Ghani Glass (Strategic Management Report)

Literature Search Strategy “Strategic Management can be defined as the Art and Science of formulating, implementing and evaluation cross-functional decisions that enable an organization to achieve its objectives” [1].

“Strategy is the direction and scope of an organization over the long-term which achieves advantage for the organization t Through its configuration of resources within a challenging environment to meet the needs of markets and to fulfill stakeholder expectations". [2]

The process of Strategic Analysis can be assisted by a number of tools, including:

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• Pest analysis - a technique for understanding the "environment" in which a business operates
• Scenario planning - a technique that builds various plausible views of possible futures for a business
• Five forces analysis - a technique for identifying the forces which affect the level of competition in an industry MARKET SEGMENTATION - a technique which seeks to identify similarities and differences between groups of customers or users
• Directional policy matrix - a technique which summarizes the competitive strength of a business’s operations in specific markets
• Competitor analysis - a wide range of techniques and analysis that seeks to summaries a businesses' overall competitive position
• Critical success factor analysis - a technique to identify those areas in which a business must outperform the competition in order to succeed
• Swot analysis - a useful summary technique for summarizing the key issues arising from an assessment of a business’s "internal" position and "external" environmental influences.
• Strategic choice- this process involves understanding the nature of stakeholder expectations (the "ground rules"), identifying strategic options, and then evaluating and selecting strategic options.
• Strategic implamentation - it is the trickiest part... When a strategy has been analyzed and selected, the task is then to translate it into organizational action.
• Vision statements. Vision statements are defined by organizations as “What do we want to become? ”. Strategic visions ought to convey a larger sense of purpose- so that employees see themselves as “building cathedral” rather than “laying stones”.
• Mission statements. Mission statements are enduring statements of purpose that distinguish one business from other similar firms. A mission statement identifies the scope of the firm’s operations in product and market terms. [5]

Other sources include magazines, newspaper, internet and business journals. Following are the 5 forces that shape strategy. These 5 forces determine the attractiveness of the industry. If the rivalry is intense, for example in auto and gaming industry, we can say that it has reduced the attractiveness of the industry. Similarly, if the forces are moderate, as they are in industries such as software, soft drinks, and toiletries, many companies are profitable.

Industry structure drives competition and profitability, not whether an ndustry produces a product or service, is emerging or mature, high tech or low tech, regulated or unregulated. While a myriad of factors can affect industry profitability in the short run - including the weather and the business cycle - industry structure, manifested in the competitive forces, sets industry profitability in the medium and long run. These five forces are further affected by the external environment which are rather uncontrollable and are widely popular as PEST in Porter theory of 5 forces.

An organization should identify and evaluate internal strengths and weaknesses in order to effectively formulate and choose among alternative strategies.

The second central question in competitive strategy is a firm's relative position within its industry. Positioning determines whether a firm's profitability is above or below the industry average. A firm that can position it well may earn high rates of return even though industry structure is unfavorable and the average profitability of the industry is herefore modest.

Each of the generic strategies involves a fundamentally different route to competitive advantage, combining a choice about the type of competitive advantage sought with the scope of the strategic target in which competitive advantage is to be achieved. The cost leadership and differentiation strategies seek competitive advantage in a broad range of industry segments, while focus strategies aim at cost advantage (cost focus) or differentiation (differentiation focus) in a narrow segment.

The specific actions required to implement each generic strategy vary widely from industry to industry, as do the feasible generic strategies in a particular industry. While selecting and implementing a generic strategy is far from simple, however, they are the logical routes to competitive advantage that must be probed in any industry.

In most industries, quite a few competitors are stuck in the middle. Ghani Glass - An Introduction: The founder of Ghani Group Sheikh Abdul Ghani (late) started business in 1963 and established a coal / silica sand mining firm in the name of Ahmad Brothers and Company. Now, the group is running a diverse range of businesses including three glass manufacturing plants, an automobile plant and a number of leading mining companies have an annual turnover of over Rs. 8 Billion. The origins of this group can be found in the mining industry given its involvement in coal, salt and sand mining since 1959.

The substantial strategic benefits of vertical integration led them to consider venturing into the manufacturing field in subsequent years. The chosen manufacturing field was glass manufacturing due to the robust demand for glass products in the country. The Ghani Group was not new to the glass manufacturing industry. They had been supplying silica sand to the glass industries four decades back. Their dedication to quality and customer service allowed them to land an exclusive 25 year excellence certificate from Phillips.

Their venture into the manufacturing field took the form of Ghani Glass, incorporated in 1992 and starting production in 1995, forming the first step on the road to success of Ghani Glass limited, which today own three glass plants namely GGL1 – Hattar, GGL2 – Landhi and GGL3 – Sheikhupura Road.

To indulge in honesty, integrity and self determination, to encourage excellence in performance and most of all to put our trust in Allah, so that we, eventually through our efforts and belief, become the leader amongst glass manufacturers not only in Pakistan but in Asia. Mission: The company has no mission statement and according to them, their vision connotes their mission.

As such, the politico legal system has not influenced the bargaining power of customers in this industry. Even in the turbulent times, the company has been successful in achieving sales targets and net income is continuously showing an upward trend. Economic conditions do not impact the bargaining power of buyer in this industry because the offerings of Ghani Glass are quite high in quality as compared to that of others. The float glass has become an indispensable element of modern infrastructure thereby; it has resulted in an increase in demand and decrease in bargaining power of buyers.

All new firms are subject to different licensing and regulatory procedures and the industry’s tax structure in also not supportive. Primarily, the economic conditions do not affect the behavior of this industry as glass has no direct substitutes and all the buyers including domestic and commercial ones are bound to buy glass when they need it.

The element of technology is very significant in glass industry and the processes involve high-tech machinery which makes superior glass. It can, therefore, be concluded that technology factor is lessening the buyers’ power. The industry is growing rapidly. The fixed costs of the business are a relatively low portion of total costs.

There are significant product differences and brand identities between the competitors. The competitors are diversified rather than specialized. It would not be hard to get out of this business because there are no specialized skills and facilities or long-term contract commitments, etc.

My customers would incur significant costs in switching to a competitor. |My product is complex and requires a detailed understanding on the part of my customer. My competitors are all of approximately the same size as I am.

Political conditions of our country don’t hit the rivalry factor of this industry up to large extent. But when small players in the industry leave the business due to unrelenting political mayhems, big players like Ghani Glass take the advantage of a decrease in competition, direct or indirect. E: The GDP of our country is growing and so is per capita income. Glass is a commodity where consumption is dependent on income. As incomes of individuals and corporations tend to increase, the consumption of glass also increases.

Glass is also used in bottling of soft drinks, medicines and automobile industry. The consumption of consumer goods also helps glass industry to endure economic slowdowns. Since the social factors are causing an increase in demand for glass, every player gets a chance cater certain segment of users. Thus it reduces the intensity of rivalry among the exiting competitors.

Due to the enhancement in technology and emergence of internet, both domestic and corporate customers have easy access to different suppliers thus it is increasing the rivalry among the existing competitors.

References:

1. Fred R. David, Strategic Management Concept and Cases 12th Edition. p. 4 2 Johnson and Scholes, Planning and Strategic Management, 1999. p. 10
2. Fred R. David, Strategic Management 12th edition p. 11
3. Thompson, Strategic Management 13th edition p. 40 5 Fred R. David, Strategic Management 12th edition p. 11 6 Mintzberg
4. Strategic Management by Thompson, 13th edition p. 80
5. Strategic Management by Fred R.
6. David 12th edition p. 73
7. Strategic Management by Fred R. David 12th Edition p. 104
8. Creating and sustaining superior performance by Michael E. Porter Free Press, 1998 (1985)

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