Threat Of New Market Entrants Management Essay

Threat Of New Market Entrants Management Essay For this assignment, we have chosen Rehm Grinaker Construction Company Ltd and have identified its strategic marketing strategies. The Construction industry plays a major role in transforming the wants and needs of people into reality; they are realised through construction projects which includes infrastructure such as roads, schools, houses, hospitals, airports, factories and dams. At present, the Construction industry in Mauritius is booming; many construction projects are being developed. Rehm Grinaker is considered as one of the leading construction company in Mauritius. Companys Profile REHM-Grinaker Co. Ltd is a renowned construction company in Mauritius and it was founded in 1991. Over the years, REHM-Grinaker has grown from modest beginnings into being a well-recognized, leading multi-disciplinary construction company reputed throughout Mauritius for delivering quality work on time.  REHM-Grinaker has a permanent workforce of over one thousand five hundred well qualified Mauritian staff.  In its 20 years of operation REHM-Grinaker has played a role in all sectors of the thriving Mauritian economy through the construction of commercial and office buildings, hotels and leisure facilities, stadia, luxury villas, industrial buildings, roads and bridges, healthcare facilities, the renovation of historical buildings, the construction of golf courses, marine works, water and sewage treatment plants, power plants, pipelines, and all types of major infrastructure and building works. REHM-Grinaker is a majority Mauritian shareholder company, with the added advantage of being able to access the expertise and resources of shareholder Aveng Grinaker-LTA, one of the largest Construction companies in Africa. Research Methodology The Construction industry has been facing a lot of issues, particularly when it comes to the marketing of their products because of the little significance given to the Marketing philosophy. Hence, the research methodology has helped to gather the required data for the research in order to better understand how REHM-Grinaker designed its marketing strategies to better sell its products. In an attempt to analyse the Strategic Marketing Management of REHM-Grinaker, an appointment was made with Mr P. Moothien Pillay, HR Manager at REHM-Grinaker in Arsenal on Monday 27th September 2012 at 10.00 a.m at the headquarters itself. All members of the group attended the in-depth interview. The latter covered various areas of the Strategic Marketing Management process, namely: Business Definition, Mission, Vision and Goals of REHM-Grinaker Marketing Audit: Internal and External Audits Marketing Objectives Marketing Strategies Marketing tactics/mix decisions Marketing Ethics and Social Responsibility Strategic Planning Evaluation and Control processes A short questionnaire (see Appendix 1) was designed as a guide in order to establish a flow in the way the questions were asked to the interviewee. The interview lasted for one hour and thirty-seven minutes and was recorded. From this interview, a proper analysis of REHM Grinakers marketing strategies was possible. Analysis of Findings The analysis and findings part will enable describe the information gleaned at REHM-Grinaker during the interview. All relevant data pertaining to the marketing strategies of this company will be studied thoroughly and commented on. Business Definition, Mission, Vision and Goals of REHM-Grinaker Business Definition Rehm Grinaker is a well known company in Mauritius providing construction services to firms and the government. It is among the leading companies in Mauritius since it has gained the reputation for delivering quality work on time.   Therefore, Rehm Grinaker particularly deals with big companies who can have the means to pay for the premium services it offers and hence the projects on which the company has worked are important ones and it uses the latest technology available to facilitate construction. For example, building the biggest shopping mall in Mauritius, that is, Bagatelle, on the Ring Road Phase 1 and the overlaying of the runway at the SSR International Airport. Mission Rehm Grinaker has five core values and for the company abiding by these is fundamental. The five core values are listed below: Safety Accountability Integrity Client satisfaction Employee fulfilment Hence, by implementing these values the company has been able to have a clear insight to develop its mission efficiently. Rehm Grinaker focuses immensely on providing quality service on time to its clientele to gain client satisfaction. However, achieving client satisfaction for Rehm Grinaker also means that this is done in accountability and integrity whereby its employees are safe and they are satisfied with their work. Thus, employees of Rehm Grinaker know these values and its importance and abide by them. Vision Build a better future. Rehm Grinaker has the above as its vision and this means the company wants the countrys advancement and by providing premium construction services it is contributing towards achieving its vision. Converting Environmental Opportunities into Organizational Opportunities This refers to fulfilling the unmet or changing customer needs; satisfy the unsatisfied buyer groups or using new means or technology for delivering value to prospective buyers. At Rehm Grinaker, the service that they provide to their customers is always up to date since they focus on delivering quality service. For instance, the company tries to minimum damage as much as it can pertaining to the environment and also tries to use eco friendly materials. Hence, its clientele are satisfied and the case whereby there are unsatisfied customers is quite rare. Nevertheless, if it happens then the company tries to find out the reasons which has caused dissatisfaction and takes the necessary actions to remedy the situation. As well, Rehm Grinaker uses the latest technology regarding its machines and equipments to facilitate the tasks of its employees and also to deliver premium construction services. Hence, the company invests in technology so that it is able to use the most efficient means in construction. Additionally, Rehm Grinaker is known to deliver quality service on time; this means the company respects the deadline given to complete its work and the latest technologies as well as the qualified labour force helps to achieve this goal. Marketing Audit Swot analysis of Rehm Grinaker Strengths The Rehm Grinaker has trained and motivated staff to serve its customers. This can benefit the organization in terms of greater productivity and serving customers better. It helps to improve the organisations image when dealing with customers. Rehm Grinaker offers specialized construction schemes to its customers. Therefore customers are now faced with greater choice and may customize what they want to build. in this context Rehm Grinaker is more customer focused. The organization operated in an environmental friendly way. The quality of service is provided at its highest. Since the organisations main motto is Quality on time, the organization makes sure that any project is being delivered on time with the highest quality. Weaknesses The cost of production is increasing every day. The cost of materials such as cement and iron bars are examples amongst others. It is difficult for the company to keep in touch with technological advances due to high cost of investment. Opportunities Rehm Grinaker can take advantage of government projects such as the building of new road networks and other projects. Expatriated labour is available at cheaper rates from countries like China and India. This can bring a decrease in the labour cost resulting in lower costs of production. Financial support is provided by banks. This can be used to improve the companys financial position. Threats There is existence of other competing firms in the construction industry such as Gamma Civic, Padco, and General Construction amongst others. Internal Audit of Rehm Grinaker This includes the objectives of Rehm Grinaker that is, it has evolved to become one of the leaders in the multidisciplinary building and civil engineering construction services. Structure of Rehm Grinaker: The management team comprises of the following: Managing Director Executive Director Financial Director Construction Manager Commercial Manager Rehm Grinaker has achieved many successes for instance it is known to have built Bagatelle Mall, and Caudan Phase II. It is presently involved in the construction of Ring Road Phase I, overlaying of the runway at SSR International Airport among other projects.  Moreover, it also provides a quality service to its clients on time and it is also considered to be a profitable and well known construction company since it originates from one of the largest construction companies in South Africa. External Audit of Rehm Grinaker The external audit comprises of the following: Micro environment-Consists of employees, customers, suppliers, competitors, intermediaries who are involved with production and sales. Employees-Rehm Grinaker Construction Ltd provides its employees the necessary tools and equipment for them to carry out their tasks effectively and efficiently. For instance, the workers wear reflective vest, hard hat, gloves, safety glasses and security shoes. Safety and security facilities are provided to the workers and in order to motivate them to work in difficult conditions incentives are also given to them. Customers-Rehm Grinaker delivers its projects on times to satisfy its customers and to maintain a good Customer Relationship Management. It also makes follow ups with its clients due to the rising customer expectations and increased competiveness has become a key feature of the construction industry. Suppliers-Rehm Grinaker buys construction components from Gamma Civic Ltd and Betonix Ltd. The company focuses on quality and prompt delivery in order to meet customer expectations that is raw materials need to be provided on time and it also believes in maintaining good Supplier Relationship Management. Competitors-The competitors in the construction industry are differentiated in terms of brand name, quality, and price and among others. They influence the factors when making tenders and bids to obtain a construction contract. Intermediaries- Rehm Grinaker engages only in offering construction services to clients. Hence, when Rehm Grinaker needs to buy construction materials for its construction projects it negotiates directly with Gamma Civic Ltd. External audit Porters Five Forces Model The importance of designing competitive strategy is to relate REHM-Grinaker to its environment in which it is operating. The strategic marketing manager seeking to develop an edge over rival firms can use the Porters model to better understand the industry context in which the construction firms operate in Mauritius. Michael Porter provided a framework that models an industry as being influenced by five forces: Threat of new market entrants The barriers to entry into the current Mauritian construction markets is not high, because there are common technology used, access to distribution channels and low scale investment. The only possible barrier is the goodwill that the current companies have established. Hence, the corporate image in the construction market is one competitive advantage. With the development of the current economic globalisation, more and more foreign companies are entering the Mauritian construction market. Furthermore, Mauritius forms part in the World Trade Organisations, SADC, and COMESA. These multinational organisations, either developed countries (e.g LAXCON Construction from Kenya) or from industrialized countries such as Colas Ltd is from France; these companies have an upper hand in terms of technology, management skills or capital as well as costs. This will bring a serious threat to the current companies, including REHM Grinaker. Threat of substitute products In the construction industry, the threat of the substitute can be assumed not existent, because of the non-substitutional nature of products or services provided by the industry, for instance there will be the absolute use of cement, rock sand, hollow concrete blocks, aggregates, iron bars and other such materials during the construction of any building, and so the question of having close-substitutes does not arise as such. Bargaining Power of Buyers In the construction industry, customers choose the contractor through a tender system. For instance, they will prefer the contractor offering the lowest price for its service and as REHM Grinaker wants to position its service as a quality service rather than relying on a penetration pricing strategy to win a bid. It somehow wants to differentiate itself from competitors like IREKO which offers a poor service at a much lower cost. Therefore, to REHM Grinaker, customers satisfaction is very important to build its repute across Mauritius and will hence comply with each and every of their exigencies (for instance, changing the whole architecture while construction is already underway, short notice deadlines) to avoid switching to competitors. Bargaining power of suppliers REHM Grinakers main suppliers are Gamma Materials Ltd, UBP. The latter are well known for providing quality products and have a considerable impact on the final delivery of REHM Grinaker to its clients. So, REHM Grinaker has no other choice but rely on these specific suppliers. Unlike Gamma Civic, it does not have the possibility of cutting on the buyer by going forward vertical integration that is produce its own raw materials itself. Hence, it is compelled to keep a good relationship with its suppliers. Existing competitive rivalry between competitors As in any industry in Mauritius and abroad, there is rivalry among competitors and the construction industry is not left out. For instance, the main rivals of REHM Grinaker are: General Construction Co Ltd, Gamma Civic, PAD Co., and BCE. So according to the strategies used by its main competitors, REHM Grinaker has to tailor-make and thus differentiate its strategies in order to outmatch them and be a leader of this market. PESTLE Analysis of REHM GRINAKER Political and Legal factors According to the manager of REHM Grinaker, the government focuses heavily on foreign contractors which impacts negatively on REHM Grinaker in the form of competition. Moreover, certain companies in the construction sector are more privileged when compared to Rehm Grinaker since they got high political background. On the other hand, for the legal factors, REHM Grinaker needs to agree upon several binding laws such as the labour laws and safety laws impose by the government. For example according to the safety law, it is recommended to have one full time registered safety officer and for REHM Grinaker it employs one senior safety manager, two safety managers and six trainee safety officers. Economic factors For the economic factors, the manager of REHM Grinaker believes that the construction sector in Mauritius is fluctuating. The demand is falling and according to him investors also are not investing their money as they are looking for the stability of the Mauritian economy. He also mentioned that due to the recent downturn, the economic situation is unstable for the construction industry as a whole. Social and Environmental factors As for the social factors, 2% of REHM Grinaker profits go for the CSR fund where the bulk of the money goes mainly for the unprivileged and disable children. For example they donate funds to APEIM and to several schools for disabled children. On the other hand, for environmental factors, the manager believes in building what is designed. He pointed out they do care for the environment when they are undertaking construction work and for each project they undertake, an environment management plan is prepared whereby according to him it consists of how to promote a safe environment that is not to harm the environment. A plan for management of waste also is prepared and strategies on how to avoid less pollution such as noise and air pollution while working. Technological factors Nowadays REHM Grinaker is engaged into the construction of huge buildings such as Bagatelle and SIT business and knowledge centre with the help of new and modern equipments. According to the manager, REHM Grinaker makes use of big cranes to facilitate and makes it easier to work. They also make use of reusable equipment, such as metal which is more flexible instead of wood which were used long ago. Moreover, one example of new equipment that was used in the construction of Bagatelle is the post tension cables. THE BCG MATRIX In the light of the information obtained from the interview with Mr Moothien Pillay, it could be deduced that REHM Grinaker is found in the Star segment of the BCG Matrix. The organization is one of the market leaders in the construction sector with so many outstanding projects in the pipeline. THE ANSOFF MATRIX As from the Ansoff Matrix, and according to the interview, it could be deduced that REHM Grinaker is actually in the Market development section. Since its 21 years of existence, it has not quite diverted from its main activity which is the construction of infrastructures. However, this company has been trying to capture new markets at all times. It is going for more prominent projects. From the extension and renovation of small buildings, it has of late been involved in the construction of Bagatelle and Cascavelle Malls, which are, if not, the biggest projects REHM Grinaker has ever embarked on. Marketing Ethics and Social Responsibility One of the most important marketing assets of REHM Grinaker, according to the Manager, is its corporate image. As far as ethical considerations are concerned, integrity is one of the main core values of REHM Grinaker. Personal relationships with suppliers, clients and project managers are always managed in an ethical manner and the organization does not run on bribes. There is no preference for family members of employees in the organization and a decent salary is given to all employees. No one worker on sites is exploited. Therefore, REHM Grinaker makes it an adage to work in the cleanest environment. And if anyone is aware of any unethical behaviour, it is the onus of that person to report it. Therefore, REHM Grinaker wants live up to its good reputation and this is the best marketing strategy it can possibly flaunt. Furthermore, as any organization, REHM Grinaker does not fail to contribute 2% of its profits to the CSR Fund. Nonetheless, it has also engaged itself in many social work activities. Since its headquarters is found in a poverty-stricken area, REHM Grinaker has chosen to help the underprivileged children living in the vicinities. The company namely invested in education training as well as in organizing events for them during the festive season. Again, through this endeavour, REHM Grinaker wants to differentiate itself and improve its corporate image. STRATEGIC PLANNING PROCESS In todays highly competitive business environment, organisations must engage themselves in strategic planning that clearly defines the mission, objectives and assesses both the internal and external situation to formulate strategy, implement the strategy, evaluate the progress and make adjustments as necessary to stay on track. THE STRATEGIC PLANNING PROCESS Mission Objectives Situation /Strategic Analysis Strategy Formulation/ Strategic Choice Strategy Implementation/Control Strategic Analysis/Situation analysis The environment Pestle analysis of Rehm Grinaker Strategic Capabilities Swot analysis of Rehm Grinaker Stakeholders expectations The stakeholders of Rehm Grinaker expects that the management and the employees perform their duties conscientiously, honestly and in accordance with the best interests of them and the company. Moreover, Rehm-Grinaker is a preferred contractor for most of the major stakeholders in the industry because the company has built its success on achieving quality on time not only to the final construction product but when dealing with partners in the construction process as well. Organisational Culture The organisation culture of Rehm Grinaker is to deliver quality work on time. Strategy Formulation/Strategic Choice Given the information from the environmental scan, the firm should match its strength to the opportunities that it has identified, while addressing its weaknesses and external threats. In addition to that to have superior profitability, firms seek to develop a competitive advantage. In the case of Rehm Grinaker, it can be seen that the company has competitive edge in providing sustainable construction works and the most important competitive advantage that the firm has over its competitors is the accessibility to the expertise and resources of shareholder Aveng Grinaker-LTA, one of the largest Construction companies in Africa. Strategy Implementation/Control The selected strategy is implemented by means of programs, budgets and procedures as well as the implementation of the strategy must be monitored and adjustments made as needed. In the case of Rehm Grinaker, the company must assess their actual performances and have detailed specifications on contracts completed such as Bagatelle Infrastructure, La Croisette Bulk Earthworks, Terre Rouge Verdun, and among others.