SECTION C:
Choose a
company of your choice and conduct a strategic management audit
Solution.
Using
Dangote Cement Plc
Strategic
Audit of Dangote Cement Plc
1.
Current
Situation
A.
Current Performance
Dangote
Cement is a fully integrated cement company and has projects operations in Nigeria
and 14 other African countries; Dangote
Cement’s current total production capacity in Nigeria from its three existing cement
plants namely Obajana (10.25 MMTPA), Ibese (6.0MMTPA) and Gboko (4.)MMTPA) is
20.25MMTPA.
The
Obajana Cement Plant (OCP) located in Kogi State is reputed to be one of the
single largest cement plants in the world with a combined capacity of
10.25MMTPA.
A fourth
line which adds 3.0MMTPA to the existing capacity will bring the total capacity
of Obajana to 13.25MMTPA in 2015.
The
company has the following current financial performance:
2014 2013
Billion
(N) Billion (N)
Turnover
391.6 386.2
Profit
Before Interest and Tax 187.1 195.9
Profit Before
Tax 184.7 190.8
B. STRATEGIC
POSTURE
i.
Mission
The
mission of Dangote Cement Plc is to deliver strong returns to the shareholders
by selling high-quality products at affordable prices, backed by excellent
customer service.
To help
Nigeria and other African countries towards self-reliant and self-sufficiency
in the production of the world’s most basic commodity, by establishing
efficient production facilities in strategic locations close to key growth
markets.
To provide
economic benefits to local communities by way of direct and indirect employment
in all countries in which they operate.
ii.
Objectives
To
be Africa’s leading producer of cement, respected for the quality of its
products and services and for the way it conducts its business.
iii.
Strategies
·
Develop
products that meet the requirements of the customers
·
Invest
in advanced level of technology to product at the minimum cot
·
Enhance
the level of distribution making product easily accessible to customers;
·
Price
stability and control across the depots;
iv.
Policies
·
Producing
at highest level of productivities
·
Consistence
research and development
·
Internal
promotion from within
·
Price
regulation and control
·
Staff
training and development
·
Total
quality control and management
·
Cost
reduction and management at every unit
·
Guided
by professional ethic and conduct
2. STRATEGIC
MANAGERS
A. Board
of Directors
The
company appointed thirteen (13) members of the board of directors including Alhaji
Aliko Dangote as the Chairman of the board and other four (4) well respected
foreigners.
B. Top
Management
Top
managements promoted from within the company are very experienced in the
industry and responsible to oversee into the operational activities of the
company.
3. External
Environment
A. Societal
Environment
The external
environment operating outside the influence of the management include the
following:
i.
Economy: These are government economic policies as
related to the industry or market (O)
ii.
Technology:
These are the advance machine or facilities used for meeting production activities
including computer and information technology needed to aid research and
development programmes (O)
iii.
Political: The company is vulnerable to any changes in
the political environment due to changes in government policies as related to
the industry (T)
iv.
Legal: Dangote Cement Plc is guided by the provision
of the company Allied and Matter act (CAMA 1990), Securities and Exchange
Commission (SEC), Nigerian Stock Exchange, Standard Organization of Nigeria
(SON) and other trade union and association such as the Manufacturing
Association of Nigeria (MAN). (T).
v.
Socio
Cultural: This is the production of
standardized and high quality product that meet the needs of the society (O)
B. Task
Environment (Industry Analysis)
These include the
following:
·
Competitive
market environment (T)
·
Availability
of productive resources (O)
·
Bargaining
power of customers (T)
·
Bargaining
power of suppliers (T)
·
Threat
of substitute (T)
·
Power
of other stakeholders such as creditors, investors, bankers etc. (T)
4. Internal
Environment
i.
Corporate
Structure:
·
The
company is well structured into segments and units for effective line of action
and responsibilities (S)
·
Decision
making is centralized and decentralized based on the laid down structure (S)
ii.
Corporate
Culture:
·
Total
commitment to quality of product (S)
·
Well
conducive working environment (S)
·
Guided
by professional ethic and code of conduct (S)
·
Attaining
highest level of productivity (S)
iii.
Corporate
Resources:
a.
Marketing:
·
The
company enjoys competitive market advantage arising from the experience in the
industry and production of quality product (S)
·
Adequate
and efficient distribution of the product across the location for easy
accessibility of product (S)
·
The
product is the price giver and not taker dominating the other similar products
(S)
b.
Finance
·
Reduction
in the sales revenue for the year 2015 as compared with 2013 (W)
·
Decrease
in the retained earnings for future expansion and growth (W)
·
Decrease
in shareholder’s fund i.e. owner’s equity (W)
·
Increase
in the market price of shares during the period (S)
·
c.
Research
and Development
·
Introduction
of 3X cement (i.e. Extra strong, Extra life and Extra yield) gaining market and
customers patronage (S)
·
Consistence
increase in the level of research and development of new products (S)
·
Availability
of technology to support research of new products (S)
d.
Operations
·
Product
centered on total quality control and management (S)
·
Total
commitment to highest level of productivity (S)
·
Consistence
and continuous production of standardized product (S)
·
Availability
of power and other productive resources (S)
e.
Human
Resources
·
Good
management employees relationship (S)
·
Staff
promotion and motivation (S)
·
Decrease
in the level of labour turnover (S)
·
Conducive
working environment and provision of safety tools (S)
·
Industrial
accidence and increase in staff insurance cost (W)
f.
Information
System
·
Adequate
information system to review the operating activities and also generate
feedback (S)
·
Information
system assist management in decision making (S)
5. Analysis
of Strategic Factors
·
The
company operations is in consistence with the mission and vision statement
·
The
long term objectives is realizable
·
There
is constant review of strategic factors
6. Strategic
Alternatives and Recommendation
a.
Strategic
Alternatives
i.
Market
Strategy and development of a small size product to meet the demand of
customers
ii.
Pricing
strategy by reduction to increase the level of turnover
iii.
Expansion
strategy by acquisition of other small competitors to control monopoly power
iv.
Distribution
strategy by increasing in distribution channel to bring the product more closer
to the customer
b.
Recommendation
Strategy
·
Pricing
strategy is recommended considering the fact that the company enjoys cost
reduction advantage as a result of large economic of scale
·
Distribution
strategy may also be developed in order to make the commodity easily accessible
to customer ahead of competitors products.
7. Implementation
The
above recommended strategies may be enforced during the coming year in order to
boost the revenue of the company, increase the profit after tax, then retained
profit for the year and the shareholder’s fund (i.e owners’ equity).
8. Evaluation
and control
The
level of actuation of the company strategies can be accessed through the
quarterly, bi-annually and annual financial statement for the year using
financial ratio and performance comparison.
References.
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