The report discusses about the overall environmental analysis of the company called GKB Corporation. It is the company that deals with trading business. The major product line that has been discussed in the report is steel. The major tool that has been used to analyze the environment of the company is PESTLE analysis that helps in determining the associated factors and their impact on the company’s functioning. Another tool that facilitates the analysis of the different factors is Porter’s five forces that help in determining the industrial analysis of the company. Later, the report focuses on the value chain analysis of the company that comprises of the discussion related to its operations, resources and the capability of the company. SWOT analysis of the company has also been conducted to identify its strength, weakness, opportunities and threats. Further, several recommendations have been made for the company according to the analysis.
PESTLE analysis:
PESTLE analysis is used to examine the environment of the business by considering various factors such as political factors, economical factors, social factors, technological factors, legal factors and ecological factors (Grant, 2016). These factors cover the whole scenario or the aspects of the business that are directly or indirectly affecting the functioning of the business. All these factors are external in nature and are related to the industry of the business.
Political factors: As identified that the company is headquartered at Singapore but operates its business from different countries such as India, Indonesia, Bangladesh, and Vietnam. Therefore, the business is affected by the political environment of all these countries and not only China. As the company diversified its product line with introduction of steel, the major market for the product is Africa and this comes with high political risk for the company (Ansoff, 2014). This is because Africa is the emerging market and there is risk of instability in the political environment of the country.
Economic factors: As discussed above, the company is dealing with all the mature markets such as India, Bangladesh etc. It is very difficult for the company to deal with African market in terms of economy. This is because Africa is the country with immature market and also facing the issues of currency depreciation.
Social factors: Social factors include changes in the needs of the customers according to the culture and environmental changes (Fleisher & Bensoussan, 2015). It has been identified that the company was focusing on Indian mills to procure steel but later it has shifted to China for the procurement of the same. This is because the product from the Indian mills is not satisfying the needs of the customers. As the time passes, the construction patterns in the market changes and this result in change of customer demand with respect to type of the steel.
Technological factors: As per the technological aspects, the company has updated accounting systems to deal with all the accounts but lacks in technological improvement in the operations. This is because the company has not felt the need to do so.
Legal factors: Legal factors include the factors that are related to the legal policies associated with the business. Every business or industry has different policies to conduct its operation and these policies vary according to the country. Thus GKB Corporation has to operate the business in different countries according to the respective policies of those countries.
Environmental factors: The environmental factors associated with the company are related to the changes in the environment taking place that affect the business operations (Barney & Hesterly, 2015). The company is very much informed about the changes in the environment and as a result brings changes in its policies accordingly. As and when they realized that the Indian mills are not giving them the products that their customers are demanding, they have changed the procurement site to China.
Porter’s Five Forces is responsible for evaluating the various factors related to the business such as competitors, buyers, suppliers, threat of new entrants and threat of substitutes. Below discussion helps in explaining the porter’s five forces of GKB Corporation.
Threat of competition: As the company is operating in many countries with many products so, competition for the company is very high. With the change in the demands of the products in the market, the competition for the company is also increasing. Not only the competitors but the knowledgeable customers in the market also contribute in raising the bars for the products standards and thus create high competition in the industry.
Threat of new entrants: As discussed, the company is operating with diverse products lines so; threat of new entrants is very low. This is because it is difficult for the new company to compete with the already established firm in the industry and also difficult to invest so much at the initial level (Birkinshaw, 2004).
Threat of substitutes: Threat of substitute is moderate in nature for the company. This is because the product lines, the company is providing to the customers is difficult to be substituted with other products. In addition to it, the company is serving as many products to the customers to it least affect the functioning of the business and its sales.
Bargaining power of buyer: As far as the bargaining power of the buyers is considers, it has been analyzed that there are more number of customers than the sellers and also the products like steel have not so much of variation in the prices. Therefore, the bargaining power does not remain in the hands of the buyers.
Bargaining power of suppliers: Trading business has high threat with the suppliers. This is because the weak relationship with the supplier may lead to ruining of the contract and trading. In this case, it can be said that the bargaining power remains in the hands of the supplier but it also depends on the popularity of the company that is dealing with the supplier.
It is the analytical tool that helps in analyzing the internal work operations of the company along with its resources and the capabilities to perform. The main aim of performing this analysis is to bring improvement in the company’s internal processes (Hollensen, 2015).
Primary activities: GKB Corporation’s value chain system follows like below:
Procurement: It is the first process that involves various steps such as:
Development and marketing:
Operations management:
GKB Corporation is the company that has various resources available. If the tangible resources of the company are considered, it involves the financial resources. The analysis of financial resources of the company suggests that company is enjoy the availability of enough funds by the banking resources along with the effective accounting system that helps the company to acquire important information regarding the balances of the accounts (Christopher, 2016).
Another type of resource that is important for the company is the intangible resource that includes the brand name and goodwill of the company. It is the company that focuses on maintaining the relation with the suppliers as well as has the capability of sourcing the products of high quality. Company is very much efficient in sourcing the products from different countries and this helps the company to deliver better product to the customers. Availability of all these capabilities results in developing the good reputation of the company (Monczka, Handfield, Giunipero & Patterson, 2015). .
In addition to tangible and intangible resources, human resources are also a major part of the company (Stadtler, 2015). The human resource associated with this company is trained and skilled in their fields. The company is guided by the tea of knowledgeable people with great trading business experiences and knowledge. Effective business development team in the company also helps in enhancing the company’s business.
There are many challenges faced by the company that needs to be overcome by adopting new strategies. The main challenges for the company are the environmental challenges. As discussed earlier also that Africa is the emerging market for the company so it is a challenge for the company to deal with the political and economic conditions of the country. Another challenge faced by the company is related to its physical presence in the market. The company is not operating from the African land and thus it is essential for the company to open its offices at Africa. This makes it easy for the customers to rely on the company (Cameron & Green, 2015). Absence of the company’s presence in the emerging market leads to less trust of the customers on the company and it also hampers the growth of the business. It is mandatory for the company to open its offices to show its better presence in the market especially in Africa. The major challenge of the business is to maintain the relationship with the suppliers. The company is already dealing with many countries in order to procure the material but it has to make more efforts in developing the strong committed relationship with the suppliers to retain them in the business.
Sourcing capabilities: Sourcing capabilities can be defined as the capability that helps in sourcing out the materials required by the company to provide the end products to the customers (Hayes, 2014). It has been analyzed that the company has strengthen its position with the year passing and the reason being the effective sourcing capability of the company. Sourcing from different suppliers according to the situation and continuous improvement in the sourcing process helps in development of the company’s business and acquiring market share.
Logistics and operations: The logistic and the operations of the company also prove to be the capability for the company (Saloner, Shepard & Podolny, 2011). This is because the logistic management of the company supports in providing the products to the customers on time without any lead time and delay. The customers can get on-time delivery and this improves the relationship of the customers with the company as well as increase the good will of the company. The company has become the preferred choice as the vendor for the steel products by the supplier as well as by the customers.
SWOT analysis is the tool that helps in analyzing or identifying the strength, weakness, opportunities and threats of the company. Strength and weakness of the company can be determined by the internal analysis of the processes while opportunities and threats can be determined by the external industrial analysis of the company (Cummings, Bridgman & Brown, 2015).
Strength:
Strength of the company suggests the basic capabilities of the company that can help the company to attain the competitive advantage over others (Rothaermel, 2015). The main strengths of the company are:
Product diversity: As identified that the company is dealing with many product lines such as textile products as well as general merchandise products. Product diversification helps the company to acquire large customer base and also helps in developing the value of the company in the industry (Williams, 2009). Availability of variety of products results in brand recognition as the company can serve to all types of customers.
High quality steel: It is not only the diversification of the products that act as the strength for the company but the quality of products especially the steel help the company to increase its customers base. This is because the company is well informed about the quality and the variety of the steel available in the market. They have the capability to source the materials from different countries like India and China (Mani, 2010).
Logistics and operations: The Company has very efficient logistic department that helps the company to provide products to the customers on time without any lead time. The department always ensures that the delivery of the merchandise should be on time and customers do need to wait for their delivery. This enhances the bond between the customers and the company as well as enhances the reliability of the customers on the company (Warner, 2010).
Weaknesses:
Lack of physical presence: As per the discussion, it can be identified that Africa is the major market for the company for its steel business. However, company does not have its offices at the place and this result in lack of reliability and trust of the customers on the company (Sadler, 2004). It is very essential to make physical presence by opening small offices at the market center.
Focus on so many product lines: the company has concentrated on diversification of the products so much that it lacks the specialization and cannot be able to deal with a particular products line efficiently (Todnem By, 2005).
Opportunities:
Developing market in Africa: The Company has the great opportunity to develop its market base in Africa as Africa is the country that is serving a new but immature market to the company. As per the research it has been identified that GKB Corporation is making efforts in serving the African market but also have to shoe their presence there. This can be possible by opening offices at Africa so that the customers can directly deal at the office rather than making deals on phones and other mediums. It will also be easy for the company acquire large market share if they have their offices in Africa (Blackstone, Prest & Paley, 2016).
Investing in procurement: China is the country that is providing good quality of steel to the company. The company has the opportunity to make its procurement operations strong by hiring more workforces at China.
Threats:
Threat of immature market of Africa: Immature market with weak and unstable economy always acts as the risk and the threat for the company (Paton & McCalman, 2008). Africa is the market that is not established and also has economy concern. This forces the company to make the risk plans so that it can fight with the risks associated with the market.
Threat of suppliers going direct: It is a great threat for the company if the suppliers contact directly to the customers. This can be possible only if the vendors do not perform well and serve the customers efficiently. GKB has to deliver the service that does not allow the customer to directly contact the suppliers and also have to make such relationship with the suppliers so that they can never try to contact with the customers directly (CBMgroup, 2017).
Economic value resource is the tool that helps in analyzing the economic value of any of the resources. This helps in identifying the strengths and the weakness of the company in terms of resources available to them. Economic value of the company resources also assist the company to make improvements in the resources that can enhance the functioning of the same.
In case of GKB Corporation, the above SWOT analysis clearly defines the strength and the weakness of the company. In terms of resources, the analysis suggests that the company has great human resource as well as the intangible resource in terms of availability of finance. Both these resources have great economic value because these are the resources that are the most important and the basic resources required to complete the functioning of the organization. The modifications or the strategic shift in the resources of the company has proved to be beneficial for the sales as shown in table. (Appendix)
As far as resource weakness is considered, it has been identified that company has lack of physical resources. This is because the major market place of the company that is, Africa does not have any of its offices there. This hampers the company’s progress at the place and also restricts some of the major deals in the African market.
Developing strategic alliances: As discussed many times that Africa is the market that is not economically stable in nature so development of the strategic alliance of the company with several Federal Institutions and other Trade bodies may help in development of the financial security for the company (Hoffmann & Wanègue, 2014). This also helps in reducing the risk associated with the financial decisions and the investment.
Customer’s verification: It is very important for the company to develop the verification audit for the customers to verify their authenticity and to avoid any of the payment risks.
Development of local offices: It has already been discussed that implementation of the local offices or the local sales offices in Africa helps the company to enhance its business there.
Investment in manpower: Making investment in the manpower at China helps the company to make its procurement team strong. This is because most of the procurement of steel is from the China mills only.
Kurt Levin Model is used for implementation of change in the company. This model helps the company to make the changes in the current process (Hughes, 2007). The model mainly has there steps.
Unfreezing: It is the first step of the process that helps in unlearning all the process that are currently available or used by the company (Commings & Worley, 2014). The unlearning of the process that requires change is being done. It is the point at which the organization get ready for the change that would be occurring in the prices. In the above case, unfreezing of current management process should be done to make the new customer demand analysis team
Change: This stage is also known as transition stage (Worthington & Britton, 2015). It is the process that is required to actually implementing the changes required on the action field. It is the most crucial time of the process because at this time the normal functioning of the organization ceases. Organization tries to learn the new things or the changes and it require immense efforts by the organization as well as by the employees (Jeyarathmm, 2008). The changes that need to apply to the organization are the implementation of the new team that looks for the customers’ demands should be made. This requires implementing the processes such formation of sales report that needs to be submitted to the customer’s demand analysis team.
Freezing: It is the final stage of the process that deals with accepting the changes that have been occurred so far. Now the organization has to work acceding to the new and modified processes implemented in the organization. At the end of this stage, people again become used to of the new process and perfectly accept the changes (Rotha?rmel, 2017). In this stage, the department starts working perfectly and analyzing the demand of the customers on monthly basis. This helps in framing new strategies to meet the customer’s changing demand.
Conclusion
GKB Corporation is the company that deals with trading business. The company has its headquarters in Singapore but operates in many different countries such as India, China Indonesia, Bangladesh and Vietnam. The company focuses on business in different product lines and there is no specific product lines on which the copay has its focus on. Initially, the company was enjoying success with these different product lines but the gradual decline in the sales of the products by the company forces it to concentrate on a particular product line business. One of the products that have been focused by the company was steel. After getting into steel business, the copay realized that it is making profits in the particular business. The company has its strength as financial and human resources. After analyzing the whole situation, it has been identified that the company needs to make several changes such as development of strategic alliances, and opening of offices in Africa that can help the company to achieve higher success (Elearn, 2008).
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