• Subject Name : Strategic Management

Strategic Management

Table of Contents

Introduction.

Vision of the company.

Mission of the company.

SWOT.

PESTLE..

Strategic Position and Action Evaluation Matrix.

Boston Consulting Group Matrix.

Competitive Profile Matrix.

External Factor Evaluation Matrix.

Internal Factor Evaluation Matrix.

Grand Strategy Matrix.

Quantitative Strategic Planning Matrix (QSPM)

Recommended Long-term Strategies and how to achieve them..

Implementation of the Recommendations.

Review and evaluation of strategies.

Conclusion.

References.

Introduction

QDVC, Qatari Diar Vinci Construction is a collaborative partnership between Qatari Diar (51 per cent) and Vinci Construction Grands Projets (49 per cent) established under the laws of Qatar. The focus of the business is general contract and building work, along with any associated facilities relevant to broad designated Design and Construction schemes, whether public or private, on which there may be a simple and powerful added benefit.

QDVC is based in Doha, Qatar and is part of the construction sector of non-residential properties. QDVC has 5,000 workers at this place and produces 737.22 million dollars in revenue (USD). There are 19 firms in the QDVC family of businesses.

Established under the laws of Qatar since April 2007, QDVC is the product of the partnership of Qatar Diar and Vini Construction. Qatari Diar is recognized as a global pioneer in sustainable real estate growth and VINCI Construction Grands Projets is recognized as one of the world's largest civil engineering planning, building and distribution firms currently operating in 40 countries. The collaboration between the two business leaders culminated in a symbiotic relationship with QDVC, the provider of in-house engineering and construction facilities for mega infrastructure ventures, with the goal of gaining feedback from local and foreign partners (QDVC, 2019a).

Vision of The Company

QDVC's vision is to build a successful and stable local construction firm of international standing whilst providing valuable service to its clients.

Mission of The Company

QDVC’s mission is to:

  • Build a professionally trained, competitive and skilled team of professionals to deliver the best level of services.
  • Effortlessly aim to establish itself as a precedent in their profession both as a service provider and as an employer
  • Ardently help its local economy by developing in Qatar and obtaining support from local partners along with its developed global supplier.
  • Continually remain on the latest technology of development and insure that its constantly ahead of its competitors.
  • To actively endorse its local society by being a responsible organization dedicated to the social cause (QDVC, 2019b).

New Strategic Mission and Vision

The new mission of QDVS, according to the proposed study are:

  • Increase profitability by building cost synergies and ensuring optimum utilisation of resources
  • Built more customer base, by obtaining more market share by delivering quality products, processes, and services.
  • Entering new geographical markets.

SWOT

SWOT Analysis is the most popular method for auditing and assessing the overall competitive role of the organization and the climate. The main goal is to define approaches that can establish a firm unique operating strategy that can better match the organization's capital and skills with the needs of the market in which the enterprise works (Gürel & Tat, 2017).

Strengths – they are the internal factors which are the qualities and attributes of the business which helps in the accomplishment of the organisation’s mission.

Weaknesses – they are the internal factors of the business which prevents the business in accomplishing the mission objectives.

Opportunities – they are the external environmental factors, in which the company operates, which would help the business operations in obtaining competitive edge.

Threats – they are the external environmental factors in which the company operates, which would pose a threat to the company’s competitive advantage.

Advantages of SWOT Analysis

  • It helps in the strategic planning.
  • Helps in synchronisation of the firm’s resources and abilities with the competitive environment for effectively gaining the competitive edge and meeting the mission and vision goals.

Strengths

  • The company, with its devoted consumer service management department, has been able to maintain a high degree of customer loyalty among current consumers and good brand awareness among prospective customers.
  • Across the years, the company has built a strong distribution network that can reach a significant portion of its target market.
  • The organization invests tremendous money on the recruiting and development of its staff, resulting in a workforce that is not only well trained but also inspired to achieve more.
  • Automation of operations provided consistency in production and made it possible for the business operations to increase or decrease on the basis of customer demand conditions.

Weakness

  • Although the group is one of the leading organizations in its industry, it has found it challenging to grow to new commodity sectors in its current culture.
  • The organization has not been willing to leverage research and development effectively to its benefit. It has come across as a veteran company looking forward to providing products based on validated quality on the sector.

Opportunities

  • The development of a global technical system and a government free trade deal have provided an impetus for the company to enter a modern, rising market.
  • Declining freight prices due to decreased import costs would thus lower the expense of the commodity and thereby offer the company an opportunity-either to boost its productivity or to pass on advantages to customers in order to raise market share.
  • Emerging technological development create an opportunity for the organization to adopt innovative business strategies in the industrial market. This would enable the business to maintain its current customers with a high level of service and to attract new customers by certain value-oriented proposals.

Threats

  • Increasing competition has raised the amount of players in the industry in the past few years, bringing downward pressure not just on profitability, but also on overall sales.
  • New technology launched by a competitor or a market disruptor can present a major challenge to the business in the coming years.
  • Economic slowdown will affect the returns on the projects, thus hampering the efficiency of the business.

PESTLE

PESTLE is an abbreviated type of financial, cultural, social, technical, legal and environmental policy. Its purpose is to figure out how the external environment influences the business. The external environment impacts businesses, but there is nothing that can be done to alter the external environment, although the internal environment may be modified to a degree (Perera, 2017). The Pestle technique is a management methodology that can be employed efficiently and easily for an external risk assessment process.

Political

Government decision to ask the expatriates to leave the country would lead to shortage in the labour supplies, along with delay in the arrival of raw material will cause delays in the completion of the construction projects. 

Economical

As a consequence, the country has witnessed a fall in stock markets, with businesses losing substantial sales owing to broken links with foreign nations, hurting exports and prospective ventures (Global data, 2018).

Social

Reduced shortage of worker will cause delays or postponement of the construction work which would lead to reduced jobs and hence decreased socio-economic life of the people.

Technological

Technological advancements in the construction industry will enable the company to take advantage of the new technology and provide better services to the customers. Government is willing to embrace new and innovative technologies (Gulf Times, 2018).

Legal

No fixed legal infrastructure in place. Thus, there is need for fixed legal documents which can be used in the construction work.

Environmental

It is important for the companies to employ technology for efficiently using the resources which would not cause harm to the environment. Using innovative technology in the construction project which would harm the environment in the least possible manner.

Strategic Position and Action Evaluation Matrix

SPACE Analysis is an empirical approach used in the planning and management of strategies.SPACE is an acronym for Strategic Position and Action Evaluation Matrix (Dimitrova, 2017).The analysis allows to explain how to build an appropriate business strategy for the company.The evaluation examines the direct and indirect, external or internal environment which enables an appropriate strategy to be followed (Dimitrova, 2017).

The analysis explains the external environment on the basis of two criteria:

Environmental stability (ES) - influences the following factors: technological advancement, inflation rate, demand volatility, price range of competitive products, price elasticity of production, rivalry from substitutes.

Industry Attractiveness (IA) - is determined by the following factors: manufacturing capacity, income, economic stability, resource efficiency, industrial intelligence, labour productivity, asset utilization, and bargaining power of the consumers.

The internal environment is also described by two criteria:

Competitive advantage (CA) – influenced by the following factors: market place, sales price, product life cycle, innovation mechanism, customer loyalty, vertical integration. 

Financial flexibility (FS) – is influenced by the following indicators: return on expenditure, productivity, debt ratio, available versus required capital, cash flow, inventory turnover.

 

Internal Strategic Position

External Strategic Position

X –Axis

Competitive

Industry

Market Share -1

Quality -1

Consumer Satisfaction - 1

Average -1

Labour productivity +1

Income potential +4

Production potential +6

Average +3.66

Total axis X Score : +2.66

Y – Axis

Financial

Environmental

Cash Flow +5

Investment +5

Average +5

Instability of demand -6

Technology -1

Average -3.5

Total Axis Y Score: +1.5

The strategic Position of QCVD is Aggressive Position.

According to the Space matrix, the company has a competitive advantage. A key aspect being the potential entrance of foreign players into the sector, new investments, a rise in market share and an emphasis on innovative goods.

Boston Consulting Group Matrix

The Boston Consultancy Group Product Portfolio Matrix (BCG Matrix) is structured to assist in long-term business plans and help businesses determine growth initiatives by assessing their product inventory and deciding how to invest, discontinue or produce products. It is also known as the Growth Matrix (Chiu & Lin, 2019). The matrix is divided into 4 quadrants – star, question mark, cash cow and dog.

Boston Consulting Group Matrix

  1. Dog: these are products having low growth and low market share.
  2. Question Marks or Problem Child: these are products having high growth markets with low market share.
  3. Stars: these are the products with high growth markets and high market share.
  4. Cash Cows: these are the products with low growth market and high market share.

The company has only one product which is construction. They fall under the category of stars, as it has high market share and high growth prospects. Thus, according to BCG Matrix the company’s product which is construction, whether for private or commercial, falls under the quadrant of stars.

Competitive Profile Matrix

The Competitive Profile Matrix (CPM) is a strategic tool that compares a company with its competitors and reveals their relative strengths and weaknesses.

CPM is also used by companies to fully grasp the economic climate and rivalry in a given market(Cassidy, Gravois & Capps, 2020). The matrix defines main rivals of the company and compares them using the critical success factors of the sector. The analysis reveals the relative strengths and weaknesses of the company against its competitors, so that the company would know which areas it should be improved and which areas are to be protected.

Some of the benefits of the CPM Table are:

  • The same variables are used to evaluate the firms. This makes the comparison much more precise.
  • The research shows details on the matrix, making it easier for businesses to be analysed visually.
  • The effects of the matrix make decision-making simpler. Companies will quickly determine which places they can improve, secure or follow.

The critical success factors for a construction industry are: cost, time, quality, management, technology, safety, organisation, and environment.

CPM Table

 

QDVC

Hanwha Construction

Critical Success factor

Weight

Rating

Score

Rating

Score

Cost

0.1

4

0.4

3

0.3

Time

0.11

3

0.33

4

0.44

Quality

0.21

4

0.84

4

0.84

Management

0.09

3

0.27

2

0.18

Technology

0.17

4

0.68

3

0.51

Safety

0.16

4

0.64

3

0.48

Environment

0.16

1

0.16

1

0.16

Total

1

-

3.32

-

2.91

According to the CPM table, QDVC is a stronger company than Hanwha Construction, and hence, the stronger performer in the market.

External Factor Evaluation Matrix

EFE Matrix is an analytical method just like SWOT analysis. EFE is an acronym for an external factor evaluation(Zulkarnain, Wahyuningtias & Putranto, 2018). EFE Matrix determines the perceived role of the company or its strategic goals in the external environment of the company.

Some of the known advantages of the methodology of external factor evaluation are:

  • It is a simple resource that is quick to use and understand, and it can be used at all levels of the organisation
  • Helps increase knowledge among managers about the world in which they operate and the improvements that can exist within them.
  • Helps managers increase the distribution of resources around the operations of the business
  • Provides an ability to handle uncertainty at a greater extent

Some of the known disadvantages of employing external factor evaluation are:

  • Determining particular considerations that might be too vague or mutually contradictory, e.g. what appears to be an advantage, might prove to be a major challenge to the enterprise.
  • Does not offer clear guidance for the development of an effective corporate plan, merely mentions and analyses external variables impacting the enterprise without offering a suggestion for how best to cope with them
  • Imposes the need to employ new decision assessment methods to assess the best course of action for the organization.

External Factor Evaluation Matrix

Key External Factors

Weight

Rating

Weighted Score

Opportunities

The introduction of a global technological framework and a government free trade deal

0.18

4

0.72

Decreasing Freight Rates

0.15

4

0.6

Advancement in new Technology

0.23

3

0.69

Threats

Strong Competition

0.09

3

0.27

Adoption of new technology by the competitor earlier than the company itself

0.16

2

0.32

Economic Slowdown

0.19

2

0.38

Total

1

-

2.98

It can be confirmed from the company’s EFE matrix that it is functioning in a favourable external environment.

Internal Factor Evaluation Matrix

IFE Matrix is an analytical tool for SWOT analysis. IFE is an acronym for Internal Factor Evaluation. IFE Matrix determines the internal status or strategic purpose of the company(Zulkarnain, Wahyuningtias & Putranto, 2018).

Some known advantages of the IFE Matrix are:

  • Easy to understand
  • Do not require extensive expertise or investment in terms of time, money, and employees.
  • Factors have clear meaning for all the stakeholders

Some known disadvantages of IFE Matrix are:

  • Does not help in the formulation of strategy
  • Easily replaced by other strategic tools such as SWOT, PEST, and so on.
  • Toobroad factors.

Internal Factor Evaluation Matrix

Key Internal Factors

Weight

Rating

Weighted Score

Strength

High Customer satisfaction

0.23

4

0.92

Robust network

0.18

3

0.64

Employee Growth and satisfaction

0.2

4

0.8

Automation of Operations

0.15

3

0.45

Weakness

Difficulty in expansion in other product segment

0.13

1

0.13

Research and Development

0.11

2

0.22

Total

1

-

3.16

Since, the IFE Matrix results are more than 2.5, thus it can be said that the company has strong internal factor advantages.

Grand Strategy Matrix

The Grand Strategy Matrix has developed as an important method for designing alternate approaches (Octavio & Wiguna, 2019).Basically, this matrix is based on four main elements:

  1. Rapid Market Growth
  2. Slow Market Growth
  3. Strong Competitive Position
  4. Weak Competitive Position

These components form a four-quadrant matrix in which all entities may be placed in such a way that the detection and development of suitable approaches becomes a simple job. In fact, this formula aims to follow the right approach based on recent development and the strategic condition of the business.

Grand Strategy Matrix

Quadrant 1

Firms have strong competitive position and flourish with rapid market growth. Firms based in this quadrant are in an outstanding geographical role and need to concentrate on new trends and goods.One of the key benefits for each of the quadrant companies is that they can continue to take advantage of external opportunities to increase wealth in many areas of business.

Quadrant 2

Firms have weak competitive position in the fast growing market. Firms in this quadrant need to change their strategies for meeting the competition head-on. It is important for the companies to conduct in depth analysis of their strategies. 

Quadrant 3

Firms have strong competitive position and slow market growth. Diversification could be option for increasing the market growth as the company has a competitive edge over its competitors.

Quadrant 4

Firms, here, have weak competitive position and slow-market growth. This is the least favourable quadrant, because companies are facing intense competition along with fading market growth. 

QDVC would fall under the quadrant 1: it is a company which has competitive advantage in the growing market. Thus, it should aggressively work towards:

  1. Market Development by penetrating new markets
  2. Product Development through the use of innovative technology
  3. Innovation in the customer service or technology
  4. Vertical Integration for being able to decrease the dependability for the supply of raw materials and other resources.

Quantitative Strategic Planning Matrix (QSPM)

The Quantitative Strategic Planning Matrix (QSPM) is a high-level strategy management method for evaluating potential strategies. The Quantitative Strategic Planning Matrix or the QSPM offers an empirical framework for evaluating feasible alternate actions(Zulkarnain, Wahyuningtias & Putranto, 2018).A variety of alternative approaches exist and the Quantitative Strategic Planning Matrix (QSPM) may be used to systematically determine the most suitable approach in the scope of all alternative strategies. The data is gathered and the equation is built using a systematic approach for strategic planning.

QSPM for QDVC

 

Generation of sub-divisions (Contract management, property management and quality assurance)

Horizontal expansion

Geographic diversification

Key Factors

Weight

Score

Weighted score

weight

score

Weighted score

Weight

Score

Weighted Score

Strength

                 

High Customer satisfaction

0.27

4

1.08

0.27

4

1.08

0.26

4

1.04

Robust network

0.19

3

.57

0.19

4

0.76

0.2

3

0.6

Employee Growth and satisfaction

0.2

3

0.6

0.19

3

0.57

0.22

3

0.66

Automation of Operations

0.17

2

0.34

0.2

3

0.6

0.19

2

0.38

Weakness

                 

Difficulty in expansion in other product segment

0.09

2

0.18

0.07

4

0.28

0.07

4

0.28

Research and Development

0.08

3

0.24

0.08

3

0.24

0.06

3

0.18

Opportunities

                 

The introduction of a global technological framework and a government free trade deal

0.2

4

0.8

0.27

4

1.08

0.27

4

1.08

Decreasing Freight Rates

0.18

3

0.54

0.2

3

0.6

0.26

3

0.78

Advancement in new Technology

0.19

4

0.72

0.24

4

0.96

0.27

4

1.08

Threats

                 

Strong Competition

0.17

0

0

0.08

3

0.24

0.05

3

0.15

Adoption of new technology by the competitor earlier than the company itself

0.09

3

0.27

0.09

3

0.27

.09

3

0.27

Economic Slowdown

0.17

0

0

0.12

2

0.24

.06

2

0.12

Sum total

-

-

5.34

-

-

6.92

-

-

6.62

According to the results the Horizontal expansion strategy yields higher score as compare to other two strategies which are market diversification and generation of sub divisions.

Recommended Long-Term Strategies and How to Achieve Them

Long-term Objectives of the company are:

  1. To increase its market share and expand to new geographical market, this supports the company’s original mission where it says it wants to be a precedent in the industry.
  2. To enhance the financial position of the company by reduce employee attrition, and retain the talent in the company, and entering new markets, this is supported by the company’s vision of creating a pool of talent, ensuring customers are provided by quality services.
  3. Ensuring effective utilisation of the assets and resources would ensure that there are no wastage, thus supporting the company’s original mission of ensuring environment and social sustainability.

The objectives mentioned above are a possible long-term strategy to help the business achieve a strategic advantage and, thereby, help the company grow its market share.

  1. Creation of subdivision: The company's strategic market plan would be improved with the development of sub-divisions such as contract management, property management and quality assurance. In fact, through these sub-divisions, the organization would be able to boost its customer base.
  2. Horizontal expansion or integration: Through the purchase of similar businesses, the business will become autonomous and would no longer be forced to be reliant on third party distributors and suppliers. This will ensure prompt distribution of the raw materials. It would also allow the business to build cost synergies and will enable them make effective and productive usage of capital, thereby generating higher income margins.
  3. Diversification to new geographic market:Business expansion in various geographies would allow the company to reap the advantages of operating in a new market that will provide additional benefits to the product. This would allow the business to develop its position in the rising industry and meet the promise of the business, which will eventually contribute to profitability.

Implementation of the Recommendations

The implementation process should be simplified for the diversification and acquisition development plan. This means that the organisation must follow a new program structure and policy to execute the plan.

The strategy should obey the systemic method by moving the requests and criteria for execution from the top of the deal to the quality control evaluation.

To order to achieve this, the changes must be made by the Head of Departments or Divisions. In order to promote transition, the engagement approach must adopt the three steps of progress formation – Unfreeze, Change, and Freeze. This approach allows branches and agencies to be integrated in order to introduce an incremental and low-resistance transition in order to insure the effectiveness of the planned goals and objectives.

The implementation strategy calls for the value of the communication principles. In order to implement the strategy in a sequential system without roadblocks and barriers and unwarranted stops, cooperation for the coordination of departments is needed, in particular because the company's projects are composed of various divisions, restructurings and acquired companies.Although all of them are related in roles, communication is the secret to the efficient operation of the whole structure.

Review and Evaluation of Strategies

Benchmarking is the technique which will be used for evaluation of the implemented strategies.Depending on the approach of diversification and integration of both acquisitions and mergers for the creation of a stronger contract management, property growth and quality control framework, the following criteria should be used for the evaluation of the strategies:

  1. Coordination of Units/ Divisions/ Subsidiaries: It is necessary to remember that the policy of the organization is focused on the alignment and incorporation of all branches, divisions and departments. Problems with teamwork can contribute to bottlenecks or a rapid and unexpected termination of the operation.
  2. Value Supply Chain: With horizontal acquisitions and extensions, diversification is made possible to allow the company to push towards the aim of growing the consolidation of companies and to become a global market leader. Value chain issues implies that the company or branch is not in a position to produce the required aggregates or generate sufficient outputs or resources are needed for the project.
  3. Financial results: If the aim of the business is to receive financial momentum and raise the profit margin or to generate better returns on the investments, financial performance is a criterion for the appraisal of the strategy. If the income will not improve even after diversification or horizontal integration or the formation of sub-units, it can be recognized that there is a need to adjust the strategies.
  4. Flexibility of the Asset Utilisation: Horizontal integration is carried out in order to minimize possible gaps in the phase and to utilize capabilities to the highest degree, thereby raising the turnover time. If the execution of the strategy is positive, the goals will be accomplished quickly and effectively by the organization.

Conclusion

Thus for being able to effectively meet its mission and vision objectives the QDVC must work on the three strategies as discussed above. These strategies: creation of subdivision, horizontal integration, and geographic diversification will help the company in increasing its market share, increase profits, reduce unnecessary operational costs and hence reduce unnecessary delays in the procurement of material and delivery of the final product, thus achieving increased customer satisfaction. Evaluating the coordination in the subunits and acquired subsidiaries, positive value supply chain, increased financial positions, and effective utilisation of assets would help the managers of the company to understand the effectiveness of the strategies and if any changes are required in the implementation of the strategies.

References

Cassidy, C., Gravois, R., & Capps, C. (2020, March). A Teaching Exercise for the Competitive Profile Matrix (CPM). In Developments in Business Simulation and Experiential Learning: Proceedings of the Annual ABSEL conference (Vol. 47).

Chiu, C. C., & Lin, K. S. (2019, July). Rule-Based BCG Matrix for Product Portfolio Analysis. In International Conference on Software Engineering, Artificial Intelligence, Networking and Parallel/Distributed Computing (pp. 17-32). Springer, Cham.

Dimitrova, T. (2017). Evaluating the strategic position of an organisation through space analysis. Народностопански архив, (3), 19-32.

Global Data. (2018). Construction in Qatar – key trends and opportunities to 2022. Retrieved from https://store.globaldata.com/report/gd-cn0398mr--construction-in-qatar-key-trends-and-opportunities-to-2022/

Gulf Times. (2018). Construction sector leads in using technology for sustainable cities. Retrieved from https://m.gulf-times.com/story/607370/Construction-sector-leads-in-using-technology-for-sustainable-cities

Gürel, E., & Tat, M. (2017). SWOT analysis: a theoretical review. Journal of International Social Research, 10(51).

Octavio, F. A., & Wiguna, I. P. A. (2019). Strategy Analysis to Improve Consultant Qualification in Surabaya. Jurnal Sains dan Seni ITS, 8(2), 1-8.

Perera, R. (2017). The PESTLE analysis. Nerdynaut.

QDVC. (2019). Creation of QDVC. Retrieved from http://www.qdvc.com/index.php/en/features/company-profile/creation-of-qdvc

QDVC. (2019). Our Mission. Retrieved from http://www.qdvc.com/index.php/en/features/company-profile/our-mission

Zulkarnain, A., Wahyuningtias, D., & Putranto, T. S. (2018, March). Analysis of IFE, EFE and QSPM matrix on business development strategy. In IOP Conference Series: Earth and Environmental Science (Vol. 126, No. 1, p. 012062). IOP Publishing.

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Strategic Management Assignment Help

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