International Business - Unipart Group of Companies - Assignment Example

Name: Institution: Unipart Group of Companies Company Description Unipart Group of Companies is a British company that has growth to become an icon of Europe’s leading independent logistics, automotive parts and accessories subsidiaries (Duncan 1996). The organization was created in 1987 following a management buy-out, and has scaled the cases through economic hurdles to enter the list of largest private companies in the UK. The keen consideration and implementation of strategic management canons has made a name for Unipart and grounded its unwavering investment policies and future-oriented approaches to business. Unipart has been steered from an enfeebled business state to success in manufacturing, logistics, and consulting fields by John Neill. Although business analysis tools and models can best identify the factors underpinning success and that derailing future growth, the case scenario underlines systematic growth and development issues that “tell-it-all” about the group of companies and their statures in the international business environment. This report presents a critical analysis of Unipart Group of Companies (UGC) from its inception in 1990s. Conventional strategic analysis: an inside out approach (from internal to external factors) will be used to unveil the characteristics of the company’s business environment within which notable success and perceived underperformances can be deduced. Although a general overview can reflect the strengths that have delivered Unipart through trying business environment moments to emerge victoriously, a SWOT analysis and Porter’s five forces (Schermerhorn 2009) will be employed to particularize business characteristics that underpin the situation of Unipart Group of Companies. Case Overview The case analysis presented in this report chronicles the formative and development pathway underwent by Unipart , which largely covers the chief executive’s (John Neill) management approaches that have delivered the group from feebly start into a global and one of the revered manufacturers in the United Kingdom. The case gives insights into the Unipart’s growth and expansion experiment that started with a strategic joint venture with Japanese Honda in the UK and its affiliates in Japan. The entrance into a joint venture with three other Japanese manufacturing companies surfaces as the turning point that redirected operational approaches at Unipart. The case study (Duncan 1996), points 1996 as the year of expansion during which UGC entered into joint ventures with esteemed Japanese firms, and acquired Railpart. These strategies are indicative of strategic investment regimes adopted by Unipart as it prepared to become a multinational. The case highlights the recognition of strategic relationships with suppliers, which somehow resulted in adversarial environment. Additionally, the repositioning for growth in the company surfaces as another strength area riddled with unprecedented success. The case study highlights the power of communication, recognition, and support services that worked for UGC. The overall effect of adopting strategic management principles in all functional areas of the group of companies reflects from testimonials of subordinate staff rising into top managerial positions owing to the inherent support and development programs. Strategic Management in Action The strategic management synergy underlying the foundation of globally revered Unipart Group of Companies registers from preliminary managerial approaches midwife by John Neill, who has been the corporation’s chief executive at least during the whole of its formative life. As suggested by Duncan (1996), Neill’s strategic management knowledge and skills stemmed from his work experience acquired while at GM, and the continual desire to align the company with functional principles of strategic management. The basis of describing Unipart’s success anchors on the rationales of strategic management, which connotes the management of the group’s overall purpose that ensures that the needs and enablers of business operations are sustainable. It is imperative that John Neill’s management model mirrored an overall and holistic view of UGC management. Though experimental ventures to learn from foreign but best performing Honda in Japan, and integration of Japanese automotive industry’s manufacturing culture with UGC’s operational practices sufficed the concept of having different components of strategic management working together in harmony to deliver stakeholders the value they expected of the new investment vehicle: UGC. Noteworthy in this context is that while every business management subject, including those extant at Leyland during its wee hours, covers strategic issues, the primary perspective as demonstrated by Neill’s UGC is partial and typically about functional strategy. To chronicle the practicability of applying strategic management in building moving a business enterprise of the stature of Leyland in 1970s to the conglomerate character achieved by UGC, uniqueness and all-stakeholder commitment and participation is crucial. According to Cameron (2009), the ascendance into a leading position in the global automotive industry requires that strategic management be deployed to achieve and sustain competitive advantage. Therefore, it was required of UGC to be fit for purpose but deploy strategies aimed at creating value that would enable functions to compete effectively with rivals. It is imperative that John Neill lived to the true spirit of strategic management for the success of Unipart from creation. The Unipart case scenario underscores the significance of customizing conventional strategic management principles, which Neill appears to have capitalized on to deliver full benefits for corporate growth and sustainability. It is stated by Sadler (2002) that although managers and their subordinates run the routine operations for the enterprise, the responsibility of steering the organization in a goal oriented direction settles on the senior managers. At Unipart, the primary base of success narrows down to the chief executive Neill that delivered purposive management strategies: importing knowledge and industrial knowledge from GM, strategic experiential and learning tours to Japanese Honda, and successive cost-effective allotment of company resources for effective production. Importantly, the inclusion of selected employees in the Japanese industrial tours was crucial in ensuring that important stakeholders were involved in experience and change-building knowledge search. SWOT Analysis The essence of a SWOT analysis in this context is to promote the understanding of strengths, weaknesses, opportunities and threats that characterize Unipart. It is imperative that the external and internal factors have been tremendously useful for growth and development of UGC. The UGC’s vision is to become the global hub of best lean production. The company’s mission underscores the need to develop, train and inspire human resource with an ambitious aim of attaining unparalleled performance within and without UGC (Unipart Group n.d). Appendix 1 gives a 2x2 matrix of the SWOT Analysis. Strengths UDC’s strengths are anchored primarily on the group’s sound financial base and the policy-directed leadership. The financial base enabled the company to seal joint venture deals with strategic partners with relative ease. The strategic fragmentation of UGC market assures incremental growth in revenues. For instance, in 1997 the UGC’s diversified business operations: manufacturing of automotive parts, sourcing and distribution of businesses in the UK and exportation to European countries made the entity break previous turnover records and profit as well. The strong financial base for UGC facilitated a business expansionary wave that made it almost impossible for would be venture partners to resist, which cultivated the internationalization of the company operations. In particular, the expansionary power manifested in 1996 during which UGC partnered with Honda UK and its affiliates in Japan was a result of sound financial base that provided inexhaustible resources. Strategic leadership is a vital intangible asset that underpins sustainability in growth and organizational performance (Morill 2010). The Neill led management UGC management suffices a beacon of strength especially through strategic investments that drove growth witnessed in 1997. John Neill serves as an irreplaceable cornerstone for the organization’s leadership in that he provided the synergy for inspiration and operational success. Dynamic and innovative human resource gives an organization unshakable strength via which ad hoc decisions can be adopted to stem imminent risk or increase profitable business activities (King 2011). The human-based strength at UGC reflected from the ease with which Neill herded a section of crucial function managers and other staff into knowledge seeking mission in Japan for technical and cultural improvement in how business should run back at the shop floor at Oxford. The innovative and goal-oriented decision making was instrumental for learning and implementing new ways of manufacturing, new styles of relating with suppliers in order to meet customer desires effectively, and instrumentation of the process-thinking working component. Weaknesses Despite the great achievements driven by the Neill management, complacency from within was an apparent weakness for organizational progression. The burden to the company from complacency extracted from the consequences of complacency that derailed affirmation of guarantees for sustainability of the growth and efficiency strands made. In particular, Neill was loud in alleging that future success would be in jeopardy in the fiercely competitive international market because sustainability of gains made is a function of the company’s ability to meet customer demands effectively. Opportunities The leadership model created by Neill for decades upon the management buy out was the pillar of opportunity exploitation at UGC. Neill reiterated that customer-centeredness was the most fertile ground to cultivate both revenue increase and performance. Higher standards of customer service with a continual improvement of effectiveness and competency provide insatiable opportunities for an organization to exploit (Pisapia 2009). The experience in this context was the beacon of business expansion opportunities because they prepared UGC for more demanding challenges of the market place in the future thus cementing resilience and futuristic policy instrumentation. Research and development present great opportunities in any commercial institution (Swanson 2009). Research foretold that by fall of the 2000 financial year, consumers would demand cars of excess capacity, fuel effective, attractive and at low prices. This hint presented UGC with synergetic insight as regards improvement of operational functions at a faster rate than before, which would confer an opportunity to lead the market. It is worthy noting that Neill’s previous managerial experience in the automotive industry presented an opportunity for UGC to build a world-class entrepreneurial empire. The lessons discerned from Leyland’s crumple presented an opportunity for the management in this context to deploy purposive and futuristic policies for growing and developing UDC. Lean production has increasingly been the tool for efficiency and performance improvement in the international business environment (Black 2008). The lean production concept presents opportunities of increasing revenue by eliminating unnecessary waste and adding appropriate value in products in order to raise revenue base. Strategic joint ventures offer great opportunities of expansion and growth for multinationals in the contemporary business environment (Hitt & Ireland 2008). This premise is evinced by the ambitious scheme by the Neill-led executive team that transformed an under-performing company acquired in 1987 into a world-class enterprise through strategic partnerships with Honda and other worthwhile Japanese companies. Joint ventures with partners that have similar corporate goals as UGC: Rover and Honda for instance, which were globally esteemed for product quality and performance energized the easiness with which Unipart evolved drastically to realize its own world-class entrepreneurial status. This approach also gives an opportunity to learn new ways of relating with crucial business stakeholders like superior suppliers and competitors that the organization end up sharing information. Threats Competition remains the main problem for any business enterprise in the world market place (Heneric, Litch & Sofka 2005). This premise is evinced by the highly competitive environment for automotive dealers in the period leading to the 1987 establishment of Unipart. Escalation of global competition poses great threat for multinationals especially in the automotive industry, which makes the companies fulfilling emerging needs of consumers render rivals uncompetitive. Drastically changing customer desires and technology pose a real threat to the continuity of business successes in any industry in the global market place (Zimmerman 2010). There is an emerging trend by consumers in the automotive industry to demand more new cars at cheaper prices, attractive and technologically improved vehicles that satisfy the dynamics of evolving lifestyles. The trend requires a manufacturer to maintain highly innovative and motivated human capital that can integrate emerging technology with prevailing consumer wants. This implies that inability to measure up to the trend is a threat not only to revenues but also to production. Resistance to change can mount a substantial threat to the implementation of transformative strategies in an organization especially when innovative strategies are viewed as risky for routine operations (Lubkin & Larsen 2006). The UGC motivated team from the Japan learning mission, despite having game-changing knowledge and experiences faced a difficulty in transferring into their colleagues. In particular, union officials viewed the new operational concepts as threatening, and many of the employees were skeptical which precipitated resistance to the imminent change that would install the sustainable success practices that characterize UGC since then. Porter’s Five Forces The Porter’s five forces comprise five crucial factors considered vital for identification of and characterization of the nature of competition within an industry. The porter’s analytical concept is employed in this context to synthesize the competitive situation as enshrined in Michael Porter’s (Hill & Jones 2009) framework (appendix 2). Supplier Power UGC employed explored cost effective strategies to benefit on industry trends (Weth 2008). Increased trade within Europe has particularly provided a cost advantage because of the low-cost destination aspect. High investments in innovation and capabilities, especially through the Japanese culture of automotive lean production, and enhanced relationship with superior suppliers has been useful in gaining substantial control over prices. Joint ventures with strategic partners in critical business areas limited supplier influence thus helping UGC gain substantial control over its diverse business (Weth 2008). Buyer Power Competitive price strategies have been instrumental through diversification of products (Warner 2010), which affords buyers pocket-friendly choices in every market segment. Investment in technology helps ensure consumer satisfaction that greatly influences buyer satisfaction and prevailing prices. This strategy attracts and maintains customer loyalty through quality and efficacy in service provision. Competitive Rivalry Increased demand of automotives (Roy 2011) globally has cultivated exports not only in the European markets but also in emerging regions where economic improvements has raised per capita income. Improved supply chain management (Griffin 2012) through innovative and technology supported strategies has drastically minimized lead times, enhanced service delivery and communication as regards goods on transit and storage, all which help beat competitive rivalry. Environmentally friendly automotive products have been a competitive advantage tool as customers are increasingly attracted to energy effective automobiles and the less polluting. Increase in innovation through research and development has been the impetus underpinning differentiation in the automotive industry. Threat of Substitution The threat of UGC products being substituted with more customer-attractive and affordable products remains real and a continual challenge. The acquisition and internationalization of core operations (Griffin 2012) give and industrial advantage of accessing cheap labor. Investments in research and development bolster innovativeness and integrate technology with production, which ensure uniqueness of products in the markets. Quality-based production methods that ensure high differentiation reduce threats of substitution. Threat of New Entry It is imperative that profitable industries attract new entrants that can impair the profitability of existing businesses (Henry 2008). Broadened diversity of business across global manufacturing hubs supplying competitive products is a sure antidote against threats of new entrants. Joint venture with partners that have advanced in manufacturing technology, and that enjoy access to factors of production is strategic for containing threat of substitutes in the automotive industry. The cost of entering the business (Hitt & Ireland 2008), and the dynamics underpinning establishment make it difficult for new companies to establish and pose threats in the marketplace. Conclusion This report presents a situational analysis of UGC, which is based on the establishment and development epic context for the company. Unipart was created from a management buy-out in 1987 that was lead by John Neill as the chief executive. Armed with management experience from previous employments, Neill transformed the underperforming entity into a world-class enterprise through planned investments underpinned by strategic management leadership concepts. The SWOT analysis and Porter’s five forces were employed as the analytical tools in this case. Much of UGC strengths extracts from the strategic leadership that delved through beneficial joint ventures that not only enhanced growth but also instilled cultural change in operations and general industrial conduct especially at Oxford. The forces of supplier and buyer power remain the main strategy focus for UGC because they underpin the continuity of gains thus far realized. Threats of substitution or new entrance do not perturb UGC because of the diversity of internationalized business operations. The unshakable financial base for UGC gives the group advantage over rivals because ad hoc decisions can be readily made to tame any risks and adjustments to emerging market trends. References Black, JR 2008, Lean production: implementing a world-class system, Industrial Press Inc., New York, NY. Cameron, S 2009, The business student’s handbook: skills for study and employment, 5th edn, Pearson Education Limited, London, UK. Duncan, A 1996, Unipart Group of Companies: uniting stakeholders to build a world-class enterprise, London Business School Case, London, UK. Griffin, RW 212, Management, 11th edn. Cengage Learning, London, UK. Heneric, O., Litch, G., & Sofka, W 2005, Europe’s automotive industry on the move: competitiveness in a changing world, Springer, Santa Barbara, CA. Henry, A 2008, Understanding strategic management, Oxford University Press, Oxford, UK. Hill, C & Jones, GR 2009, Strategic management: an integrated approach, Cengage Learning: London, UK. 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Appendices Appendix 1: UGC SWOT Analysis Diagram Strengths: Strategic leadership Strong financial base (Porter 2008) Dynamic and innovative human resource Opportunities: Leadership model Higher standards of customer service (Duncan 1996) Research and development Lean production Strategic joint ventures Weaknesses: Complacency Threats: Competition (Porter 2008) changing customer desires and technology Resistance to change Appendix 2: Porter’s Five Forces Diagram Read More