Corporate Strategy: Cookson Group PLC - Essay Example

Corporate Strategy Table of Contents Introduction 3 Product and Services of Cookson 4 Geographic Scope 7 Critical External Analysis of Cookson Group with Appropriate Models 8 PESTLE Analysis 10 Porter’s Five Forces Analysis 12 Critical Internal Analysis of Cookson Group with Appropriate Models 13 SWOT Analysis 13 Stakeholder Analysis 14 Conclusion 15 References 16 Bibliography 18 Introduction Corporate Strategy is described as a direction by which an organization obtains its predetermined objectives in order to attain business success in the long-run. The creation of corporate strategies comprises the development of scope as well as objectives in relation to the organization’s actions and the business nature in which it is involved, taking into consideration the environmental elements, market position and the competition it has to face (Sekulic, 2002). These overall aspects can be analysed with the help of certain strategic tools such as Porter’s Five Forces, PESTLE Analysis, SWOT Analysis and Stakeholder Analysis to obtain an in-depth idea regarding the opportunities of the company to prosper in its industry (Johnson & et. al., 2011). Cookson Group PLC is one of the world’s largest ‘materials science group’ which attempts to deliver advanced materials by facilitating innovative technologies to its customers all over the globe. Cookson operates through various branches located all over the world along with 15,500 employees covering more than 40 nations as its production zones and more than 100 countries as its marketing zones. Cookson can be observed to possess highly effective core competencies, which have certainly added to its efficient market position within the current market scenario (Cookson Group Plc, 2012; Wit & Meyer, 2010). Product and Services of Cookson Cookson offers its products in six categories; i.e., Joining technologies, surface Chemistries, steel flow control, foundry technologies, advanced factories and fused silica. Cookson is further recognized as one of the largest worldwide suppliers of materials used for PCBs assemblers and the packaging industry semi-conductors. This particular product line is also known as Alpha which is used basically to fasten electronic equipments such as semi-conductors and capacitors with bare boards in order to form essential electrical as well as physical connection among the boards and its devices (Cookson Group Plc, 2012). The product line of surface chemistries is one of the largest suppliers of ‘electro-plating chemicals’ to the international electronics, jewelries and automotive industries. This division is known as ‘Ethone’. This division is also quite popular in terms of technical innovation, where ‘Ethone’ has a track record regarding the delivery of ‘leading-edge’, facility of advanced technology within fabrication of semi-conductor which is demonstrated as ‘Via-Form multi-generation copper damascene portfolio’ (Cookson Group Plc, 2012). Under the category of steel flow control, company provides wide range of products such as VISO product range, Slide-gate refractories and Mechanism (or system). VISOTM product range: This range offers a versatile kind of pipes that facilitate the Enclosed Continuous Casting of steel. These products are isostatically-pressed alumina graphite refractories comprising dipper shrouds which help to protect the flow of steel dipper to the tundish in architectural projects (Cookson Group Plc, 2012). Slide-gate refractories: These products assist the entire manufacturing process to control the steel flow. The features of these products comprise nozzles, plates, unique shape for dipper and tundish slide-gate techniques. Both the products VISO and slide-gate refractories are made in order to resist extreme thermo mechanical stress and corrosive atmosphere therefore facilitating the overall manufacturing process (Cookson Group Plc, 2012). Mechanism (or system): Both VISO and slide-gate refractories are however examined as non-durable in nature. Therefore, in order to increase the durability of its products, company had introduced a mechanism system. This in turn depicts that the company pays much attention towards the quality aspect of its products to ensure better customer satisfaction (Cookson Group Plc, 2012). Similarly, under the categorization of foundry technologies, Cookson provides molten metal transfer and molten treatment products, binding and coating products and filter and feeding system products. Crucibles: It is a kind of vessel used for melting solid metals and pouring those into the moulds for further use (Cookson Group Plc, 2012). Metal treatment: It is a kind of chemical which is added with a liquid metal for cleaning or changing the metallurgic structure in order to encourage the required mechanical properties (Cookson Group Plc, 2012). Binders: It is a chemical material which is mixed with sand in order to form moulds and cores where the molten metal can be poured without disturbing its mechanical properties (Cookson Group Plc, 2012). Coatings: A refractory coating is generally applied in sand moulds and cores so as to endure the high temperature of molten metal effectively and also to improve the surface of finish casting (Cookson Group Plc, 2012). Filters: This product is a kind of foam filter which is made with ceramic materials. This filter helps to remove non-metallic impurities from the stream of molten metal and provides high quality clean ingots of casting metal (Cookson Group Plc, 2012). Feeding System: It is a kind of exothermic insulating system which is designed for extending the solidification time taken for a molten metal in the feeder hands in order to ensure that casting is complete (Cookson Group Plc, 2012). Under the third classification of advanced refractories, the company provides a wide range of products such as alumina-silica products, basic refractory products, tape-hole clays, silicon carbides and performed refractory shapes. Along with these products, the company also offers lining design, engineering, and construction as well as installation services. Alumina-silica products: These refractories are primarily based on natural as well as synthetic raw materials such as corundum, bauxite, and mullite among others (Cookson Group Plc, 2012). Basic Refractory products: It is a product which is made with magnesia-chrome and olivine raw materials. This product is primarily used in metal industries for the processing of liquid copper, steel, nickel and Ferro-alloys (Cookson Group Plc, 2012). Silicon Carbide: It is a kind of high thermal conductivity monolithic used in boilers, furnished and incinerators (Cookson Group Plc, 2012). Cookson’s lining design primarily consists of various types of applications and the parameters which are used for heat transfer analysis, comprising hot-face temperature, vessel atmosphere, anchor temperature limits as well as mechanical stress during the production process. Under its Vesuvius PLC division, Cookson aims to obtain effective refractory performance along with low-cost advantages (Cookson Group Plc, 2012). Finally, under the fourth category of fused silica, the company offers two types of products i.e. solar crucibles and glass industry products. Solar Crucibles: It is a kind of crucible product which is prepared from fused silica to contain polycrystalline silicon feedstock after heating and subsequently, cooling in the vacuum furnace (Cookson Group Plc, 2012). Glass industry products: Vesuvius manufactures a wide variety of fused silica products which are primarily used in glass industries. One of the limitations of these products is that these goods need more maintenance and should be replaced every after few years (Cookson Group Plc, 2012). Geographic Scope Cookson operates in various geographical locations such as New Europe, Asia pacific and United States. In these regions Cookson has been obtaining ample opportunities for its business activities. Contextually, it has been observed that the company has already attained a strong market position obtaining sustainable revenues within these global locations. Both the divisions of the company hereby avail effective scope of growth in their prospective markets with the virtues of incessantly introducing innovative industrial material products. Furthermore, substitution effects and availability of competitive brands are observed to be quite less in these markets owing to which the company obtains greater scope for success (Cookson Group Plc, 2012). In this existing geographic region Cookson’s Foundry technological business experienced a slow-down demand from its ultimate target markets such as high-end automotive companies, mining as well as agricultural equipment producers, and wind turbines and heavy truck equipment manufacturers among others. To be illustrated, since the year 2002, the revenue of company’s Foundry business has been observed to effectively increase in terms of market volume growth acquiring various geographic locations, such as United States, India, China and Europe (Cookson Group Plc, 2012). Critical External Analysis of Cookson Group with Appropriate Models Cookson operates under two divisions; one being the performance material division and other as the Engineered Ceramic Division which were recently renamed as ‘Alent PLC’ and ‘Vesuvius PLC’. It is worth mentioning in this context that the company attempts to sell its products by concentrating largely on value rather than on the costs of the products. A major intention of the company to render utmost concern to its product quality is to consistently maintain an effective position within the global market through leadership technology, trustworthy products, Just-in-Time (JIT) supply and an excellent service of technology. Furthermore, the group is also strongly committed towards maintaining a high financial position in order to render support to its business operations, robust risk management strategies and the framework developed for its internal controls (Cookson Group Plc, 2012). Figure: Cookson’s business Model and Strategy Source: (Cookson Group Plc, 2012) Through this business model, both the division of the company provides effective value to its customers’ businesses in terms of quality products as well as JIT services. Robust control is regarded as a new approach which is considered regarding the issues of pricing option. The term ‘robust control’ is often used for describing the class of control problems which principally deal with uncertainty circumstances. It is also considered as a branch of control theory which concentrates on identifying and managing uncertainty while acting as a design controller (Johnson & et. al., 2011). Cookson group effectively focuses on its products and services offered with the sole intentions to add value to their customers preserving high performance. Moreover, both the divisions of the company attempt to offer excellent quality of products and services with quite affordable prices in a customer focus way. For instance, with the strategic implementation of just-in-time, which is a process regarding the management of inventory by which raw materials and its components are obtained from the supplier before they are needed for manufacturing procedures, the company attempts to ensure timely delivery of the products with a higher degree of quality assurance. Moreover, it is a kind of inventory strategy which company implements in order to improve the efficiency as well as reducing the wastes during the manufacturing process. Hence, it can be stated that the overall business activities of Cookson largely depends upon customers’ perspectives by which the company aspires to fulfill the needs of the global target market (Cookson Group Plc, 2012; Johnson & et. al., 2011). PESTLE Analysis Political: Alent’s and Vesuvius’ business operations have often been observed to be unfavorably affected by political as well as legal aspects throughout the world. These aspects include taxation procedures, environmental matters and political risks including the requirements specified according to the changes in regulatory acts of the host country, trade barriers, selling prices and instability of input costs (Grant, 2010). Economic: The recent global economic recession has been observed to create a significant impact upon both the divisions of Cookson. As per the statistical review, it can be stated that the demand of Alent’s major electronics end-market has been stable during the first half of 2012, while the demand in European market had been observed as declining during the same year (Cookson Group Plc, 2012; Grant, 2010). Social: Cookson’s also renders due significance towards the influence caused by social beliefs and characteristics. It is with this concern that the company always attempts to manufacture safety products and focuses towards satisfying the needs of the consumers, a major proportion of which is located in regions of Europe, Asia, and United States (Cookson Group Plc, 2012; Grant, 2010). Technological: Alent and Vesuvius, the two dimensions of Cookson, principally operate within attractive high end-markets with the virtues of which, the group is able to attain a strong growth in its performances in both long-run and short-run. Both the division operates under high technological advancements in order to bring connectivity as well as portability in consumer electronic industry. Subsequently, company’s R&D operations also provide innovation-driven growth due to improvement of technology (Cookson Group Plc, 2012; Grant, 2010). Legal: Both the divisions of Cookson have to face strong legal obstructions in various geographic locations which may hamper its business activities apparently. Legal issues such as trade barriers, taxation policies and instability of inputs among others can create a strong impact upon its overall operational activities (Cookson Group Plc, 2012; Grant, 2010). Environmental: It is in this context that environmental regulation acts impose strict restrictions regarding the operations executed by Cookson in order to control pollution, safety regarding human health, proper disposal of hazardous and waste materials. Company’s Research & Development department has been a major contributor towards attaining a continuous success to control the entire organizational process in order to fulfill the demand of ‘leading-edge’ products and simultaneously abiding by the strict environmental regulations creating turbulence within the overall operational activities (Cookson Group Plc, 2012; Grant, 2010). Porter’s Five Forces Analysis Supplier Power: As can be observed with reference to the above discussion, Cookson belongs to the international chemical engineering and technology industry. In the current scenario, due to the fluctuation of price related to its raw materials, the bargaining power of suppliers is observed to be quite high. Subsequently, labor disruption, changes in laws and regulations also affect the supply of raw materials of Cookson throughout the world (Catapault University, 2012; Cookson Group plc, 2006). Buyer Power: It has already been observed that electronic markets in relation to the chemical engineering and technology industry are spread all around the world in large varieties and numbers where Cookson has to face high bargaining power from its buyers’ end. In terms of electronic products, consumers’ demand is always for faster, smaller and lighter products. Although Cookson has always been offering products with such attributes, due to strong industry competition, the company also has to face strong bargaining power from its consumers all around the world. While on the other hand, the industry divisions face low bargaining power from its consumers, fundamentally owing to the minimum substitution effects and greater persuasive qualities (Cookson Group plc, 2006). Competitive Rivalry: It is worth mentioning that the chemical engineering and technology market, where both the divisions of the Cookson group operate can face rapid changes due to the initiation of new technologies. The rivalries are highly competitive in nature owing to the fact that in its electronic segment, competitors bring strong products which can create effective competition against Cookson due to massive changes in technologies, innovative products and low cost pricing strategies (Cookson Group plc, 2006). Threat of Substitutions: From an overall industrial perspective, Cookson have to face low threat of substitutions, being able to offer industrial consumable products at a cost-effective way, but simultaneously assuring higher degree of quality. Accumulatively, these two features provide greater competitive edge to the company reducing the impacts created by substitutions (Cookson Group Plc, 2006). Threat of New Entry: The overall stance of chemical engineering and technology industry also reveals that it faces low threat of new entry as the products which are offered by this division, are quite difficult to be imitated by the new competitors, which not only requires adequate experiences, but also mandates huge capital. However, the service division of the company has to face strong threat from new competitors, as it has been observed that electronic industry is quite vast in order to introduce innovative products (Cookson Group plc, 2006). Critical Internal Analysis of Cookson Group with Appropriate Models SWOT Analysis Strengths: One of the major strengths of Cookson can be identified as its ability to render equal significance towards product variety, product as well as service quality, customer requirements and profitability as well. Furthermore, its huge market share, lesser substitution effects higher degree of attained customer loyalty also adds upon its strengths (Cookson Group plc, 2006). Weaknesses: Cookson’s weakness can be considered as its reduction of investment within the R&D department due to legal constraints and decline of its profit in its electronic division, especially in the European context. To be summarised, the financial limitations of the company, currently being witnessed in specific locations, can be attributed as its major weakness (Cookson Group plc, 2006). Opportunities: The increasing flexibility of the developing nations, the meagre influence of substitution, controllable competitive rivalry and huge customer demand can be signified as a few of the opportunities obtainable by Cookson in its industrial context (Cookson Group plc, 2006). Threats: Threat of Cookson can be considered as market cycle downturn and frequent utilization of hazardous materials within industrial context which acts as a motivation for stricter legal implications and constraints (Cookson Group plc, 2006). Stakeholder Analysis According to Cookson’s business model and strategies, the company is quite confident that they will provide effective benefits to its stakeholders in every aspect of their business activities. In UK, the operations of Cookson effectively contribute according to the stakeholders’ plan obeying which, the company provides significant benefits to its existing and new employees. The stakeholders’ scheme of Cookson is considered as a ‘contract-based’ relationship which is developed by UK divisions’ leading investment manager. Stating precisely, the company tends to avoid any kind of miscommunication, conflicts and obstructions in its organisational process execution by maintaining a well-structured and defined policies and norms (Cookson Group plc, 2006). Conclusion The core idea that emerges from overall strategic discussion is that Cookson’s business model and strategies is effectively implemented in every aspect of its operational activities. Company’s strategic implementation is thus observed as quite noteworthy and competitive within every geographical location. Contextually, the Performance Material Division offers various unique products regarding industrial material usage by which it attempts to grab competitive leading position within its targeted global markets. The revenues of this division are quite strong through which the company can obtain various opportunities for the improvement of its business performances from a futuristic perspective. On the other hand, the company’s Engineered Ceramic Division has to face various issues and threats regarding environmental policies, political restrictions and from new entrants. In order to eliminate these threats and issues, the company should therefore utilize less hazardous materials in its operations, and simultaneously adjusting its business operations according to the political aspects through incessant development of innovative products with low cost advantages. References Cookson Group Plc, 2006. Circular to Cookson Shareholders and Explanatory Statement under section 897 of the Companies Act 2006. Important Notice. [Online] Available at: http://www.cooksongroup.co.uk/cooksongroup/dlibrary/panda/Cookson%20Shareholder%20Circular.pdf [Accessed November 22, 2012]. Cookson Group Plc, 2012. Business Model and Strategy. Our Business. [Online] Available at: http://cooksongroup.annualreport2011.com/our-business/business-model-and-strategy [Accessed November 22, 2012]. 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 November 22, 2012]. Cookson Group Plc, 2012, Products. Steel Flow Control. [Online] Available at: http://www.cooksongroup.co.uk/cooksongroup/businesses/engineered-ceramics/productsv [Accessed November 22, 2012]. Catapault University, 2012. Porters Five Forces. Assessing the Balance of Power in a Business Situation, pp. 1-4. CPS HR Consulting, 2012. SWOT Analysis. Working Planning Toolkit, pp. 1-6. Grant, R. M., 2010. Contemporary Strategy Analysis: Text Only. John Wiley and Sons. Johnson, G. & et. al., 2011. Exploring Strategy: Text & Cases. Prentice Hall. Sekulić. V., 2002. 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