Open Innovation and Strategy - Assignment Example

CSR COMPANY ANALYSIS Name of student Name of School EXECUTIVE SUMMARY This paper discusses CSR Limited a company in Australia dealing in the manufacture and supply of building products and aluminum. The company operates in Australia and also New Zealand while also owning a number of subsidiaries. The paper touches on the industry analysis, the market trends, macro environment, internal analysis, financial and product analysis. A SWOT and TOWS analysis has also been done to find out the strengths and weaknesses of the company while also matching the strengths to external opportunities. TABLE OF CONTENTS. PAGE NUMBER 1.0 Introduction 5 2.1 Situation Analysis 5 2.2 External Analysis 5 2.2.1 Industry Analysis 5 2.2.2 Market Analysis 6 2.2.3 Customer Analysis 6 2.2.4 Competitor Analysis 7 2.2.5 Macro environment 7 2.3 Internal Analysis 8 2.3.1 Operational Analysis 9 2.3.2 Financial Analysis 10 2.3.3 Product Analysis 11 2.4 SWOT/TOWS 11 2.4.1 SWOT Analysis 11 2.4.2 TOWS Analysis 12 References. 13 1.0 Introduction CSR is an Australian based public company that deals with the manufacture and supply of building products and aluminum. The company’s headquarters are in Sydney with operations in other countries such as New Zealand and Asia. The company was founded in 1887 as a colonial sugar refining company and later expanded to building materials manufacturing and mining of bauxite, petroleum and aluminum. This paper involves a company analysis of CSR looking at its external and internal structures (“CSR Limited” 2017). 2.0 Situation Analysis 2.1 External Analysis 2.1.1Industry analysis. Using the porter’s five forces of structure we find we look at the industry and what is happening in it currently. The threats of new entrants are high since the industry is very profitable, barriers of entry into the building and construction industry include the start up costs which are very high, government regulations, access to distribution channels is sometimes found to be challenging but not impossible. The threat of substitutes is also evident with the number of these types of companies running as high as 70,000 companies with 590 dealing in construction and mining, meaning clients can find these products sold in CSR in other companies also. Bargaining power of buyers is average since the substitutes found also work with roughly the same prices, differences found are very slight. The prices also vary with the quantity of the building materials available in the company (“CSR Limited” 2017). Bargaining power of suppliers sometimes come into play when there are unique resources being supplied which may cause the prices of the raw materials to go up. Looking at CSR who mine some of their raw materials, we find they are a bit advantaged as they do not have to incur huge costs of buying raw materials. 2.1.2 Market Analysis 2.1.2.1 Market Structure. The Australian construction industry has low degrees of market share concentration. There are many small scale businesses and a huge span of diverse range of products and services (“CSR Limited” 2017). Individual companies are less likely to reach huge sizes that would allow them to become vertically integrated (Kotler 2015). The top players command less than 10% of division revenue. 2.1.2.2 Customers Buyers of the building and construction materials include the real estate companies that build houses for sale or are contracted to build houses for sale. Also individual buyers who are constructing their own homes. Those involved in the purchase decisions include architects and structural engineers. They but building and construction materials ranging from concrete , glass, ceilings, roofing tiles, wooden doors all sold at CSR. These items are bought all round the year with the building and construction industry booming there is always high demand for the products. They buy some of these products at CSR because they can offer better prices they mine some of their raw materials used in the making of these building products such as bauxite. These products are bought by visiting the company warehouses where purchases can be made then delivered to the client. Comparisons on the brand are high due to availability of the products from other providers with equally good quality. 2.1.3 Competitor Analysis. Using the Kotler’s competitors classification tool we find that the key industry market leaders include companies such as Boral limited, CSR limited, Hanson Australia (holdings) proprietary limited, James Hardie industries public limited and Holmic (Australia) holdings pty ltd. Challengers of these companies include Adelaide Brighton ltd, Owens-Illinois (Australia) pty limited, Brickwoods ltd, GWA group limited and Cement Australia holdings pty ltd. Nichers include Prime constructions, Raptis Group, Mossop group, Becton Property Group while the followers are AJ Lucas Group, Sunland Group, Watpac with others following. 2.1.5 Macro environment. In this section we look at the key trends in the external environment that impact the organization in a positive or negative manner. Political trends that might impact the company include the prolonged periods of economic instability brought about by increased interconnectivity found globally in recent times. This may lead to fluctuations in prices sometimes going to record lows while taking a long time to recover to their previous states. Global shifts in power and economic prosperity also presents risks and opportunities in the Australian construction industry. In recent times overseas construction firms have been making competitive turns in acquiring projects in Australia which I turn increases innovation and supply chains making it advantageous for growth of the construction industry. Economically the industry has been at an upward scale meaning the profits have been good with an increase in demand for the building and construction materials. Technologically construction has always lagged behind other industries meaning that CSR is also one of the companies that are not fully embracing technology. In so doing the company could experience increase in productivity by adopting new technologies such as new energy technologies, wearable computers, virtual and augmented reality and 3D printing. Social and ecological trends in the market include the migration of people into the country with population expected to grow to 36 million by the year 2050. The population of the aging will also be high which will mean a lot of older people will be engaged in the workforce. For the building and construction industries it will mean the looking for non-traditional sources of labor to fill the gaps such as migrants. Increase in population growth will add greater tension on the supply of energy, infrastructure and human resources. Thus more pressure will be put on the construction industry to make available these amenities. Ecologically the large quantities of carbon emissions coming about due to the manufacturing of construction products and processes will mean pollution of the environment (Chesbrough et al 2007). In a bid to curb this from being a problem places such as Melbourne have set out plans to be carbon neutral by 2020 which might lead to the rise in production of materials that are carbon rich. Estimates indicate that around 80% of a firm’s carbon footprint usually comes from the supply chain and hence pressure is being put on suppliers such as CSR to reduce carbon footprints and emissions. 2.2 Internal Analysis. CSR’s core competencies include the operation of low cost manufacturing facilities with the strong distribution networks to customers across Australia and New Zealand. Products are manufactured meeting all relevant building codes and standards. They specialize in the manufacture and distribution of building products such as AFS walling solutions, insulation and solar systems, fiber cement systems, gyprock plasterboards, ceiling systems, hybrid and natural ventilations systems, aerated concrete, roofing tiles, PGH bricks an pavers, vidian glass and gove aluminum. Financial performance of the company indicates growth of up to 12.9 % up to the month of March in the year 2016 for total revenue growth, sales growth are up by 13.6% and total assets by 4.6%. Looking at financial ratios return on revenues stands at 6.1% as of March 2016, return on shareholders’ stands at 10.8%, profit margins are at 10.2% for the year 2016. In regards to the human resources management the company is very keen on maintain safety and health of the employees in the organization by ensuring there is compliance of the regulations and operational policies and standards. They have established WHSE objectives and targets that are measurable (Goi 2009). There is the identification, assessing and control of hazards associated with the job with approaches being put in place to minimize the risks involved for workers. They have provided the appropriate safety, health and environmental training to employees and contractors. Consultations and communication with employees is carried out to continually improve the workplace environment in terms of safety and health. Investigation into incidents is done and the lessons learnt shared with stakeholders so as to prevent re-occurrence. 2.2.1 Operations. Using the 4P framework, we start with the product. Here we find that quality service is one of the key points the company invests in with the making sure their products are of good quality and their delivery services are swift and efficient. They have also heavily in innovation to make sure they remain at the lead of companies that provide building products and materials with researches being done on products such as wall wrap to demonstrate their efficiency in energy while reducing leakage. Looking at price we find that the acquisition and joint ventures with various companies such as Boral CSR bricks pty and AFS products group gives them the competitive advantage they need to offer pocket friendly prizes to customers to keep them coming back. In regards to place we find that the company has been able to maintain their footing with the acquisition of companies that supply building products to allow for the control over supply chains which allows them to sustain good positions in the building and construction industry (Hollensen 2015). Promotion is done by communicating the value of the products. It is done by use of marketing channels such as the internet where the company has created a website to show clients what they offer and also advertising in business magazines and newspapers to allow for the spread of information regarding their products. 2.2.2 Financial Analysis. Financial growth for the company indicates 12.9% increase with reports dating up to March 2016. Sales revenue growth stands at 13.6%, total assets are at 4.6% growth annually and employees at 14.2%. Financial ratios indicate the return on revenue stands at 6.1%, return on assets is at 6.4%, profit margins are 10.2%, and revenue for employees is at 652.0%, dividends per share stands at .02%. Revenue & NPAT (AUD $ billions) 2.2.3 Product Analysis. 2.2.3.1 Current Products. The company specializes in the sale of AFS walling solutions, insulation and solar systems, fiber cement systems, gyprock plasterboards, ceiling systems, hybrid and natural ventilations systems, aerated concrete, roofing tiles, PGH bricks an pavers, vidian glass and gove aluminum. Marketing communication is done by the use of advertising such as on the internet and in magazines, branding of company vehicles and its suppliers with an aim of letting the clients know who is supplying the building materials, printed materials such as the reflector jackets in construction sites. There is also the use of trade shows appearances and packaging with the brands names being visible. 2.2.3.2 Current Target. The current target is middle level families looking to own homes and also real estate companies that are looking to build homes for sale (McDonald et al 2011). Looking at the marketing plan we can see the company is leaning more towards a stronger internet presence and also the use of more branding on their products. 2.3 SWOT Analysis. Strengths. The mining done in the company gives them the advantage of having their own raw materials to manufacture some of their products. It means that they always have materials to supply the demand. The company has the potential to expand since they also have branches in other places. Weaknesses. They have not invested heavily in their internet presence which can be a good place for them to market their products. More should be done in regards to that as it helps to get the information about their products across the boards much faster while doing marketing. Opportunities. Having a research team gives them the opportunity to make new innovations that would guarantee their development in the industry to avoid being phased out. Their acquisition of other companies working as suppliers also gives them more opportunities to expand their business while also being efficient in supplying the products. Threats. The high numbers of people migrating to Australia might put pressure on the building and construction industry due to high demands of homes and infrastructure. Too many companies of the same nature means they have to share the market while it also puts a restriction on the pricing of the products. Also the ever changing economic times are sometimes found to be a threat to the well being of the business. 2.3.2 TOWS Analysis Strengths Weaknesses Opportunities SO S2/ O2: Being present in other countries gives them the opportunity to acquire more companies to expand their business even further. S1/O1: The mining done means there are lower costs of running business and these funds can be directed to the research and innovation of new products to place the company in better position in the industry. WO S3/W1: Having their presence in another place they could use the internet to market their products in the new place to make them better known to their clients. S2/W1: Having the ability to supply the demand there is for construction materials could be advertised in the internet to broaden their clientele base. Threats ST S1/T1: having the ability to get their own raw materials means they would be ready to supply the demand that comes with an increase in immigrants. S1/T2: Having mining capabilities means they could be able to weather the harsh economic times since they do not have to incur costs buying the materials they need to supply to their clients. WT W1/T1: Having the use of the internet could make sure information about their products reaches those immigrating into the country in a quicker manner since everyone uses the internet nowadays and they could use it to advertise their products. References Kotler, P., Keller, K. L., Manceau, D., & Hémonnet-Goujot, A. (2015). Marketing management (Vol. 14). Englewood Cliffs, NJ: Prentice Hall. Chesbrough, H. W., & Appleyard, M. M. (2007). Open innovation and strategy. California management review, 50(1), 57-76. Goi, C. L. (2009). A review of marketing mix: 4Ps or more?. International journal of marketing studies, 1(1), 2. Hollensen, S. (2015). Marketing management: A relationship approach. Pearson Education. McDonald, M., & Wilson, H. (2011). Marketing plans: How to prepare them, how to use them. John Wiley & Sons. http://www.csr.com.au/ http://www.ibisworld.com.au/ Read More