The purpose of this report is to outline the changes in the external environment that are affecting UK business organizations and to discuss additional theoretical concepts. The business organization that is focused in this report is The Anglian Water Company. This company is among the biggest water companies in England. It not only supplies water to England but it also supplies water to some parts of Scotland. As of May 2010, Anglian Water Company had more than 6 million customers which were both commercial and residential. In addition to supplying water. The company also runs water treatment firms in East Anglia. Bearing in mind, the size of the company and the large geographical area that it operates, this company has a lot of power in the business market when it comes to water distribution. It is also ranked very high among other water companies due to its huge influence in the water business market.
Due to the size of the company, one might be tempted to think that the Anglian Water Company does not face any challenges. However, this is not the case. After referencing four major high quality newspapers, The Telegraph, The Times, The Financial Times and The Guardian, it is clear that the company is facing political, economical, social, technological, environmental and legal external changes that are posing a lot challenge to its operations.
Environment as a PRESTEL factor
The first important PESTEL factor that is worth looking at is the, The Anglian Water Company is currently facing a huge problem with the cold weather that is England currently. Hundreds of residential customers have continued to complain of burst-ed pipes. Cases of burst-ed pipes was very minimal in the summertime. However, after winter set in, there has been freezing of water in water pipes that have caused a lot of pipes to burst because they cannot withstand the internal pressure that is subjected to them by the ice inside them (Murray-West 9). This has cased a lot of damage to residents in that when these pipes burst, they destroy ceilings, flood houses, and destroy connection lines like phones. The Anglian water company has to compensate all these residents in order to save its reputation. Compensation of these residents means that the company will be spending much of its money to cater for compensation rather than developing its operations.
According to the author of this article, Murray-West, in The Telegraph, there is no hopes that this problem is ending soon in that Winter is expected to be continuing for a couple of months. The company has no other choice other than to continue compensating the people in that cases of Water Pipes will continue to be prevalent. In this case, the pressure that is posed on the company by the the cold weather is not preventable in that the company does not have the capacity to change the weather conditions. The only thing that the company can do is to try and make other pipes that are not affected by the cold weather. This will be an endeavour that will cost the company additional money in that if it is successful in getting other types of pipes that are not affected by the cold weather, it will mean that the company has to remove the pipeline channel that is in place currently and install a new pipeline. Bearing in mind the large geographical area that The Anglian Water Company renders its services it is clear that the company is going to use a lot of money in order to be able to achieve this.
According to the author of this article, Michael Harrison, The Anglian Water is thinking of terminating more 400 jobs that were available to people in the past due to the hard times that it is facing currently. The company is also thinking of retrenching more than 10% of its labourers who are based in the UK. The company is thinking of doing all this in order “ to meet the tough new price curbs imposed on the company by the industry regulator, Ian Byatt”(Harrison 8). Harrison explains that this problem is not only facing the Anglian water company. In fact, Water UK is thinking of terminating more than 9000 due to the harsh conditions that have been subjected to water companies in England. According to this article, all the water companies in England have been required to cut down their bills by 14 percent. This means that if the companies continue with their operations as normal, they going to face huge losses. They hence to find alternatives of reducing their costs to be in a position to realize profit. One of the ways to be in a position to reduce their expenses is retrenching people which will in the long run make the water companies very unpopular within the general public. Another water company that is being required to cut down its workforce is the Bristol Water that is being required to cut down 630 of its staff.
According to the author, Michael Harrison, “Anglian has been told to cut its bills from next April by 11 per cent – equivalent to a saving of £34 on the average £277 bill. In the subsequent four years, Anglian may not increase bills by more than 2.5 per cent in real terms” (Harrison 10). The Managing director of Anglian Water finds it very difficult to cope with the conditions that the government is subjecting the company to. He in fact thinks that “the company should take advantage of its growth abroad” since there is little hope in England(Harrison 11). The company is thinking of signing more outside contracts abroad to make sure that they are not hard hit by the sudden political changes in the water sector.
Social changes as a PRESTEL factor
On March 25 this year, “A rising water main running through Hall Farm, in Shipdham near Dereham, with sewage ruining crops and flowing in to the River Black-water” (Wallage 15). according to daisy the main has burst more than three times in the last seven years. The company has had to face court charges by the Environmental Agency because of massive water pollution in River Blackwater. According to the charges placed against the company, it has failed to replace the main, yet it is causing a lot of pollution in the river and also destroying crops. This incidence has made The Anglian Water Company very unpopular among the public since the pollution of water on this river is a health hazard.
The public has had the notion that the company is only geared at generating profit at the expense of the welfare of the society that it serves. Trying to defend the company, the company Lawyer Arabella Prothero claims that the company is aware of what is going on but the fact that the company serves areas that have an ever growing population has caused the company a great financial constrain. The company Lawyer hence explains that the company does not give the replacement of this main priority in that there are many more projects that the company is carrying out that need money to have them running. The company also defends itself by saying that it has been trying its best to reach the landowners whose crops have been affected by the pollution, but the landowners are not ready to listen to the company. The main aim of the landowners is not to solve the pollution but they are targeting the the huge lump sums of money that they might reap from the company in case they took the company to court and won the case against the company. In a nutshell, the society does not want to cooperate with the company. The huge population is also very hard to cater for. These social changes in the business environment place the Anglian Water Company in great difficulties in its operation.
According to this article written by Rebecca Bream, the Anglian company is facing a lot of accusations from its business counterparts remarkably Water UK. These water companies are out to tarnish the reputation of the company as away to be able to affect its market position. The Anglian Water Company is being accused of misusing its position in the market to exploit its customers. According to Rebecca Bream all these accusations are brought about the threat that Anglian Water company poses to many other small companies that find it very hard to catch up with the company due to its size and the fact that it is well established. They accuse the company of not being environmental friendly yet in 2009 the company won the prize for being the best company in terms of being environmentally conscious.
These are all ways of trying to counter the competition that is created by the Anglian company in the water sector. This is the reason other small companies are trying to gang up to discriminate against this big company.
In conclusion,It is clear from the four news articles that though the Anglian Water Company is the biggest water supplying company in England, the fact remains that it has a lot of difficulty in its operations. According to the findings, political changes,legal,environmental and social changes that are making it very difficult for the company to continue operating smoothly.
Bream, Rebecca. “Anglian accused of abusing its market position.” The Financial Times. 2010: 8-9. FT.com. Web.
Harrison, Michael. ” Anglian Water to axe 400 jobs to meet price curbs.” The Independent 2010: 6-12. THE INDEPENDENT BUSINESS. Web.
Murray-West, Rosie. “Top tips for preventing burst pipes.” The Telegraph.
Wallage, Daisy. “Anglian Water fined £22,000 for polluting a Norfolk river.” Times. 2010: 14-15. Web.