The Application of Global Strategic Management - Assignment Example

Global Strategic Management Student’s Name: Name of Institution: Instructor’s Name: Course Code: Date of Submission: Abstract This case study will look at the strategic global management methods adopted by CSE Global in achieving its global goals. CSE Global’s main focus is to become a major company that runs various businesses associated with engineering in the world. This is already seen in the many acquisitions it has made. Part of this discussion will include an evaluation – implicit at times- of other related factors, e.g. challenges/complexities, market and competitive environment, customer base, human resource situation, opportunities. However, the general focus will focus on the key global strategic management by which CSE Global drives its global charge. Overview CSE Global, headquartered in Singapore, is a company that provides technologies on telecommunications and security surveillance services, industrial automation, healthcare and environmental markets (CSE Global website, 2012). As the name explicitly asserts, CSE has always set its sight upon the global market. Most probably, this is by virtue of its business, which is characterized by the provision of those goods and services and/or solutions that mark globalization. This is reflected in the value that it places on diversity, not only as we have seen in its business dealings, but also in its outreach to other parts of the world and diverse workforce. For instance, according to the company website, it has over 1,500 technical and qualifies staff that operates an extensive network of more than 30 offices based in 20 countries across all continents (i.e. Middle East, Europe, Asia Pacific, Americas and Africa). In the region that includes Australia and New Zealand, for instance, CSE Global has its headquarters in Perth (i.e. in Western Australia), with offices based in all the capital cities and other key regional hubs. The company’s global business landscape is further reflected in the fact that it derives over 90 percent of its revenue from outside Singapore (CSE Global Website, 2012; CSE Global Annual report 2010 &2011; Reuters, 2011). Based on this background, this paper is a case study on CSE Global. The main focus will be on the company’s key global management strategies and how these have helped the success of the company in the global market. Historical Background CSE began in 1985 as the engineering projects department of the Chartered Electronics Industries, which was the electronics section of Singapore Technologies (ST). In January, 1997, the management of CSE was successfully bought by ST, this being part of the ST’s corporate objective to encourage higher management participation level and ownership of selected companies. Two years later, February 1999, CSE became a member of Singapore Exchange, with its shares traded on the SE’s main board (CSE Global Annual report 2010 &2011). As already mentioned above, CSE adopted, as part of its growth objective, a global approach. With this being the main driving force, CSE has since acquired a series of companies in various industries across the globe, e.g. USA, UK, Australia, etc. These acquisitions include Australia’s Uniserve Corporation and RTUnet in 2004, US-based Energy Storage and Power Corporation (ESPC) in 2005, New Zealand’s W Arthur Fisher (WAF) and the US-based Hankin Acquisition Corp in 2008, UK’s Systems Integration and Automation (SIA) in 2010, and Australian-based ASTIB on the 12th of January, 2011 (CSE Global Annual report 2010 &2011; Reuters, 2011). The specific business operations of these companies will be discussed later in this paper. These acquisitions have not only expanded the company’s capabilities, but also provided a broader international base for sustained growth. Global Strategies It is apparent that CSE Global’s key strategy for managing its global objectives and operations is diversity. This approach is obviously in response to the equally diverse market that CSE targets. It is generally agreed that strategic diversity is informed by both the internal and external environment (Yip, 2000; Yip, 2002; Ingram, 2001). In relation to CSE Global, diversity as a strategy can mainly be seen in the two key areas: the company’s involvement in different businesses and industries, and the company’s aim to reach as many international markets as possible. First, according to the CSE Global Annual Reports (2010; 2011), the company’s global presence cuts across all continents: America, Europe, Asia Pacific, Middle East and Africa. This is reflected in the more than 38 offices in various countries across these continents. Two, one of the most visible characteristics of CSE Global is the fact that although it mainly focuses on engineering, it is generally open to different businesses in different industries. This is especially reflected in its different lines of business, as well as those in which its various acquisitions operate. For instance: Telecommunications & Security Surveillance services is mainly responsible for designing and providing solutions for turnkey telecom infrastructures in the gas, oil and other energy industries through on and offshore processing facilities (e.g. petrochemical and LNG plants, refineries, mining and other industries for process minerals. Industrial Automation department deals with designing and supplying a wide range of systems for industrial automation (e.g. safety shutdown, process control, subsea control, wellhead control, electrical control and protection, traffic control and management, medium and high voltage system, plant information, etc. Environmental solutions refer to designing and supplying various systems of specialized furnace used in applications for industrial processes (e.g. incineration to various municipal and industrial clients). Health solutions supplies, amongst many others, the UK healthcare market with systems for electronic management of patients care records (CSE, 2012). Its acquisitions and businesses include: Control Concepts & Technology Corporation (CCTC) deals with the integration of engineering systems; the Australian-based Uniserve Corporation provides electrical engineering services for mining industries, and water and power utilities; the Belgium-based Techno TradeSA (which has been renamed CSE Semaphone) develops and sells telecontrol and telemetry products and/or services for various industries (e.g. oil and gas, railways, utilities, building automation); the US-based Hankin Acquisition Corp mainly deals with the designing and installation of incineration and other high temperature thermal systems for both environmental and industrial markets; Systems Integration & Automation Limited (SIA), which was acquired by CSE Global in 2010 provides power, nuclear and oil & gas industries with safety & protection, and control systems; and Australia’s Astib Group deals with a range services for systems integration which help to develop and deliver sophisticated communications, among others (CSE Global Annual report 2010 &2011). It is possible for diversity to translate to a heavier workload, which may perhaps cause more difficulty to growth and management. However, this diversity has become the key to CSE’s growth and development. CSE’s success at managing diversity, envisaged in its diverse businesses and the various international contexts in which it runs its operations is reflected in its key strengths and capabilities, as well as the contracts that it has won in these places. As has been mentioned already, CSE Global’s strength lies in the expansiveness of its operations. According to the CSE Global Annual reports (2010 &2011), under Automation business, CSE Global deals with process control, safety shutdown, gas & fire detection, telemetry/SCADA/pipeline control, electrical control and protection, subsea control, wellhead control, traffic control & management, and plant information management systems, as well as I & E construction. Under environmental business, CSE Global deals with meteorological systems, systems for carbon and energy recovery, incinerators (i.e. fluid bed and rotary kiln incinerators), multiple heart furnace, etc. Under the healthcare business, the company deals in hospital information system, emergency care, electronic prescribing and clinical decision making support, record system for community and mental health care. Under telecommunication business CSE Global deals in construction communication, fiber optic systems, telephone networks, radio systems, telemetry/SCADA networks, CCTV and systems for FIDS and access control, general alarm and public address systems, VSAT satellite communications network, WAN/LAN networks, etc. Naturally- if it may be said- this diversity in business operations and in a broad geographical scope has resulted in a broad customer base, which mainly consists of multi-national blue-chip companies as well as institutions, governmental or in the private sector. As the company continues to grow and acquire more companies in various engineering-related industries, and in different countries, the customer base equally continues to grow in every line of business. Going by the statistics in the CSE Global’s Annual Report (2011), Automation still remains to be CSE Global’s largest business, raising 68 percent of its revenues. In the second half of 2011, the Automation business experienced strong growth, especially as a result of the development of the US on-shore shale market for gas and the rejuvenation of off-shore Gulf of Mexico. The largest CSE Global’s telecommunication market, by 2011, was the Middle East. Increased demand and orders from the region created an excess backlog of $150 m as the company entered 2012. Although the healthcare business has only operated in the UK, CSE Global also aims to take the business to the global market. Another key advantage of such diversity is that not all of the businesses can be affected at the same time. They compliment each other. In 2011, for instance, projects in the Middle East faced difficulties, but other parts thrived well. And while the Middle Eastern and African geographic regions raise only 18 percent of the group’s profits, it is complimented by other regions, e.g. Americas that raises 44 percent, and Asia Pacific and European region that raises 74 percent of the profits. This diversity objective has been helped by an even diverse workforce. According to CSE Global Annual Report (2011), 1,700 employees are of both genders and from diverse ethnic backgrounds, and they work in all the four technical areas. As the group chairman, Lim Ming Seong (cited in CSE Global Annual Report, 2011), describes as committed, resourceful and flexible. This characteristic of the employees is perhaps driven by the group’s emphasis on creativity and innovation. Dealing with Challenges The discussion here so far may imply that CSE Global has not had challenges. On the contrary, like every other organization and business line, CSE Global has also had to assess and evaluate certain possible risks that it faces or could face in its operations. These possible challenges can be faced in relation to various operational objectives. Generally, these challenges may be operational or financial. But this paper will mainly focus on the operating challenges. CSE Global divides its operating challenges in three main categories: Growth Management Indeed, the group has enjoyed rapid growth in the years since its public listing in the Singapore Exchange, especially in relation to the size of its staff or number of employees, scope of business activities, geographical market base, and the level of its technical expertise. This growth is attributed to the company’s management, which has effectively worked towards expanding the company’s operations into not only new products, but also geographical markets. But the demand brought by both its current and future projects is still great. It therefore recognizes and acknowledges that its current pool of workforce is relatively small and inadequate in dealing with the growing global demand. In order to effectively deal with this, the company, as envisaged in its 2011 Annual Report, aims to acquire, motivate and retain many more qualified and professional workforce with relevant experiences in the various industries in which CSE Global deals, and at competitive costs. The group plans to continue expanding its team of management by injecting more talent to address the issue of growth management. This is to be accompanied by efforts to improve financial management and operational efficiency. Risks Relating to Future Acquisitions As part of its growth strategy, the groups still aims for strategic acquisitions of other companies in various industries across the globe so as to provide complimentary products and/or services, technologies, expanded customer base and qualified professionals. However, such acquisitions may come with certain risks that may in-turn present potential negative impacts on the company’s business operations as well as earnings. For instance, so much focus on acquisitions may: divert the attention of management from key objectives and strategies; affect the company’s ability and capacity to retain key personnel; cause the company to assume liabilities; as well as cause the company to amortize goodwill and other intangible assets. Also, should the company face key problems relating to the performance of newly acquired technologies, it may face customer dissatisfaction, which could have detrimental effects on the reputation of the group. Equally, it is possible for the acquired companies not to give the expected returns. For instance, although the company’s revenue rose by 2 percent in 2011, relative to 2010, its profits fell by 47.3 percent (CSE Global Annual Report, 2011). In some cases, the company may instead incur major loses. Realizing this, the company emphasizes the need to exercise caution and diligence for every acquisition that it considers. For instance, the company may impose certain warrantees and performance guarantees on the vendors involved in all its key acquisitions. Also, the group may retain key personnel of the new acquisitions through service agreements. This is aimed at retaining good expertise. Competition By virtue of its diverse operations and its global approach to business, the group faces a broad scope of competition from every line of business (e.g. industries) in which it deals: “The Group competes against many firms in the international marketplace” (CSE Global Annual Report, 2011). Some of these firms even have greater professional, financial and other resources. Customer base is one of the areas in which this competition is strong. Another area regards the need for qualified professionals. The intensity of this competition is even compounded by the rapidity with which global markets for industrial automation and information technology have grown. Even more, this competition may lead to the increase of the group’s labor costs. The group has so far managed to counter this competition. This has been helped by its ability to persuade various customers to use its products and/or services rather than the ones they have developed in-house (CSE Global Annual Report, 2011). Also, in a rather ironical twist, the very diversity that is responsible for the group’s intense global competition becomes its biggest strength. It is for this reason that the group aims to expand even further its niche market and scope of operation in various industries: chemical/petrochemical and energy industries; oil & gas industries; power and process utility industries; water, sewerage, drainage and environmental (e.g. hydrology and pollution) industries; healthcare industry, finance/banking industry; as well as the public sector. The group’s strategy for achieving this includes offering its potential customers not only intimate industry-specific knowledge, but also cost-effective options. This strategy has, for instance, facilitated and enhanced the group’s growth in the past few years. This is especially reflected in its profits and turnovers. Delivering high quality products and services even at affordable prices is another factor that has favored CSE Global’s competitive advantage. Conclusion This case study on CSE Global has focused on the company’s global strategic management. The company’s primary objective is to become a global force in various industries associated with engineering. This case study has looked at the strategy the company has employed so as to meet this goal. The most apparent strategy discussed here is diversity- in all its variants. The company has indeed exercised strategic diversity that is in line with the key businesses and industries that drive or influence globalization today. This has won it good competitive advantage (Yin, 2000; Yin, 2002). Ultimately, CSE remains intent to focus on growth. 2012, for instance, will see the company focus on its new business units that offer great business opportunity, e.g. in Australia (CSE Global Annual Report, 2011). Equally, the group aims to strengthen its Balance Sheet so as to resume its goals for strategic acquisitions. Bibliography CSE Global Annual Report 2010. http://www.cse-global.com/InvestorRelations/AnnualReports.html (accessed 20th May, 2012”) CSE Global Annual Report 2011. http://www.cse-global.com/pdf/Annual%20report%202011.pdf (accessed 20th May, 2012) CSE (2012). Corporate profile, http://www.cse-global.com/OurCompany/AboutUs.html (accessed 20th May, 2012) CSE Global (2012). http://www.cse-global.com/# (accessed 20th May, 2012) Ingram, PD 2001. An overview of diversity awareness. Penn State: College of Agricultural Sciences. Reuters 2011. CSE Global Ltd.'s CSE-Global (Australia) Pty Ltd To Acquire ASTIB Group Pty Ltd, 26 Dec. http://www.reuters.com/finance/stocks/CSES.SI/key-developments/article/2052658 (accessed 21th May, 2012) Yip, GS 2000. Asian advantage: key strategies foe winning in the Asia-Pacific region. Cambridge, MA, Perseus Yip, GS 2002. Total global strategy II. Harlow, UK, Prentice Hall APPENDIX Essentially, this section will present certain statistics to accompany the discussion above. These will be based on specific questions related to the discussions above. 1. Now that CSE Global’s key objective is to become a major global business, what is its key strategy in this respect? CSE Global’s key strategy is diversity, especially envisaged in its diverse business dealings and operations in various engineering related industries, as well as its target geographical market scope. Appendix 1): CSE Global Ltd Markets CORE COMPETENCY PROJECT MANAGEMENT TURNKEY SYSTEM INTEGRATION CONSULTANCY & DEVELOPMENT SOFTWARE & SYSTEM ENGINEERING FACILITIES MANAGEMENT Markets OIL & GAS CHEMICAL/PETROLEUM WATER UTILITY POWER UTILITY MINING MINERAL HEALTH CARE TRANSPORTATION Source: CSE Global Annual Report (2007), http://www.cse-global.com/pdf/CSE_AR07.pdf (p. 2) 2. With these diverse businesses in place, what is the group’s understanding or internal assessment of the market environment and what opportunities does it expect the market(s) to present? With such a network of businesses in conjunction with the various accompanies its has acquired from various countries across various continents, CSE Global carried its own evaluation of the market environment, including possible opportunities. The following Appendices 2 a) and b) represent part of that evaluation. Appendix 2a) & b): Evaluation of the Asian Market Source: http://www.finanznachrichten.de/pdf/20080107_062856_544_386B07915B90255C482573C800514A92.1.pdf Source: http://www.finanznachrichten.de/pdf/20080107_062856_544_386B07915B90255C482573C800514A92.1.pdf 3. Besides diverse products and services, what other forms of diversity does CSE Global exercise? CSE Global also takes into account the diversity of values and ethics in the contemporary world. Appendix 3, for instance, shows the group’s commitment to environmental protection. Source: CSE Global UK (2011), http://www.cse-globaluk.com/PDF/Environmental%20and%20Sustainability%20Policy%20Statement.pdf 4. What financial standing does CSE Global have today to reflect the successes- albeit with challenges- it has had over the years? The Group has obviously experienced certain challenges. These have been discussed above. Nonetheless, the group has generally enjoyed some success in not only its finances (profits), but also its business activities and its efforts to gain more access to more regions. Appendices 4, 5 and six represent these- at least to an extent. Appendix 4 Source: http://www.cse-global.com/pdf/CSEmasnet-Q4FY2011.pdf Appendix 5: Regional Standing Source: http://www.cse-global.com/pdf/CSEmasnet-Q4FY2011.pdf Read More