ENGINEERING MANAGEMENT 2
SEMESTER 2, 2015
Paper Leader: Dr. Nicola Naismith
Students should work individually.
The full report including TASK 1 and TASK 2 as 1 document not exceeding 2500 words in total should be handed-in electronically through AUT Online and Turnitin by:
Issued: Week 4 (13th of August 2015)
To Be Submitted: by 9.00 am NZ time, Monday 21st September 2015
The GEA Group Aktiengesellschaft
GEA Group Aktiengesellschaft is one of the largest suppliers of technology for the food processing industry and for a wide range of other process industries. As an international technology group, the Company focuses on world-leading process technology and components for sophisticated production processes.
In 2014, GEA generated consolidated revenues in excess of EUR 4.5 billion, more than 70 percent of which came from the food sector, which is a long-term growth industry.
The group employed more than 18,000 people worldwide as of December 31, 2014. GEA Group is a market and technology leader in its two business areas of Equipment and Solutions. The company is listed on Germany’s MDAX stock index (G1A, WKN 660 200) and on the STOXX® Europe 600 Index. In addition GEA Group has a sponsored level I ADR program in the USA.
‘The GEA Group – engineering for a better world’
As an engineering management consultant you are required to advise the company on their strategic plans.
This includes an analysis of the influence which the external environment plays on the formulation of GEA’s organisations strategy.
You will be required to use the tools of strategic management to analyse and evaluate the strategic position of the GEA organisation and propose and evaluate its strategic options to meet its objectives and make suitable recommendations.
You will be required write an individual strategic report (approximately 2500 words) to the senior management of the GEA organisation highlighting the benefits and risks associated in the current set-up and make suitable recommendations to champion the benefits and mitigate the outcomes of the risks identified.
Q1 Strategic Analysis:
The aim is to achieve an understanding of the key strategic issues, both externally and internally, that are likely to influence the performance of the company into the future. You are required to carry out extensive research to update the information provided, in order for a full strategic overview to be formed.
Q2 Strategic Options and Strategy Selection:
Develop a range of strategic options, their evaluation and the selection of the ones to be implemented. Various models and tools that are part of strategic management theory may help you in your analysis. The emphasis here is very much on widening the strategic perspectives and creating a cross-disciplinary approach. Additionally, there is a key issue that has received research attention in management journals, students are encouraged to introduce this into the debate presented in their projects.
Understanding is only achieved by interpretation of the analysis undertaken, and it is up to you as an engineering management consultant to present a well justified and logical argument for the strategic plan presented.
Justification should be made by referring to the relevant literature, or additional research. It is the quality of the argument presented that will determine the final mark. Hence it is the data / interpretation of the data that is important and not the volume of tools of analysis used.
Under no circumstances should you approach the case study company for any reason.
Appropriate Secondary Data Sources
It is suggested that secondary data sources are extensively utilised e.g. electronic library sources / hard copy data / articles in academic journals / business press such as the Financial Times and the Economist – class notes should not be referenced and the ‘popular press’ not be used. Wikipedia references are not considered to be of the required standard and hence should not be included.
As in all decision making in business, generally there are no right and wrong solutions. Good strategic decisions are generally recognised as those where there has been generation of several alternative strategies, consideration of the likely outcome from adopting each alternative, and a convincing justification for why the chosen strategy is likely to be more effective than the other alternatives.
The range of strategic issues that are to be addressed in the strategic plans presented, and the relative emphasis that is given to each is part of the decision making process, should be decided by you, this in itself part of the assignment. The content of your individual engineering management report will differ from other candidates, there is definitely not one “right answer”.
• Students shall work individually.
• The assignment is to be submitted in report format and as such should have a formal structure and layout. It should be presented as a professional electronic document.
• The total submission should not exceed 2,500 words.
• The assignment must be submitted electronically ONLY through AUT Online and Turnitin on or before the above submission deadline. Turnitin will be used to check the originality of the report.
• All students should be aware on the School’s policy on plagiarism, collusion, late submission and special considerations.
• All submissions shall have a bibliography of references and sources used in the preparation of the project. Students must use AUT APA referencing system when citing literature sources.
• All submissions should have a cover sheet identifying the course, the date and the student’s name.
• All submissions should be in Times New Roman 12pt 1.5 spaced (excluding table of contents, tables, references list and appendices).
In order to gain a pass in this paper you must obtain 50% overall in the paper (and complete any compulsory assessment events for the paper).
Late Assessments Hand in
The School has a policy of not accepting any late assignment without there being special circumstances. Late assignments will only be accepted and/or adjustments made to assessment marks provided that the students makes application for special consideration and the application is accepted. In all other cases the penalties detailed by lecturers for late assessments will apply.
The following are extracts from the Faculty policy on academic discipline:
At AUT our aim is to develop confident, capable learners. In our learning, teaching and assessment we emphasise students’ active engagement with their learning and the development of capabilities such as critical thinking and communication. By insisting that students are honest in submitting assessed work we are demonstrating the importance of each student gaining and demonstrating a deep understanding of the disciplines they are studying.
The University has an obligation to preserve the integrity, rigour and fairness of its assessment procedures and the granting of credit to students. This means ensuring that students are only given credit for work which abides by the principles of honesty, integrity and fairness. Plagiarism, copying, unauthorised collaboration are all forms of dishonesty in assessment that breach these principles.
http://www.aut.ac.nz/__data/assets/pdf_file/0004/577210/Academic-Calendar-2015.pdf pg 105.
It is a breach of the AUT Academic Statute for a student to engage in any unfair practices in submitting any assessment materials at AUT, including resubmitting previously submitted work without gaining permission beforehand. Any breaches observed will be penalised.
The faculty policy also gives a definition of forms of cheating and academic dishonesty”.
The Faculty of Design and Creative Technologies defines plagiarism as occurring where a person effectively and without acknowledgment presents the work of others as their own work. That may include published material such as visual images, audio clips, books, newspapers, code, lecture notes or handouts, materials from the Internet or other students’ written work.
Note that the definition includes the use of visual and audio work such as a photograph, video, illustration or artwork. All the sources used must be credited including:
• images used in an artwork, piece of design or illustration.
• code copied from a book or website.
• direct reference to a concept from an existing piece of art or design.
Students should include a bibliography/picture-credit sheet for each assignment, listing all sources used (whether visual, written, code or other), and will be asked to sign an assignment cover sheet stating that all other material in the assignment is their own work. Changing a few words of an existing text, or even paraphrasing it, does not make it your own. This still needs to be credited. Similarly copying an image into another medium (i.e. making a drawing from a photograph) is also plagiarism unless it is acknowledged.
Unauthorised Collaboration in Assessment
The Faculty of Design and Creative Technologies defines collaboration in assessment as occurring where a student has worked with others in the preparation of an assessment task which has not been identified as a group assessment (i.e. it is an individual assessment). Such collaboration is unauthorised and unacceptable.
Note: It is acceptable for students to collaborate in researching and discussing ideas, and in clarifying their thinking in relation to an individual assessment task. When the student writes their answer, essay, project or assignment for assessment, it is essential that they write their own ideas or synthesis of the material gathered, discussed and researched. Students must use their own words. It means that students should NOT swap or pass on one person’s written work to another by disc or computer file or share the task of writing and preparing a duplicated copy of work.
Other Forms of Dishonesty in Assessment
• Resubmitting previously submitted work for assessment without prior approval.
• Submitting for assessment any work which has been copied from any person.
• Taking any unauthorised material into an examination.
• Copying from or inappropriately communicating with another person in an examination.
• Impersonating any student or allowing a person to impersonate you in an assessment.
• Using any other unfair means in assessment.
(Faculty of Design and Creative Technologies Policy and Procedure on Academic Discipline (p2)
You are advised to consider the assessment criteria and ensure that these areas are covered in your report. Assessment grading will be according to the following criteria:
Criteria Marks Remarks
a) External Environment Analysis 35% Analysis of both the General/Distant Environment and the Immediate/ Proximate Environment, utilising appropriate strategic analytical tools (e.g. PEST, Porter’s “5 Forces” and Market Segment Analysis)
b) Internal Audit 15% Analysis of both tangible and intangible assets, especially as regards the skills/competencies available to the company, and to show an understanding of the financial situation.
c) Strategic Options and justification 20% Identify two distinct strategic options for the GEA group. Fully Justify your choices.
N.B.: Your justification(s) should be based upon, and reflect your responses to tasks A and B.
d) Strategic Choice 10% Choose one of the two alternative strategic options examined and present reasoned argument to justify your choice of strategic option/ direction for the GEA group. Put forward and argue the case for the strategic option you recommend, which will involve identifying strategic advantages and countering potential weaknesses and problems with your chosen strategic option.
d) Presentation of report 10% Presentation means clearly and neatly presented material with good use of English, layout, clear and logical structure, visual presentation, and clarity of expression. Any written work should read well and be concise as well as logical. Spelling should be accurate and the overall appearance, including any graphical material, should be of good quality to a professional standard.
e) Additional reading demonstrated to show deep knowledge and understanding, with referencing and supporting published material 10% Additional background and supplementary reading should be undertaken and incorporated into the work. The report should contain references to relevant published material which underpins the work. Correct use of the AUT APA referencing system when citing literature sources is rewarded.
A + = 90%, A = 85%, A- = 80%, B+ = 75%, B = 70%, B- = 65%, C+ = 60%, C = 55%, C- = 50%, D < 50%
Grade Standard and Academic Rigour of work submitted Presentation of material (Criteria e)
(10 marks) Additional reading demonstrated to show deep knowledge and understanding and use of correct references
(35 marks) Criteria (b)
(15 marks) Criteria (c)
(20 marks) Criteria (d)
A+, A, A-
Work is of an excellent standard and has academic rigour. Work will be distinctive. There will be an extensive use and application of key principles. There will be a very high degree of comprehensive examination of key issues, reflecting the intricacy of the strategic management process and the creativity to see imaginative solutions. Material is presented in a professional manner, following an excellent clear and logical structure to permit understanding of the strategic analysis, options and choice. Clear evidence that background and supplementary reading has been undertaken and incorporated. Contains references to relevant published material which underpins the work.
Generally of a good standard, confidently and clearly written, displaying an understanding of the issues in the strategic management process. The work demonstrates an understanding of the task, sound judgement and a grasp of investment decision making and choices. Arguments are sensible and realistic, however there is room for improvement. Presentation of material could be improved as it is not to a high professional standard. Structure of the work demonstrated. There is minimum evidence of background and supplementary reading being completed.
Contains some references but they are not specifically related to the work submitted.
C+, C, C-
The work is graded at an above average standard. Generally demonstrates familiarity with the strategic management process. Arguments are sensible and realistic but could benefit from improved clarity, fewer ambiguities and enhanced structure. Despite such positive attributes, however, there will be room for improvement on the above issues including the sharpness of focus on the remit, and explanation of ideas. The report does not communicate a convincing argument to support strategy decision and choices, and does not support the recommendations. The material is not presented to a high standard. Unclear structure. Limited logic in contents provided. Little evidence of background and supplementary reading being completed. Reference material is limited and is not specifically detailed to relate it to the topic and/or the reason for inclusion is not explicit
Work is of a basic quality with substantial weaknesses.
A weak answer which shows basic understanding but constitutes no danger to contract administration practice.
The work is graded at a below average standard. Generally the report indicates a poor grasp of the subject matter. There is substantial improvement required to the demonstration of the strategic management process. Incoherent in most parts with little evidence of logic or deductive reasoning. Work is presented to a poor standard. Little evidence of content structure considered or no logical structure provided.. No evidence of background or supplementary reading being completed. Superficial and descriptive text is provided with limited analysis and referencing.
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Version 2.0 Issue Date: 01/01/2009 Last Updated: 20/07/2009
Markets are most usefully thought of in terms of market segments. Identifying which organisations are competing in which markets is an important exercise. Market segmentation is the identification of specific parts of a market and the development of different market offerings that will be attractive to those segments. Market segmentation is important to strategy for several reasons:
• Some segments may be more profitable and attractive than others. For example, large segments may have low profit margins but their size may make them attractive, even at these levels of profitability.
• Some segments may have more competition than others.
• Some segments may be growing faster and offer more development opportunities than others.
• Relative market share (i.e. in relation to competitors) within market segments is an important consideration.
Other considerations when analysing the market:
• The role of Government – the extent to which government policies support of hinder the organisation.
• Opportunities for global market development – from limited internationalisation, to a major opportunity to build a global organisation.
These three areas may operate totally independently of each other or they may inter-connect. For example, governments may wish to encourage global-scale companies as a matter of national policy or simply to bring foreign revenue into the country.
Market= a group of customers for specific products or services that are essentially the same (for example, a particular geographical market)
Market segment = a group of customers who have similar needs that are different from customer needs in other parts of the market
An industry or sector may be too high a level to provide for a detailed understanding of com- petition. The Five Forces can impact differently on different kinds of players. For example, Hyundai and Porsche may be in the same broad industry (automobiles), but they are positioned differently: they are protected by different barriers to entry, and competitive moves by one are unlikely to affect the other. It is often useful to disaggregate. Many industries contain a range of companies, each of which has different capabilities and competes on different bases. Some of these competitor differences are captured by the concept of strategic groups. Customers too can differ significantly and these can be captured by distinguishing between different market segments. Thinking in terms of different strategic groups and market segments provides opportunities for organisations to develop highly distinctive positioning within broader industries.
A market segment is a group of customers who have similar needs that are different from customer needs in other parts of the market. Where these customer groups are relatively small, such market segments are often called ‘niches’. Dominance of a market segment or niche can be very valuable, for the same reasons that dominance of an industry can be valuable following Five Forces reasoning.
For long-term success, strategies based on market segments must keep customer needs firmly in mind. Two issues are particularly important in market segment analysis, therefore:
• Variation in customer needs. Focusing on customer needs that are highly distinctive from those typical in the market is one means of building a long-term segment strategy. Steel producers might segment by industry, with automobile and domestic appliance customers having very different needs for the quality of sheet steel used in their products. Airlines segment by consumer type, business versus tourist for example. Being able to serve a highly distinctive segment that other organisations find difficult to serve is often the basis for a secure long-term strategy.
• Specialisation within a market segment can also be an important basis for a successful segmentation strategy. This is sometimes called a ‘niche strategy’. Organisations that have built up most experience in servicing a particular market segment should not only have lower costs in so doing, but also have built relationships which may be difficult for others to break down. Experience and relationships are likely to protect a dominant position in a particular segment.
SWOT and PEST Differences and TIPS
PEST analysis is conducted to ascertain strategies for the future or else to understand the market before launching them.
It is a fundamental tool of market planning and strategizing that must be carried out to comprehend market trends and the systematic risks involved.
PEST analysis gives you an overview of the whole situation your business might be in. Precisely, it is a bird’s eye view of the stimulus and the scenarios that surround your trade and your business.
The PEST analysis is a useful tool for understanding market growth or decline, and as such the position, potential and direction for a business.
A PEST analysis is a business measurement tool. PEST is an acronym for Political, Economic, Social and Technological factors, which are used to assess the market for a business or organizational unit.
The PEST analysis headings are a framework for reviewing a situation, and can also, like SWOT and Porter’s Five Force Model, be used to review a strategy or position, direction of a company, a marketing proposition, or idea. C
Use PEST analysis for business and strategic planning, marketing planning, business and product development and research reports.
PEST analysis is similar to SWOT- it’s simple, quick, and uses four key perspectives.
As PEST factors are essentially external, completing a PEST analysis is helpful prior to completing a SWOT analysis.
The PEST model, like most very good simple concepts, has prompted several variations on the theme. For example, the PEST acronym is sometimes shown as STEP, which obviously represents the same factors. Stick with PEST – nearly everyone else does.
PEST is also extended to seven or even more factors, by adding Ecological (or Environmental), Legislative (or Legal), and Industry Analysis, which produces the PESTELI model.
Other variations on the theme include STEEP and PESTLE, which allow for a dedicated Ethical section. STEEPLED is another interpretation which includes pretty well everything except the kitchen sink: Political, Economic, Social and Technological – plus Ecological or Environmental, Ethical, Demographic and Legal.
Generally speaking a SWOT analysis measures a business unit or proposition, whereas a PEST analysis measures the market potential and situation, particularly indicating growth or decline, and thereby market attractiveness, business potential, and suitability of access – market potential and ‘fit’ in other words. PEST analysis uses four perspectives, which give a logical structure, in this case organized by the PEST format, that helps understanding, presentation, discussion and decision-making. The four dimensions are an extension of a basic two heading list of pro’s and con’s.
PEST analysis can be used for marketing and business development assessment and decision-making, and the PEST template encourages proactive thinking, rather than relying on habitual or instinctive reactions.
Be sure to describe the subject for the PEST analysis clearly so that people contributing to the analysis, and those seeing the finished PEST analysis, properly understand the purpose of the PEST assessment and implications.
PEST is useful before SWOT – not generally vice-versa – PEST definitely helps to identify SWOT factors.
There is overlap between PEST and SWOT, in that similar factors would appear in each. That said, PEST and SWOT are certainly two different perspectives:
PEST assesses a market, including competitors, from the standpoint of a particular proposition or a business.
SWOT is an assessment of a business or a proposition, whether your own or a competitor’s.
Strategic planning is not a precise science – no tool is mandatory – it’s a matter of pragmatic choice as to what helps best to identify and explain the issues.
PEST becomes more useful and relevant the larger and more complex the business or proposition, but even for a very small local businesses a PEST analysis can still throw up one or two very significant issues that might otherwise be missed.
The four quadrants in PEST vary in significance depending on the type of business, eg., social factors are more obviously relevant to consumer businesses or a B2B business close to the consumer-end of the supply chain, whereas political factors are more obviously relevant to a global munitions supplier or aerosol propellant manufacturer.
All businesses benefit from a SWOT analysis, and all businesses benefit from completing a SWOT analysis of their main competitors, which interestingly can then provide some feed back into the economic aspects of the PEST analysis.
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