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Royal mail contrast
Faced with great financial hardship, Richard Hooper, the former deputy chairmen of the Office of Communication, proposed the introduction of private capital In 2008, as a way to save Royal Mail In the digital age. On 15 October 2013, 52. 2 percent of Royal Mall’s shares were finally floated on the London Stock Exchange (National Audit Office, 2014). Flotation Is when the shares of a business are partially or totally sold to the public for the first time (Marabous, Surprised and Gillespie, 20111 and it indicates the appropriation of a company, which was once owned by government bodies.
Appropriation has been playing a lead part in national reform programs, especially in industrial countries which uphold the invisible hand rather than the role of the state. However, every coin has two sides, appropriation too. This transformation In ownership of Royal Mall can exert great impact on stakeholders, both good and bad. A stakeholder is anybody who has an interest in an organization, either internal or external (Marabous et al. , 2011). N this essay, the author will mainly assess the impacts of Royal Mail’s appropriation on three major groups of stakeholders, including the company as a whole, the government, and employees. For the company as a whole, there are also both positive and negative Influences. The first and foremost benefit is that, appropriation gives Royal Mail the access to private capital so as to complete the shift in business scope from letter to parcel delivery. As mentioned above, with the increasing use of Email and many other online communication tools, the number of letters has been dramatically declining in recent days.
According to the Economist (2013), the volume of letters sent dally dropped to Mall, which used to be a major player in letter business, redesign Its business model in order to survive in such a digitized world). It is said that parcel volumes have en rocketing because of the popularity of online shopping (The Economist, 2013). In fact, before the appropriation, the UK government had already invested E billion to modernize 11,500 branches of Royal Mail (The Economist, 2013). So it became difficult for the government to further financially support the shift In Royal Mall business scope.
Appropriation, on the contrary, was deemed as a valid solution to collect enough capital to support Royal Mail’s operation in parcel delivery. Another major positive impact is that, being a privatized business, Royal Mail is motivated to achieve improved efficiency. On one hand, managers can be more productive because of the profit incentive. In a state-owned corporation, managers usually enjoy little share in profits. While In a privatized one, managers can be cost sensitive and profit driven, as they often have a share In profits (Greenfield, 2007; Petting, 2011).
On the other Royal Mail, will also drive this company become more efficient (Petting, 2011). Furthermore, with less political interference in the operation of Royal Mail, this company is able to operate according to the laws of market, pushing it to become ore efficient (Petting, 2011). A major negative impact is caused by the balance between short term and long term profits. Unlike a state-owned corporation, a private company is bound to please its shareholders, who tend to lay an emphasis on short run benefits while avoid investing long term projects (Petting, 2011; The Economist, 2013).
However, in the case of Royal Mail, one of the primary goals of appropriation is to help this company complete the shift in business scope, which is actually a long term project for Royal Parcel to achieve great profitability in the future. So, there can be potential disagreement on the strategic planning for Royal Mail between public shareholders and those decision makers (Petting, 2011; The Economist, 2013). In the meantime, appropriation is often implemented as a way to resolve financial difficulties of a business in a short timeshare (Greenfield, 2007).
So, faced with the pressure from public shareholders, and the urgency to remove the financial problems of Royal Mail, top management may have to make alteration in strategic planning from long term orientation to short time horizon. Therefore, when dealing with the balance between short term and long term profits, Royal Mail ought to meticulously design it strategic plans in order to secure a success in the future. In most cases, government is always one of the primary stakeholders in appropriation. In the case of Royal Mail, the I-J government enjoys both positive and negative impacts.
First of all, the government is able to raise revenue from the sale of Royal Mail. As mentioned above, 52. 2 percent of Royal Mail’s shares were put on sale (National Audit Office, 2014). Besides, a privatized Royal Mail is expected to more efficient and profitable so that it will not be a future liability of the government. Another benefit is that, potential disputes in the future with the Communications Workers Union over the payment for postmen and their working conditions might lead to less political damage on ministers (The Economist, 2013). It was reported that, the appropriation of Royal Mail also implies political motivations.
The government might aim to bring back positive memories of the popular sell-offs during the sass, through the discounted sale of Royal Mail’s shares. In terms of negative impacts, the government will lose out on future dividends after the appropriation of Royal Mail, because such dividends will be also enjoyed by other public shareholders. Besides, the government will have less control on the management of this business. Prior to appropriation, the government is entitled to design organizational strategies to plan the development of Royal Mail.
While after the appropriation, opinions of all shareholders, included but not limited to the government, should be listened to when creating business strategies of the Royal Mail. Royal Mail is the employee. A major benefit for employees is their ownership of this company. Royal Mail had designed an employee share scheme before the appropriation. It was reported that 10 percent of this business would be distributed as shares equally among 1 50,000 employees of Royal Mail, free of charge (The Economist, 2013). It is so far the most generous employee share program for a appropriation in three decades (The Economist, 2013).
Employees however are not supposed to sell their shares in three years for the purpose of securing the stability of Royal Mail’s stock prices. Employees are also encouraged to hold their shares for vive years, which will bring them full tax benefits in the future. There are also negative impacts on employees. As the company goes public, employees feel increased Job insecurity. Supported and to some extent protected by the government, a state-owned enterprise can hardly go bankruptcy. But appropriation makes Royal Mail more volatile.
Besides, this business has to go through so many changes in terms of business model and management structure, so employees can easily feel insecure at work. Appropriation has been considered to be a panacea for salvaging state-owned genuineness out of financial hardships. With the increasing popularity of Email and other online communication tools, the business in letter delivery, which used to be a main stay of Royal Mail, has been dramatically falling. So it was of great necessity that Royal Mail made changes in its business scope so as to survive and grow in this digitized world.
The prosperity of internet shopping gives rise to the increasing volume of parcel delivery, and Royal Mail decided to shift its focus on offering this delivery service. As the government claimed that it was unable to financially support he transformation of Royal Mail, appropriation was employed by this company to obtain private capital. When evaluating the influence of Royal Mail’s appropriation on stakeholders, this essay introduced both positive and negative impacts on three and the employees.