In the growing competitiveness of the global businesses, it becomes essential for Downer Group to design and implement the sustainable business strategies in order to attain the competitive advantage in the global industry. This report discusses the strategic planning premises of the Downer Group Plc. This first task of this assignment will analyze the setting of the strategic objectives for Downer Group. The second task will describe the alignment of the current strategies used by Downer Group with achievement of the postulate strategic objectives. The third task will determine the influence of current organization structure and culture for supporting the strategy execution in attaining the organizational strategic objectives (Cunningham and Harney, 2012). In addition to this, the alternative strategic options will be suggested for attaining the improvement in the strategic management practices of the organization of Downer Group.
Background information and company profile of Downer Group
Downer Group is a leading provider of the infrastructure management and engineering services to the customers in the private and public transport, infrastructure, energy, technology and communication, mining and construction, maintenance, Rail, utility services and resource sectors. Downer Group was founded by Arnold Fielder Downer in 1933 and has its main headquarters in Sydney, Australia. Downer Group mainly operates its businesses in Australia and New Zealand, but also has business operations in Asia Pacific Region, Southern Africa, and South America (Downer Group, 2016). Downer Group believes in developing harmony relationships with the customers, colleagues, and communities that enable the company in creating and sustaining its business in the modern environment. It is aimed at building good customer relationships by predicting and understanding the needs, interests, and expectations of both private and public sector customers. Downer Group has employed the staffs for more than 19,000 employees to manage both is internal and external business operations. It is a public limited company whose shares are listed on the Australian Stock Exchange, ASX: DOW.
Task 1 Analysis and Evaluation of Appropriateness of the Strategic Objectives and Justification
Downer Group is one of the leading service providers of the infrastructure, mining, energy, transport, construction and maintenance, and utility services to the customers around the world. The strategic objectives are aimed aligning its strategy with the implementation of the objectives. The strategic objectives of Downer Group are following as:
- To become the market leader in the world in the engineering and infrastructure management services by enhancing the market share, gross profits, net margins, and sales volumes of Downer Group through offering the value-added and high-end customer service solution. This strategic objective will be implemented by conducting the SWOT analysis for analyzing the strengths, weaknesses, opportunities and threats for the firm. This strategic objective will provide the firm a basis to grow the businesses by exploiting the business opportunities as well reducing the threats or risks for its businesses (Frynas and Mallahi, 2015).
- To maintain the competitive positioning of Downer Group in the industry through offering the unique and exclusive quality of the infrastructure, engineering, construction, mining, rail, and transportation services at low cost to the customers for encouraging the repeat purchase from them. This strategic objective will be achieved by using the low-cost provider, broad differentiation, focused-low cost strategy, focused differentiation, and best-cost provider strategies for attaining the sustainable competitive advantage in the industry(Alkhafazi and Nelson, 2013).
- To create the high brand awareness and customer loyalty into the infrastructure and engineering management services of Downer Group in order to establish and maintain the trusted relationships with both private and public sector customers (Harrison and Jones, 2013). This objective will represent the high brand reputation and corporate social image of Downer Group in the competitive world for developing and sustaining the harmony relationships with the stakeholders and communities. It will provide the value-added and high range of infrastructure, engineering, construction and repairing, and utility services to the customers for enhancing the customer acquisition and to persuade them to make repeat purchase.
- To run the sustainable business operations by reducing the impact of the environmental and sustainability on its business operations through the development of environmental sustainable programs. This strategic objective will enhance the suitability, effectiveness, and adaptability of the firm to make significant changes and innovation in its business operations, products, service quality, and technologies as per the dynamic business environment and changing climate conditions (Thompson, Peteraf, Gamble, Stickland, 2011).
Task 2 Evaluation and determine the alignment of the currently used strategy with the postulated objectives
The strategy will be aligned with the postulated objectives to determine the success of Downer Group firm in the highly competitive and dynamic strategy. This will provide a framework to the firm to support the short-term and long-term planning cycles, entire set of the strategic management practices, continually reviewing and evaluating the performance and track and assess the efficiency of the strategic initiatives. The strategy planning by the senior management will provide a right direction for the employees to assist in the strategy execution and implementation for the achievement of the postulate objectives as this will assist to guide the strategic management team to work as per the organizational vision, mission statement, goals, and values of Downer Group for the attainment of the set business objectives.
Two key strategies of Downer Group will include the marketing strategy and Environmental sustainable strategy that will be executed for the attainment of the business objectives. The environmental sustainability strategy of Downer Group is aimed at achieving the objective of enhancing the corporate brand reputation and developing the harmony relationship with the communities through the sustainable environmental programs and initiatives (Pearce and Robinson, 2010). This strategy of Downer Group is focused on three foundations including compliance and risk management, improvement in resource efficiency, and minimization of adverse environmental and sustainability impact on its operations. Downer Group is committed to resource efficiency system and development of a robust environmental management system that will assist to sustain the businesses of Downer Group in the future.
The firm follows the CSR guidelines, ethical principles, and sustainable environmental practices to apply into the organizational components as well as with its stakeholders that will encourage the employees to perform with their best skills and remarkable efforts for achieving the objective of sustaining the businesses in the global Infrastructure and engineering service industry despite of the high industry rivalry. Its business operations are focused on the sustainable environmental practices, such as green environmental practices, environmental-friendly campaigns, recycling of material (for reducing the waste disposals and unused materials), and reducing carbon footprints and gas-emissions for maximizing the sustainable environmental performance as well as developing good relationship with the communities and stakeholders.
The company is committed to lowering the fuels and energy consumption for reducing the carbon footprints. For this, Downer Group has developed a sustainability chart showing the strategic objectives, corporate governance, and internal responsibility of the management and executive staffs for reducing the impact of the business operations of Downer Group on the Environment (Pearce and Robinson, 2010). For example, Downer Group is continuing to identify the business opportunities through climate change solutions as well as developing capabilities in key sustainable service offering, such as low energy products (sustainable transport and renewable energy).
The marketing strategy of Downer Group is related to attaining the competitive advantage in the infrastructure, mining, and engineering industry by beating the competitors’ products, technologies, and strategies. Porter’s generic strategic model is performed by Downer Group that is comprised of five competitive industry forces based on three strategic components including the cost leadership, brand differentiation, and focus strategy. The low-cost provider strategy provides the cost advantage for Downer Group by offering its infrastructure and engineering management services at lower costs than the competitors’ products or substitute products. This strategy is effective to enhance the value chain of the operations by reducing the excessive supply chain costs, distribution, procurement, and manufacturing operations. The focused-low cost strategy is effective for focusing on narrow or small segments and offering the low-cost products (Thompson, Gamble, Stickland III, and Peteraf, 2015).
(Source: Porter’s Generic Strategies of Competitive Advantage)
The broad differentiation strategy provides the competitive advantage in the industry by differentiating the products, operations, and technologies from the competitors for delivering the exclusive quality and uniqueness of the construction infrastructure, engineering and utility services to the clients with added values. The focused-differentiation strategy is efficient to provide Downer Group a sustainable competitive advantage by focusing or small or narrow customer segments and represent the customized services for meeting the customers’ needs (Hiriyappa, 2011). The differentiation strategy is used to offer the customers the high-end infrastructural, engineering, construction, and utility service solution for achieving the awareness and loyalty of the customers into the brand in order to get the repeat purchase from them. The best-cost provider strategy will provide the sustainable competitive advantage by combining both low-cost provider and differentiation strategy. So, five generic strategic model will be effective for Downer Group to align the marketing strategy with the set objective of Downer Group for becoming the market leader in the infrastructure and engineering service industry.
Market research, integrated marketing communication, brand repositioning, and e-CRM strategy will also support the marketing strategy of Downer Group to align with the strategic objective of creating and sustaining a modern environment for building and maintaining good relationships with the customers of both private and public sector. For ex- the market research will be conducted to anticipate, understand, and analyze the current and future needs, assumptions, and demand pattern of the customers for offering them the engineering projects and infrastructure construction and maintenance services accordingly after making changes in its products, services, operations, and technologies (Harrison and Jones, 2013).
Task 3 Evaluate and determine the current organizational structure and culture support the strategy execution and attainment of postulate strategic objectives
At Downer Group, the matrix organizational structure and cohesive and learning culture of Downer Group support the strategy execution for the attainment of the postulate business objectives. Downer Group has hierarchical structure in which there is a hierarchy of the orders, organizational processes, and command of decisions and authorities from the top management to determine the roles, responsibilities, and duties of the lower level employees or executives. The organization of Downer Group is so structured that the strategic components including the mission statement, vision, core values, goals and objectives, critical success factors, brand reputation, value proposition, and operational planning support the attainment of strategic objectives.
The corporate governance of Downer Group includes the board of directors and senior management that provide the appropriate strategic direction to the subordinates or lower level employees for contributing toward the attainment of strategic objectives by performing their roles, tasks, and duties responsibly (Thompson, Peteraf, Gamble, Stickland, 2007). Different divisional units or departments of Downer Group including the Downer infrastructure, Downer Rail, Downer Mining, and Downer Transportation and Utility service departments are divided on the based on functions including transportation, mining, technology, construction and maintenance, power and energy, utility, finance, engineering, sales, marketing, and operations. All these functional and divisions are interconnected and interrelated with each other for the achievement of the postulated objectives through the strategy execution and implementation.
The senior management and directors develop the operational plans and strategies for the accomplishment of the set business objectives. The HR administrative staffs of Downer Group play a significant role in recruiting and retaining the best skilled, multi-talented, and experienced employees having ability to perform effectively for the attainment of the objectives with their best efforts, skills, and knowledge. The senior management and team leaders assign the tasks, duties, roles, and responsibilities of the subordinates or employees for preparing them for the strategy implementation in order to achieve the business objectives and annual targets of the company. The senior management communicates the vision, mission, goals, and values with the employees in order to attain the strategic objectives.
The cohesive and learning culture of Downer Group is aimed at the best utilization and management of the resources for contributing toward the business objectives. The learning and flexible culture of Downer Group assists to enhance the skills, knowledge, and strategic capabilities of the employees by providing the training and development programs so that the employees could prepare for the working on the strategy execution for the attainment of the strategic objectives (Thompson, Peteraf, Gamble, Stickland, 2011). Along with this, the flexibility of the working practices, cross-cultural or technological training and supportive work environment of Downer Group develop the employees to prepare for the attainment of the organizational goals and objectives. The senior management support, team work, and collaborative environment provide the employees learning opportunities for the attainment of the strategic objectives.
The senior management provides the compensation and rewards in the form of monetary benefits (bonus, incentives, allowances, paid leaves, and insurance and family benefits) and non-monetary benefits (performance appraisal and evaluation) for enhancing the employees’ morale, confidence, and job satisfaction that encourage them toward achieving the proposed or set business objectives. For example, Zero harm is embedded into the organizational culture of Downers’ Group to provide a supportive environment that supports the health and safety of the employees as well as avoiding the adverse impact of the environment on the communities and living people.
The great communications, harmony relationship, and collaborations are the key areas of the culture of Downer Group that assist in achieving the objective of establishing and maintaining the trusted and long-term relationship with the private and public sector customers by offering the value-added and high-end customer service solution (Thompson, Gamble, Stickland III, and Peteraf, 2015). Downer Group makes large investment into the research and development, engineering ideas, scientific methods, and business model innovation for offering the high-end solution to both private and public-sector customers.
Downer Group focuses on building trust with the customer by delivering the business premises with excellence. It works in collaboration of the partners for providing a complete service solution to its clients in the form of rails, infrastructure, and engineering, and construction and maintenance, transportation and utility services. The culture of Downer Group promotes the use of highly advanced technologies, process led innovation, and maintenance solution for ensuring the reliable and timely service delivery with added value by reducing the excessive costs. It also assists in bringing the best technical and process innovation solution for meeting the needs of the customers (Hill, Jones, and Schilling, 2014). For example, Downer Group uses disruptive business model innovation to prepare the workforce for servicing the customers effectively after understanding and analyzing their actual needs and demands.
Task 4 Recommendations for improvement in better alignment of the strategy execution and justification to support arguments
Downer Group should make the best utilization and management of the physical, human, financial, and information resources for the effectiveness of the strategic management in order to connect these resources with the strategy for the achievement of the business objectives. The Information System Management (ISM) will be effective to create alignment of the organizational structure with the strategic components for ensuring the regular information flow for the use of different organization to get the industry related updates. The information and communication technologies (ICT) will be effective to create an effective communication among the senior management and subordinates or executive staffs to assist in decision-making by the top management on the strategy execution for the attainment of business objectives (Downer- Relationship Creating Success, 2015).
The internationalization strategy will be effective for Downer Group for expanding its businesses into the international markets by using the strategic option, like joint venture through merger or acquisition. This strategy will be effective to expand the businesses by investing into new markets of Brazil, South Africa, India, and the UK through acquiring the local firms of these countries or making partnership with the local vendors.
The strategic model of McKinsey will be effective to achieve the alignment of the organizational structure with the strategic components. This model could be applied to Downer Group for improving the strategic performance by connecting 7S components including staff, structure, skills, style, strategy, and shared values, and systems interactively. This model will be effective for the firm to implement the proposed strategy effectively by aligning these components for the achievement of the postulated business objectives (Witcher and Chau, 2010).
Mintzberg’ theory of strategic management will be effective to Downer Group for making changes in the strategy execution through changing or modifying the roles, responsibilities, tasks, and projects of the managers that may assist in improving the strategic performance of company to assist in achieving the business objectives. According to this theory, the managers can play the role of informational (monitor, spokeperson, and dissemination), decisional (negotiator, resource allocator, disturbance handler, and entrepreneur), and interpersonal (Figurehead, leader, and liaison) to encourage the workforce for the strategy execution in order to attain the business objectives.
(Source: Mintzber Model of Strategic Management)
The strategic change management model, such as Lewin’s Force Field analysis model could be applied to bring significant changes in the strategic management practices of the firm to prepare for better strategy execution for the achievement of the strategic objectives (Williamson, Jenkins, Cooke, and Moreton, 2013). This model will assist in strategy decision-making by strengthening the forces for supporting the organizational changes and weakening the forces against the strategic changes.
The strategy tool, such as Pestle analysis could be used to analyze the impact of the external environmental forces, such as political barriers and instability, country risks, socio-cultural risks, rapid technological advancements, legislations and taxation, environmental protection laws, customer protection laws, and competitive legislations on the strategic performance so that the appropriate changes could be made in the strategy accordingly to respond to the external environmental forces.
(Source: Pest Analysis of Downer Group)
The performance monitoring and evaluation methods, such Benchmarking, Balance Scorecard, and Goals-setting will be effective for Downer Group to monitor and evaluate the strategic performance for preparing the strategic personnel and organizational resources for better strategy execution and attainment of the strategic objectives. Benchmarking is a tool to measure the strategic performance for Downer Group on the basis of level of achievement of the performance criteria in order to improve the strategy execution as well as achievement of the postulate objectives. Another method, like Balance Score card will be effective for Downer Group for bringing improvement in the strategic performance by giving score marks on the performance of the strategic team members on the basis of set performance criteria (financial perspective, customer perspective, internal perspective and innovation and learning perspective) within the organization (Thompson, Gamble, Stickland III, and Peteraf, 2015). The strategic evaluation method, like goals-setting will provide an appropriate strategic direction for executing the strategies by directing the strategic personnel toward the attainment of the strategic objectives by meeting the organizational goals.
(Source: Benchmarking method of strategic Evaluation)
From the above discussions, it can be concluded that the effectiveness of the strategic management is quite essential for Downer Group for developing strategies in the alignment of the achievement of the strategic objectives. Along with this, the firm should use the strategic option in the form of joint venture (merger or acquisition) for the expansion of the businesses of Downer Group into the high-growth potential markets. Porter’s competitive generic strategic model was executed for using five competitive strategies in attaining the competitive advantage in the global industry. The matrix organization structure and cohesive and learning culture of Downer Group supports the strategic implementation and achievement of the postulated business objectives. The alternative strategies were also suggested to provide the strategic direction to Downer Group toward the sustainable growth for maintaining its leading positioning in the Construction Infrastructure and Mining industry.
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