Draft a presenation report highlighting Business Strategy

Introduction

Achieving competitive advantage is not easy, particularly in global markets. Businesses that do well in these markets need to be able to use their systems, technologies and knowledge effectively across the whole of the organization and respond to local people, cultures and different ways of working.

One such organization that uses its knowledge and expertise to achieve competitive advantage is IMI. IMI is a global engineering group involving many different engineering specialities. It is recognized worldwide for its innovation, expertise and global service and sells engineering solutions in over 50 countries to match customer needs.

IMI’s competitive advantage comes from combining the knowledge and skills of its people with an in-depth understanding of what its customers want and need. IMI’s strengths of expertise and innovation differentiate it in the markets it serves. IMI operates in a B2B (business to business) environment, providing tailored products and services to companies. These include large household names such as Chevron, Shell, Volvo Trucks, General Motors, Coca-Cola and McDonalds, as well as smaller niche companies dealing in specialized equipment or building materials.

The company has a long history of working in valve and fluid engineering technology. It uses this expertise to design and develop products to control the flow of liquids or gases for organizations in a wide range of markets. These include nuclear, oil and gas, medical devices and the food and drink industry. By providing specialized products and services, IMI adds value for customers and helps them, for example, to reduce carbon emissions or improve energy efficiency.

The business spans five areas or ‘platforms’, most of which rely on IMI’s core skills and competencies in valve and fluid engineering:

• Fluid Power – develops precision-engineered valves to control air or fluid flow in many industries. Examples of applications include ventilators and anaesthesia machines; compressed air systems for train door control; and valve solutions for controlling emissions on heavy duty trucks.
• Severe Service – develops specialized valves to control the flow of steam, gas or fluids in heavy industries such as nuclear, oil and gas, and petrochemicals. These industries require the highest levels of safety, operating in conditions of extreme pressure and temperature.
• Indoor Climate – produces valve solutions for heating and cooling systems to reduce energy consumption, for example, thermostatic valves for radiators or energy efficient heating systems for office blocks such as the Shard in London.
• Beverage Dispense – provides cooling and dispensing equipment for drinks such as carbonated soft drinks and smoothies for retailers, restaurants and hotels.
• Merchandising – develops innovative displays for shops to influence consumer buying decisions. This case study looks at how IMI has developed its strategy of ‘Engineering Advantage’, combining its skills and knowledge, customer insight and innovation to achieve global market leadership.

Setting strategy

Strategies are the long-term plans that a business puts in place to achieve its aims and objectives. IMI’s goal is to achieve market leadership in the global niche markets it serves. A niche market is a relatively small and often highly specialised segment of a market, which has few competing companies supplying it. There are many different strategies an organisation can choose to achieve its goals. For example, these might include developing new products, growing by acquiring other companies or reducing costs.

IMI’s strategy focuses on:

• Increasing business in its chosen niche markets
• Accelerating growth by investing in new products and emerging markets
• Maintaining high operating margins and reducing costs of manufacturing and costs within its supply chain. Few competitors can provide the specialist knowledge and tailored fluid engineering solutions IMI offers, so it is able to command higher margins for its high quality products and services in its chosen niche markets. Imi’s strategy brings together three key aspects:
  • Its engineering skills in fluid technology and innovation
  • Its market leading positions in its chosen niche markets
  • Its exposure to markets which are benefiting from long term structural growth trends such as climate change and urbanization.

IMI calls the point of overlap between these three factors, the ‘sweet spot’. Where these three areas come together is known as strategic convergence. It is an area where IMI expects to achieve clear market leadership, higher profit margins, greater product differentiation, opportunities to meet global trends and to grow. Over half of IMI’s operations are positioned within the strategic ‘sweet spot’ today, with plans to increase this to over 70% over the next five years.

Strategic convergence

Strategic convergence provides IMI with a clear focus. At the ‘sweetspot’ IMI’s knowledge and skills are delivering products and services which meet long term customer needs and help to give greater product differentiation. This means offering products which do things competitor products cannot. This enables IMI to attract higher profit margins as well as gaining clear market leadership and creating barriers to entry for other competitors.

This strategy IMI defines as ‘Engineering Advantage’. By understanding the needs of its markets and customers, IMI is able to provide them with customised products and services. This creates customer loyalty and enhances competitive advantage. IMI’s technical focus is on the precise and reliable control of gases and fluids. However, to retain its leadership position IMI needs its people to develop business competencies such as:

• Key Account Management (KAM) – which requires highly talented and customer-focused people to maintain the company’s in-depth insight into what its markets need.
• Project management – translating the insight offered through KAM into products and services which deliver real commercial advantage for its customers. That advantage could be unique selling features to increase market share or lower supply chain costs.
• Seizing the initiative in emerging economies – IMI invests in emerging economies – areas of the world that are rapidly growing and industrialising such as China, India, Brazil and Eastern Europe. These offer great potential for growth, so IMI needs people with strong commercial skills and local market knowledge to win new business. IMI’s people are a key factor in helping to deliver its strategy and their skills are a core competence for the business. Engineering and technical know-how is important. However, IMI looks for people who also have an entrepreneurial spirit. This mindset helps the company to look for new and creative ways to add value for customers and the business. IMI also supports ongoing development of its people in various ways in order to maintain its innovative edge. For example, the IMI Key Account Management Academy not only provides training for employees but also establishes best practice across the Group. This also helps the company to transfer knowledge from one part of the business to another. External drivers for growth Businesses need to take account of and react to what is happening outside the company – the external environment. These environmental factors may be analyzed through the acronym SLEPT. These stand for: By monitoring the external environment, it is possible to identify whether factors represent either an opportunity or a threat to achieving its strategies. IMI has identified four clear global trends within its external environment. These trends are shaping the direction that the business is taking to achieve growth.
  • Social factors – for example, the UK’s ageing population is affecting the availability of skills
  • Legal factors – regulatory standards or legislation such as Health & Safety might lead to increased training needs
  • Economic factors – the current global recession is causing downturn in demand
  • Political factors – government initiatives are requiring businesses to address the issues of climate change
  • Technological factors – the impact of the internet makes it easier to compare the value of products and services. These external factors may influence how a business will achieve its strategies.
  • Climate change: IMI has responded to this global issue by developing products to provide cleaner energy as well as helping organisations to reduce their energy consumption. IMI is supplying severe service valves into a number of major liquefied natural gas projects (LNG) in Australasia. The demand for LNG has been growing because gas is a much cleaner fuel to use for power generation than coal. IMI has a market-leading position in applications such as anti-surge valves. These valves have to be able to provide very precise control at very low temperatures down to minus 162°C.
  • Resource scarcity: There is a global need to manage resources such as water and energy more efficiently in order to ensure sustainability. IMI is developing a range of engineering solutions to manage the use of energy, water and waste more efficiently. IMI’s innovative engineering has also developed ways of controlling building environments. In France IMI has developed the country’s first ‘energy positive’ building which produces more energy than it consumes. IMI’s technical skills in valve and fluid control have produced a new pressurisation and heating control system. This allows the building owner to control the temperature of each room depending upon heating requirements. This not only gives better comfort to users, but the building has been designed to reduce energy consumption by 65% compared to buildings constructed under current standards of regulation.
  • Urbanization The rapid urbanization taking place around the world, particularly in emerging markets such as China, requires significant investment in mass transit infrastructure. This is to ensure that the rapidly expanding urban populations have reliable transport options to enable them to travel easily around the cities and, of course, to work. CSR Zhuzhou in China services main line electric locomotive trains. They required a new type of pantograph (the equipment which links the train to the overhead electricity cables) as their existing pantograph could only cope with speeds of up to 200km per hour. IMI’s subsidiary, Norgren, was able to create a new pantograph which could operate effectively at 400km per hour in addition to coping with temperature fluctuations from - 40°C to +80°C – without affecting performance. The new technology and design not only met the high standards of the Chinese Ministry of Rail, but also effectively utilized both standard and bespoke Norgren technology to set it apart from the competition.
  • Ageing population: IMI’s technical expertise is also used to support many different types of medical equipment. As the global population is living longer, more support is needed to keep people healthy. IMI is delivering specialized products to support this.

Internal values

IMI believes in behaving responsibly towards all its stakeholders, including its customers, shareholders and employees. Its values of Excellence, Innovation and Integrity guide the behaviors of all employees. Values are the beliefs shared by those within an organization which underpin its business strategies. IMI’s values translate through its processes to increase the value of its products and services to customers. They also define the high standards for how the business and its employees deal with customers and stakeholders. This commitment to the business behaving in a responsible manner is known as the IMI Way. The IMI Way is an integrated approach across the company and enables the business to achieve sustainability in its management of:

• Health and safety – IMI promote a strong health and safety culture. This minimizes risks to people as well as to communities and the environment.
• Energy efficiency – IMI has an internal commitment to become more energy efficient in developing its products and processes.
• Risk in the supply chain – IMI sources materials and components from many countries. To make sure that products are sourced responsibly, it sets out standards for its suppliers as part of its Supply Chain policy. This includes aspects such as minimum working conditions.
• Supporting customers to act responsibly in business – IMI helps its customers to recognize and develop opportunities for sustainability.

Role

You have been recruited as a Corporate Strategy Manager by a well-known large global organization, IMI or an organization of your choice. You have been asked to produce an environmental analysis and strategic growth management for the company plan based on the use of recognized internal and external analytical tools.

Requirements:

1. Apply PESTEL and Ansoff frameworks to analyse the impact and influence of the macro environment on a given organization's strategies. Furthermore, critically analyse the macro environment to determine and inform strategic management decisions.
2. Using VRIO and SWOT (or any other relevant) framework, conduct an internal environment and capabilities assessment of a given organisation. In addition, interpret information and data to assess strengths and weaknesses of an organisation’s internal capabilities, structure and skill set.

Part 2: Strategic Management Plan

The part 2 of the assignment is to be submitted as a Written report and Individual PowerPoint Presentation which must be clear and concise. Read and follow the instructions carefully.

All your work must be supported with research and referenced correctly using the Harvard referencing system (or an alternative referencing system). You also need to provide a bibliography using the Harvard referencing system (or an alternative referencing system). Inaccurate use of referencing may lead to issues of plagiarism if not applied correctly.

The recommended word limit for the part 2 is 1,500–2,500 words, although you will not be penalized for going under or exceeding the total word limit.

Unit Learning Outcomes

LO3

Apply the outcomes of an analysis, using an appropriate strategic management tool, in a given market sector

LO4

Develop a strategic management plan in an organization, informed by models, theories and concepts, to achieve competitive advantage in a given market sector

Transferable skills and occupational competencies developed

• Use appropriate software effectively to create and deliver an individual presentation.
• Analyse various market sectors.
• Devise appropriate strategic objectives.
• Design strategic management plan.

Vocational scenario

You have been recruited as a Corporate Strategy Assistant Manager by IMI. You have been tasked in formulating a strategic management plan to help IMI in improving their competitive edge and strengthening their market position.

• Determine and apply Porter Fiver forces model to analyses a given market sector for an organisation and inform strategy. (A 5-minutes individual PowerPoint Presentation should be created and presented in class).
• Based on the analysis in you conducted above, devise (using bullet points) four strategic objectives for an organization to inform strategy. Briefly provide the rationale for these objectives. Furthermore, justify the use of an appropriate strategic management tool for a given market sector, to inform strategy and strategic objectives for an organization.
• Apply a GAP analysis and Balance score card to devise and interpret strategic planning for a given organization.
• Design a strategic management plan, applying appropriate strategies to improve competitive edge and market position based on the outcomes. The plan should include the following elements
  • Mission of the organization
  • The objectives devised in section 4
  • Select and explain if the business should opt for diversification or integration.
  • Select and explain a suitable strategy from porter generic model to achieve the objectives
  • Implement the plan explaining the requirements related to the following
    • Human,
    • Financial,
    • physical environment,
    • Time
    • Cost
    • Monitor and evaluate the success of the plan
    • Additionally, produce a strategic management plan that has tangible and tactical strategic priorities and objectives. Moreover, create a set of valid strategic directions, objectives and tactical actions for successfully achieving strategic alignment, based on critical interpretation of internal and external data, and information.