Strategic Management - KONE Corporation - Case Study Example

Strategic Management Executive Summary KONE Corporation is a large producer of automated services and developer of elevators and other automated products that are likely to increase the safety and security of people to travel within a building. By developing effective services such as automated doors, conveyor belts as well as walking belts, the company has been meeting with the quality needs of the consumers. However, the key issue that is observed from the operations of the company is in terms of changing needs of the customers. The external threats act as a huge challenge for the organisation to maintain its sustainable domain as well as increase its business peripherals. As the organisation is maintaining its business across the globe, it has to deal with the different challenges imposed by the external environment in relation to the strict norms and other governmental policies. Conversely, as the company is dealing with a unique product line, the threats of the new entrants are quite low and there are high chances of the company to prosper. Table of Contents 1. Executive Summary 2 Table of Contents 3 2. Mission Statement and Corporate Objectives 4 2.1. Mission/ Value Statement 4 2.2. Corporate Objectives 4 3. External Analysis 5 3.1. Macroeconomic Analysis 5 3.1.1. Political 5 3.1.2. Economic 5 3.1.3. Social 6 3.1.4. Technological 6 3.1.5. Environmental 6 3.1.6. Legal 6 3.2. Competitive Analysis 7 3.2.1. Competitive Rivalry 7 3.2.2. Threat of New Entrants 7 3.2.3. Threat of Substitutes 7 3.2.4. Bargaining Power of Suppliers 8 3.2.5. Bargaining Power of Customers 8 4. Internal Analysis 8 4.1. Portfolio Analysis 8 4.2. Analysis of Strategic Capabilities 10 5. Strategic Marketing Framework 10 5.1. Analysis of Bowman’s Strategy Clock 10 6. Strategic Choice 12 7. Strategic Implementation: Digital Marketing Strategies 14 7.1. Digital Marketing Strategy 14 7.2. Market Segmentation Analysis 14 7.3. Online Channels 15 7.4. Number of KPIs 15 8. TOWS Matrix 15 References 17 2. Mission Statement and Corporate Objectives 2.1. Mission/ Value Statement With the notion of value creation, the company has framed a mission or value statement that is aligned with its strategies. To develop their strategic advantage, KONE formulates their mission statement as “to create the best people flow experience” (3KONE Corporation, 2014). The aim of the company is majorly focused on expanding the needs of the customers. By responding to these needs of the customers effectively, the organisation is successfully addressing their needs and enhancing its global excellence. With the strategic implementation of their vision of creating value to the consumers, the company has been addressing the diverse needs of consumers. Furthermore, by enhancing the working environment the company has been successfully developing the ability of its workers to enhance their work experiences. By maintaining consumer loyal, the organisation is enjoying a profitable growth in the global domain. Additionally, by maintaining employee satisfaction, the organisation has been successfully nurturing a finest group of experienced people who are effectively enhancing the organisational performances (1KONE Corporation, 2014). 2.2. Corporate Objectives The corporate objectives are to ensure the smooth as well as safe movements within the building. By increasing the level of comfort and reducing waiting time in buildings, the company ensures a value creation for the consumers. Furthermore, the corporate objectives as per the financial terms are to address the long-term financial objectives. The company even opts for maintaining global presence and key market segment in their business domain of modernised accessories that enhances the quality of movement within the building (4KONE Corporation, 2014). With the notion to develop value and comfort for its consumer, KONE has been effectively increasing the experience of urbanisation. By effective maintenance of strategic tactics, the organisation is enhancing its overall ability to meet with the diverse business needs. Moreover, in order to sustain the competitive domain of the globe, the organisation is successfully nurturing its employee strength and maintaining the level of competitive edge (2KONE Corporation, 2008). 3. External Analysis 3.1. Macroeconomic Analysis Macroeconomic analysis of an organisation reflects on the impact of the external environment on the organisation. These external factors are noted to be having a huge impact on the overall performances of the organisation and affect the long-term development of the same. To ascertain the impact of macroeconomic factor, PESTEL analysis has been conducted on KONE. PESTEL analysis reflects the following factors that are affecting the overall performances of the organisation. 3.1.1. Political The increased import duty of the areas where goods are transferred and services provided has been affecting the business of the organisation (3KONE Corporation, 2009). 3.1.2. Economic The company has been operating in the prime locations of the globe and providing services majorly to the advanced nations. Hence, as the country where the organisation is providing services with is noted to be one of the developed economies and has a stable economic system. This acts as an added advantage for the company to proper (3KONE Corporation, 2009). 3.1.3. Social With the increased amount of safety and comfort, the company has been successfully meeting the social needs of the people and developing the quality of services. By developing the elevator services in the unique buildings of the world, the company has been successfully meeting the social needs of the environment (3KONE Corporation, 2009). 3.1.4. Technological The technological factor of the company is mostly related with the challenges imposed by the external environment and continuous technological development. The company needs to update its technology to meet the diverse needs of the changing environment (5KONE Corporation, 2012). 3.1.5. Environmental The environmental factor of the company is majorly inclined towards maintaining the global standards at the refurbishment and construction. By meeting the Corporate Social Responsibility (CSR), the company is duly addressing the different needs of environmental development (5KONE Corporation, 2012). 3.1.6. Legal The legal factors imposed by the government are in relation to maintain a ‘low tech manual elevator’. This has imposed a huge challenge for the company to maintain its product as per the stated guidelines of the government (5KONE Corporation, 2012). 3.2. Competitive Analysis The competitive analysis of the market helps in developing the different attributes of the company to meet with the diverse challenges of the external environment. Competitive analysis helps in addressing the diverse challenges that are imposed by the organisation in order to enhance its competitive domain. The following section addresses Porter’s five forces analysis to enhance the ability of the organisation to face the diverse challenges. 3.2.1. Competitive Rivalry The competitive rivalry for the organisation is the projected growth of the companies dealing with similar standard of products. With the increasing number of skyscrapers across the globe, the organisations are potentially incorporating automated services of escalators and elevators as a part of its business projecting enhanced amount of threat on KONE (5KONE Corporation, 2012). 3.2.2. Threat of New Entrants The threats of new entrants are considered as low owing to less number of elevator and escalator industry based companies in the present market. However, the chances that there can be an increase in the number of entrants in this market competition may develop due to the exclusivity and profit prospect associated with the business (5KONE Corporation, 2012). 3.2.3. Threat of Substitutes Threat of substitutes is low in this market and the increasing number of skyscrapers makes elevators and escalators a compulsory source for travel (5KONE Corporation, 2012). 3.2.4. Bargaining Power of Suppliers The bargaining power of suppliers in the industry is quite high as there are few companies dealing with these types of mercenaries in the global domain (5KONE Corporation, 2012) 3.2.5. Bargaining Power of Customers The bargaining power of the customer is low as there is less number of organisations dealing with and providing services of equal level of quality goods as that of KONE (5KONE Corporation, 2012). 4. Internal Analysis 4.1. Portfolio Analysis Managing portfolio is one of the major issues, which is related to the development of different attributes based on performance. Planning an investment is the prime needs of management to ensure a proper flow of funds that would generate optimum amount of return. For analysing the overall portfolio of investment, the GE-McKinsey 9 box matrix is deemed to be one of the decisive forms of developing a favourable investment plan. The matrix helps in ascertaining market planning and also enhancing the adaptability of the market to the designed investment plan (Amatulli & et. al., 2011). The matrix is depicted as follows: High Medium Low High Medium Low Figure 1: GE-Mckinsey 9 Box Matrix Source: (Strategic Management Insight, 2015) KONE deals in manufacturing elevators in leading nations throughout the globe. This unique chain of business is acting as a major advantage for the company to develop its business efficiently. In terms of managing a portfolio for investment, Kone needs to develop its overall ability to sustain and make effective investment planning. With better management of investments, the company can ensure long-term sustainability in the respective industry (1KONE Corporation, 2014). The portfolio planning for KONE in relation to the above portrayed matrix is ascertained to be undertaking different projects associated with large buildings and skyscrapers that are projected to be potential investments for the company. With the increasing trends of skyscrapers and development of an intensive building plan, the company can develop its profitability plan by making investments in different projects and maintaining the existing ones (1KONE Corporation, 2014). 4.2. Analysis of Strategic Capabilities Kone is intending to develop its core capabilities based on the management of its present services being provided to the end customers. Based on the unique chain of services that the company is providing to its consumers, the core competencies of the same could be revealed. Furthermore, based on its unique product line, the company is even likely to gain superior competitive position over its chief business market competitors. Additionally, the other unique resources as well as core competencies of Kone could be ascertained as its capability of making considerable level of investments in any project and employing diversified workforce to fulfil various functions among others (2KONE Corporation, 2014). 5. Strategic Marketing Framework 5.1. Analysis of Bowman’s Strategy Clock Kone planned to develop secured elevators within the skyscrapers meant for residential purposes and needs for developing transparency within the system. In order to comply with the security needs of the consumers, the company attempted to develop secured elevators and enhance the efficiency of the system. By maintaining a secured system of elevators, the company tends to ensure maintaining security and developing the overall system (2KONE Corporation, 2014). The following Bowman’s Strategy Clock has been depicted for analysing the various practices that Kone adopts to sustain its competitive position: Figure 2: Bowman’s Strategy Clock Note: Note: Prepared for the study Based on the above depicted graphical illustration, it can be affirmed that Kone mainly follow and perform certain quality practices that eventually make the company to sustain its competitive position. In this regard, such practices include generating best user experiences by the application of various effective solutions and comprehending customers’ requirements among others (2KONE Corporation, 2014). 6. Strategic Choice Present New Present Market Penetration Product Development New Market Development Product/Market Diversification Figure 3: Ansoff Matrix Note: Prepared for the study KONE deals with such products that enable easy movement within the building as well as skyscrapers. The company is majorly located in the prime cities of the globe and planning to develop its peripherals across different cities (KONE Corporation, 2008). Specially mentioning, for product development, the company tends to increase the quality of the services including automated doors and walking bands among others. Besides meeting the needs of the skyscrapers and offices, this company is even aligned towards designing safety needs and ease of movement for nursing homes as well luxury hotels for ITS probable market development and diversification (2KONE Corporation, 2014). This could be duly justified as more and more elevators are being demanded with the increasing needs of movements within the buildings. Additionally, to enhance the effectiveness of movements, more and more technically sound products are being demanded that are eventually increasing the ease of movements within the buildings (2KONE Corporation, 2014). The following statistics justifies the above discussed statement: Figure 4: Demand increase in Elevators Source: (1KONE Corporation, 2014) Correspondingly, with the increase in elevators, there has been a parallel development in the services needs of the consumers. The following diagram reflects on the increase in maintenance of the products that are already into operation. Additionally, it is even noted that Kone is even inclined towards developing the present market by enhancing the services that it is providing in the global domain (2KONE Corporation, 2014). Figure 5: Elevator Maintenance by KONE Source: (1KONE Corporation, 2014) 7. Strategic Implementation: Digital Marketing Strategies 7.1. Digital Marketing Strategy Kone is witnessed to develop its competitive domain by the use of digital media such as internet and other resources for obtaining several significant advantages. Notably, the enterprise is effectively using the internet source to develop its overall ability to perform and increase the credibility factor. Commendably, with the development of digital strategies like using various sites of social networking, it is evident that the company will be able to manage its global prominence and enhance the level of competence (Ayodele & et. al., 2012). 7.2. Market Segmentation Analysis Kone is dealing with a specific brand of product, which is required only for skyscrapers or buildings that possess huge amount of movements. The level of services that the company is providing to its consumers mainly focused on developing the quality of the same and enhancing their prominence. Hence, to enhance the efficiency of the system, the company is likely to develop its market across the leading nations and economies. The major segment of the market of the enterprise is focused on the leading economies that are likely to develop their prominence across the globe with the effective use of different strategies and meeting diverse needs of societal development (Amatulli & et. al., 2011). 7.3. Online Channels By developing effective channel of marketing with the use of online sources such as social media and other online sources, it is observed that Kone is efficiently increasing its prominence at several areas across the modern world. Additionally, for developing different online peripherals, the enterprise is even likely to enhance its prominence and meet the diverse challenges that erupt while developing the market (Ayodele & et. al., 2012). 7.4. Number of KPIs To identify the development of the Key Performance Indicator (KPIs) for digital marketing technique being used by Kone, the number of views of the advertisements as well as likes posted by the viewers is essential to consider. Furthermore, the company can even analyse the needs for development within the same by making parallel comparison of the different forms of digital advertising techniques used and the responses received (Jackson, 2009). 8. TOWS Matrix With effective management of diversity in business and meeting the needs of safety along with security, KONE increased its consumer base across the leading countries of the globe. The company at present must focus on expanding its business with the use of digital marketing and develop several peripherals with the integration of digital technology. The TOWS matrix considered in this context would certainly aid in analyzing diverse challenges as well as opportunities that the enterprise is going to face in future during the integration of digital marketing technology (Amatulli & et. al., 2011). Strengths Unique product range Quality Services Sustainable development Weakness Extreme reliance on host country based revenue Opportunities Huge chances of growth in Europe To expand customer base and likewise develop respective business markets To find niche market opportunity in the areas that possess huge figure of growth chances Threats Saturated decline in certain markets Kone, through digital market, can diversify its product range and thus increase consumer satisfaction Find better opportunities in other markets with the use of digital marketing and develop global presence Figure 6: TOWS Matrix Note: Prepared for the study References Amatulli, C. & et. al., 2011. Strategic Analysis through the General Electric/McKinsey Matrix: An Application to the Italian Fashion Industry. International Journal of Business and Management, Vol. 6, No. 5, pp. 61-75. Ayodele, A. & et. al., 2012. A Strategic Review of KONE and how it can use Digital Marketing. Academia. [Online] Available at http://www.academia.edu/10574199/A_Strategic_Review_of_KONE_and_how_it_can_use_Digital_Marketing_Full_Research_Paper_and_Video_ [Accessed April 03, 2015]. Jackson, S., 2009. Cult of Analytics. Elsevier. 1KONE Corporation, 2014. A Challenger’s Mind-Set: The Case of KONE. Sellar Properties, pp. 1-16. 2KONE Corporation, 2014. KONE Design Collection Monospace ® 500. KONE plc., pp. 1-23. 3KONE Corporation, 2014. Turning Strategy into Reality. Company. [Online] Available at: http://www.kone.com/en/company/vision/ [Accessed March 16, 2015]. KONE Corporation, 2012. A Cost Effective Lift for Low-Rise Buildings Kone Ecospace. KONE Plc., pp. 1-11. KONE Corporation, 2009. Managing the Flow of People and Goods in Medical Buildings KONE Solutions for Medical Facilities. KONE plc. pp. 1-19. KONE Corporation, 2008. Automatic and Manual Entrance Solutions Pedestrian Doors. KONE Doors, pp. 1-16. Strategic Management Insight, 2015. GE McKinsey Matrix. Tools. [Online] Available at: http://www.strategicmanagementinsight.com/tools/ge-mckinsey-matrix.html [Accessed April 03, 2015]. Read More