Al-Musanna determines its long-run direction and performance by ensuring

 

Al-Musanna College of Technology

ACT Department
of Business Studies

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Strategic Management (BAMG4216)

Semester I

 

 

 

 

 

 

 

ASSIGNMENT

For

STRATEGIC
MANAGEMENT

 

 

 

 

 

 

 

 

 

 

Students’ names:

 

Yousuf Al-Balushi     51j138

Ahmed Aloufi            51s1220

Gulib Al-Siabbi         51s1230  

Introduction

 

Strategic Management focuses on understanding how organizations might
achieve advantage relative to competitors. Ultimately, it is concerned with
firm decisions that cut across functional, product, and geographic boundaries.
It views firms as competing for resources with rivals across an economic
landscape. Key issues include the firm’s pursuit of competitive advantage
through analysis of its capabilities and the competitive environment in which
it operates, as well as through the effective development and implementation of
strategy.  It constitutes the processes
by which a company, large or small, domestic or international, single or
multi-business determines its long-run direction and performance by ensuring
careful formulation, effective and efficient implementation, and continuous
monitoring of results.

Strategic management can also be defined as a bundle of decisions and
acts which a manager undertakes and which decides the result of the firm’s
performance. The manager must have a thorough knowledge and analysis of the
general and competitive organizational environment so as to take right
decisions. They should conduct a SWOT Analysis (Strengths,
Weaknesses, Opportunities, and Threats), i.e., they should make best possible
utilization of strengths, minimize the organizational weaknesses, make use of
arising opportunities from the business environment and shouldn’t ignore the
threats.

 It is a continuous process that evaluates and controls the
business and the industries in which an organization is involved; evaluates its
competitors and sets goals and strategies to meet all existing and potential
competitors; and then reevaluates strategies on a regular basis to determine
how it has been implemented and whether it was successful or does it needs
replacement.

 

 

 

 

The
company

 

 

Al Hassan Engineering Company SAOG engages in electrical, mechanical,
instrumentation, and civil contracting activities in the Sultanate of Oman and
other GCC countries. The company operates as an engineering, procurement, and
construction contracting and construction company; and provides design,
fabrication, and repair services for pressure vessels and boilers, as well as
maintenance services across various sectors. It undertakes works in oil and
gas, petrochemicals, and refineries sectors, including gas gathering and
processing plants; oil processing and storage facilities; production, pumping,
and compressor/booster stations; water and steam injection etc..

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The  loss of the company

 

Al Hassan Engineering Company (AHEC) incurred a loss of RO10.8mn in
2016, compared to a loss of RO8.2mn in 2015. In order to manage the financial
situation, thee major shareholders gave a long term subordinated loan of RO3mn
to the company during the year.

AHEC made contract closeout agreements with ABB, OOCEP and PDO in 2016.
The borrowings decreased from RO48mn to RO35mn, though the interest rates have
significantly increased, reflecting in the overall financial costs. Major banks
have been approached to convert the short term loans to long term loans
enabling the payments for projects to continue in the interest of all
stakeholders.

In view of the oil prices and difficult contract change management
conditions, there continue to be challenging times for the company and the
contracting industry as a whole.

AHEC which currently employs 3687 people in Oman and 2937
people in UAE has a confirmed order backlog of over RO64mn as
of December 2016 and expects its revenues in 2017 to be at par with
2016, despite the market environment. There are forthcoming opportunities such
as Liwa Plastics, OMPET, Duqm Refinery, IPPs and some PDO projects. The
company is well placed to get a reasonable share of these significantly
high-value projects being/to be tendered. The subsidiary company has also
established engineering design capability in UAE which would present
new opportunities.

 

 

Their
strategy:

 

Al Hassan Engineering Co has invited all shareholders to attend an
extraordinary general meeting (EGM) to discuss the capital erosion and widening
losses of the company.

The company extra general body meeting gave approval to the CEO’s
strategic action plan. It included steps to be taken in managing the financial
position of the company. The meeting appreciated the efforts put in by CEO and
the executive management in putting up the appropriate plan as presented and
agreed to proceed with the implementation.  The plan will be evaluated
during the year and wherever necessary the board was expected to provide support.

The shareholders suggested continuing to pursue the possibility of
bringing in new equity partners. Besides they wanted the company to continue
its operations and aggressively pursue negotiations to settle payment issues.

While a few projects were contributing to the loss, the company earlier
in 2016 engaged the services of external auditors for expert techno commercial
and contractual assessment of revenue on certain projects and was to check
capital erosion.

In a disclosure to the MSM on Thursday, Al Hassan said it called for an
EGM on February 7 to discuss “the decline of the company’s capital and to take
appropriate measures to redress the faltering financial situation of the
company.”

Al Hassan Engineering held a meeting with senior officials from the Ministry
of Finance, the major bankers, Central Bank of Oman (CBO) and the Capital
Market Authority (CMA) to discuss the company’s financial status and way
forward through bank support.

In a filing on the Muscat Securities Market on Sunday, the company said
the outcome of the meeting is expected to be finalized well.

 

 

The
suggested strategy

 

The company has gone through this loss issue because of not adopting a
strategy that would help them overcome or avoid this loss. We suggest the
following strategy to be taken into account:

 

Study Impacts and Causation regularly 

In order to get the work done on time, on budget, and without loss, you
must first have a series of plans in place. You need a manpower plan, a
timeline, and an intended work flow. The best way is to incorporate all of
these into a schedule that’s cost-loaded and resource-loaded.

If project management has created a resource loaded baseline schedule,
has updated it and utilized it to accurately reflect the planned course of
construction on a regular basis, has tracked detailed manpower breakouts on a
daily basis and has used that information to build a robust as built schedule
in real time, then management has the ability to understand impacts and
causation at any given point of the project, throughout the life of the
project. One of the biggest reasons that projects become delayed, prone to
loss, impacted or suffer from budget overruns is through the lack of knowledge
of critical impacts as they are occurring. In a majority of the projects that the
company  has  been involved in, a significant portion of
critical delays and impacts identified began as very minor issues and
eventually snowballed into major problems that a project couldn’t recover
from. The sooner one identifies critical impacting issues, the better the
chance of overcoming them.

The industry has become so dispute heavy that construction companies
often avoid these discussions because they either don’t want to “show their
cards” or because they fear the owner will throw a fit if they use the term
delay, impact, cardinal change or any variation thereof.  We  don’t necessarily blame them for thinkingRKKU1  this, but what we have found is that more information and collaboration
is better for any project – and if construction companies can establish an open
door policy of such information, projects run smoother, there is a greater
amount of trust, there are less disputes and relationships become stronger in
the long run.

While manpower is tracked on most projects for accounting and payroll
purposes, it is rarely captured in a manner that allows anyone to study and
understand productivity at the level that productivity needs to be studied in
construction. This data needs to be captured every day for all work going on in
a project. If tradesmen worked on an activity, I want to know how many and for
how long. This is a very powerful set of information as it relates to
controlling cost and schedule, so powerful that the company has developed a
tracking and analysis technology around it.

 

 

 

 

 

Conclusion

 

 

Strategic planning is important to an organization because it provides a
sense of direction and outlines measurable goals. Strategic planning is a tool
that is useful for guiding day-to-day decisions and also for evaluating
progress and changing approaches when moving forward. In order to make the most
of strategic planning, your company should give careful thought to the
strategic objectives it outlines, and then back up these goals with realistic,
thoroughly researched, quantifiable benchmarks for evaluating results.

 

 RKKU1https://www.linkedin.com/pulse/7-proactive-steps-construction-company-can-take-avoid-michael