The Strategic Case of KONE
You have been requested to undertake a strategic review of KONE. All group members are expected to participate. As part of the strategic review you must identify how KONE might use digital marketing as a competitive advantage.
In the strategic report, using the KONE Case Study and the suggested strategic plan structure undertake a strategic review of KONE in 2015. In your report ensure to identify the role and future significance of digital marketing. Identify the need for adjustment, change and development. State how KONE might realign itself to the needs of the external environment and evaluate the possible outcome of the strategic initiatives, including the role of digital marketing.
Support your strategic review with reference to a range of strategic management theories. The external environment, strategic purpose, strategic capability, market segmentation and positioning, the marketing mix, digital marketing, innovation, strategic choice and implementation should all be addressed.
Identify and evaluate how knowledge of strategic management/strategic thinking together with digital marketing can improve KONE’s competitiveness and efficiency. You are also encouraged to provide a critique of contemporary strategic management research and practice within your report.
The information given in the case study is seemed like a big challenge for KONE Company. This particular study has been executed in line with the competitive landscape in which the organization operates along with the company’s present situation analysis. In addition to this, here the researcher have discussed about the external environment of the company with the help of PESTLE analysis, Ansoff matrix, which helps to explore the current trend about digital marketing. Further, this study has also examined the strategy of KONE Company and also provided a digital marketing campaign which will accomplish its strategic objectives. Though, this there is lots of successful small and medium lift contractor in the UK market. To be sure, the independent lift making sector in the UK is significantly larger than is to be establish in continental Europe and many of these firms have significant success in export smaller and bespoke lift installations to Europe.
KONE itself refers that it’s a machine company and establish in Finland. Todays, KONE organization is divided into two part new equipment and service business (Chen, Delmas, & Lieberman, 2015). The company deals with five geographical areas, Middle East, central and north Europe, Asia pacific, south and west Europe, China and America, but it is UK based company. Companies engage in the maintenance and sales of Elevators, auto walk and escalators. It is well known for their Eco- friendly products, and keep on bring new innovative ideas in their products in the industry. KONE designed machinery is featured in stadium, shopping malls, skyscrapers, high rise buildings etc. company is well-known among the main four organizations within the industry of its type (Groth, 2014). Though, this there is lots of successful small and medium lift contractor in the UK market. These firms offer the smaller and bespoke lift installation that the major contractor is not capable, and frequently unresponsive, in supplying. To be sure, the independent lift making sector in the UK is significantly larger than is to be establish in continental Europe and many of these firms have significant success in export smaller and bespoke lift installations to Europe. This is a sector where the smaller, UK-based lift contractors are mainly energetic and successful (Chienwittayakun, & Mankin, 2015).
2. Mission and corporate objectives:
2.1 Company vision is to create the best people flow experience.
As per the mission statement of KONE elevator and escalators industry want to satisfy their customer because as KONE is one of the global leaders in the elevator and escalator industry, along with dependable of after sales services, through this company want to satisfy their customers and want their customers to live their life in modernization, continuous development, exceptional values and ultimate customer experience (Chen, Delmas, & Lieberman, 2015).
As per the KONE Company, Value statement, toward their customers, there first responsibilities are toward their customers, because customer is very important of the company and company responsibility is to fulfill the needs and wants of their customers. They build life long relationship with their customers with respect, real care and excellent individual services (Joyce, 2015).
2.2 As per the KONE company, their corporate objective is to present the most excellent people to Flow their knowledge skills by developing solutions that allow people to go easily, carefully, comfortably, and without building in an increasingly urbanizing location (Groth, 2014). In 2012, KONE had yearly net sales of EUR 6.3 billion and approximately 40,000 employees. KONE class B shares are planned on the NASDAQ OMX Helsinki Ltd in Finland. Their plan is to deliver a performance edge to customers by creating the most excellent consumer experience by means of innovative people, Flow solution. At the same time people leadership and process allow operational quality and cost competitiveness (Groth, 2014).
3.1
Figure of PESTLE ANALYSIS (Radomska, 2015)
As per the KONE Company, it increase in import duties and help the company to adapt the policies of different countries. KONE Company is also known as the worldwide company which includes many customers around the world and their customers are well maintained (Joyce, 2015).
As KONE is based on UK market, economy was increasing more rapidly. According to this KONE is one of the fasted growing companies in UK and also become fourth largest companies in UK market, with this their price of the product keep on fluctuating during a period of time and this fluctuating rate will affect the company in many ways (Chen, Delmas, & Lieberman, 2015).
In KONE Company, urbanization areas are taking place rapidly. In the UK market, cities were taking form of metro and traditional buildings were becoming more stylish and professionalized.
In KONE Company, client wants to improve in service and facilities. In the context of UK market, the organization is mainly emphasized on technological advancement on a frequent basis to gain competitive advantages. Since, elevators are very basic equipment, al these are now taking place in advancement of technology, in this technology help in growth in margin in post sales maintenance (Joyce, 2015).
In this sector government excluded low- tech manual elevators and follow international legislation.
In KONE Company, financial sectors are rises and the government was emphasizing on environmental safeties likes recycling, pollution control, minimizing the energy utilization. In this, company wants to build their products which are eco-friendly in all aspects with minimum production (Groth, 2014).
Porter’s competitive forces:
Figure: Porter five force analysis (Groth, 2014)
A] Threat of Substitute:
In the contemporary market place, the competition was extremely tough and they can move forward from local company as well (Shen and Jiang, 2013).
A1] Impact: High
B] Bargaining power of customer:
Research has shown that the customers of KONE were asking for modified products (Chen, Delmas, & Lieberman, 2015).
B1] Impact: Moderate
C] Bargaining power of suppliers:
Bargaining power of suppliers is very high because of the heavy demand of raw materials, machineries etc in luxury brand segment (Groth, 2014).
C1] Impact: Moderate
D] Threat of new entrants:
Schindler group, Mitsubishi elevator, and very luxurious to enter the market as there are many reserve needed (Joyce, 2015).
D1] Impact: Low
E] Threat from rivalry:
In this particular category, a large number of players run their operation to fulfill the demands of the customer (Groth, 2014).
E1] Impact: Moderate
Figure: Strategic group analysis
(Johnson and Lipp, 2006):
Otis Elevator, it is a world’s largest elevator and escalator organization. It subsidiary is in United Technologies and provide one fifth of the parent body’s sales (Joyce, 2015). In this countries, engaged in maintenance, installation and upgrade services for escalators and elevators. This company is known for providing gearless elevators for high- rising building as well as energy efficient elevators that offer up to 75% energy consumption reduction (Simons,2015).
Schindler Elevator, it is one of the competitors of KONE and it is second to none in terms of volume and sales in escalators and second behind Otis in elevators. It focus provide such for high-rise, mid and low buildings (Shen and Jiang, 2013).
4.1 GE- McKinsey 9 box matrix:
Figure: GE- McKinsey 9 box matrix
(Amatulli, Caputo and Guido, 2011)
GE- McKinsey nine box matrixes offer a systematic approach for the decentralized company to decide where to invest its cash (Chen, Delmas, & Lieberman, 2015). According to the Portfolio Analysis of KONE using the GE-McKinsey 9 box matrix, it can be said that 47% of Eco Inno track covers the medium area where as 71% of Eco lift cover low area (Holopainen and Toivonen, 2012). In terms of strength of SBU, they cover 32% of medium area only. Further, KONE Nano space covers 72% of low to medium in strength of SBU. KONE jump lift Eco Mod covers 38% of medium area of both industry as well as business. KONE mini space covers 81% of low to medium in both industry as well as business (Shen and Jiang, 2013).
Focus on the core competencies of KONE Company; they distinguish itself in the market while using the environmental issue for illustrates the product which is produce, they produce eco-friendly products that are in line with the demand for greener products (Shen and Jiang, 2013). According to this Porter’s further claim that a company must increase competitive advantages by dwelling on its core competencies during a low cost or a differentiation strategy (Ketata, Sofka and Grimpe, 2014).
First, in the production of Eco friendly system, KONE has frequently won in the eco- friendly field. In Dubai company won sustainable supplier award (Joyce, 2015). It was renowned that the reduction of energy spending by 70% with continuous eco- friendly, elevator design, earned the award (Chen, Delmas, & Lieberman, 2015).
Secondly focus on the area of innovation, in 1996 company create eco-disk which lead to the removal of elevator rooms and the introduction of the world’s first elevator that did not want a room in the industry (Holopainen and Toivonen, 2012).
Newly, KONE invent a KONE Ultra Rope, this comprise of super light weight technology which is made of carbon fiber with a special high- friction coating (Joyce, 2015). And lastly, KONE first approach toward dealing with their customers and their staffs.
5.1 Bowman’s Strategy Clock:
Market segment in a chosen business area:
Residential building- In this area KONE elevators facilitate passenger to reach fast, carefully and comfortably. For tenant they offer quite operation, which is particularly important at night. For architects, they are simple to integrate into design and help optimize available building space (Forger et al., 2005). For building owner, they help decrease whole lifetime costs by providing outstanding maintainability and also decrease in energy consumption (Dolnicar, Freitag and Randle, 2005).
Hotels- KONE elevators and escalators with a wide variety of interior plan and performance requirement are ideal solution for all types of hotels (Shen and Jiang, 2013). Spacious cars allow guests and their baggage, or employees and their kit to travel comfortably and efficiently through the hotel (Joyce, 2015). They also make a consistent aesthetic skill for their guests as they travel from the reception to their rooms (Dolnicar, Freitag and Randle, 2005).
Office building- KONE provide their elevators and escalators for all types of office building, like from low rise building to highest skyscrapers (Chen, Delmas, & Lieberman, 2015). Generally office area is open environment. KONE help to ensure people flow in office buildings by carrying out careful analysis and simulation (Dolnicar, Freitag and Randle, 2005).
6.1 Ansoff’s matrix:
Figure: Ansoff Matrix of KONE
(Holopainen and Toivonen, 2012):
Under market development, KONE launched Monospace and new maxi space in UK which are successfully launched because UK is a growing market for elevators and escalators (Holopainen and Toivonen, 2012).
Under diversification, KONE think that Monospace and new maxi space should launched in UK and Finland because it can easily be accepted and also build trust which are already existing product (Simmonds, P, 2015).
Under market penetration, they think that for a new market area UK is a good place for Eco Mod, Inno track etc.
And last in product development, publicity, Campaign, media and other area were they should give a discount on Eco Mod, Inno track and other product which will oversupply and make a place of new future product (Shen and Jiang, 2013).
7.1 Digital Marketing Strategy Objectives
TACTIC- under this strategy, KONE centaury and their five campaigns are also called as KONE compact flash campaign which will be launched across many cities where their products are sold. To achieve this they suggest, KONE should set up computer internet panel, with flat screens in all their lifts. They should be used to employ the public and give new information from KONE (Joyce, 2015). In strategic places KONE should install this kind of similar screens, which were installed by the transport for London airports and hospitals (Chen, Delmas, & Lieberman, 2015).
Design a phone app which gives all the information to KONE concerning lifts which is manufactured by KONE. KONE can also set up screens in the cities were their lifts are placed were users can give feedback (Edmiston, 2015).
ACTION- KONE CD campaign would see the following lines like firstly they set in the media panel and then they set in any building which are containing a KONE machine like walkway, elevators etc (Lam, 2015).
CONTROL- To give out control measures of traffic increased as a result of individuals who visit their site must be monitor. Further control will see a feedback of the strategies which are outlined above and conduct monthly at the professional level. While doing this KONE should visit to their customers on their websites being to REACH ACT (social media) ENGAGE (customers and lift users should loyal to KONE and their product) etc (Moiseieva, 2013).
Segmentation – it is based on geographical area like Asia, Australia, and Africa.
Target group- they target the business which require elevator and escalators. And also merger target market in other parts of the world (Holopainen and Toivonen, 2012).
Positioning- company want their people to move safely, easily and comfortably without waiting in building in an increasingly urbanizing environment (Hann and de Guevara, 2014).
According to KONE they segment their market according to the purpose of the building. Their main segments are hotels, office, medical buildings etc. The companies serve hundreds of thousands of customer’s crossways overall, the majority of which are personated customers (Edmiston, 2015).
KONE care online is a web based information channel formed to help client monitor their KONE maintained tools and plan and account ahead (Holopainen and Toivonen, 2012). It gives customers immediate contact of data on equipment performance, maintenance visits, call outs and restore. It also gives additional information to their customers for two way communication with KONE (Chen, Delmas, & Lieberman, 2015). The main purpose of KONE online care is to improve their communication with their customers.
Benefits of KONE online care services are, maintain data at your fingertips, transparent reporting, this process should suit for their customers etc (Open Research Online, 2014).
|
KPI |
Status |
|
Email marketing. |
Successful |
|
Organizing the redesign of the subsidiary company websites. |
Successful |
|
Provide periodical KPI reports for websites and internet to senior management group. |
Ongoing |
|
Corporate video production. |
Ongoing |
|
Advertising. |
Successful |
|
Google awards campaign. |
Ongoing |
|
Email campaign. |
Successful |
|
Print and production |
Successful |
(Holopainen and Toivonen, 2012)
S.1 Company has the strong brand image and one of the leading market positions and also increases the prospective of future sales.
S.2 Reputation, KONE is a family owned company and well reputed brand, their products are well known with no problem and also efficient (Edmiston, 2015).
S.3 Strong acquisition strategy, KONE believes organic and inorganic growth as their key success.
W.1 Fluctuating exchange rates, rates are fluctuating in developing countries while operating like in Asian markets (Chen, Delmas, & Lieberman, 2015).
W.2 In their websites lists of lifts and escalators are their but they forgotten to mention the price of it.
O.1 Growth are very strong in Asia and Australia because in Asia-Pacific the demand for elevators and escalators are increasing this was an opportunities for them.
O.2 Strong R&D operation, they constantly discover and innovate their new technologies.
T.1 Strong competition, there is a many KONE competitors which are in same size or little bigger in size and much more experience. And this is a big threat for new entrant (Chen, Delmas, & Lieberman, 2015).
T.2 Declining US markets, in the market of elevators and escalators the growth of the product are declining in US market over a year and this will effect in the KONE business.
T.3 Government regulation, regarding the health and safety of people would require in higher standard and also increased the taxation rate of their goods (Shen and Jiang, 2013).
S-O If the brand image of a company is strong then only the demand of that product would increase and it will help in growth of the company (S.1 – O.1)
If the company reputation is very high, it will help the company to bring variation on their product while during R&D of that product (S.2 – O.2).
S-T If the brand image of the company is high and help them to sell their product more and more, it will definitely increase their competition level (S.1 – T.1)
Well reputed companies are simply define that there product are manufacture while taking care of their customers safety (S.2 – T.2) (Shen and Jiang, 2013).
W-O Asia and Australia are the developed, and the growth rate is high and due to this, price of product are keep on fluctuating , according to the economic growth rate since they are on the process of developing the price would be low to fluctuated (W.1 – O.1).
Company R&D team coming with new ideas and technology, they bring new variation on their product, but the companies are too busy in their R&D research that they forgotten to mention the price of their product in their online websites (W.2 – O.2).
W-T Exchange rate of company is keep on fluctuating, due to this reason, in US market the growth of their product are declining over a year and this will effect in the KONE business ( W.1 – T.2).
KONE competitors are keep on competing and bring variations on their product, due to this competition level is so high that they forgotten to mention the price of their product in their online websites (W.2 – T.1).
References
Amatulli, C., Caputo, T. and Guido, G. (2011). Strategic Analysis through the General Electric/McKinsey Matrix: An Application to the Italian Fashion Industry. IJBM, 6(5).
Dolnicar, S., Freitag, R. and Randle, M. (2005). To Segment or Not to Segment? An Investigation of Segmentation Strategy Success Under Varying Market Conditions. Australasian Marketing Journal (AMJ), 13(1), pp.20-35.
Forger, D., Drapeau, M., Collins, B. and Blau, J. (2005). A new model for circadian clock research?. Mol Syst Biol, 1(1), pp.E1-E2.
Groth, R. (2014). Using the five practices model to promote statistical discourse.TEST, 37(1), pp.13-17.
Hann, R. and de Guevara, V. (2014). Addressing practice: introducing a new section for STP. Studies in Theatre and Performance, 35(1), pp.3-6.
Holopainen, M. and Toivonen, M. (2012). Weak signals: Ansoff today. Futures, 44(3), pp.198-205.
Johnson, R. and Lipp, A. (2006). Cognitive Mapping: A Process to Support Strategic Planning in an Academic Department. Group Decis Negot, 16(1), pp.43-60.
Ketata, I., Sofka, W. and Grimpe, C. (2014). The role of internal capabilities and firms’ environment for sustainable innovation: evidence for Germany. R&D Management, 45(1), pp.60-75.
Moiseieva, M. (2013). Mini Cooper: Marketing Strategy, Digital Marketing, Brand & Ethics. CRIS – Bulletin of the Centre for Research and Interdisciplinary Study, 2013(1).
Open Research Online. (2014). Choice Reviews Online, 51(06), pp.51-2973-51-2973.
Radomska, J. (2015). Strategic Flexibility of Enterprises. JOEBM, 3(1), pp.19-23.
Shen, H. and Jiang, Z. (2013). SWOT Analysis for Serviced Apartment Based on Information Technology. AMM, 380-384, pp.2011-2015.
Chen, C. M., Delmas, M. A., & Lieberman, M. B. (2015). Production frontier methodologies and efficiency as a performance measure in strategic management research. Strategic Management Journal, 36(1), 19-36.
Chienwittayakun, J., & Mankin, D. (2015). Strategic Management Planning Process (SMPP) as an Organization Development Intervention (ODI) to Align Values, Goals and Objectives and Improve Employee Teamwork, Engagement and Performance: A Case Study of a Family-Owned Business in Thailand.ABAC ODI JOURNAL VISION. ACTION. OUTCOME., 2(1).
Joyce, P. (2015). Strategic Management in the Public Sector. Routledge.
Newton, P(2014). What is the PESTLE Analysis?.
Simmonds, P(2015). Product Market Diversification. Wiley Encyclopedia of Management.
Simons, G. W. (2015). U.S. Patent No. RE45,371. Washington, DC: U.S. Patent and Trademark Office.
Lam, T. A. (2015). U.S. Patent No. 8,947,892. Washington, DC: U.S. Patent and Trademark Office.
Edmiston, D. (2015). Strategic digital marketing. Journal of Product & Brand Management, 24(1).
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