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Student ID number: A001426098

Student name: Gopi Rajaratnam

Course name: AIB 12 MONTH MBA

Subject name: Strategic Management

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No. of pages: 19

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Title: Strategic planning: Roadmap to best-in-class MES solution

Assignment topic

You are required to perform strategic planning for your organisation or one you are
familiar with in your country or region and:

 Develop a vision statement, a mission statement and a statement of values, and


explain their appropriateness.
 Undertake an internal analysis of the organisation and an analysis of its
external environment, using appropriate strategic management tools.
 Craft strategies and explain their appropriateness.

You do not need to develop implementation processes. But you should mention the
critical importance of implementation, execution and evaluation of the strategies you
come up with for this assignment.

Executive summary

Wonderware Australia (WWA) is a small to medium enterprise (SME) company,


distributing Wonderware (WW) manufacturing execution system (MES) software
solutions for the Invensys global group. Besides the sale of MES software, WWA
provides some core services in the areas of technical support, training and basic
consultation in product selection.

This paper outlines the strategic planning roadmap for WWA in restructuring its
current business model, taking advantage of its existing internal resource and
capability, thereby positioning WWA to be the best-in-class in MES project
implementations. Prior to this a concise market force analysis is drafted using proven
strategic management tools and methodology.

Strategies are then crafted and selected to place WWA in a competitive advantage
against business rivals in the same market segment. Implementation, evaluation and
control are glanced briefly highlighting issues to consider in sustaining and meeting
WWA’s business objectives.

Keywords: Focus differentiations, Vertical integration, strategic alliance, Lean


management

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Table of contents

1 Introduction ............................................................................................................ 6

2 Guiding cornerstones .............................................................................................. 6

2.1 Product, services and customers...................................................................... 6

2.2 Current mission ............................................................................................... 6

2.3 Vision .............................................................................................................. 7

2.4 Values .............................................................................................................. 7

2.5 Goals & Objectives ......................................................................................... 8

3 External environment analysis.............................................................................. 10

3.1 Macro Environmental Factors ....................................................................... 10

3.2 Micro Environmental Factors........................................................................ 10

3.3 Strategic group mapping of Industry rivals ................................................... 11

3.4 Key success factors ....................................................................................... 12

3.5 Opportunities and threats .............................................................................. 12

4 Internal environmental analysis ............................................................................ 12

4.1 VRIN ............................................................................................................. 12

4.2 Value chain .................................................................................................... 14

4.3 Strength and weakness .................................................................................. 15

5 SWOT and TOWS Synthesis ............................................................................... 15

6 Strategic crafting................................................................................................... 17

6.1 Five competitive strategy .............................................................................. 17

6.2 Vertical integration ........................................................................................ 18

6.3 Flexibility through strategic alliance ............................................................. 18

7 Implementation, execution and evaluation considerations ................................... 19

8 Conclusion and recommendations ........................................................................ 20

References .................................................................................................................... 20

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Index of figures

Figure 1 – Current WWA Business Model .................................................................... 6


Figure 2 – WWA Roadmap ........................................................................................... 9
Figure 3 – Strategic group mapping............................................................................. 11
Figure 4 – MES Software technology S-Curve ........................................................... 11
Figure 5 – WW is everywhere ..................................................................................... 13
Figure 6 – Value chain analysis against customer value proposition .......................... 14
Figure 7 – ARC insight ................................................................................................ 16
Figure 8 – WW customer value proposition ................................................................ 18
Figure 9 – Microsoft WW Alliance ............................................................................. 19
Figure 10 – Proposed WWA Business Model ............................................................. 19
Index of tables

Table 1: Manufacturing Status in Australia ................................................................... 8


Table 2: Competitive strength assessment ................................................................... 12
Table 3: Opportunities and Threats.............................................................................. 12
Table 4: Strength and Weakness .................................................................................. 15
Table 5: Completed SWOT analysis............................................................................ 15
Table 6: Synthesis of TOWS to WWA ........................................................................ 16

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1 Introduction
In recent years, the market demand for MES solution has escalated in Australia
(source: http://www.frost.com, 12/3/2014). Riding this growing wave is MES project
implementations, predominantly carried out by system integrators (SI). WWA has
identified this lucrative revenue from MES projects and has initiated a strategic plan
to endeavour opportunities through reorganisation of its business model (Cravens,
Piercy & Baldauf 2009) thus, gaining new customers and market segments (Kanti
2012). This paper has been put together to elucidate this plan.

This paper has seven main sections. First, the guiding cornerstones for WWA will be
defined followed by a scan of the market landscape that includes an internal and
external assessment. Outcomes of these assessments will be strategically synthesised
using the SWOT-TOWS analysis. The strategic crafting will then be discussed
followed succinctly by implementation, execution and evaluation considerations.

2 Guiding cornerstones

2.1 Product, services and customers


WWA’s current business model is defined in Figure 1. WWA conducts its business in
Australia across all manufacturing sectors with a small staff of fifteen engineers
distributed across all states in Australia, headed by three directors. All engineers are
responsible and proficient in the areas in Figure 1 below.

WWA

Product Training Technical support WW Product sale Consulting Service

Figure 1 – Current WWA Business Model

2.2 Current mission


At its core, a mission statement articulates two things about itself which is, its identity
and what its business (Williams 2008) is. This objective has been fulfilled by WWA’s
existing mission statement as defined below with the added component (Williams
2008) of providing ‘the best experience when you are in need of an advice’ putting
customer satisfaction in the forefront (Box 2011). Weaving, the word ‘distinctive’ in
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the mission statement is encouraged to highlight the differentiation strategy the
company would embrace and offers. Further discussion on this subject will be carried
out in this paper.

‘WWA was formed as a new entity to service WW in the Australian market, continuing
a relationship established more than 15 years ago. As your local WW presence, we
are here to deliver to you the best experience when you are in need of advice for the
best product selection, certified training, technical support and consulting services’.
(Source: http://www.wonderware.com.au/)

2.3 Vision
A company needs a direction, where it wants to take the business to survive, what
markets to serve and products and/or service to develop and offer to the target
customer (Box 2011). Due to a lack of vision statement currently at WWA, the
following is suggested:

‘Making Australia the number one manufacturing hub in the world with our solution’

The vision above emphasises our drive to make our target customer, Australia,
predominantly in the manufacturing, the top destination with our innovative product
and services. This is in line with becoming customer centric as postulated by
(Cravens, Piercy & Baldauf 2009).

2.4 Values
It's not hard to make decisions when you know what your values are – Roy Disney.
Values are an emotional creed, which provided a sense of belonging towards the
company, mission and vision (Williams 2008). Following are five core values
proposed for WWA. The prefix of each statement with a ‘first-person-plural pronoun
is intended, as it instils a sense of group affiliation with the audience (Williams 2008)

 We will show pride in our product and service.


 We will show respect for all individuals’ regardless of backgrounds, styles and
ideas.
 We will collaborate within and outside the company to give the best.
 We will understand what the customer wants and delivering it flawlessly.

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 We will exceed customer satisfaction, while empowering their operational
excellence.

Note that last two values are customer centric. This is intended as the company must
also consider the value proposition of the customer (Box 2011) to provide their
importance to the company.

2.5 Goals & Objectives


The very purpose of strategy is to accomplish short term goals leading to long term
objectives and vision (Box 2011) regardless of the size of the company (Box 2011),
perhaps more pertinent for SME’s (Banham 2010). Strategies are a means to an end
and the following goals are listed below, culminating towards WWA’s vision:

 Vertically integrate WWA solution throughout F&B value chain, while


capturing 90% of the F&B market in Australia.
 To be able to leverage the market presence in the F&B industry and move
aggressively into all manufacturing sectors in Australia within the next 1 year.
 To reduce the exit rate of manufacturing by 3% (referring to Table 1) by
providing manufacturing environment in Australia that produces quality and
safe products with the highest efficiency and minimum energy wastage.

(Source: http://www.abs.gov.au, 24/05/2012)


Table 1: Manufacturing Status in Australia

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Banham (2010) identified that tools and models bring clarity to complex issues, by
providing a useful roadmap for enabling planning, implementation and tracking. The
following roadmap is defined for WWA, referring to Figure 2.

Products & Services


Mission
Vision
Values

Goals & objectives


(Define)

External environment analysis Internal environment analysis


VRIN
Micro environmental
Macro environmental
factors
factors Resource Capability
(Five competitive
(PESTEL)
forces)

Industry rivals (Strategic group map) Competitive strength assessment

Key success factor (KSF) Value Chain

Select strategic factors Situational Synthesis Select strategic factors

(SWOT &
Opportunity & Threats (OT) Strength & Weakness (SW)
TOWS)

Goals & objectives


(Review)

Strategy crafting & selection

Five competitive
Vertical integration Strategic alliance
strategy

Implement

Evaluate & Control

Figure 2 – WWA Roadmap

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3 External environment analysis
Let us begin with the external environment, as we can better anticipate and plan for
any business impact (Banham 2010).The business is constantly bombarded with
changed from the environment in a very broad context (Cravens, Piercy & Baldauf
2009) and we will look at this in detail in the next sections.

3.1 Macro Environmental Factors


PESTEL analysis will be used here within the context of Australia to make an
assessment of the broader environmental factors. The idea here is not only to identify
these factors, but to also link them and consider their fluctuation and interaction with
time (Burt et al. 2006). The following paragraph covers all elements of this tool.

Australia’s political landscape has seen the changes to the carbon tax policies,
affecting the economic climate by increasing the cost of manufacturing, perpetuating
to the exodus of the car industry and high unemployment. These sociocultural
changes have prompted the government to shift focus to other manufacturing sectors
such as F&B. More attention has been given enhance the technological breakthrough
in optimising F&B manufacturing thru automation due to environmental factors such
as draught whist is arguable caused by green-house effects bringing us back to where
we started i.e. reducing the carbon footprint, thru the means of legal and regulatory
policies mandated by the government.

Thus, we can conclude that these macro environmental factors favour WWA
investment into the F&B beverage industry, whilst increasing food integrity and
safety, along with reducing operating cost. These are opportunities along with threats
identified in Table 3. However, changes in the government have seen the relaxation
of the carbon tax and this impact would need to be continuously re-evaluated.

3.2 Micro Environmental Factors


We will move to the micro environmental forces and the application of the five model
of competition, defined by renowned business strategic, Michael E. Porter. Grundy
(2006) aptly correlates the dependencies of this model back to the macro environment.

Ormanidhi & Stringa (2008) have mention that this model’s popularity, well-defined
structure, feasibility, clarity, simplicity, generality lends itself to be an ideal tool to
analyse a company’s competitive advantage and strategy. Ormanidhi & Stringa (2008)

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also mentions how the model is complementarity to other approaches, one of which is
Resource-Based Perspective, which we will cover later.

WWA focus will be on industry rivals who are involved in the F&B area and this will
be covered in the next section as it has the most strongest downwards pressure. New
entrants and substitutes pose some weak threats and do not contribute to any major
downward pressure in the near future as the MES product is an integrated system not
easily replaced.

The next forces are the suppliers and buyers. WWA, being a distributer and a major
customer of the Invensys Group, experiences weak supplier bargaining power. The
buyers are the manufacturing industries, business buyers that inherently have weak
bargaining power. The cost of switching is also expensive, so this would deter new
entrants and substitution.

3.3 Strategic group mapping of Industry rivals

(Source, Gartner 2014)


Figure 3 – Strategic group mapping

Based on the data compiled by Gartner in Figure 3, we can posit four key rivals in the
global market across various industries. Focusing on the F&B industry, Invensys,
represented by WWA, Siemens, Rockwell Automation (RA) and GE Intelligent
Platform (GEIP) are identified. These vendors are all scrambling for market share as
MES is in the starting growth phase as depicted by Figure 4.

(Source: MESA 2011)


Figure 4 – MES Software technology S-Curve

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3.4 Key success factors
The following have been identified and compared to the key rivals to create a
competitive strength assessment in Table 2 for analysis (Weihrich 1982). We can
access WWA’s dominance here from the total score below.

Table 2: Competitive strength assessment

3.5 Opportunities and threats


Finally, assessment from the previous external environment is tabulated in Table 3
below:

Table 3: Opportunities and Threats

4 Internal environmental analysis


The company’s internal environment is important in its ability to compete on different
market situations (Talaja 2012). Resource and capability are mutually exclusive to
competitive advantage (Talaja 2012) and strategies should be developed based on
these. The following sections dwell further.

4.1 VRIN
Box (2011, p.116) stated that ‘Core competencies that lead to significant competitive
advantage are valuable, rare, difficult to imitate and essentially non substitutable’

Empirical analysis (Talaja, 2012) has also shown that companies achieve higher levels
of sustainable competitive advantage and performance owning valuable and rare
resources.

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WWA has a strong staff technical capability, whereby engineers are able to multitask
on the core business. This is both rare and valuable in other industries, where
engineers focus is in only one area. WWA enjoys a large install base and history in
Australia, refer Figure 5 below.

Source: http://www.techvalidate.com
Figure 5 – WW is everywhere

WW is a leader in the industry, being the first to embrace Microsoft technology while
the rest was catching up (http://www.controldesign.com , 2005). WW provides value
to customers allowing operational excellence (http://www.processonline.com.au,
2012). These traits of value and rareness provide WWA with a competitive advantage
(Talaja 2012). These traits also make WWA inimitable and non-substitutable thus
giving it a sustainable advantage (Talaja 2012). For example, WWA high penetration
and long-time relationship with the customer gives it the advantage as the cost of
switching can be high. The integrated nature of the product into the manufacturing
system requires retraining, testing and new technical support infrastructure if
substituted.

Finally (Talaja 2012) has concluded that the VRIN framework supports the
importance of these resources, thus supporting the strategic management concepts to
allow companies to compete in different markets. This paper agrees with the
hypothesis.

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4.2 Value chain
Value chain management ensures that the value provided is in line with building a
long term sustainable relationship with the customer (Kanti 2012). WWA value chain
is captured in Figure 6.

(Secondary activities) (Primary activity)

Technical Support PROJECTS


WWA (Core Business) WW solution implementation
throughout F&B vertical scope
Training
(Core Business) Customer value proposition:

 Leverage WW software solution and WWA


Consulting consultation in implementing Lean and TQM.
(Core Business)  Technical support throughout product life-cycle
 Training needs fulfilled
 Overcome challenges identified in the graph below
WW Products
ALL THIS FROM ONE VENDOR i.e. WWA
(Core Business)

Project
Management

WWA cost identified (first pass):

 Further staff training in project management


 Labour cost for project implementation
 Labour cost for commissioning (Alliance with SI’s)
 Lunch & learn event, workshop, seminar and marketing

WWA additional revenue identified from Projects (first


pass):

 WW products licenses sold


 Training offered to customer for product implemented
 Project and further consultation fees
 360 days 24 / 7 days onsite and remote support fees

Figure 6 – Value chain analysis against customer value proposition

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4.3 Strength and weakness
Assessment from the previous internal environment is tabulated in Table 4 below

Table 4: Strength and Weakness

5 SWOT and TOWS Synthesis


The combined SWOT, Table 5 is displayed below and illustrates WWA’s competitive
advantage, having the highest score:

Table 5: Completed SWOT analysis

The TOWS analysis, Table 6 allows for a dynamic, multi-dimension framework,


providing a visual dependency between SWOT (Weihrich 1982). Although, it was
penned many years ago, it is a variant tool that fits the requirements now.

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Internal Strength: Internal Weakness
1. Diversified product offering 1. Small workforce
2. Multi-disciplined workforce 2. limited sales & marketing
3. Regional presence 3. New to Project implementation

External Opportunities: Strength to Opportunities(SO) Weakness to Opportunities(WO)


1. Conducive F&B market 1. New Business Model 1. Leverage social media
2. Food integrity & safety 2. Vertical Integration 2. Mature product knowledge
3. Reducing operating cost 3. Automation Integration 3. On the job training

External Threats: Strength to Threats(ST) Weakness to Threats(WT)


1. Intense competition 1. Service throughout the lifecycle 1. Lean management philosophy
2. Low-cost providers 2. Efficient project delivery 2. ‘Of the shelf’ software
3. Increased Globalisation 3. Cost effective scalable solution 3. Alliance with system integrators

Table 6: Synthesis of TOWS to WWA

Noted observation from Table 6, weakness of small workforce with threat of low cost
providers can be offset with Lean management philosophy (Box 2011) as well as
focusing on short project lifecycle using ‘off-the-shelf’ software. Thus providing a
competitive advantage in terms of time dimension (Box 2011)

New Business model has been formulated (Cravens, Piercy & Baldauf 2009) to
combat the changing market landscape emphasising on project management, here
cross-referencing ST2 to SO1 in Table 6. Relationship and hence added strategy can
be identified, for example between SO3 and WT1. To elaborate, refer to the following
excerpt from ARC insight, which correlates to Lean philosophy (Box 2011), figure 7.

Source: ARC insights, MOM /MES Deserves a


Little Respect, May 2013
Figure 7 – ARC insight

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6 Strategic crafting
WWA has the advantage of speed due to its size and capability. Time dimension
(Box 2011), in which speed of performing an operation has a competitive advantage is
supported with processes that WWA possess in other words, templates of project
management methodology and technical documentations that can be reused. In
addition to small multidisciplinary project team and WW software that is out-of-the
box. The software and the team structure also allow tasks within the projects to be
carried out in parallel. All these increases speed of execution

WWA suitability towards focused differentiation, vertical integration and flexibility


thru alliances will be discussed next.

6.1 Five competitive strategy


(Ormanidhi & Stringa 2008) have identified from Michael E. Porter generic
competitive strategy two dimensions. The first dimension being competitive
advantage, which is differentiation or low cost in a broad target market, focused cost
or differentiation in a narrow target market and finally both cost and differentiation in
a narrow target market. The second dimension is strategic target. F&B industry is the
strategic target for WWA.

SME’s, which is the category WWA falls into, should always be focused on
differentiation (Box 2011) due to the limited staff resources compared to large
organisation. WWA differentiates itself with its product strength and an understanding
of how to fulfil the need, wants and desire of the customer (Box 2011) as evident in
Figure 8. Hence, supporting both (Ormanidhi & Stringa 2008) and (Box 2011)
opinions.

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Source: http://www.techvalidate.com
Figure 8 – WW customer value proposition

6.2 Vertical integration


(Ormanidhi & Stringa 2008) postulated an alternate model to Porter’s i.e. Structure-
Conduct-Performance (SCP), whereby the structure of an industry and common cause
of entry barrier, one of which is vertical integration has been adopted by many
manufacturing industries including F&B industry. WWA will take advantage of this
structure and drive its solution across the vertical scope as opposed to providing a
standalone solution. Thus, providing a ‘barrier to change’ of its MES to another
solution.

6.3 Flexibility through strategic alliance


WWA alliance with Microsoft and benefits achieved depicted in Figure 9. Similarly,
Alliances with System Integrators for commissioning support is seen as a contingency
strategy for WWA to minimise the cost of hiring permanent staffs. WWA would
enforce a complimentary partnership with SI, while maintaining a project
management role for coordination (Kale & Singh 2009).

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Source: http://www.techvalidate.com
Figure 9 – Microsoft WW Alliance

7 Implementation, execution and evaluation considerations


Implementation of the strategy is reactive, adaptive and cyclic in nature depending on
the dynamism of the market (Cravens, Piercy & Baldauf 2009). This has been show in
the analysis and crafting stage. The transformation is depicted in Figure 10, where a
new business model has materialized. WWA’s cross-functional (Cravens, Piercy &
Baldauf 2009) and lean organisational structure has an inherent competitive
advantage. But the overall strategy will fail if it is not conveyed to the whole
organisation, continuously monitored against WWA’s objectives for its effectiveness
and directed through the company leaders (Banham 2010).

WWA

Product Training Technical support WW Product sale Consulting Service

PROJECT

Figure 10 – Proposed WWA Business Model

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8 Conclusion and recommendations
From the analysis conducted and taking into consideration, the external and internal
environmental forces and the tools utilised within this framework, we have identified
some key strengths of WWA that can be capitalised to exploit opportunities and
deflect threats in a dynamic market, thus positioning WWA in a sustainable
competitive advantage against business rivals.

It is recommended that WWA uses all the experience gained from its core business to
funnel into MES projects, which would span the entire customer value chain from
inbound warehouse to process to packaging and to outbound warehouse. WWA is
then able to provide a comprehensive packaged solution differentiated from other
vendors. Venturing into projects is also bi-directional to the business as more of the
core business offerings will be required by the customer. Finally, alliances with SI
would ensure additional engineers are available to support the project.

It is imperative that the strategy is communicated to the entire WWA team to be


actioned, and the upper management team takes the role of enforcing and monitoring.

References
Banham, HC 2010, 'External Environmental Analysis for Small and Medium
Enterprises (SMEs)', Journal of Business & Economics Research, 8, 10, pp. 19-26

Box, TM 2011, 'SMALL FIRM STRATEGY IN TURBULENT TIMES', Academy of


Strategic Management Journal, 10, 1, pp. 115-122

Burt, G, Wright, G, Bradfield, R, Cairns, G, & Van der Heijden, K 2006, 'The Role of
Scenario Planning in Exploring the Environment in View of the Limitations of PEST
and Its Derivatives', International Studies of Management & Organization, 36, 3, pp.
50-76

Cravens, Piercy and Baldauf, D, Piercy, N, & Baldauf, A 2009, 'Management


framework guiding strategic thinking in rapidly changing markets', Journal of
Marketing Management, 25, 1/2, pp. 31-49

Grundy, T 2006, 'Rethinking and reinventing Michael Porter's five forces model',
Strategic Change, 15, 5, pp. 213-229

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Kale, P, & Singh, H 2009, 'Managing Strategic Alliances: What Do We Know Now,
and Where Do We Go From Here?’ Academy of Management Perspectives, 3, 3, pp.
45-62

Kanti, T 2012, 'Market Segmentation and Customer Focus Strategies and Their
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Ormanidhi, O, & Stringa, O 2008, 'Porter's Model of Generic Competitive


Strategies', Business Economics, 43, 3, pp. 55-64

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RARENESS AS SOURCES OF COMPETITIVE ADVANTAGE AND ABOVE
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Weihrich, H 1982, 'The TOWS Matrix -- A Tool for Situational Analysis', Long
Range Planning, 15, 2, pp. 54-66, Business Source Complete, EBSCOhost, viewed 11
August 2014, http://www.usfca.edu/fac_staff/weihrichh/docs/tows.pdf

Williams, L 2008, 'THE MISSION STATEMENT', Journal of Business


Communication, 45, 2, pp. 94-119

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