Theory of Business

1) I would describe the Royal Mail’s theory of the business as one that is unsuccessful and no longer works. The reason many corporations are no longer successful is that their theory of business no longer works as Chapter 1 mentions. The theory of business has four characteristics which are mentioned in our textbook on Page 14 and the fourth characteristic is the one that I believe Royal Mail is definitely not complying with. This characteristic mentions that the theory of business has to be continually tested which in Royal Mail’s case is being tested but is not adapting to change to meet conditions very well or at all for that matter. In conclusion, basically the theory of business no longer fits reality and Royal Mail must adapt the same measures that companies such as Deutsche Post and the Netherlands TNT Post had followed up with. The case mentions that Royal Mail is 40% less efficient than its local competitors so there’s obviously a change that must be made because you need to distinguish yourself from competitors and currently Royal Mail is not even keeping up with the market. In order to succeed, you have to stay in front of the changes being implemented in the market and the competition so I would say that this organization’s theory of business is encountering difficulties because the assumptions are no longer fitting reality.

2) The case mentions at the end that privatisation is the best possible solution to solve company’s issues in the postal service sector because this would ensure that the public does not end up serving the post office since the public pays. The extent of determination for the political factors outside the control of Royal Mail’s management is at a high level because it mentions that the government has abandoned the plan of privatisation for the postal service even though it’s the home of privatisation. The case mentions that the Governments, for the most part, have run their postal services shockingly badly and holding back from modernisation and the ability to increase flexibility. Therefore, if privatisation is continuously disallowed, then Royal Mail will continue to be less efficient and will eventually lead to becoming obsolete. This basically means that management can only do so much if government is interfering with the way that Royal Mail currently operates, rather than the way Royal Mail