Analysis of Strategic Management

Question: Describe about the strategic management. Answer: Executive Summary: Strategic management is defined as a art and science in which a company or management formulate, evaluate and take necessary steps to implement the cross functional decisions within the organization which helps the organization to achieve the Goals which are required for proper Growth. Strategic management mainly focuses on integrating marketing, finance, manufacturing and all the necessary and required for the proper function of an Organization. The term Strategic management was first originated in the 1950s and in the upcoming decades it becomes famous as well in the different sections of the Industries. That time its believed that the strategic planning is one of the vital options for the dissolution of many organization related issues. The strategic planning is considered as a Game plan for a company as its believed that the company is basically working on the Strategic plans to achieve the desired Goals. (David, 2011). The Company: The Company which I have chosen for this assignment is the Willmar International Limited; the company has taken over Goodman Fielder in the year 2015. The companys business activities include oil palm cultivation, oilseeds crushing, specialty fats, edible oils reining, oleo chemicals, biodiesel and fertilizers manufacturing and grains processing. The core strategy of the company is to integrate the whole value chain in the business which consists of the manufacturing, distributing as well as marketing of the products. Company has about 300 Plants which are distributed in different locations throughout world and they are mainly operating in Australia, Singapore, China, India and other 50+ countries. The overall workforce of the company is of 90000 peoples who are working in different location and taking care of all the operation related to the company. Company is operating extensively and they are expanding the market share in different sections of the market. Willmar International Li mited works on some core values which are Integrity, Excellence, and passion, Innovation, Teamwork and Safety. This show the companys core value in which (Annual Report, 2011) The Macro Environment of the company is considered as the factors which generally impacts the business decisions of the company. As Willmar international is mainly working in different Agribusiness sectors so the Economical and Geographical conditions of the countries where they are operating considered as Macro Environment. Willmar is worlds largest producer and processor of palm oil and with a well structured and distributed network of Supplies and Distribution. The processing plans of the company as well as the production plants are mainly situated in the countries which are major producers of the palm oil. The condition of the production growth as well as the market condition is considered as a Macro-factor of the company. ( Annual Report, 2011) Pestel Analysis: Political: The political stability of the Market countries plays a vast role in the Growth of the Country. Sudden change in the rule and regulations of the country could impact the Willmars activities and interests. Economic: The Economic Condition such as Inflation, Taxes severely impact the Public buying habits and companys sales. Social: Any kind of civil unrest or social working condition will impact the company operation in the Processing countries as well as in market countries. Technological: The Invention of new technologies which could be used by the company for fast and low cost processing and production. Legislative: Any change in the rule and regulation related with the countrys export and Import could Impact the country in long term operation of the Company. As per the potters five factors, Competitor. Different other companies which are also operating in same field. Geographical conditions which can impact the Palm production. Barrier to entry Threat of the Substitutes Economic status Strategy Company has taken over the company which is a Australia based Food processing company which was started by Mr. Geo Fielder in the year 1905. The company mainly deals with production and distribution of different Food products in Australian Market. As stated by the Heffernan in the Business day the Stockholders of the Goodman has voted for the merger of the company with the Willmar international limited which is a Multinational company headquarters in Singapore. The deal was closed on the $1.3 Billion. Chairman of the Company Steve stated that the company is looking to expand the business of the Willmar into the Australia and New Zealand and they are aware of the iconic status of the Goodman Fielder so this acquisition will help the company to compete with other companies. This corporate strategy is totally based upon the Horizontal Strategies of the Company (Heffernan, 2015). The decisions were taken in the sense of market expansion for the Willmar Limited and its subsidiaries. The c ompany is already operating in the Asia and some parts of Europe and the market which was untouched by the company are now being covered by the acquisition of the companies. Apart from that the company is also using different strategies for the market expansion as well as the business portfolio expansion. Willmar International is also considering introducing some Indo foods into the Australian Market so that they can introduce more and more product and increase the business share of the company. This is a perfect business strategy by the company so that they can get an edge over the competitor companies. Easier in the year Goodman has suffered a 50 per cent drop in the banking profit, as Mr. Nicholson. States that the dropping Profit margin is considered as a challenge for the company but we are making the strategies by putting the customers in the centre. The help from the Willmar and market expansion strategy will help the company to catch the revenue cycle (Mitchell, 2015) The Strategy of a company which is developed by the management of the company which reflects its mission and values which is particularly based upon the Goal which the company has to achieve. The corporate strategy Provides clear direction and a blueprint of the planning which will be implemented by the company for the long term business. There could be different corporate Strategies which can be implemented in a Company. These are, Value creating Strategies: These Strategies are basically adopted by the Companies to get a edge over the competitors. Value- Neutral Strategies: The Company adopts these strategies if they have to retain the current market share without increasing the capital and the manpower in the organization. Value- Reducing Strategies: When the market and the customers as well the stockholders of a business start to think that the Growth of the company is mainly concentrated in the upper position. In that case to avoid the negative Growth the companies generally adopt these strategies so that they can manage the market. ( Bradley, 2013) Corporate Strategies are the Concentration Strategies, Diversification Strategies and the Outsourcing. Concentration and Diversification is further divided into Horizontal and Vertical Integration as well as into the Related and Unrelated Diversification. In the case of Willmar the company is adopting the HI Strategies through which they are operating and expanding the company in different Geographic Locations on same point on an industry value chain. Swot analysis: SWOT analysis helps us to develop the strategy and tactics to have a growth and succeed in the business. It is a short form of weakness, strength, threats and opportunities. It is mainly carried out for an organization, place, product and the external factors which are favorable and unfavorable to achieve the goal or objectives. In the case of Willmar International Limited who is operating in different segments such as Palm oil, food processing so they have a good product base which could be utilized to increase the market share. Here I am enlisting the 4 Prospects of the SWOT analysis. Strength Global Presence of the company. Huge Capital and market exploration A number of portfolios Well established Distribution and Management. Weakness: New in Food Industry in Australia. Need to know he Market Competition and Market condition in Australia. Opportunity They could explore an untouched Market, in which they can also sell the Palm oil and Products. Huge Market Demand Well established and Iconic Brand Goodman Fielder Threat: Market Competition Reducing Market share of the Goodman Fielder. Changing Market and Economical conditions. What is meant by the terms Stakeholders and Stakeholder Theory? Was the decision intended to favors all, or only some stakeholders and why? Stockholder: Stockholders are those who are directly or indirectly involved with the corporation and decision taken by the Management of the organization has impact over the Stockholders interests. These are directly or indirectly impacted by the organizational move so the companies and Organizations generally take care about the stockholders and there interest. The decision to take over the Company by the Willmar International Limited was taken by the Board of directors and Governors, while taking the decision regarding the acquisition company must takes care the interest of the stockholders. In this case the decision was taken collectively so that the Stockholders interest shouldnt be ignored. Every aspect o the business was taken care by the Management and they collectively came into a point where they have taken over the company. The Company Goodman Fielder is one of the fastest growing companies which have a significant market share in the same field where the Willmar internatio nal is operation. The acquisition would help the company to increase the market share in the Australian market and expand the organizations operation in different areas and sections. The Goodman Fielder Stockholders have voted for the merger o the company with the Willmar, as this was an 1.3 billion dollar agreement. Goodman Profit percent has dropped by 50 % due to increasing market competition and challenges which occurred in front of the company. The merger with the Willmar International will help them to explore market effectively and retain the market share. (David Koh, 2015) Outcomes: The merger decision was occurred in the year 2015, between the Global Giant Willmar International and Australian Food products company Goodman Fielder. There could not be significant impact on the company in current fiscal year. I have measured the impact over the company in 2 different objectives. Financial Base Market Share These two bases are considered as two most important objectives for the Growth of the company. Financial Base: In Global operations, the Company has got a profit of 1.03 billion dollars, with total revenue of 38.78 Billion Dollars ( Financial report, 2015). As company is operating in different locations and the merger happened in the starting of the 2015, there is significant loss in the case total revenue and the net profit of the company. The revenue of the company has decreased to the 38.78 billion dollars from the 43.25 billion dollar in the financial year 2014. The share of the Sugar and the other section has increased in the financial year of 2015, where as there is significant decrease in the sales of Tropical oil. Here we can see that the Australian Market of the company mainly consists of Sugar and Food section which is directly related with the products of Goodman Fielder. There is a little Growth in the sugar sales in Australian market. ( Financial Report, 2015) Source: Financial Report, 2015 Source: Financial report, 2015 Market Share: The Market share of the Willmar International has increased with the merger of the Goodman Fielder. The Sugar Industry of Australia is increasing with average rate of 1.8 % which is reaching the annual revenue of 3 billion dollars (IBIS sugar production report, 2015). The total revenue collection of the company in the financial year has reflected net profit of 29 million dollar, which is 1 percent lower than the profit earned in financial year 2014. There was a growth in the dairy and bread products, The Grocery and the baking products sales has decreased by a significant amount. Normalized EBIT of $77.3 was steady compared to the $77.2 million in the financial year 2014. The Net interest expense is increased by 2.5 % , the share of the company has decreased after the merger of the company with the Wilmer International limited (Langley, 2015).As here we can say that the Market share of the Wilmer International has Increased by a significant amount due to this merger. No w company is trying to introduce different food products in the Australian market which will help the company to achieve the target and increase the customer base. The decrease in the profit and revenue of the Wilmer is due to the decrease in the sales of Tropical oils so we cannot blame this acquisition for this loss. Overall this merger is going to help the Wilmer to make a significant impact over the Australian Market. Conclusion: The assignment was basically based upon the Strategy management, how could a company implement and get benefitted by the strategy management. I have Chooses Wilmer International limited which as the company which has taken over the Goodman Fielder company. This merger is as per the Concentration strategies of the Company and the management. The company has followed by the Horizontal Integration (HI) strategy. I have described the Kind of strategy which companies implement for the business process and also did PESTEL and SWOT analysis of the company. In the last section I have discussed the Outcomes of the strategies of Merger which the company has followed for the Market Expansion. The market expansion and the Internalization are becoming popular among the business houses for the business expansion. These are under the corporate strategies which are linked with the internationalization. This Strategy management is necessary for the companies so that they can effectively plan and impl ement it for the Growth of the Company or Organization. This also takes care the interests of the Stockholders which are an important part of the Organization. Reference: Company Description - Businessweek". investing.businessweek.com. Retrieved 30 May 2016. "Wilmar's Harvest". Forbes. 9 August 2010. "Wilmar International (WLMIY) Stock Price, Financials and News | Global 500". fortune.com. Retrieved 30 May 2016. Losing land to palm oil in Kalimantan bbc 3.8.2007 Kuok Khoon Hong on Singapore's 40 Richest (2009) Forbes 9.9.2009 Martua Sitorus on Indonesia's 40 Richest (2009) Forbes 2.12.2009 Helena Varkkey, The Haze Problem in Southeast Asia (Abingdon: Routledge, 2015), p. 90 "palmnewsdetail". palmnews.mpob.gov.my. Retrieved 30 May 2016. Langley, 2015, Goodman Fielders results reflecting difficult trading conditions Koh David, Goodman Fielder Accepts Wilmar-First Pacifics Offer; Retrieved From Mitchell, 2015, Goodman Fielder CEO Chris Delaney departs as Wilmar, First Pacific take control; Retrieved From Heffernan, 2015, Goodman Fielder approves $1.3b Wilmar International, First Pacific takeover.