Business and Corporate Strategies| Online Assignment Help
Choose ONE (1) of the following three illustrations from our text and answer the questions at the end in the forum. Be sure to include the title of your illustration so everyone knows which one you selected.
Instructions:
Your initial post should be at least 250 words, not including repeated questions, references and quotes.
196 CHAPTER 6 BUSINESS STRATEGY
ILLUSTRATION 6.1
easyCouncils: a not so easy low-cost strategy
The London Borough of Barnet has chosen a budget airline model for its services, on the lines of easyJet.
In 2008–9, with pressures on budgets increasing,
Conservative-Party-controlled councils in the United
Kingdom were looking to save costs by adopting
the low-cost model pioneered by airlines such as
Ryanair and easyJet. Barnet, a borough council in
North London with a population of over 300,000, is
one of the pioneers.
The Conservative borough council was led at the
time by a former PwC management consultant, Mike
Freer. In a context of falling central government subsidies,
and wanting to save local taxes, the council was looking
to cut costs by £15 m (~b16.5 m; ~$22.5 m) a year.
In 2008, the council launched a consultation process
on radical reform called ‘Future Shape’. In 2009, it
declared its intention to adopt a budget airline model,
which council officials dubbed ‘easyCouncil’.
Mike Freer gave some examples. Just as budget
airlines allow passengers to pay extra for priority
boarding, in future householders will be able to pay
extra to jump the queue in order to get faster responses
on planning applications for new buildings or house
extensions. Similarly, as airline passengers can choose
whether to have a meal or not (and pay accordingly),
users of adult social care will be allowed to choose
their own options. Freer explained to the Guardian :
‘In the past we would do things for our residents rather than letting them choose for themselves. We would tell them they need one hour help shopping, or one hour cleaning, meals-on-wheels, and they would get it, like it or not. Instead, we will assess what level of personal care they need, place a value on it and give them the budget. If they say, “Frankly, I’d like a weekend in Eastbourne [a holiday resort]”, they can have it.’
Opposition Labour leader Alison Moore warned in the Guardian :
‘There is a real danger of problems in the local community and that vulnerable people will lose
out. People who are dependent on care services may find that they aren’t there at the same quality as before.’
None the less, the new low-cost strategy was launched
in 2009. Unfortunately, the costs of retraining staff,
building an in-house delivery team, hiring consultants
and closing facilities were higher than originally
projected. The council estimated it spent £1.5 m on
delivering the first year of the reform programme. On
the other hand, savings were slower to come through
than expected, with a series of strikes by council
workers resisting job cuts and the transfer of many
employees to private-sector subcontractors. Savings
in the first year were just £1.4 m, less than half
of what had been projected. Alison Moore, leader of
the Opposition, commented: ‘Barnet claim that easy-
Council is all about a relentless drive for efficiency, so
it is absurd that in the first year, they’ve spent more
money than they’ve saved.’ By this time, Mike Freer
had moved on to become a Member of Parliament.
However, Lynne Hillan, the new council leader, said
it was too soon to judge. Big savings would come
soon: ‘The programme took longer to establish than
planned because we took the decision to develop an
in-house team of officers. I’ve no doubt this will give
us the most efficient process and the greatest long-
term savings.’
Sources : Guardian , 27 August 2009; Guardian , 26 October 2010; The Economist ; 22 September 2012.
Questions 1
What are the advantages and disadvantages
of this approach to low-cost council services?
2 In what sense do borough councils ‘compete’?
