Analysis of the industry and the firm
Oman Aluminium Rolling Company LLC (OARC) is one of the leading companies in the field of Aluminum rolling in Oman and in the Gulf area as its start was in 2011 as it began to be a green field aluminum rolling mill plant based in Sohar Industrial Estate. The company was established for purposes of producing products of aluminum by processing aluminum metal to make the required rolled products in the Gulf and Omani markets. The plant has actual capacity estimated with 140,000 metric tons per annum of multi-purpose Aluminum sheets that are marketed in the local and the Middle East, Asia, Europe, Australia, North and South America markets. The company follows very modern strategies in production and marketing of such products based on the needs of the market as according to the Aluminum association, (2007), the aluminum rolling industry requires high efficiency in managing the different relevant operations such as the sheet rolling operations, the sheet finishing and the quality and process control. The OARC focuses on the rolling processing operations with the help of other companies contracted with it such as the Sohar Aluminum company to smelt the material directly and produce enough amounts of aluminum coils and products. The company is trying to make different expansions to include more operations as in 2014 it built a new aluminum Coil Coating Unit for its existed units with a capacity of 25,000 ton per annum as an expansion to the company's existing OARC rolling mill located in the Sohar Industrial Estate (SIE) in Oman. The plant is able to provide customers with different aluminum products as the Coil Coating Line is the first of its kind in Oman. The Plant was established for meeting safety and environmental standards, and it is equipped with high industrial technologies relevant to the aluminum coating industry. Due to the high safety standards of the plant, it exceeded 5 million accident-free man-hours in its construction phase. OARC is keen on producing the best quality aluminum products as it is following national and international standards to meet the needs of the market and to reach a high level of customers’ satisfaction aligning with its quality policies and sustainable improvement. The Company looks forward to being a world-leader in the field of rolled aluminum production. Among the company's goals is to be a part of the Takamul project and is adapting its objectives for developing the mineral, metal and petrochemical projects as Takamul is developing an aluminum downstream park that is known as the Metal Park and it includes a number of projects that will be able to convert the liquid aluminum from the smelter to the semi-finished as well as the finished aluminum products. Takamul project is a subsidiary of the OOC which is a completely Government owned company located in the Sultanate of Oman.
According to United States, Bureau of the Census, (2001), the aluminum industry is one of the most important metal manufacturing industries in the world which makes it a good chance to establish a plant for manufacturing aluminum and produce different types of it via rolling and other processing methods; the aluminum industry can be one of the income resources for a country and it can provide many job opportunities but this industry requires specific levels of quality that can raise sales and lead to more profitability as this industry can meet the market demands of different products including food packages, finished coil products, semi finished coil products and other different products. OARC has a vision that depends on making the company an organization of a world class that is able to support the Omani economy and ensuring job opportunities for its youth. Its mission is to provide safe work environment for its society and keep it without harms on both environmental and industrial levels with a customer focus in order to meet customers' expectations with a product that is of high quality and to ensure the highest market productivity that results from its efficiency and capabilities. The company depends on a concept of value creation that ensures the continuous creation of values in relation to production and services. ORAC has a business strategy that applies many principles that can benefit the country's economy and raise more profits such as Omanization as the company tries to nationalize its policy of employment and it follows employing Omani young people who are trustworthy and talented in strategic positions in the company to build a strong future of employees who are loyal to the company and reduce the ratios of turnover in the organization to gain them as valuable assets that help in the growth and development of the organization. The organization of OARC supports the creative initiatives that develop and retain local Omani talents and consider Omanization as one of the organization's “Corporate Social Responsibility” concepts. Omanization aims at ensuring a sustainable increase in the competency among Omani Employees at all the different levels of the Company. OARC has an internship program that applies basics of corporate social responsibility principles and tries to develop the students of Omani universities by offering them an internship program that provides them with opportunities for practicing their educated material and understand how rolling aluminum industry works on in real life with a presentation for the different used techniques, machinery and technologies in the plant of ORAC as students have the chance to acquire skills and experiences in addition to practical knowledge about the functions applied within the rolling aluminum industry. (Oman-arc, 2016)
The aluminum rolling industry requires innovative strategies and developed techniques in all its practices in order to compete the market and boost other rivals as aluminum rolling mills require updated different solutions in order to produce higher quality products everyday; it is a great challenge for a company as OARC to maintain sustainable plant productivity and quality rolled products. Due to the international economic growth, the company is faced with severe competition from other countries in areas as Asia that has witnessed great economic growth and success in the aluminum rolling field as many plants there have been developed and grew so it is important for OARC to have continuous optimizing for the different aluminum rolling processes so as to keep competitive. There should be higher rolling speeds as well as raised plant productivity which are the best key factors for securing the company's position in the market. Regarding such industry; there are many different strategies that can improve and develop its current position as flexibility is important as the company has to be flexible in its products and amounts according to the needs of the customers and the plants should be adapted to such changes as this may require fast production, different delivery times or other relevant decisions that a strategy can suggest. The changes in products locally and internationally should also be regarded and put into consideration by the strategy as there should be logistic design as a part of the company's plant solutions; another important factor in the aluminum rolling industry is to cut operating costs and increase quality in order to increase profits. (w3.siemens, 2016)
Identification of the possible scenarios
According to Burn, Marshal and Barnett, (2007), any business organization that seeks success and competitiveness should depend on its strategic management techniques that need to be developed and improved along with the advancement and developments occurring in the industry and to choose the best business and corporate strategies that help in improving its efficiency and profitability. This requires the company to make the needed analysis that help in identifying the best strategies and this PESTLE analysis can be helpful in this:
- Political
The political environment where OARC works is a safe environment as Oman is one of the countries that is advantaged with a stable political climate as the country enjoys peace without conflicts or wars with other countries or inside Oman. The government of Oman also gives many opportunities for its businessmen who establish great projects as ORAC and gives them many opportunities and facilities to develop and help its economy.
- Economic:
ORAC enjoys being established in a country with a stable economic conditions as there is good economic conditions for the company to be established and flourished with a welcoming public audience of customers who prefer Omani products rather than others. The country is also advantaged with providing its citizens with high individual incomes which encourage any businessmen to build its own business with a trust in profit.
- Social:
OARC is established in a country with a peaceful and interactive social life as Oman is one of the Arabian Gulf countries that is characterized with vivid changing nature and it is full of different people from different areas of the world who come to work and get privileges of Oman. The Omani society is an active changing one that bears welcoming for any innovative ideas and new industries and new businessmen who have the ability to improve the economy of Oman. The Omani society has changed to be a basic user of rolled aluminum products as they are widely used in machines, kitchens, restaurants, homes and everywhere due to its easiness, cleanliness and being friendly to the environment which makes the opportunities for a company such as OARC great and available in a society such as the Omani one.
- Technological:
Oman is a country that is characterized with following the latest technologies in all fields as most plants and factories follow the latest technologies in machinery, production and marketing in order to improve the service as well as the products and this technological trends are used in all areas of Oman which makes OARC keen on developing its facilities, plants and machinery in order to compete other market rivals locally and internationally and raise its profitability and success levels.
- Legal:
The legal system of Oman is characterized with being clear supportive legal system for businesses and other different activities relevant to the market as the legal system has many laws that make businesses establishment in Oman flexible and receive many governmental and legal facilitations which makes OARC has good chances for development.
- Environmental:
Oman is characterized with a safe environment with a desert climate but this environment has accepted many new life styles such as using aluminum products everywhere due to the easiness for its usage and the cheap prices of such products so the company has good opportunities to market its products in such environment. (BBC, 2016)
Porter theory
According to Constanta-Nicoleta, (2016), business organizations look forward to reaching competitive advantage through developments done for their strategies on both business and corporate levels as they try to reach higher productivity and profitability by developing their strategies and find the most suitable ones to be implemented. According to Porter, (2011), discussed the different possible strategies that can be helpful for any business organization and should be followed or chosen from by the organization; he referred to main three strategies which are cost leadership, differentiation strategy and the focus strategy and that each of them can be used according to the needs and nature of the business and how far profits are needed and related to the business strategies. As to OARC, it is an organization that looks for profitability and each of the three strategies can be effective with it as it can use the cost leadership strategy for reducing production and distribution costs or use the differentiation strategy in order to present new different services and products for its customers and beat the aluminum market with innovative high quality products or to use the focus strategy for focusing on some basic products and increase the production of these products to present them to the market with higher quality and better prices in order to attract more customers.
Cost Leadership strategy:
The cost leadership strategy is based on cost reduction through applying many techniques as it helps in raising the market share of the company and let it make more profits. Eldring, (2009) discussed Porter's generic strategies and explained how each strategy of the three can be effective and useful for business organizations, he discussed how the cost leadership strategy can be helpful for companies that need to save of its costs in production or other processes and operations in order to make more profits as the strategy depends on keeping a specific level of quality; this can be applied to OARC as the company can reduce costs of producing specific foil products and to make them less in selling prices to sell more but this needs the company to make different types of analysis to realize if prices reduction will affect its position in the market and if quality will not be affected by cost reduction of production.
The Differentiation Strategy
Lewis et al, (2006) explained how Porter's differentiation strategy can be effective when used by a leadership team of an organization either it was meant for raising profits or for satisfying customers and enhancing the company's name in the market as they stated that this strategy enables the company to add differentiation to its products to make them unique and innovative through applying differentiation on any feature of the product such as durability, functionality or others. This can be applied on OARC as it can present new innovative different product made of rolled aluminum or to improve a current product made of the aluminum to make it more durable for more usage time or for heat or to add more features for the service of delivering its products. This strategy can be effective in beating the market if the company succeeded in choosing the product or the feature but it requires high risk taking abilities and deep analysis from the company. Yet it seems to be suitable for OARC as it can bring in more success and profitability in addition to enabling the company to open new markets.
The Focus Strategy
Moon, (2010) discussed the focus strategy as one of the three generic strategies of Porter and explained that this type of strategies is used when the organization tries to focus on a specific niche or a specific product and find new ideas for it regarding production, marketing, distribution or other practices in order to provide customers with a specific product with specific interest. As for OARC, this strategy may need much effort to be done with a specific product after studying all products and its effect on the market and its customers.
Evaluation of the strategy and recommendations
The differentiation strategy
Daft, Murphy and Willmott, (2010) discussed in their book the Porter's differentiation strategy and explained that this strategy can be applied on any type of organizations either it was established for profits as a main purpose or even governmental organizations or others. It is based on the concept of making the product different and unique by working on the product and make it ready for competitiveness against other products in the market, as to OARC; the company can employ its leadership to apply such strategy on products such as gauges in order to make them distinguished and qualified for stronger conditions and to be more durable and be different from other products in the market. The company can also differentiate its services and open new markets in other areas than the Gulf area such as the North Africa or in KSA in order to get more fame and make its products more needed in these markets. Daft, Murphy and Willmott, (2010) explained that this strategy can be effective with big organizations that produce many types of products and can choose some of them to make them differentiated by adding features of quality to the products such as reroll light and heavy gauges in order to improve the way they can be used by customers who will be more satisfied and happy with the new differentiation; this can help the company make more profits out of selling more of the product. The company can also applies new services for reaching more customer satisfaction and can reach more areas in Oman. By using the PESTLE analysis, it can be clear that the company has a good opportunity to work in Oman and can find new opportunities by differentiating its products in Oman at first and then to go out Oman and open new markets in other areas but as Oman is a rich country with peaceful political and social condition, the company can differentiate in many things such as the technology used in manufacturing its products as it can add advanced machines and developed technologies in manufacturing the products which fastens the process of manufacturing and produces better and higher quality products with big numbers and huge amounts in order to fill the Omani market with such innovative products and then to enter new neighboring markets. The requires the company to make a number of different analysis including a cost benefit analysis to calculate the cost of new advanced machines and the change that will occur in the product and to compare this with the profits gained from selling more products and attracting more customers in order to make more profits. The company can also deliver new aluminum products to the market that can be used easily at homes and offices such as kitchen appliances and parts of furniture that are suitable to offices and can be cheap in price and at the same time high in quality in order to beat the local market with local products that are better than imported products which will help the company make more profits and at the same time help the Omani economy to flourish and master the rolled aluminum market locally and perhaps internationally. Abdelkafi, (2008) discussed how the Porter's topology is important in developing the business organization strategic management by applying strategies such as the differentiating strategy and the need to fill any gaps that can be found at time of implementing the strategy such as realizing the company's situation in the market, understanding the financial needs for the change, the market needs and the company's chances compared with other companies in the market; this means that the company has to investigate its situation before implementing the change and the differentiation strategy. These views were discussed by Porter, Magretta and Kramer, (2014) as they checked methods for implementing differentiation strategy in large business organizations such as OARC and explained that there should be analysis for the company's internal and external environments and identify any problems or difficulties that may face the leadership of the organization while implementing the strategy.
OARC has to regard many points before implementing the differentiation strategy based on the company's needs and situation in the market locally and internationally as the company is recommended to analyze the internal and external environments with all the operations and processes occurring for producing and marketing the products as they have to be adapted to suit the new products, machines have to be innovated and employees are in need to be trained for the new operations and systems of work; employees have also to be asked about the changes that will occur and their opinions should be regarded and considered as this can be done through holding meetings with employees and identifying their opinions, special analysts should be asked to give reports about the market and the needed products and how to compete the market locally and internationally. Dealings with suppliers and customers have to be update and developed in order to suit the new differentiation applied on the products. Services should also be developed to suit the new products and be suitable for encouraging the purchasers to ask for the new products. Advertisements should also be developed in order to make the market of Oman acknowledged about the new products and be encouraged to learn more about them and purchase them.
Recommendation criteria
Any business organization that is trying to succeed has to identify its strategies and strategic management and check if they are useful or not in order to find new strategies to be applied and update the current strategy to find more suitable ones. In the case of OARC; the company is asked to follow the differentiation strategy to update its current products and develop its techniques in producing and processing rolled aluminum. The company can use the PESTLE analysis to investigate its position in the Omani market and then to use it for investigating its position in other countries or markets before entering such markets. As a big company, OARC can benefit greatly from the differentiation strategy according to the market needs in order to compete with other companies in the market and beat them. OARC is recommended to ask consultants in analysis and get advice from them about the best products to be developed via applying the differentiation strategy in order to reach the best results. The company is also asked to make the needed types of analysis that show the areas in Oman and the products that can suit applying the differentiation strategy and the methods that can be used in this in order to succeed and make the utmost benefit out of it.
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