to a group of British financiers led by John Boot, Jesse’s son. Under John’s chairmanship, the first overseas store opened in New Zealand in 1936; key brands No7 and Soltan was both launched in the 1930s. He also continued his parents’ tradition of staff welfare – improving working conditions, reducing hours and introducing pensions for all employees. More recent decades, the introduction of successful brands such as 17 cosmetics and Botanics and new business ventures such as Boots Opticians are more popular to the customers. A new chapter in Boots history started on 31st July, 2006with the merger with Alliance Unichem, to become part of Alliance Boots, an international pharmacy-led health and beauty group. Their product and services are Health and beauty, Personal care, Cosmetics and toiletries, Baby care, Dental & health care, OTC and Prescription medicines, Perfumes, and Skin care. (www. bized. co. uk,) MISSION: Their mission is to be the world’s leading pharmacy-led health and beauty group. They seek to develop their core business activities of pharmacy-led and beauty retailing and pharmaceutical wholesaling and distribution across the world and become a significant player in many leading international markets. PURPOSE: Their purpose is to deliver products that help people look and feel their best. VALUES: They believe in making a difference for the well being of the communities they serve. The core values are described below. * PARTNERSHIP: It includes respect, understanding and working together. They create and build value through partnerships and alliances, inside and outside the business. * TRUST: The essence of the way they do business. People trust because they deliver on their promises. * SERVICES: They hold high standards of care and service for customers and their people. * ENTREPRENEURSHIP: They are innovators, seeking new challenges and having a winning entrepreneurship. SIMPLICITY: They are proud of being lean and efficient, uncomplicated and easy to do business fairly. (www. allianceboots. com) AT A GLANCE: * Operating over 20 countries. * It has115, 000 employees. * Operating more than 3,250 health and beauty retail stores. * Dispensing more than 245 million items each year. * 1500 Stores in the UK and Irish Republic. * Serving 420 million customers (pa). * Operat ing over 360 pharmaceutical wholesale distribution centers. * Cash generated from operation ? 1130 million. * Revenue is ? 22. 5 billion. * EBITDA is ? 1,360 million. * Trading Profit is ? 1,074 million. www. allianceboots. com) BUSINESS ENVIRONMENT OF THE BOOTS: The organizational environment consists of internal and external environment. Alliance Boots operates in highly attractive markets with potential for significant long term growth. The Company expects to increase life expectancy and product innovation to continue to drive demand for prescription medicines and related healthcare services. At the same time, they believe that a growing customer focus on personal well being will drive demand for health and beauty consumer products and related services. Fig: The Organizational Environment of Boots: Legal Environmental Technological Political Social Economic External Environment Communication External Environment ————————————————- Innovation Strategy Change Internal Environment (Writer’s observation) INTERNAL ENVIRONMENT: In order to sustain an organization, it is necessarily to adapt internal structures, process and behaviors to enable to cope with complexity and the pace of external change. It is concerned about organization’s strategy, teamwork, management, leadership style, working practices, empowerment, employment patterns, etc. * STRATEGY: Johnson et al (2008) say that strategy is the direction and scope of an organization over the long term, which achieves advantage in a changing environment with the fulfilling stakeholder expectation. The Boot’s strategy is to focus on its two business activities of pharmacy-led health and beauty retailing and pharmaceutical wholesaling and distribution, while increasingly developing and internationalizing product brands to create a third dimension. * CHANGE: According to Mullins (2007), every change becomes welcomed as an opportunity for increasing efficiency and building new organizational success. Boots increased female participation in the workforce and growth of services. It also changed the sophisticated information technology where cognitive skill demands. It has created fast flat and flexible organizational design. The company plans to further increasing the number of Boots stores through new openings and pharmacy acquisitions and have also just commenced a trial with Waitrose to sell selective product ranges in each other’s stores. * INNOVATION: According to Mullins, innovations arise from technological advancements, new processes, and improvements in all major areas of organizational activity. Boots concentrates in expanding their core business in existing markets, continuing to deliver productivity improvements and other cost savings, pursuing growth opportunities in selective new high growth markets. Boots is always launching products in the new markets. * COMMUNICATION: Boots always focus on customers/patients needs and services. Their communication and distribution channel is well updated which improves productivity. EXTERNAL ENVIRONMENT: The external environment is the pressures of the organization from outside that can influence and affect the performance of the organization. The significant environmental pressures are the PESTEL which locates for Political, Economic, Social, Technology, Environmental, and Legal factors. * POLITICAL: The political environment of a country predisposes by the political organizations such as philosophy of political parties, ideology of government, legislation, taxation, employment law, trade union policy and activities. Boots are also affected for political decision in the UK. The UK government is cutting the employees from most of the sectors. As a result, people will have no enough money to spend on health and beauty. ECONOMIC: It is mainly concern about total GDP of the country as well as consumers’ expenditures and disposable income. It is also included currency exchange rates, tax regime, wage rates, raw material prices etc. Boots is a multinational company. So, during recession, UK’s currency rates fell down and Boots lost lots of money to exchanged currency from other country to UK. * SOCIAL: It concerns about demographic trends, lifestyle preferences, social values, distribution of incomes, education and health, labor mobility, attitude to work, discrimination trends, skills availability, etc. Boots never discriminates any employee. Boots always tries to adopt different life style in different countries, languages, traditions, people expectations etc. * TECHNOLOGICAL: The technology adopted by the industries determines the type and quality of goods and services to be produced and the type and quality of plant and equipment to be used. The technological environment influences the business in terms of investment in technology. It refers to the innovations of IT, nanotechnology, new production methods and process, level of expenditure on R&D by organization’s rivals etc. Boots uses to invest more money on research and development of its cosmetics and medicines. ENVIRONMENTAL: It links to the ‘Green issue’ of the environment, reducing toxic emissions, pollution, spills, hazard prevention, disposable of wastes or rubbishes etc. Boots dedicates to reducing the carbon intensity of their business and continued to launch specific carbon reduction initiatives. For example, Boots UK launched in August 2009 an awareness campaign aimed at reducing energy use in its retail stores. In February 2010, Boots UK received the Carbon Trust Standard in recognition of recent achievements in reducing its ‘carbon footprint’. Over 50% of the waste, they create as a Group recycles. * LEGAL: It deals with international law, legislation and taxation, human rights concerns, local regulation. It also concerns international trade agreements, employment and safety law, and product safety issues etc. Alliance Boots operates in regulated markets. It could be adversely affected by changes to existing regulation, new regulation such as licensing regimes for pharmacies, prescription processing regimes. www. boots. com) ORGANIZATIONAL STRUCTURES OF BOOTS: Director Director Director Finance Director Chief Executive Health & Beauty Chief Executive Legal Chief Executive Health & Beauty CEO Chief Executive Pharmaceutical Wholesale Division Chairman of the Board Director Director Director Director Chief Finance Director (www. theofficialboard. com) Organizational structure is the formal system of task and reporting relationships that controls, coordinates and motivates employees so that they work together to achieve organizational goals. (Buchanan and Huczynski, 2004. P. 874) It is the pattern of relationships among positions in organizations and among members of the organization. Structure makes possible application of the process of management and creates a framework of orders and commands through which the activities of the organization can be planned, organized, directed and controlled. Mullins (2007, p. 564) Alliance Boots has a flat organizational chart. In the structure, we can see that there are eight directors including Board of Chairman and non executive directors. Under Board of Chairman, there are six Chief Executives who are responsible to report to Chairman. All the Executives are the same level in decision making. This structure helps Boots to do better communication between top management and employees as well as increased team spirit too. Hence, we can see less bureaucratic power which helps to make decision easily. It also improves sound coordination and timely passing information among the different department within the Boots which increases productivity. This flat structure is mostly helpful to do faster responses to changing condition. This flat structure has demerits in Boots. Here, workers may have more managers for one job which creates confusions. It is mostly helpful for a small organization but Boots is such a large organization, where it will have demerits. As a result, this will reduce the growth of the organization. (www. learnmanagement2. com) (www. blurtit. com) MOTIVATIONAL FRAMEWORK: MOTIVATIONAL Individual Colleagues The Manager Customers Organization FRAMEWORK (www. ashridge. org. uk) ORGANIZATION: The organization will provide the structure and processes such as performance management and reward schemes, training, interesting work. In the organization, leaders and managers must earn the respect of others, create an appropriate working environment and provide opportunities for people to grow and develop. THE INDIVIDUAL: Individuals need to be more open about share values with colleagues and managers. Organizations need the accurate strategy and processes that make it abundantly clear that individuals have a responsibility for their own development. THE MANAGERS: The Boss provides a crucial role in the motivation process not only acting as a role model but valuing each of colleagues in a way that makes them feel motivated. COLLEAGUES: Colleagues can play a crucial role in motivation at work. By sharing skill and ability, every employee will be motivated in the work place. THE CUSTOMERS: People will be motivated by feedback from both internal and external customers and clients. We should regularly review and share the results of feedback with staff. FACTORS AFFECTING EMPLOYEES PRODUCTIVITY: The proportion that measures the efficiency of the resources concerned in production of products and services is called productivity. It is also the ratio of inputs and outputs of the production. (www. ayushveda. om) The factors that affect the employee productivity are as follow: * TRAINING AND DEVELOPMENT: If the employees are not trained properly in their particular job role, then the organization cannot get the benefit from the employees. Sometimes Boots cannot get enough time to schedule the training timetable. COMMUNICATION: There will be constant communication among top management, middle management and the em ployees. But sometimes there is miscommunication or take time to communicate within the Boots because of managers’ holiday, Internet break down etc. * WORK LIFE BALANCE: If the husband or wife works together and there are kids, there will be a problem to match the time table. Boots gives priority to those families. * PAY AND BENEFITS: If the employees get under pay, a late payment, or wrong payment, then they will not be encouraged to perform better the job. * REWARD AND RECOGNATION: Sometimes employees are not rewarded for meritorious services which create employees opposition to complete the job. * WORKING ENVIRONMENT: If the working environment is not suitable for employees or the coordination and cooperation is lacking, the productivity will be low. EQUALITY AND DIVERSITY: If there is any discrimination, the productivity will decrease and employees will dissatisfy. Boots strictly follows the rules and regulation about equality. * OTHERS: There are few more factors which affect the productivity, such as poor management, slow decision taking, lack of trust, stress level, conflict, frustration, etc. WAYS OF MOTIVATING KEY EMPLOYEES IN BOOTS An organ ization has many attributes to its success one of which is motivation of staff of the organization. Boots has various ways of motivating their workers leaving them satisfied which encourage them to go ahead and deliver. * TRAINING AND DEVELOPMENT: Boots provides an online module and training for their staff. This enables them to fulfill their potential at work. The organization makes a significant investment in the development of a range of training. This helps new employees of the organization feel as part of the team and makes them more confident. This year, Boots put additional investment into developing their pharmacists and registered technicians supporting them with their continued professional development. DISCOUNT FOR STAFF PURCHASES: Employees get discounts for purchases on Boots and non-boots products. They obtain 12% discount on Non-boots products and 25% discount for boots products. Every employee, within a year gets double discounts for 2days, which means 25% and 50% for non-Boots and Boots products respectively. This makes them want to stay in the organization. * HEAL TH INSURANCE: Boots believes that their responsibility is to look after their colleague’s health which will help them deliver better customer service. This is particularly beneficial to the employees though this is not compulsory. It encourages them to stay with the organization hence longevity of service, intimate working knowledge and greater output. (www. boots. com) * RETAINING AND PROMOTION: The organization is decidedly particular about recruiting, retaining and promoting diverse employees in the organization. Therefore they strive for this through hard work and hence contribute enormously to the success of the organization. * ATTRACTIVE REMUNERATION: Salary is also another factor that encourages employees to work. If they are well paid they feel like coming to work coupled with a enjoyable working environment at Boots, their employees get an increase in salary every year especially when the economy is stable or growing. * HEALTH AND SAFETY: Boots always provide the right equipment to do the job. All the training regarding health and safety provide every employee to protect them as well as customers. (www. allianceboots. com) APPRAISAL SYSTEMS OF BOOTS: As mentioned above Boots appraises its employees once a year. They are informed when they are going to be appraised and what is expected of them. A form is given to each line manager for every employee just to tick the most suitable one. It describes the employees work performance. Feedback is given to employees, so they will know where to improve. The performance management cycle of Boots Plan for performance appraisal Informing employees about appraisal Feedback and working to achieve goal Performance appraisal of employees Appraisal systems depend upon the individual performance which includes quality of services, customer care knowledge, flexibility of working time, competences, skills, learning achievement, relationships with colleagues etc. ORGANISATIONAL RECORD KEEPING: It is where an organization records information from the time it creates to the time of its disposal. Record keeping is truly essential for an organization because it helps keeps the organization on track and thus achieves organizational goals. Record keeping helps the organization to monitors its financial transaction. In Boots, record keeping uses for verification financial transaction and recording information about employees such as employees personal data, training records, how many times an employee has been absent. Boots keeps its records for two years then at the end of the two the last year records destroyed and a new one is started again. (http://en. wikipedia. org/wiki/Records_management) Boots always keep employees personal data secretly and maintain the rules and regulation of the Data Act. All employees have personal record file where all the information are stored in secret. (www. 123helpme. com) CONCLUSION: Boots has a outstanding reputation about health and beauty products at the UK as well as all over the world. It is a delightful place to work everyone says. They have to work closely with manufacturers and pharmacists to improve health among the local communities as well as national level. Boots should give priorities about customers’ loyalty, retention, communication and in store marketing. In the current economic recession in the UK, they have to monitor all the financial activities to minimize the cost. There will be commitment and clear indicators from top level to lower level. Motivation is essential to business success. Boots needs to pay more attention about employees’ learning and development to meet the future demands of the organization.