abubakar mehmood(08108061) wac

8/11/2019 Abubakar MEhmood(08108061) WAC

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GROWTH OF SONA KOYO STEERING SYSTEM LIMITED

Problem Statement:

How to make comprehensive evaluation of Sona Koyos competitiveness? What are the factors

and strategic initiatives for competitiveness? How company can enhance competitiveness for

global expansion to business. What is companys future business strategy and business plan?

Sona Koyo wants to formulate future business strategy. Strategy formulations have three stages:

1. Strategic Analysis

2. Strategic choice

3.

Strategic Implementation

Strategic Analysis:

Strategic Analysis model ( Exhibit 1) have been made to make comprehensive analysis of

previous strategic analysis start from mission and vision of company, shareholder concern, and at

different type of company and industry analysis. Sona Koyo has successfully achieved its

previous mission and vision. Sona Koyo have highest market share 50% in volume terms and

35% in value. It is market leader in steering business still from its inception companysuccessfully in operation excellence like installment of Toyota production system, just in time,

Judoka and Kanban. Company diversity its customer as well as product portfolio diversity

investment risk. Company is making strategic alliance with suppliers and buyers. Shareholders

expectations are very high as company strong financial position and above average industry

return. Even high return to its parent company in order to environmental, corporate and position

order. I have made different model for each type of analysis just to make detailed information

each type of company detail of each type of model is shown in exhibits from 1 to 7. In

summarize all of our analysis. I come to this conclusion that general to specific environment is in

favored of firm. Company has very strong competitive position in industry but still there is a

room for improvement. As shown in exhibit 5 and exhibit 6of case company is adding value at

each stage of value chain and making value added investment to get high returns and try to


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diversify business portfolio to make reputation in international market for further detail go to

exhibit 2 to 7.

Strategic Choice:

In this stage, company formulates new strategy for future on basis of strategic analysis results. I

have successfully done strategic analysis portion now I move to strategic formulation stage. On

the basis of strategic analysis option for Sona Koyo is growth. Dr. Surinder Kapur, the

companys founder and chairman want to expand worldwide through collaboration with

multinational market reputation for quality and low cost product. Company has strong financial

position and multinational location so want to compete with world automotive market leaders.

Business expansion or growth help Sona Koyo to achieve the benefits of economies of scale, to

enhance its position in industry vis--vis its competitors and to provide more opportunities for

professional development and advancement of its employees. Growth will be achieved internally

by market penetration, market development and product development. External growth comes

from merger with multinational firms. I will discuss it in detail in future business plan.

Strategy Formulation:

In order to find factor and strategic initiative for competitiveness I have to use discovering core

competences model for new sources of competitiveness, merger and building relevant

competitive assets and process. Discovering core competencies model have shown in exhibit 10.

Company has all type of resources financial, physical, human, technological capital and efficient

management system which are source of competitiveness. Resources make the Sona Koyo

capable to equipped with people management system, knowledge management and expert top

management so bundling of skills and technology that enable company to satisfy their customer

in the core competency of the company. In this way high quality, low cost and human capital is

the strategic competitiveness. All this leads to competitive advantage through above average

industry returns. In this way we are able to identify source of competitiveness. Now we use these

resources of competitiveness for making future business strategy. In order to formulate future

business strategy, I have used resource base view shown in exhibit 9. I have already discuss core

competency model to find out core competency on the basis of these I will formulate new

strategy for Sona Koyo is to expand business by becoming the part of the Koyos global


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resourcing organization for passenger car business worldwide. This is only make the company

enables to get superior returns. Now we move to business plan and implementation of strategic

initiatives.

Business plan and Decision criteria:

Dr. Surinder Kapur emphasized that exports going to be the most important growth drivers for

the company. Sona was targeting exports to reach US$22.86 million by 2007. Company has to

grow both by internally as well as externally. Sona should focus on export rather than panic

about mergers. Company has to develop plants locally for exports orientation. It has to invest

75% of total investment in new project over passenger car segment. It can be clearly indicated

that market trend in this segment is growth every year especially in medium cars from exhibit 12

of the case. While in case of merger company have to invest 25% of total investment in new

projects over in heavy commercial vehicles due their growth trend displayed in exhibit 15

(Outlook for utility vehicle sales). Investment is not a big issue for company. Sonas Koyo

present financial trends are very strong. We can produce financial ratio to check company

performance here are some rations such as current ratio is 1.8 times which shows the company

have strong ability to pay its maturing obligations, assets turnover is 3.4 times, inventory

turnover is 30 times indicate efficient use of assets to generate revenue. Debt to equity ratio is

0.32% predicts that low risk in terms of debt when case of low profitability or cash flow

problems, return on equity 11.65%, net profit margin is 7.55% indicated high return over sales

and capital assets. So it is clearly predicated that firms have good performance and status. Its a

public limited company, can issue new equity to raise capital in case of any investment

initiatives. I have make an intervention plans for new strategic initiatives shown in figure 11 as

target of change. Company has to intervene strategic, techno structural, human resource

management and human process for business expansion for export and merger.

Strategic Implementation:

Recommendations:

In case of strategic intervention, Sona Koyo does not have to panic about globalization strategy

because international market is in stagnant stage. Most of international players interring Indian

economy due to growth option, economies of scale, cost and labor so instead of get intensive just


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to make merger with multinational player. Company has just invested just like in case of Fuji

Autotech. Company has to influence spouse companies by their competitive advantage of human

capital expertise to make partner company quality and cost efficient company. Company have to

major emphasis on export by development of local unit just Chennai. company have many

advantages in this case like developed market , market reputation, low labor and material cost

export doom , experienced human resource and economics of experience . Company actual profit

is less than expect so still is room for improvement. In this transportation change, company has

gone for product innovation heavy investment in R&D.

Technostructural interventions lead to restricting of Sonas Koyo. For restructuring company

have strongly co-ordinate between departments and remove department barrier. Employee

involvement programs have to initiate for division of work force and its leads to increase their

skill variety, task identity, task significance, autonomy and feedback. Company has to invest in

new manufacturing technology to compete with world leader. Company has to developed an

international subsidiary who will coordinate with local and multinational department as well as

multinational partners.

Human process interventions have to face diversity issues at individual, group and organizational

level. In order to resolve issue of diversity company have educate the employees about cross

cultural diversity communication, decision making and leadership. All of these trainings will

effectively enhance the human process intervention. When we effective resolve the conflicts and

create the climate of trust through developing hierarchies at each level and open dialogue system

will effectively enhance the satisfaction and performance of employees and organization.

When we come to human resource manage intervention we have to face performance issues at

each level either individual or firm level. We have set target at each level. In order to achieve

targets we to recruit people multinational assignments and make management by object

programs.

We have to properly developed source card and dash boards for performance management

system. We have to implement rewards and recognition to employees who meet timely

assignments and actively participate in resolving issues. This will do by profit sharing and

employee ownership programs. We have to identify people who need to trained and developed


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just as company done by employees exchange program with koyo Seiko. All this ultimately leads

to increase productivity probability of company. Developed career ladders for succession and

generate planning so that confidence over employment and make their best efforts.


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Exhibit 1 Strategic Analysis

Exhibit 2 PEST Analysis


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Exhibit 3 Porter 5 forces

Exhibit 4 SWOT Analysis


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Exhibit 5 Gap Analysis

Exhibit 6 Value Chain Analysis

Exhibit 7 Portfolio Analysis


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Exhibit 8 Strategic Choice

Exhibit 9 Strategy Formulation

Resource Base Model

Resources: Strong financial position (Exhibit 15), Multinational location, Experience

professionals, Latest technology like TPS, JIT, ERP , Large product portfolio, Different type of

cooperation with firms like Koyo Keiko and Fuji Autotech

Capabilities: People management practices, Knowledge management, Market leader and

Expert top management, Alliance with multinational firms

Core Competence: High quality and Low cost producer, Expert human resource

Strategy Formulation/ Implementation: Expand business by becoming a part of

the Koyos Global sourcing organization for passenger car business worldwide. Bundle of

skills & technology that enable Sona Koyo to provide high quality and low cost product to

customers

Superior Return: Above industry average returns like high EOIC, NPM & OPM

Corporate Strategic Choice

Choice:

Growth Strategy

Company wants to expand worldwide

Evaluation:

Shareholders want to expand their business

Compete with world automotive leader

Have strong financial position and reputation


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Exhibit 10 Discovering Core Competencies

Exhibit 11Target of change Strategic Intervention

Competitive & Collaborative Strategies,

Organizational Transformation

Issues

Alliance and Network with multinational players, Global

competitive strategy, Market and product development

HRM Intervention

Performance

Management,

Training and

Development

Issues

Division of work force,

Coordination of

department,

Production

Technology, Job

Characteristic

Techno-structural

Intervention

Sonas Restructuring,

Employee involvement,

Work design

Issues

Target Competent

People, Set goals

and targets,

Career planning &

Development

Human Process Intervention

Individual, Group& Organizational process

Intervention

Issues

Diversity Issues related to communication, Decision

making, Leadership & Interaction

Resources: Strong financial position, Multinational location, Experience

professionals, TPS, JIT, ERP& Large product portfolio

Competitive Advantage: Above industry EOIC, NPM & OPM

Strategic Competitiveness: High Quality & low cost

Core Competence: Bundle of skills & technology that enable Sona Koyo to

provide high quality and low cost product to customers

Capabilities: People management practices, Knowledge management,

Market leader and Expert top management

abubakar mehmood(08108061) wac

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