STRATEGIES TO ACHIEVE STRATEGIES TO ACHIEVE SUPERIOR PERFORMANCESUPERIOR PERFORMANCE

MOHD TUSIRIN NORMOHD TUSIRIN NORUKM GRADUATE SCHOOL OF BUSINESSUKM GRADUATE SCHOOL OF BUSINESS

NATIONAL WORKSHOP: EMPOWERING NATIONAL WORKSHOP: EMPOWERING TELECENTERS IN BRIDGING THE DIGITAL DIVIDETELECENTERS IN BRIDGING THE DIGITAL DIVIDE

SEREMBAN, 8SEREMBAN, 8--9 FEBRUARY 20119 FEBRUARY 2011

STRATEGIES TO ACHIEVE STRATEGIES TO ACHIEVE SUPERIOR PERFORMANCESUPERIOR PERFORMANCE

1.1. Brief Strategic Management Brief Strategic Management FundamentalsFundamentals

2.2. Strategic Management in Practice @ Strategic Management in Practice @ Golden HopeGolden Hope

3.3. Blue Ocean StrategyBlue Ocean Strategy4.4. ConclusionConclusion

PRESENTATION OUTLINEPRESENTATION OUTLINE

Strategic Management Process

External Environment

Internal Organization

Competitive Dynamics

Business Level Strategy

VisionMission

Corporate Governance

Org Structure and Controls

Acquisition & Restructuring

Strategies

International Strategy

Cooperative Strategy

Strategic Leadership

Strategic Entrepreneurship

Corporate Level Strategy

Strategic Competitiveness

Strategy Formulation Strategy Implementation

inpu

tac

tions

outc

omes

feedback

Above average returns

STRATEGYIntegrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage and earn above average returns

Ireland, Hoskisson, Hitt (20110The management of Strategy

RESOURCES CAPABILITIES

CORE COMPETENCIES

COMPETITIVE ADVANTAGE

ABOVE AVERAGE RETURN

SUSTAINABLE Competitive Advantage

Valuable, Rare, Costly to imitate, Non-substitutable

INDUSTRY ENVIRONMENT

PORTER’S 5 FORCES; ENTRANT, SUBSTITUTE, BUYER, SUPPLYER, RIVALRY

COMPETITOR ENVIRONMENTObjectivesStrategiesAssumptionsCore competencies

SOCIOCULTURAL

POLITICAL/LEGAL

VISIONMISSION

OBJECTIVESGOALS

KRAKPI

STRATEGIC MANAGEMENT MAP

INTERNAL ENVIRONMENT

EXTERNAL ENVIRONMENT

STRENGTHSWEAKNESSES

OPORTUNITIESTHREATS

STRATEGIES

PHYSICAL

Market commonalityResource similarityAttack & Response1st Mover

STRATEGY FORMULATION

BUSINESS LEVEL CORPORATE LEVEL

COOPERATIVE

MERGERACQUISITIONTAKE-OVER

STRATEGIC ALLIANCE

EQUITY -JVNON EQUITY -CONTRACT

NETWORKING

WHOLLY OWN

LOCAL REGIONAL INTERNATIONAL GLOBALWHERE

HOW

WHAT

COLLUSIVE ALLIANCE

Actions to gain a competitive advantage in specific product markets

Gain a competitive advantage by selecting and managing a group of different businesses

Firm sells its goods or services outside the domestic market

Firms work together to achieve shared objectives

To form subsidiary or associate companies

Com

petitive S

cope

Competitive Advantage

5 components1. Effective customer relationship

management (CRM)2. Customer Reach (connected),

Richness (depth), Affiliation (intimacy and usefulness)

3. Who will be served (market segment)

4. What needs to satisfy (product’s benefits and features)

5. How needs is satisfied (Core competencies: resources and capabilities)

Integrated & Coordinated commitments and actions to gain a competitive advantage in specific product markets

BUSINESS LEVEL STRATEGY

REASONS FOR DIVERSIFICATIONValue-creating

• Operational relatedness• Corporate relatedness• Economy of scope• Market power• Increase revenue/reduce cost

Value-neutral• Antitrust and Tax Laws• Diversify to increase performance• Uncertain Future Cash Flows;

defensive strategy• Synergy and Firm Risk Reduction

Value-reducing • Top management compensation

& risks• Benefits to top management, not

shareholder

Related Constrained

Related Linked

Operation & Corporate

Relatedness

Unrelated O

pera

tiona

l rel

ated

ness

Corporate relatedness –core competency

To gain a competitive advantage by selecting and managing a group of different businesses

CORPORATE LEVEL STRATEGYLEVEL OF DIVERSIFFICATIONLow :Single biz; income >95% from one bizDominant biz; 70-95% income from one bizModerate; income <70% from dominant bizRelated Constrained – more operation relatedRelated Linked – more corporate relatedHigh; income <70% from dominant bizUnrelated related diversification

Vertical – along supply chainHorizontal – across supply chainDiagonal

STRATEGY IMPLEMENTATION

STRUCTURE AND CONTROL OF

ORGANIZATION

CORPORATE GOVERNANCE

STRATEGIC LEADERSHIP

STRATEGIC ENTREPRENEURSHIP

Organization’s professional and ethical values thru Agency Relationship: Separate Owner, Board and Management

Exploit opportunities; commercialize innovations

Framework to implement; monitor and control strategies

Envision and empower to create strategic change

Strategy on Human Resource

9

A. BackgroundB. Corporate Vision and StrategiesC. Group Organization StructureD. Key Performance IndicatorsE. Strategic Directions

STRATEGIC MANAGEMENT IN PRACTICE @ Golden Hope (2004)

A. BACKGROUNDChallenges & Opportunities in Palm Oil Industry

Challenges Limited Land for Expansion Rising Production Costs Stagnating Yields Growing Influence of NGOs /

Consumers In Relation To The Environment, Food Safety And Sustainability

Human Capital

Opportunities Higher Import Level by China,

India & EU Reputable Global Producer and

Exporter Further venture into downstream

Oil Palm An Environmental

Friendly Crop

Growing Concern Over GMO &

Trans-Fatty Acid

THE MAJORTHE MAJOR PLAYERS ARE MOVING DOWNSTREAM (2004)PLAYERS ARE MOVING DOWNSTREAM (2004)

* Figures for 2003 *** Figures for FY2003/2004** Figures for 2004 # Malaysian palm and palm-based products export value 2003

REFINING, BULK, COMMODITY, SPECIALTY

PRODUCTSCONSUMERPLANTATION

CARGILL **

KARSHAMNS *

MILLING/CRUSHING

Source: Annual reports

UNILEVER *

MALAYSIAN PALM OIL INDUSTRY

ARCHER DANIEL MIDLANDS **

AARHUS GROUP *

-UPSTREAM MIDSTREAM DOWNSTREAM

GOLDEN HOPE ***

IOI GROUP ***

KLK *

FELDA

239,000 4,860

137,000 5,930

198,500 21,100

2,780 88

1,720 102

2,802 472

4,993 1,112

3,473 569

27,700 #

SALES PROFITRM million

B. CORPORATE VISION and STRATEGIES

CORPORATE VISIONCORPORATE VISION

CORPORATECORPORATESTRATEGIESSTRATEGIESCORPORATECORPORATESTRATEGIESSTRATEGIES

1. Multi-skilled workforce2. Developing and leveraging on technology,

knowledge and information3. Total commitment to strong corporate

governance and economic stability4. Dynamic and synergistic growth to enhance

shareholder value5. Expansion in the core businesses to

maximize growth in markets and profits6. Building global brand identity

““Global leader in sustainable plantations, commodities & oils & fats businesses”

13

Group OperationsGroup Operations

Group Chief ExecutiveGroup Chief Executive

Plantations

Group Support ServiceGroup Support Service

Oils & Fats/Oleo-Chemicals

Oils & Fats/Oleo-Chemicals

OtherBusinesses

OtherBusinesses

Consultancy & Services

Consultancy & Services

Finance &

Accounts

Finance &

Accounts

Corp Legal &

Secretarial

Corp Legal &

SecretarialHRHR

Corp Strategy &

Business Dev

Corp Strategy &

Business DevSecuritySecuritySecuritySecurity

Public Affairs Public Affairs & &

CommunicationsCommunications

Public Affairs Public Affairs & &

CommunicationsCommunications

C. GROUP ORGANISATION STRUCTURE

14

Why Do We Need KPI ?1. To stay focus on key & pertinent issues

2. To drive us towards achieving our goal

D. KEY PERFORMANCE INDICATORS (KPI)

15

Corporate KPI for FY 2004/2005BALANCED

SCORECARD PERSPECTIVE

KPI TARGET (2004/2005)

Financial Group Profit Before Tax RM715 mil

Group Return on Capital Employed 9.92%

Customer Sales Non-Commodity Products 47%

Market Share of Oils & Fats Purchase of MNC 2.5%

Internal Business Process

Palm Oil Price vs MPOB Price 2% Above

Group Average Oil Yield Per Hectare 5.19 Tons

Learning and Growth Corporate Brand Strength (Survey) 75% Positive Responses

Extent of Leveraging ICT for Competitiveness 80%

D. KEY PERFORMANCE INDICATORS (KPI)

16

1. Strengthening present core operations

Sustainable plantation – People, Planet, Profit

Intensifying R&D

Fully integrated value chain

Technology advancement

E - STRATEGIC DIRECTION

2. Specialize and focus in oils and fats business value chain (includes oleo chemicals)

-UPSTREAM

PLANTATIONS

MILLINGREFINING

(Standard – Customized)

MIDSTREAM DOWNSTREAM

REFINING - Oleo Chemicals(Basic – Derivatives)

BRANDING & PACKAGING

CONSUMER

E - STRATEGIC DIRECTION

18

3. Branding and product development

E - STRATEGIC DIRECTION

19

4. Harness human capital & performance driven culture

FinancialFinancialCustomerCustomerBusiness ProcessBusiness ProcessLearningLearning & Growth& Growth

FinancialFinancialCustomerCustomerBusiness ProcessBusiness ProcessLearningLearning & Growth& Growth

PART E - STRATEGIC DIRECTION

20

5. Strengthening global presence

PART E - STRATEGIC DIRECTION

GOLDEN HOPE CONFERENCE 2004GOLDEN HOPE CONFERENCE 2004GOLDEN HOPE CONFERENCE 2004GOLDEN HOPE CONFERENCE 20049 – 11 DECEMBER 20049 – 11 DECEMBER 2004

MARRIOTT HOTEL, PUTRAJAYAMARRIOTT HOTEL, PUTRAJAYA

GOLDEN HOPE STRATEGIES FOR OILS & FATS AND OLEOCHEMICALS

By

Dr. Mohd. Tusirin NorSenior Director, Oils & Fats

PAPER 2

ASPIRATIONSASPIRATIONS“ TO BE THE LEADING GLOBAL SOLUTION PROVIDER IN FOOD AND

OLEOCHEMICAL APPLICATIONS THROUGH EXPERTISE & KNOW-HOW IN

REFINING AND MODIFICATION OF EDIBLE OILS ”

CONTINUOUS DIFFERENTIATION

EXTEND PRODUCT MIX INTO SPECIALTY PRODUCTS

INCREASE MARKET COVERAGE

BRANDINGHUMAN RESOURCES

“You innovate value for stakeholders”

Cirque du Soleil

Factors industry competes and invests

Offe

ring

leve

l buy

ers

rece

ive

6 path

Is there a compelling reason for people to buy?

(continued)

3E principle

Strategy Formulation Attitude Behavior Strategy Execution

BASIS RED OCEAN BLUE OCEAN OPEN UNIVERSE

Economy Scarcity Scarcity Abundance

Competition Rivalry; Competitive Advantage

Above competition; not relevant

Partnership; benchmark others

Results Average Above average Superior Performance

Innovation Technology; Products Service , process Relationship : Creator <> Created.

Technology Tool Tool Tool

Application Commercial Commercial Commercial & non-commercial

CONCLUSION: 0PEN UNIVERSE STRATEGY

ENDTerima kasih