Strategic Management at the Rotary Engineering Ltd. And JTC Corporation

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Table of Contents

Executive Summary
Introduction
Organizations Analysis
Present and potential future projects
Effects of implementations of future strategies
Implications
Conclusion
References

Executive Summary

Strategic management forms an integral aspect of any organization operations. Strategic management guides an organization towards achieving; its goals, objectives, mission and vision successfully. Some scholars assert that strategic management is a vital tool that helps management to allocate resources effectively. In an attempt to understand how strategic management influences business organizations, this essay looks at the operations of Rotary Engineering Limited Company (REL) and Jurong Town Corporation (JPC).

REL is a world leading petroleum producer, whereas, JPC is a public owned corporation that offers a competitive economic platform for an organization to produce, and enhance its economic improvement. The main activities carried by JTC are; construction, technoprenuer centre, underground oil reservoirs, incubators, wafer fabrication hub, and chemical production.

The company’s mission is to facilitate Singaporean economic performance. On the other hand, REL is a petroleum producing company that operates in Singapore, and in major Asian countries such as; Saudi Arabia, India, China and Malaysia. The company’s mission is to produce quality products that meet customer’s needs. To achieve its long-term goals, the company embraces strategic plans, as the route map to achieving its goals.

A viable strategic management is essential for any organization, as it incorporate organization goals, objectives and mission in relation to the long-term plans. Although, the two organizations operate in different economic structures, individual strategic plans have helped them to cope, both with internal and external environment. Additionally, strategic decisions have steered them towards improving their performance.

Nonetheless, it has not been smooth sailing for the two companies; challenges have emerged, compelling the management to devise alternatives in order to adjust themselves to the demands of steady growth. Induced pressure that results from steady growth has resulted in delegation of duties to subordinate staffs, some of whom are less competent. However, despite of its steady growth, REL revises its strategic policy and management organization to suit the new demands.

Introduction

Competitive organizations need to make deliberate measure to cope with the existing cutthroat competition. The existence of such stiff competition renders managers to devise alternatives, and means to remain ahead of their competitors. To achieve this, managers design and implement strategic plans to sustain performance effectiveness. Strategic plan is an evolving initiative aimed at aiding an organization to cope with complex external environment (Porter 1996).

Thus; strategic plan forms an integral part of any organization as it encompasses strategic objectives. The strategic objectives outline both current and medium- term goals, which assist organization in achieving its long-term goals (Dess, Lumpkin & Eisner 2008 p.24).

Strategic management facilitates effective utilization of 4 Ms; men, money, material, machinery, and technology for conversion of inputs to outputs. Each organization has unique strategic plan that suit its performance. To understand this concept better, this essay compares and contrasts the strategic plan for two Singapore organizations; Rotary Engineering Company and Jurong Town Corporation (JTC) Corporation. Great emphasis will be on current and future plans for these two organizations.

Organizations Analysis

Rotary Engineering Limited (REL) and Jurong Town Corporation (JTC) are public limited companies. The two companies operate in different sectors of the economy. JTC has a wide product mix that include; construction, technoprenuer centre, underground oil reservoirs, incubators, wafer fabrication hub, and chemical hub among others. (Jurong Town Corporation, 2011).

JTC mission is to plan, develop and promote a vibrant economic environment as a mean to promote Singapore’s economy. The organization goal is to establish permanent and continuing relationship with their customers, through provisions of high quality products and services. In addition, the organizations strive to optimize land use, due to the small geographical area of Singapore.

To understand JTC internal environment, SWOT analysis reveals that the company’s current strength depends on its strong financial position (Marilyn and Nixon, 2010). The sound economic position makes it possible for the company to invest in modern technologies and research.

The expansion of the firm to reach the external market opens opportunities such as new marketing opportunities (Johnson et al, 2011). However, the firm faces challenges from new entrants that compete for market dominance. Finally, land scarcity in Singapore limits the company’s ability to expand.

To cope with the ever-changing global demand, JTC management adjusts its strategic plan in order to give the best to its customers. To achieve this strategy, the organization carries out in-depth research to determine the best way to optimize the scarce resources, yet meeting customer needs satisfactorily.

Stettinius et al (2006, p. 45) contend that development of viable strategic plan requires intensive research in collecting relevant information. Due to land scarcity in Singapore, JTC management uses innovative designs blended with functional layouts to ensure optimization of the available land.

On the other hand, REL is the market leader in provision of engineering services. The company deals in; engineering designs, procurement, manufacture, and maintenance services. The clients of REL are; oil and gas industries, petroleum companies, and pharmaceuticals companies.

REL mission is to provide quality services that match with customer’s expectations and satisfaction. The company’s vision is to become an excellent international engineering, production, and procurement company. In order to accomplish this mission, REL embraces the need to have a diverse, dynamic, and competent pool of employees.

Since the REL strategic management emphasizes on the human resource management, the organization therefore, invest heavily on training and research to enrich the workforce. Currently, the company employs over 7,000 staffs across its operation countries. The concern for the organization is to build a reputable organization for the local market as the basis to excel in international market (REL Corporation, 2011).

REL Corporation boasts vital international experience that helps it in penetrating new markets. The other strength is its ability to adopt the current state-of-the-art technology in all its productions. However, as it is in the case with JTC, lack of expansionary land, limits REL ability to increase its production capacity in Singapore. The existence of political, economical, social restrictions in international markets limits JTC global expansions.

The strategic plan for both organizations focuses on meeting the clients need satisfactorily (Johnson et al, 2011). While JTL Corporation focuses on innovative procedures to achieve their goals, REL shift focus on employment on competent personnel as means to achieve their competitive advantage.

For both REL and JTL organizations, innovation and desire to satisfy customer-changing needs remains the focal point of their strategic management. Additionally, since the two organizations operate in the same country, they face similar internal and external environments.

Since strategic plans are vital in revitalizing organization performance, it also invokes other organizations to counter the actions (Helms and Nixon, 2010). Both TEL and JTC corporations are influenced by actions of traditional competitors, suppliers, new entrants, customers, and substitute products (Karaglannopoulos et al, 2005, p. 74). To ensure continuous operations, both TEL and JTC bargains each of the forces to enhance its success strategy.

Present and potential future projects

JTC and REL have invested heavily on projects that influence its current situation as well as the future performances. With over four decade’s operation experience, JTC Corporation is relishing increased potential to maximize its performance.

Currently, the company has sound economic base, utilizes high technology in its operation and enjoys market monopoly status. The firm is breaking new grounds, with maiden projects that anticipate in meeting the prospect needs of the industry. Some of these projects are; Juarong Rock Caverns and Seletar Aerospace.

Although both projects anticipate shaping the current and future operations of the company, some limiting forces are in action. The Juarong Rock Caverns project seeks to create more land for expansion of the company. Implementation of this project would argument production capacity of the project while presenting room for future expansions. The other option would be for JTC to engage in Seletar Aerospace.

The project is expensive and requires heavy investment in human capital. The success of the project promises huge profit turnover, however, increased interests in aerospace engineering by developed countries pose threat to the project Helm and Nixon (2010, pp. 215 – 251). Therefore, to strategically position for future success, JTC is well positioned in pursuing the land expansion project.

Currently, the organization strategic plan is to create new ideas to improve future welfare. Should the company opt to invest in expanding land; future operation capacity will be enhanced. However, since this a capital investment that has no revenue outflow, the company’s immediate revenue will decline.

Nevertheless, increased future revenue outlay will consequentially improve the company’s ability to compete with international firms. Last, the organization launched JTC Innovation Fund (JTCIF). This fund was important in supporting creative projects as a mean to develop a bright future.

Rotary Engineering Limited Company has managed enjoy participation on an international market. The company’s current strategy aims at improving the operation dynamics to ensure its presence in global market is strong. Owing to the fact that, the company is ISO satisfied, its performance levels are exemplary, and uphold reputation on a global market.

The company endeavors to strengthen petroleum project in order to retain its profit margin. A project such as Saudi Aramco Total (Satorp) accounts for 60 -70 per cent of the company’s revenues.

Also, the company is investing US$ &billion on Jizan refinery in Saudi Arabia. The other potential project is constructing chemical plant in the local market. Considering the two alternatives, investing in Saudi Arabia would guarantee increased revenues, and expansion in foreign market. However, the high taxes imposed on foreign companies will tend to slice profit outlay. Nevertheless, such investment help retain the company’s international venture.

On the other hand, investing a chemical project in homeland would diversify the company’s product mix. However, since the petrochemical market is not proven, the project is likely to fail. Thus, investing in the Saudi Arabia petroleum projects presents higher chances of success.

Since this venture has a long-term investment outlay, it presents a perfect opportunity. According to Clarke (1984, pp.101-102) successful strategies, should have long-term goals. In addition, Clerk explains the three phases of a success strategy grow, hold and harvest (Clerke 1984, pp. 101-102).

Effects of implementations of future strategies

Both organizations have-long term strategies designed to enhance future performances and production levels. Rotary Engineering Limited (REL) has a long-term expansionary strategy. The strategy aims to make the organization an international market leader in production of quality production and services. In tandem with this goal is a multi-million project in Fujaira, United Arab Emirates.

The company plans to invest US$ 250 million in construction of a petroleum storage facility that holds 1.1 million. The constructions of the reservoir will increase future growth impetus of the company (Rotary Engineering Limited, 2011).

Furthermore, the corporation aims to enhance its performances through broadening and deepening of skills and experience. This strategy aims at changing the mindset and the working styles employed. The strategy endeavors to provide unique, first-class, and matchless services to its customers.

As part of its long-term strategy, REL wishes to expand its frontier to Malaysia, Saudi Arabia, UAE, China, and India among other viable markets. The ultimate goal of the firm is to embrace the spirit of globalization where most of its operations will be automated, integrated, besides adopting SmartPlant suite.

REL launched the globalization strategy in 2008 and it is still in the initial stage. To enhance employee dexterity, skills homogeneity, and leverage employee performances, the organization plans to launch Oversees Training and Test Centers (OTTC). Finally, the organization has a plan to improve employees’ health, safety, and care for the environment against pollution and degradation (Rotary Engineering Limited, 2011).

Conversely, JTL corporation future strategic management aims at improving the planning, promotional, and development of vibrant industrial setting. Some of the corporation long-term strategies are; enhancing sustainable economic development, optimizing land use, and positioning Singapore as the regional digital media centre of fineness. As a pertinent goal, the organization aspires to utilize modern technology to facility its achievement of these long-term goals.

Both companies embrace the need to streamline their operation through enhancement of their workforce. JTC is planning on training facilities to help the organization produce, at the highest level possible. Conversely, REL has launched Oversees Training and Test Centers to improve employees’ performances in India and china (Rotary Engineering Limited, 2011).

Bonn and Fisher (2011) associate failure to implement sustainable development to poor utilization of human resources. The ability of mangers to integrate strategic policies to employee helps in dealing with the problem. With the resolve undertaken by the two organizations, human resource has been given priority as a major driving force for future success.

Both corporations are determined to improve health and environmental welfare. JTC focuses on optimizing land use by investing heavily on modern land rehabilitation. In addition, JTC invested $900,000 in a research to find out sustainable ways of preserving the environment.

On the hand, REL being a heavily industrialized company has projects to conserve environment against excessive pollution and greenhouse effects. REL endeavors to maintain risk free environment, in this regard, the Total Recordable Report Incident Rate (TRIR) declined from 1.14 in 2009 to 0.65 in 2010.TRIR is the rate of injury sustained during a particular year (Rotary Engineering Limited, 2011).

Implications

Implementation of the aforementioned projects presents the company with great opportunities to establish a blueprint in the global market. Landy (2010) asserts long-term strategy has the capacity to break barriers elected by competitors. In addition, patience and persistence are vital predatory instincts that should accompany any long-term strategy (Landy, 2010). Thus, successful implementation of its strategic plan will invoke the organization productivity; enhance its brand name and the international image.

The focus on globalization and automation of production processes will reduce the operating cost. Similarly, the resulting mass production will result to economies of scale. Mankiw (2011 p. 273) outlines that a company enjoy return to scale when average costs do not vary with production levels, still, the overhead costs remain stable when production volume increases.

Implementation of the strategic plan will increase REL market share thereby triggering reaction from the competitors. For instance, automation of organization productions processes would trigger rival firms to follow suit. Eventually, price wars will emerge as a desperate measure to lure customers.

Emergency of price wars may damages efforts invested on production and advertisement of a product. They may necessitate change in distribution channels to meet to able to earn some profits (Bungert, 2003 p. 17). On the other hand, persistent market dominance and employment of latest state-of-the-art will drive competitors away. Thus, REL will start enjoying monopoly powers.

The quest to invest in new markets helps the firm to diversify its revenues sources on large portfolio basis. Prevalence of adverse economic condition in a single country affects that country alone while other firms enjoy normal returns. Apart from diversifying risks, geographical expansion enhance company’s brand name. Strong brand name attract customer and it increases their royalty.

However, these strategic plans are risky ventures that might adversely affect the organization performance. Rapid expansion presents management with myriad of issues to deal with; political, financial challenges, legal, economical, social, and technological challenges.

Perch (2009) contends that rapid expansion reduced centralized leadership that result to continuous employee conflicts and misunderstandings. Unless, strong organization framework is used, merits of steady growth would cripple down in a flash. New staffs continuously rely on already strained central managers for leadership and directions; existence of huge workload often reduces their competencies.

Conversely, JTL corporation future strategic management aims at improving the planning, promotional, and development of vibrant industrial setting. Some of the corporation long-term strategies are enhancing sustainable economic development, optimizing land use, and positioning Singapore as the regional digital media centre of fineness. As a pertinent goal, the organization aspire utilize modern technology to facility its achievement of these long-term goals.

Unlike JTC whose operations are confined in Singapore, REL global ambitions present it with numerous bureaucratic and logistical challenges. Operation in another country requires adherence to the local trade union rules, conformation with the existing registration formalities, and being subject to higher tax rates. Some governments’ regulations on private firms affect their profit margins as well as their scope of operations.

Additionally, international branches require new work force, training, and adapting to the organization operation criteria (Francis, p. 330). The other challenge facing REL is cultural diversity. The way of life from one country to the other differs, high diplomatic approach is vital if the organization is to become successful.

Conclusion

Strategic management forms the integral part of any organization going concern. The strategic management helps management allocate resources efficiently to meet both current needs and future concerns (Cherunilam, 2010). Both JTC and REL have designed strategic plans to help them cope with both internal and external environment.

The internal environment comprises organization strength, weakness, opportunities and threats, whereas, the external environment is made of forces that cannot be influenced by the organization such, political factors, economical, social factors and technological forces.

A good strategic plan accommodates organization’s goals and objectives and projects them to meet the future needs of the organization (Sherman and Andrew, 1997). Although, strategic plans present opportunities, revenues and growth, they also present challenges especially in international operations. Nevertheless, a well though strategic plan holds key for future prosperity.

References

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