Strategic Plan of Ceylon Business Appliances

Document Sample
Strategic Plan of Ceylon Business Appliances Powered By Docstoc
					Executive Summary
In this report, our aim was to understand the strategic plans of the company “Ceylon Business
Appliances”. In order to achieve it we have first given an introduction on the company and its
functions and its wide array of products in Office automation, Banking equipment, Plastic cards
and stationery industries.

In order to understand about the internal structure of the company well, we have presented the
departments the company has and also a organization structure hierarchy is presented. And also
in this section a brief outline to the organizations current issues are presented and these issues are
further discussed in later chapters with further explanations and justifications.

In order to understand the industries the company operates in, we have then elaborated the PEST
and SWOT analysis and using those, the attractiveness of the industry and the company’s
competitive position is decided. Through Porter’s five force analysis, the overall competitive
intensity of the industry the company operates in is assessed. Following those analysis
techniques, as the next step, the company strategy is identified which is the Focus strategy.
Relevant explanations are given to justify and explain the strategy.

In the last chapters of the report we have discussed the current issues faced by the company, and
we have given our recommendations in order to overcome them. And also we have analyzed and
challenged the vision and mission of CBA and analyzed the practicality of it in today’s context.
Table of Contents

1.0 Organizational Background

    1.1Core Business Areas of CBA

    1.2 Organization Structure & Geographic Dispersion

    1.3 Size of the Organization

    1.4 Issues Confronted by the Management

2.0 Environmental Analysis

3.0 Industry Analysis

    3.1Background and Attractiveness

    3.2 Evaluation of the Competitive Position of the Company

    3.3 Porter’s Five Forces Model

4.0 SWOT Analysis

       4.1 Utilizing SWOT: Matching and Conversion Strategies

5.0 Company Strategy

6.0 BCG Matrix of Ceylon Business Appliances

7.0 Analyzing and Challenging Vision & Mission Statements

       of Ceylon Business Appliances

8.0 Analysis of Key Issues Faced by CBA
9.0 Recommendations, Justifications and actions to be taken to

       handle the Key Issues Faced by CBA
The report titled “Strategic Plan of Ceylon Business Appliances” aims to gain a thorough
knowledge about the strategic management tactics of the company we have selected, which is
Ceylon Business Appliances (CBA). In this report we have introduced the company and its wide
array of functions it performs.

The company structure, separate departments it has have been elaborated and explanations of the
products CBA offers to the market is also provided. And in order get to know about surviving in
the competitive market conditions, we have used internal and external analysis tools like SWOT
analysis, PEST analysis and Porters Five force Analysis in order to understand the industry the
company operates in, and to understand the environmental forces which affect the company.

The scope of the report is limited to the above explained analysis tools that we have conducted
using the information we obtained through the company visit and apart from that we have also
presented issues faced by the organization and our recommendations and justifications on the
issues faced by CBA. And also we have included a chapter on vision and mission of the
company where we have analyzed the vision and mission and gave our point of view on those
and how it should be adjusted and changed according to current company and market conditions.

As limitations in this study, we can state the insufficient information we got from the company
management, which was not sufficient to conduct a thorough analysis of company internally.
And also complexity of CBA which operates in several industries by offering different lines of
products have also made it a harder job to complete since analyzing the industry to each and
every product line is difficult.
1.0 Organizational Background

Established in March 1970, CBA has come a long way to be the leading supplier of office
equipment to the Sri Lankan market and today the name of CBA is synonymous with office
equipment. The company was registered in 1970 with a small family of 5, initially marketing a
few banking machines. Today, the company's reputation is very strong in the high value and high
profile banking sector in Sri Lanka. Today, CBA is established as a quality Supplier of office
equipment and a service provider with a solid and ever increasing customer base due to its
dedication and responsibility towards fulfilling the requirements of its valued customers.

    1.1Core Business Areas of CBA

Ceylon Business Appliances (CBA) is consisting with the wide variety of product range. Among
them followings are the major products.

     Banking Solutions.
     Office Automation.
     Card Solution.
     Stationery.

Banking Solutions

CBA is extremely strong in this most vital sector in the country irrespective of private or state
sectors. We provide the banking sector with the most modern machineries which are most
appropriate with their banking activities. Major customers for their Banking Solutions are
Nations Trust Bank, Bank of Ceylon, Peoples’ Bank, Commercial Bank, Seylan bank, National
savings Bank and etc. Major competitors are Epic Lanka, DMS.

      Automated Teller Machine

CBA provide sales and services for Automated Teller Machines (ATM’s) which are complies
with industrial standards including ISO. They are fully equipped with engineers and technicians
who have undergone comprehensive training on hardware and software troubleshooting. They
have succeeded because of the service we provide to you, before, during and after a purchase.
      Bulk Cheque Deposit Machine

The CSD 2002/E is a Self-Service Kiosk designed to combine speed and reliability in depositing
cheques. It is the only dedicated high speed and bulk feed cheque deposit machine, capable of
accepting batch cheque deposits up to 35 pieces in a single feed operation.

      Card Personalization

Card milling & embedding is a crucial part of the smart card production process (including
contactless cards). In order to embed the chip into a plastic card, the card must first have a
crevice created that can house "embed" the chip. Coupled with a high-volume personalization
solution, customers can truly possess the complete solution when including milling and
embedding equipment into their central card issuance personalization process.

      Note counters
      Fraud note detectors

Office Automation

With a superior understanding of customer needs gained from forty one years of experience, and
a philosophy driven by "unsurpassed reliability", CBA enjoys a well-deserved reputation in Sri
Lanka as a leading Manufacturer / Supplier of a broad range of products and services including
Office Machines, Office and School Furniture, Plastic Identity cards, prepaid cards and
Electronic Assembly for export.
The company's reputation is especially strong in the high-value Banking sector, where constant
repeat business is the norm, where low price is not the only criterion for a deal, and where CBA's
experience, insight and trusted relationships gives it a formidable and a competitive advantage.

Today CBA is a one of the key players in the office automation business in Sri Lanka. It not only
provides total office solutions but offers a superlative after sales. Service for its wide range of
products it sells. Major customers for these types of products are UNICEF, Government and
private organizations.
        Attendance Machines

The HSUN V7 time & Attendance Display terminal with a combination of fingerprint reader and
keypad offers the industry’s most accurate solution for keeping track of employees’ time and

     Binding Machines
Binding machines and supplies will help reports and proposals look sharper and more impressive
than ever before.

Card Solutions

CBA is the undisputed market leader in this field, and has been dominating from the inception.
Today, CBA proud to have a large and very high profile clientele in both State and Private
sectors, whose first and obvious choice is CBA for all their ID cards requirements. They are
equipped with the sixth sense technology efficiently backed by highly skiATM Cards/Debit


The fully air-conditioned ‘One Stop Stationery Shop’ is certainly different from typical and
ordinary stationery shops. You name it and we have it. You do not need to worry about your
vehicle as ample parking facility is available for our valued customers enabling them to do their
shopping peacefully. CBA Stationary Shop also sells Infinite copy paper from Indonesia which
today is one of the leading paper brands sold in Sri Lanka. We have been in the forefront in
supplying stationery & office machinery to government and private sector clients.
       1.2 Organization Structure & Geographic Dispersion

There are no branches Island wide. The head office where situated at Thummulla and the
Dehiwala division. The balance of the company is mainly coming from the head office.

When we consider about the employees of the organization, the total numbers of employees are
250 of the CBA Company. There are two type of divisions relating to the CBA company such as
125 technical services division and also they have 75 engineering manufacturing division.

Engineering and Manufacturing Division

The Division consists of professionally qualified engineers who not only possess the technical
know-how but also innovative thinking to manufacture equipment/machinery to suit the ever-
changing expectations of the market. This enables CBA to introduce something new and a more
viable product to valued customers.

Technical Service Division

A well equipped workshop managed by a qualified and experienced force of Engineers and
Technicians providing prompt reliable services Area Technicians are located in over 25 principal
towns in Sri Lanka.
The Organizational Structure



                      Technical                                 Operations              Financial
                      Executive                                 Executive               Executive
                       Director                                  director                Director

                                                      Business                Human
   Engineering        Technical       Operations
                                                    Development              Resource   Accountant
    Manager           Manager          Manager
                                                      Manager                Manager

                      Assistant                                            Human
    Assistent                         Operations     Marketing                          Account
                      Technical                                           Resource
    Engineer                          Executive      Executives                         Associate
                      Manager                                            Executives

                                      Minor Staff
  Technical Staff     Supervisor

                    Technical Staff
       1.3 Size of the Organization

We can categorize CBA as a large organization, based on the number of employees. CBA is
current employing 250 employers. They have 125 employees at Technical Services division, 75
employees at Engineering Manufacturing Division and 50 employees at head office. According
to the World Bank, the organizations which are having employees more than 100 are consider as
large organizations. Therefore based on the World Bank guidelines we can identify CBA as a
large organization.

       1.4 Issues Confronted by the Management

CBA is currently facing several management issues. Some of them are as follows.

   1. Fierce competition from mainly market leaders such as DMS, EPIC Lanka & Toshiba
   2. Relatively low level of wages, benefits and allowances for non-managerial level staff
       (e.g. technicians)
   3. Lack of top management support to implement new strategies brought up by the
   4. High cost of material required (service cost >agreement values)
   5. More authority to the chairman. He does not act as a non-executive director. Hierarchy is
       not properly sectioned down. Board of directors cannot constructively challenge his
   6. Less focus on the future. They do not diversify their products by applying the latest
       technology. More focus on traditional technology than modern. (due to lack of top
       management commitment)

More detailed explanation of these issues is discussed at later chapters.
2.0Environmental Analysis
In analyzing the macro-environment, it is important to identify the factors that might in turn
affect a number of vital variables that are likely to influence the organization’s supply and
demand levels and its costs. A number of ways have been developed to analyze the external
environment factors which affect the functioning of the company and PEST analysis is one of the
frameworks that categorize environmental influences as political, economic, social and
technological forces. The use of PEST analysis can be seen effective for business and strategic
planning, marketing planning, business and product development. Using PEST external forces
that affect the business and its operations can be identified and used in a way that maximizes the
company’s opportunities and to minimize the potential threats. Since CBA deals with more
advanced type of product line which uses technology as the main ingredient, and since CBA
deals with foreign suppliers for almost all of their raw material and product supplies, the analysis
environmental forces is very much essential. And since CBA operates in an industry where the
changes in the environment have to be adopted as swift as possible, the analysis of environment
is of major importance.

      Political and Legal Environment

The political and legal environment consists of government policies and laws which affect the
functioning and operation of a business. Political factors which affect CBA include tax policy
and environmental laws. Since CBA imports most of their office automation products including
photocopiers and printers from suppliers in Japan and Italy, the import tariffs have a direct
impact on CBA’s operations. When import tariffs are higher, it will have a direct impact on the
prices of the products they import and they won’t be able to supply products to the market at a
lower price and win customer satisfaction. And also under tax policies, we can mention the BOI
tax concessionaries CBA receives. If these allowances are not provided, the company will have
to incur a higher cost for importing goods. And also since CBA in engaged in production of pre-
paid telephone cards, the prior approval for communication equipments are needed from
Telecommunications and Regulations Commission.
      Economic Environment

Under economic environment CBA is mostly affected by the exchange rates and the interest
rates. The exchange rates of the country is of prime importance to CBA since almost all the
suppliers of equipment and parts for the product range including Printers, photocopiers, banking
equipment including ATM machines, Fraud note detection machines etc all are supplied from
abroad and since CBA carries out a large amount of international transactions the exchange rate
pertaining in the country matters a lot. The rupee devaluations and undervaluation affect the
company as well as its strategies.

      Social Environment

The social characteristics of the country affect the company since it’s a company which provides
appliances for carryout tasks easily. The culture and trends pertaining in the country affects the
demand for the goods. Nowadays the lifestyle of the citizens have changed and they look for
machines which make it easy for them to carryout tasks, not only in households but also almost
all the businesses have turned towards computerized systems and paperless systems, and since
this is where CBA’s products come to play, these trends and life style changes affects the
company demand directly. Not only private organizations, but also government organizations
have moved towards computerized systems. And also printing and photocopying machinery have
become essentials to any company. The trend and technological improvements of the banking
industry have created a lot of opportunities and digital transactions are carried out all over. These
trends have increased the opportunities CBA has for better office equipment supplies.

      Technological Environment

CBA’s product portfolio consists of a product which are high-tech related and that’s why the
technological environment changes are the most affecting environment to CBA’s business
activities. Since the technology which exists today, exits tomorrow making products up to
industry standards and according to the quality and latest technology requirements of customers
is the most important concern at CBA. For example, in making banking equipment like ATM
machines or Plastic cards like credit and debit cards the technology plays the most important
role. Keeping the technology upgraded is another matter of concern.
Ex: POS- PSTN technology is now shifting towards GPRS. If the company keeps old models,
the after sales support will lack from suppliers. Hence, the portfolio has to be updated.

3.0Industry Analysis

    3.1 Background and Attractiveness

Office automation began a new trend in the 1980s i.e. the integration of previously separate
capabilities into single powerful work stations. Office automation products include various
automation equipment used in offices for executing multiple tasks like creating copies
of documents, sending and receiving important data, video conferencing solution etc. These
office automation products help in managing and electronically transferring business information
easily when required. Office automation equipment includes fax machines, photocopy machines,
printers, scanners etc. Usage of these automation equipment has simplified the work, decreased
manual work and drastically reduced the time taken to complete different tasks. In this
competitive business environment, time management is extremely important and the major
advantages of using these office automation products are that they save time and reduce costs in
the long run. When talking about the other industries CBA operates, the ‘Banking Equipment’
industry can be listed as a major one since it’s the highest revenue generating function of the
company. The banking equipment industry has also simplified the work at banks making less
customer traffic inside branches by having ATM machines and plastic cards including debit and
credit cards. The industry attractiveness can be discussed under the following sub-headings.

   1) Market Characteristics
       The market, in which CBA operates, is a very attractive market segment since almost all
       the private and government organizations are customers of this market segment and
       without this market they cannot do without. It has become an essential part of the
       business which makes business activities easy and swift with no hassle with paper. In
       talking about the banking sector to which CBA supplies banking equipment, it is
       considered to be growing at a fast rate since the use of technology in banking activities is
   increasing. The uses of equipment in the banking sector increases hence the attractiveness
   of the industry also increases since there are few major players like Epic Lanka, DMS
   and CBA. In the plastic cards industry, it is also considered to be growing at a
   considerably higher rate since the use of plastic cards as loyalty cards increase with time
   cause most of the organizations are now moving towards loyalty programs which include
   cards. The increasing customer base for banks have also increased the demand for plastic
   cards in terms of credit and debit cards have definitely increased the attractiveness of the
   market. CBA has occupied more than half of the market in terms of their variety of
   products including stationery, plastic cards, printers, photocopiers, and banking
   machines. CBA mainly targets the Sri Lankan market other than overseas markets and the
   population in Sri Lanka is increasing at a rapid rate and the investment attraction rate of
   Sri Lanka has increased due to non-war peaceful conditions; we can consider the market
   of CBA is widening.
   CBA is playing a leader’s role in the Sri Lankan office appliances market with several
   main competitors such as Xerox, canon, Sony etc who occupy a particular market share
   as well as their own advanced technologies.

2) Trends and Drivers
   In the office appliances industry, the trends change a very little. These changes attribute
   to the changing and improving living standards of people. And also the focus on
   efficiency and effectiveness has driven the technology to be more sophisticated in the
   business appliances industry. When talking about the banking industry where the
   company supplies teller machines, cash counters etc the latest technology and security
   improvements sets trends. The development of the high-end office worker, office owners,
   and the baby-boomer executive is an important trend for CBA. Today's high integration
   of technology in the work place, especially in the multi-task oriented, executive
   environment, sets the stage for growth in the area of high quality, technologically
   integrated office environments. Similarly, home offices and small business owners
   continue to demand more advanced technologies and their integration into the office
3) Technological Factors
   Day by day advancing technology being a trend setter in the office appliance industry it
   also acts as a major determining factor of the market. To grab the market opportunities it
   is vital for the company to capitalize on the technology enhancements and combine them
   with the products at hand. Since CBA produces ATM machines, Teller cards, other
   banking equipments etc the technology they use is the main ingredient of their success.
   So, the changes in the technology have to be adopted by the companies in this office
   appliances industry in order to survive.
       3.2 Evaluation of the Competitive Position of the Company

In evaluating the competitive position of the company, we can first look on the competitive
advantages the company possesses. Through the following competitive advantages the company
is able to cope with the competition and establish its brand as a leader in the industry.

      Brand Advantage – the company has a 40year experience in the field of business
       appliances and has established an outstanding reputation. Based on the constant
       technological accumulation and innovation CBA has become one of the major office
       appliances suppliers in Sri Lanka.
      Product Advantage – CBA’s strong innovation ability and nearly a half a century of
       accumulated technology has enabled CBA product range to have an extraordinary quality
       and performance.
      Service Advantage - CBA is dedicated to providing top quality service in all facets of its
       business. Founded by some of Sri Lanka's top office products sales professionals, Superb
       Service has always been a cornerstone of CBA's operating philosophy. Thus, from the
       inception of the company 40 years ago, “Customer Service” has been what CBA have
       stood for. This philosophy and reputation is embodied in their logo as "Reliable People,
       Reliable Machines, and Reliable Service".
      Channel Advantage – Being one of the oldest office appliance suppliers in Sri Lanka
       CBA has the most direct and non-direct distribution channels including agents and

Acquiring a position in the industry has become a difficult task owing to the presence of
international brands in the Sri Lankan market. Their high investments and global brand image
has become a threat to CBA in most of the product areas they compete in.

The following positioning map specifically looks in to the office automation equipment industry
where most of the international brands are competing for market share. CBA also competes in
this industry under Kyocera and Jollymark brands which are Japanese brands imported and
distributed by CBA. Other companies in the Sri Lankan Market who are competing are; JKH,
Browns, Metropolitan, and PC house. As elaborated in the map below CBA’s products offer
highest quality for the lowest price. Main competitors for CBA are PC house who offer the
highest quality products and JKH who offer quality products at a lower price.

                                                                               PC House

                                                       Metropolitan            CBA


                      Low                        Quality                              High

The following positioning map is for ‘Banking Equipment’ industry where ATM machines, Note
counters and Fraud note detectors are considered. In this industry CBA is the market leader since
there are few players in the industry and CBA offers the highest quality for a higher price. The
price quotient does not matter in the industry since the security functions and quality of the ATM
machines outshine the price issues and due to that price is considered to be non-affecting factor.
Most of the banks in the banking industry are customers of CBA in this industry and also CBA
acquires the largest proportion of revenue from this industry. Even though CBA is the leader,
there’s high competition for CBA from Epic Lanka and DMS.

                                                            Epic Lanka

              Price                                                      DMS


                      Low                    Quality                                 High
       3.3 Porter’s Five Forces Model

Porter’s five force analysis is a framework for industry analysis and business strategy
development. Through the five forces in the framework, it determines the competitive intensity
and attractiveness of a market. By conducting the five force analysis for CBA, we will be able to
understand the nature of the industry that CBA operates and its attractiveness. Since CBA is
engaged in producing a line of products in distinct industries including Banking Equipment,
Office Automation, Plastic Cards and Stationery; rather than analyzing Five forces in one
industry perspective, analyzing it in all components of industries in which CBA operates would
give us a much clear picture about the industries and also about the intensity of the rivalry faced
by CBA.

      Threat of New Entrants
       The strongest barrier to come in to the market of office automation supplies is the
       monopolistic market conditions in the supplier side. The raw materials and equipment
       needed to produce the products are available in several reputed suppliers and the
       relationship the companies in the industry has with the suppliers plays a major role in
       creating entry barriers to the industry. It is said to be hard to contact and build a
       relationship with a credible supplier who has experience and reputation in the industry.
       For example CBA enjoys a variety of cost benefits plus preference benefits from its
       suppliers like GRG Technologies (China) and Lauren (Italy) due to the long term credible
       relationship they have with each other.
       And also the high cost incurred in manufacturing printers and photocopiers and banking
       equipment like automated teller machines, cheque writers and cheque scanners incur a
       higher fixed cost and a high initial investment. This requirement of high initial
       investments, restrict many new companies in entering to the industry of office automation
       With the international competition in the industry where a lot of brands form around the
       world compete for the same share of market, competitive countries like China where the
       labor cost is very low, offer products at a lower cost. Since the need for producing in
       large batches with sophisticated technology is required and this also acts as an entry
       barrier to the industry.
    And in the office automation industry the international trend of “Assembly Line
    Manufacturing” has taken place and a larger proportion of the current companies are
    following that and it requires products to be produced in large batches or series which
    need a higher amount of investment, making it an entry barrier to the new entrants. Due
    to these facts we can conclude that threat of new entrants to the industry is low.

   Threat of Substitutes
    In the industry of office automation supplies’ probability of substitutes is almost
    impossible. Current global trends have a favorable influence on increase in demand for
    office equipment and banking equipment as well as plastic cards like loyalty cards, credit
    and debit cards etc, due to ever faster obsolescence and shorter machine lifetime, i.e. due
    to frequent changes in design and manufacture technology.

   Bargaining Power of Customers
    In the industry where CBA is operating in, the quality and credibility matters a lot. Since
    there are only few major players in the industry other than the small players whose
    quality lies at a very low level, the customers are left with few suppliers of office
    appliances to choose from.
    In the banking industry almost all the banks including NSB, People’s, NTB, Commercial,
    HNB, Seylan, NDB and BOC are customers of CBA for their ATM machines, Note
    Counters and Fraud Note Detectors. In the other areas such as office machinery, credit
    cards and loyalty cards, Etisalat, Hutch, Dialog and Suntel are major customers in cards
    sector and most of the supermarkets and private organizations are customers of CBA for
    office machinery. There are only few competitors available in the industry for including
    JKH, Browns, Metropolitan and PC House. Considering the options the customers can
    switch to, since there is only a few available, the bargaining power of customers can be
    stated to be at an average level.
   Bargaining Power of Suppliers
    When talking about the supplier power in the industry where CBA operates, in the
    banking machinery supplying side there are only few major and credible companies
    available. GRG Technologies (China) and Lauren (Italy) are the major suppliers for CBA
    in banking machinery like ATMs and Fraud Note Detectors. Since there are no other
    banking machinery supplier in Sri Lanka, the technology richness and credibility of their
    suppliers have highly intensified supplier power. In office machinery CBA’s major
    suppliers are Kyocera (Japan) and JollyMark. The qualities of the products of these
    suppliers and their exclusive technology ownership have also intensified their bargaining

   Industry Rivalry
    The office equipment market is consolidated, with the leading manufacturers Xerox
    Canon, HP and Ricoh Co Ltd dominating the market. Smaller market players must
    compete alongside large multinational players. Competition remains intense in a market
    where products are highly similar. Market players invest heavily in research and
    development in an attempt to maintain a flow of innovative products into the market. The
    strong threat of substitutes brought about by the desire for offices to achieve a paperless
    status further intensifies the competitive environment. On the other hand, a number of
    larger market players operate in a diverse range of markets, reducing reliance on the
    office electronic market. For example, Canon's optical segment features products used in
    such diverse applications as semiconductor manufacturing equipment, television
    broadcast lenses, and devices used for eye examinations. Canon also still operates its
    original camera business, which makes digital cameras, camcorders, liquid-crystal
    display projectors, lenses, and binoculars. The industry rivalry is assessed in this industry
    to be considerably high due to the diversity of the rivals and also due to the high fixed
    costs. Overall, there degree of rivalry in this market is assessed as moderate.

                          High                  Moderate                 Average


Since the threat of new entrants is at a lower level; threat of substitutes is also at a lower level;
bargaining power of suppliers at a higher level, power of buyers is at an average level; the
overall competition of the industry can be concluded to be at an average level.
4.0 SWOT Analysis
By conducting a SWOT analysis for CBA we would be able to audit its internal and external
environment well and plan well using strengths of the company to turn weaknesses in to
strengths and to face threats with confidence. Since CBA operates in different industry segments
such as Office automation, Banking equipment supplies, Plastic cards manufacturing and
Stationery, the SWOT which is conducted below considers all the areas of businesses CBA
engages in as a whole.

Strengths                                        Weaknesses
      Very good reputation                             Weak response to complaints
      High popularity                                  Weak financial resources management
      High technology innovation ability               Low consumer satisfaction in pricing
      Superior after-sales service                     Low    top   management      commitment
      Efficient production lines                        towards innovation
      Superior products
      Highly qualified workforce
Opportunities                                    Threats
      Expanding markets                                Intense competition
      Growing demands                                  Availability of cheaper alternatives
      New distribution channels                        Economy changes
      Building innovation reputation                   Regulation changes
    Strengths
      Good reputation and High Popularity

CBA has been in the industry for more than 42 years. Owing that CBA has developed
themselves a good reputation and a highly trusted brand name. Since CBA operates in an
industry where credibility and trust matters a lot like in the banking industry where due to the
security issues the credibility of supplier plays a major role, CBA have established themselves as
a credible office equipment supplier in the industry. And as a result of that reputation and
credibility CBA has developed a loyal customer base for them including major private and
government organizations in Sri Lanka. Ex: In supplying banking equipment like ATM machines
and note counters etc, almost all the private and government banks are CBA customers due to
their high quality highly reliable products.

      Superior after sales service and products

Since the inception of CBA, they have stood for superior service. It is one of the factors why
CBA is ahead of the competition. Providing a superb service has always been CBA’s operating
philosophy, and it is very well reflected in their positioning statement which is "Reliable People,
Reliable Machines, and Reliable Service" Not only CBA’s service, their products are also have
won the trust and credibility of their customers and it has become the reason why customers of
competitors switch to CBA. Since CBA imports products and manufacturing material from the
best suppliers with whom CBA has strong supplier relationships, the quality can be trusted
because even though it costs them more to have higher quality products, they are not ready to
compromise the quality of their products with lower quality products to go for better margins.

      Highly qualified workforce

CBA’s workforce is one of the major assets they have. They are equipped with most talented
engineers and technicians who work together towards manufacturing high quality products.
Other than the employees working in the company premises, CBA is having station technicians
or resident technicians who work for CBA in every district for after sales service supplying and
troubleshooting services.
      Efficient product lines

Since CBA is not only engaging in office equipment supplying business, they are having an
advantage over the others in the industry. Even if CBA incur losses in one industry they are
operating in, they have established other supporting industries which will help them to cover up.
And also they have used their already developed brand name to excel in these industries. For
example, even though CBA is not much profitable in Plastic card manufacturing business, their
Banking equipment sector has become their main source of revenue.

    Weaknesses
      Weak response to complaints

Even though CBA has an excellent after sales service the complaint management element of the
company is weak. Even though there is a procedure for complaint management, the procedure is
highly methodological and has to pass through different officials before action can be taken. A
swift complaint handling system would be much desirable for the company, since it will
definitely increase customer satisfaction and also their credibility towards the company.

      Weak financial resource management

CBA has a very competent engineering, technical and manufacturing divisions, but in their
administrative function they fall short. The financial resources of the company are not well
managed and if they are well managed the company would be able to invest in research and
development and in other functions and it will take the company to greater heights.

      Low consumer satisfaction in pricing

Since there are a lot of competitors in the field of office automation who offer products at lower
prices, due to the high pricing at CBA the consumer satisfaction level falls short in pricing. But
the quality aspects of CBA’s product portfolio are at very high levels, they are not able to adjust
the pricing. And also due to government taxes on imports, the imported product prices are at a
higher level and due these factors, consumer segment s which are price sensitive go for low
quality, low priced manufacturers in the industry.
      Low top management commitment towards innovation

Even though there is an opportunity for CBA to grow towards new heights through innovations,
the top management commitment towards innovation is at a lower level. Proper funds are not
allocated towards research and development functions and funds are allocated for continuing the
same business functions because they consider it as a risky decision. And also, in order to
innovate, the fund requirement is also not very little, since new technology, expertise people and
equipment incur a higher amount of fixed cost and if failed, it will be a great loss for the

    Opportunities
      Expanding markets and growing demands

The market for office automation equipment are expanding due to the fact that, the tasks at office
culture are now more machine based and more equipments are used to carry out every task with
ease. In earlier days there were only photocopiers and with the advancement of technology,
printing and fax functions have come to play expanding the market. Furthermore the market will
expand due to the variability of functions performed and with the advancement of technology
“all-in-one” equipment come to play and the market expands eventually. And due to the benefits
of using these office automation equipments, the demand for these also increase at a rapid rate.
The market is growing and it arises many demand opportunities. Owing to the peaceful political
condition in Sri Lanka, more companies are launched arising opportunities for more demand.

      New distribution channels

With advancement of technology CBA is able to broaden its distribution network furthermore
using internet as a medium. Till now, they are not using internet to promote or to direct selling
purposes. They can use internet and target more prospects and send them information about their
company’s product line and by that they would be able to increase the awareness for their
product brands as well as their coperate brand CBA.
      Building innovation reputation

Out of the other companies competing in the same industry as CBA, no one has targeted the
innovation factor in their company positioning. Not only in the office supplies industry, but also
in the banking equipment and plastic card manufacturing industry other competitors have not
positioned themselves as an “innovator” who offers new products the market with the touch of
latest technology. Most of the companies go with the flow and offer existing products to the
existing market, but as an opportunity CBA can focus more on innovation factor and research on
building new equipment that will satisfy customer needs and also be profitable to the company.

    Threats
      Intense competition

The office automation industry is highly competitive in nature. The business is characterized by
competitors that vary considerably by their size, quality of facilities, number of operations, brand
identities, marketing and growth strategies, financial strength and capabilities, level of
amenities, management talent and geographic diversity. CBA competes with numerous players
of varying quality and size in the market areas. Some of the competitors of the company include
John Keels Holdings, Browns, PC house, Epic Lanka, Metropolitan, DMS, and Informatics etc.
And this increasing competition could adversely affect the company’s margins.

      Availability of cheaper alternatives

With an increase in the number of products being manufactured in China and Korea, the
company faces serious threats in most of its market segments. These products, although of poorer
quality in most cases, are considerably cheaper due to low manufacturing costs. Even the strong
brand equity that CBA enjoys may not be able to lower the impact of cheaper products being
manufactured in China and Korea.
      Economy changes and Regulation changes

The economic factors act as a threat for CBA’s functioning in way of taxes. CBA imports most
of their inputs such as parts of equipments produced and also other branded office equipment
sold under CBA. If the import taxes are increased, in the prevailing highly competitive market,
CBA will not be able to compete for price since due to import taxes; they will have to incur more
cost to bring products to Sri Lanka. And also due to various regulation changes the functioning
of specific functions like production of credit cards, banking equipment and prepaid mobile top-
up cards is at risk. If regulations are put increasing the prerequisites on production and other
regulations like authority to produce, CBA will have to put more effort in order to offer their
products to the market.
       4.1 Utilizing SWOT: Matching and Conversion Strategies

One way of utilizing SWOT is matching and converting. Matching is used to find competitive
advantages by matching the strengths to opportunities. Converting is to apply conversion
strategies to convert weaknesses or threats into strengths or opportunities. If the threats or
weaknesses cannot be converted we should try to minimize or avoid them.

Matching – In matching CBA’s strengths to opportunities, we can capitalize on CBA’s good
reputation and popularity and reliable and trustworthy services to respond to growing demand
and market opportunities. The direct marketing strategies of CBA can be polished and
developed, so that we can communicate those in our communication strategies (about the
company’s reputation etc) by including some customer feedbacks and recommendations in our
marketing communications. For this we can use internet as a medium and create a new web page
or in the same company web page a separate section to add customer feedbacks and
recommendations. By this we can increase awareness about CBA in the business market and
grab the opportunity of growing demand.

CBA already have a highly qualified workforce and individual technicians who are dispersed in
every district and supply troubleshooting and supportive services, with the use of this strength
we can make them either distributing agents or order taking agents as well. So that will help the
company to provide a more efficient service to their island wide customer base and capitalize on
the opportunity to have more efficient distribution channels.
Converting – As conversion strategies which convert weaknesses or threats in to strengths or
opportunities, in CBA we can focus more on controllable internal factors. Here, we can develop
a complaint handling system which will attend to customer complaints within minimum time
possible. Ex: 48hours. The existing procedure which requires authorization of several officials
can be minimized by having one specific person responsible for handling complaints. And by
having this kind of system which is swift in handling complaints, it would be a strength to the
company and they will be able to satisfy customers with better office supplies solutions.

Since CBA has the top most ability towards using technology to create new products the market,
by obtaining the top management commitment towards innovation and new product development
would benefit them in the long run by having more diversified product lines.

For the weakness in pricing in products, CBA can get in to long term contracts with their
suppliers through which they will obtain products and equipment at a lower price. And here the
relationship between CBA and suppliers also matters. If price cannot be adjusted to meet
customer preferences, CBA can stress the fact that their products are of top class quality. By
establishing the “High Quality – High Price” concept in the mind of the customer, they would be
able to attract more customers who are less price sensitive and more quality sensitive.

For threats like intense competition and lower priced alternatives, CBA can improve their
communication and marketing strategies in order to convert them to opportunities. Since a
moderate level of competition is said to be desirable, by focusing more on specific customer
segments and improving the communication strategies to let customers know that CBA’s product
quality is high, they will be able to take advantage of it. Since CBA operates in the B2B industry,
appropriate communication tactics and direct marketing and personal selling tactics can be used
to grab the opportunity.

As the end result of the SWOT analysis, CBA would be able to identify its weaknesses threats
and minimize them or avoid them by carrying out “matching and conversion” strategies.
5.0 Company Strategy
Ceylon Business Appliance (CBA) is a leading organization in the engineering, office
automation & banking industry. The secret behind their success is the strategy they are
practicing. They are currently practicing the differentiation (quality conscious) focus Strategy to
make management decisions.

According to Michael Porter there are three types of strategies. They are cost leadership,
Differentiation and focus.

      Cost Leadership

This is being the lowest cost manufacture in the industry. This strategy is difficult to practice in
CBA due to their key focus being catering high quality products to their customer segments with
the philosophy driven by "unsurpassed reliability". Most of the products manufactured by CBA
are unique products which uses latest technology. Therefore the company has to invest in new
technology and eventually it boosts the final unit cost of the product. Because of this nature it is
difficult to be the lowest cost manufacture in the industry.

Cost motive will give rise to unnecessary competition between the competitors and this finally
leads to deviation of the core business objective of providing quality products to the customers.

      Focus Strategy

Porter also recommended that organization should focus on one strategy. A company could use
either a cost focus or a differentiation focus strategy and operate in a niche. By operating with
more than one single generic strategy the firm will be stuck in the middle and will not achieve a
competitive advantage.

CBA is currently practicing the differentiation focus strategy.

CBA focuses on a narrow target and highly focuses on differentiation. Because of this strategy it
makes easy for CBA to introduce new products to the customers. Porter argues that to gain the
competitive advantage the organization should differentiate their products over competitors.
However it is said that firms pursuing a differentiation strategy may be able to pass higher costs
on to the customers due to their unique products and customer loyalty levels. CBA is currently
practicing this strategy to maintain a good competitive advantage. CBA differentiate their
products based on the quality and customer support. They have positioned their products in the
mind of the customer as quality conscious products with the motto of ‘reliable people, reliable

CBA’s most products are unique to the customers and require high level of security. These
products are highly customized. Each customer requires high level of attention to their product.
(Ex: Point of sales machinery, banking machinery sales & Maintenance, Note counters, ATM

Therefore these products should be high quality and difficult to be imitated by the others.
Furthermore their Intellectual Property (IP), unique technical expertise, innovative processes
brings about an added advantage. This nature of the products creates CBA to practice the
differentiation strategy. As well as their products are having low Price Elasticity of demand for
its corporate customer base which helps CBA to successfully implement the Differentiation
focus Strategy.

A potential disadvantage could be that during recessionary periods consumers may rethink on
most of their buying decisions in order to mitigate cost over runs. In this instance imitated low
cost products carry the risk of destroying the image of the quality products.

       Differentiation Strategy

A differentiation strategy is appropriate where the target customer segment is not price-
sensitive, the market is competitive or saturated, customers have very specific needs which are
possibly under-served, and the firm has unique resources and capabilities which enable it to
satisfy these needs in ways that are difficult to copy.

But a firm operating this strategy caters a large market. For example in the industry CBA
operates, EPIC Lanka, Browns and Metropolitan operates a differentiation strategy where they
cater to a broad target.
6.0 BCG Matrix of Ceylon Business Appliances
Ceylon Business Appliances as a leading supplier of high quality office appliances in Sri Lanka
offers wide range of products & services under four major different business segments. They can
be listed out as follows.

   1. Banking Machines & Solutions
   2. Card solutions
   3. Office Automation products & solutions
   4. Stationery items

The above listed business segments are plotted in the below shown BCG matrix on the basis of
their relative market share & growth rates.

                                                     Market Share

                                 High                                 Low

                                          Stars                Question Mark
               High           Banking Machines &            Card Solutions
       Market Growth
                                        Cash cows                    Dogs
               Low            Office automation             Stationery items
                              products & solutions

Above groups are explained below.

Stars: Banking Machines & Solutions

Banking Machines & Solutions: Automate Teller Machine, Bank Cheque Deposit Machine,
Card imprinters, Card personalization, Card printers, Cheque book dispensers, Cheque writer,
Cheque scanner, Coin counting machines, Currency bundling machines, Pass book printers
CBA’s banking machines & solutions emerge as clear stars with a high market growth rate and
high market share because CBA supplies banking equipments and security stationary to almost
every Bank in Sri Lanka Island wide. Service and maintenance is also a key factor which wins
many Orders for CBA. Therefore out of the broad range of CBA’s products & services banking
machines & solutions product segment is well established & growth is exciting as there is some
strong opportunities are emerging up. Hence CBA’s Business Development Team always in the
forefront in capitalizing external opportunities & finding new equipment and solutions for Banks
in Sri Lanka.

Question Mark: Card solutions

Card solutions: Access control cards, ATM cards, High security cards, loyalty cards, Magstripe
debit cards, Membership cards, Product ID cards, Time attendance cards

CBA’s card solutions are in a growing market but in low market share. These card solutions are
essentially new products especially high security cards and loyalty cards where buyers have yet
to discover them. Even though now its getting low returns due to low market share these
products have high demands & the potential to make money is there because of now most of the
companies go for the Electronic cards. The best strategy to handle this business segment is CBA
has to invest heavily on this to gain the market share as supplying banking ATM , debit cards
will be a cross business to banking machines & solutions. Card solutions business segment will
be STAR business once the CBA has put enough investments to convert it into a STAR.

Cash Cows: Office Automation Products & Solutions

Office Automation Products & Solutions: Attendance machines, Book Binders, Calculators,
Duplicators, External storage devices, Fax machines, Printers, Scanners, Projection screens,
Shredders, Electronic type writers, Visual presenters

CBA’s office automation products & solutions business segment emerge as the cash cows in a
position of high market share & in a mature market because this business segment is well
established & the company has 41 years of experience of being in this business segment & also
CBA is the major player in the office automation business segment in Sri Lanka.
Here the market opportunities are limited because the market is not growing. Therefore as a
strategy CBA has to maintain existing market share even though its not growing.

Dogs: Stationery items

Stationery items: Pens pencils & markers, Exercise books, papers, filing & storage, package
materials, General stationery, computer stationery, school stationery

CBA’s Stationery items business segment is in low market growth & low market share hence it
emerge as the Dog in BCG matrix. In this segment CBA’s market presence is weak as there is
only one stationery shop established so far & and also there are major stationery items suppliers
in Sri Lanka dominating the market as “ Richard Quality Stationery” supplier where the CBA
cannot compete with them & gain a higher market share since their core business is stationery
supplying. Therefore they have a competitive advantage than the CBA. Therefore best strategy is
to avoid & minimize investing finance in this segment because expensive turn around plans
usually will not be help.
7.0 Analyzing and Challenging Vision & Mission Statements of Ceylon
Business Appliances
Vision of CBA

“ To be the No. 1 supplier and service provider of Office Automation in Sri Lanka, introducing
state of the art technology to customers in the field of office automation to guarantee the state of
the art working environment enhancing the overall productivity towards accomplishing
development targets towards nation building.”

Agreement on the basic vision for which the firm strives to achieve in the long run is critically
important to company’s success. The big dream behind this lengthy vision statement of CBA is
“to be the No. 1 supplier and service provider of office automation industry in Sri Lanka
introducing the best technology to enhance the overall productivity to nation building”. So
Ceylon Business Appliances as a profit driven company focus on not only profit objective as
well as they concern on how their services contribute towards the nation development. Therefore
in a broader sense their vision emphasizes two aspects as they want to be the No.1 supplier in
office automation industry in Sri Lanka while contributing towards nations building through
increasing the efficiency & productivity in office places through the products & services they
offered. Furthermore as a Sri Lankan business organization they are not focusing on expanding
their business into global.

Mission of CBA

“Maintaining and further nurturing our solidarity with our valued customers and providing
highly personalized and customized service in a customer friendly atmosphere with total
dedication and commitment with a sense of responsibility in achieving all set objectives of the
both partners in business.”

In the mission statement of CBA they basically concern on four components such as customers,
products & services, competitive advantage and shareholders. In delivering their products &
services CBA concerns on maintaining & further strengthening the relationship between the
customers offering them best products & service solutions. What makes CBA differentiates from
the rivals is the highly personalized & customized service delivered in a customer friendly
atmosphere. Furthermore as a profit driven company ultimate target of CBA is to generate
maximum return for the owners of CBA while offering best quality highly customized &
personalized products.

Seeing strategy as vision as in the projection of a desired future state is another misconception that
dominates the thinking of many organizations and acts as a bar in too deep going strategic thinking.
CBAs vision is to be the No. 1 supplier and service provider of Office Automation in Sri Lanka to
provide superior returns to shareholders are expressing equation strategy with vision.

Seeing the strategy as a mission or a way forward is to attain a desired state is another error of strategic
thinking. Strategy should not be perceived as mere operational efficiency. Doing same things faster and
cheaper may give you an edge over your competitor for a while. But as Porter (1996) argues this is not
strategy. Doing better things in relations to competitors is not strategy either.

Strategy is none of these. Treating strategy as vision, mission and operations makes the fundamental
mistake of taking association for essence and substance. Clearly strategy is all about stand, and the
position CBA should adopt to take the company forward. The stand should be taken is about the position
taken by an organization on the industry and in the market. This is analyzed in our report using the BCG

CBA in constructing their strategies should focus on main two questions. That is ‘where you want to go’
and ‘how do you get there’ (goal and path). Putting the planning cart before the strategic horse is a
blunder that bedevils many an organization in its attempt to hone strategic action. Indeed strategy making
is inextricably associated with a standing and series of steps, and also importantly with a set of shared
values. A company like CBA which a company stands for engineering and innovative breakthrough
products should set itself an ambitious standing to achieve a high predetermined level of profitability
from its set of innovative customized products. Shared values play a major role in this instance. It may
encourage employees to experiment with new product formats.

                                          Standing         Step

                                 Stand + Shared Value = Role and Scope

                                     Standing + Step = Goal and Path

Defining CBAs’ role and scope first and then its goal and path are keys to strategy formulation. The letter
without he former is not an excise in strategy making, but one of planning.

Our suggestion for a standalone position for CBA is as follows.

                            Strategy Factor            Narrow Scoped
                                                       Differentiator (CBA)

                            Stand                      Position

                            Standing                   Objectives

                            Shared Values              Behavioral Norms

                            Steps                      Action Program

CBA an expert in office automation and engineering could define its stand merely in terms of type of
products and customer service that it offers to its particular markets or segments (position); merely where
they stand. It could have specific measurable objectives in terms of revenue. Furthermore the organization
should have specific behavioral norms in order to promote an innovative culture in place in order to gain a
competitive advantage.

Indeed it could also have a guiding system of operations and integration (business model) at the same
time or could have an action plan with detailed steps in order to be faith fully followed by all. The risk
here is the consequently many managers fail to grasp the quintessence of strategy, its essential content
and vital processes. CBA must ensure that such situations would not take place within the organization.
8.0 Analysis of Key Issues Faced by CBA

   1) Autocratic decision making limit involvement & innovation

According to Kurt Lewin’s different leadership management styles CBA usually adopt an
authoritarian approach in managing their employees. Furthermore a top-down approach in
decision making is practiced which is very directional. The top level managers carry high
authority power which will limit collaborative involvement of the subordinate staff. Instruction
given to the operational level of employees is rather forceful. But the positive side of this
circumstance is that the organization as a whole can make quick decisions, which will make it
rather easier for the top management to implement a decided new policy.

The most troublesome issue in CBA is that it was initially started 42 years back as a family
business by the present chairman who is now in his 80’s. The board of Directors rather discovers
it troublesome, because the chairman does not act solely as a non-executive director neither
constructively challenge the decisions & opinions brought in by the operational, managerial or
sometimes even sometimes by his director level colleagues. This eventually leads to staff feeling
de-motivated since their new ideas and innovations are not considered. Further this will lead
them towards waiting for instructions thus causing more & more delays. CBA focuses on high
quality & differentiation; therefore as a result this will bring about operational inefficacies to the
company long term.

   2) Poor financial & non-financial benefits for the non-executive level staff

Motivation is the driving force within individuals by which they attempt to achieve some goal in
order to fulfill some need or expectation. When speaking about reward systems one of its key
aims is maintaining a fair and a consistent basis for motivating and rewarding people. Where as
in the context of CBA a disparity is more over seems to be visible among the reward scale of the
executive and non-executive level staff. The pay ranges and benefit packages offered for the
executive level staff is highly attractive in contrast to the salary and benefit packages offered for
the non-executive level staff.
Mostly key operations of CBA is driven by the non-executive staff (technical) where as they
benefit packages show a huge disparity with regard to the benefit package of the executive level
staff which breaks one of the key aims of a reward system; ‘being fair and rather consistent’. It's
one of the thorniest management problems around in the company: dealing with unmotivated
technical staff. It's easy to point the finger of blame at them. But it's the reward system, not the
workforce, that's causing poor attitudes and performance: many reward systems actually
discourage desired behaviors while rewarding the very actions that drive executives crazy.

   3) Costly material acquired which leads Servicing cost > Agreement values

CBA imports raw materials from numerous international suppliers; China, Italy, USA & Japan
are some few example. All of these countries are adversely impacted by the global financial
crisis. Furthermore, the fluctuating exchange rates are rather more troublesome for quality
conscious organizations as CBA. Therefore raw material inflation has continued struck adversely
due to a current weak trading environment, which eventually leads to rising in servicing costs
more than its agreement values, which could potentially give rise to an unprofitable business.

If purchasing renegotiates a higher price for a particular raw material to ensure availability when
prices are rising, but sales has already locked the company into non-negotiable customer
contracts for the same time period, the higher prices cannot be passed on to customers. In effect,
CBA assumes the full cost of mitigating the supply risk, rather than being able to share some of
that cost and risk with the customer. Therefore is atmosphere eventually leads CBA to
transaction, translation and economic risks; where appropriate risk management methods and
strategies are not quite visible in the organizational context.

   4) Uncertainty in the market and fierce competition among players in the market which
       CBA operates

CBA further more continues to be challenged by fierce competition. CBA continues to operate in
a quality conscious segment which is relatively high priced comparing to its competitors. Only if
the firm drops the price it can enjoy a major market share. Therefore CBA faces a key barrier in
dropping its price and furthermore passing a very high price on to its customer.
Not only are the key players mentioned in the previous sections of the report, a lot of few other
players in the market who are operating at low cost levels are a threat to CBA. It brings about a
position for CBA which makes it hard for them to achieve a sustainable competitive advantage
long term. Furthermore as technology improves the competition is able to leap frog the
production capabilities eliminating the competitive advantages. Furthermore, uncertainty and
slow responsiveness can risk out the business strategy of CBA.

The bottom line is that uncertainty leads to a short-term focus. Companies are shying away from
long-term planning in favor of a shorter-term focus with uncertainty as the excuse. For example
CBA was slow to enter in to the ATM market where as the competitors like EPIC Lanka & DMS
got a good long term competitive advantage due to that delay.

   5) Over focus only on one core business area (engineering): reluctant to diversify in to other
      business areas.

The engineering industry has gotten more complex even as certain tasks and activities have
become easier due to information technology. The pace of change is quickening. Whereas
competitors of CBA have started to diversify in to many unrelated business areas in order to
diversify its risks. For example Browns group and John Keels, the market leaders in this industry
have diversified in to business areas such as plantations, power generation, pharmaceuticals etc.

This issue that CBA faces highly relates with the issue number one. Lack of diversity in
leadership teams leads to a narrow view of an ever-changing and diverse world. Diversity brings
many challenges, as it makes it far more likely that people do not agree, and the lack of
agreement makes execution very difficult.

Unrelated diversification if managed efficiently can bring very good financial results to CBA due
to its brand name & historical prestige. Furthermore this diversification can secure funds on
hand during a seasonal slowdown, adding to the cash flow for the main business activity. It will
more over give CBA the opportunity of spreading the risk through different sectors of the
economy. As a rule, the implementation of unrelated diversification strategy requires allocation
of significant financial and human resources.
9.0 Recommendations, Justifications and actions to be taken to handle the Key
Issues Faced by CBA

   1)      Autocratic decision making limit involvement & innovation

Take advantage of employee knowledge and skills.

The management of CBA needs to identify the key competencies and skills of the employees.
Furthermore they have to understand how people can contribute in implementing the strategy.
Most employees in an organization want to be recognized and considered as valuable members
in the organization. People of CBA may have unused talents that are crucial for the success of
the strategy of differentiation (quality conscious) that the company focuses on. Furthermore
communication would be a key value adding tool with regard to this. Effective communication
throughout functional and hierarchical would be rather more beneficial for CBA to get rid of this

They key actions to be taken would be delegation of authority and boosting up an innovative
culture in CBA where the top management would also get the advantage of spending more time
on key strategic issues. Improved succession planning and appropriate training would also be
rather value adding in this context. The chairman should be advised to act as a non-executive
director who constructively challenges operations of CBA and not the person who drives the
organizational operational functions. The managing director should be given the freedom to
handle the strategies and appropriate issues. A more decentralized approach and an innovative
culture is also a key. The focus should be to letting people have room to “play” is to refrain from
judgment of their activities or methods. Furthermore top management of CBA should resist the
temptation to look for immediate results.

   2)      Poor financial & non-financial benefits for the non-executive level staff

Management should ensure that CBA is using the full range of financial and non-financial
rewards available to them backed by equity with a minimum level of discrimination.

It is very important to have a well-managed remuneration system in place. Fair and reasonable
reward is essential and very important for good morale.
The equity theory of motivation plays a major role here. Employees of CBA (especially the non-
executive level staff) have to believe that their pay is equitable with others. When they compare
their salary and benefits with their colleagues and co-workers, they must believe that they are
being fairly compensated. If they believe their compensation is not equitable, they become very
de-motivated and their work performance suffers.

Furthermore financial compensation is an element, the importance of which increases when the
compensation received is not appropriate. Non-financial rewards can be very important for their
long-term effect. It is time for CBA to look at their human resources and management practices.
The Human resources department of CBA should be advised to design a fair and an equitable
reward scheme in order to motivate their employees over the long run, not only financially but
furthermore, through non- financial approaches such as empowerment and authority delegation.
The Balance Score card would be an ideal performance measure for CBA since it focuses on
diverse aspects of the organization, which is not only financial.

   3)      Costly material acquired which leads Servicing cost > Agreement values

CBA should focus more on appropriate cost projection methods to avoid cost over runs, and
moreover should enter in to financial agreements (e.g. Forward contracts) with its suppliers in
order to mitigate the transaction risks the company is exposed to.

Because of uncertainty in demand, the need to stay lean is critical. Uncertainty in supply, driven
by wildly changing commodity prices, an apparent increase in weather-related disruptions, and
increasing competition for raw materials from the suppliers of the above mentioned countries,
makes materials planning more challenging than ever. Furthermore CBA is also exposed to
currency risks. The problem to be solved is to develop a supply-chain strategy that not only
ensures the lowest costs, but that also minimizes the risk of crippling supply-chain disruptions.

Furthermore the company should also focus on going in to appropriate contracts to mitigate
currency risks. Additionally CBA can employ sourcing and contracting techniques to limit
suppliers' ability to pass on additional costs. For example, diversifying the supplier base for
priority raw materials gives companies negotiation leverage and limits the power of individual
suppliers when prices spike. In some circumstances, it is possible to partner with suppliers to
share supply chain risk (such as using fixed, long-term contracts).
Additionally CBA should not rely on them exclusively; hedging strategies that transfer risk to
counterparties in the financial markets can be critical. CBA must take clear financial assistance
to understand the sophisticated positions they need to take; otherwise they may end up creating
more risk for their organization.

   4)      Uncertainty in the market and fierce competition among players in the market which
           CBA operates

CBA should focus more on incremental change rather than focusing on planned change. It would
eventually help CBA to match the organizational performance with the external environment.
When the need for change is ignored the organizational decline generally follows.

Therefore CBA should focus on adaptation in collaboration with the recommendation number
one; delegation. Flatter organizational structures and bottom up approach would rather add value
to CBA in order to overcome uncertainty and to gain a sustainable competitive advantage.
Change should be open ended and going on. Flexibility and cultural adjustments should play a
major role in this instance. Loss of managerial power and more trust in the individual worker
should not be the case. It should be a balanced approach in collaboration.

Resistance to change must be overcome in an effective manner in order to win this game. Politics
in the organizational context should be rather avoided and mitigated. Participation and
involvement of employees should be a core action. Furthermore they should be properly
educated and communicated. Involvement of the CBA employees especially the non-executive
level staff is thus critical. Facilitation and support should be provided via appropriate training.

This will eventually lead CBA to overcome any resistance of change and to face the uncertain
environment in a more confident manner which would result in them gaining a sustainable
competitive advantage over the long run.
    5)      Over focus on one core business area (engineering): reluctant to diversify in to other
            business areas.

CBA can diversify from its core business area in to other unrelated or related business areas
(provided that it is well planned and through planning is done) in order to reduce risks.

If CBA is focusing on unrelated diversification CBA should carefully develop and undertake it
only after thorough analysis of the environment and the company´s own resources. However, in
all cases it should be a low risk investment with a potential for high returns. CBA is a firm that is
rich in availability of cash. Furthermore the cash is idling (as cash in bank and deposits) where it
is not invested in a proper manner in order to bring about sufficient wealth for the shareholders
in the long run. Additionally CBA has all the capability of being listed in public which would
allow the firm to get more and more adequate cash in order to expand its operations.

Therefore CBA could focus on spreading the risk through different sectors of the economy. It is
very important to identify industries in which the business activity slowdown does not coincide
with the slowdowns in the main business of CBA. Since CBA is one of the BOI approved
organizations, it has the flexibility and the government support adequately.

Achieving successful unrelated diversification requires good management skills, closely
following each of the business activities and timely identifying and solving even the smallest
problems. The greater the number of business activities, the more difficult is the total
management task. As a rule, competent board members should be assigned in order to plan for
the future, proper implementation and strategies should be adopted where as it can always follow
the best practices of its market leader. Expansion will give room to competitive advantage but it
should be noted to focus on product, market, financial and other operational risks involved with
its strategies.

Shared By: