Strategic Management D and L Industries

Question: Discuss about the Strategic Management for D and L Industries. Answer: Recognition of an organisation DL Industries is a company in Filipino which was incorporated on July 27, 1971 which deal in customization and they particularly has a specialisation for the food, plastic, soaps, detergents and other aerosol industries. The main revenue generation comes from manufacturing of the food products and it manufactures materials needed for making plastics and other chemicals necessary for general and personal use. It also provides goods and services through some model. It is now mounting its forte products or we can as expanding the business with some of its special portfolio of products with two big Australian food companies. The company has a top built relationship with the Philippines end user and chemical companies (DL industries, 2012). Corporation A corporation is been said as a company or a cluster of people acting as a single entity or can be said as legal person with proper recognition in law having rights and obligations of a normal individual but with the characteristic of a company that is restricted liabilities and succession. The corporations which are registered and the shareholders of the company and they owe them with the liability restriction up to their investment in the company. Mc Donalds Corporation is an example of the most known corporation in the world. It can also be said as union of employers and employees in an industry and represents politically in a state. Corporations are established as it enables an individual to invest money without any fear of loosen money. Corporation tends to enable investors to use their own money with a deduction in any further liability. Any revenue generation in the company would lead to sharing of profit between the investors and the maximum loss that can be bearded is the in itial money put in to the corporation (What is a corporation?, 2016). Product portfolio It is the gathering of all the products or services in which the company deals and generates revenue. It is the best mix of the products to offer to the people .It also includes planning plotting .The baseline proposition is that comparison the perpendicular combination and have a strategically outsourcing in the quest to diminish integration gives a success to product portfolio of the company. Product portfolio can be managed only be group of person having good managerial capability. A company gives variety of products in the market, which tends to provide certain amount of investment and the duties of the managers are to maintain how the portfolio should be maintained depending on the ratio of the product in the portfolio to generate huge profits to the company (Cooper, 1999) Service Portfolio Everybody in this world wants to have a backup and wants to diversify. The industrial manufacturers around the world have also arranged in providing services along with the product portfolios to have a great growth opportunities and competition. It is a storehouse of all the information for all the services of the corporation. It includes all the services that is not there or what has been retired previously and watt is up to in near time. Identification of business units The Company in cooperation with its subsidiaries operates in four different units Food and other ingredient unit Colorants and plastic additive segment Oleo chemicals resins and units of power coatings Aerosols segment Management and administrative segment Business unit Due to change in surroundings and the competition, which is, almost everywhere, the social mental, political pressures as there are so many companies existing and every time they tend to bring new marketing strategies to survive in the market and letting out other companies to drive out. After all this, they have adapted a new technique and the growing business will be known as strategic businesses units. Example is the senior authorities decide that the products will be allocated to the product managers and they will individually pay attention to each of their products. Their main motive is to manage the profit and loss arising, so it concludes that they are managing a product based business unit. They are just considered as a component of a company. They can just be a single product or just a brand. Every business unit, which has growth opportunities, needs to be reorganised every year (Ionescu, n.d.). The products of the units and the services are as follow:- In the food segment the different products are fats and oils and other food items In the plastic segment, there are a line of pigment blends and other polymers for the applications(moorthy, 1984) In resins and powder units, they have products like coconut methyl Easter and other chemicals originated from vegetable oils, resins such as polystyrene and a series of powder coatings. Aero sis unit which manufactures cans and components and supplies aerosol filling Management and administrative segment providing goods and services through some appropriate model. Product line Product lines are different types of products, which are interconnected to each other and are grouped under a single brand. It very important a product to be steady so that the customers have a good understanding of all of it. For example, HUL, which delivers, soaps biscuits shampoo under one brand. Another example is Maybelline, which sells lipsticks, concealer, and foundation under one brand. It has an advantage on just maintaining one brand name and gaining advantage. The main base is that the products should be interrelated to the main product to be successful .Example is that IBM is incurring heavy loss in selling the computers as the product is not interrelated. The disadvantage is on the retail shelf and other manufacturing considerations that occur .Product lines help the industries to manage their products better and the strategy are designed around a single product and more attention can be paid. A term called Product line stretching comes in to picture when there is a new addition in the brand and the product is either of low quality or very high and thus the stretching happened either downward or upward (Gilbert, 1993). Service line It is said to be a structure which is modern and can be allocated for any business type. For example in simple terms, an employee has several persons to report until he finally report the owner of the company. Revenue Revenue centres Revenue centres are the centres that gains revenue by the sale of the product or the services that is provided. The revenue centre is the aerosol centre the food centre (Ailawadi, 2003). Identification of greatest revenue D L Industries manufactures food and other varieties of food had the strongest sales in the first three months of 2015 in both the special products and commodities. The company is also getting involved in new product innovation as per the prediction this product will generate good revenues. The commodity revenues are increasing by 34 percent year to year. The highest revenue generation was the special products of food ingredients. Oleo fats also contributed to good revenue (Morales, 2012). Generalising the high margin speciality products contributed to 59 percent in 2014 and 62 percent in 2015 and the low margin commodity products contributed to 41 percent in 2014 and 38 percent in 2015. Next comes the plastics the last three quarters of 2015, they had huge growth in sales. The revenues and net income were seven percent and 4 percent lower than last year. Next comes the aerosols, in this year the sales were much better than 2014 and it includes the high margin items the revenue was 15 percent and the net income was 5 percent. There was good growth in 2015, which was because of the home care and the industrial space. Next comes the oleochemicals, grew the most in 2015 topping the charts and more and more customers are entering new markets. Oleochemicals were allotted 65 percent revenue for the division and more expectation were being formed from the same. The products of personal care like home care products, coconut oil was contributing to good revenues. There was a mu ch higher profit as compared to 2014. Chemicals, which was related to construction, and manufacturing were catering to low revenues. Definition of Revenue Revenue is defined as total amount of money, which is received by the company for its products, or services in a period before any expenses have been deducted. It includes all like selling of products, rendering of services, exchange of assets. There are different types of way a revenue can be identifies. Some companies identify it as accrual way, some on cash basis. Accrual system means the period on which the revenues were earned. It means that revenues can be accounted before cash are being received by the party. Therefore, we can conclude that revenues and cash receipts are completely different and are not interrelated. A business achieves profit only the revenues are greater than expenses. There are two types of revenue falling in to revenue categories that is operating revenues and non-operating revenues. Operating revenues are revenues that is related to the business that is sale of products rendering of services, and other repair revenues. Non-operating revenues contributes t o the company other activities, which is not actually the main business of the company. For example the interest a rent on the investments. Much deduction happens from the revenue like the sales return and other allowances discounts the company offers and other sales taxes. They are listed on the top of the income statement. Net profit or net loss is in the bottom line. There are organisation, which are non-profit based, and they refer revenue as the gross receipts. There are generally four types of revenue in accounting, the sale of goods, providing services, lending fees and investment and other. If we go in to the characteristics of revenue it can be said that (Oxford Dictionaries, 2016). Revenue arises from the normal activities that the company deals with There is no kindness or affection that can measure revenue, only monetary consideration can measure revenue. It is allocated to particular accounting period Non-operating income is not the operating revenue, it is just the money gained from the noncore operations of the business and it is separately noted in the bottom (Baskerville, 1990). External Environmental Analysis Political, economic, social, technological, environment, legal factors of the unit Increase in tax can be great political factor affecting the business due to budget or new law. This is the least predicable of all. Some of the political factors are the tariff control, tax policy etc. There are social factors affecting business are the continuous change in change. This is because the popular social media. The taste changes. Therefore, in food, the consumers need different taste and different varieties. They needs to shop online. Therefore, the products must be listed online as ecommerce is all over. Some of the factors are different life styles different attitude towards saving and investing, different religious and beliefs, the growth rate of population. The legal factors affecting business are the tax system that changes anytime. The trade policies, the politics, and the economic policies that is not stable. The environmental factors are which affect the units are the natural conditions like tsunami or any type of natural calamities that occurs (Merriam, 1828). Definition of Political, economic, social, technological, environment, legal factors Political means affairs, which are related to government, or any public matters .It is related with human affairs (Christensen, 2014). Social means some issues which is related to society and the industries .It is a type of informal assembly, which are organised by members and discuss their issues(caroll, 1991) Economic means the economic matters of the country that exists. It deals with the principles model that affect the market. Technological means the methods or technology that applies .It is like a science and it applies in everyday life to make life easier .It is also said as systematic Environmental means the natural world and the result of its environment conditions it affect industries, individuals and businesses. It means the surrounding. Legal means related to law and which is not illegal. It is connected with law or the administration. Operating environment After doing all the strategic planning, no one has the ability to predict the future but there are certain hints, which can nearly predict the future. The environment forces that are impacting the business they play a very important role .Everything should be taken in to consideration, the most strategic part is to figure out what the recent technologies that matter to the business .Success can only achieve by keeping in mind of the environmental forces .Operating environment is intimidated by many things .It is actually the outside area affecting the business. The examples are the social and cultural shifts, the economic indicators, the new technological trends that are there, the political factors that come and create havoc, globally the market is not static so the global forces that impact the business and also some of the natural issues that take place such as cyclone, tsunami, which cant be predicted and just take place, laws and other activities that take place and other market social economic trends. (olsen, 2016) Sources of Sustainable competitive Advantage Sustainable competitive advantage of the unit Sustainable competitive advantage is that position that the company develops in specific products or overall and they could easily outstand their competitors. The sources are:- Strong research and development capabilities:- It is very important to have a good research and development capability in order to grow. There should be innovation as there was in the food industry. There were new products involving within it. Possession of capital equipments It is very important to have capital equipments to grow as in the case of aerosol they are hiring equipments in manufacturing and construction Very Strong marketing strategy The full crux of the business is marketing. Good marketing leads to good competitive advantage and it is the reasons people spend on marketing and advertising so much and the DL industries is focussing on that Excellent team and management A good team is very important to gain advantage over other companies as it creates opportunities. Other sources are the economic factors, which prevail at that point of time, and the low cost and high amount of production is responsible. Information technology is also a great source as more information about the products can lead to better operations of the product (NingHe, 2012). Factors of sustainable competitive advantage Sustainable competitive advantage is that position that the company develops in specific products or overall and they could easily outstand their competitors. Sustainable competitive is different from competitive advantage as the first one deal with long-term survival. Therefore, we can conclude that Sustainable competitive advantage can be intact in the market after facing competition or the presence of competition. It enables any business to grow and survive A firm can achieve sustainable competitive advantage by enabling strategies that enable exploiting their internal strengths. It can only attain when he can be effective and efficient in comparison with its competitors. It is also necessary that the strategies adopted must not be inherited by the competitors and cannot be duplicate by them. (Iyiola, 2016). The four factors are- It should be perfectly imitable That the strategies must be rare among the firm competition It must be valuable and it should be exploitable threats in the surrounding The substitutes for the resources should not be easily available Company must be ready to invest in heavy machinery equipments and other capital investment, and it is only possible when the company is properly secured financial conditions(Dyer, 1996) . How does the company plan their resources, make alternatives is equally important (Oliver, 1997). Strategic Direction Future Strategic Direction of the unit During the meeting of the company shareholders, the DL officer termed D L industries that it is going to innovate many of its products. He also said that the new products would be the reason of the growth that will take place in the past or in the near time. The directions are with the innovation of lot of products there will be more profit and high margin. We should concentrate on Price earnings ratio a higher PE ratio will automatically reflect high growth (DL industries, 2012). The future directions that can be implied are: Enables risk to be managed more efficiently and effectively and there should be lessening of losses Risk management is the overall management of the company. Less risk and less losses ensures more growth and prosperity (DL industries, 2012). There should be harmonization of intellectual property. It should grow the implications of the technologies and should incorporate corporate social responsibility in their companies. There should be stock dividend rather equity sales. The strategies should be growth and it should be research oriented. The direction is to ensure to that the reputation for the quality and value should be at its peak. There should be enough leadership in the market through experience and better performance. A better performance can only be generated through better employee satisfaction. At the end, the assets are the employees. They work together to achieve the goal. Definition of Strategic direction It is said as the amalgamation of the mission the vision and the ethics and values that define the organisation. We can say that paying the employees high salary is a vision a company sees ,an a person who takes one look and guarantees her is a strategy. Strategy means the actions to achieve the goal of a business. All the three components that is the vision the task and the strategy and combining the values of ethics. A good strategic direction identifies the weakness and the strengths of the industry and the possible threats the organisation can suffer(Crouch, 2014). Frankly speaking, strategic direction has an involvement of leaders who are focussing on their strategies and by this; they develop strategic goals and give a good portfolio to the investors. It acts as a governance. Without this, it is very difficult to ensure that the projects are actually complying with the rules and regulation of the strategy made and will actually generate value to the business. A strategy in todays world is very important to achieve as it gives a certain path to the business and gives a crux to the people associated with the business that what the business is actually about. It serves as aroid map with which provides us the objectives an all the resources and criteria needed to fulfil the objective. Every single area needs to properly versioned to ensure better growth of the company (Regan, 2016). Conclusion We conclude that there should be a product portfolio comprising all the products so that it is easy for the customers to choose and the entire service portfolio should be maintained. The units should have appropriate products accordingly. This product is the main source of revenue and generates growth of the business. There are various threats that occur in the business such as legal physical political threat and proper measures are taken to handle them. It is very important to handle the external as well as internal environment. To gain success over other it is important to have advantage over other and this is where the competitive advantage comes in to picture. It is very important to gain this to avail long-term growth. Proper decisions should be taken so that the company does not go directionless and maintain prosperity. References Christensen, T., Laegreid, P. (2014). Trust in Government: The relative importance of service satisfaction, political factors and demography. Public performance and management review. 28(4), 487-511. Gaba, D. M., DeAnda, A. (1988). A comprehensive anesthesia simulation environment: recreating the operating room for research and training. Europe PMC. 69(3), 387-394. Regan, N., Ghobadian, A. (2004). The importance of capabilities for strategic direction and performance. Management Decision. 42(2), 292 313. Crouch, B. (2014). Strategies to create a more static board. CSAE. Oliver, C. (1997). Sustainable competitive advantage: combining institutional and resource based views. Strategic management journal. 18(9), 697-713. Dyer, H. J., Singh, H. (1996). The Relational View: Cooperative Strategy and Sources of Interorganizational Competitive Advantage. Academy of management. 23(4), 660-679. Iyiola, O. (2016). Sustainability of competitive advantage: a must for every firms. Academia. NingHe. (2012). How to Maintain Sustainable Competitive Advantages-----Case Study on the Evolution of Organizational Strategic Management. International Journal of Business Administration. 3(5), 45. Olsen, E. (2016). SWOT analysis: finding oppurtunities in your operating environment. Dummies. Carroll, B. A. (1991). The pyramid of corporate social responsibility: Toward the moral management of organizational stakeholders. Business Horizons. 34(4), 39-48. DL Industries expands product portfolio with Australian partners 2012, DL industries, viewed 2012, https://dnl.com.ph/index.php/news-events/7-d-l-industries-expands-product-portfolio-with-australian-partners. What is a Corporation?, Legal zoom, https://www.legalzoom.com/knowledge/corporation/topic/what-is-a-corporation. Cooper, G.R., Edgett, J.S., Kleinschmidt, J.E. (1999). New Product Portfolio Management: Practices and Performance. Product innovation management. 16(4), 333-351. Ionescu, T. F. (n.d.). Strategic Business Unit The Central Element Of The Business Portfolio Strategic Planning Process. RePEc. Revenue. (2016). Oxford dictionaries Baskerville, P. (1990). What is revenue in accounting?. Saylor. 1-4. Merriam 1828, Political. Merriam Webster, viewed 1828, https://www.merriam-webster.com/dictionary/political. Moorthy, S.K. (1984). Market Segmentation, Self-Selection, and Product Line Design. Marketing Science. 288-307. Gilbert, J.R., Matutes, C. (1993). Product Line Rivalry with Brand Differentiation. The journal of industrial economics. 41(3), 223-240 Aliwadi, L.K., Lehmann, R.D., Neslin, A.S. (2003). Revenue Premium as an Outcome Measure of Brand Equity. AMA journals. 67(4), 1-17. Morales, C.J.N 2012, DL Industries earns 20% more in Q1. DL industries, viewed 2012, https://dnl.com.ph/index.php/news-events/45-d-l-industries-earns-20-more-in-q1.