The Strategic Management of the Organisation - Case Study Example

Strategic Management Case Analysis: Kazi and Kazi Tea E Limited al Affiliation: Strategic Management Case Analysis: Kazi and Kazi Tea Estate Limited Strategic management refers to a set of managerial decisions, which determines the long run performance of an organisation (Child & Faulkner, 1998). Kazi and Kazi teas estate limited has been in operation for thirteen years (Kazi & Kazi Tea Estate Limited, 2014). Although the company has not experienced success in all the years, they have managed to be profitable in the last five years (Massachusetts Institute of Technology, 2013). The management of the firm has been influential in its success. This paper will evaluate the strategic management of the organisation. It will examine aspects such as industry analysis, corporate strategy, international strategy, sustainability and the firm’s corporate social responsibility. After an in-depth analysis, the paper will offer strategy recommendations that can help improve the business. Employee relationship with the firm In the recent times, the working conditions of tea farmers in the world of the workers are in a sorry state. The poor people who are often used as labourers in tea plantation receive low remuneration, no insurance cover, harassment, failure to have protective gears from adverse weather conditions and other necessities. The trade unions do not focus much on such farmers. The workers in the tea plantation are prone to occupational health hazards. They pick tea for long hours, with tea bags on their backs. The musculoskeletal problems remains an issue especially after a long duration of work. To worsen the situation, most of the regions have an uneven terrain and the slopes are steep. This even strain them further. They are predisposed to falls, which may lead to fractures. The weather conditions are too harsh for these workers, who do work without protective gears. They are at risk of dangerous insects and animals such as mosquitoes and poisonous snakes. With the distance to health facilities being another hindrance, most workers resort to death on most occasions. Discrimination is common. Ethnicity also plays a great role in promotions and good employments remuneration. This component is different from what Kazi kwa Kazi does offer to its employees and shareholders. It is worth noting that the firm has improved the lives of many people in the area it operates within through creation of employment opportunities and corporate social responsibility activities. Subsequently, the local economy has escalated. The introduction of other activities such as rearing poultry and dairy farming has further escalated the living standards via employment creation. The market wages are satiable to their employees, as compared to the current world rates. Their goal remains core in ensuring that their clients report full satisfaction, which is a method of motivating them. Additionally, they do value professional development. All the workers working in their projects receive specialized education to boost the service delivery process.it is mandatory for the staff members to be rich in some skills such as composting, managing pests, mulching and other sustainability measures to be adopted. Most significantly, those within the firm’s area of operations have been indirect beneficiaries too. First, they have been reliable suppliers of sand, feeds to the dairy cows, materials, and other necessary equipment’s. Volunteers have not been left behind in commencing occupational health and sanitation programs such as latrines construction. The firm has improved the health insurance of its workers. Sustainability Sustainability refers to the good use of resources so that they can benefit the current and future generation. The method of farming used by KKTE was very sustainable. They invested in an arid area and were able to make it productive. They used locally produced fertilizers (Bio fertilizers) which do not affect the fertility of the soil. They planted trees and harvested rainwater, which facilitated agriculture. The use of leguminous crops to cover the soil added nitrogen into the soil and made it more fertile. Mulching added the humus in the soil and helped conserve water. Their method of farming considered both profitability and sustainability. The productive capacity of the soil was maintained. They helped the society start up their projects, which made them live better lives. The company supplied the workers with tools and education on health care and thus made the society more sustainable. Additionally, all the workers are fully trained on sustainability issues and how to implement them. There is rainfall arrest for irrigation and other activities that may take place in the farm. The tea farms are well mulched to prevent soil erosion. Trees are available to ensure habitat maintenance. The employee have further received extensive training on safe handling of pesticides and other chemicals. The sustainability philosophy of “meeting the needs of the present without compromising the ability of future generations to meet their own needs” have been well applicable to the firm. They have embarked on the projects to promote the philosophy through the environmental, societal and economical pillars. Cooperative strategy KKTE attempt to venture into the USA market led them into a partnership, which is a cooperative strategy. Since the company did not understand the US market, they decided to use Lipsius, who would help them sell their tea in USA (Massachusetts Institute of Technology, 2013). Lipsius branded the product so that it would be acceptable in the market. Branding proved challenging and they were forced to embark on promotions such as film festivals to promote the brand. To manage costs, they advertised their products during the day. They packed their products in biodegradable tea bags so as to extend their environment concern. They sold their products directly to consumers in order to create brand awareness in the new market. The tea was packed in compostable cans, which ensured that it remained fresh, and in the best condition. This cooperative strategy helped KKTE establish itself in the USA market. International strategy KKTE has only moved into one international market. Venturing into the USA market helped them increase their sales and consequently increase their production in Bangladesh. The move also helped eliminate the limitation that was put in place by the auction system. Corporate strategy The company has not diversified its operation in large-scale. However, they started farming animals so as to obtain dung to be used in the farms. This small diversification was meant to increase the limited input for their major operation, which is organic farming. This form of diversification is called a related diversification strategy (Child, & Faulkner, 1998). Industry analysis There have been a good number of tea producers gaining popularity in the world. Many countries and organization are emerging in the tea market, producing the best quality tea available. Competition has escalated, and the only way to survive in the market is via establishing a good loyal customer base. However, KK tea has been in Bangladesh market for quite some time hence does enjoy elements of monopoly and stability without experiencing many threats from the new entrants. However, with relation to tea auctioneering, the new entrants may lower their auctioneering prices, which goes a long way to affect the prices of KK tea too. They are forced to auction their tea at a bit lower price, which have a detrimental effect to the workers and the overall firm at large. The firm has enough capital assets; hence, most of the financial returns are used in maintenance of new machines and other daily turnover rather than purchase of new products. It is for this reason that the firm has embraced diversification of the products produced. Their commencement of dairy farming went a long way to increase their overall profits. KK tea is facing an element of threat substitute. In essence, the needs of the consumers are changing dairy with the change in standards of living. People want to buy products they can afford and those whose content is health friendly. Many people are opting for other cheap drinks rather than tea. However, the marketing department has been vigilant to ensure that tea remains the most consumed drink in the region. The company had suffered security threats from locals (Massachusetts Institute of Technology, 2013). Some locals took away the company’s land and used it for stone mining. The dung problem is another threat that KKTE are facing. Continuous expansion of production will require more dung, which may not be available. Competition from other tea-producing firms poses a threat to the economic existence of KKTE. Figure 1: summary of the external forces affecting KK tea in Bangladesh Figure 2: internal and external factors affecting the sale of the tea products in world Figure 3: factors that ushered in the success of KK Tea Corporate social responsibility Every organisation should benefit the immediate environment or society (Ireland, Hoskisson, & Hitt, 2008). KKTE has done a lot to benefit the society around in Bangladesh. They trained workers and non-workers on skills such as manure composition, mulching, and animal production. Although the company intended to have certain benefits from this training, it was a form of corporate social responsibility. The company purchases sports equipment for the residents, which they used for extracurricular activities. The sports activities brought people together and improved the reputation of the company. The region had little infrastructure and therefore crucial requirements like health facilities were not available. KTTE managed to start health and hygiene programs, which benefited the people of the area most of whom were their employees. They built safe latrines, which helped prevent diseases and infections. They started the cow-cop program, which helped the residents purchase cows, which became an asset and a source of food. The payment system of the cow was easy they paid using dung and a litre of milk each day (Massachusetts Institute of Technology, 2013). The residents were trained on how to take care of the animals to ensure that they got enough milk. The climate of the area changed since more trees were planted, and rainwater was harvested. The residents also began to grow their own tea that they sold to KTTE. The neighbouring populations also did supply their milk their produced milk in the firm, a component that acts to benefit them in improving their livelihoods. KK tea has also lead to improvement of gender and women affairs in the region. It has led to an escalating improvement in the women’s affairs through introduction of income generating projects, campaigning for education, accessibility to credit services and ensuring that women have a say in the society. Its greatest implication has been creation of employment opportunities to the residents, a component that has changed their lives completely. The rate of unemployment in the region surrounding KK tea has very low unemployment levels. The infrastructural patterns have improved considerably. The firm has ensured that the roads within their areas of operation are all weather roads to enhance transportation of their products (Verbeke & Merchant, 2012). Recommendation The company performs a unique form of agriculture. They should take advantage of the uniqueness and move into other arid areas. Globalization is a strategic move for the company. They will be in a position to produce more tea and serve a much larger market. They should diversify into farming other crops so that they can reduce the risk of collapse. Producing many crops will not only increase their market recognition but also help them gain customer loyalty. Introduction of a pension system scheme for its workers, together with a generous comprehensive medical scheme would go far in ensuring that the corporate social responsibility activities are detailed and focused to the welfare of the staff members. The firm can set relevant policies in areas dealing with charity, business integrity, and welfare to the workers, environmental sustainability issues and economic policies. The strategies have been in place but their total adoption is too slow Expansion of their plantation to ensure that they reap more of the proceeds annually Despite the fact that mechanization of their processes would reduce the wage bill, it would end render other people jobless. The management team should evaluate both components and decide which one to settle on depending on the intensity of implications. Conclusion KKTE has grown into an international company over a short period of time. This shows that they are efficient in management. The company has managed to achieve its vision of producing tea through organic farming. The management of the company deserves credit for their great achievement despite the many challenges that have come their way. References Child, J., & Faulkner, D. (1998). Strategies of cooperation: Managing alliances, networks, and joint ventures. New York: Oxford University Press. Ireland, R. D., Hoskisson, R. E., & Hitt, M. A. (2008). Understanding business strategy: Concepts and cases. Mason, OH: South-Western Cengage Learning. Kazi & Kazi Tea Estate Limited. (2014, December). Kazi & Kazi Tea Estate Limited. Retrieved from http://www.kazitea.com/company.html Massachusetts Institute of Technology. (2013) Teatulia: case # 1-13-004. 1-16 Verbeke, A., & Merchant, H. (2012). Handbook of research on international strategic management. Cheltenham: Edward Elgar. Read More