The Tools and Techniques of Strategic Management - Atkins - Case Study Example

The Tools and Techniques of Strategic Management Table of Contents Table of Contents 2 Introduction 4 Strategic Management Techniques 5 SWOT Analysis5 Strengths 5 Weaknesses 7 Opportunities 8 Threats 10 Five Forces Model 11 Threat of substitute products 11 Bargaining Power of Suppliers 12 Bargaining Power of Buyers 12 Threat of New Entrants 13 Rivalry among Existing Competitors 13 Balanced Scorecard 14 PESTLE Analysis 17 Political Factors 17 Economic Factors 17 Social Factors 18 Technological Factors 18 Legal Factors 18 Environmental Factors 19 Conclusion 19 References 21 Introduction Organisations in the modern world have to face various challenges, owing to the increase in level of competition owing to globalization and advent of technologies. High level of competition has led to the creation of immense pressure on the organisations, hence, it is necessary for the organisations to develop and implement certain strategic moves. In this context, strategic management plays a key role in minimizing the effects of challenges faced by a company because of internal and external factors affecting the business environment (Hill & Jones, 2012). Strategic management techniques are formulated by top management, which requires setting-up of major objectives to be achieved by the organisation along with their implementation and assessment. Strategic management enables an organisation to face internal as well as external challenges, which possess a major influence on the business environment of the organisation. Strategic management involves formulation of tools such as SWOT Analysis, Five Forces Model, Balanced Scorecard and PESTLE Analysis among others. The execution of such techniques provides the management with necessary information that ultimately leads to value creation. One of the contemporary examples of an organisation in the context of utilizing strategic management techniques is WS Atkins plc, which has successfully devised the techniques in order to add value to the organisation. WS Atkins plc, popularly known as Atkins, is a premier multinational UK based engineering consultancy firm, providing consulting services on planning, designing and management of projects in the engineering segment. Founded by Sir William Atkins in 1938, the company has set its benchmarks throughout the years by diversifying itself for providing contemporary services including engineering sciences and management functions, with operations spread across the UK, Middle East and the US. The aim of the study is to discuss how strategic management techniques have become an indispensible necessity of the modern-day organisation with reference to Atkins. The study would reveal the procedure for the formulation and execution of strategic management techniques that would contribute to the development and value creation for Atkins to survive in the modern world (WS Atkins plc., 2013). Strategic Management Techniques Strategic management imbibes a number of techniques. The paper aims at discussing some of the prominent and widely used strategic management techniques from the perspective of Atkins. SWOT Analysis SWOT analysis refers to the evaluation of internal as well as external factors influencing the business environment. The internal factors will encompass the strengths and weaknesses of the organisation, and the external factors will include future opportunities and threats for the organisation. Strengths Atkins has gained a sizeable number of strengths in the engineering and construction industry, owing to its diversified strategies, dedicated workforce, efficient HRM structure and existence of strong corporate leadership. One of the major strengths of the company lies with its ability to provide the highest dividends to its shareholders. The company, owing to its first-mover advantage in the engineering consultation industry, has been able to deliver maximum returns to the concerned stakeholders. The rise in the prices of the shares has been marked by the increase in demand and supply of the company’s offerings. Another important strength of the company is the implementation of diversification strategies (The Financial Times Ltd, 2015). (Source: The Financial Times Ltd, 2015) Atkins has diversified in various segments as well as nations throughout the globe. Apart from providing consultation for engineering projects, Atkins now provides similar services in the field of Information Technology (IT), designing of projects, outsourcing and environmental services. Additionally, the company has diversified in finance of projects and consultation for private properties. Another major strength of the company lies with the company relates to expanding its operational footprints in both private and public sectors. The company has been involved in providing consultancy services to the government offices in the UK. The increase in construction projects has enhanced the ability of Atkins to work with the clients in areas of defence, education, nuclear energy and healthcare services. Another important strength of Atkins is the management of internal human resources, with the help of key metrics such as rewards, headcounts, training and diversity of employees in the workplace scenario. This has been made possible through the increasing number of employees receiving prior training and high rewards for their work. Amongst many others, one of the important strengths of Atkins is its intensified knowledge base. The company offers a wide range of unique service, which similar companies are unable to provide to its clients. Atkins has further developed strong relationships with the government to secure projects in the field of nuclear energy, military services and healthcare initiatives. Furthermore, a major strength of the company is its recognition among others. Atkins is a major player in the consultation industry throughout the world with an increasing number of successful projects such as ‘Tianjin World Financial Center’ in China, ‘Burj Al Arab’ in UAE and ‘Oxford Circus’ in London (WS Atkins plc, 2013). Weaknesses One of the primary weaknesses that Atkins faces is the wrongful implementation of its ‘well-being centred methodology’, aimed at fulfilment of expectations from the workforce. Atkins has been unable to manage human resources in an effective manner, owing to which the company faces problems of increased imbalances amongst the employees. This has furthermore led to a depression in the workplace and establishment of relationship strains amongst the employees. Another limitation of Atkins that affects its internal environment is the organisational structure. Atkins has developed and implemented a matrix organisational structure within the organisational boundaries. This has led to the emergence of conflicts amongst people working in several departments concerned with offering unique services. Matrix organisational structure has resulted to conflicts between the divisional and functional heads, which consequently diminished the performance of the organisation. In addition, another major weakness faced by the company is its inability to provide equal services to all the sectors to which it caters. Atkins provides consultancy services in various sectors of engineering, healthcare and nuclear resources; however, the company generates most of the revenues from its engineering consultancy service. Atkins has further been unable to maintain a generalized wage structure that has affected its internal environment. The company has been involved in providing differentiated wages to its employees spread across various nations where the company operates. Atkins provides differentiated pay to its employees, which hinders the motivation level of the employees and reduces their efficiency. In addition, internal weakness of the company includes its workforce diversification strategy. As Atkins selects its employees based on a diversified strategy, it is unable to manage the conflicts arising out of discrimination in workplace based on nationality, gender and age of employees. Hence, Atkins is unable to reduce the negative consequences of employee discrimination and provide equal priority to the employees (WS Atkins plc, 2014). Opportunities Several opportunities lie beneath the internal strengths of Atkins and its unique operations. One of the major opportunities for Atkins is the continuous rise in the number of clients, owing to which the company will encounter high prospects for growth in the near future. In addition, as part of the diversification strategy, the company has acquired several subsidiaries such as ‘Houston Offshore Engineering, LLC’ in Texas and ‘Confluence Project Management Pte. Ltd’ based in Singapore. These major acquisitions have enabled the company to enhance growth and profit margins as well as attract more clients. In addition, opportunities exist for Atkins to enhance its top line through operational excellence and commitment for contracts received from the government. In addition to the existing services, diversification has been witnessed for Atkins in environmental and urban development facilities, remediation and waste management. (Source: WS Atkins plc, 2013) Furthermore, Atkins has several opportunities for growth because of the fact that the Government of UK seeks to establish high infrastructure in the future markets, to strengthen the economy and development of various sectors. Hence, Atkins may be able to grab such opportunities of growth. In addition, the company can create opportunities in the railroad sector in the UK wherein, the government has introduced electrification program (Atkins Ltd., 2013). Threats Despite the rising opportunities of increment in the company, there has been a substantial rise in the threats associated with the development and growth of the organisation. Because of diversified operations in various regions, the company has been involved in high level of regional threats as well as security threats, especially in the Middle East nations. Another threat that the company faces is the lack of qualified skilled personnel in various sectors underlying its operations. Furthermore, failure in designing business functions can hinder the business performance in future leading to successive losses faced by the company. Risks such as shortcomings in designing a project structure may lead to injuries and loss of valuable lives in the workplace, concerning health and safety concerns. Threats can also arise in case the projects are managed improperly, resulting to dissatisfaction amongst clients. Designing errors and data insecurity in the consultation process may act as a major threat leading to negative consequence and hindrance of business growth. In addition, competition from other players in the similar field such as ‘RPS’, ‘Amec’ and ‘Scott Wilson’, can act as a major threat, leading to losses for Atkins in future (Atkins Ltd., n.d.). Five Forces Model Porter’s Five Forces Model (Source: Stroe, 2013) Threat of substitute products The engineering consolation industry, although having a huge potential has certain threats that may restrict the level of growth. In the case of Atkins, the company may find itself losing its hold over the penetrated markets, as the local consultation firms may come up with newer services and hampering the growth prospects for Atkins. Furthermore, the rivals can acquire certain government contracts, which may lead to potential losses for the company as well as for the stakeholders. The company may come up with similar products at a lower price, which can further provide complimentary services at a lower cost than Atkins can. In such a scenario, the threat of substitute products for Atkins can be considered medium to low. Furthermore, the third parties who may be indirectly involved with the construction consultancy may introduce newer services and regulations (Mawhinney, 2008). Bargaining Power of Suppliers The bargaining power of buyers in the engineering consultation industry is low in nature. The suppliers provide materials required for delivery of consultation services to the clients. Some of the general supplies that will improvise the services are the software required for performing modelling, calculation along with computer devices. Furthermore, the inputs may encompass stationery materials, online sources for resourcing valuable information and specialised engineering firms that provide an overview of the service to be delivered in various nations. The nature of bargaining power of the suppliers is low as the inputs can be managed easily without any difficulties, owing to the internal capabilities of the organization. Furthermore, Atkins reserves the right to select inputs, which further reduces the bargaining power of suppliers (Atkins Ltd, 2012). Bargaining Power of Buyers As opposed to lower bargaining power of the suppliers, the bargaining power of the buyers is considered high in the engineering consultancy industry. One of the strongest reasons for high level of bargaining ability of the buyers is the availability of engineering consultancy firms on a large scale. The buyers will encompass the clients and government who provide projects to be achieved in future that requires providing consultation services. Availability of many consultants results in failure of acquiring prominent projects, further leading to losses for the company. Furthermore, the right of cancelling or abandoning the project and receiving consultation regarding the project lies with the clients, which increases their bargaining power. Threat of New Entrants The threat of new entrants in the engineering consultation industry is considered low, as the number of barriers pertaining to the industry is low. The barriers that can act as a hindrance are differentiation, wherein, a firm may face difficulty owing to first mover advantage or may be unable to attract potential clients in case of high competition from already established clients. The experience and learning can also be considered as a barrier; however, they tend to affect a company only at the initial stages. Hence, there exists high level of threat of new entrants in the construction industry as new firms may easily enter the construction consultancy segment with the presence of the required devices. Rivalry among Existing Competitors The final factor that may have an influence over the company is the level of rivalry amongst the existing competitors. Atkins may face high level of competition from rivals that include ‘Scott Wilson’ and ‘Amec’ among others. These rival companies may restrict the growth of the company in the long run. The existing rival firms provide similar services in various nations where Atkins operates for introducing additional services at lower costs, which may lead to the inability of Atkins to attract potential clients. Hence, there is an existence of high level of rivalry for Atkins (Stroe, 2013). Balanced Scorecard With the changing context of the present day business, measuring performance of the companies has become quite crucial to analyse the positioning of the unit at large. There are various tools that prevail in the process of analysing performance of companies including SWOT, Porter Five Forces and others. Balance scorecard technique is one of such approaches used by companies as a tool to determine current positioning of the unit within the tough external business environment. Notably, the concept of balance score card acts as a strategic management process used towards aligning the goals and objectives of a particular business in a significant manner with that of its visions and long term objectives. There are certain specific components of balance scorecard technique, which can be analysed with regard to the operations of Atkins. Some of the most vital components of balance scorecard technique include proper execution of goals of customer satisfaction, financial management, internal business management, execution of vision and mission of the business as well as working effectively with knowledge and innovation among others. Effective operation in all the aforementioned aspects would certainly enable the companies in various sectors to ensure or to attain noteworthy performance at large (Kaplan & Norton, 1996). Atkins is a particular business unit that intends to deliver service that are in alignment with the needs and demands of the customers. Though operating in a challenging business environment, Atkins has been able to meet the demands of the customers by understanding or anticipating their needs and demands. The company is in constant interaction with the customers to understand their expectation from the business unit and likewise, deliver products and/or services that are in alignment to the same. In each of the functioning of the unit including consultation, planning and project management, the core aim of the unit is to deliver quality services that meet the expectations of the buyers. Attaining maximum goodwill for the business is one of the prime strategic goals of the unit at large (Kaplan & Norton, 1996). The financial performance of the unit has also been quite stable in the last decade or so. The management of the company hold the belief that meeting the objectives of the business to attain customer satisfaction will more or less be reflected in the financial positioning of the unit in a positive manner altogether. This aspect can also be justified from the consolidated statement of income of the business in various operational sectors. Notably, income of the business unit has augmented in the year 2014 as compared to the preceding year i.e. 2013. In this regard, revenue of the company has also seen a considerable incline from the preceding year of operations. This aspect can be seen as aligned with the expansion of the operations of the company at large. Expanding more on this particular topic, the effectiveness of the mission and vision of the company can also be taken into consideration. The mission of the company is to enhance and establish its business positioning within the industry it operates through gaining utmost effectiveness. The company intends to attain the reputation of being called as most reliable and trustworthy within the industry it operates. On the other hand, the vision of the business includes integrating its innovative ideas and creation towards meeting the short term and long term goals of the unit. To elaborate in this context, it can be determined that innovation and creativity is deemed as one of the prime aims of the company for its operations within the industry in the UK. In this regard, it has been understood that knowledge and innovation has been among the core success factors with regard to the operations of the company. The management of the company largely focus on the prevalence of knowledge sharing environment within the workplace. Knowledge sharing enables the company to enhance the performance of the business by ensuring circulation of innovative ideas and creativity within the workplace (WS Atkins Plc, 2014). This aspect has also been seen as one of the core performance indicators of the company within the industry. The role of internal business operations, which is one of the most vital parts within the operations of the companies, also acts as a key aspect within the operations of Atkins. The management of the company make sure that its goal of attaining utmost goodwill from the end of the customers must not harm the internal business operations in the long run. The management of the company also believe to work on facts, rather than moving ahead on the basis of assumptions with regard to the internal business functioning. This aspect has further reflected in the form of effective operational performance of the business at large. Effective risk management is also deemed to be among the most essential parts of the internal operations of the business. It is widely believed amid the management of the company that in order to ensure effective and comprehensive achievements of the goals of the business, proper risk management is quite prominent (WS Atkins Plc, 2014). Hence, from the overall analysis of the components of the balance score with regard to the operations of Atkins, it can be depicted that collective value has been achieved by the company over the years, which one way or the other formed the base or strong foundation for long term success of the unit. PESTLE Analysis Political Factors Political factors comprise the key political scenario of a particular place. United Kingdom is deemed to have one of the stable political paradigms in the current scenario. The country has been on the receiving end of less level of issues in the political aspect, since it remains prosperous owing to its systematic nature at large. In terms of conducting business with regard to the political environment, the UK is regarded as among the top 10 countries of the world in terms of operating business. This is because of the fact that the country ensures negligible hurdles for the business units operating in the same (World Bank Group, 2015). This has one of the influential aspects for the authorities of Atkins to base its business mostly in the UK market. Notably, the company has been headquartered in the UK since the days of its inception and its operations are largely dependent on this particular market (WS Atkins Plc, 2014). Economic Factors With regard to economic landscape of the nation, the UK scores high for the business sector. Though the country has been significantly impacted from the recent economic downturn, the prospect of conducting business in the nation is still quite significant. This can be aligned with the fact that since the per capita income of the nation is on a rising trend, certain specific benefits can be acquired by the business group (World Bank Group, 2015). This can also be aligned with the extensive focus on the operations of Atkins in the UK market. Notably, most of the operations of the business have its existence in the UK market owing to broad scope this particular aspect ensures (WS Atkins Plc, 2014). Social Factors The UK society is quite diversified owing to the prevalence of people from different parts of the world. The country has one of the strong structures in terms of social integrity amid the various nations of the UK. The public spending of the country with regard to the business sector is also quite considerable owing to the large potential customer base of the nation (World Bank Group, 2015). A large and considerable percentage of revenue of Atkins is acquired from the business market of the UK (WS Atkins Plc, 2014). Technological Factors Technologically, the market of the UK is booming significantly. The number of internet users of the nation has also enhanced and augmented significantly in the recent years. This shows the appreciation of the people towards emerging technologies. The government spending on technological domain has also augmented in a commendable manner (World Bank Group, 2015). Correspondingly, business units like that of Atkins, which involves utmost creativity and innovation in its approach perhaps have better scope for operations in the UK market. The company is known for ensuring integration of technology in the business design to ensure the deliverance of quality services at large (WS Atkins Plc, 2014). Legal Factors In terms of conducting business in the nation, the UK is deemed to be appropriate with regard to its appreciative policies for the business domain. In terms of getting permits for new projects, the country ranks 17th in the world while with regard to tax policies, the nation ranks 16th amid the global nations, which is again deemed as quite positive (World Bank Group, 2015). Correspondingly, Atkins is believed to work in alignment with the legal policies of the nation in order to ensure long term uninterrupted business operations. Legal as well as regulatory compliance is one of the integral approaches of the operations of the company in the market of the UK (WS Atkins Plc, 2014). Environmental Factors The government of the nation is quite strict with regard to its laws regarding environmental sustainability. With effective policies of the nation with regard to climate change, CO2 emission in the UK has gone down significantly as per the recorded data for the year 2010 (World Bank Group, 2015). Correspondingly, Atkins is seen to be quite focused towards enhancing its CSR positioning within the UK and worldwide marketplace. In this regard, some of the effective environmental approaches of the unit include waste management, reduction in carbon emission and others (Atkins, n.d.). Conclusion From the overall analysis of the study, several key facts can be compiled together to have a better understanding of the research topic. It is evident that in the challenging present day business sector, it has become important for companies to develop a unique reputation for themselves, so that they could be able to sustain for a longer duration within the challenging external business domain. In this regard, it has been comprehended that strategic alignment of the goals and objectives of any particular business is quite crucial; irrespective of the sector a particular business is being conducted. Correspondingly, proper analysis of the internal and external operations of the company is deemed to be quite crucial for developing effective strategies at large. In this regard, the study has implemented tools such as balance scorecard, PESTLE analysis and SWOT analysis among others to comprehend the market positioning of the business of Atkins, which is established and headquartered in the UK market. Hence, it can be concluded that strategic business objectives indeed can be attained with due adherence to systematic processes. References Atkins, No Date. Corporate Sustainability. Home. [Online] Available at: http://www.atkinsglobal.com/en-GB/corporate-sustainability [Accessed March 10, 2015]. Atkins Ltd, 2012. Risks and Opportunities for Inclusive Growth in Developing Countries. Future Proofing Cities, pp. 1-158. Atkins Ltd, No Date. Plan Design Enable. Countering Increased Threat Levels. [Online] Available at: http://www.atkinsglobal.com/~/media/Files/A/Atkins-Corporate/middle-east/sectors-documents/security/library-docs/brochures/countering-increased-threat-levels.pdf [Accessed March 10, 2015]. Atkins Ltd., 2013. Good results, Progress on Strategy and Full Year Outlook Slightly Ahead of Expectations. Half Year Financial Report For The Six Months Ended 30 September 2013. [Online] Available at: http://www.atkinsglobal.com/~/media/Files/A/Atkins-Global/Attachments/corporate/investor-relations/2013-11-14.pdf [Accessed March 10, 2015]. Hill, C. & Jones, G., 2012. Strategic Management: An Integrated Approach. Cengage Learning. Kaplan, R. & Norton, D. P., 1996. The Balanced Scorecard: Translating Strategy into Action. Harvard Business Review Press. Stroe, G. S., 2013. Structural Analysis of Engineering Consulting and Design Industry. Management & Marketing Challenges for the Knowledge Society, Vol. 8, No. 1, pp. 41-62. The Financial Times Ltd, 2015. WS Atkins PLC. Equities. [Online] Available at: http://markets.ft.com/research/Markets/Tearsheets/Forecasts?s=ATK:LSE [Accessed March 10, 2015]. World Bank Group, 2015. Ease of Doing Business in United Kingdom. Home. [Online] Available at: http://www.doingbusiness.org/data/exploreeconomies/united-kingdom [Accessed March 10, 2015]. WS Atkins plc., 2013. Good Results, Despite Challenges in Some Markets. Annual Report 2013, pp. 1-166. WS Atkins plc, 2014. Good Results and Significant Progress on Our Strategy. Annual Report 2014, pp. 1-185. Read More