Interpretation compared with board’s investment strategies Strategic Management

Below listed are the strategic actions that GI had under consideration for each business with my provisional recommendation drawn from the analysis.

  1. Fasteners Several million on new-look marketing campaign.Construction of new head office. Recommendation Operate for maximum cash, with such expenditure/ investment as is necessary to maintain market share. The weighting of fasteners is important, and it should not be allowed to slip. The feeling that fasteners should be able to reinvest their own ‘earnings’ is wrong.
  2. Hydraulics Purchase of hydraulics interest of major company for £20 million. Recommendation Do not do this. Business should clearly be considered for divestment.
  3. Pneumatics No investment needed. Should be a cash generator.
  4. Oil Rig Services Possible replication of other activities in other areas. Recommendation May be better to run for cash. However, I would not rule out expansion subject to careful project appraisal and consideration against other uses of funds.
  5. General Engineering £6 million modernisation programme. Recommendations Would the investment push it into a cash generator box?. Initial indications are no. In this case divestment should be considered.
  6. Machine Tools Defend market share against Japanese. Recommendation This business has to be looked at on a wider geographical basis, and strengths and weaknesses compared with Japanese competitors. Needs a careful market appraisal, and consideration of capital needs to give most efficient production. Investment should be balanced against risks and rewards. Indications are biased against investment.
  7. Personal Computers £50 million investment plan which board predisposed to reject. Recommendation Depending on competitive position in key markets, this would appear to be the best opportunity for the group. Needs heavy cash support. GI should be sure they have the resources and nerve for a game that requires a speed build-up of market position across a wide front.
  8. Guarding Little hope, unless new concept giving unique advantage can be built up. What joint resources with vehicles?
  9. Security Vehicles Expansion of market share needs new facilities. Recommendation On the surface, not the best use of resources.

Market-prospects



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Strategic Management Topics