The adapted Strategic Management Approach from Wheelan and Hunger ... and. Market. Forces. Strategic. Group. Develop. -ment. Business Level. Cost ... Notes - Product diversity in residen al segment includes landed proper es like terrace, ...
Nottingham University Business School MBA Programme Strategic Management (N14M07) Individual Coursework SP Setia (A Competitive Advantage Implementation Plan) ]
Yap Far Loon [015752] (The author)
Word count: 2995
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The SP Setia’s Challenges in a League of their Own This paper intends to study both the academic use and contemporary practices of strategic management approach focusing on an organisation called SP Setia. Established in 1974, SP Setia is one of the largest Malaysia based property developer by revenue, at RM 6.8 billion, listed in Malaysia stock exchange, the BURSA Malaysia. The objective of this study is to recommend SP Setia a Competitive Advantage Implementation Plan beyond 2016. Despite being a leader within its league, SP Setia forthcoming issues include pessimistic downward forecast of global GDP growth at 3.4% (IMF, 2016) and Malaysia slow growth at 4.5% in GDP (World Bank, 2015), uncertain market conditions from government cooling measures to curb property speculations, BREXIT effect on international sales with significant impact on the total unbilled sales of RM 9 billion, and finally cost pressure from competition and demanding property buyers. SP Setia has been consistently winning awards (The Star Online, 2015) for instance The Edge PAM Green Excellence Award 2015 for being a highly sustainable development and FIABCI Malaysia Property Award 2015. Anticipating economic challenges ahead, SP Setia revised downward its sales target for the 2015 financial year from RM4.6billion to RM4.0billion for 2016. SP Setia has accumulated RM9 billion of unbilled sales, highest in the industry, where 50% are accounted for international project in the UK London called Battersea Power Station BPS. The recent UK’s BREXIT result (The Economist, 2016) where decision to leave the European Union, has thrown SP Setia project BPS to even greater uncertainty impacting their international unbilled sales. YTL#LAND# SUNSURIA#
98,428## 135,479##
SENTORIA#GROUP#BERHAD#
219,625##
IBERHAD#
257,390## 340,650##
TITIJAYA#
3 Organisa on Target (To be studied)
E&O#
449,497##
MK#LAND#
488,316## 583,576##
HUAYANG# LBS#
680,296##
MKH#
1,041,898##
TROPICANA#
1,252,714##
MRCB#
1,697,000##
ECOWORLD#
1,712,061##
UEM#SUNRISE#
1,749,866##
IOIPROPERTY#
1,906,491##
MAHSING#
3,108,506##
SUNWAY#
4,448,390##
SP#SETIA# 0##
1,000,000##
Source – Respec ve organisa ons’ annual reports
6,746,343## 2,000,000##
3,000,000##
4,000,000##
5,000,000##
6,000,000##
7,000,000##
Exhibit 1 - Selected Top Malaysia Listed Property Developers by Revenue
The scope of this study will cover 3 organisations or companies, of the same league, SP Setia against MAHSING Group and ECOWORLD where their core business in primarily property development with similar product offerings for Residential segment at the price range between RM500k and RM2 million, affordable housing commitment to Malaysia state governments which are below RM500k and Commercial property segment. These 3 companies compete in middle range price sub-segment market or customers. MAHSING holds the 3rd position and ECOWORLD at 6th position with recorded revenue of RM3.1 billion and RM1.7 billion respectively in 2015.
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The adapted Strategic Management Approach from Wheelan and Hunger This study has drawn lesson learned from actual practices failure on managing strategy implementation (Ivančić, 2013) difficulties, multiple input sources of literature reviews, secondary information access from company annual report and online news. As the result, this paper has adopted with adaptation based on the overall Strategic Management Approach (Wheelan and Hunger, 2006). Within the approach, there are 4 components namely Environment Scanning, Strategy Formulation, Strategy Implementation and finally the Strategy Evaluation. Additionally, a deep dive on Strategy Implementation (Noble, 1999a) based on a 4-phase model is employed. Refer to figure 1 Adapted Strategic Management Approach. Strategic Management Approach1
External
Environment Scanning
Strategy Formula on
Strategy Implementa on
Strategy Evalua on
(Current State and Future State)
(Gap Analysis and Plan)
(Levers and Phases)3
(Monitoring Performance)4
Overview of Property sector
PESTEL and Market Forces
Strategic Group Develop -ment
Malaysian Market Outlook Market A rac veness vs Internal Company Strength
Internal
Sub components2
Components
Company Brief
Value Chain Analysis
Business Level Cost and Differen a on Matrix
SWOT/ TOWS and Strategic Choices
Diversifica on Matrix (Opera on versus Corporate Relatedness)
Strategic Implementa on (4 phases)5 Corporate Level Business Level •
1)
Note 1 – Adapted from Wheelen T.L., Hunger D., 2002 Note 2 - Adapted by author for this study Note 3, 4, 5 - Adapted from Noble’s 1999a
Figure 1 Adapted Strategic Management Approach
Environment Scanning 1. Overview of the competitive landscape of the Malaysian property sector and product offerings There are more than 20 listed property developers brands in Malaysia with popular brands like YTL Land, Sunway, E&O, UEM Sunrise, IOI Property, Tropicana, ECOWORLD, MRCB, etc. There are 3 pricing ranges of product offerings loosely defined as high price value greater than RM1.5 mil, middle price between RM500k and RM2 mil, and finally low price at below RM1.5 mil. Refer to exhibit 2 Property Developer Brands and Pricing Range by Product. A strategic group mapping exercise by product pricing against product diversity provided 4 distinct group of companies where SP Setia, ECOWORLD and MAHSING are clustered in Group D having a broad range of product, middle price range and good product quality. Refer to exhibit 3 Strategic Group Mapping (Product pricing vs. product diversity). This is the selection basis of the 3 companies for comparison purposes. Product Pricing
High More than 1.5 mil
UEM Sunrise
YTL Land Sunway E&O
A Premier Lifestyle Developer
IOI Properties
Group A
- Narrow range - High price - High quality
Group B
- Moderate range - Medium price - Acceptable quality
Group D
Tropicana Group A
Middle
To be the Best in all we do
SP Setia
Group B
MRCB
RM500k - RM2 mil Scope covers 3 selected Crea ofngstudy Tomorrow & Beyondcompanies
Eco World
MK Land
Mah Sing
Titijaya Group C
- Moderate - Low price - Below acceptable Quality
MKH
I-Berhad Sunsuria HuaYang Sentoria
Low
Group C
Group D
- Broad range - Medium price - Good quality
LBS
Less than RM1.5 mil
Product Diversity
Source – Respec ve organisa ons’ annual reports
Notes - Product diversity in residen al segment includes landed proper es like terrace, townhouse, semi-D, and bungalow; and non-landed buildings like apartment and condominium; and commercial proper es such as office, retail, shop-lot. Source - www.bursamalaysia.com
Exhibit 2 Property Developer Brands and Pricing Range by Product
Exhibit 3 Strategic Group Mapping (Product pricing vs. product diversity)
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2. Downward forecast by SP Setia and MAHSING but ECOWORLD remain optimistic for 2016 In 2015, SP Setia, MAHSING and ECOWORLD have recorded revenue of RM6.7 billion, RM3.1 billion and RM1.7 billion respectively. Both SP Setia and MAHSING reported Return of Equity ROE about 12% besides ECOWORLD reported only at 1.39%. Refer to Exhibit 4 Company Level Summaries. This year, both SP Setia and MAHSING have anticipated slow market growth by downward sales target from RM4.6 billion to RM4.0 billion (The Star Online, 2015) and RM3.0 billion to RM2.3 billion (Focus Malaysia, 2016) respectively. However, ECOWORLD remained optimistic with higher sales target from RM 4 billion to RM4.5 billion. SP Setia downward forecast were attributed to the uncertainty around the UK housing market namely Battersea Power Station BPS (RHB, 2016), price escalation in construction (i3investor, 2016) and raw material costs, and delays in launches. The recent BREXIT referendum decision to leave has hampered further investor confidence on UK economic outlook and market.
Exhibit 4 Company Level Summaries
Again, both SP Setia and MAHSING corporate structure, operation presence and product offerings are similar in many ways such as having a core business in property development and management, non-core business in manufacturing of wood and plastic to support the industry, having regional presence in Malaysia, and finally green initiatives namely Malaysia’s Green Building Initiatives GBI, Singapore’s Building Construction & Authority BCA and US Leadership in Energy and Environmental Design LEEDS and ISO management certifications. Refer to Exhibit 4 Company Level Summaries. Affordable housing remained the top agenda for Malaysia market despite weak economic outlook evidently reported by all 3 companies (Property 360, 2016). SP Setia has considered the current slow take-up rate and affordability issues, by launching more mid-priced range of 900 units affordable housing in Setia Eco Templer with prices ranging from RM150,000 to RM400,000. MAHSING has RM4.75 billion in unbilled sales and reported that 89 per cent of the group’s planned residential launches have been priced below the RM1 million threshold, with 50% of this year’s planned residential launches priced below RM500,000 (Property360online, 2015). ECOWORLD too has an unbilled sales of RM4.5 billion and working with state government Rumah SelangorKu providing affordable housing in Eco Majestic with three 11-storey apartment blocks on a 4.42ha freehold plot priced at RM100,000. 4
3. PESTEL Analysis and Market Forces Observations PESTEL (Aguilar, 1967) analysis looks into 6 dimensions of market environment affecting the property sector. From the dimensions of the political front, implication from government policy intervention to promote growth such as extending loan support and stamp duty exemption, launch of public transport of mass rapid transit MRT in Klang Valley, RM1.2 billion allocation programme to boost tourism from Ministry of Tourism and Culture MOTC, Ministry of Agriculture MOA to allocate RM5.3 billion to agriculture are positive news to market however the flip side are the legal dimension such as implementation of Good and Services Tax GST in Apr 2015, introduction of capital gain tax to curb speculative pricing and restriction to foreign buyer to purchase property below RM1 mil has negative impact to the market despite a good intention as a legal protection for local buyer. From the economic dimension, market is cautious in buying property due to slower GDP growth outlook globally and in Malaysia, central bank cooling measure and bank tightening due to loan regulations. The rising demand for affordable housing from the sociocultural dimensions with the increased in middle class segment age between 25 and 45 and civil servants mortgage loan raised to RM600,000 to spur buying of property. Technology investment in construction are crucial to have Industrialised Building Systems IBS and integrated building information system to cater real-time planning, monitoring and building in improving the industry operations to remain competitive, and to keep up with the cost pressure by customers. Finally, there are government incentives to promote sustainable living for companies to use solar energy and include green building certification as product differentiator. Refer to exhibit 5 Market Environment Snapshot with PESTEL.
Exhibit 5 Market Environment Snapshot with PESTEL
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Porter 5 market forces (Porter, 2008) observations showed a triple prong pressure to the industry. Firstly, the strong rivalry with competitors is the biggest challenge with over 50 industry players for customers or buyers to choose from. Secondly, medium bargaining power from demand for good location and value seeking by price pressure fuel further intense competition. Thirdly, medium threats of substitutes where customer may buy from secondary housing market or simply resort to rental market. Additionally, there is no clear product differentiation point of difference POD, weak currency impeding imports and high labour dependency are the challenging the industry as the whole. The bargaining power of supplier and threat of new entrant remain low. Refer to exhibit 6 Malaysia Property Development Market Forces. LOW bargaining power of suppliers
MEDIUM bargaining power of customers •
•
•
•
Demand for good loca on Value-seeking coupled by price pressures (i.e. package, ameni es, free SPA, etc.) Strong sen ments over brand and reputa on Insist on high quality
•
STRONG rivalry with compe tors •
•
•
MEDIUM threat of subs tutes •
•
Secondary housing market Rental market
Abundant raw material sources (except in Sarawak’s monopolis c environment) Various financing op ons Crowded market for consultancy intermediaries (i.e. architects, legal, project management, engineering etc.)
•
•
•
Over 50 industry players Slower growth due to glut, GDP growth (3% - 5%) Cost increase (i.e. GST, Weak RM impede imports) Product with high POP and no clear POD High foreign labour dependency
•
LOW threat of new entry •
•
•
•
High capital requirement Limited land banks in good loca ons Brand name and reputa on (i.e. China Country Garden, R&F etc.) Strong connec on with relevant industry authori es (i.e. DBKL, MPPJ, u li es like Tenaga, Syabas, SAJ, etc)
SPA – Sale Purchase Agreement, GST – Goods and Services Tax, RM – Ringgit Malaysia, POP – Point of Parity, POD – Point of Difference
Exhibit 6 Malaysia Property Development Market Forces
4. SP Setia’s well-balanced structure with good secondary supporting activities backing the company primary activities The value chain analysis (Porter, 1985) diagram revealed that both primary and secondary business activities are well defined and reflected good company position for example the company infrastructure has good governance with 10 directors and publicises 38 key people resulting strong financial performance, international presence, sustaining CSR and winning awards. Human resource management were successful in nurturing the strong 1,800 staff, technology development in promote Green Building Index GBI rated product and investment in information dissemination, and success in procurement by promoting good relation with suppliers and contractors. Refer to figure 3 SP Setia’s Value Chain Analysis.
Competitive Scope
Broad Target
Cost
Cost Leadership
MAHSING
Differentiation S P Se a ECO WORLD
Narrow Target
Figure 2 SP Setia’s Value Chain Analysis
Competitive Advantage Uniqueness
Focused Cost Leadership
Focused Differentiation
Figure 3 Cost vs. Differentiation Matrix
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6. Malaysian Property 2016 growth outlook is flat in all sectors nationwide for 2016 Property consultant (Thestar, 2016) has predicted that growth in Malaysian property market remain flat in 2016 in all 3 key regions namely Klang valley, Penang and Johor for 2 sectors such as Residential for landed property and Commercial for retail and hotel property however the industrial sector is deemed to grow. Refer figure 4 Market Outlook by Region and Sector. 5. SP Setia is sustaining the Cost Leadership Model All 3 companies are alike where SP Setia, MAHSING and ECOWORLD product offerings are broad range of residential and commercial sector in the middle range pricing between RM500,000 and RM2 million resulting an undifferentiated market segment. Therefore, these companies fall into the cost leadership strategic grouping. Refer figure 5 Operational Relatedness vs. Corporate Relatedness.
Strategy Formulation This component looks into 3 sub-components of GE/McKinsey matrix (Grant, 2010), Diversification Matrix (Hitt, Ireland, Hoskisson, 2013) and SWOT/TOWS (Johnson, Scholes, Whittington, 2005). The outcome from this analysis provides Strategic choices (Johnson, Scholes, Whittington, 2005) decision-making. 1.The Strategic Direction is continue to prioritise Market Focus in Residential sector The observation made from the GE/McKinsey matrix of market attractiveness against company strength shows the 3step priority strategic direction for SP Setia’s considerations. The first priority is to Protect their residential sector primary the sub-segment of the affluent and their current investment in UK Battersea Power Station project. Secondly, Invest to Build on First time Buyers on affordable residential sub-segment and Leisure commercial. Lastly, Build Selectively on civil servant residential and agriculture sectors. Refer to figure 6 Market Attractiveness vs. Company Strength. 2. Leverage Company Strength over Opportunity with Market Focus, Brand Building and Strategic Alliances The SWOT/TOWS observation uncovered and reinforced that SP Setia should leverage their strength over opportunity in 3 key areas. Refer to figure 7 SWOT/TOWS
Market focus in residential with highest potential growth from rising demand of affordable housing subsegment Brand building as concept lifestyle and sustainable living due to growing environment-conscious society Strategic alliances with state government and private on residential, agricultural, industrial and commercial leisure sector where these partners has interest joint venture with SP Setia to cater demand on housing
3. Convergence of Strategic Choices in Directional strategy, Corporate strategy and Business strategy The strategy formulation has led to 3 recommended convergence of strategic choices I. II.
III.
Directions strategy development looks at Protect and Build (Ansoff, 1998) the existing market and existing product in Malaysia and UK BPS project to recoup the unbilled sales Corporate strategy consideration on Value Creation and Corporate Parenting in providing overall thought leadership role and expectations of the organisation on the strategic intent (Hamel and Prahalad, 1989). This include Focus on value creation, Clarity to external stakeholder and Clarity to business units basis on which strategic choice in the setting of clear expectations and standards Business strategy looks into the Collaboration with other land bank owners such as government, in both Malaysia states and UK project, and other joint venture with private developer to increase selling power by reaching out to the localized market and customer segments 8
High
Construcon Infrastructure Opera onal Relatedness
Wood based manufacturing
Promo on, marke ng, and other ac vi es
Property Development
Property Management Investment
Corporate Relatedness (Support Ac vi es)
Low
Figure 5 Operational Relatedness vs. Corporate Relatedness
Figure 4 2016 Market Outlook by Region and Sector
9
High
Market Segment Attractiveness Average
Unattractive Avoid
Industry1
Weak
Build Selectively
Manage for Earnings
Agriculture4
Manufacturing of Wood based Building Material
Invest to Build
Average
Build Selectively
1st Time Buyers2 and Civil Servants2 Residen al
Lower income Civil Servants2 Residen al
Invest to Build
Protect
Leisure3 Commercial
Affluent2 Residen al and UK BPS project
Strong
Company Strength
Attractive
Note based on 2015 data from Ministry of Finance and indexmundi 1. Industry is RM12 bil market (i.e. 8% share by segment) but EW has no track record 2. Residen al remain the biggest market value at RM78bil ( i.e. 49% share by segment) from demand of lower income segment of popula on age 25-45 account 10 mil (i.e. comprised of A. 1st Time buyer market and B. civil servants market) and Affluent segment (i.e. for both local and interna onal buyers) 3. Commercial’s Leisure subsector market value at RM26bil with government spending to spur tourism ac vity 4. Agriculture market value at RM 13b with to from the government programmes
Figure 6 Market Attractiveness vs. Company Strength
Strengths
Internal
(S1) Visionary leadership and experienced key management team (S2) Strong financial posi on
External
(S3) Good mix of product diversity
Weaknesses (W1) High unbilled sales accumula on (W2) Undefined unique selling point except the overall brand performance (W3) Perceived expensive and reaching out to lower residen al market segment
(S4) Presence and interna onal market
Opportuni es
Strength over Opportunity (SO)
Opportunity over Weakness (WO)
(O1) Rising demand from affordable housing segments
• Market focus residen al with highest poten al growth from affordable housing
• Marke ng and financing to reach out lower residen al market segment
(O2) Growing environmentally-conscious society
• Brand building as concept lifestyle and sustainable living
• Brand lifestyle as sustainable living, environmental friendly and energy/cost saving
(O3) Government and private developer interest for joint development
• Strategic alliances with state government and • Strategic alliances with state government and private on residen al, agricultural, industrial private on residen a and commercial leisure sectors
Threats (T1) Intense compe
Strength over Threat (ST)
on and new subs tutes • Rent-and-Buy model considera on
Min Weakness and Avoid Threat (WT) • Aggressive product marke ng and promo on
• Con nue support to government and financier to detract speculators/investor to overhea ng the market (T3) Exposure of uncertainty in UK market • Manage UK BPS financing risk by hedging and due to Brexit leveraging foreign partnership • Promote premium investment for foreign (T4) Falling foreign investments into Malaysia investors (T5) Currency deprecia on nega vely • Market awareness communica on of stability Min – Minimise, ROI – Return of Inves ment BPS – Ba ersea Power Plant affec ng consumers’ sen ments ROI (T2) Government policies in curbing investment / specula ve market
Figure 7 SWOT and TOWS
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Strategy implementation 1. Literature review determining the selection of strategy implementation approach Strategic of formulation consistent strategy is challenging throughout companies and implementation or execution is even more challenging (Hrebiniak, 2006). The definition of strategy implementation is not universally accepted (Sashittal & Wilemon, 1996), however the term implementation, execution, and actualization of goal are interchangeable, are not successfully realised by many companies’ managers. Strategic implementation (Yang, Sun, Eppler, 2008) from 60 literatures review uncovered two types of approach Firstly, the individual factors approach were nine crucial factors were identified and Secondly, “big picture” which comprised a multi-factor approach. In general, strategy formulation (Yang, Sun, Eppler, 2008) comes from mixed form of factors, nine factors of soft and hard, and mixed factors. Soft factors (or people and talent) are communications, consensus and commitment. The hard factors (or organisation structure) are administrative systems. Relationships among different units/departments and different strategy levels are treated as a mixed factor. See figure 6 Proposed Strategic Implementation Framework.
Research of Strategic Implementation model
Hard Factors: Organizational structure Administrative systems
Soft Factors: Implementation tactics Mixed Factors: Strategy Formulation
Consensus Commitment
Executors
Implementation Outcome
Communication
Mixed Factors: Relationships
among
different
units/
departments and different strategy levels
Source : Yang, Sun, Eppler (2008)
Noble’s (1999a) 4-phase model Phases Pre_implementation: Gather viewpoints
Organizing implementation: Ensure buy-in
yy
Managing implementation: Foster collaboration
Sustaining _performance: Monitor results
2: A framework of strategy implementation research Figure 8 ProposedFigure Strategic Implementation Framework (Source - Yang, Sun, Eppler, 2008) As aapproach mixed factor, with strategy formulation is both animplementation institutional and an 2. The adaptation of a multi-factor 4-phase strategy interpersonal process that gathers data and viewpoints and ultimately results in strategic decisions. These strategic decisions how they have been reachedhas have included a The strategic implementation framework proposal (Yang,andSun, Eppler, 2008) a 4-phase model major impact on strategy implementation success. Hard, institutional, factors (Noble, 1999a). The first phase is Pre-implementation where inputs were gathered from stakeholders of (organizational structure, administrative systems) and soft, people-oriented factors organisation. This is followed by Organising to secure syndication or buy-in from stakeholders. The Managing (executors, communication, implementation tactics, consensus, and commitment) stage is collaboration among stakeholders and finally Sustaining performance phase is to monitor result and influence implementation outcome dialectically. Consensus and commitment can be propose course correction achieved if needed. the authortactics of and thiscommunication study hasactivities. added the sub-components of with theSeparately, help of proper implementation internal and external analysis tools earlier in figure Adapted Approach. There are depicted complex mutual influence among 2mixed factor Strategic (relationshipsManagement among different units/departments and different strategy levels), soft factors (executors, communication, implementation tactics, consensus, and commitment) and Hard, factors (organizational structure, administrative systems). These factors in turn are influenced by four generic phases of strategy implementation: pre-implementation, 38
11
3. Employing Strategy Implementation Framework for SP Setia To reach the goal of having competitive advantage over its competitors, there are 3 key focus areas, selected from the earlier discussed TOWS where Strength over Opportunity were recommended, Market Focus, Brand Building and Strategic Alliances. The following are five levers this 4-phase strategy implementation (Nobles, 1999a). These levers are categorised at Corporate Level and Business Level strategy. Refer to figure 9 Strategy Implementation Framework adapted from Noble’s 1999a. The first 2 levers at corporate level are
Goals – SP Setia to ensure all manager having Awareness strategic goal, introduce goals that Fit overall strategic Vision, Flexibility to adapt for course correction and focus common goals to promote team Cohesiveness Organisation Structure – SP Setia’s structure to be adequate and Resourceful, Visible status reporting and equal Representation from functional areas
The remaining 3 levers at business level are
Leadership – SP Setia to develop people’s Knowledge, established Champion, ensure committee shows Equal Attention and maintain Balanced Autonomy on functional areas Communications – SP Setia to promote Regular communications, Discuss and Resolve implementation issues, and Update changes and Foster buy-in among functional areas Incentives – SP Setia to Reward cross-functional skill, develop Performance-based incentives, Adjust incentive accordingly and Consistently reward on successful effort 4 Phases Strategy Implementation Levers
(Key areas - Market Focus, Brand Building and Strategic Alliance) Pre- Implementation
Corporate Level
Managing Implementation
Sustaining Perfomance
Ensure all manager (i.e. 10 directors and 38 management team leads) aware of strategic goals
Introduce goals to fit broader strategic vision (i.e. consult management teams and request team leads feedback)
Maintain flexibility to adapt from changes for course correction (i.e. review and update from independent sources)
Develop and focus on common goals to promote cohesiveness (i.e. KPI, milestone achievement)
Organisational Structure
Ensure resources are adequate in functional areas with clear reporting model (i.e. BOD members, committees, champions, team leads)
Establish formal unit with visibility status and board reporting (i.e. committees of marketing & sales, authority & government relations)
Ensure equal representation by affected functional areas (i.e. coordinated execution of programmes and activities)
Temporarily suspend team leads from routines job to implementation assignment (i.e. lateral job rotation or job secondment)
Leadership
Develop people’s knowledge and capability (i.e. affordable residential, international financing, stakeholder engagement)
Establish champions with supporting team leads matrix including check & balance (i.e. marketing & sales by champion and audit by committees)
Ensure committee show equal attention and supportive to facilitation (i.e. recommendations, concerns and escalations)
Balance leadership and maintenance of autonomy of the functional areas (i.e. cellular working group)
Promote regular communication, understandings and appreciation (i.e. standing / coffee chats, townhall, workshops)
Discuss and resolve implementation process (i.e. term of reference, conflict resolution, escalation)
Update progressive on changes objectives of programmes and activities (i.e. regular scheduled townhall)
Foster communication and buy-in among functional areas (i.e propose and request for feedback)
Reward cross-functional skill and talent development (i.e. MBA, CFA, LCCI, BDA, etc.
Develop performancebased incentives (i.e. mandatory training hours, grant & bond)
Adjust incentives accordingly to environmental conditions (i.e. quarterly, bi-annual)
Consistent rewards on successful efforts (i.e. award recognitions and remunerations)
Goals • • • •
Awareness Vision Fit Flexibility Cohesiveness
• Resourceful • Visibility • Representation • Knowledge • Champion • Equal Attention and Balanced Autonomy
Business Level
Organizing Implementation
Communications
• Regular • Discuss & Resolve • Update & Foster
Incentives
• Reward • Performancebased • Adjust & Consistent
Evaluation Monitoring Performance (KPI / Metrics)
• Quarterly review sales target, unbilled sales • Bi-annual Customer Satisfaction Index • Annual number of alliances review • Live Social Media Measure (i.e. Social Mentions, sentiment analysis etc.)
• Bi-annual Employee Satisfaction Index review • Quarterly training hours reviews • Annual certification records
Figure 9 Strategy Implementation Framework adapted from Noble’s 1999a
The Strategy Evaluation has been embedded into the above Strategy Implementation Framework and suggested 12
KPI and Metrics are also categorised in the same manner at Corporate level and Business level as means of feedback. The Corporate level metric •
Quarterly review sales target, unbilled sales
•
Bi-annual Customer Satisfaction Index
•
Annual number of alliances review
•
Social Media Measure (i.e. Social Mentions, sentiment analysis etc.)
For the Business level metric •
Bi-annual Employee Satisfaction Index
•
Quarterly training hours review
•
Annual certification review
13
Concluding study with a 9-year SP Setia Strategy Management Roadmap (2016-2025) The use of the adapted overall Strategic Management Approach (Wheelan and Hunger, 2006) with observations on 4 components namely Environment Scanning of the current and future state of the industry, Strategy Formulation from gap analysis to plan suggestion, Strategy Implementation (Noble, 1999a) with a 4-phase approach and finally a Strategy Evaluation by suggesting performance monitoring KPI or metrics have resulted a formation of 9-year Strategic Management Roadmap for SP Setia between 2016 and 2025.
Competitive Advantage • Growth • Sustainability • Innovation
a. Strategic alliances with Governmet for affordable Residen al b. Strategic Alliances with UK for Leisure sub-segment c. Invest in • Green technology on GBI development and cer fica on for sustainable living • Industrialized Building Systems • Technology for informa on System a. b.
Collaborate with Government and local private developer Construc on affordable housing for Residen al and Leisure
2021
2021-2025
3
Build Selec vely
2017
Now 2016
Corporate
in Agricultural and High Dense Residen al a. Strategic alliances with Australians for Agricultural development b. Star c. Con nuous Performance and Improvement Measures
Business
a. Plan 4-Phase Strategy Implementa on • Leadership • Communica ons • Incen ves b. Seek new business partner for strategic alliance c. Review and revise marke ng ac vi es • Capture affluent sub-segment • Explore affordable sub-segment • Explore leisure and agricultural segment
2 Corporate
a. Plan 4-Phase Strategy Implementa on • Goal • Organisa on Structure b. Plan poten al strategic alliances for new sector and new markets c. Brand equity plan d. Protect exis ng market of affluent subsegment e. Protect UK BPS project
Business
Corporate
2017-2020 Invest to Build in affordable Residen al and Leisure
Business
1
Jul – Dec 2016 Plan and Protect exis ng market
2025 Goal
a. Joint development with Australians for Agricultural sector b. Joint development with Singapore HDB for high dense Residen al for lower income
Figure 10 9-year SP Setia Strategy Management Roadmap
This roadmap suggests SP Setia to focus in 3 key stages broken into corporate and business level activities. Refer to figure 10 9-year SP Setia Strategy Management Roadmap. Stage 1 - Plan and Protect existing market (Jul-Sep 2016) At corporate level, the activities include planning for 4-phase strategy implementation, strategic alliance to develop new sub-sectors, namely Leisure and later phase Agricultural, and new markets on affordable housing. The business level activities entail review and revise marketing activities to capture affluent sub-segment, explore affordable sub-segment, and explore leisure and agricultural sector. Stage 2 - Invest to Build in affordable Residential and Leisure sub segment (2017-2020) This stage comprises strategic alliances with Government on affordable Residential, UK for Leisure subsegment, invest in Green technology, Industrialized Building Systems and Technology for information system at the corporate level. The business level activities are collaboration with Government and local private developer to construct 14
affordable housing for Residential and Leisure complex. Stage 3 - Build Selectively in Agricultural and High Dense Residential (2021-2025)
The corporate level activities encompass strategic alliances with Australians for Agricultural development, and parenting control with continuous performance and improvement measures. Business level activities are joint development with Australians for Agricultural sector and Singapore HDB for high dense Residential for lower income including civil servants sub-segment. References Yang, L., Guohui, S. & Eppler, M.J., (2010) Making Strategy Work: A Literature Review on the Factors Influencing Strategy Implementation. Ivančić, V., (2013) The biggest failures in managing strategy implementation’ (Interdisciplinary Management Research, p.197-208. Mălina, C. & Alina-Daniela, M., (2008) The Competitive Advantage and the Business Strategies Used By Romanian Companies. Annals of the University of Oradea, Economic Science Series, 17(4), p.184-188. Porter, M.E., (2008) The Five Competitive Forces that Shape Strategy. Harvard Business Review, 86 (January), p.78-94. Wheelen, T.L. & Hunger, J.D., (2006) Strategic Management and Business Policy .13th ed: Pearson Education, p. 14-29. Porter, M., (1980) Competitive Advantage 1st ed: The Free Press
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