Str 581 Strategic Plan Part 3 Paper
Strategic Plan, Part 3 Paper
Dannielle Dunagan
STR/581
July 18, 2016
Fred Greifenstein
Introduction In this paper I will be looking at the generic strategies, value disciplines, grand strategies and global strategies of Worthington Industries, Inc. I will identify the best generic, grand, and global strategies and the best value disciplines for my recommendations. I will also recommend a strategy and / or strategies that Worthington Industries, Inc. should implement and include a rationale for these recommendations. First lets take a quick over view of Worthington Industries, Inc. This company established in 1955 is a diversified metal manufacturing company, which operates in America, Europe and Asia markets. Its headquarters are in …show more content…
Columbus, Ohio and as of May 2015, employed 10,500 people. Worthington Industries, Inc. reported revenues of $3,384.2 million during the financial year ending May 2015. According to Worthington Industries, Inc. this was an increase of 8.2% over financial year 2014 (Worthington Industries, Inc. 2016). The operating profits were $60.6 million in 2015, a decrease of 55.4% from 2014 and the net profit was $76.8 million in 2015, also a decrease of 49.2% from 2014 (Worthington Industries, Inc. 2016).
Generic Strategies Porter's calls the generic strategies, “Cost Leadership”, differentiation, which is creating uniquely desirable products and services.
(Mind Tools, 2016). Then focus which offers a specialized service in a niche market. (Mind Tools, 2016). Then he subdivides the focus strategy into two parts: Cost Focus and Differentiation. For Worthington Industries, I would recommend the differentiation strategy. The differentiation strategy consists of making the goods or amenities dissimilar from the competitions. Worthington Industries currently does a bit of this by venturing into nearly any market that has steel involved in it. Most steel companies seem to focus on one particular entity in their market, for example automotive industry. Providing just automotive steel parts really limits you to one industry. Worthington Industries differentiates by providing materials for builders, automotive industries, individuals with special requests, dive equipment, etc. I really haven’t been able to locate an industry that Worthington Industries hasn’t tapped into or is a co partner in. They are also a global entity so they have branched off from domestic, which is certainly a differentiation between them and some of their
competitors. * Retrieved from Mind Tools 2016
Value Disciplines Business Dictionary breaks down value disciplines into three areas with the first being operational excellence, the second product leadership and finally the third customer intimacy. (Business Dictionary, 2016). In this model the company is meant to choose one of these disciplines, and act upon on it both vigorously and consistently as their primary value principle. Strong market position across key product lines gives Worthington Industries, Inc. a competitive edge with a strong brand image. Worthington Industries, Inc. has a diversified customer base ranging from steel processing segment services, appliances, automotive, construction, hardware, office furniture, office equipment, etc. Worthington Industries operational excellence starts with its employees. Factory workers get a piece of the monthly profit sharing and are paid salary, not an hourly wage. In the industry of steel manufacturing, Worthington Industries, Inc. is a leader and one of the best. Diversification plays a huge roll in their success. They do not just produce steel for the automotive industry, they provide steel for nearly any industry imaginable that uses steel in their product. Worthington Industries, Inc. is also diverse in domestic as well as international affairs, which widens their success. Finally the customer’s intimacy starts from the top, “In 1996, John McConnell’s son, also named John, took over as chairman and CEO” (Worthington Industries, 2016). Implements of grand strategies such as market development and product improvements by outlining progression within Worthington Industries will add value for its customers. Also implementing a generic strategy, like differentiation will create new products that are preferred over it leading contenders that focus on one industry.
Grand Strategies A grand strategy expands on the traditional idea of strategy by examining internal in addition to external forces (Business Dictionary, 2016). Grand strategy is defined as “comprehensive, long-term plan of essential actions by which a firm plans to achieve its major objectives. Key factors of this strategy may include market, product, and/or organizational development through acquisition, divestiture, diversification, joint ventures, or strategic alliances” (Business Dictionary, 2016). The competition is primarily on the basis of price, product quality and the ability to meet delivery requirements. This industry is highly competitive. Depending on a variety of factors, including raw material, energy, labor and capital costs, government control of currency exchange rates and government subsidies of foreign steel producers, Worthington Industries, Inc. may be materially adversely affected by external competitive forces. However, Worthington Industries, Inc. is currently doing a great job at diversifying its company’s asset base as 33 of the companies facilities are operated by and consolidated subsidiaries of the company (Worthington Industries, Inc. 2016). To enhance the quality of products, technical service, support for material testing and customer-specific applications can be helpful. However, the extent to which technical service capability has improved Worthington Steel’s competitive position has not been quantified. Worthington Steel’s ability to meet tight delivery schedules is, in part, based on the proximity of their facilities to customers, suppliers and one another. The extent to which plant location has impacted Worthington Steel’s competitive position has not been quantified.
Potential Global Strategies A global strategy may be appropriate in industries where companies are faced with strong pressures for cost reduction but with weak pressures for local responsiveness. This would allow companies to sell a standardized product worldwide. Global strategies require firms to tightly coordinate their product and pricing strategies across international markets and locations. It involves assessing every product or service from the perspective of both domestic and international market standards. This may mean meeting world standards even before seeking world markets and deepening the company's understanding of local and cultural differences in order to become truly global. “Global strategy: the organization treats the world as largely one market and one source of supply with little local variation. Importantly, competitive advantage is developed largely on a global basis” (Lynch, 2014). “Companies talk about ‘going global’ when what they really mean is that they are moving internationally, outside their home countries. It is important to clarify precisely what is meant by such wording because the strategic implications are completely different” (Lynch, 2014). Worthington Industries, Inc. currently supplies raw material for automotive industries globally, which gives the company a global presence already.
Reference:
Business Dictionary. 2016. Retrieved from: Read more: http://www.businessdictionary.com /definition/grand-strategy.html
Business Dictionary. 2016. Retrieved from: http://www.businessdictionary.com/ definition/value-disciplines.html
Lynch, Richard. 2014. Global Strategy. Retrieved from: http://www.global-strategy.net/what-is- global-strategy/
Mind Tools. Porter’s Generic Strategies. 2016. Retrieved from: https://www.mindtools.com /pages/article/newSTR_82.htm
Worthington Industries. 2016. Retrieved from http://worthingtonindustries.com/Company/About-Worthington-Industries
Dannielle Dunagan
STR/581
July 18, 2016
Fred Greifenstein
Introduction In this paper I will be looking at the generic strategies, value disciplines, grand strategies and global strategies of Worthington Industries, Inc. I will identify the best generic, grand, and global strategies and the best value disciplines for my recommendations. I will also recommend a strategy and / or strategies that Worthington Industries, Inc. should implement and include a rationale for these recommendations. First lets take a quick over view of Worthington Industries, Inc. This company established in 1955 is a diversified metal manufacturing company, which operates in America, Europe and Asia markets. Its headquarters are in …show more content…
Columbus, Ohio and as of May 2015, employed 10,500 people. Worthington Industries, Inc. reported revenues of $3,384.2 million during the financial year ending May 2015. According to Worthington Industries, Inc. this was an increase of 8.2% over financial year 2014 (Worthington Industries, Inc. 2016). The operating profits were $60.6 million in 2015, a decrease of 55.4% from 2014 and the net profit was $76.8 million in 2015, also a decrease of 49.2% from 2014 (Worthington Industries, Inc. 2016).
Generic Strategies Porter's calls the generic strategies, “Cost Leadership”, differentiation, which is creating uniquely desirable products and services.
(Mind Tools, 2016). Then focus which offers a specialized service in a niche market. (Mind Tools, 2016). Then he subdivides the focus strategy into two parts: Cost Focus and Differentiation. For Worthington Industries, I would recommend the differentiation strategy. The differentiation strategy consists of making the goods or amenities dissimilar from the competitions. Worthington Industries currently does a bit of this by venturing into nearly any market that has steel involved in it. Most steel companies seem to focus on one particular entity in their market, for example automotive industry. Providing just automotive steel parts really limits you to one industry. Worthington Industries differentiates by providing materials for builders, automotive industries, individuals with special requests, dive equipment, etc. I really haven’t been able to locate an industry that Worthington Industries hasn’t tapped into or is a co partner in. They are also a global entity so they have branched off from domestic, which is certainly a differentiation between them and some of their
competitors. * Retrieved from Mind Tools 2016
Value Disciplines Business Dictionary breaks down value disciplines into three areas with the first being operational excellence, the second product leadership and finally the third customer intimacy. (Business Dictionary, 2016). In this model the company is meant to choose one of these disciplines, and act upon on it both vigorously and consistently as their primary value principle. Strong market position across key product lines gives Worthington Industries, Inc. a competitive edge with a strong brand image. Worthington Industries, Inc. has a diversified customer base ranging from steel processing segment services, appliances, automotive, construction, hardware, office furniture, office equipment, etc. Worthington Industries operational excellence starts with its employees. Factory workers get a piece of the monthly profit sharing and are paid salary, not an hourly wage. In the industry of steel manufacturing, Worthington Industries, Inc. is a leader and one of the best. Diversification plays a huge roll in their success. They do not just produce steel for the automotive industry, they provide steel for nearly any industry imaginable that uses steel in their product. Worthington Industries, Inc. is also diverse in domestic as well as international affairs, which widens their success. Finally the customer’s intimacy starts from the top, “In 1996, John McConnell’s son, also named John, took over as chairman and CEO” (Worthington Industries, 2016). Implements of grand strategies such as market development and product improvements by outlining progression within Worthington Industries will add value for its customers. Also implementing a generic strategy, like differentiation will create new products that are preferred over it leading contenders that focus on one industry.
Grand Strategies A grand strategy expands on the traditional idea of strategy by examining internal in addition to external forces (Business Dictionary, 2016). Grand strategy is defined as “comprehensive, long-term plan of essential actions by which a firm plans to achieve its major objectives. Key factors of this strategy may include market, product, and/or organizational development through acquisition, divestiture, diversification, joint ventures, or strategic alliances” (Business Dictionary, 2016). The competition is primarily on the basis of price, product quality and the ability to meet delivery requirements. This industry is highly competitive. Depending on a variety of factors, including raw material, energy, labor and capital costs, government control of currency exchange rates and government subsidies of foreign steel producers, Worthington Industries, Inc. may be materially adversely affected by external competitive forces. However, Worthington Industries, Inc. is currently doing a great job at diversifying its company’s asset base as 33 of the companies facilities are operated by and consolidated subsidiaries of the company (Worthington Industries, Inc. 2016). To enhance the quality of products, technical service, support for material testing and customer-specific applications can be helpful. However, the extent to which technical service capability has improved Worthington Steel’s competitive position has not been quantified. Worthington Steel’s ability to meet tight delivery schedules is, in part, based on the proximity of their facilities to customers, suppliers and one another. The extent to which plant location has impacted Worthington Steel’s competitive position has not been quantified.
Potential Global Strategies A global strategy may be appropriate in industries where companies are faced with strong pressures for cost reduction but with weak pressures for local responsiveness. This would allow companies to sell a standardized product worldwide. Global strategies require firms to tightly coordinate their product and pricing strategies across international markets and locations. It involves assessing every product or service from the perspective of both domestic and international market standards. This may mean meeting world standards even before seeking world markets and deepening the company's understanding of local and cultural differences in order to become truly global. “Global strategy: the organization treats the world as largely one market and one source of supply with little local variation. Importantly, competitive advantage is developed largely on a global basis” (Lynch, 2014). “Companies talk about ‘going global’ when what they really mean is that they are moving internationally, outside their home countries. It is important to clarify precisely what is meant by such wording because the strategic implications are completely different” (Lynch, 2014). Worthington Industries, Inc. currently supplies raw material for automotive industries globally, which gives the company a global presence already.
Reference:
Business Dictionary. 2016. Retrieved from: Read more: http://www.businessdictionary.com /definition/grand-strategy.html
Business Dictionary. 2016. Retrieved from: http://www.businessdictionary.com/ definition/value-disciplines.html
Lynch, Richard. 2014. Global Strategy. Retrieved from: http://www.global-strategy.net/what-is- global-strategy/
Mind Tools. Porter’s Generic Strategies. 2016. Retrieved from: https://www.mindtools.com /pages/article/newSTR_82.htm
Worthington Industries. 2016. Retrieved from http://worthingtonindustries.com/Company/About-Worthington-Industries