STRATEGIC MANAGEMENT

SBS/MBA

Chris Anto
[email protected]
EXECUTIVE SUMMARY

ORMA GROUP INTERNATIONAL

Orma group International had started as a trading & contracting company and it
now provides value added services in various fields of business, such as Jewellery,
Restaurant, Tourism, Food-stuffs, Financing, real-estate and so on. We have the
expertise in our services and our business is widespread all over Kuwait and in
parts of India.

About Orma Foodstuff

Orma foodstuff was established in 2012. Orma foodstuff is a reputed trader and
supplier of rice and other food stuffs in Kuwait. Our product portfolio includes
more than 600 items which are imported from manufactures in India, Thailand,
Sri Lanka, Pakistan, Malaysia, UAE, Saudi Arabia and Vietnam.
All suppliers and their production and packing plants are located in several parts
of world and strictly follow ISO, GMP, Halal, HACCP guidelines. Products are
sourced from the finest manufacturers and are supplied to a broad spectrum of
customers including hotels, restaurants, confectionery makers, and many a well-
known distributor. We are sole distributors for Mayil Rice and Food products in
Kuwait
We offer a wide assortment of high-quality products to all our customers. In
addition to the manufacturer's tests, we also conduct intensive sampling tests of
the products to determine their quality and for other factors.
Having an adequate inventory at all times, Orma Food Stuffs is capable of
supplying its products within the scheduled time frames to its clients and will
continue this commitment to quality and timely supplies. Adequate warehouse
facility is provided for our products and they are kept under controlled
temperatures and pressure levels to increase their shelf-life.
Orma Food Stuffs Near Al Mira Souk, Shuwaikh,Kuwait
1) Identify the firm’s existing vision, and mission statement

Vision
To be recognized as a leading supplier of food items in the Kuwait region for high
quality and good value products while sustaining a unique excellent service to our
customers.

Mission
“Our mission is to operate our food divisions of high ethical standards and quality
service as we build long-term relationships with our customers, employees, and
vendors “
2) Develop vision and mission statements for the organization, what you think
it should be as, per knowledge developed in your study

Vision
To give customers a wide variety of their favorite products, with guaranteed
satisfaction, at reasonable price.
Mission
To continually supply, develop and market a range of nutritious and highly
qualified products as required by the market. To adopt a safe work
environment across our business to develop and inspire our work force excess.

.
3) Identify the organization’s external opportunities and threats.
Opportunities can occur for a variety of reasons and may result from changes
within the market, customer lifestyle changes, advances in technology, new
production methods, etc.

External opportunities
a) Global expansion of retail operation
Global expansion of retail operation means expanding our business other
countries. Through global expansion we enter in to new market, which will
create opportunities to drive more revenue and operations.

b) Global Expansion of supply chain

Increasing our distribution channel on different parts of the country’s
through opening outlets in the main business areas. It helps to supply
products on correct time. If supplies are not sourced carefully, we lose our
customers and result in financial ruin.

c) Competitive Pricing
Effective pricing is essential for a business. If We are selling same or similar
products to the market, we have to study the competitor’s price. we have
to fix less price than competitors to increase our sales.

d) Adding new products with the existing products

Now we decided to add muneer Basmathi rice in our product list. It is very
risky to find market for new product.
External Threats
These are referred to as threats and are made up of external factors that are
beyond your control.

a) Competitors reducing prices

An increasing number of organic and health food retailers are starting to
offer lower price.

b) Rise of new products

Entering new products with similar features is a threat to our products.

c) Global Warming
Seasonal change is an important external threat which can alter or reduce
food production

Develop PESTLE Analysis

PESTLE Analysis, which is sometimes referred as PEST Analysis, is a concept in
marketing principles. Moreover, this concept is used as a tool by companies to
track the environment they’re operating in or are planning to launch a new
project/ product/service etc.
When it expanded P stands for Political, E for Economical, S for Social, T for
Technological, L for legal and E for Environmental. It gives a bird’s eye view of the
whole environment from many different angles that one wants to check and keep
a track of while contemplating on a certain idea/plan.
Political Environment
 Tax Policy
 Labor law
 Environmental law
 Trade restrictions
 Tariffs

Economic Environment
 Economic Growth
 Interest rates
 Exchange rates

Social Environment
 Population growth rate
 Distribution of income
 Social Mobility
 Life style changes
 Consumerism
Technological Environment
 Research and Development
 Technological Development

4) Construct a competitive Profile Matrix

It is a tool that compares the firm and its rivals and reveals their relative
strengths and weaknesses.
The competitive profile matrix consists of following attributes mentioned below.

CRITICAL SUCCESS FACTORS

Critical success factors are extracted after deep analysis of external and internal
environment of the firm. Obviously, there are some good and some bad for the
company in the external environment and internal environment. The higher rating
show that firm strategy is doing well to support this critical success factors and
lower rating means firm strategy is lacking to support the factor.

RATING
Rating in CPM represent the response of firm toward the critical success factors.
Highest the rating better the response of the firm towards the critical success
factor, rating range from 1.0 to 4.0 and can be applied to any factor. [sky]

There is some important point related to rating in CPM.

 Rating is applied to each factor.

 The response is poor represented by 1.0

 The response is average is represented by 2.0

 The response is above average represented by 3.0

 The response is superior represented by 4.0

WEIGHT
Weight attribute in CPM indicates the relative importance of factor to being
successful in the firm’s industry. The weight ranges from 0.0 means not important
and 1.0 means important, sum of all assigned weight to factors must be equal to
1.0 otherwise the calculation would not be considered correct.

WEIGHTED SCORE
Weighted score value is the result achieved after multiplying each factor rating
with the weight.

TOTAL WEIGHTED SCORE

The sum of all weighted score is equal to the total weighted score, final value of
total weighted score should be between range 1.0 (low) to 4.0(high). The average
weighted score for CPM matrix is 2.5 any company total weighted score falls
below 2.5 consider as weak. The company total weighted score higher than 2.5 is
consider as strong in position. The other dimension of CPM is the firm with higher
total weighted score considered as the winner among the competitors.

Our Company Competitor

Critical Success Weight Score Weighted Score Weighted
Factor Score Score
Brand .10 3 0.30 3 0.30
reputation
Product Quality .20 4 0.80 3 0.60
Marketing .15 2 0.30 3 0.45
Price .25 3 0.75 2 0.50
Competitiveness
Product range .25 2 0.50 4 1.00
Location .05 1 0.05 2 0.10
Total Score 1 2.70 2.95
Form this table, it is found that our company score better strength in Product
Quality and minor strength in Price competitiveness and in brand reputation.
Company has minor weakness in Product range and Marketing and major
weakness in Location. From this Competitive Profile Matrix, it is revealed that
competitor enjoys more competitive advantages by .25 than our company.

5) Construct an External Factor Evaluation Matrix (EFE Matrix)

It is a strategy tool used to examine company’s external environment and to

identify the available opportunities and threats.

An External Factor Evaluation (EFE) Matrix allows strategists to summarize and

evaluate economic, social, cultural, demographic, environmental, political,
governmental, legal, technological, and competitive information. EFE Matrix
indicates whether the firm is able to effectively take advantage of existing
opportunities along with minimizing the external threats. Similarly, it will help the
strategists to formulate new strategies and policies on the basis of existing position
of the company.

External factors are extracted after deep internal analysis of external environment.
Obviously, there are some good and some bad for the company in the external
environment. That’s the reason external factors are divided into two categories
opportunities and threats. Opportunities are the chances exist in the external
environment, it depends firm whether the firm is willing to exploit the
opportunities or maybe they ignore the opportunities due to lack of resources.
Threats are always evil for the firm, minimum no of threats in the external
environment open many doors for the firm. Maximum number of threats for the
firm reduce their power in the industry.
Developing an EFE matrix is an intuitive process which works conceptually very
much the same way like creating the IFE matrix. An External Factor Evaluation
(EFE) Matrix can be developed in five steps:

1. List key external factors as identified in the external-audit process. Include a total
of from ten to twenty factors, including both opportunities and threats affecting
the firm and its industry. List the opportunities first and then the threats. Be as
specific as possible, using percentages, ratios, and comparative numbers whenever
possible.
2. Assign to each factor a weight that ranges from 0.0 (not important) to 1.0 (very
important). The weight indicates the relative importance of that factor to being
successful in the firm’s industry. Opportunities often receive higher weights than
threats, but threats too can receive high weights if they are especially severe or
threatening. Appropriate weights can be determined by comparing successful with
unsuccessful competitors or by discussing the factor and reaching a group
consensus. The sum of all weights assigned to the factors must equal 1.0.
3. Assign a 1 to 4 rating to each key external factor to indicate how effectively the
firm’s current strategies respond to the factor, where 4 = the response is superior,
3 = the response is above average, 2 = the response is average, and 1 = the response
is poor: Ratings are based on effectiveness of the firm’s strategies. Ratings are thus
company-based, whereas the weights in Step 2 are industry-based. It is important
to note that both threats and opportunities can receive a 1, 2, 3, or 4.
4. Multiply each factor’s weight by its rating to determine a weighted score.
5. Sum the weighted scores for each variable to determine the total weighted score
for the organization.

KEY EXTERNAL WEIGHT RATING WEIGHTED SCORE

FACTORS
OPPORTUNITIES
Signing a contract .15 3 .45
with a new
supplier.
Introducing new 1 .10
technology to .10
increase the
quality of our
products and also
for decreasing the
cost
New trade .20 2 .40
agreement that
lift the ban of
imported food is
signed with a
neighboring
country
Introducing new .15 3 .45
products in the
market
THREATS
The contract with .10 4 .40
the main
customer expires
in 2 months.
Extreme cases of .05 1 .05
natural disasters
occurring next
year
New laws which .10 3 .30
affects our trading
like banning
products from
neighboring
countries.
Competitors .15 2 .30
opening new
stores in the town
TOTAL 1 2.450
6) Identify the Organization’s internal strengths and Weakness.

INTERNAL FACTORS
Internal factors are the outcome of detailed internal audit of a firm Obviously,
every company have some weak and strong points, therefor the internal factors
are divided into two categories namely strengths and weakness.

Strengths
Strengths are the strong areas or attribute of the company, which are used to
overcome weakness and capitalize to take advantage of the external
opportunities available in the industry. The strengths could be tangible or
intangible; such as brand image, financial position, income, human resource.

Weaknesses
Weaknesses are the risky areas which needs to be addressed on priority to
minimize its impact. The competitors always searching for the loop holes in your
company and put their best effort to capitalize on the identified weaknesses.

Internal Strengths of Organization

o Successful track record of developing new products – product

innovation.

o Strong Free Cash Flow

We have strong free cash flows that provide resources in the hand of
the company to expand into new projects.
o Good Returns on Capital Expenditure
We are relatively successful at execution of new projects and
generated good returns on capital expenditure by building new
revenue streams.

o Superb Performance in New Markets

We have built expertise at entering new markets and making success
of them. The expansion has helped the organization to build new
revenue stream and diversify the economic cycle risk in the markets
it operates in.

o High level of customer satisfaction

The company with its dedicated customer relationship management
department has able to achieve a high level of customer satisfaction
among present customers and good brand equity among the
potential customers.

o Highly skilled workforce

Workforce is the main strength of any organization, in that case we
are very lucky because we have highly experienced, trained and
motivated workforce to achieve more.

o High Quality products

We are offering high quality products to the customers it helps to
crate good relationship with customers.

o Strong brand reputation

We are the only dealer of Mayil branded products in Kuwait. We
have created a good impression on the customers. We are supplying
rice’s, spices, rice powders, Oil in the brand name of Mayil.
Internal Weakness

 Weak Distribution Channel

We are not able to reach every areas in Kuwait due to low
infrastructure facilities of our company and it is our big weak
marketing strategy.
 High Maintenance cost
Our building rent and its maintenance cost is very high and vehicle
maintenance also.
 High debt level
Most of the customers in Kuwait is recommending credit facilities so
companies forced to give credit facilities. It will leads to high debt
level if their payments will come pending.
 Not Enough Space in godown
 Due to low space facilities in godown the company is forced to
reduce the purchase of products which will leads to low continuation
of supply.
7) Construct an Internal Factor Evaluation (IFE) Matrix

Strengths and weaknesses are used as the key internal factors in the
evaluation.

Key Internal Factors Weight Rating Weighted

Score
Opportunities
Diversified Income (5 different .10 3 .30
brands sales income)
Brand reputation .10 2 .20
Excellent Workforce .15 3 .45
High Quality Products .20 4 .80
Threats
High Debt level .20 3 .60
Low net profit margin .10 2 .20
Competition based on prices .15 2 .30
TOTAL 1 2.85

8) Recommend Long-term objectives and specific Strategies to achieve them.

Compare your recommendations to actual strategies planned by the
company.

Objectives represent the purpose for which an organization has been started.
Objectives guide and govern the actions and behavior of businessmen. According
to William F. Glueck, “Objectives are those ends which the organization seeks to
achieve through its existence and operations.”

long term objectives are prepared from the mission statement of the organization
on the basis of which all other activities depend. Long term objectives highlight
the expected consequences that emerged from application of certain strategies.
All the strategies of the Business Organization are formulated & implemented in
the guidance of the long term objectives. These objectives are for longer period of
time ranging from two to five years & this time frame should also be consistent
for the resulting strategies.
Long term objective of Orma Foodstuff are as follows:-

Profit Earning:
Profit is the lifeblood of business, without which no business can survive in a
competitive market. In fact profit making is the primary objective for which a
business unit is brought into existence. Profits must be earned to ensure the
survival of business, its growth and expansion over time.

Profits help businessmen not only to earn their living but also to expand their
business activities by reinvesting a part of the profits. In order to achieve this
primary objective, certain other objectives are also necessary to be pursued by
business, which are as follows:

(a) Creation of customers:

A business unit cannot survive unless there are customers to buy the products
and services. Again, a businessman can earn profits only when he/she provides
quality goods and services at a reasonable price. For this it needs to attract more
customers for its existing as well as new products. This is achieved with the help
of various marketing activities.

(b) Regular innovations:

Innovation means changes, which bring about improvement in products,
distribution of goods. Business units, through innovation, are able to reduce cost
by adopting better methods of production and also increase their sales by
attracting more customers because of improved products.

Reduction in cost and increase in sales gives more profit to the businessmen. Use
of power looms in place of handlooms, use of tractors in place of hand
implements in farms etc. are all the results of innovation.

(c) Best possible use of resources:

As we all know, to run any business we must have sufficient capital or funds. The
amount of capital may be used to buy machinery, raw materials, employ men and
have cash to meet day-to-day expenses. Thus, business activities require various
resources like men, materials, money and machines.

The availability of these resources is usually limited. Thus, every business should
try to make the best possible use of these resources. Employing efficient workers.
Making full use of machines and minimizing wastage of raw materials, can achieve
this objective.

ii) Supply Quality Goods and Services:

The society expects to get quality goods and services from the business so
business should be to produce better quality goods and supply them at the right
time and at a right price. It is not desirable on the part of the businessman to
supply adulterated or inferior goods which cause injuries to the customers.

They should charge the price according to the quality of e goods and services
provided to the society. Again, the customers also expect timely supply of all their
requirements. So, it is important for every business to supply those goods and
services on a regular basis.
(iii) Make Available Globally Competitive Goods and Services:
Business should provide goods and services which are globally competitive and
have huge demand in foreign markets. This will improve the image of the firm and
also helps to increase the sales.

(iv) Sustained growth and diversification:

A business enterprise should be a growing organism. With the passage of time, an

enterprise must expand its activities. It should also aim at diversification of
products and markets. It is an age of competition and struggle.

A static business soon grows stale and disappears. It should grow from a small-
scale concern to a medium one and from a medium scale concern to a large scale
one. Organization plays an important role in this respect. Execution of policies in
organized manner builds the necessary capacity and confidence in undertaking
bigger activities.
9) Prepare SWOT Analysis

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, and so a

SWOT Analysis is a technique for assessing these four aspects of your business.
We can use SWOT Analysis to make the most of what you've got, to your
organization's best advantage. And you can reduce the chances of failure, by
understanding what you're lacking, and eliminating hazards that would otherwise
catch you unawares.
Better still, you can start to craft a strategy that distinguishes you from your
competitors, and so compete successfully in your market.

Strengths
Strengths are things that your organization does particularly well, or in a way that
distinguishes you from your competitors. Think about the advantages your
organization has over other organizations. These might be the motivation of your
staff, access to certain materials, or a strong set of manufacturing processes.
Your strengths are an integral part of your organization, so think about what
makes it "tick." What do you do better than anyone else? What values drive your
business? What unique or lowest-cost resources can you draw upon that others
can't? Identify and analyze your organization's Unique Selling Proposition (USP),
and add this to the Strengths section.
Then turn your perspective around and ask yourself what your competitors might
see as your strengths. What factors mean that you get the sale ahead of them?
Weaknesses
Now it's time to consider your organization's weaknesses. Be honest! A SWOT
Analysis will only be valuable if you gather all the information you need. So, it's
best to be realistic now, and face any unpleasant truths as soon as possible.
Weaknesses, like strengths, are inherent features of your organization, so focus
on your people, resources, systems, and procedures. Think about what you could
improve, and the sorts of practices you should avoid.
Opportunities
Opportunities are openings or chances for something positive to happen, but
you'll need to claim them for yourself!
They usually arise from situations outside your organization, and require an eye to
what might happen in the future. They might arise as developments in the market
you serve, or in the technology you use. Being able to spot and exploit
opportunities can make a huge difference to your organization's ability to
compete and take the lead in your market.
Threats
Threats include anything that can negatively affect your business from the
outside, such as supply chain problems, shifts in market requirements, or a
shortage of recruits. It's vital to anticipate threats and to take action against them
before you become a victim of them and your growth stalls.
Think about the obstacles you face in getting your product to market and selling.
You may notice that quality standards or specifications for your products are
changing, and that you'll need to change those products if you're to stay in the
lead. Evolving technology is an ever-present threat, as well as an opportunity!
Always consider what your competitors are doing, and whether you should be
changing your organization's emphasis to meet the challenge. But remember that
what they're doing might not be the right thing for you to do, and avoid copying
them without knowing how it will improve your position.
Boston Consulting Group (BCG) Matrix
The Boston Consulting Group Matrix (BCG Matrix), also referred to as the product
portfolio matrix, is a business planning tool used to evaluate the strategic position
of a firm’s’ brand portfolio. The BCG Matrix is one of the most popular portfolio
analysis methods and classifies a firm’s product and/or services into a two-by-two
matrix. Each quadrant is classified as low or high performance depending on the
relative market share and market growth rate.
Understanding the Boston Consulting Group (BCG) Matrix
The horizontal axis of the BCG Matrix represents the amount of market share of a
product and its strength in the particular market. By using relative market share,
it helps measure a company’s competitiveness.
The vertical axis of the BCG Matrix represents the growth rate of a product and its
potential to grow in the particular market.
In addition, there are four quadrants in the BCG Matrix:
Question marks: Products with high market growth and a low market share.
Stars: Products with high market growth and a high market share.
Dogs: Products with low market growth and a low market share.
Cash cows: Products with low market growth and a high market share.

The assumption in the matrix is that an increase in relative market share will
result in increased cash flow; the firm benefits from utilizing economies of
scale and gains a cost advantage relative to competitors. The market growth rate
varies from industry to industry but usually shows a cut-off point of 10% – growth
rates higher than 10% are considered high while growth rates lower than 10% are
considered low.
The BCG Matrix: Question Marks
Products in the question marks quadrant are in a market that is growing quickly
and of which the product(s) have a low market share. Question marks are the
most managerially intensive products and require extensive investment and
resources to increase their market share. Investments in question marks are
typically funded by cash flows from the cash cow quadrant.
In the best-case scenario, a firm would ideally want to turn question marks into
stars (as indicated by A). If question marks do not succeed in becoming a market
leader, they end up becoming dogs when market growth declines.

The BCG Matrix: Dogs

Products in the dogs quadrant are in a market that is growing slowly and of which
the product(s) have a low market share. Products in the dogs quadrant are
typically able to sustain themselves and provide cash flows, but the products will
never reach the stars quadrant. Firms typically phase out products in the dogs
quadrant (as indicated by B) unless the products are complementary to existing
products or are used for a competitive purpose.

The BCG Matrix: Stars

Products in the star quadrant are in a market that is growing quickly and of which
the product(s) have a high market share. Products in the stars quadrant are
market-leading products and require significant investment to retain their market
position, boost growth, and maintain a competitive advantage.
Stars consume a significant amount of cash and also generates large cash flows.
As the market matures and the products remain successful, stars will migrate to
become cash cows. Stars are a company’s prized possession and are top-of-mind
in a firm’s product portfolio.

The BCG Matrix: Cash Cows

Products in the cash cows quadrant are in a market that is growing slowly and of
which the product(s) have a high market share. Products in the cash cows
quadrant are thought of as products that are leaders in the marketplace. The
products already have a significant amount of investments in them and do not
require significant further investments to maintain their position.
Cash flows generated by cash cows are high and are generally used to finance
stars and question marks. Products in the cash cows quadrant are “milked” and
firms invest as little cash as possible while reaping the profits generated from the
products.

10) Specify how your recommendations can be implemented and what

results you can expect. what Management,Marketing,Finance/Accounting,
R&D and CIS issue, if any you foresee. Your recommendations to address
them.
o I advise to improve marketing infrastructure facilities of company by
increasing vehicles and salesforce. It will help to reach the products
in more areas of Kuwait.
o The research and development managers have to promote
innovative products to the market which leads to well standing of the
company and they also must focus on subsidiary products of the
market
o I advise credit period of company should be shortened which leads to
good financial position.

11) Recommend Procedures for Strategy review and evaluation

a. The company can check their sales and profit margin were increasing
through expanding business in new areas and introducing new
products in the market.
b. The company must follow good debt ratio which leads to good
financial position.
c. Due to good Internal control of management can reduce
malpractices.