Strategic Management

Over the last few years other competitors have been experiencing cutbacks and short falls in their profit earnings. Not Virgin Atlantic; in 2004, Branson merged into a partnership with a global company based in India, known as WNS Global Services. According to Outsourcing Journal (2008), Jim Carrington, head of procurement for Virgin Atlantic at that time stated, “We needed a partner that understood both the industry and Virgin unique culture.

” This merger with WNS expanded Virgin Atlantics outreach, allocated other business strategies that suited the airlines rapid growth. WNS expert business strategies won the confidence of Carrington and Virgin Atlantic; according to Carrington, “WNS’s knowledge was comprehensive and its solutions flexible. They could talk the talk. ” Branson’s airline began to undergo major business restructuring through process that brought beneficial change to Virgin Atlantic. These changes consisted of a complete analysis to all aspects of Virgin Atlantic’s relations with the public.

Considering that this was a period of economic crunch the major airlines industry was facing catastrophic revenue losses due to the raising fuel cost, unstable economy, and poor business practices, tightening the belt seems to have its rewards for Virgin Atlantic during this turbulence period. It was able to cut cost while implicating a new business practice, which endured the economic crisis surrounding the airline industry, without having to resort to harsh cut backs or lay offs. Virgin Atlantic was in fact expanding and creating its image with the expertise of WNS.

The infrastructure to Virgin Atlantic airline industry began to seek out solutions to cut cost. Outreaching Journal indicates that WNS and Virgin found innovative ways to address attrition rates, often at 30 to 40 percent across the industry. Senior managers put their own bonuses at stake, demonstrating their commitment to resolving the issue. Virgin Atlantic also worked with WNS to provide a comprehensive incentive plan including retention bonuses and free airline tickets to the best performing agents.

Undoubtedly, the incentives that Virgin Atlantic provided for their employees around the world created loyalty among them and their colleagues in general. Of course, Virgin Atlantic was still striving to accommodate the air travel of the public as well by creating an image that was tailor made for the airline customer’s needs, desires, and comfort while in flight. Above all, Virgin Atlantic’s reputation was depending on the quality of service provided. Customers relation depended on their experience before their flight, while in flight and after the flight.

The crucial factor was promoting the accommodations available to the airlines traveler. This meant that Virgin Atlantic needed a sound public relation strategy that in turn offered incentives to the customer while meeting their travel needs. Public relation took on the task of creating and establishing every accommodating need a customer may encounter when choosing to travel by air. WNS and Virgin Atlantic created information attainable by all forms of media. Virgin Atlantic has its own web site where customers can read about the history prior to the buy out of 1980, and after Sir Richard Branson purchased it.

The information on the Virgin Atlantic web site provides customers insight to the types of planes that they will be traveling. The web site provides information on schedule maintenance reports on each airplane in flight. It provides customers inside views of the luxurious accommodation provided inside the airplane itself, the one they would be traveling in. Upon personal evaluation of traveling on other airlines in seat’s that no one could step over the knees of two other passengers to go to the restroom and cramped in like sardines the desire to travel in luxury outweighs the compact travel that other airlines provide at the same cost.

Comparing Virgin Atlantic to American airlines is like comparing diamonds to coal, big major differences, mainly comfort. Because of this scenario occurrence when choosing an air flight even the accommodation, provide by the competition in first class pales in comparison to Virgin Atlantic. When choosing an airline do you consider the accommodations provided? What if you were traveling over the Atlantic Ocean, wouldn’t you like to be able to stretch your body out and recline in luxury? Watch a movie without an elbow poking your ribs when the guy besides you decides to adjust his sitting?

Better yet, would you like someone to crawl over your lap in the middle of an airplane flight? Do you like to look out the window as you’re in flight to see the skies or look over the ocean? Most airlines are so cramped that you can’t even turn to look out the window because someone’s head is your view. Well these are the things Virgin Atlantic considered when they redesigned the interior of their airplanes. Not only does Virgin Atlantic care about the comfort of their passengers they realize the smallest detail of the travel experience.

Virgin Atlantic and WNS decide to cater to all the customers needs. As complex as it seems individuals can conduct their travel plans through their web site by email, phone calls, reservations, ticketing, fares, baggage tracing, frequent flyer inquiries, and post flight complaints. Data processing focused on meal allocation, cabin crew reporting and cargo revenue management. According to Outreaching Journal, airport offices worldwide, Virgin needed to establish an enterprise-wide customer service system in baggage tracing.

WNS re-engineered previous processes to create a new system that streamlines lost baggage support. This includes keeping the passengers informed on the status of their baggage through proactive phone calls, which helps increase customer satisfaction. The business benefits, WNS has enabled Virgin to perform existing processes faster and “implements new ones, such as amendments to bookings,” explains Carrington. By standardizing and automating process, Virgin can focus on more strategic initiatives. Off shoring allowed the airline, “to consider business streams it had not previously imagined,” noted Gover.

A firm successfully implementing a differentiation strategy would expect a) Customers to be sensitive to price increases. B) To charge premium prices. C) Customers to perceive the product as standard. D) To have high levels of power over suppliers. 20. TTS is most helpful to firms following the leadership b) integrated cost-leadership/differentiation c) focused cost-leadership d) focused differentiation business strategy. A) cost- Section B [16 marks] Short Essay Questions – Answer all questions below. 1 . Intensify, and explain briefly how five forces model of competition affect industry refit potential? . How does a value chain analysis help a firm gain competitive advantage? 3. What is/are risk(s) associated to the differentiation strategy? 4. Describe the advantages of integrating cost leadership and differentiation strategies. Section C Case Analysis [9 marks] International Cow Packers (ICP) is a $12 billion meat processor (slaughter, processing, and packing). Founded in 1943, ICP has grown to become the largest beef and lamb processor in the United States (revenues come 90% from beef and 10% from lamb) and also has a growing export market to Japan.

The company follows a focused cost- dervish strategy, delivering USDA-graded meats primarily to the institutional (schools, prisons, hospitals) and supermarket channels. Sips entire value chain is organized to deliver volume product at the industry lowest per-unit cost. Its supplier industries, primarily cattle feedlots, have relatively little power since prices for these raw materials are determined in the commodity markets. While entry barriers to the industry are high due to high minimum start-up costs, industry rivalry is extremely intense – primarily due to the fact that three large companies (including

ICP) control 80% of the market for processed meats. The threat of substitutes is high with an increasing trend for consumers to favor poultry and other non-beef proteins. Buyers are also powerful since supermarkets are relatively concentrated at a regional level and end-consumers have ample choices. 1 . Refer to Case Scenario is ICP;s focused low-cost strategy appropriate for its industry? Why? 2. What risks is ICP accepting by adopting its focused low-cost strategy? 3. What can ICP do to decouple itself from the ups and downs of the pure commodity markets? What specific actions might ICP undertake?

Organizational management is a variety of tools and assets that must be managed well in order to be successful. Patients are our number one stakeholder in health care and health care is a business that requires a strategic mindset to steer a health care facility not only in profitability but also in innovation to keep up with new medicines and technology.

Having a strategic mindset not only look at the present but also looks at the past for mistakes that as a health care manager can learn from to ensure those stakes will not happen again, but also looks abroad to the competition and future projects which can bolster opportunities to capture more patients for the facility. The key elements of organizational strategy, according to Patrice Spats and Stanley Abraham IS, ” It requires identifying who its competitors are and how it might best them. It means accurately identifying its consumers and knowing what they want.

It entails determining whether it can produce the kinds of services consumers want to buy, whether it has the people and organizational structure to make it all happen, and, most important, how to make a profit when all is said and done. “(Spats, & Abraham, 2013, peg. 1. 4) These key elements are in direct relationship with a strategic mindset because these are the blueprint to be successful in healthcare. Profits is a key element at the end of the day is what matters, yes we want to cure diseases and help as many people as we can but if you have no money to find those initiatives than unfortunately you will become bankrupt.

Everybody has the capacity to learn traits to become a successful health care manager but you have to have the motivation and drive to learn these traits. There are many resources to help and guide you to develop a strategic mind but you have to be motivated to take the time and learn and develop those traits.

Literature Search Strategy “Strategic Management can be defined as the Art and Science of formulating, implementing and evaluation cross-functional decisions that enable an organization to achieve its objectives” [1] “Strategy is the direction and scope of an organization over the long-term which achieves advantage for the organization t Through its configuration of resources within a challenging environment to meet the needs of markets and to fulfill stakeholder expectations”. [2] Stages of Strategic Management The strategic-management process consists of 3 stages that are; pic] Strategic Analysis This is all about the analyzing the strength of businesses’ position and understanding the important external factors that may influence that position. The process of Strategic Analysis can be assisted by a number of tools, including: • PEST ANALYSIS – a technique for understanding the “environment” in which a business operates • SCENARIO PLANNING – a technique that builds various plausible views of possible futures for a business • FIVE FORCES ANALYSIS – a technique for identifying the forces which affect the level of competition in an industry MARKET SEGMENTATION – a technique which seeks to identify similarities and differences between groups of customers or users • DIRECTIONAL POLICY MATRIX – a technique which summarizes the competitive strength of a business’s operations in specific markets • COMPETITOR ANALYSIS – a wide range of techniques and analysis that seeks to summaries a businesses’ overall competitive position • CRITICAL SUCCESS FACTOR ANALYSIS – a technique to identify those areas in which a business must outperform the competition in order to succeed SWOT ANALYSIS – a useful summary technique for summarizing the key issues arising from an assessment of a business’s “internal” position and “external” environmental influences. STRATEGIC CHOICE This process involves understanding the nature of stakeholder expectations (the “ground rules”), identifying strategic options, and then evaluating and selecting strategic options. STRATEGIC IMPLEMENTATION It is the trickiest part… When a strategy has been analyzed and selected, the task is then to translate it into organizational action. VISION STATEMENTS

Vision statements are defined by organizations as “What do we want to become? ” [3] “Strategic visions ought to convey a larger sense of purpose- so that employees see themselves as “building cathedral” rather than “laying stones”. [4] MISSION STATEMENTS “Mission Statements are enduring statements of purpose that distinguish one business from other similar firms. A mission statement identifies the scope of the firm’s operations in product and market terms. ” [5] “A mission describes the organization’s basic function in society in terms of the products and services it produces for its customers”. [6]

A clear Mission statement should have each of the following elements: [pic] External Assessment: Porter 5 Forces Model That Shapes Industry The process of performing an external audit must involve as many managers and employees as possible. Awareness of the 5 forces for external assessment can be very useful for the firm as it is able to determine the position of the respective company in the industry. To perform an external audit a company must accumulate competitive intelligence and information about economic social cultural demographic environmental political governmental legal and technological trends.

Other sources include magazines, newspaper, internet and business journals. Following are the 5 forces that shape strategy. [7] These 5 forces determine the attractiveness of the industry. If the rivalry is intense, for example in auto and gaming industry, we can say that it has reduced the attractiveness of the industry. Similarly, if the forces are moderate, as they are in industries such as software, soft drinks, and toiletries, many companies are profitable. Industry structure drives competition and profitability, not whether an ndustry produces a product or service, is emerging or mature, high tech or low tech, regulated or unregulated. While a myriad of factors can affect industry profitability in the short run – including the weather and the business cycle – industry structure, manifested in the competitive forces, sets industry profitability in the medium and long run. These five forces are further affected by the external environment which are rather uncontrollable and are widely popular as PEST in Porter theory of 5 forces.

They are called Political, Environmental, Social and Technological. Relationship between External forces and Organization [pic][8] Internal Assessment: Strengths and Weaknesses A strategic-management audit of a firm’s internal operations is imperative to organization’s health. Increasing number of successful organizations are using the internal audit to gain competitive advantage. Management, marketing, financial/accounting, production / operations and management information systems represent the core competencies of the organizations and their value chains.

An organization should identify and evaluate internal strengths and weaknesses in order to effectively formulate and choose among alternative strategies. [9] GENERIC COMPETETIVE STRATEGIES The second central question in competitive strategy is a firm’s relative position within its industry. Positioning determines whether a firm’s profitability is above or below the industry average. A firm that can position it well may earn high rates of return even though industry structure is unfavorable and the average profitability of the industry is herefore modest. Each of the generic strategies involves a fundamentally different route to competitive advantage, combining a choice about the type of competitive advantage sought with the scope of the strategic target in which competitive advantage is to be achieved. The cost leadership and differentiation strategies seek competitive advantage in a broad range of industry segments, while focus strategies aim at cost advantage (cost focus) or differentiation (differentiation focus) in a narrow segment.

The specific actions required to implement each generic strategy vary widely from industry to industry, as do the feasible generic strategies in a particular industry. While selecting and implementing a generic strategy is far from simple, however, they are the logical routes to competitive advantage that must be probed in any industry. [10] COST LEADERSHIP: Cost leadership is perhaps the clearest of the three generic strategies. In it, a firm sets out to become the low-cost producer in its industry.

The firm has a broad scope and serves many industry segments, and may even operate in related industries — the firm’s breadth is often important to its cost advantage. The sources of cost advantage are varied and depend on the structure of the industry DIFFERENTIATION: The second generic strategy is differentiation. In a differentiation strategy, a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers. It selects one or more attributes that many buyers in an industry perceive as important, and uniquely positions itself to meet those needs.

It is rewarded for its uniqueness with a premium price. FOCUS: The third generic strategy is focus. This strategy is quite different from the others because it rests on the choice of a narrow competitive scope within an industry. The focuser selects a segment of group of segments in the industry and tailors its strategy to serving them to the exclusion of others. By optimizing its strategy for the target segments, the focuser seeks to achieve a competitive advantage in its target segments even though it does not possess a competitive advantage overall. STUCK IN THE MIDDLE:

A firm that engages in each generic strategy but fails to achieve any of them is “stuck in the middle. ” It possesses no competitive advantage. This strategic position is usually a recipe for below-average performance. A firm that is stuck in the middle will compete at a disadvantage because the cost leader, differentiators, or focusers will be better positioned to compete in any segment. If a firm that is stuck in the middle is lucky enough to discover a profitable product or buyer, competitors with a sustainable competitive advantage will quickly eliminate the spoils.

In most industries, quite a few competitors are stuck in the middle. Ghani Glass – An Introduction: The founder of Ghani Group Sheikh Abdul Ghani (late) started business in 1963 and established a coal / silica sand mining firm in the name of Ahmad Brothers and Company. Now, the group is running a diverse range of businesses including three glass manufacturing plants, an automobile plant and a number of leading mining companies have an annual turnover of over Rs. 8 Billion. The origins of this group can be found in the mining industry given its involvement in coal, salt and sand mining since 1959.

The substantial strategic benefits of vertical integration led them to consider venturing into the manufacturing field in subsequent years. The chosen manufacturing field was glass manufacturing due to the robust demand for glass products in the country. The Ghani Group was not new to the glass manufacturing industry. They had been supplying silica sand to the glass industries four decades back. Their dedication to quality and customer service allowed them to land an exclusive 25 year excellence certificate from Phillips.

Their venture into the manufacturing field took the form of Ghani Glass, incorporated in 1992 and starting production in 1995, forming the first step on the road to success of Ghani Glass limited, which today own three glass plants namely GGL1 – Hattar, GGL2 – Landhi and GGL3 – Sheikhupura Road. Companies of the Group The diversified businesses operating under the umbrella of Ghani Group are as follows: • Ghani Glass Limited, Hattar (GGL-I) • Ghani Glass Limited, Karachi (GGL-II) • Ghani Glass Limited, Sheikhupura (Float Glass Plant) • Ghani Automobiles Limited (formerly Ghani Textile Ltd. • Makerwall Collieries Limited • Ghani Mines (Pvt. ) Limited; • Ghani Chromites Mines Pvt. Limited • Ghani Corporation • Ahmed Ghani Joint Venture • Al-Muhandus Corp. • Ahmed Brothers and Co. Vision: To indulge in honesty, integrity and self determination, to encourage excellence in performance and most of all to put our trust in Allah, so that we, eventually through our efforts and belief, become the leader amongst glass manufacturers not only in Pakistan but in Asia. Mission: The company has no mission statement and according to them, their vision connotes their mission. External Environment

Porter’s Five Forces Applying Porter’s five forces to the Glass Industry allows us to acquire a fair view of the potential attractiveness in terms of profitability of the industry and Attractiveness. | | |Yes |~ |No | |A | |(+) | |(–) | | |Threat of New Entrants | | | | | |Do large firms have a cost or performance advantage in your segment of the industry? | | | | | |[pic] | | | | |Are there any Proprietary product differences in your industry? | | |[pic] | | |Are there any established brand identities in your industry? | | | | | | |[pic] | | | | |Do your customers incur any significant costs in switching suppliers? | |[pic] | | |Is a lot of capital needed to enter your industry? | | | | | | |[pic] | | | | |Is serviceable used equipment expensive? | | | | | | |[pic] | | | | |Does the newcomer to your industry face difficulty in accessing distribution channels? | | | | | |[pic] | | | | |Does experience help you to continuously lower costs? | | | | | | |[pic] | | | | |Does the newcomer have any problems in obtaining the necessary skilled people, materials or | | | | | |supplies? |[pic] | | | | |Does your product or service have any proprietary features that give you lower cost? | | | | | |[pic] | | | | |Are there any licenses, insurance or qualifications that are difficult to obtain? | | | | | | |[pic] | | | | |Can the newcomer expect strong retaliation on entering the market? | | | | | | |[pic] | | |

The threat of new entrants is significantly low as there is high capital investment required for establishing a manufacturing facility in this industry. Besides, the current players in market are well settled and have strong brand identities. Incase any new firm wants to enter this industry; it will be faced with predicaments in setting-up distribution links as the existing companies have substantial control over main channels. PEST ANALYSIS P: The Government of Pakistan has certain regulations related to establishment of a manufacturing facility.

All new firms are subject to different licensing and regulatory procedures and the industry’s tax structure in also not supportive. E: Primarily, the economic conditions do not affect the behavior of this industry as glass has no direct substitutes and all the buyers including domestic and commercial ones are bound to buy glass when they need it. S: With a strong cultural heritage, Pakistanis are well known for their arts and crafts. The words beautification and decoration are directly related with glass.

Besides basic usage, people decorate their houses with vases and other decorative items made up of glass (mainly float glass). Hence, the social and societal values are in favor of this industry. T: Pakistan is an underdeveloped country and one of the basic reasons for that is lagging behind in the field of technology. The technology required in this industry is not only expensive but the manufacturing / processing equipments are also not easily available in Pakistan.

All existing companies have to import the machines from countries such as Japan, Germany and China. | | |Yes |~ |No | |B | |(+) | |(–) | | |Bargaining Power of Buyers | | | | | |Are there a large number of buyers relative to the number of firms in the business? | | | | | |[pic] | | | | |Do you have a large number of customers, each with relatively small purchases? | | |[pic] | | |Does the customer face any significant costs in switching suppliers? | | |[pic] | | |Does the buyer need a lot of important information? | | | | | |[pic] | | | | |Is the buyer aware of the need for additional information? | | | | | | |[pic] | | | | |Is there anything that prevents your customer from taking your function in – house? | | | | | | |[pic] | | | | |Your customers are not highly sensitive to price. | |[pic] | | |Your product is unique to some degree or has accepted branding. |[pic] | | | | |Your customer’s business are profitable |[pic] | | | | |You provide incentives to the decision makers. |[pic] | | | In this industry bargaining power of buyers is very low. This is due to low number of producer of glass compare to large number of buyers of glass. There are hardly four companies existing in this industry. PEST ANALYSIS

P: As such, the politico legal system has not influenced the bargaining power of customers in this industry. Even in the turbulent times, the company has been successful in achieving sales targets and net income is continuously showing an upward trend. E: Economic conditions do not impact the bargaining power of buyer in this industry because the offerings of Ghani Glass are quite high in quality as compared to that of others. S: The float glass has become an indispensable element of modern infrastructure thereby; it has resulted in an increase in demand and decrease in bargaining power of buyers.

T: The element of technology is very significant in glass industry and the processes involve high-tech machinery which makes superior glass. It can, therefore, be concluded that technology factor is lessening the buyers’ power. |C | |Yes |~ |No | | |Threat of Substitutes |(+) | |(–) | | |The industry is growing rapidly. | | | | | |[pic] | | | | |Industry is Not Cyclical with intermittent over capacity. | | |[pic] | | |The fixed costs of the business are a relatively low portion of total costs. | | |[pic] | | |There are significant product differences and brand identities between the competitors. | | | | | | |[pic] | | | | |The competitors are diversified rather than specialized. | |[pic] | | |It would not be hard to get out of this business because there are no specialized skills and | | |[pic] | | |facilities or long-term contract commitments, etc. | | | | | |My customers would incur significant costs in switching to a competitor. | | |[pic] | | |My product is complex and requires a detailed understanding on the part of my customer. | | |[pic] | | |My competitors are all of approximately the same size as I am. | |[pic] | PEST ANALYSIS P: Political conditions of our country don’t hit the rivalry factor of this industry up to large extent. But when small players in the industry leave the business due to unrelenting political mayhems, big players like Ghani Glass take the advantage of a decrease in competition, direct or indirect. E: The GDP of our country is growing and so is per capita income. Glass is a commodity where consumption is dependent on income. As incomes of individuals and corporations tend to increase, the consumption of glass also increases.

Glass is also used in bottling of soft drinks, medicines and automobile industry. The consumption of consumer goods also helps glass industry to endure economic slowdowns. S: Since the social factors are causing an increase in demand for glass, every player gets a chance cater certain segment of users. Thus it reduces the intensity of rivalry among the exiting competitors. T: Due to the enhancement in technology and emergence of internet, both domestic and corporate customers have easy access to different suppliers thus it is increasing the rivalry among the existing competitors. F | | | | | | |Critical Success Factors |Weight |Rating | | | | | |Weighted Score | |Opportunities |  |  |  | |Increasing demand of glass products |0. 20 |4 |0. 80 | |Forward integration (opening retail outlets) |0. 10 |3 |0. 30 | |Ability to grow rapidly because of sharply rising demand in |0. 15 |3 |0. 5 | |construction of business arcade (in which float glass is the main | | | | |ingredient) | | | | |Acquisition of small players such as Prince Glass which is |0. 15 |3 |0. 45 | |technologically well-equipped | | | | |Partnerships and joint ventures with regional conglomerates in |0. 05 |2 |0. 10 | |pursuit of globalization | | | | |Uprising demand of Float Glass in Afghanistan, Iran and Indian |0. 05 |1 |0. 05 | |markets. | | | |  | | | | | | | |  | |Threats | | | | |Gas Load Shedding |0. 10 |3 |0. 30 | |Emerging rivals such as Khawaja Glass |0. 0 |3 |0. 30 | |The emergence of substitute products such as aluminum and wood |0. 05 |2 |0. 10 | |Import of Chinese, Saudi, Belgium and Malaysian Float Glass |0. 05 |4 |0. 20 | | | | | | |TOTAL |1 | |3. 05 | INTERNAL FACTOR EVALUATION | |IFE MATRIX | | | | | | |Critical Success Factors |Weight |Rating | | | | | |Weighted Score | |Strengths |  |  |  | |1. Superior Technology than Rivals |0. 15 |4 |0. 60 | |2. Team Vigilance |0. 10 |3 |0. 20 | |3. Loyalty of employees |0. 15 |4 |0. 60 | |4.

Ample financial resources to grow their business |0. 10 |3 |0. 30 | |5. Better product quality compared to rivals |0. 10 |4 |0. 40 | |6. A widely recognized brand |0. 05 |4 |0. 20 | |7. Strong distribution channels |0. 05 |3 |0. 15 | | 8. Dedicated human resource at managerial levels |0. 10 |3 |0. 0 | | | | |  | |Weaknesses | | | | |9. Weak R & D related to new product development |0. 10 |2 |0. 20 | |10. Lack of technically-sound labour |0. 05 |3 |0. 15 | | 11. Not upgraded training facilities for labor |0. 05 |1 |0. 5 | | | | | | |TOTAL |1 | |3. 15 | COMPETITIVE PROFILE MATRIX (CPM) | | |Ratings |Total |Ratings |Total | |Product Quality |0. 10 |4 |0. 40 |2 |0. 20 | |Technology |0. 10 |3 |0. 30 |2 |0. 20 | |Advertisement &

Communication |0. 05 |3 |0. 15 |1 |0. 05 | |Financial Position |0. 15 |3 |0. 45 |3 |0. 45 | |Management |0. 10 |3 |0. 30 |3 |0. 30 | |Market share |0. 10 |4 |0. 40 |2 |0. 20 | |Competition |0. 10 |3 |0. 30 |1 |0. 10 | |Price Competitiveness |0. 10 |3 |0. 0 |2 |0. 20 | |Dedicated Human Resource |0. 10 |3 |0. 30 |3 |0. 30 | |Distribution Channels |0. 10 |3 |0. 30 |2 |0. 20 | |TOTAL |1 | |3. 20 | |2. 20 | Competitors Analysis Pharmaceutical Industry: Ghani Glass has a share of 88% in this industry. Float Glass Industry: Ghani Glass has a share of 75% in this industry. Food & Beverages Industry: Ghani Glass has a share of 88% in this industry. Major Customers: Leading national and multinational companies of Pakistan • Construction companies – local and multinational • Architectural and engineering companies • Also being exported to over 12 countries KEY SUCCESS FACTORS UNMATCHED QUALITY: Ghani Glass is successful because of the quality it offers. In connivance with same, they charge a premium price and this results in high profit margins. Consequently, the company has more money to reinvest. STRONG DISTRIBUTION CHANNEL ALL OVER PAKISTAN: Ghani Glass has successfully formed a strong distribution network by giving better margins to distributors. SUPERIOR TECHNOLOGY: Ghani Glass uses the most advanced technology in the industry. The company installed its first state on the art plant in 1993.

Later on, the company set-up first Float Glass manufacturing facility in 2003. Since then, they are constantly improving their technology and resultantly, they have been able to make quality oriented products and it helped them in becoming a trend setter and market leader. MARKETING STRATEGIES: Word of mouth is the most important tool which they have used for the promotion of their products. They have also used billboards and personnel selling tools to promote their products. In nutshell, they were able to position their product as the best in terms of quality through marketing strategy. This also increased their brand equity. SKILLED ENGINEERS HIRED FROM FOREIGN MARKETS:

In Pakistan, the education level is backward that has led to lack of availability of skilled labour in the country. Also there is such institution in Pakistan that engineer can be trained to handle the technology. Therefore to overcome this hindrance they have hired employee mainly engineer from foreign market. As compare to their rival their engineer are more skillful and efficient. DEDICATED HUMAN RESOURCE & EMPLOYEES: Ghani Glass provides is staffs with three time meal that is breakfast, lunch and dinner free of cost. It means that they make sure their employee and labors are fit and healthy. It is due to their policy that their labor has become dedicated and hard working. Company makes sure that no labor or employee is ill-treated.

They follow strictly the labor law which has made the labor and employee loyal to the company. Core Competencies: – Technology: The company is using superior technology as compared to others in market and it has helped them in retaining market leadership status. – Dedicated HR: The employees are extremely loyal and the company is using strategic tactics to retain their motivation level. For instance, there are no overtimes and each and every employee is given free meals throughout the day. – Product Innovation: Ghani Glass is leading the industry by innovating round the year and becoming pioneer in every segment of glass industry. Value Chain Financial Ratio Trends

Financial Ratio Trends |Ratios |2009 |2008 |2007 |2006 |2005 | |Activity Ratio | | | | | | | | | | | | | |Inventory Turnover |6. 55 |6. 13 |5. 67 |4. 04 |2. 0 | | | | | | | | |Fixed Asset Turnover |1. 86 |1. 78 |1. 6 |1. 45 |2. 68 | | | | | | | | |Total Asset Turnover |1. 04 |0. 78 |0. 79 |0. 86 |1. 04 | Analysis Ghani Glass is the market leader of its industry.

It is financially sound with increasing returns and stable inventory control. Following is an in depth analysis of Ghani Glass Ratios: LIQUIDITY RATIO Liquidity ratio examines the liquidity position of the company. This means, whether the company has enough liquid or cash or inventory to cope up with its short term liabilities and expenses. The current ratio FY2005 was 2. 9 which is very high. Ghani had a lot of liquid FY2005 which was idle and needed to be invested back in the company, and hence doing so GHANI reduces its current ration to 1. 98 FY2009 which is still very high, but it defines GHANI to be in a strong position with enough liquid to cope with short term liabilities.

Quick Ratio describes whether the company is able to pay its short term liabilities without relying on its inventory. GHANI FY2009 has an adequate quick ratio of 1. 05, hence defining GHANI to be in a better position even if it runs short of inventory. Price to earning ratio, though has fallen very hard. It has fallen by 11. 06x in a year. It is due to the conditions that took place in KSE and instable political, economical , law and order situation. Profitability Ratio Ghani has been able to produce good profits and returns for its investors. Ghani has been able to maintain its Gross Profit Margin between 25-30% and Net profit Margin between 15-20%.

This explains a balanced business operation that has been able Ghani to maintain this level of profits, despite deteriorating political and economic conditions. Return on Capital employed has been increasing since 2006. In 2006, the return on capital employed was 12. 06% but now has been increased to 25. 65% which is clearly overwhelming. It clearly shows that Ghani have been successful in producing excellent returns but every penny invested in the company by its investors. This proves Ghani to be a market leader and why Ghani is financially sound. Price to earning ratio, though ,has fallen very hard. It has fallen by 11. 06 xs in a year. It is due to the conditions that took place in KSE and instable political, economical, law and order situation. MATCHING STAGES

THE Strategic Position and Action Evaluation (SPACE) Matrix The Strategic Position and Action Evaluation (SPACE) Matrix is another important Stage 2 matching tool of formulation framework. It explains that what is our strategic position and what possible action can be taken. It is not closed matrix. It is prepared on graph. It is closed matrix. This follow counter clock wise direction. It contains four-quadrant named aggressive, conservative, defensive, or competitive strategies. The axes of the SPACE Matrix represent two internal dimensions financial strength [FS] and competitive advantage [CA]) and two external dimensions (environmental stability [ES] and industry strength [IS]).

These four factors are the most important determinants of an organization’s overall strategic position. |Financial Strength (FS) |Rating | | | | |1. Return on investment |+4 | |2. Leverage |+3 | |3. Liquidity |+3 | |4. Cash Flow |+3 | Financial Strength:

Ghani has a strong Financial Condition with increasing returns and has enough liquidity to cope with its short term liabilities. |Industry Strength (IS) |Rating | | | | |1. Growth Potential |+4 | |2. Profit Potential |+3 | |3. Technological know-how |+3 | |4. Financial Stability |+3 | Industry Strength

The growth potential of the entire Glass industry has been on the higher side since the demand of glasses in households and offices had taken shape in our businesses and daily lives. Financial stability is quite positive in the industry as Ghani has been performing well along with its competitors who are located in the informal sector of the market. Technology is an important factor here as people get more and more aware of the new technologies coming in the market & their benefits the more they will demand it as influenced by the external as well as internal forces. Profit potential in the industry is quite high as population & demand are ever growing factor. Environmental Stability (ES) |Rating | | | | |1. Technological Changes |-2 | |2. Barriers to entry into market |-2 | |3. Competitive Pressure |-1 | |4. Price range of competing products |-3 | Environmental Stability Barriers to entry are low as Technology required for producing glass is very high. Competitive pressure is low due to only 2 major companies in the Industry. Also price range of competing product is stable in the industry Competitive Advantage Ghani has excellent market share which accounts for 71% in the market.

Ghani has a good product quality to cater to its audiences. The industry doesn’t necessary has customer loyalty and any customer would be looking for good quality affordable glass irrespective of the producer of the glass. |Competitive Advantage (CA) |Rating | |1. Market Share |-1 | |2. Product Quality |-2 | |3. Customer Loyalty |-3 | |4. Technological know how |-1 | SPACE MATRIX RESULT |x-axis: 5 + -2 = 3 | |y-axis: 6 + -3. 25 = 2. 75 | 4 | | | | | | | | | | | | | | | |  | | | | | | | |  | | | | |POSITION |  |  |  |  |  |  |COMPETITIVE | | | | | |  | | | | | | | |  | | | | | | | | | | | | |IV |V |VI | | | | | |VII |VIII |IX | [pic] 3 to 4 [pic] 2 to 2. 99 [pic] 1 to 1. 99 |STRENGTH |WEAKNESSES | | |Superior Technology than competitor. |Weak R&D related to new product development | | |Team Vigilant |Lack of Abundant quantity of quality labor | | |Skilled and abreast with knowledge employers|Not upgraded training facilities for Labor | | |Ample financial resources to reinvest and | | | |grow their business. | | |Better product quality relative to rivals | | | |A Widely recognize market leader | | | |Strong Distribution channel | | | |Dedicated Human resources | | |OPPORTUNITIES | Strengths-Opportunities SO |Weakness-Opportunities WO | |Increasing demand of glass products | |With increasing demand of glass products, | | |With superior technology, better skilled |Ghani glass should improve its research and | |Forward integration (opening retail outlets) |employees and increasing demand of glass, |development department. (W1 O1) | | |Ghani Glass can pursue product development | | |Ability to grow rapidly because of sharply |by producing products such as bowls and |Partnering and ventures with regional | |rising demand in construction of business |glass crockery. (O1 S1 S3 S4) |conglomerates will bring in skilled labor. |arcade in which float glass is the main |Ghani should export glass to Afghanistan (S4|(O5 W2) | |ingredient |O6) | | |Acquisition of small players such as Prince |Ghani should install plant in Iran (S4 O6) | | |Glass which is technologically | | | | | | | | | | | | | | | | | | | | | | | | | | | | |With ample financial resources, Ghani Glass | | |well-equipped |can acquire small businesses in the | | |Partnerships and joint ventures with regional|industry. (O4 S4) | | |conglomerates in pursuit of globalization | | | |Uprising demand in Afghanistan and Iran | | | |markets. | | |THREATS |Strengths-Threats ST |Weakness-Threats WT | |Gas Load Shedding |Increase trade promotion as a proactive |Ghani R&D should produce new products to | |Emerging rivals such as Khawaja Glass |measure to silent emerging rivals. (S4 S5 S6|compete with emerging rivals like Khawaja | |The emergence of substitute products such as |T2) |Glass. (W1 T2) | |aluminum and wood |Negotiate with the Government to receive | | |Importing of glass from China, Saudi Arab, |exemption in Gas Load Shedding. T2 O6) | | |Malaysia and Belgium | | | | | | | | | | | | | | | | | | | | | | | | | | | From the I-E Matrix it can be concluded that Ghani Glass is internally very strong with the IFE of 3. 15 and EFE weighted score of 3. 05 which means that it lies on the first quadrant of the I-E matrix. Company lying on the first quadrant of the matrix are suppose to adopt aggressive strategy. Company which lies on Quadrant I,II or IV are suppose to grow and build. Here Ghani Glass lies in First Quadrant so it should Grow and build its market which means it has to adopt aggressive strategy such as forward integration, Market penetration or product development. IMPLEMENTATION STAGE Q S P M | |Key Success Factors |Weight |Market Develop. In Iran & |Product Development (Glass | | | |Afghanistan |Crockery) | | |AS | | |TAS | | | |TAS |AS | | |Opportunities | | | | | | |Increasing demand of glass products |0. 0 | | | | | | | |4 |0. 80 | |0. 60 | | | | | |3 | | |Forward integration (opening retail |0. 10 | | | | | |outlets) | |- |- |1 | | | | | | | |0. 0 | |Ability to grow rapidly because of sharply | | | | | | |rising demand in construction of business | | | | | | |arcade in which float glass is the main | | | | | | |ingredient | | | | | | | | | | | | | | | |3 |0. 5 | | | |Acquisition of small players such as Prince|0. 15 | | | | | |Glass which is technologically | | | | | | |well-equipped | | | | | | | | |3 |0. 45 |3 |0. 45 | |Partnerships and joint ventures with |0. 05 | 2 |0. 10 |2 |0. 10 | |regional conglomerates in pursuit of | | | | | |globalization | | | | | | |Uprising demand of Float Glass in |0. 05 | | | | | |Afghanistan and Iran markets. | | | |3 | | | | |2 |0. 10 | |0. 15 | |  | | | | | | |Threats | | | | | | |Gas Load Shedding |0. 0 | | | | | | | |- |- | | | |Emerging rivals such as Khawaja Glass |0. 10 | | |2 | | | | | | | |0. 20 | |The emergence of substitute products such |0. 05 |- |- |- |- | |as aluminum and wood | | | | | | |Import of Chinese, Saudi, Belgium made and |0. 05 | 3 |0. 15 |3 |0. 5 | |Malaysian Float Glass | | | | | | | | | | | | | |TOTAL |1 | | | | | | | |Strengths | | | | | | |1. Superior Technology than Rivals |0. 15 |3 |0. 45 | | | |2. Team Vigilant |0. 10 |- | | | | |3. Skilled and abreast with knowledge |0. 15 |3 |0. 45 | | | |employers | | | | | | |4. Ample financial resources to grow their |0. 10 |3 |0. 0 | | | |business | | | | | | |5. Better product quality relative to |0. 10 |- | |2 |0. 20 | |rivals | | | | | | |6. A Widely recognize market leader |0. 05 |3 |0. 15 |3 |0. 15 | |7. Strong Distribution channel |0. 05 |2 |0. 10 |3 |0. 15 | |8. Dedicated Human resource |0. 10 |3 |0. 30 |2 |0. 0 | |Weaknesses | | | | | | |9. Weak R&D related to new product |0. 10 |- | |1 |0. 10 | |development | | | | | | |10. Lack of Abundant quantity of quality |0. 05 |1 |0. 05 |- | | |labor | | | | | | |11. Not upgraded training facilities for |0. 5 |- | |- | | |Labor | | | | | | | | | | | | | |TOTAL |1 | |3. 60 | |2. 35 | Interpretation of QSMP After thoroughly analyzing the QSPM scores, it can be concluded that the Market Development in Afghanistan and Iran is much more feasible rather than opting for product development. The pitfall in applying this strategy can the cultural mismatch in the organization.

Balanced Business Scorecard | | | [pic][pic][pic][pic][pic][pic][pic][pic][pic][pic] ———————– [1] Fred R. David, Strategic Management Concept and Cases 12th Edition. p. 4 2 Johnson and Scholes, Planning and Strategic Management, 1999. p. 10 [2] Fred R. David, Strategic Management 12th edition p. 11 [3] Thompson, Strategic Management 13th edition p. 40 5 Fred R. David, Strategic Management 12th edition p. 11 6 Mintzberg [4] Strategic Management by Thompson, 13th edition p. 80 [5] Strategic Management by Fred R.

David 12th edition p. 73 [6] Strategic Management by Fred R. David 12th Edition p. 104 [7] Creating and sustaining superior performance by Michael E. Porter Free Press, 1998 (1985) ———————– 10 2 1 3 1 10 4 10 1 2 10 1 3 10 1 [pic] Objective 1. Continuous training and development 2 Organizational cultures which encourages change and development. Measure Create a supportive work environment & corporate culture. Target 1. Increased one-to one contact at all levels; 2. Real time communication. 3. Collective decision making Initiative 1. Empowerment. 2. Restructuring of Human Resource department and policies. Learning & Growth Initiative

Simplify procedures and streamline workflows. Target More strategic acquisitions of small players Measure Engineering efficiency, continuous technology adoption Objective To bring continuous improvement in business processes and reduce costs Internal Processes Objective To strengthen relationship with customers. Measure Number of co-operative efforts Target Maximum customer participation and involvement Initiative Increase focus on check-in services. Customer Objective Increasing profit by 3% in F. Y 2010 Initiative Trade promotions locally and internationally Target Retain Market Domination Measure Strive for an incline in Sales Revenue Financial TOWS Matrix AMMa

Nowadays, the automotive industry has become the major industry in the Malaysian economy. Malaysia automotive sector started at the incorporation of Proton (Perusahaan Otomobil Sdn. Bhd.) in year 1985 and consequently Perodua (Perusahaan Otomobil Kedua Sdn. Bhd.) in year 1993. The domestic market is essentially a duopoly controlled by these two dominant national car manufacturers.

Overview of merger strategy

More and more countries around the world are taking the approach of consolidation to increase the competitive advantages. The global automobile industry has seen significant consolidation over the last few decades. A lot of the corporations have found it beneficial to join hands with some of their former competitors. In the other word, this consolidation is the result of increased their competition strength, create a win-win situation to distribute the market share together. On the other hand, consolidation intensifies competition as the emerging groups are highly research intensive (Aamir and Johannes, 2007).a

Aamir and Johannes (2007) stated that if the industry is not very concentrated, some consolidation may increase the innovative activity. However, if the industry is already concentrated, further consolidation may reduce the innovation incentives. Beside that, mergers reduce the values of merging firms though they may increase the aggregate values of the industry. Other than that, mergers between giant firms may reduce consumers’ utility. However, they make rivals by reducing their extent of competition in the market. The overall effect of mergers on aggregate industry value is positive if merging firms are large in size.

Feasible of merging between proton and perodua

Strategy formulation

Corporate Strategy Generally, corporate strategy is primarily about the choice of direction for a firm as a whole which including determines and reveals its objectives, mission, vision, produce principal policies and plans for achieving goals, and defines the range of business the company is to pursue, the kind of economic and human organisation it is or intends to be, and the nature of the economic and non-economic contribution it intends to make to its shareholders, employees, customers, and communities.

In fact, corporate strategy consists of directional strategy, portfolio strategy and parenting strategy. The directional strategy involved overall orientation towards growth, stability and retrenchment. The portfolio strategy is involving markets that the firm competes in through products lines and business units, and parenting strategy involving coordination and transfer of resources between product line and business units. In orientation toward growth, there are two basic form, either is concentration or diversification. It also incorporates for internal growth or external growth. A merger is considering as external growth and it is commonly used increase the competitive advantage.

Merger Objectives According to the Nation Automotive Policy Framework (2005), Proton and Perodua have big encouraging in merging. The policies that encouraging Proton and Perodua merger including the followings:

1. To enhance value added and local capabilities in the automotive sector.
2. To become a regional hub for manufacturing, assembly and distribution for automotive vehicles.
3. To promote a competitive and viable automotive sector, in particular national car manufacturers.
4. To promote export-oriented Malaysian manufacturers as well as component and parts vendors.

As a conclusion, the policies’ objectives are to create national automotive manufacturers have more competitiveness advantage to compete with non-national automotive assemblers and manufacturing company in domestic market while export and introduce the national brand to the global market. Initially, the feasibility of merge starts from evaluation of corporate strategy for both company especially on the aspect of mission and vision, the company’s future business plans and the direction in the near future. The strategic roadmap shall including future product designation, advance technology, and customer segmentation, geographical distribution and capabilities to research and develop. The role of the management will include creating an action plan for the near future, targeting future business position, deciding short, medium and long term direction and ensure the new company has a strong identify.

Business level: business strategy analysis

Proton Holdings Bhd Effective from 1 January 2009, Proton’s chairman Datuk Mohd Nadzmi Salleh has identified that product planning as a major task for him in leading Proton’s direction locally and internationally. The product planning determined a long term period and a short to medium term goals in order to achieve any annual target. The strategy covers to make the right car models as well as their marketplace and replacement cycle. This strategy will enable Proton to maintain its competitiveness in the future (Hatipah Ahmad, 2009).

The product strategy “The right car for the right market” implemented with the Saga and Persona. Anyway, by implemented strategy so far is cannot work alone to survive the tougher global automotive landscape amid slowing growth, changing demand to smaller and more fuel efficient vehicles, volatile currency rates and pressure on margins. Therefore, Proton will continue extended their product strategy to form non-equity alliances with other carmakers in areas like product development and completely knocked down operations. (Mahanum, 2008).

Perodua Perusahaan Otomobil Kedua Sdn Bhd (Perodua) has always been Malaysia’s leading compact car market and expects to continue its strategy of selling fuel efficient, compact cars to continue driving its growth. Perodua’s product strategy is based on their brand statement “Building Cars, People First”. According to Perodua marketing strategy is targeting the first-time buyers and also the additional car segment. Based on previous years sales, first-time buyers comprising fresh graduates, has accounted for 30 to 35 percent of Perodua’s total sales. While for the additional car segment was made up about 40 percent of their sales (Eugene, 2008).

The reason behind the good sales mainly contributed by the people want a car that is affordable and fuel efficient. Perodua had poor sales of the segments of replacement car category due to the stringent in granting loans from banks. Perodua’s product strategy is always referring to the Product Life Cycle (PLC). Perodua believe that the markets are not ready to embrace compact cars in a big way. Hence they will continue to target to be the leader in the domestic market before expanding globally (Frost ; Sullivan, 2007).

As at the Human Resource section, Perodua is tries to identify high potential employees and create an attractive value proposition for them; cultivate an integrated talent development mind-set among line managers; create a talent pool to meet future leadership needs; and institutionalise “pay for performance” culture. Perodua also provide different types of support and encouragement to different levels of executives to develop their potential in creative thinking (Rikza, 2008).

Teece et al, (1997) define dynamic capabilities as “the ability to integrate, build, and reconfigure internal and external competencies to address rapidly-changing environments”. The shortcoming of the resource-based view of the firm has given rise to the concept of dynamic capabilities. Resource based view assumes that the factors surrounding resources simply exist. It does not take into account how the resources are developed and integrated within the firm and how the resources are released. Dynamic capabilities attempt to bridge these gaps.

Dynamic resources act as a buffer between the firm resources and the changing business environment. Dynamic capabilities of O2 Telefonica have enlarged to newer heights through the company’s various acquisitions. The acquisition strategy has enabled the company to strengthen the company from the “shared learnings”. The company could consolidate itself through realigning the name and O2 has emerged as a powerful brand globally. The financial benefits resulting from the acquisitions have enabled the company to compete at top global levels and additionally the company could launch its business in Czech.

The company has planned investments of Euro 3. 5 billion between the years 2007 and 2010 in the German business. The launch of “Be” and broadband line in the UK are the additional advantages resulted from the dynamic capabilities of the company (Key, 2008). Telefonica through its dynamic capabilities has become leading distributor of iPhone in almost 16 countries. Global mobile advertising has resulted in revenue of Euro 6. 9 billion from the market, which is way ahead of the competitors in the market (Key, 2008). Value Chain

Value chain analysis allows the firm to understand the parts of its operations that create value and those that do not. Understanding these issues is important because the firm earns above-average returns only when the value it creates is greater than the costs incurred to create that value (Porter, 1985) Value chain of a firm is segmented into primary and support activities. Primary activities are involved with a product’s physical creation, its sale and distribution to buyers and its service after sale. Support activities provide the assistance necessary for the primary activities to take place.

Primary activities The primary activities include: Inbound Logistics – covering the receiving, storing and inventory control of materials that are needed as inputs. With an established system of procurement and supplier development, the company has been able to do well in inbound logistics activity. Operations – are the value creating activities, which are helpful in converting the inputs into finished products of the firm. In the year 2007, Telefonica introduced over 600 products and services. The company has established an innovation network to which each of the group companies contribute innovation programmes.

The company continuing its excellence in the network technology has brought fibre optic to the home and expanded its 3G and 3. 5G capacity (Annual Report, 2007). Outbound Logistics – encompass the activities involved in placing the finished goods at the hands of the customers including distribution systems and order processing. O2Telefonical has well established systems catering to 169 million telephony accesses, 42 million fixed telephony accesses, more than 10 million broadband accesses, with presence in about 24 countries (Annual Report, 2007).

Marketing and Sales – covers activities connected with enabling the customers to purchase the product including selection of channels of distribution, advertising and pricing. O2 Telefonica is the only operator in the market for deploying and monitoring advertising campaigns across all mobile channels. WAP, Games, Video, Messaging and other applications have identified O2 Telefonica as unique in providing varied customer experience. The operations of the company have set new standards to the advertisers to reach more than 170 million mobile users (Key, 2008).

Service – these activities include those that are necessary to maintain and enhance the value of the product like after sales service and other customer support activities. Support Activities On Firm infrastructure, O2 Telefonica works with three regional business divisions Telefonica Epa, Telefonica O2 Europe and Telefonica America Latina. The company has well established principles of business with strong professional management base and financial strength. On procurement activity, O2 Telefonica through its own management model has developed a coordinated procurement system.

“Telefonica divides its purchasing into six product lines” (Annual Report, 2007). The product lines are: (i) services and works, (ii) market products, (iii) network infrastructure, (iv) IT systems, (v) advertising and marketing and (vi) content. The human resources management of the company is well organized with more than248, 000 professionals employed by the company. The company has spent 59 million Euros during the year 2007 for the training of over 100,000 employees (Annual Report, 2007)

Tecnology development through R&D and innovation has been one of the core competencies of O2 Telefonica. The objective of the primary activities is to generate value that is in excess of the cost of producing the product or service and thereby to result in earnings to the organization. The other objective is to help the organization to identify its core competencies. By focusing on value creating activities, firms can remove the non-value adding activities from the purview. Value Chain and Future Strategy

By concentrating on improving the value chain strengths company O2 Telefonica has identified the following future strategies; (i) to become an integrated operator and exploit cross-selling and convergent services opportunities, (ii) an increase of 40% in the customer base between 2006 and 2010 and (iv) more than 25% growth in the UK and Germany mobile market (O2Telefonica, 2006) Balanced Scorecard The balanced scorecard focuses attention not only on the financial objectives of the company but also highlights the non-financial objectives that an organization must achieve in order to meet its financial objectives (Kaplan & Norton, 2001).

The balanced scorecard reduces the organisation’s emphasis on short-term financial performance like quarterly earnings, because the non-financial and operational indicators measure fundamental changes the organisation is making. The four key perspectives of performance of the balanced scorecard approach are; (i) Financial Perspective, (ii) customer perspective, (iii) internal business processes perspective and (iv) learning and growth perspective. Based on these key perspectives, the organization has to specify the objectives, measures, initiatives to achieve the objectives and target performances.

The target performance levels for non-financial measures are based on competitor benchmarks. They indicate the performance levels necessary to meet customer needs compete effectively and achieve desired financial goals. Financial perspective evaluates the profitability of the strategy. For instance, cost reduction relative to competitors and sales growth may be a key strategic initiative, since financial perspective focuses on how much of operating income and return on capital employed results from reducing costs and selling more units of production.

Customer perspective identifies the targeted market segments and measures the organisation’s success in these segments. Market share, number of new customers and customer satisfaction may be some of the key strategic initiatives. Internal business process perspective focuses on internal operations that further both the customer perspective by creating value for customers and the financial perspective by increasing shareholders wealth.

The internal business process perspective comprises of sub processes like (i) innovation process, (ii) operation process, and (iii) post-sales service. Learning and growth perspective identifies the capabilities in which the organization must excel in order to achieve superior internal processes that create value for customers and shareholders. Employee capabilities, information system capabilities and motivation, and empowerment may be some of the key strategic elements of learning and growth perspective (Kaplan & Norton, 1992). Benchmarking

“Benchmarking is the process of identifying best practices in relation to both products (including) and the processes by which those products are created and delivered” (Tutor2U, n. d. ) The search for best practices can be undertaken from both inside a particular industry and in other industries. The objective of benchmarking is not only to understand the current position of a business but also to evaluate them in relation to best practices. It also involves identifying the areas and means of performance improvement. The process of benchmarking involves four different steps.

These are; (i) understanding in detail the existing business processes, (ii) analyzing the business processes of others, (iii) comparing own business performance with that of others analyzed and (iv) implementing the steps necessary to close the performance gap (Tutor2U, n. d. ). Influence of Managers on the Development of Capabilities “Where Competence focuses on the acquisition of knowledge, skills and attributes, capability focuses on people’s confidence in applying those knowledge, skills and attributes in a range of contexts” (Stepehnson & Weil, 1992).

Capability development is considered as the development of the individual or team, through the deployment of resources that aim to accomplish current goals of the organisation, meet future challenges and enable the organisation to acquire strength for meeting the challenges of change. Capacity development placed the importance on people and their capacity to achieve in ever chaging business environments. This is due to the fact that managers are creative and are confident in applying their competencies. They are also capable of working well with team members in circumstances both familiar and unfamiliar to them.

This enhances the influence of managers on the development of capabilties of the organisation. Bibliography AnnualReport, 2007. Telefonica Auunal Report 2007. [Online]. Available at: http://www. telefonica. es/informeanual/pdf/080420_IAnual_2007_eng. pdf [accessed 01 January 2009] Hitt, M. A. , Ireland, R. D. & Hoskinson, R. E. , 2005. Strategic Management Competitiveness and Globalization. Versailles KY: Thomson South Western. Kaplan, R. S. & Norton, D. P. , 1992. The balanced Scorecard-Measures that Drive Performance. Harvard Busiiness Review, 70(1), p. 71-79.

Kaplan, R. S. & Norton, D. P. , 2001. The Strategy-Focused Organization. Strategy & Leadership, 29(3), p. 41-42. Key, M. , 2008. Telefonica: Leadership in Europe. [Online]. Available at: http://www. o2. com/media_files/matthew_key_-_media_briefing-june08. pdf. [accessed 01 January 2009] O2Telefonica, 2006. O2 Telefonica Merger. [Online]. Available at: http://www. telefonica. es/accionistaseinversores/ing/pdf/060123-wholly-unconditional-ing. pdf [accessed 31 December 2008] Porter, M. E. , 1985. Competitive Advantage. Free Press p. 33-61. PressRelease, 2008.

Telefonica rolls out multi-million euro start-up investment programme. [Online]. Available at: http://www. o2. com/media/press_releases/press_release_14137. asp [accessed 01 January 2009] Stepehnson, J. & Weil, S. , 1992. Quality in Learning: A capability approach in higher education. London: Kogan Pag. Teece, D. J. , Pisano, G. & Shuen, A. , 1997. Dynamic Capabilities and Strategic Management. Strategic Management Journal, 18(7), p. 509-533. Tutor2U, n. d. Strategy-Benchmarking. [Online]. Available at: http://tutor2u. net/business/strategy/benchmarking. htm [accessed 27 December 2008]

In 1956, Aberrant proposed the conversationally of his Idea, the first sweet with a simple ball and a stick of wood and the success was immediate, in spite of the high price. In 1 967 Aberrant created the first foreign factory in France. Salvador Dali, who in hardly one hour invented the famous yellow daisy to which the success of Chap Scups is attributed, created the design of the logo. In the same year, The Company replaced the stick of wood by the en of plastic, more hygienic and safe.

Aberrant created another factory in France and began the international expansion of the company. Now, Chap Scups is distributed successfully everywhere of the world. Every year, Chap scups company sales anywhere In the world more than 4,000 million units of chap scups lollipop. Recent problems THE barrier to Growth One barrier to growth in the confectionery market over the review period was a global decline in the 0-15 year-old population, which constitutes the main consumer ease for a wide range of products, including bubble-gum, lollipops and chocolate with toys.

Keep the leadership The company regulates employment and refinances debt to be able to adapt to the downfall of sales In accordance with the actual patter of global downturn of consumption the Spanish candies’ multinational Chap Scups is now realizing that its sales in the world are losing pace. Situation audit The Chap Scups Group is one of the world’s leading suppliers of confectionery products, with year-on-year sales increasing at a rate of more than 10 percent.

The Chap Scups Group owns factories in Spain, France, Russia, China and Mexico, with current projects In Brazil as well as commercial companies In Spain, Germany, the U. S. , Brazil, Russia, England, Japan, South Korea, Canada and Australia. Chap Scups specializes In diverse confectionery products which have been developed using their own technology and marketed under the brands: Chap Scups, Saint and Crazy particularly because 92 percent of the company’s revenue comes from outside of Spain.