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Strategy Management
1. Wong GengSen 0321690
Part A
Nowadays, to build a successful company, the company required to have vision and mission
statements to help the company more forward and become a big player in the industry. What is
vision and mission? How does it benefit the company and why is it so important? According to
(Community Tool Box, 2015) it stated vision mission is your vision, your dream. It's what your
company believes are the ideal conditions for your company. Is just like pilot for an air plant, to
allow the flight heading to the right direction, attitude and altitude and reach the final destination at
last. Vision statement is playing the same role in the company. It provides guidance and inspiration
as to what a company is focused on achieving in the future and act like a road map, provide the
direction and goal for the company. Usually vision statement is a long term achievement or ultimate
goal for a company. The importance of the vision statement is it serves as a guide for all of the
company's decision-making (Neil, K. 2015). A company with vision statement provide a more focused
basis for allocating resources and a common purpose of direction. Hence the company is able to
focus on the right path, make the right decision without wasting their resources or time and
enhance the efficiency of the company work. There are good and bad vision statements. Good vision
statements define the values of company and lend to a clear direction for the employees, improve
productivity and efficiency (Evolution training, 2015). A good vision is able to motivate and inspiring
managers and employees working on the same goal as a body and build up the team spirit in the
company which eventually will enhance the working environment for workers. On the other hand,
bad vision statements are uncertain, too easy to achieve or not reliable. It will lead to lack of
specificity. A vision statement that does not paint a specific picture of the desired visionary goals will
not inspire movement toward those goals (Chron, 2015). It do not lead to a clear direction for the
company and leave too many directions open and causes the company's efforts to be scattered,
which hinders direct progress. Hence the company may focus on the wrong area which may affect
the profitof the companyand worst case will causesbankruptcy.
In order to produce a good vision statement, the company leaders should understanding and
identifying the business's core values (evolution training, 2015). Core values define what the
business stand for and intrinsic to the organization. These values are fixed throughout time and
cannot be changed. They are the essential and enduring tenets of an organization. After identified
core values, it is time to define the purpose and vision of the company. Core purpose is the reason
why the company exists. Leader of the company and top managements will discuss and set the
ultimate goal for the company. It required a lot of communication and discussion to produce a good
vision that suitable for the company. Once the vision is created, it must be communicated and
articulated effectively so that it becomes the shared vision of everyone in the organization. The
reason why it should share to everyone is to provide the common goal for the workers to pursuit
and givenaguide line forworkerswhentheymakingabydecision.
After decided vision statement, the company should continue with mission statements. A
Mission statement defines the present state or purpose of an organization (Evans, J. 2010). People
tend to misunderstand the concept of vision and mission or assume both are refer to the same thing.
However, there are totally different from each other. A mission is something to be accomplished
whereas a visonis something to be pursuitfor the accomplishment. Mission statement is about how
you will get to where you want to be. It actually is the way how to achieve our goal and vision.
According to the business dictionary, it claimed mission is serves as a filter to separate what is
2. Wong GengSen 0321690
important from what is not and which market will serve and how to serve. Hence, it can be said that
mission is actually more action base, show the workers what where and how to get out target done.
A good mission statement able to provide clear and detail step how we move toward our vision.
Your vision statement should inspire people to dream; your mission statement should inspire them
to action (Community Tool Box, 2015). Furthermore, mission statements should be align with the
visionthatbeensetat the beginning.
To produce good mission statements in the company, firstly the company should know the
current situation and condition of the company. Top managements in the company should identify
where they are now and plan how they can reach where they want to be. After that, establish a
mission statement which is clear and easy to understand for all employees. In this state, top
managements have to ensure the mission statements are align with the vision that been set at the
beginning. Every decision make should base on the vision of the company in result to bring company
heading toward the ultimate goal. Lastly, top management have to make sure all the leaders
understand the mission enable them to lead the team to achieve the specific task follow by one
another.
Here is an example of vision statement from Albertsons:" To create a shopping experience
that pleases our customers; a workplace that creates opportunities and a great working
environment for our associates; and a business that achieves financial success”. Albertsons is a chain
of grocery stores and it is the second largest supermarket chain in the South America. However, in
the vision statement it does not focus on what it company actually does and the vision statement
was focus more on the employees. Thus, the vision did not clearly bring out the core value and
purpose of the company. In addition, Albertsons did not clearly explain what is financial success in it
vision. Financial success can be simply define as profitable which already achieved by Albertsons.
Hence, Albertsons should change the vision become more specific and focus on what it company
does, their core value. I will suggest Albertsons change the vision to :“Find all you need in our shop.”
In this statement, I will claim that “all you need” is actually meant costumer services, workers
expectation and all the need or grocery. So as a worker, you will find working opportunities, good
working environment and pay; as a customer you will find all you want to buy in out shop and also a
goodqualityof services.
3. Wong GengSen 0321690
Part B
In the world of business is like warfare. As a manager in the company, to be able service or
win this war, we need to have strategy. Before we plan how to eliminate other players or
competitors, first we have to understand ourselves very well. What is our strength and weakness,
how we maximize our capacity to have the best performance among others. Hence, this is where
SWOT analysis came in. SWOT meant Strength,weakness, opportunities and threat. SWOT analysisis
to help you develop a strong business strategy by making sure you’ve considered all of your
business’s strengths and weaknesses, as well as the opportunities and threats it faces in the
marketplace (Berry, T. n.d). This analysis able to understand the internal condition of a company
which are the strength and weakness as well as external factor which are opportunities and threats
that will affect the company. It is one of the most common analysis tool used to understand an
individualororganization.
Why SWOT analysis is important for a business? Before we market our product or access a
further plan, it is important to remember the features are good but the differentiators that matter.
SWOT actually help us to identify these differentiators, our competitors and at the same time it also
findoutwhat make us differentfromothersandwhypeople shouldchoose us.
Strengthsandopportunities
To begin the analysis, our company have to list out the strength we have and what are the
opportunities that will benefit our company. For example, we have a large amount of cash on hand.
Due to this, our company actually allow us to service during economies down. Every company will
have periods when things are not going well. Without sufficient cash on hand, company would be
forced to cut down employee operations or may even have to declare bankruptcyin order to pay off
its fixed expenditures. Cash in hand given the opportunity to service for a period of time when
economy down and allow our company react to the situation and make emergency preparation
while other company are suffer in the damage. Beside that, to make a company become stronger, it
often needed to invest in factories, property, technology or even acquisition. All of these
SWOT Analysis
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investments will actually bring up the value of company in the market and make the company
growth bigger and stronger. However, the company must have enough hand on cash to do
investment which our company are capable to do so. Next, our company have a great
communication link with government. It is one of our greatest strength. It make our company to
have the first hand information allows our company to have enough time to do preparation. For
example, our company got the information where government going to start develop a piece of land.
In this case, our company are given the chance to have more preparation to get this project or make
investment before the news is published. In addition, due to our company have good relationship
withgovernment,we are able togetrelationship-baseproject.
Weaknessesandthreats
Without a doubt, there are two sides to every coin. There is nothing perfect in the world, so
as a business. When there is strength, you will find weakness as well. Unfortunately, our company
have sufficient human resources but we do not have enough experienced leader. Workers on side do
not have sufficient leader to lead and supervise them in results bring down the efficiency of work
down. Company are required to spend more time on training skilled leader and hence it always
delayed the submission date of project. Due to the delayed of work, our company have to pay for
the penalty which affect our profit. Another weakness our company facing is we do not invest much
in heavy machinery and used to rent from suppliers. Our company actually spend a large amount of
money on renting machinery instead of buying one. Due to the bad economy environment in our
country lately, our company bargaining power to the machinery supplier was affected. The renting
cost was getting more expensive but we still have to rent it because he is the only supplier have
sufficientmachinery forourcompany.Hence,itactuallyreduce the profitof projectearn.
Once you have identified and prioritized your SWOT results, we can use them to develop
short-term and long-term strategies for our business. To gain competitive advantages among other
players, we will have to reinforce the strength we have by now. The strengths we have may be the
differentiators that make our company win the battle, whereas for the weaknesses, we have to work
on it and try to eliminate all of them. Because the weaknesses we have may become the weapons
for otherplayersattackon us.
Porter’s Five Forces
Nevertheless, understand only ourselves is not enough to gain competitive advantages. We
will have to understand other forces that will affect our company as well. Hence we will need to
apply Porter’s five forces theory in our company. This theory work best when looking into the entire
market sector instead of competitors only. It helps the company to determine how much
competition will exist in a market and consequently the profitability and attractiveness of this
market for a company (Martin, 2014). There are five forces exist in the market which are:
competitive rivalry, threat of substitution, threat of new entry, bargaining power of suppliers and
bargaining power of buyers. The application of this tool involves evaluating the relative position of
buyers and suppliersin the market, as well as the other forces including substitution, industry rivalry,
and newpotential marketentrants.
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Competitive rivalry
Competitive rivalry meant the degree of rivalry between existing companies in the market. If
there are many similar companies in the market, the competition in that industry will be very high
and reduce company power in the market. The rivalry in an industry will be increased with a large
number of firms because they are competing for the same customers and the relatively the same
market share. For example, in food and beverage industry is always high rivalry. Every human being
will need food to service, but there are millions of restaurants in the world where serving the same
purpose provide food for people. All of the shops are competing for market share and gain more
customers. In this case, it comes down to gaining a competitive advantage over the other companies
in an industry. The resulting competitive pressure will mean that prices, profits and strategy used.
Firms can obtain a competitive by changing the price, product differentiation and so on. The
products and services is one of the potential advantages to gain and separate from one another. It is
very important that we have to understand the level of competition in the market and the
competitorsituation.
In current situation, YTL is one of the biggest competitors in our market. YTL Company has
the similar scale with our ABC Company and we are targeting the same market. To get the
competitive advantage fight over YTL, we need strategy plan. For example, our company may lower
down the price and cost, provide the same features and offer the same benefits but have a lower
price compare to other players. In this case we are able to gain customers and market share from
other player, but it will affect the profit of work. However, when the other players realize what we
are doing, they may use the same technic reduce their price hence create a cash war in the market.
Ironically, our company actually have quite amounts of cash on hand, therefore our company able to
afford the lost or even gain minimum profit just to eliminate the small player, it resulted all the weak
companieswill be forced out. However, our company cannot assure we will have the same customer
coming back to us when it goes back to market price. Hence, it may not be the best way to gain
market share but it may get competitive advantage for a short period. Next, our company able to
buy products or materials by cash on hand with cheaper price compare to cheque payments. It
actually reduced the cost and increased the profit of project. Additionally, cash on hand allows our
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company to have emergency cash flow when crisis occur. Another way our company could try is to
promote and establish a good reputation in the industry. Customers will get the same price as others
competitors but a greater service from our company. A good image is one of the key to gain more
market share. A great service with reasonable price will help us to keep our customers with our side
and have a fixed market share. Our company may able toinvest more in the advertising promote the
image and service of our company. This could attract the new customers enter our market because
of ourreputationandqualityguarantee.
Threat of newentry
Next, the competitive threat to a company’s business may not only from existing players in
the market but also from potential new entrants into the market place (Martin, 2014). If the market
is worth to do investment, it will be attractive to the new companies unless there are barriers to
entry in the industry. The threat of new entry in construction industry was relatively low but at the
same time, it is hard to exit the industry. One of the reasons why it is less number of entries is
because most of the market share is already fixed in the market. If a new entrant cannot do thing
differently it is hard to service in the market. At the same time, construction industry is hard to do
product differentiation. Every company offer the same service as others, it result to gain market
have to base on image, product guarantee and services. Low switching cost is one of the reason
resulted the low entry. Once the project or constriction was done, new consultants may be
appointed. It is not easy to keep the customer for this market. Furthermore, in constructionindustry
it is hard to get cost advantage. To get the project, the lowest tendering always has the highest
chances. Hence, everyone will try the best to cut the cost to minimum to get the project. In present,
the threat of newentrantwill notreallyaffect andbringanyharm to our company.
Threat of substitutes
The threat of substitutes refers to products outside of the industry. Substitute products are
those that exist in another industry but may be used to fulfil the same need (Martin, 2014). When
the switching cost is low, substitutes can have a great impact to the industry. In every industry, the
more substitutes that exist for a product, the larger the company’s competitive environment and the
lower the potential for profit. A threat of substitutes exists when a products demand is affecting by
another product. For example, when the price of sweet increase, customers may choose to buy
others product like snack or chips. In our country, the threat of substitutes for construction and
development was low. Malaysia is knows as developing country, there are still many land and
opportunities we can look for. However, when come to a time our country become developed
country where all our land is fully utilized and advanced. The owner of the building can either choose
to reconstruct the building or maintenance. This is where substitutes come in. The owner will take
consideration on the price of demolish and maintenance, hence there is alternative way to fulfil the
same need.
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Bargaining power of suppliers
The bargaining power of suppliers refers to an assessment of how easy it is for suppliers to
drive up prices (CGMA, 2013). In order for a suppliers to drive up the prices, it have to take
consideration on number of suppliers of each essential input, uniqueness of their product or service
and switching cost from one supplier to another. The suppliers of raw materials, labours and
expertise services provide industries and have power over industries (Quick MBA, 2010). The
bargaining power is in the price for the materials or services provided. In every industry, they will
need suppliers provide the raw materials in order to run their business. Some of the company will
have only one or two suppliers to supply their need, thus the bargaining power of suppliers is strong
and able to put any price on the materials or services they offer because the customers need the
suppliers more than the suppliers need the customers. Powerful suppliers may be able to increase
costs without affecting their own sales volume or reduce quantities that they sell but it will bring a
big impact to buyers. Suppliers may enjoy more power if there are less of them because the costs of
switching to an alternate are high. However, if the bargaining power is low mean customers is able
to compare the price from different suppliers and have more control over the suppliers. Although
the supplierpowerisweak,itstill hasamajorimpact onthe industry.
In our company situation, we have few suppliers willing to supply raw materials to our
company. Construction materials like cement, steel or timber are readily available from many
suppliers. If the suppliers drive up the price without any reason, our company are able to find
another supplier to work with. However, there are not many big suppliers in the market that able to
afford the large amounts of need in a short moment. So in this situation, the bargaining power of
suppliers to our company is moderate. We are in a relation where both need each other to service.
Either one make a small mistake will bring a significant damage to both. In YTL situation, they have a
greater control over the suppliers, because they own a cement factory. YTL company able to
manufactured cement which are the core material of construction to supply their project. In result,
YTL owna bettercontrol towardsupplierscompare toourcompany.
Bargaining power of buyers
The last one is the bargaining power of buyers. The bargaining power of buyers is a reversal
of the power of suppliers. When buyer power is strong, the buyer can essentially set the price and
change to another supplier easily. If a business has just a few powerful buyers, they are often able to
gain all the bargaining power. In addition, if a product is similar to its competitor with little or no
differentiation, there are chances that the company may need to let the buyers dictate terms in
order to avoid losing the customer. To determine the power of buyers we have to know how many
buyer are there and do they have the power to dictate term and cost. When buyers have the power
to affectpricesinan industry,itbecomesanimportantfactorto considerfora company.
The bargaining power of buyers in industry relatively high compare to other industry. In
construction industry, there are many existing competitors. In order to get a project, we are ask to
prepare tender for developers which mean the buyers have the power to choose which company he
wanted to work with. Buyers have the power to dictate term and cost and our company have to
follow the rule set by the buyer. If our company do not want to compromise on the price, then we
will have to pursuit the buyers on the product we produce for example the quality of construction or
the services. However if the buyers do not concern on the quality of the product but only the cost,
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our company will definitely lost the project unless we compromise on the price. Next, the switching
cost on our industry is low. Buyers can easily find others to supply their need without any extra
payment. Our company do not have the intensity to keep the customers unless we are able make
differentiation,developadifferentproduce whichcanbringmore advantagestothe buyers.
In conclusion, we find that the overall industry attractiveness is very low. The collective
impacts of the five competitive forces will result in lower profitability of the industry participants.
The rivalry among competitors is very vigorous. The industry is hard to get in and out. There is
intense competition from substitutes. Buyers are able to exercise considerable bargaining leverage
as well as the suppliers. By using SWOT and porter five forces, it gives us access to ourselves and
knowing the market condition hence we can focus on the right sector and make effective move
conquerthe marketand ourselves.
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References
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