Content 1. Introduction 1. 1) About Herbalife 1. 2) Mission of Herbalife 1. 3) Herbalife Way 1. Macro Environmental Factors 2. 4) Political/Legal Forces 2. 5) Economic Condition 2. 6) Social/Cultural Environment 2. 7) Technology Changes 2. Micro Environmental Factors 3. 8) Customer 3. 9) Intensity of rivalry among competitor 3. Four Management Functions that affects the economy 4. 10) Planning 4. 11) Organizing 4. 12) Leading 4. 13) Controlling 4. Conclusion 5. Recommendation 1. Introduction 1. 1) About Herbalife Herbalife is a global nutrition, weight management and skin care company.
It runs the business in 84 countries (As July 2011) and distributes the products by approx. 2. 7 million independent distributors. Herbalife recorded 5. 4 billion USD in retail sales in 2011 that surpassing Mark Hughes’s (founder of Herbalife) vision of 5 billion USD. This company was founded by Mark Hughes in July 1980. (cited from Herbalife History) 1. 2) Mission of Herbalife To change people’s lifestyles by providing the best business opportunity in direct selling and the best nutrition and weight-management products in the world. (cited from Herbalife Mission) 1. 3) Herbalife Way
Herbalife penetrates the market by sponsoring world-class athletes, teams, events around the global such as Lionel Messi, FC Barcelona soccer clubs, 2011 World Football Challenge and champions in more than 15 other sports. (Cited from Herbalife Sponsorship) Herbalife adopted multi-level marketing to distribute their products from independent distributors. 2. Macro Environmental Factors There are many environmental factors that affect the business. Among these factors, we can categorize into two segment- internal and external factors or micro and macro environmental factors.
In external or macro environmental factors, following are contains: political/legal forces of the Government, social/cultural environment, economic condition and the technology changes. From the above factors, I want to discuss 4 factors. 2. 1) Political/Legal Forces Political forces are a kind of laws and regulation. This is the level of the government what and how intervenes in the economy. For example, tax policy, tariffs, environmental law, trade restrictions, labor law and what goods and services are provided by the government and what are not and so on. And then the infrastructure of the business and how affect to the health of nation.
Laws and regulations are always changing and complex in the economy. For Herbalife, some products cannot import to Singapore because of the law. In this condition, Herbalife should try to discover in another way to export to Singapore that accept from the Singapore Government such produce the product in different way or scrutiny the way of production to get the same effect. 2. 2) Economic condition Economic condition can affect to the company. Economic condition contains economic growth, interest rates, exchange rates, inflation rates and taxation rates. The noticeable thing is exchange rates.
For Herbalife, it is base in US and run the business in above 80 countries. So, Herbalife always deal with exchange rate. Normally, exchange rates are always fluctuating. All countries are also using their own currency. When local currencies devalue in exchange market, this will be a problem. As the prices of the products are fix, the profit will be reduced than original expect. 2. 3) Social/Cultural Environment It is the social aspect or cultural aspect such as health awareness, population growth rates, education, trends, lifestyle changes, attitudes to work, safety, age distribution, leisure activities, career attitude and so on.
For example in Singapore, most of senior people willing to work and earn money. Most of companies and organization desire to recruit young and active people. Herbalife reduce this problem by recruiting senior people. In this way, Herbalife penetrates within senior people market. 2. 4) Technology Changes Technological factor also can decide the company profit and standing the company in the business. This factor encloses research and development activities, automation, and technology incentives and so on. It can define the barrier of entry to the market, efficient level of production, outsourcing decision.
For Herbalife, they have Nobel laureates to do research their products in their own labs. Herbalife always pressed in Time magazine and magazines in US but they never press and advertise in Singapore. To penetrate Singapore market, they should advertise and press in Singapore’s magazines and newspapers. 3. Micro Environmental factors Internal or micro environmental factors include Poter’s Five forces- bargaining Power of consumers, barging power of suppliers, threat of substitution, intensity of rivalry owing competitor, threat of new entrants. Among them, I want to discuss the following. 3. ) Customers Customers are one of powerful things in the business. They want the highest quality and the lowest price. Bargaining power of the customer mean that more than negotiation of the price and broader meaning than that. Customer’s words also helpful and work for the company. Once they satisfy with the products or service, they advise other people to use the product. For Herbalife, customer service needs to be better. They very take care the new customers but not very much to the old one. This fact must be aware because the new or the old both are important for the company. 3. 2) Intensity of ivalry among competitors In earlier economic, rivalry makes the company profit to zero. Today, rivalry makes improve the quality and profit. In business, if competitors produce the same products, the company can learn from the competitor and even can produce better quality of the products. In that condition, the company no needs to introduce the product and only need to advertise and think about how to penetrate and how to get more market shares percentage. 4. Four Management Functions that effect to company There are four main functions which are necessary and essential to be an efficient and effective company.
These functions are planning or strategizing, organizing, leading and controlling. 4. 1) Planning It is the first step of the management functions. It comprises three stages of setting the objectives, deciding the action and achieving the goal. There has three kinds of planning which are strategic action plan, tactical action plan and operational action plan. In every action plan of this step, the most important thing is knowing SWOT – strength, weakness, opportunities and threat. As Herbalife, they should analyze these things to be a successful company. For Herbalife, their strength is the products.
Herbalife products are very effective and base on the natural things therefore can rely on these products. There are two weaknesses in Herbalife. The first one is that the retail price is expensive for normal-income people and the second one is outsider cannot buy the products without person, who introduces the products as Herbalife term, consultant or sponsor. So everyone cannot buy everywhere. As Herbalife use multi-level marketing, there is no up-front cost, everyone can find part time or full time jobs as sale representatives and make profit themselves.
This fact can attract the people to join and participate to Herbalife. In this way, Herbalife expands day by day. There are so many positions or steps in Herbalife such as consultants, supervisor, world team, millionaire team etc. Everyone cannot get these positions. For example, Herbalife does not run the business in Myanmar. So, Myanmar people cannot get this kind of position except from PR. This can affect on motivation of the staffs or employees. 4. 2) Organizing The second step of management functions is organizing.
Depending on how the company organizes the resources (such as human resources, financial resources, data from the market and technology from the technicians) decide the standing of the company in the business and the company profit. Some companies do not set the specific jobs for example, managers do chaos, office staff are fixing machinery broke, and employees are chatting and fighting each other in office hour. In this condition, managers and senior managers can reduce this kind of problems by setting rules and regulations and the responsibilities and prepare the work schedule.
The second thing is the time. Most of managers do everything and not sufficient time. Managers can solve this problem by delegation. After that, most companies face with budgeting problems. Managers want to do so many things consequently; they have not sufficient finance in later. These things are making to failure organization. In Herbalife, all stake holders are doing their respective works and always setting rules and regulations and all of the stakeholders must follow. And then, Managers have authority to do and distributors are also as their respective ways.
Financial of the company are always growth because of the independent distributors. 4. 3) Leading The third one is leading. It concerns about human resources or employees. According to Gomez-Mejia and Balkin (2012) P. 30, it consists of energizing and motivating the employees, leading or guiding the subordinate to achieve the organizational goal. Not all employees are always motivated. To be an effective business, all employees and subordinates must be motivated and active and the managers are responsible to that.
Firstly, manager let the employees know and clear the organization and then motivate to the employees will be the good result such as public Employee of the Month, Employee of the Year, Recognition letter etc. In Herbalife, they have training every month and motivate the people by incentive such as promoting, awarding, increasing the volume point, vacation to worldwide and so on. The bad thing for Herbalife is charge for the training. If he or she wants to attend the training he or she must be pay the training fees. 4. 4) Controlling The last step of management function is controlling.
It means that monitoring the performance standard. In this step, there are three steps; firstly setting the performance standard, secondly comparing the actual performance to the standard performance and the last is correcting the actual performance to achieve the standard performance. In performance, there are so many factors such as quality performance, customer service performance, and financial performance and so on. To be a successful company in the business, managers should be scrutiny their subordinate and the company performance.
In Herbalife, they set the target that how much net sale to be for the coming year. If distributors sales the product surplus, company appreciate and award to the distributors. This is the correcting and performing to achieve the standard performance. Controlling does not mean for only one time. If the companies overcome the standard performance once, set the next standard performance. Most of company looks only for the profit. This makes company to meet failure. Actually, if company meets with the target budget once, look other field to get success such as customer service and so on.
Because customer satisfaction is very important for the business in market. 5. Conclusion As I mention from the above, Herbalife is weight-management products and skin-care Company. Today is good time to run the business for Herbalife because fast food outlets are more and more open and changing people eating style from family home dinner to outside food. So people getting unhealthy and obesity rate is very high than the earlier. Time and circumstances are good. For second point of my view, they already expand and popular in above 80 countries.
The more expand the business, the more problems will appear. So the company should always test and check their products and emphasize on customer service. Although the product is very good, the business will fail when customer service is not good quality. The third point is all of the employees, distributors, consultants, and supervisors are very proud to talk about their products. They love very much their company and the founder Mark Hughes. All of them are always motivate and unity. This is one of the ways to be a successful company in business. These are good points of Herbalife.
On the other hand, not everybody knows Herbalife products. Only few people know. So, they should do advertise and make people to know their products. 6. Recommendation I can surely approximate that Herbalife will get success in near or further future because people in nowadays want to be slim, looking good, healthy, beauty and earn more money. This company produces weight management products, medicine to prevent diseases such as heart disease, liver disease, cancer, diabetes, stomach ache and so on. For unhealthy or desire to slim person, they will use the products.
To earn money, Herbalife can do as full time or part time distributor or consultant. Their skin-care products are made from aloe vera and natural herbs and things do not put chemical into the products. So their skin care are reliable and there is no side effects. On the other hand, Herbalife products cannot buy in everywhere and anytime. Some products cannot import to Singapore. There are very few Public image in Asian country for example, Singapore. There is no press in Singapore’s magazines or newspapers from the established year of last 9 year ago. There have to pay money for training classes.
From my point of view, these things should be shifting to effective ways. They can expand more and more but still need to find out the more effective ways. References http://www. oppapers. com/essays/Environment-Factor/887124 Environment factor http://wiki. answers. com/Q/List_macro-environmental_factors List macro-environmental factor http://answers. yahoo. com/question/index? qid=20100528065638AAQ6Wyo What are the environmental factors affecting business and the impact of the environment factors affecting it? http://www. quickmba. com/strategy/porter. shtml Rivalry http://www. oup. om/uk/orc/bin/9780199296378/01student/additional/page_12. htm PESTEL analysis of the macro-environment http://www. enotes. com/business/q-and-a/among-planning-organising-leading-controlling-polc-123875/ among planning, organizing, leading and controlling (POLC) what are the two most important process and why? (according to me its planning and leading) http://www. articlegeek. com/business/marketing/pros_and_cons_of_mlm. htm https://new. edu/resources/managing-the-international-business-with-the-p-o-l-c-framework Controlling Books Management People / Performance / Change Gomez-Mejia. Balkin