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Strategic Management Refers To The Continuous Process To Plan

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Question:

What is the Strategic Management refers to the continuous process to plan?

 

Answer:

Introduction

Strategic Management refers to the continuous process to plan, monitor, analyze and assess all the necessary aspects on organization that are needed in order to achieve the ultimate objectives and goals of the organization (Hill, Jones and Schilling 2014). The objective of this study is to evaluate the various aspects of the strategic management of a public listed company of Singapore named Singapore Technologies Engineering (ST Engineering). ST Engineering is one of the largest organizations in Singapore founded in the year of 1967. ST Engineering is one of the largest companies in Singapore that is listed in Singapore Exchange. The main business of the company is to provide engineering solution and Services in aero aerospace, electronic, marine sector and others. One of the major strategic business units of the company is ST Electronics. This unit of ST Engineering was founded in the year of 1969. ST Electronics is a provider of Information Communication Technologies (ICT) in Singapore. The three main business areas of ST Electronics are satellite and broadband communication, eco-enabling ICT and e-Government and e-Enterprise. The main purpose of this study is to analyze the various elements of the business environment of ST Electronics, as it is a strategic business unit of ST Engineering (Stee.stengg.com 2016).

PESTEL Analysis

PESTEL analysis is done in order to evaluate the impact of several elements of macroeconomic environment on an organization. In this regard, the six factors of PESTEL are political factor, economic factors, social factor, technological factor, environmental factors and legal factors (Yüksel 2012). The impacts of these entire factors on ST Electronics are discussed below:

Political Factor

Political factors refer to the political condition of the country that affects the business of any organization. As per a report of Political and Economic Risk Consultancy (PERC), ST Electronics enjoys a lot of political independence as the political situation of the country is good and there is not much risk in the political situation of the country. As per the political regulation of the country, the free speech of the political parties is limited. Limited dissemination of the political contents leads to the stable political situation of the country (Ho 2014).

 

Economic Factor

The non-existence of corruption makes the economy of Singapore a vibrant free market economy. The developing economy of Singapore is growing at a fast pace that supports the business sector of country. ST Electronics has been beneficial by the economic policies of the country. The Government’s decision to diversify the economy of the country has helped to enrich the business operation of ST Electronics. However, there are some areas where the company is facing difficulty. They are the shortage of labors; the rise in the cost of the labors and the continuous decline in the productivity (Rothaermel 2015).

Social Factor

Some major social factors influence the operation of ST Electronics. Singapore can be described as one of the Eastern countries that still follow the traditional cultural values. The people of this country use to work hard in order to fulfill their desires. This process helps to increase the purchasing power of the economy and this process creates business opportunities for ST Electronics. On the other hand, the country has a very high literacy rate that helps ST Electronics to get educated and skilled employees for their  various business operations as ST Electronics is operating in an industry where the requirement of skilled and educated employees are very high (Kolios, Read and Ioannou 2016).

Technological Factor

The technological factor of the country has contributed magnificently in the success of ST Electronics. The advancement of the internet services in the country has helped ST Electronics to carry their business on another level as technological improvement of the country is related to the improvement of the business of ST Electronics. This process results in the lowering of the business expenses of the company; on the other hand, ST Electronics now connects to the rest of the world due to the progress in the technology of the company. Due to the advancement in the technological factors, the e-commerce business of the country has taken a big positive turn. All this aspects help the business of ST Electronics.

Environmental Factor

The Ministry of environment and Anti-Pollution has taken some positive steps to revive the environmental condition of the country. As a result, the Singapore Government has introduced laws, rules and regulations that has created some difficulties for Singapore Petroleum Company. As ST Electronics is a technology and engineering company, they have to comply with a lot of IT related rules and regulations to carry on their operation. The lack of water resources in the country makes the operation of Singapore Petroleum Company a little difficult, as the country has to rely on Malaysia for the supply of necessary water.

Legal Factor

The Government of Singapore has introduced some major legislative rules and regulations for the smooth running of the operation of the businesses of the country. ST Electronics use to comply with some major legislation of the country like Electronic Transaction act, Intellectual Property Rights Acts, Corporate Taxation Act, Imports and Exports Acts and others.  On the other hand, the Government of the country has taken some legal actions in order to eradicate the scope of cyber crimes from the country. For these particulars reasons, ST Electronics has to comply with a lot of cyber crime and other information technology related rules and regulations. In a broader sense, the legal aspect of the country suits the business of ST Electronics.

Based on the above PESTEL analysis, it can be concluded that Singapore is a remarkable county to carry on the business of ST Electronics. Most of the factors in the PESTEL analysis support the business operation of ST Electronics. Most importantly, the political stable condition of the country suits the technology and engineering business of ST Electronics. The inadequate supply of labors and the increase in the labor cost is a hinder for ST Electronics. However, it can be said that with the help of the developing economy of the country and the rules and regulations introduced by the Government of Singapore, ST Electronics will not take much time overcome these issues.

Porter’s Five Forces Analysis

Porter’s five forces model is a framework that is used to analyze the level of competition in a particular industry. On the other hand, the evaluation of porter’s five forces model helps to analyze the competition in the industry and help the organization to formulate the necessary strategies in order to get the necessary competitive advantage. There are five elements in the Porter’s Five Forces model. They are threat of new entrance, bargaining power of the customers, bargaining power of the suppliers, threat of substitutes and the rivalry among the existing competitors (Dobbs 2014). All these above aspects are discussed below in relation to ST Electronics.

 

Threat of New Entrance

Threat of new entrance refers to the entry of new companies in a particular industry. The entrance of new customers vastly depends on the entry and exit barriers of the particular industry. In the technological engineering industry of Singapore, the entry barriers are very much high. Many aspects are necessary to enter in the technological engineering industry like capital, economies of scale, brand equity, regulatory policies of the government; and most importantly, the new entrants need to take permission from the government and other authorities of the country as they will be providing electronically and engineering solution to the government as well. All these aspects make it difficult for the new companies to make an entrance in this particular industry of Singapore. Hence, there are is not much threat in this aspect of Porter’s Model. Thus, it can be rated as low threat factor (Porter and Heppelmann 2014).

Existing Rivalry

The intensity of the existing rivalry among the competitors depends on the number of rivals in the particular industry and the level of their business. The high exit barriers of the industry increase the intensity among the existing rivals. The oil and gas industry in Singapore is one of the biggest industries in the country. There are three major competitors of ST Electronics in Singapore. They are Evergreen Marine Corporation (Taiwan) Ltd., Aviall, Inc. and Panasonic Avionic corporation. These are the top companies in Singapore and the presence of them makes the competition more intense. Hence, the pose of threat is high in this case (Anton 2015).

Threat of Substitute Products

There is not many kind of substitute products are available in the market of Singapore of ST Electronics. The company is providing various kind of satellite services, broadband services, e-commerce and e-Government services which are not possible to be supplied by many other companies. The reason is the cost of production of these kinds of products. The cost of production of these products is high and this reason contributes to the overdependence on the products of ST Electronics. All these reasons contribute to the low level of risk or threat in this particular aspect of Porter’s model (Yunna and Yisheng 2014).

Bargaining Power of Suppliers

At the presence of well-organized market, the availability of few substitutes and high switching cost, the suppliers gain strong bargaining power. In case of the technological engineering industry of Singapore, there in not much role of the suppliers as ST Electronics are producing their own technological electronic products. Hence, it is posing as low level of threat for ST Electronics.

Bargaining Power of Buyers

Bargaining power of the buyers refers to the power of the buyers to reduce the price of products for more quality and more services. Bulk purchase, low switching cost and others increases the bargaining power of the buyers. In this case, there is a low threat involve in this factor of Porter’s model. All the products of ST Electronics have a high brand loyalty and there is an existence of product differentiation. Thus, due to the brand loyalty of the products of ST Electronics, it is not easy for the customers to switch to other brands from ST Electronics (Haucap et al. 2013).

From the above discussion, it can be said that there entrance of new competitors do not pose high threat for ST Electronics as the high entry and exit barrier; but the intensity of the existing rivalry is a threat for the company as there are three major competitors in the country. The high cost of production of substitute products eliminates the threat of substitute. On the other hand, the brand equity and brand loyalty of the various products of ST Electronics eliminate the threats of bargaining power of buyers and suppliers.

Core Competency Analysis

Core competencies refer to the combination of some resource and skills that distinguish an organization from the others. The core competencies of an organization help it to access in the greater market. As per the VRIO framework, there are four aspects of core competency analysis. They are valuable, Rare, Costly to Imitate and Non-Substitutable (Shuen, Feiler and Teece 2014). All these aspects are discussed below:

Valuable: this aspect of core competencies indicates those aspects of the organization that help to add value to the organization by exploiting all opportunities. These are called the valuable core competencies of an organization. It has been said earlier that ST Electronics is a strategic business unit of ST Engineering. ST Electronics is involved in the technological and engineering services in Singapore. The main core competency of ST Electronics is to provide end-to-end satellite communication for the commercial purpose along with the defense application around the country. These aspects are considered as valuable as they help to add value to the organization as well as to the customers of the organization (Stee.stengg.com 2016).   

Rare: Some resources can only be acquired by some selected organization. All these resources are considered as rare resources. ST Electronics involved providing the end-to-end satellite solution to the commercial as well as defense sectors. This is a rare process as it is not possible to develop and produce this kind of products. Hence, the products of the company make ST Electronics rare in the market. This aspect give the company the necessary competitive advantage as ST Electronics has the ability to satisfy the needs of the consumers in a better way than the others do.

Costly to Imitate: Costly to imitate is one of the major core competencies of any organization. A resource is costly to imitate if other companies cannot access that particular resources. The other companies of Singapore cannot imitate the business process of ST Electronics, as they do not have the access to the electronic satellite resources. One just cannot imitate the business operation of ST Electronics as high cost is involved in this process. This is the reason it can be considered as one of the core competencies of ST Electronics.

Non-Sustainable: This core competency implies that the other companies cannot sustain the rare and costly to imitate core competencies. ST Electronics has the rare and costly to imitate competencies that make the company different from other companies and provide it the necessary competitive advantage.

From the above discussion, it can be observed that the supply of the end-to-end satellite solutions make ST Electronics unique from the companies in the same field. With the help of all these core competencies, ST Electronics can achieve the desired sustainable competitive advantage. 

 

Business Strategy

Business strategies are the means that help to achieve the ultimate objective or goal of the organizations. It can be described as the long term planning of the business. Business strategies are developed for a period of three to five years. ST Electronics has adopted some unique business strategies to gain the market in Singapore. ST Electronics have adopted some major strategies that have been helping them make their business a grand success. As discussed earlier, the main strategy or core competency of ST Electronics is to provide end-to-end satellite solution to the commercial as well as governmental sectors. In this regard, the strategy of the company is to deliver innovation and quality products to the customers of the organization. This strategy can be identified by observing the fully equipped facilities located in the various regions of Singapore and the research and development facilities of the organization. On the higher hand, the strategies of the organization are well backed by the highly qualified experts of the organization. The various kind of products of ST Electronics like telecommunication, satellite services and others help to the success of the strategies of ST Electronics (Stee.stengg.com 2016).  

Suitability of Strategies

Suitability of the strategies refers to the process of measuring the fitness of the business strategies in the organization. It is essential to match or fit the strategies with the organization in order to gain the organizational success. As per the above discussion, the main strategy of ST Electronics is to deliver their various kinds of innovative products with high quality. On the other hand, the main core competency of ST Electronics lays in the production and supply of end-to-end satellite communication services. As per the strategy of ST Electronics, the company aims to produce a lot of products and services that are different from other competitors. It can be seen that ST Electronics has a lot of different kind of products than the competitors of them. The strategies and the strong record of accomplishment have made the company a trusted one to the commercial sector as well as to the government. The strong employee base of the organization helps the organization to deliver high quality and innovative security and infrastructure projects. On the other hand, the continuous research and development process of ST Electronics has made the company a cost-effective one. The company has become successful in the implementation of the strategies of the company. Hence, it can be said that, the adopted strategies are suitable for ST Electronics (Eden and Ackermann 2013).

Recommendation

Based on the above discussion, it can be said that the adopted strategies of ST Electronics is appropriate to achieve the goal of the organization. However, there is always a scope of improvement. Hence, certain recommendations are provided below:

  • It is recommended that ST Electronics should focus more on the cost-benefit strategies of the company. Though, the various products and services of ST Electronics are satisfying the needs of the customers, the introduction of cost-benefit strategy will help tap the customers more effectively.
  • It is recommended that ST Electronics should introduce more product differentiation strategies in order to create a more diversified portfolio of their business products. The company already has a large variety of different products and services. However, the introduction of new products will increase the profitability of the company.
 

Conclusion

The objective of the study was to evaluate the aspects of strategic management of ST Electronics. For this purpose, PESTEL analysis and Porter’s Five Forces analysis is taken into consideration. As per the PESTEL analysis, it can be said that the external environment of Singapore is suitable for ST Electronics to carry bon the business as there is absolute political stability in the country. However, the increasing labor cost is a concern for the organization. The Porter’s Five Forces Model states that the intensity of the competition among the rivals firms is high in Singapore. Due to the existence of high entry and exit barriers, the threat of new entrances is low here. As per the above discussion, the core strategy of ST Electronics is to deliver the innovative as well as high quality products and services to the commercial as well as defense sector of Singapore. Some crucial factors are helping ST Electronics for the success of the strategies of ST Electronics. They are well-equipped facilities, effective research and development section, well skilled experts and many others. On the other hand, the company is stepping forward towards the development of the strategies of cost-effectiveness. Due to the successful implementation the strategies, the company can provide more products and services at an affordable price. The success of the strategies shoes the suitability of the business of ST Electronics. Based on the analysis of the strategies of Singapore Petroleum Company, some recommendations are provided.

 

References

Anton, R., 2015. An Integrated Strategy Framework (ISF) for Combining Porter's 5-Forces, Diamond, PESTEL, and SWOT Analysis.

  1. Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a set of industry analysis templates.Competitiveness Review,24(1), pp.32-45.

Eden, C. and Ackermann, F., 2013. Making strategy: The journey of strategic management. Sage.

Haucap, J., Heimeshoff, U., Klein, G.J., Rickert, D. and Wey, C., 2013. Bargaining Power in Manufacturer-Retailer Relationships. Düsseldorf Institute for Competition Economics (DICE).

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

Ho, J.K.K., 2014. Formulation of a Systemic PEST Analysis for Strategic Analysis. European academic research, 2(5), pp.6478-492.

Kolios, A., Read, G. and Ioannou, A., 2016. Application of multi-criteria decision-making to risk prioritisation in tidal energy developments. International Journal of Sustainable Energy, 35(1), pp.59-74.

Porter, M.E. and Heppelmann, J.E., 2014. How smart, connected products are transforming competition. Harvard Business Review, 92(11), pp.64-88.

Rothaermel, F.T., 2015. Strategic management. McGraw-Hill.

Shuen, A., Feiler, P.F. and Teece, D.J., 2014. Dynamic capabilities in the upstream oil and gas sector: Managing next generation competition. Energy Strategy Reviews, 3, pp.5-13.

Stee.stengg.com. (2016). ST Electronics | A Company of ST Engineering. [online] Available at: https://www.stee.stengg.com/ [Accessed 14 Dec. 2016].

Stee.stengg.com. (2016). ST Electronics | A Company of ST Engineering | The Group | ST Electronics (Satcom & Sensor Systems) | About Us | Our Business. [online] Available at: https://www.stee.stengg.com/group/Satcom/ [Accessed 14 Dec. 2016].

Stee.stengg.com. (2016). ST Electronics | A Company of ST Engineering | Our Company | About Us. [online] Available at: https://www.stee.stengg.com/ourcompany/aboutus.html [Accessed 14 Dec. 2016].

Yüksel, I., 2012. Developing a multi-criteria decision making model for PESTEL analysis. International Journal of Business and Management, 7(24), p.52.

Yunna, W. and Yisheng, Y., 2014. The competition situation analysis of shale gas industry in China: Applying Porter’s five forces and scenario model. Renewable and Sustainable Energy Reviews, 40, pp.798-805.

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