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In this assignment would try to focus on a company named Applied Research Technologies which has many divisions like healthcare, industrial automation, energy conversion, transportation solutions for oil and gas industry and preparation of water filtration equipment and HAVC (heating Ventilation and Air Conditioning, including climate control solutions for residential, commercial and industrial markets. With Mr.David Hall as its CEO of ART's and Mr Peter Vyaswas appointed as the manager of filtration Unit. ART was one of the technology world's emerging giants. In this essay we try to emphasis on and analysis on various industrial tools' like Porter's Five Force analysis, PESTEL analysis and also on strategic management tools of the organization.
Vision Statement of ART's:
''We aim to change the world through innovation, and to grow our place in it through entrepreneurship''. Harvard Business School, (2010)
In order to create and sustain in competitive market the organization undertakes decisions, actions and analysis the situation to gain competitive advantage in the industry. This definition captures two main elements that go to the heart of the field of strategic management.
First, the strategic management of an organization involves three on going processes which are as follows: analysis, decisions, and actions. That is, strategic management is concerned with the analysis of strategic goals like vision, mission and strategic objective of the company, which also includes the internal and external environment of the organization.
Michael Porter says that sustainability cannot be achieved through operational effectiveness alone. Dess, Gregory , Lumpkin and Taylor, (2005.)
The strategic positioning of an organization includes the developing of the desired future position of the organization on the basis of present and likely developments, and the making of plans to realize that positioning.
In the ART's company dedicated on supporting new ideas, but also in funding various research & development projects. Sharing of knowledge and dissemination was another key factor which positioned the company into the market. The company's biggest strength was in its core product and technology which they used.It had the objective of to attract the best and brightest wherever they live. Harvard Business School. (2010, pp.61)
As the organization functions the entire resources and the results are disturbed with the whole of environment. Important strategic decisions are major resource ideas for a company. Strategic decisions are tough in nature and very complex to deal within organization. The decisions are the long-term decisions and are concerned with future planning. They also related to overall counter development of all organization and also strive through growth. Management Study Guide (1998-2000)
In ART's the strategic choices were the most vital for company. Vyas was accountable for the major decisions involved in the water filtration unit. Vyas took active interest in developing the unit. As, he was appointed as the manager as for the filtration unit in 2001 his first decision was to rebuilt the team by carefully selecting entrepreneurial-minded individuals to fill the vacancies left by turnover in the unit. One of the major recruitment was Janice Wagner, whom he knew from her five year as a marketing manager in the HVAC division.
Organization successes at strategy operation effectively manage three key support factors:
Action planning: Companies success at implementing strategy established detailed action plans and assigning duty to specific individual for doing each of those action steps. Thus breaking down their big strategy statement in to small targets Birnbaum (2000-2009).
The main objective for the manager Mr.Vyas to look in to the detail planning of the organization and his job involved was to assign different task to each department and also recruiting new people in the organization.
The organizational structure is depended on the current structure whether the proposed strategy fits in the current situation and whether the current trend is suitable for the business. ART's also focused on its business strategy as its current position and structure formation was depended on the management.
The Annual Business:
To fund all the projected strategies companies are aware of their needs. They need to consider about the important financial commitment in the planning method. They have their own forecasting plans and strategic to deal with annual business.
ART's company did have their own plans for their particular units assigned to the manager's to carry out the day-to-day activities. The company had many financial decisions to be made, on part of their business strategy.
Strategic Analysis of ART's:
Here we would try to study the various strategies which would benefit the industry to reach their goals and could get success to their planning of strategies. Here we would also be discussing the various tools which can be used to review the company's performance.
Porter's Five Forces:
Porters five forces model helps regaining where the power lies in a business. Porter's model can be used as one of the industrial tool to analysis the company structure.
Porters Model is an important part of anticipating tool set by the industry, by using a outline rather than a formal statistical model. Porter's model of competitive forces accepts that there are five competitive forces that identify the competitive power in a business situation.
(Source: Chapman, (2005). Porter's Five Forces Model)
New substitute: The threat to the organization can be due to the customers moving to other competitors. There may be many substitutes available in the market and thus customer can certainly find the product or service that offer's that same service for lesser price. Substitutes are a major threat to the company, as it creates competition in the market.
In the ART's company as a company there is always the threat in the market which could arise due to various substitutes available in the market. There are various other companies which offer a similar kind of product and at a cheaper price. The biggest implication for the company would be that it would directly affect its product launch due to intense competition in market and various products competing with each other.
New Entrances: The entrance in the market also declines the power of the organization. Threat of new entry depends upon on the entry and exit barriers. There may be many reasons for it like economies of scale are not high, customer switching to other products, thus it is always viable to keep the entry barriers high so that the market maintains its standard on the level of players in the market and so there could me more profit even when the market is not good. As, you can see in the case study there is also huge investments made ART's company to develop its new product. It is very difficult for the competitors to break into the industry as there are already much well established players in the market which are already well known in the market and they also have a maintained a very good relation with buyers and sellers. As, the ART's has always maintained a good relation with its buyers' and suppliers it's very becomes difficult for any competitors to entre to this industry.
Power of suppliers: Power of suppliers means, how control the suppliers have to drive down their products. When suppliers have more hold over supplies and its prices that segment is less attractive. This could also happen in any organization where suppliers have an upper hand. As, the switching cost is very high from one supplier to another supplier it's very difficult for any supplier of the ART's to switch to any other supplier. It's only possible in the ART's company when suppliers ar directly competing with their buyers and if they do not get a proper price for their product and they margins what they require.
Power of Buyers: Buyer power is always said to be remain high as in the condition where the suppliers are like a very small operators and the buyers have a upper hand. As, in the ART's company the ultimate buyers are the consumer of their products or their distributers. The implication for the ART's is that the company is going to launch its new product, so the buyers could demand for margin and could also create competition for ART's suppliers. This could be due to if ART's not supplying the right product or satisfactory price to its buyers and it could end up the buyers producing their own products hence creating competition for ART's before launch of their product.
One of another tool which used by all the industry to start up a new business is the PESTEL analysis which also emphases on the industrial factors:
Pestle analysis is strategic planning method that offers a valuable outline for evaluating the environmental pressure on team or on the group. Rogers, J (1999), M & Edmonstone, J (1999)
The following are the main factors in PESTEL analysis:
The local, national and world economic influence. As you can see there was huge potential for the company to grow organically. In April 2006, according to palmer drought index 26% of united states was considered in moderate to extreme drought condition's' and there was a major scarcity situation. They had a huge market in the U.S for residential water purification. As, the US market is a saturated market the ART's company needs to focus on the other growing market. As, the company faces financial difficulties in producing the goods and also the economic scenario of the market due to recession and shortage of money supply in the company for the product manufacturing the company may face a great difficulty in introducing its product in the market.
The ways in which changes in the society affect the project. There are some sociological factors which also disturb the organization like the demographical factor in countries like India or the income distribution of the country which could affect the penetration of the organization due high price or market condition.
How new and developing technology affects the organization. Technology was the key factors of the ART's as an organization which drive the company. The company spend more on its' technological units due to its core focus of the product depended on the success of its technology. Like new discoveries' and development in the technology of the unit and the speed of the technology to develop a product also are the key drivers for the company's goals.
How local issues like legal matters and laws affects any organization or industry. This can be through the management law's towards its employee's and could be used, towards the safety of the employee's and the product safety, could be the issue which company could have faced while developing the product.
This could be in form of global and national environmental issues. As the whole concept to develop the product was to provide a solution to provide a safer and clean drinking water to the society by providing a technology which could help the environment and provide more comprehensive household water. ART's may also face legal hurdles like the energy consumption to produce their technology for their product, also the waste disposable form the industry which contaminates the water and the government laws to protect the environment.
Rapidbi, (2007) says that there are various factors that could affect the organization. One has to look beyond all the factors for a successful running of the organisation. Renewal Associates,(2003). There are always key drivers for change in the company. For ART's the key drivers for change are the economical factors and other one is the technological factors which are driving the company. As, the economy is growing the ART's as an company is trying to grow through various acquisition which it had done in past and has kept the its pace of growth study by providing sound and fundamental company. Technology is the key driver of change in the company as, the company is fully depended on its technology which it has adapted from time to time and has always adapted the new technology with the growing demand.
Key Driver's for Change:
The different scenario for the company is to grow globally like going internationally and taping international consumers. Increasing global competition which will encourage further globalisation. For ART's the key drivers like their technology which could help the company to grow globally by providing good products to its international customers or following their strategy by acquiring new companies or their competitors. But the company should remember that every, change comes with the cost and hampers companies profitability, ART's needs to focus on its key driver and also maintain the cost.
Strategic groups are the organization within an industry or sector with similar strategic features, similar strategies or competing on similar bases. It helps to know who the competitors of the given company are and also emphases on the basis of competitive conflict within each strategic group is different from another group. It also relates to finding threats and opportunity to the organization. In the case study we have seen that the team identified the potential market and the competitor's which affected business. Johnson, Scholes and Whittington, (2008).
Key Success factors:
They key success factors for ART's unit from my point of view was their management skills which their manager Peter Vyas exhibited on all the stages of the decision making. The company's has also succeeded through various merger and acquisition of number of technology based companies. As, per the PESTLE analysis ART's had a very favourable environment which provided a huge potential market for the company. Studying the POTER's Five Forces we can analysis that ART's as an organization had a very promising future due to its external environment and its prospects for the growth which company aimed for.
Key Driver's for the ART's as an industry:
The PESTEL factors is the most important to identify a number of key drivers of change, which are forces likely to affect the structure of an industry, sector or market. It's important for any organization to identify the key drivers across levels. As it could not be the same factors which could impact the company's success, but there could be different factors like macro-environment factors or technological factors which could be the key drivers for the company. The key drivers can be identified and understood. They vary by industry or sector and it also depended on organization how they identify each driver. Johnson, Scholes and Whittington (2008, pp.69-71).
In the above organization the key drivers could be a). Technological factors, b). Environmental factors, For ART's above mentioned factors were the key drivers which pulled the organization towards their vision.
The importance of strategic planning in any organization used with in this assignment and various tools adopted by the organization for their growth. Opportunities are only possible by looking across strategic groups particularly in the macro-environment and the concepts and framework used in this company should help in understanding the factors in the macro industry and competitor or market environments of an organisation. However the implications drawn from this understanding in strategic decisions and strategic management are the key success drivers of any organizations. Identification of threat and opportunities can be extremely valuable when doing strategic analysis and thinking about the strategic choices in the future .As the key drivers for the company was their technology and marketing skills, but they lacked in financial decision making.
For the ART's its always viable to look at the external factors around the industry and management needs to build a trust in their employee's. The organization needs to rethink on the part of its business strategies as well as financial strategies before launching their products. The company needs to identify their key drivers using these industrial tools to have a success of their launch, so that they do not fail again and maintain their key position in the market. The company can work on various other strategies like financial decisions on the part of their launch and also can implement various new strategies to get the product launched successfully. It has huge potential and could have a very big market to focus on and should work on each and every resource which is provided to them whatever the market environment existed