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Business Operations and Sustainability

Discuss about the Idea Migrations in Strategic Management.

The group maintained the sustainability of competitive advantage by acknowledging the importance of information technology. The process of updation of information technology is done on an ongoing basis.

JHK has also carried out various strategic corporate social responsibilities activities in its several areas of operations and for ensuring the sustainability of their business.  Implementation of strategic capabilities is done in an integrated way for enhancing the business operations sustainability (Keells.com 2018). Group also makes employment of holistic approach in the process of strategic planning and the business cycle. It was perceived by group that placing their stores in strategic locations would help in driving revenue for business and the five-year strategic mapping exercise of business. Projects relating to logistics and transportation sector would be developed by enhancing skills and knowledge of employees. Group also relied on differentiation strategy by way of innovation of products, technological superiority, reliability, comprehensive customer services and quality of products. Therefore, JHK undertook strategy of differentiation in the past years for gaining competitive advantage in the industry.

Innovative thinking has always been the core strategic thinking of JHK for enhancing product development and therefore, efforts have been taken in terms of creating product innovation and meeting changing requirements of customers.

In the initial years, locating retain stores in strategic location was done with smaller format. However, with the changing time, there has been placing of stores in such locations with bigger format for gaining higher market shares. Technology implementation in recent years was to maintain international standards hygiene and safety in the products. It has been done by the employment of modern automated machineries that also contributed to cutting down of the cost of operations. Keells has been the customer centric organization as the group is inclined towards delivering excellent services to its customer base (Goetsch and Davis 2014). Moreover, providing customers with quality products have always been the core business practice of Keells. New product formulation forms the part of innovative ideas that helps in retaining customers and building brand loyalty. One of the key strategies that is pursued by business is to locally source raw materials and thereby leading to purchase cost optimization and ensuring that social license of operation is maintained. Strategy for implementing sustainable practices in the value chain process and at retail stores is entrenched. Offering customers with unparalleled services is one of the objectives of group in every sector and focuses on building long-term strategy (Frynas and Mellahi 2015).

Competitive Advantage in the Industry

Bargaining power of suppliers for John Keells is high and the reason is attributable to increased demanding on customer front that put pressure on long-run profitability of company. In order to deal with such higher bargaining power, Keells is required to expand their customer base and streamline their sales and production process (Nerur et al. 2016). Moreover, rapid product innovation should also be incorporated in the strategy of group.

Threat of substitute is considered low when the value proposition of products in uniquely different from what is being offered in industry.  Substitute threat of Keells could be low as requirement of maintaining higher quality standard of products might create difficulties for its competitors to substitute (Fisk 2014). However, substitute threat can be handled by making the group more service oriented along with product oriented. Moreover, switching cost of customers should be increased by way of implementing suitable strategies.

Suppliers in dominant position can reduce the profit margins earned by Keells considerably. Suppliers can use their negotiating power for extracting higher prices and therefore, it is required by the group to build efficient supply chain with many efficient suppliers. Product design should be experimented by using different materials so that if raw material price from one supplier increases, they can easily switch to other suppliers (Kim and Mauborgne 2014).

The lower pricing strategy employed by John Keells group would be pressurized if there is higher rate of new entrants in the industrial sectors of Sri Lanka. In order to safeguard the competitive edge of business of Keells, strategic capabilities should be build.

Rivalry threat faced by Keells can be regarded as high and this can be dealt by building sustainable differentiation. In extreme case of competition, group can opt for collaboration with competitors for increasing the market share by increasing market size (Knott 2015).

Intellectual capital is regarded as one of the crucial value factors and the dynamic management of intellectual capital is the part of strategic management of group. Strategic allocation of resources is the rarity factor along with assessing the verticals of business. Sustaining competitive advantage by making it costly for competitors to imitate its valuable and rare resources is the imitability factor of group. Volume driven strategy is one of the ways in which keels does the strategic allocation of resources (Engert et al.  2016).


The business model of John Keells is formulated in such a way that it incorporates vision and hence, mission and vision are at the core of business. Mission statement of the group is to retain its pre eminent position as rubber and tea broker of Sri Lanka. Significant investment opportunities are being evaluated by the group and its investment in consumer and retail business have been fruitful. However, in light of changing economic conditions of Sri Lanka, it is perceived by the group to revise its mission statements. There should be increased investment in transport and airline services due to increased demand. An appropriate mix of skills and experience in board is done by reviewing the composition and aligning it with the current and future business needs (McKiernan 2017). In recent years, the group is committed to carry out its business in an efficient way and ensures establishment of procedures and policies. Commitment of group is also driven towards serving communities by reducing the impact of their operations of environment.

Application of Blue Ocean Strategy

Slow down of global economy have contributed towards low profit generation in sectors such as transportation. Business sentiment and behavior of consumers was impacted by economic growth slowdown. Increase in global commodity prices affected the consumer food sector and in relation to group, the impact was not regarded as material.

The core areas of operation of business are advanced materials, energy storage, nanotechnology, biotechnology, renewable energy generation and synthetic biology (Husted et al. 2014). In light of changing economic conditions of Sri Lanka, it is required by group to make some modifications in the process of business activities. In order for business to defend its core strategies, it is required by John Keells to formulate appropriate strategies that would help in addressing such operational areas.

The application of model of blue ocean strategy would help in creating innovation that are value based and help in considering of the factors that should be addressed effectively and factors that should be eliminated. The factors that are involved in the framework of blue ocean strategy are elimination, reduction, raising and creation. Value innovation can be created by organization using the blue ocean strategy framework by creating factors that are unique to industry. The factors that are below the industry standards should be reduced while raising the factors that are above the industry standards. Moreover, the factors that are competed in the industry for long should be eliminated by organization. Therefore, in this regard, the factors that are competed for long in the industry should be eliminated. Elimination of such factors would help in lowering cost by reducing scale of operations complexities. Group should raise factors that are above industry standard and this involves involvement of high degree of retail stores and introducing unique events.

The factors that should be eliminated, raised, reduced and created by John Keells are explained by implementing blue ocean strategy.

Elimination factor-

  • In hotel sector, there should be elimination of less efficient standard air conditioner and it should be replaced with type air condition unit that are energy efficient.
  • Consumption of energy in plantation services sector should be eliminated
  • In the cinnamon project, equity and debt infusion should be eliminated due to long gestation period.

Reducing factors-

  • In different sectors, energy consumptions should be reduced
  • In several areas of business operations, associated level of risks should be reduced
  • Reducing requirement of water by way of recycling of treated effluent and bringing it to quality that is acceptable.
  • Reducing impact on environment due to its operational activities and associated operational cost.

Creating factor-

  • Completing round trip offerings of hotel sector portfolio.
  • Product portfolio in the consumer food sector should be expanded
  • Creating strategic expansion of retail footprint by way of capitalizing retail sector of group on low penetration of modern retail.
  • Creating growth platform by increasing production capacity and Widening portfolio offerings to customers.
  • Creation of diversified offering to customers by addressing the ever-evolving trends of travel and leisure industry.

Raising factor-

  • Systematic execution of brand strategy of Cinnamon.
  • Making continuous improvement in efficiency of carbon and increasing the production volume in the consumer food sector.
  • Integration of intellectual capital management in the strategic management process.
  • Operational activities across all the sectors of group should be performed optimally.
There are several areas where change is needed such as consumer food sector along with transport and financial service sectors. Different sectors of group should maintain highest regulatory standard in terms of the quality of products and services. This requires them to maintain compliance with statutory and regulatory environment at both domestic and international levels. Within residential and commercial property market, group is required to place more emphasis on unique product propositions identification. The group in gaining advancement in productive improvement and marketing sales should implement new technologies.

Implementation of change process within the organization requires employees to enhance their skills and upgrade their knowledge. This should incorporate promotion of innovative thinking within the organization and encouraging diversity at workplace.

Customer centricity within the organization should be enhanced by incorporation of technological platforms within the core activities. Patentee technology should be properly utilized by examination of commercial viability of prototype product.  

It is essential for group to implement several infrastructure projects and promote community development for strengthening the core business of organization. Therefore, in order to implement changes within the organization, it is required by John Keells to undertake several infrastructure projects.

Conclusion


When it comes to making changes in skills of human resource and upgrading their skills, it is essential to provide training to employees and such training should be aligned with business specific requirements. Training activities and professional development of employees should be done by way of framing several internal and external programs (Baumgartner and Rauter 2017).

Strategic capabilities should be modified in accordance with changing business environment due to changing economic conditions of business. There should be development of integrated strategy so that change is implemented by aligning to the needs and demands of customers in the market. Customer food sector and transport sector should be dealt strategically in line with economic changes. Tackling resistance of employees by providing training and development of employees and therefore, addressing the hurdle to change implementation.

References list:

Arikan, A.M. and Stulz, R.M., 2016. Corporate acquisitions, diversification, and the firm's life cycle. The Journal of Finance, 71(1), pp.139-194.

Baumgartner, R.J. and Rauter, R., 2017. Strategic perspectives of corporate sustainability management to develop a sustainable organization. Journal of Cleaner Production, 140, pp.81-92.

Dälken, F., 2014. Are porter’s five competitive forces still applicable? a critical examination concerning the relevance for today’s business (Bachelor's thesis, University of Twente).

Dess, G.G., McNamara, G. and Eisner, A.B., 2016. Strategic Management: Creating Competitive Advantages, ch3 pp74-106.

Engert, S., Rauter, R. and Baumgartner, R.J., 2016. Exploring the integration of corporate sustainability into strategic management: a literature review. Journal of cleaner production, 112, pp.2833-2850.

Fisk, P., 2014. Gamechangers: Creating innovative strategies for business and brands. John Wiley & Sons.

Frynas, J.G. and Mellahi, K., 2015. Global strategic management. Oxford University Press, USA.

Goetsch, D.L. and Davis, S.B., 2014. Quality management for organizational excellence. Upper Saddle River, NJ: pearson.

Grant, R., Butler, B., Orr, S. and Murray, P.A., 2014. Contemporary strategic management: An Australasian perspective. John Wiley & Sons Australia, Ltd..

Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning.

Hubbard, G., Rice, J. and Galvin, P., 2014. Strategic management. Pearson Australia.

Husted, B.W., Allen, D.B. and Kock, N., 2015. Value creation through social strategy. Business & Society, 54(2), pp.147-186.

Jenkins, M., Ambrosini, V. and Collier, N. eds., 2016. Advanced strategic management: A multi-perspective approach. Macmillan Education.

Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education.

Keells.com. (2018). Investment in Sri Lanka | John Keells Holdings PLC, Sri Lanka | JKH | Careers. [online] Available at: https://www.keells.com/ [Accessed 22 Mar. 2018].

Kim, W.C. and Mauborgne, R.A., 2014. Blue ocean strategy, expanded edition: How to create uncontested market space and make the competition irrelevant. Harvard business review Press.

Kim, W.C. and Mauborgne, R.A., 2017. Blue Ocean Leadership (Harvard Business Review Classics). Harvard Business Review Press.

Knott, P.J., 2015. Does VRIO help managers evaluate a firm’s resources?. Management Decision, 53(8), pp.1806-1822.

Lasserre, P., 2017. Global strategic management. Palgrave.

McKiernan, P. ed., 2017. Historical Evolution of Strategic Management, Volumes I and II (Vol. 1). Taylor & Francis.

Morden, T., 2016. Principles of strategic management. Routledge.

Morschett, D., Schramm-Klein, H. and Zentes, J., 2015. Strategic international management (pp. 978-3658078836). Springer.

Nerur, S., Rasheed, A.A. and Pandey, A., 2016. Citation footprints on the sands of time: An analysis of idea migrations in strategic management. Strategic Management Journal, 37(6), pp.1065-1084.

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