Strategy Consultation for Oryx KBM

Strategy Consultation for Oryx KBM
Maastricht School of Management – Kuwait
MBA: Intake 14
Global Corporate Strategy
center42100522/05/2023
Table of Contents 1.      Overview of the Company. 3 2.      Rationale. 3 3.      Main Findings and Conclusions. 3 3.1.      PESTEL Analysis. 3 3.2.      Porter’s Five Forces Analysis. 4 3.3.      VRIO Framework. 4 3.4.      BCG Strategy Palette. 5 3.5.      SWOT Analysis. 5 3.6.      Conclusion. 5 4.      Recommendations. 5 5.      Annex: Analysis. 6 6.      References. 11
1 Overview of the Company
Oryx Kuwait Building Materials (KBM) is a Kuwait-based company established in 2017 as a subsidiary of Oryx Holding. It operates within the construction industry, specifically supplying building materials for ready mix, asphalt plants, road works, and other construction projects. Its vision is to become a key supplier of building materials by providing a steady supply of quality products at stable prices (Oryx, n.d.). To this end, Oryx KBM maintains a high level of efficiency, especially in meeting customer requirements, specifications, and government standards. It has been given approval by the Ministry of Defense, the public authority for roads and transportation, and the Ministry of public works (Oryx, n.d.). Its mission is to provide the government and the private sector with high-quality products from secure and reliable sources. The core values that guide it to achieve its vision and mission are ethics and integrity, safety, efficiency and reliability, cooperation and team spirit, and respect for people and the environment (Oryx, n.d.).
Safety, quality, and reliability are significant to the company's operation. It ensures its products undergo a screening process and are tested for quality by the company and government-approved laboratories (Oryx, n.d.). In addition, it has access to multiple quarries across the United Arabs Emirates (UAE). These quarries supply about 9.5 million metric tons of quarry products annually (Oryx, n.d.). This supply has helped Oryx become a reliable supplier in the construction industry.
2 Rationale
I chose to conduct a strategic analysis exercise in this particular company because a strategic analysis can help it achieve its full potential. In addition, I have inside knowledge of this company, as I occupy the position of Operation & Marketing Director, which gives me insights into how it works, what is being done, and what needs to be done to increase its competitiveness. Oryx KBM has enjoyed significant success in recent years. However, it has not achieved its full potential yet.
I have access to information that can help me assess the company’s strategic position and provide recommendations that can actually be implemented. I also saw that there is a missed opportunity and room for improvement within the company. Specifically, the company has access to multiple large quarries that have given it a competitive advantage but have the potential to offer it a sustainable competitive advantage. It also has an opportunity to provide sustainable products to address environmental concerns and expand its portfolio.
The company's management will use the results of this analysis in making decisions about the company's future. Specifically, the management will use these findings to set the strategic pace of the organization and push it toward sustainable competitive advantage.
3 Main Findings and Conclusions
Oryx KBM strategic analysis was performed using five key strategic tools: the PESTEL analysis, Porter's Five Forces analysis, VRIO framework, BCG strategy palette, and SWOT framework. The findings from the analysis are as follows:
1 PESTEL Model
The PESTEL model was used because it provides a good starting point when analyzing the external environment to inform the organization's future (Lynch, 2021). The key political factor that influences Oryx KBM's external environment is government regulations. Through the Ministry of public works, the Kuwaiti government sets policies and specifications that govern Oryx KBM's operation. Although the company complies with the current regulations, any changes in regulation can affect Oryx KBM. Economically, Oryx KBM is influenced by high energy and transportation costs. According to Lynch (2021), changes in energy, transport, and raw materials costs can affect the economic future of an organization. Oryx KBM is experiencing high production costs due to these high costs of energy and transportation.
Also, sociocultural factors such as changes in consumer preferences and values affect Oryx KBM. Customers are increasingly shifting to sustainable construction and demanding sustainable building materials (Ismael & Shea, 2018). This shift will impact the demand for Oryx KBM’s traditional building products as customers favor sustainable products. Technologically, Oryx KBM has not fully utilized available technological opportunities. For instance, it lacks an ERP system to facilitate the tracking of goods. Also, environmental concerns call for a shift from traditional to sustainable raw materials for building.
Consumer protection and product safety issues are key legal factors influencing the company's external environment. The Kuwait government is determined to protect consumers from being charged high prices by building materials companies (Times Kuwait, 2022), which limits Oryx KBM's prices, despite increased production costs. The company must remain cognizant of these factors because they inform its future. It should note and respond to any changes in the external environment to remain competitive.
2 Porter’s Five Forces Model
Porter’s Five Forces model was used in this analysis because it provides an understanding of the industry’s attractiveness (Henry, 2021). Based on this model, Oryx KBM faces high competition from rival competitors with a more diversified portfolio. However, the threat from new entrants is low because of the high initial capital requirement. Isabelle et al. (2020) indicate that capital intensity hinders new firms from entering an industry. The recent increase in the cost of production (Times Kuwait, 2022) also creates a barrier to new entrants. The threat of substitutes is also low because there are no alternatives for the quarry products used in the construction industry.
The bargaining power of suppliers is low, but it can be high in the future. The company has access to quarries, which are estimated to ensure a sufficient supply of products for the next 25- 30 years (Oryx, n.d.). It does not rely heavily on external suppliers for its products. However, land ownership of potential quarries poses a high bargaining power for suppliers (Isabelle et al., 2020) in the future after its current quarries are depleted. The bargaining power of buyers is moderate. There is limited product differentiation, which reduces the switching cost of buyers (Isabelle et al., 2020). However, most buyers have long-term contracts with the firm and changing takes up to three months, increasing the switching costs. The findings indicate that the industry is attractive.
3 VRIO Framework
The VRIO framework was selected to analyze Oryx KBM because it ensures that firms can leverage their internal resources to create a competitive advantage (Chatzoglou et al., 2018). It reveals that Oryx KBM offers stable prices and access to sufficient quarries that can supply 9.5 million metric tons of quarry products per year (Oryx, n.d.). Thus, its quarries are a resource that possesses value, meaning the firm is not at a competitive disadvantage (Chatzoglou et al., 2018). In addition, this resource is rare, mostly because only a few companies in Kuwait have access to such large quarries that assure customers of a long-term supply of quarry products. Also, it is challenging to acquire such quarries due to cost implications, making it difficult for competitors to acquire this resource. This difficulty in imitating the resource gives the company a temporary competitive advantage (Chatzoglou et al., 2018). However, Oryx KBM lacks appropriate management systems and processes to capitalize on this resource. For instance, it does not have a proper product tracking system, which hinders the effective delivery of quarry products. As a result, it has not achieved a sustained competitive advantage (Chatzoglou et al., 2018).
4 BCG Strategy Palette
The BCG strategy palette was selected for this analysis because it allows organizations to match their strategy to the nature of their business environment (Boston Consulting Group (BCG), n.d.). In Oryx KBM's case, the classical strategy from the BCG strategy palette was identified as best fitting the company's business environment. Under this strategy, firms gain a competitive advantage through competitive positioning (BCG, n.d.). Oryx KBM has competitively positioned itself based on its access to large quarries and stable prices.
5 SWOT Framework
The SWOT framework was chosen for this analysis because it analyzes the external and internal factors to facilitate the formulation of strategies (Benzaghta et al. 2021), which is the goal of this strategic analysis. Based on the analysis, Oryx KBM’s key strengths include access to adequate quarries and a reputation for stable prices (Oryx, n.d.). At the same time, its weaknesses are poor tracking of goods and over-dependence on a single portfolio. Its key opportunities are sustainable building materials and cost leadership, while its key threats are firms supplying sustainable construction materials and the depletion of quarries. Effective strategies should help the firm leverage its current strengths and opportunities while mitigating the threats and weaknesses.
6 Conclusion
Based on these results, the following conclusions can be drawn:
* Oryx KBM s external environment is prone to change due to changes in government regulation, economic factors such as high costs of energy, shifts in consumer preferences, technological adaptation, environmental concerns, and consumer protection issues. However, an understanding of these factors provides an opportunity for the company to grow and gain additional competitive advantage.
* Oryx KBM operates in an attractive industry with low supplier bargaining power, a low threat from new entrants, a low threat from substitute products, and moderate buyer bargaining power. It faces high competition from rivals, but the industry is still competitive.
* The company has a temporary competitive advantage because, although its key resource is valuable, rare, and inimitable, it lacks appropriate systems and processes to give it a sustained competitive advantage.
* It has positioned itself based on its access to large quarries and stable prices. This has been its source of competitive advantage. However, it can leverage its strengths and opportunities to create a sustainable advantage.
4 Recommendations
Based on the findings of this strategic analysis, Oryx KBM can incorporate the following recommendations.
1 Focus more on sustainable building materials.
The PESTEL and SWOT frameworks reveal that there is an opportunity for Oryx KBM to provide sustainable products. The PESTEL analysis indicates that consumers are shifting towards sustainable construction, which, coupled with environmental concerns, calls for a shift to more sustainable building materials. The SWOT analysis also reveals that a shift to sustainable materials is an opportunity if Oryx KBM makes the necessary changes and a threat if it does not. Therefore, offering more sustainable building materials will leverage the opportunity and avert the threat. Specifically, it should provide sustainable concrete raw materials such as diatomaceous earth and termite hill clay (Gashahun, 2021). This shift will address the environmental concerns and meet the sustainability needs of consumers.
2 Invest in current technology for tracking goods.
The analysis also reveals that Oryx KBM lacks appropriate systems for tracking goods, especially because it has not invested in the right tracking technology. The company has not achieved sustainable competitive advantages despite having a valuable, rare, and inimitable resource because it lacks the systems to capture the value. It can implement an enterprise resource planning system to facilitate how it runs its business processes. An ERP system promotes greater follow-up, efficiency, reduced costs, remote information access, and better decision-making (Nilsson et al., 2020). This will help the firm capture more value from its resources.
3 Diversify its...