Strengths and weaknesses - Strategic Management

Strengths :

  1. A reputation for quality and technical excellence.
  2. A special leadership position (55 per cent of domestic market) in specialist eating and ventilation systems for computer rooms, laboratories, and otherbuildings housing sensitive equipment requiring ahigh degree of dust and temperature control (currently 15 per cent of sales) split in the ratio 2 domestic to 1 export.
  3. An established position in European export markets (10 per cent of sales).
  4. Strong technical management.

Weaknesses:

  1. 85 per cent of sales related to general building activity, and consequently subject to fluctuations in volume and profits.
  2. 40 per cent of profit emanates from the 15 per cent turnover in the specialist control area.
  3. One in every five general contracts is undertaken at breakeven, in order to secure the business.
  4. All business in France (50 per cent of export sales) has been undertaken at a loss due to overestimation of the competitors’ prices.
  5. The company, with its two UK plants, has double its required capacity without allowing for overtime working.
  6. Marketing management is generally poor.
  7. Management information is rudimentary. Lack of data is a contributory reason for several bad decisions taken in the company.
  8. The company has reached a point when it must make many changes. Its profitability from current operations must be improved, and new activities must be started, both to bring profitable growth and to reduce the effect of profit fluctuations.
  9. If the company does nothing new and merely continues to operate as at present its turnover will increase to £25m by the last year of the plan. Profit, at its best estimate, will have declined to £200,000 – or much less if the general building industry does not develop at the rate expected. This gives a ‘gap’ of £550,000 between the profit objective and the current forecast, as well as indicating a worsening position and a declining return on investment.
  10. The company has also to think beyond the five-year period, and must commit research and development resources to produce a new generation of environmental control equipment to meet the needs of the future.
  11. Many decisions have to be taken, and a new pattern of risks accepted. The company is fortunate in being in a position from which it can make the necessary changes to assure its future.

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