Professional Documents
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1.
(MTWI)
Myanmar Treasure Wood Industry Co., Ltd was founded in 2000 and is based
in Yangon, Myanmar and operates machineries by skilled local teams. The
main products of the company are furniture, scantling, decking, boards,
veneer, finger joints, flooring, door frames, quality sawn squares and custom
sizes. The first Europe Quality products are exported to Europe, USA, India,
China, UAE, Singapore, Vietnam and Thailand whereas the second quality
products are locally distributed, especially in Yangon, Mandalay and
Naypyitaw. The objectives of the company are to penetrate export and
domestic markets, to increase sale revenue by 10% by the end of 2017, to
produce high quality products for export, and to control and maintain the
quality.
C
M
hD
a
i
r
p
e
r
s
o
n
Figure 1:
Structure of MTWI
Gap analysis: The first tool to analyze the effects of current business plans
of MTWI is gap analysis, which is the comparison of actual performance with
potential or desired performance. If a company or organization does not
make the best use of current resources, or forgoes investment in capital or
Market Share
50
40
Future Prospect
30
Current Position
20
Gap
10
0
2013 201420152016
Year
Valuable?
Yes
Rare?
Yes
Exploited
Competiti
Costly to
by the
ve
imitate
organizati
implicatio
on?
ns
Sustained
Yes
Yes
Economic
performa
nce
competitiv
Above
normal
advantage
According to this assessment, the economic performance of the company is
found to be above normal, which means that the company can survive and
stand for a certain period. However, it will be necessary to review and revise
strategic plans to comply with changes in policy. Moreover, the business is
one of natural resource extractive industries, which requires review and
revision of strategic plans due to the peoples perceived environmental
concerns. For example, round wood raw material should be sourced from
own plantations or by imports from abroad instead of harvesting timber from
natural forests.
3.
To review the current position of MTWI in the market, the Framework of the
Boston Consultancy Group Matrix is applied.
High
20
Stars
Question Marks
Cash Cows
Dogs
10
Low
10x
1x
Relative Market Share
0.1x
To develop strategic options for MTWI, Portfolio analysis and the Grand
Strategy Matrix are applied:
Portfolio analysis
STAR
-
Question Mark
Forward integration
Backward integration
Horizontal integration
Market integration
Market penetration
Market development
Market development
Product development
Dog
Cash Cow
-
Product development
Concentric diversification
Forward integration
Backward integration
Horizontal integration
Market integration
Market development
Product development
Product development
Or
Divesture
- Retrenchment
- Divesture
- Liquidation
According to Portfolio Analysis, the current position of MTWI is in the STAR:
1.
2.
3.
4.
5.
6.
Quadrant I
Market development
Market penetration
Product development
Horizontal integration
Divesture
Liquidation
Quadrant III
1.
2.
3.
4.
Retrenchment
Concentric diversification
Horizontal diversification
Conglomerate
diversification
5. Divesture
6. Liquidation
1. Market development
2. Market penetration
3. Product development
4. Forward integration
5. Backward integration
6. Horizontal integration
7. Concentric diversification
Quadrant IV
1. Concentric diversification
2. Horizontal diversification
3. Conglomerate
diversification
4. Joint ventures
Quadrant II
When studied in accordance with the Grand Strategy Matrix, the company is
found to be in Quadrant I where seven strategies are mentioned. They are:
-
Market development,
Market penetration,
Product development,
Forward integration,
5.
Backward integration,
Horizontal integration and
Concentric diversification.
Future organizational strategy (3.3)
The Portfolio analysis and the Grand Strategy Matrix analysis are applied to
develop strategic options for MTWI. According to Portfolio analysis, the
company is in Star, meaning that its growth rate and market are in good
positions. Similarly, according to the Grand Strategy Matrix analysis, it is
situated in Quadrant I which implies that the company is in its optimum. Of
the seven important strategies, two are most relevant to the company. These
two strategies are market penetration and market development.
Market penetration: Market penetration can be achieved by attracting
non-users of products and increasing the usage or purchasing rate of existing
customers. Some of market penetration strategies include price adjustments,
increased promotion, usage of more distribution channels and product
improvements. Since 2000, MTWI has established and installed wood-based
industries to produce value-added finished products. However, the Ministry
of Environmental Conservation and Forestry allowed log export at that time.
Thus, the company focused on log export rather than value adding and
manufacturing finished products for export. But, log export ban policy took
into effect since April 2014, and thus the companys primary concern is
value-adding. These products are being distributed in large volume in
existing local and foreign markets. On the other hand, the log importers, who
now cannot get round logs and cannot manufacture finished products, have
to buy the famous Myanmar teak products. Similarly, MTWI will also keep
trying to increase sales volume for the betterment of the company.
Market development: This strategy can be achieved by expanding a
regional business, by emerging new markets or by discovering new uses for
the existing products. Market development is a business strategy whereby a
business attempts to find new groups of buyers as potential customers for its
existing products and services. These potential customer groups may already
be served by competitors or may not be currently marketed by anyone for
the product. Market development is a process the goal of which is to increase
sales by expanding into untapped markets. The first step starts with market
research. For MTWI, it is planning to develop markets by exporting EU and
USA markets. Previously, due to EU sanctions and Myanmar being
designated in SDN list (SDN = specially designated nations) by USA, neither
MTWI nor any other wood companies could export Myanmar wood products
to these markets. Now, EU has lifted its sanction and at the same time, USA
also exempted Myanmar for one year. Thus, these markets have potentials
for Myanmar wood companies. MTWI is now manufacturing and exporting
high quality products for these markets. Another strategy for MTWI is to
export sawn timber to the customers who formerly purchased round logs and
at least to maintain its market share.
6.
MTWI has already chosen two strategies for the development of strategic
options, but these still need to be confirmed and approved by stakeholders.
Thus, stakeholder analysis is conducted as follows:
The likely situation
Intere
st
Low
Low
Forest Department
Power
Low
High
-
Employees (B)
(-)
Marketing
(-)
Customer abroad (+)
Board of Directors (+)
Customer (Local) (+)
Government
(+)
Local community (+)
Employees (A)
(+)
D
C
Economic aspects
-
Social aspects
-
Technological aspects
-
Environmental aspects
employees
Requirements for conducting environmental impact assessment (EIA)
and for developing and duly implementing environmental management
plan
Legal aspects
-
From PESTEL analysis, it is observed that due to log export ban policy, MTWI
could not export logs to foreign countries. Moreover, timber harvesting was
reduced. These situations are actually undesirable for wood-based industries.
On the other hand, it can be seen that raw material supply for local timber
business entrepreneurs are secured. Again, due to EU sanction lift and the
USAs exemption for one year, finished wood products are able to export to
these markets. These are opportunities.
Due to some attractions prescribed in Foreign Investment Law, international
businessmen will come and invest in Myanmar, which creates more
competition. Moreover, according to Environmental Conservation Law, EIA
and environmental management plans will have to be incorporated into the
companys project management.
8.
strategy (1.3)
Log export ban policy (Possible secured supply of raw material round
logs)
EU sanctions lifted (able to export quality finished products to EU
markets)
Exemption of Myanmar for one year from SDN (specially designated
nations) list by the USA (opportunities to export wood products to the
USA)
Governments SME development policy (Encourage development of
Threats
-
prescriptions)
Gradual reduction in timber harvesting volume (sustainability issue for
9.
Strengths
-
industries)
Staff motivation
Strong international marketing network
In-depth knowledge of product-market-buyers
Good credibility in eyes of buyers
Ability to meet customers expectations and tastes
Weakness
-
10.
markets (3.3)
To assess the activities from MWTI in the markets, competitive profile matrix
analysis is applied against its competitors Concorde Company and National
Wood Industry Co., Ltd as follows:
Competitive Profile Matrix
National
MWTI
Weight
Concorde
Weight
Industry
Weight
Rati
ed
ng
score
Key success
Weig
Rati
factor
ht
ng
0.20
0.60
0.40
0.40
0.20
0.80
0.60
0.40
0.40
1.20
0.80
0.40
0.10
0.20
0.30
0.30
0.10
0.20
0.30
0.30
Market share
price
Competitiven
ess
Financial
position
Product
quality
Customer
loyalty
Total
Weighted
Score
ed
score
3.0
Rati
Wood
ng
ed
score
2.4
1.8
performance,
Business
Dictionary
(Online)
Available
at
businessdictionary.com/definition/economic-
performance.html#ixzz3IMALOZn4
2. Gap analysis - Wikipedia, the free encyclopedia (Online) Available at
http://www. en.wikipedia.org/wiki/Gap_analysis