Every business on this land operates in a specific niche which is not common for all the businesses to have been started, prospered and even back fired in this land. This emanates from the fact that surroundings of a business changes due to different regulatory requirements, of course subject to the proprietor’s strategy of entry in the market (Robin, 2004).
As a way of demonstration of how businesses are driven by the surrounding, two examples will establish an impeccable ground. To begin with, competition has been on the fore front. As a matter of public knowledge, businesses are not islands of operation. A business operates in a surrounding where other firms have occupied and prospered, failed and where others are willing to take the mantle if they manage to break the capital deadlock that ensues every investor who plans to invest (Thomas,2003).
A business has to modify its strategies to ensure that it will not be driven to the edge by other businesses who are supplying the same products to the same customers. Hence considering this, any firm those intents to venture in to a market that has been previously under control of other firms, there are ways it has to modify its operations to be at par with the businesses. This may be the defining line between successful and unsuccessful ones (Robin, 2003).
The next factor will be regulatory requirements. It has been a well-known fact that a business has to be monitored by independent authorities so as to prevent any exploitative tendencies by scrupulous business people against willing and innocent investors, customers and business stakeholders. There are terms that any business has to meet in any trading environment, example are taxes, and any shareholding requirements for the benefit of investors. This will be a deciding factor for any business that decides to venture in a new environment, say a foreign country, where the business has not been operating on (Thomas, 2004).
The universal strategies for all businesses will revolve around different other factors among them cost reduction, adherence to the laid down rules and regulations by regulators, governance threshold set by the capital providers who are out to safeguard their investment among other factors (Thomas,2004).
Back to the case logistics in business scenario joins the above factors in determine the success or otherwise of any venture that engages itself in activities of transporting, as well as coordinating the movement of goods from one point to another for purposes of smooth facilitation of trade. In this regard, all the business will be aiming to minimize all the costs that come with successful coordination of logistical infrastructure (Mitchel,2011).
Taking an hypothetical situation of a business has operations in different parts of the world, its transport costs may soar exponentially if not well monitored since any movement of goods from one point to another (say from A to B) will be through consumption of resources (for this case referred to as the consumables) say petrol for vehicles. This will go hand in hand with human capital in terms of hiring skilled man power that are to keep all the machines used in the process of movement of the products going. Arguing along these lines, it is thus rational to say that if proper coordination is not done on the process, there will be high likelihood of unnecessary costs being incurred in the process, since lack of coordination will come at a cost to the business (Stice,2010).
As a way of example, proper coordination will give a clarification where one employee is capable of keeping the business afloat, where including using more than one asset (say truck) in a particular hub will amount to wastage. In this regard, the business will be doing a very noble thing to keep all activities under central monitoring for it to seal all the monetary loopholes emanating from inefficient coordination (Thomas,2003).
It will also be noted that the benefits that come with close monitoring of activities, be it logistical or otherwise of a business will emerge with cost the benefit of cost reduction up to a certain level where the cost will remain more or less fixed. This will be observed when ewe put in to consideration the fact that most elements of cost will be avoidable when a an activity is repeated time and again by a person keep watch of the changes occurring, example is a fleet of vehicles plying a certain route will be better placed to cut some of the avoidable costs that emanate from its operations. This justifies the need for establishing monitoring the operations of a certain area forming part of the whole network (Robin.2003)
There will be the benefit of keeping the flow of goods constant, keeping the possibility of stock outs as well as well as periodic shortages under control. This will have the protective effect to the buyers of a particular class of goods, and hence safeguarding their interests. On the other side of the equation, the suppliers, especially for perishable goods, will not be adversely affected avoidable malfunctions of the logistical system (Brown, 2011).
For businesses involve value addition, efficient handling will prevent idle cost when consignments are unnecessarily delayed out of poor communication (Robin .2003).
Michell, T (2010). Fleet management, New York. John Wiley & Sons.
Choi, F & Meek, G (2010). Logistical efficiency. Edition7. Publisher: Prentice Hall.
Stice,W. E & Stice, J (2010). Financial Accounting Available Titles Cengage NOW Series. Edition11. Cengage Learning.
Brown, K .M (2011). Secrets behind effective logistic coordination. New York: McGraw Hill.
Thomas R. &Paul M. (2004) cost reduction: New York: Cengage learning.
Robin J. (2003).Business & economics. New York: McGraw Hill.