Management challenges faced by Aurecon
Questions:
How Can Aurecon Improve Its Organizational Structure, Processes, Systems In Order To Attain Alignment With Its Mission And Vision?
What Are The Ways In Which Aurecon Can Enhance Its Stakeholders’ Management For Making Sure Of Increased Alignment With The Expectation And Vice-Versa?
Why Is The Pricing Of The Products Offered By Aurecon High In The Local And International Market?
Why Is The Organizational Structure Of Aurecon Not That Efficient For International Business Expansion?
Why Is The Company Not That Able To Be Successful Within The SG Market?
Understanding management challenges faced by any company is essential in developing effective strategic recommendations. The company that is selected in this report is Aurecon that is an Australian owned organization which provides specialist technical, engineering and management practices (Barney and Hesterly 2015). The company is an engineering and architecture company that has developed plans in elevating and designing skyscrapers. Considering the same, this report will evaluate challenges faced by the company in Singapore market. However, the company does not offer environmental services in the nation and its competitors are threat to its international expansion strategy (Bergh et al. 2016). The objective of this paper is to identify the research or management problem and develop a research question. Moreover, a literature review will also be conducted in order to attain better understanding of the identified management challenge. In compiling the same, the report will consider implementing suitable tools, theories and models that can facilitate understanding the identified problem. The report will also consider identifying the weaknesses and strengths of all the selected tools, models and theories.
Certain other management challenges that can be faced by Aurecon for in expanding its global business includes stakeholder management, culture or mindset and organizational structure (Bettis et al. 2014). Despite facing such challenges the company can be able to attain enough market share regardless of unwillingness to decrease the price. This includes developing strategies such as product innovation, market segmentation and promotional innovation. Aurecon can face the stakeholder challenge in business expansion as it might face high competition from business rivals that can tell stakeholders about the negative aspects of the company’s presence. The competitors might seek to undermine few major relationships of Aurecon with its distributors, suppliers and investors (Chen, Delmas and Lieberman 2015). Properly adopting contents and documents to the culture is important in addressing the cultural challenge. There might a cultural mismatch as there might be a distinct set of variables including regulation rules, distinct currency and taxation.
Tools, models, and theories to address Aurecon’s challenges
Aurecon also faces challenges related with its organizational structure in its business expansion that includes business operation for maintaining functional organizational units. Another challenge is on generating differentiated company units responsible for the foreign markets while linking business operations all through the organization (David and David 2017). Aurecon can deal with the issue of increasing its market share without decreasing its prices. Attaining increased market share can facilitate the company in attaining better economies of scale and experience. This can lead to decrease in prices and can increase the company’s ability to invest within service quality and future products (Durand, Grant and Madsen 2017). Through attaining increased market prices, Aurecon can attain increased market share that can facilitate it in attaining better prices from the suppliers for their larger order volumes boost their buying power. Aggressive pricing strategy can be followed by the company in attaining increased market share. Initially Aurecon can just sell its products online initially with low prices of its products as this can facilitate the company in attaining highly competitive position within the market (Engert, Rauter and Baumgartner 2016).
Ethiraj, Gambardella and Helfat (2016) signified that porter’s generic competitive strategies model can serve as an effective model in filling the gaps or dressing the management challenges faced by Aurecon Company. This model includes two major types of competitive advantages associated with activities scope for which Aurecon intends to attain them. Ethiraj, Gambardella and Helfat (2016) explained though the case of Aurecon that a competitive advantage is there when a company is able to offer the identical advantages as its business rivals but has a low cost advantage. This also includes offering advantages that is more than the competitive products such as differentiation advantage. For this reason, a competitive advantage facilitates the company in generating high value for its consumers along with higher profits for itself.
Frynas and Mellahi (2015) presented a view that differentiation and cost advantages are renowned for its positional advantages as they explain the company’s position within the sector being a leader in whether differentiation or cost. Moreover, any resource based view focuses on the fact that a company uses all its capability and resources in generating a competitive advantage which ultimately leads to high value creation. This is deemed to address the management challenges associated with attaining enough market share regardless of unwillingness to decrease the price. Grant et al. (2014) indicated that the diagram below includes the resource based or positioning viewpoints that can explain the competitive advantage concept for Aurecon Company in successful international market expansion.
Strengths and weaknesses of selected models
In contrast, Inyang and Egor (2017) stated that this new theory of porter’s competitive advantage if implemented in Aurecon Company can address most of the management challenges explained before. These researchers also explained through this model that capabilities can be referred to a company’s capability to utilize the resources in a better manner. Hill, Jones and Schilling (2014) stated that for better stakeholder management, the company can include its capabilities within the routine of the company and are not documented as procedures that will not be easy for its business rivals to replicate. The competencies that can facilitate Aurecon Company in successfully expansion its business internationally includes innovation, quality, efficiency and consumer responsiveness. These capabilities can be used by the company in attaining cost or differentiation advantage in the foreign market.
Blue ocean strategy is relied on a decade-long study of more than 150 strategic moves that is peent for more than 30 industries for the 100 years (Lopez, Mascione and Liu 2017). Aurecon Company focused on identifying the common factors which results in generation of blue oceans. Strategic move of the company is to create technical, engineering and management practices that is a vital instance of the blue ocean strategy. Aurecon Company followed a traditional blue ocean strategy where all its services providers targeted the office purchasing managers those looked products that Aare large, fast, durable and needed minimum maintainice. Focusing on the industry logic, the company can consider implementing blue ocean strategy in an efficient manner (Lopez, Mascione and Liu 2017).
The theories and models that were used in explaining the Aurecon company’s management challenges includes PESTEL analysis, porters five forces, industry life cycle curve, VRIO and strategic capabilities (Lasserre 2017). Certain other models that were used previously in explaining the company’s strategic position and challenges faced includes SWOT and Confrontation matrix. The strengths along with weaknesses and gaps that were faced while using these tools for Aurecon company strategic analysis are explained in order to address the same through developing new model.
Strengths of SWOT analysis used in Aurecon company includes understating the threats that impacts the business in the international market (Lopez, Mascione and Liu 2017). This model when used by the company can facilitate in understanding the business in better manner, capitalizing on opportunities. This analysis was used by the company as it can facilitate in taking steps that can enhance business without bearing business advisor expenses. Weaknesses of the SWOT model must be considered by the company. SWOT analyses has gaps as it does not priories the identified issues and does not offer solutions or provide with alternative solutions (Morden 2016). Moreover, the model might generate several ideas but will not select the best option. Considering such gaps, it is gathered that for the difficult issues, the company requires carrying out detailed research along with evaluation to make effective decisions.
Conclusion
Strengths of the strategic capabilities and competencies model is relied on the notion that Aurecon company’s internal resources along with core competencies arrived from different capabilities offers a strategic platform which explained the company’s long term profitability (Peteraf, Gamble and Thompson Jr 2014). However, the company also observed certain weaknesses or gaps that must be addressed to attain reliable decisions for business expansion. These weaknesses also include lack of durability, in transparency and immobility and missing these aspects can hamper the company’s ability to attain core competencies in the international market. In case of Aurecon Company, it has been observed that there is a lack of major management functions that is necessary for recognizing the resource gaps (Rothaermel 2015). This requires identification of resource gaps which has to be addressed in order to sustain a competitive advantage in which such capabilities are needed.
The main issue in this analysis is that the external factors are changing constantly, which necessitates the need of the management to keep reviewing continuously (Schoffelen 2015). For instance, the government of Singapore might increase taxes, which would have direct impact on the net margin of Aurecon and this falls under the volatility aspect. In addition, the organisation might not be able to obtain complete details about the competitor policies and strategies along with tastes and preferences of the customers. This is related to the uncertainty aspect, since the present status is not clear (Rothaermel 2015).
Pestle analysis needs to be conducted with the involvement of various individuals and thus, a particular scenario might be viewed from different perspectives (Lasserre 2017). This is related to the complexity aspect due to engagement of various key decision factors. If Aurecon misinterprets the results due to viewpoints of different individuals, it might incur serious losses and hence, it might lead to ambiguity.
With the growing advancement of technology, the impact would be significant market disruption and the stability of market structures (Rothaermel 2015). Hence, this would result in overall market volatility and thus, the business risk of Aurecon would be increased. In addition, the broad variety of product lines of the organisation could result in difficulties at the time of defining markets and thus, this leads to uncertainty in the present state. The technological changes have minimised the time length a product has between market maturity and conception and thus, this results in complexity (Ethiraj, Gambardella and Helfat 2016). Finally, the model does not provide any basis for meaningful information regarding meaningful actions. As a result, it would lead to ambiguity in decision-making for Aurecon.
It has been identified that in VRIO framework, few resources and capabilities of Aurecon could be imitated by the other competitors operating in the market of Singapore (Ethiraj, Gambardella and Helfat 2016). This would lead to loss of originality of the actual product and the organisation would lose the opportunity of sustaining competitive advantage in the market. As a result, it could be linked with the overall volatility aspect. In addition, it has been assessed that Aurecon lacks technical expertise and regards for the sustainable environment. This could emerge out as a serious weakness for the organisation in both national and global levels and thus, it results in uncertainty aspect in the present scenario.
Even though VRIO framework is simple and clear, there are many other financial indicators evaluating the financial performance and position from different point of view (Lasserre 2017). In the similar fashion, there are indicators related to information, property and human resources for indicating the efficiency, quality and performance. This could be linked with the complexity aspect. VRIO analysis needs to be conducted with the involvement of various individuals and thus, a particular scenario might be viewed from different perspectives (Rothaermel 2015). This is related to the complexity aspect due to engagement of various key decision factors. If Aurecon misinterprets the results due to viewpoints of different individuals, it might incur serious losses and hence, it might lead to ambiguity.
New theories are developed in order to address the gaps or weaknesses in the implemented models by Aurecon. This can further support the company in addressing management challenges faced by it in its international business expansion strategy. Rothaermel (2015) evidenced that certain other industries can implement the new models and theories related with addressing the research questions. This can facilitate the company such as Aurecon in dealing with the issues that are faced by them. The selected theories are highly relevant to the developed research question. Lasserre (2017) indicated that VUCA can be considered as a new theory that is effective enough in addressing the research question. The aspects of this model includes volatility, uncertainty, ambiguity and complexity. Volatility aspect will explain the quick change or large magnitude; uncertainty explains aspects regarding the Aurecon Company’s any unclear facts about the present.
In addition, Lasserre (2017) explained that complexity explains the major decision factors and complete understandability is required regarding the way it works. Moreover, ambiguity explains the difficulty of understanding the ways in which a decision works that can also be termed as a cause effect relationship. These factors can be analyzed with considering the case of Aurecon Company. In contrast, Lasserre (2017) signified that porter’s generic competitive strategies model can serve as an effective model in filling the gaps or dressing the management challenges faced by Aurecon Company. This model includes two major types of competitive advantages associated with activities scope for which Aurecon intends to attain them. This indicates that there are three generic strategies that can be employed by the company in order to attain over average performance within the sector. This includes differentiation, focus and cost leadership. Slater (2015) revealed that when an organization like Aurecon attains profit that is more than the industry average, the company is intended to attain a competitive advantage over its business rivals. The objective of this model is to address the management challenges faced by the company such as implementing pricing, product and process development strategy for international markets. For addressing such management challenges, indicated two major types of competitive advantages such as cost and differentiation advantages.
Conclusion
The objective of this paper was to identify the research or management problem and develop a research question. The report also considered identifying the weaknesses and strengths of all the selected tools, models and theories. It is gathered from the paper that Certain other management challenges that can be faced by Aurecon for in expanding its global business includes stakeholder management, culture or mindset and organizational structure. Despite facing such challenges the company can be able to attain enough market share regardless of unwillingness to decrease the price. This includes developing strategies such as product innovation, market segmentation and promotional innovation.
Considering the same, porter’s generic competitive strategies model can serve as an effective model in filling the gaps or dressing the management challenges faced by Aurecon Company. This model includes two major types of competitive advantages associated with activities scope for which Aurecon intends to attain them. Moreover, Weaknesses of the SWOT model must be considered by the company. SWOT analyses has gaps as it does not peripteries the identified issues and does not offer solutions or provide with alternative solutions. Moreover, the model might generate several ideas but will not select the best option. Weaknesses also includes lack of durability, in transparency and immobility and missing these aspects can hamper the company’s ability to attain core competencies in the international market. In case of Aurecon Company, it has been observed that there is a lack of major management functions that is necessary for recognizing the resource gaps. This requires identification of resource gaps which has to be addressed in order to sustain a competitive advantage in which such capabilities are needed. New theories are developed in order to address the gaps or weaknesses in the implemented models by Aurecon. This can further support the company in addressing management challenges faced by it in its international business expansion strategy.
References
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