Managers have the role of developing policies, strategies, and tools to enable their companies to attain corporate goals, objectives, vision, and vision. Strategic management is an approach adopted by effective leaders/managers to develop responsive and efficient strategies to make their organisations competitive and increase their sales revenue. The approach aims at total business management, where different practices are integrated into the whole system for a well-coordinated business (Fred, 2008).
In Australia, the business world is changing rapidly; new challenges, opportunities, regulations, and threats from domestic and international players need to be managed for a successful business. The sugar manufacturing and sales industry is a multi-billionaire business in Australia, to remain competitive and profitable; businesses in the industry need to develop strategic management tools. Colonial Sugar Refinery (CSR) is a sugar company in Australia it was incorporated in 1855 in Sydney as a sugar refining company; it was incorporated to refine imported raw sugar. With time it has diversified its business to supplying building material. It is also in the investment business with a shareholding of 25% in Tomago Aluminum Smelter (Colonial Sugar Refinery official website, 2011). This paper uses CSR to analyses how strategic management tools are used in Australian companies.
A brief history of the company
CSR has been in operation for the last over 150 years and registered as a trading company in Australian security trading. The company first venture outside Australia was in 1883 when it established a refinery in New Zealand. The New Zealand Company is currently known as the New Zealand Sugar Company. Australia Company owns 75% (Haddon, 1993). The company diverted its business into building material production in 1942. It built a plaster mill in Sydney and later in 1947, started the business of making plaster for sale in Australia. Its operation is in Australia, Asia and New Zealand. Currently, it owns seven sugar mills in Australia and is the leading building material producer and sugar in Australia. The company was incorporated in the era that the business of sugar was highly politicised and took 75 years for the company to establish itself internationally. There are currently approximately 10,000 workers in the company (Colonial Sugar Refinery official website, 2011).
PESTLE analysis
The sugar industry is an industry that attracts several political influences in the country; sugar is a fast-moving commodity where the government has control. Colonial Sugar Refinery has to abide to set governmental regulations that include the countries that the sugar should be imported, for political reason. During campaigns, the company is bound to support the side of the government.
Currently, there are some increased moves to protect the environment; Colonial Sugar Refinery has embarked on measures that ensure it remains environmentally friendly; the moves include automating its refineries, using modern technologies is different processes as well having environmental consecration programs like tree planting and recycling.
The Australian technology is on an upward rise, there is a growth in the area, and the company has no option other than adopting the right technology of the time. Colonial Sugar Refinery has an internal information and technology department mandated with the role of advising the company on the best technology to adopt.
Australia, like any other country, has some business legislation and laws; in the sugar industry, there are sanctions, restrictions and barriers to trade enacted by the Australian laws. Colonial Sugar Refinery has no option other abiding by the laws.
The world is under recession out of world financial crisis that hit it at the end of 2007; Colonial Sugar Refinery was one company that suffered the economic depression. However, the Australian economy has taken shape, and the company has no worry in the sector. This has affected the economic growth of countries that, in turn, affects a business. Economic environment greatly affects the hospitality business. The interest groups in a particular geographic area have different levels of prosperity and preferences.
Porter’s five forces
These five forces are discussed below:
- Threat of New Entrants
- Bargaining Power of Buyers
- Threat of Substitute Products or Substitutes
- Rivalry Among Existing Competitors
- Diagrammatically;
The success of a business is dependent on the buyers; they are the customers of a business. They shape the kind of products that a business makes; in the sugar industry, the demand is sufficient to keep, the company running. Thus, the effects of buyer’s power are minimal.
The company has local and international cane suppliers thus it has no issues with suppliers power; however, the suppliers sometimes demand higher pays through the government and other bodies forcing CSR to have an increased cost of production.
The Australian sugar industry is politically controlled. Thus, there are fewer chances that in the future, there will be more sugar refining companies. Competition is also not high since the governments control the entry of imported sugar.
CSR has the advantage of being in an industry where there are no many substitutes other than those from imported sugar products. The governments control the imported sugar products, so the company enjoys a wider oligopoly market.
Opportunities and threats
The increasing population and growth in international trade offer a good opportunity to the company; it can diversify its markets and have more gains from the trade.
The main threat facing the company is the strong political influence in the industry and the company that can lead to reduced business in the future.
Competitor analysis
Despite the company having a market share of over 75%, the company is faced with competition from other domestic and multinationals operating in the economy; these companies include Bundaberg Sugar Ltd, Mossman Central Mill Company Limited, Marlborough Cane growers Limited, and other companies making sugar from beet.
To face the fiancé competition, the company continuously improves its products and processes to make its products cheap and affordable.
Company’s internal environment
Colonial Sugar Refinery has is highly developed in technology; this assisted the company make products affordable and use all the raw materials for economic gain; cane wastes are used for making molasses and fuel. Customers have become loyal to the company, as they are aware and guaranteed quality. Occasionally, the company undertakes its level of technology evaluation and aims at being the leader in technological development.
The company has a strong financial base and experienced management system, strong attributes that have kept the company keep going. It includes high technology in physical/tangible resources in the company; it has strong intangible assets like patents, trademark, and goodwill.
Strategic management approach at CSR
To remain competitive in the fiancé sugar industry, CSR has embarked on the following strategic moves:
Intergraded supply chain management tools
CSR management appreciates that for an effective business, there is a need to have an adequate supply of raw materials supplied either from local suppliers or from imported materials. In recognition of this, the company has an effective supply-chain management system. Supply chain management refers to the process undertaken by a business in the supply of goods and services into the business and sometimes extends to supplying goods to a customer. The logistics start from ordering until delivery of goods; it is the major task of the procurement department, although it is conducted in collaboration with other departments. Companies involved in a supply chain vary. Thus, the company needs to develop a strategy that caters for all the companies. The company is in the sector that is influenced by political moves, sugar company and building industry; it has to ensure that it has an adequate supply of the materials right in time that it can manufacture the needed products and meet the demand of the market (Haberbeg & Rieple, 2001).
To have a competitive advantage, the company ensures that it has managed its internal process well; the procurement department has the role of ensuring that the company has the required materials for effective production. One of the areas that determine the quality of products that a company makes is supply. Companies should thus manage in a strategic manner such that at any one time, there is adequate supply for continued production. When developing a supply chain strategy, it is important to look into the following areas; have a supply chain synchronisation, establish a procurement department/team, set a supplier base, integrated purchasing strategy, set minimum quality and value determination. The result is a just in time supply where a company has strategic supplier alliances.
When supplies are well managed, numerous benefits accrue to an organisation, they include continuous production, fair cost of production, reduced warehousing time and there is no risk that materials will not be available for production. Under the larger supply chain management policy, there are some tools that are used. They include just in time management (JIT) policies, supplier relations management, value determination policies, quality management policies, and fair trade approaches. Managers have the role of using the best approach to fit their kind of business.
Effective human resources management
As strategic too, companies have realised the need to have an effectively managed human capital; a company requires both physical and human resources for its operations; human resources are the greatest asset that an organisation can have; without it, no business transaction can take place. It ensures that the business is run in the right way, and thus determines the current as well as the future state of the business (Smith & Mazin, 2004).
CSR has a human resources management department with the role of ensuring staff needs have been addressed effectively. The department has the role of ensuring that the company has the right number of human capital at the right time at an appropriate cost. It has the mandate of planning, deploying, employing, training, retaining, and dismissal of employees. When the department is undertaking this duty, it looks into quantitative and qualitative aspects. The quantitative aspect means the right number of employees and qualitative means employees with the right skills (Hitt, Hoskisson & Ireland, 2003).
Managing human resources has been an ignored area in traditional business management, however with modern strategic management; managers increasingly understand that the success of their organisation is highly dependent with how well they manage their human resources. When managing human resources, managers ensure that they understand the needs of the human resources and their motivations, when they are well managed, they are sources of creativity, innovations and innovation. Strategic management gurus are of the opinion that organisations that have well managed human resources have an asset over their competitors that can be used for a long time as a source of competitiveness.
CSR hires from the domestic and international market to ensure that it has the right expertise and have a diverse workforce, with such a people resource the company is able to trade effectively in the local and international markets (Renckly & Renckly, 2003).
Strategic marketing
Amidst the competitive business environment, companies have to sell their products in the best method; this calls for strategic management tools to be put in place. A marketing strategy is a well-thought process through which a company gets its products in the target market amidst prevailing competition. It involves products development, resource allocation, market segmentation, and positioning of a company’s products; strategic marketing can be said to be the process that is responsible for identifying, anticipating and satisfying the requirements of consumer profitably. Strategic management goes further than the mere selling of products to customers as it involves creating a close relationship between the company and the customer (Wheelen & Hunger, 1998).
CRS maintains an internal marketing department with the mandate analysing, planning, implementing, coordinating, pricing, promotion and distribution of products, services and ideas the required output after the process is to have a company with competitiveness and one that creates customer loyalty and brand identity. The department is designed to create and maintain beneficial exchange with target markets for achieving organisational objectives; there is a difference between the sales and marketing roles, although they are integrated into the same department of marketing. A misconception exists that sales and marketing mean the same; however, they are different. The misunderstanding comes because they have similar objectives, and sometimes they use similar mechanisms to attain their goals. The major difference between sales and marketing is on their scope. Marketing creates a path for sales through a universal approach, whereas sales have a micro approach as one activity in marketing.
Under the marketing strategy, there are different tools that can be implemented to have effective marketing management; they include marketing research, market research, target market development, market segmentation, market positioning brand identity, and products differentiation. Managers have to integrate all the above marketing tools to come up with one marketing strategy that is responsive to their needs (Kurtz, MacKenzie & Kim, 2009).
Customer-relationship management strategy (CRM Policies)
Customers are the reason why businesses operate, they need to be managed, developed and a good relationship maintained with them. In modern strategic management policies, there are deliberate moves to maintain good customer relations (CSR Policies). Customer relationship management (CRM) is a strategic management tool, strategy, and weapon that managers have to ensure that customers become and remain royal to their business; when well implemented it is the best approach to mitigate against strategic risks facing an organisation. CRM is a comprehensive approach to creating, maintaining and expanding customer-business relationship; it has the main role of ensuring that the customer is satisfied with the products and services of a company (Kristin & Kerr, 2002).
Although CSR does not have a strategic program that aims at meeting the needs of its customer, it maintains a customer management department that aims at advising the company on the best moves they should implement to maintain good relations with their customers. Under this section, leaders have the mandate of undertaking numerous customer behaviour analysis, analysing feedbacks, engagement in corporate social responsibility reporting and accounting and doing business ethically (Raab, 2008).
Knowledge management and business intelligence tools
With current changes in the business world, Knowledge management and business intelligence approaches have taken centre stage in ensuring that decisions made by managers are responsive to the needs that their company have. Knowledge management cannot be given a single definition, but it entails a combination of issues and processes. Knowledge is intangible assets, which are unique to different business and can be improved with experience and information interpolation. The most important factors that are considered are human assets that a company has. Human beings have different talents and capabilities; however, tapping this asset requires strategic operation and management. Other than utilising the knowledge and experience that the employees have, there is the need to use available information to grow and develop knowledge and expertise in employees (Singh & Soltani, 2010).
Information can be internal and external information and how well the information is utilised can result in the growth of knowledge; effectiveness, and efficiency in doing business. To effectively utilise information, organisations should move from information hoarding to sharing of information that they are holding for the benefit of others; this is son despite that there is some private information that a company can hold (March & Kim, 1988). Other than physical, financial and human resources being available in an organisation, there is need to integrate an intellectual asset where these resources can be managed, and measures developed to ensure a company has a competitive advantage. Knowledge management is a process that involves understands the current operation, understanding the potentials and weakness of a company, then strategies to get relevant business information and knowledge developed. With the right knowledge, then a company can be able to make sound decisions responsive to the needs of the organisation. CSR has enacted on information collection to ensure that it has made decisions that are responsive to the needs of the environment they re operating it; the information is crucial for domestic and international competitiveness (Johnson, 2008).
Business intelligence is a term used to refer to a collection of applications that aim at keeping and making available a data bank in a certain industry or organisation; the bank is referred to when decisions are made. When developing the database, the initial stage is information gathering, then sorting the information, analysing it, and finally making is accessible for use. Business intelligence can be used in the general strategy of a business or a certain area/department in an organisation. The major benefit that a company derives from using business intelligence tools in the right way is a competitive advantage. This is because a firm has access to information that assists in making informed, current and futuristic decisions. Business intelligence tools take two angles; custom-built tools and commercial reporting tools. Whichever the category they are meant to keep custody and give access to certain information from data warehouse maintained in a company for better decision making. Custom-built software’s are developed in a company and aims to keep and avail certain information, to limited people working in a certain area or organisation. Commercial reporting tools are developed for sale to help in a specific line of business; they are made kin such a way that they can be integrated into the system operating in a business (Olszak & Ziemba, 2004).
Total quality management and Six Sigma management approach
Total quality management consists of competitive moves and business approaches aimed at producing successful performance; it is management’s “game plan” for running the business, strengthening a firm’s competitive position, satisfying the customers, the stakeholders, shareholders and the staffs. CSR aims at fulfilling its stakeholders thus have embarked on massive total quality management policies. It seeks to develop the way into which all those that are a party to the business get satisfied. It aims at going a step further and satisfying the customers beyond their expectations. There is a lot of focus on the customer; the customer is the greatest asset that an organisation can have. To get customer loyalty is every business dream and target (Swamson, 2009).
Under the Six Sigma approach, much emphasis is on efficiency; efficiency is a strong competition tool in businesses; it reduces the cost of production and leads to more satisfied customers. On the other hand, satisfied customers are an increased business to an organisation. In 1981, the Motorola company was pondering of a system that can point out areas of inefficiency. Finally, it innovated a system called Six-Sigma. Six-sigma is a management tool that approaches management from a scientific angle. It analyses an entire organisations processes, and by creating relationships and data analysis, the area with a deficit is recognised. Six-sigma is implemented in business to improve the efficiency and increase the productivity of the entire organisation; when the system is implemented, it focuses on all areas in an organisation to have a totality of good results in the organisation. Though when implemented is a project that undertakes a number of procedures, it is a continuous process that requires constant improvements and upgrading. The success of CSR can be attributed to its continuous process improvement (O’Connor, 1989).
Conclusion
Leaders have the role of ensuring that their organisations are competitive and fulfil the needs of all stakeholders; to attain this noble goal, they need to develop and implement strategic management tools that are responsive to the needs of their organisations. When these tools are well managed, then the managers are likely to be successful in the competitive business environment.
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