Cookson Group Plc Future Strategy - Essay Example

Topic: Corporate Strategy By Insert Presented to Location Due INTRODUCTION Cookson group is a British public limited company London mainly dealing with Ceramics and its major products are used by solar energy, glass and steelmakers industries. The company key major operations include foundry technologies, steel flow control, precious metal processing and advanced refractory. The company is also listed in London stock exchange. The company has its major operations in Britain but the company has expanded its operations globally including United States, Asia Pacific as well as other countries in Europe, this comes as a strategy of obtaining opportunities in the international markets (Cookson Group Plc 2006). Strategic Positioning Cookson group plc notable has enhanced its strategic position which put the company forward as a competitive in the industry. The company business model and strategies takes into account the changing corporate environment and the systematic realization of the underlying positioning. The company has achieved this through devise of a desired position in the future based on the foreseeable and present developments as well as strategizing to realize this positioning. Focus and emphasis is laid on the company continuity and the determination of character and contents of the organization activities. The company strategic position is underpinned on several aspects including leading global markets positions in its industry and development of market exposure to increase revenue and profits. Others include enhanced technology, increased R&D capability, acquisitions, strong cash flow momentum and expansion into international markets. COOKSON GROUP PLC BUSINESS MODEL Cookson group plc has two main divisions in its business model which are Performance material section and Engineering Ceramics where it operates under Alent PLC and Vesuvious PLC respectively. These divisions facilitate in supplying specialist consumable materials and chemicals in industrial production processes. It is notable that both divisions have adopted the same business model and the way operations are carried out. The company notably sells its products based on added value as opposed to just price (Cookson Group Plc 2006). Cookson group plc also focuses on sustaining and maintaining strong financial position enhancing support on its businesses in the divisions. This business model strives to achieve this through enhanced long-term financing arrangements with ample liquidity and low leverage headroom. Cookson business model and strategy can be summarized as follows:- Cookson’s business Model and Strategy COOKSON GROUP PLC STRATEGIC ANALYSIS This analysis involves study on the corporate environment that the company operates so as to determine the best future strategy that the company can adopt (Gautam 2006). This regards strategic position of the company taking into account external factors influences on the current and the future performance of the company. Michael Porter’s Generic Strategy Model Based on Porter’s forces of competition companies need to place their activities in markets with low competition. This model is essential is developing future strategy in any company and this is basically based on its underlying generic strategies. These strategies include cost leadership, differentiation and focus. The major focus of the strategies is for companies generate more profits and revenues. Cost leadership strategy The company notably invest on scale efficient production thus there products are easily manufactured and enhanced research and development attributed to their business model design. There is also emphasis on the control of overheads reducing costs and sustenance of capital access and investment (Cookson Group Plc 2012). The company has achieved this through tight cost control, intense supervision of labor, structured organization and coordination and detailed control reports on its business operations. Differentiation strategy The company through this strategy is able to deliver high technology unique products and services to the market. Emphasis is put on branding enhancing the company corporate reputation on its quality technological leadership. Strong coordination on functions such as product development, R&D and marketing attracting skilled employees in addition is encouragement of subjective measurement and incentives as opposed to quantitative measures (Cookson Group Plc 2012). There are also unique skills and knowledge combination enhancing innovation and promotional activities. Focus strategy The company basically focuses on high technology market segment in the market. Therefore they focus in developing strategies that best serves these market segments. This has enabled the company proved best prices achieving price advantages in their market segments (Cookson Group Plc 2012). This has been enhanced by understanding of the market segments as well as the behavior of the buyers. ANSOFF MODEL This model facilitates determination of growth strategy of the company as well as its markets. The future strategy of Cookson group plc should be based on the provisions of this model. This model is based organization growth depending on the company ability to markets its products in the new markets. This facilitates suggestion of various strategies of growth and the futures strategies that a company can adopt. Marketing penetration This is a core pillar in achieving growth and sustainability in an industry. Focus is put on offering existing products into existing markets. The objective is to increase and to maintain the market share of the current products through appropriate marketing strategies; consolidating market dominance and containing competition. Development of markets This basically involves selling products into new markets majorly new geographical markets, new channels of distribution, new product dimension and different pricing policies. This strategy should not be overemphasize as it is more risky compared to other approaches. Product development This is where a company achieves its growth through introduction of new products into the existing markets. This requires modification of products in the new markets and new competencies. This enhances company competitiveness by the need of product differentiation. Diversification of Products This entails marketing of new products in new markets and this requires knowledge on the market and the expected gains. Therefore companies need to have experience on the market and that assessments need to be made in regard to the adoption of this strategy. COOKSON GROUP PLC FUTURE STRATEGY It is important for Cookson Group plc to establish its future strategy in order to manage its growth and development. According to Teece (2010) organization future strategy constitutes incorporation of strategic plans in organization key major decisions to develop plans to deal with anticipated challenges in the organization. Therefore, Cookson Group plc need to establish future strategies to enhance their competitiveness in the market place as well as the industry with major focus on the company capability. The company needs to examine each of the strategy adopted to determine how it can be sustained for the advantage to the organization. Therefore, it can be argued that for this company to adopt any strategy it should bring maximum value to the stakeholders and the community at large. It is noted in the industry analysis of Cookson group plc is competitive and dynamic; therefore the strategies that needs to be adopted should be dynamic to sustain the company future success. This implies that the company strategy in place should be modified and changed to suit the future organization challenges. The focus of changing and modifying these strategies is to sustain the favorable strategic position of the company (Teece 2010). The company also aims to provide change the company strategic position and business model to be more competitive than other companies in the industry. Organization strategic management Through effective strategic management the company will be able to adopt effectively the established strategies for maximum performance in its business operations in the two divisions. Each of the strategies should be consistent with the goals and objectives of the organization. All the stakeholders need to be consulted before any decision is finalized which involves many players in the organization (Goold 1996). These diversified perspectives and consultations ensure that the company adopts a well rounded approach in its management and achieving both the short term and long-term objectives of the company. The company should establish its corporate strategy Board that will provide analytic tools, advisory and data-driven insight support that facilitates corporate strategy executives to facilitate functional, individual as well as corporate performance. The company should adopt a strategic choice that focuses on understanding the nature of stakeholder’s expectations, identification of strategic options, selecting and evaluating strategic options (Teece 2010). The company should emphasize on putting risk management and strong internal control framework as well as maintaining high levels of governance and accountability. Cookson group future strategy will also focus in meeting the stakeholder’s expectations which will significantly influence their investors and their strategic decision-making throughout their operations. The adoption of this strategic approach has implication on the company strategic position as well as the business model. The impact on this aspect of the organization is expected to be favorable (Shafer 2005). This will ensure that the company adopts effective industrial organizational model that will ensure there is maximum maintenance and sustenance of the large market share in the industry and international markets. There will be few firms pegging for the company products and the limited competition. This can be achieved through availing appropriate advertisement information, reduced costs on customers and clients, production as well as strategic government alliances in the respective countries of operation. This approach will modify the company business model to suit the dynamism of the corporate environments. This will keep the competition pool low enhancing entry barriers and the maintenance of foothold in the industry enhancing the company strategic position in the industry (Goold 1996). Resource Management This entails organizations making sound decisions in regard to resource management. According to Claudio Vignali (2008) the decisions made should have maximum returns and that all the resources should not serve only the narrow requirements of individual, department or subsidiary. A standard process approach in decision making should be adopted to ensure that effective and efficient management of resources is achieved (Vignali 2008). Effective and efficient resource management ensures that the company has outstanding technical support services as well as “Just in time” capabilities of supply. This will ensure that there are adequate technical support resources in all the regions thereby taking these services close to their customers in various economic regions. This will further enhance the company through the emphasis establishing effective central research and development resources (Shafer 2005). It is expected that Cookson Group business model will change ensuring that the company become a commanding leader in the global markets embedded on its business operations, products and services. This will ensure that Cookson products and services constitute minimized cost on their customers with maximizing addition of significant value to be realized by their customers (Vignali 2008). Effective resource management will also ensure that Cookson group plc has its strategic position identified by their clients and customers worldwide and placed as leaders in regard to technological use in its operations. Company Diversification of Operations According to Thomas Burgess (2002), companies with diversified operations, products and services notably perform better in the corporate world. The diversification aspect in any organization increases sales, revenues as well as profitability in the organization. It is notable that Cookson group plc in the past has engaged in acquisitions as a way of expanding and diversifying its operations. The company has also engaged in focusing on specific products and this approach has notably favored the company profitability and expansion considerations into international markets (Burgess 2002). The company in 2005 focused majorly on high technology products and penetration in emerging markets. The company since its establishment has strategically diversified its operations and acquisition of other related companies facilitating its long-term corporate sustainability strategy. Some of the acquired companies include A.J Oster Company a non-ferrous metal producer in 1979, buying of Vesuvious Crucible Company a ceramic supplier and in 2008 acquired Foseco a supplier to the foundry and steel industries. Therefore ascribing to these events the company can further diversify its operations through acquisition of other related companies. This will boost its consideration in the acquisition of global markets and taking advantage of the opportunities available in the market. With increased acquisition the company will notably consolidate its strategic position in both domestic and international markets (Teece 2010). The business model will also be changed and modified to conform to the international operations and procedures in the markets it has acquired. Focus and Future Vision Cookson group plc future strategy should be based on achieving the organization future vision. This can be achieved through focus and adoption of effective organizational strategies that will ensure that the company strategic position is consolidated. Cookson group plc need to have well defined goals and objectives and it should establish a discipline to rule other courses of action. The future goals and objectives should be agreed upon by all the stakeholders who include affiliates, workers and the management teams of the company (Shafer 2005). The organizational focus increases exponentially attributed to the effective coordination towards the achievement of the agreed upon goals and objectives. With the change in the company goals and objectives it is expected the business model also changes with the aim of sustaining favorable company strategic position. For this company to achieve this, it should be able to visualize the goals accurately and be inspired to go for them. “Keeping your eyes on the prize” should be followed by the organizations who want to move from a present state to a future as a more effective as well as a dynamic state. It is notable that most organizations lose momentum in cases where focus on the future is lost (Burgess 2002). Cookson group plc can have written statements that will enumerate and describe the company future goals precisely. According to Michael Goold (1996) he provides that flexible detail is essential in ensuring that organizations continue to move forward. The lose of focus future vision in general can negatively impact on the strategic position of the company as well as inappropriate approach of the business model which will lead to inefficiencies and poor governance in the organization (Goold 1996). Dynamism and Cooperation Cookson group plc future strategy should enhance organizational focus in moving towards achieving the future organizational goals and objectives. This requires that companies remain dynamic which is essential in eliminating inefficiencies, poor management strategies and poor attitudes in the organization. The management teams and team leaders should be full of dynamism and diplomacy since the organization has its priority consideration in expanding into international markets (Vignali 2008). This will be important when it comes into decision making regarding the company operations in countries with varying legislations, regulations and other legal aspects. This is facilitated by knowledgeable managers and strategic management teams that help in creating organizational strategies that ensure that organization progress, growth and development is enhanced (Burgess 2002). The aspect of dynamism needs to be incorporated in the company business model. This strategy in the future ensures that the stakeholders in this company feel to progress towards something. This motivates them to engage fully with the company activities towards success enhancing company strategic position. In addition to dynamism Cookson group plc future strategy should have effective cooperation as a core central necessity. Cooperation enhances collective efforts towards the achievement of organizational goals and objectives (Gautam 2006). Therefore the company needs to bring all the stakeholders in the most effective and efficient way as possible. The company should have in its business model clear assignment of roles, progress timeline layout and path to success milestones. In order to sustain the organization strategic position it is important to anticipate challenges and therefore it is important to make contingency plans. This ensures that roadblocks and obstacles that may arise in the future is factored in the future organizational strategy. CONCLUSION Cookson group plc strategic position currently is considered favorable as far as its markets and industry it operates is concerned. The business model it has adopted is effective and significantly enhance smooth running of operations between the two divisions. The company needs to adopt future strategic approaches in order to sustain its competitiveness as well as the favorable strategic position in the market. The core major approach in to incorporate strategic thinking in all aspects of the company decision making in regard to the future. This is facilitates strategic management, resource management, company diversification, focus and vision of the future and finally dynamisms and cooperation. These approaches should be incorporated in the company business model in order to sustain the favorable strategic position in its industry. REFERENCES Avi Fiegenbaum, H. T, 1995, Strategic groups as reference groups: Theory, modeling and empirical examination of industry and competitive strategy, Strategic Management Journal, 461–476. Cookson Group Plc, 2012. Interim Management Statement and Initiation of Strategic Review. Overview. [Online] Available at: http://www.cooksongroup.co.uk/cooksongroup/uploads/press/IMS-17May2012.pdf [Accessed March 21, 2013]. Cookson Group Plc, 2006. Circular to Cookson Shareholders and Explanatory Statement under section 897 of the Companies Act 2006. Important Notice. 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