Strategy Development and Initiatives

2) Identifying Kleenmaid St George's Internal Strenghts and Weaknesses.

The next step is to identify environmental opportunities and threats. Here we should apply all information we have learned on Kleenmaid St George's and macro environment, to analyse the environment our company is confronting. Of particular importance at the industry level is Porter's five forces model and the stage of the life cycle model. Which factors in the macro environment will appear prominent depends on the company being analyzed. However, use each factor in turn (for instance, demographic factors) to see whether it is relevant for the company in question (Johnson & Scholes 2002).

Having done this analysis, you will have generated both an analysis of the company's environment and a list of opportunities and threats.

2.1) Potential internal strengths

Many product lines?

Kleenmaid St George has a huge variety of product lines such as Ovens, Cook top, Rangehood, Dishwasher, Washing machine, Refrigerator, Sink, Tap, Cookware, Dryer, Microware, Vacuum, Waste Disposal (Hill et al. 2004).

Broad market coverage?

Kleenmaid St George has stores all across Australia:

* Australian Capital Territory - Canberra.

* Queensland - Borwns Plains, The Gold Coast, Stones Corner, the Sunshine Coast, Toowoomba and Viriginia.

* New South Wales- Alexandria, Auburn, Castle Hill, Chatswood, Dee Why, Tuggerah, Warners Bay, Wollongong, Liverpool and Taren Point.

* South Australia - Marion and Stepney.

* Tasmania - Hobart and Launceston.

* Victoria - Camberwell, Dandenong, Geelong, Mitcham and Thomastown.

* Western Australia - Cannington, Malaga and Myaree (Hill et al. 2004).

In addition it has developed an extensive network of dealers in regional areas of Australia.

* Good marketing skills? Yes

* Good materials management systems? Yes

* Information system competencies? Yes

* Human resource competencies? Yes

* Brand name reputation? Yes

* Appropriate management style? Yes

* Appropriate organizational structure? Yes

* Appropriate control systems? Yes

* Ability to manage strategic change? Yes

* Well-developed corporate strategy? Yes

* Good financial management? Yes (Hill et al. 2004)

2.2) Potential Internal Weaknesses.

* Obsolete, narrow product lines? No

* Rising manufacturing costs? Yes

* Decline in R&D innovations? Yes

* Poor marketing plan? No

* Poor material management systems? Yes

* Loss of customer good will? No

* Inadequate human resources? Yes

* Inadequate information systems? No

* Loss of brand name capital? Yes

* Growth without direction? Yes

* Bad portfolio management? No

* Loss of corporate direction? No

* Infighting among divisions? No

* Loss of corporate control? No

* Inappropriate organizational

structure and control systems? Yes

* High conflict and politics? No

* Poor financial management? No

3) Analysing the external environment of Kleenmaid St George.

The next step is to identify environmental opportunities and threats. Here we should apply all information we have learned on industry and macro environments, to analyze the environment the company is confronting. Of particular importance at the industry level is Porter's five forces model and the stage of the life cycle model. Which factors in the macro environment will appear salient depends on the specific company being analyzed (Mintzberg & Quinn 1992).

Having done this analysis, we will have generated both an analysis of the company's environment and a list of opportunities and threats.

3.1) Potential Environmental Opportunities.

* Expand core business(es)? Yes

* Exploit new market segments? Yes

* Widen product range? Yes

* Extend cost or differentiation advantage? Yes

* Diversify into new growth businesses? Yes

* Expand into foreign markets? Yes

* Apply R&D skills in new areas? Yes

* Enter new related businesses? Yes

* Vertically integrate forward? Yes

* Vertically integrate backward? Yes

* Enlarge corporate portfolio? Yes

* Overcome barriers to entry? Yes

* Reduce rivalry among competitors? Yes

* Make profitable new acquisitions? Yes

* Apply brand name capital in new areas? Yes

* Seek fast market growth? Yes

3.2) Potential Environmental Threats.

* Attacks on core business(es)? Yes

* Increases in domestic competition? Yes

* Increase in foreign competition? Yes

* Change in consumer tastes? Yes

* Fall in barriers to entry? Yes

* Rise in new or substitute products? Yes

* Increase in industry rivalry? Yes

* New forms of industry competition? Yes

* Potential for takeover? Yes

* Existence of corporate raiders? Yes

* Increase in regional competition? Yes

* Changes in demographic factors? Yes

* Changes in economic factors? Yes

* Downturn in economy? Yes

* Rising labor costs? Yes

* Slower market growth? Yes

4) Evaluating the SWOT analysis

Having identified Kleenmaid St George's external opportunities and threats as well as its internal strengths and weaknesses, you need to consider what our findings mean. That is, we need to balance strengths and weaknesses against opportunities and threats. Is the company in an overall strong competitive position? Can it continue to pursue its current business- or corporate-level strategy profitably? What can the company do to turn weaknesses into strengths and threats into opportunities? Can it develop new functional, business, or corporate strategies to accomplish this change? Never merely generate the SWOT analysis and then put it aside. Because it provides a succinct summary of the company's condition, a good SWOT analysis is the key to all the analyses that follow (Pearce & Robinson 1994).

A SWOT analysis of Kleenmaid St George has revealed the company's success is in exploiting the weaknesses of the competition. The organization's internal strengths and external opportunities out weigh the internal weaknesses and external threats (Hill et al. 2004).

5) Analyse Corporate level strategy

To analyze a company's corporate-level strategy, we first need to define Kleenmaid St George's mission and goals. The information you need to collect to find out the company's corporate strategy includes such factors as its line(s) of business and the nature of its subsidiaries and acquisitions. It is important to analyze the relationship among the company's businesses. Do they trade or exchange resources? Are there gains to be achieved from synergy? Alternatively, is the company just running a portfolio of investments? This analysis should enable you to define the corporate strategy that the company is pursuing (for example, related or unrelated diversification, or a combination of both) and to conclude whether the company operates in just one core business. Then, using your SWOT analysis, debate the merits of this strategy. Is it appropriate, given the environment the company is in? Could a change in corporate strategy provide the company with new opportunities or transform a weakness into strength? For example, should the company diversify from its core business into new businesses? (Richardson & Richardson 1989)

Other issues should be considered as well. How and why has the company's strategy changed over time? What is the claimed justification for any changes? Often it is a good idea to analyze the company's businesses or products to assess its situation and identify which divisions contribute the most to or detract from its competitive advantage. It is also useful to explore how the company has built its portfolio over time. Did it acquire new businesses, or did it internally venture its own? All these factors provide clues about the company and indicate ways of improving its future performance (Thompson & Strickland 2003).

Andrew Young and Dick England, the founding directors of Kleenmaid St George, established the following mission statement for the company, " We founded Kleenmaid with a commitment to introduce and maintain new leveles of product quality and service within the major electrical appliance industry. We, together with all of our team at Kleenmaid, stand personally accountable to that founding commitment" (Hill et al. 2004).

6) Analyze business-level strategy.

Once we know the company's corporate-level strategy and have done the SWOT analysis, the next step is to identify the company's business-level strategy. If the company is a single-business company, its business-level strategy is identical to its corporate-level strategy. If the company is in many businesses, each business will have its own business-level strategy. We will need to identify the company's generic competitive strategy - differentiation, low cost, or focus - and its investment strategy, given the company's relative competitive position and the stage of the life cycle. The company also may market different products using different business-level strategies. For example, it may offer a low-cost product range and a line of differentiated products. Be sure to give a full account of a company's business-level strategy to show how it competes (Rosen 1995).

Identifying the functional strategies that a company pursues to build competitive advantage through superior efficiency, quality, innovation, and customer responsiveness and to achieve its business-level strategy is very important. The SWOT analysis will have provided you with information on the company's functional competencies. You should further investigate its production, marketing, or research and development strategy to gain a picture of where the company is going. For example, pursuing a low-cost or a differentiation strategy successfully requires a very different set of competencies. Has the company developed the right ones? If it has, how can it exploit them further? Can it pursue both a low-cost and a differentiation strategy simultaneously? (Rosen 1995)

The SWOT analysis is especially important at this point if the industry analysis, particularly Porter's model, has revealed the threats to the company from the environment. Can the company deal with these threats? How should it change its business-level strategy to counter them? To evaluate the potential of a company's business-level strategy, you must first perform a thorough SWOT analysis that captures the essence of its problems (Rosen 1995).

Once you complete this analysis, you will have a full picture of the way the company is operating and be in a position to evaluate the potential of its strategy. Thus, you will be able to make recommendations concerning the pattern of its future actions. However, first you need to consider strategy implementation, or the way the company tries to achieve its strategy (Thompson & Strickland 2003).

Staff members are consulted from time to time as required, rather than having regular that is weekly or fortnightly meetings. The specific departments are also involved in analysing data and providing useful inputs to the chief executive officer who assumes the role of chief strategist and chief entrepreneur. At meetings every month, the staffs discuss organizational issues (Hill et al. 2004).

The Electrolux group holds about a 50 per cent market share with sales of more than A$1 billion hence dominating the appliance category in Australia. Other competitor include Simpson, Dishlex, Fisher & Paykel are relatively new entrants in the market. A range of high end brands like Maytag, Smeg, Gaggenau, Ilve and Blanco "compete for the same premium dollar" as Kleenmaid St George does (Hill et al. 2004).

The competitive advantages Kleenmaid St george has over them are our superior product design, superior warranties and superior in-store experience. Our sales persons are fully trained and have abetter knowledge than the competitors' sales staff making the customers beter informed about product performance. Kleenmaid St George's stores help the customers to see a working demonstration before they buy the product (Hill et al. 2004).

Kleenmaid St George offers free delivery on the same day to customers as well as installation. We were one of the first whitegoods companies to offer a five-year warranty to our customers as well a six month money back guarantee i.e. if a customer is not fully satisfied with our product within six months of purchase then full purchase price will be refunded to them (Hill et al. 2004).

We also offered 'Clever Kitchen Concept Seminars' where experienced kitchen professionals provide advice on designs, colour, etc. we also use the Kleenmaid Integrated Software System (KISS) which is capable of recording customer information but few problems were faced like slow performance and frequent lock - ups. This was later replaced by a new system called Calls & Services, which can support more than 200 users simultaneously. Customers find that information is retrieved quickly and a lot of detail is available when they contact Kleenmaid St George. Our company has recognized technology as a source of competitive advantage, and it employs a team of qualified professionals to work on technology enhancements (Hill et al. 2004).

7) Analyse structure and control systems.

The aim of this analysis is to identify what structure and control systems the company is using to implement its strategy and to evaluate whether that structure is the appropriate one for the company. Different corporate and business strategies require different structures. For example, does the company have the right level of vertical differentiation (for instance, does it have the appropriate number of levels in the hierarchy or decentralized control?) or horizontal differentiation (does it use a functional structure when it should be using a product structure?)? Similarly, is the company using the right integration or control systems to manage its operations? Are managers being appropriately rewarded? Are the right rewards in place for encouraging cooperation among divisions? These are all issues that should be considered (Hannagan 2002).

In some cases there will be little information on these issues, whereas in others there will be a lot. Obviously, in analyzing each case you should gear the analysis toward its most salient issues. For example, organizational conflict, power, and politics will be important issues for some companies. Try to analyze why problems in these areas are occurring. Do they occur because of bad strategy formulation or because of bad strategy implementation? (Hussey 1994)

Organizational change is an issue in many cases because the companies are attempting to alter their strategies or structures to solve strategic problems. Thus, as a part of the analysis, you might suggest an action plan that the company in question could use to achieve its goals. For example, you might list in a logical sequence the steps the company would need to follow to alter its business-level strategy from differentiation to focus (Hussey 1994).

Kleenmaid St George has around 300 employee of which 200 work in the stores and the other 100 work as Kleenmaid St George personnel. Kleenmaid St George has a practice of rewarding staff with competitive remuneration. Those working in the sales area receive evaluation appliances valued at approximately A$ 5000 and are regularly required to report on the product's performances. Head office personnels are provided wih lunches cooked using company products (Hill et al. 2004).

Kleenmaid St George has ambitious growth plans, mainly through expanding its retail network of franchises to gain better customer availability nationally (Hill et al. 2004).

Recommendations

The last part of the case analysis process involves making recommendations based on your analysis. Obviously, the quality of your recommendations is a direct result of the thoroughness with which you prepared the case analysis. Recommendations are directed at solving whatever strategic problem the company is facing and at increasing its future profitability. My recommendations are in line with my analysis (Hannagan 2002).

Conclusion

After performing a comprehensive analysis, formulating strategic options and making recommendations and developing implementation plan it can be concluded that very little changes is required for the company. Also answers to questions and issues raised in the case have been included.

References

) Hannagan, T.J. 2002, Mastering Strategic Management, Basingstoke, Palgrave.

2) Hill, C.W.L, Jones G.R. & Galvin, P. 2004, Strategic Management: An Integrated Approach, Milton, Qld.: John Wiley and Sons Australia.

3) Hussey, D.E. 1994, Strategic management : theory and practice, Oxford, Uk.

4) Johnson G. & Scholes K. 2002, Exploring Corporate Strategy Text and Cases, 6th Ed, London, Prentice Hall

5) Mintzberg H. & Quinn J.B. 1992, The Strategic Process; Concepts and Contexts, Englewood Cliffs, Prentice Hall

6) Pearce A. J. & Robinson R. B. 1994, Strategic Management, Formulation, Implementation, and Control, 5th Ed, Boston, Irwin.

7) Richardson B & Richardson R 1989, Business Planning; An Approach to Strategic Management, London, Pitman

8) Rosen R 1995, Strategic Management; An Introduction, London, Pitman.

9) Thompson, A. & Strickland, A. J. 2003, Strategic Management; Concepts and Case, 13th Ed. NY, McGraw Hill.

Strategy Development and Initiatives MGMT 20112

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