Strategic Management: Analysis, Competitive Advantage, and Market Scenarios

This document provides an overview of strategic management, focusing on the strategic direction followed by VADS Berhad in the past 5 years. It discusses the use of appropriate frameworks for strategic analysis, the company's competitive advantage among direct competitors, and the probable industry scenarios facing the entity. Additionally, it explores how VADS Berhad aligns its mission and vision with market demands. The document also includes an analysis of the company's strategic capabilities.

Strategic
Management

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Strategic direction which the entity has followed in past as well as the way through which
strategic thinking has developed in last 5 years...........................................................................1
TASK 2............................................................................................................................................2
Choices as well as use of appropriate framework for strategic analysis.....................................2
Critical discussion on organisational competitive advantage among direct competitors............4
Probable industry scenarios facing the entity in existing marketing domains.............................5
TASK 3............................................................................................................................................5
Mission and vision statement of company are aligned to demands of marketplace....................5
Organisational strategic capabilities............................................................................................6
TASK 4............................................................................................................................................7
Discussion on possible strategies which can be followed by the entity for defending its core
business........................................................................................................................................7
TASK 5............................................................................................................................................9
In light of discussion in Task 1 to 4, analyses and evaluation of resource implication of
recommendations which the entity has to address.......................................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Strategic management is a continuous planning, designing, monitoring, analysing and
assessing major necessities that a business requires for accomplishing objectives. With the
concept, a firm take stocks of pertaining circumstances, chalking strategies, arranging and
installing them along with analysing overall effectiveness of executes management tactics
(Armstrong and Taylor, 2020). For understanding about strategic management, VADS Berhad is
selected. The headquarters of the entity are located at Kuala Lumpur, Malaysia. It is among the
entity which is listed in Malaysia Public List and Bursa Malaysia Company. The main working
of the entity are in IT and technology which brings together processes, technologies along with
people for enabling effective and dynamic utilisation of ICT as well as BRP Services.
The report covers strategic direction that has been followed by the entity in last 5 years,
suitable frameworks for strategic analysis, industry scenarios and competitive advantages of
business among direct competitors. It also includes alignment of mission and vision to
marketplace demand. It also discusses possible strategies which the entity could follow for
defended its core business.
TASK 1
Strategic direction which the entity has followed in past as well as the way through which
strategic thinking has developed in last 5 years
Organisational overview
VADS Berhad was established in 1991 at Kuala Lumpur, Malaysia for providing IT and
technology services to the citizen of nation. It offers international addition to national managed
technological services, managed application services along with system integration services. The
company is listed in Bursa Malaysia Stock Exchange and Malaysia Stock Exchange. It is only IT
service provider in Malaysia which provides managed services as well as end to end solutions to
customers in the market. Along with this, the entity has right mix of expertise and set of skills
ranging from operations, project management, software development etc (VADS Berhad, 2020).
Company background
VADS Berhad was incorporated in the year 1990 and formed in 1991 for taking
advantage in IT and technology industry. The official workings of the organisation were started
on 1993 and 1995. Its major activities include core hosting services, virtual private services, Web
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& Domain hosting, hosted managed services, system integration services, managed networks
services etc. Since its establishment, the entity always geared towards maximising values of its
customers. It also has proven track record to provide reliable technologies addition to expertise
for serving needs (Baumgartner and Rauter, 2017). With this, it takes complexities out of
managing its e- business infrastructure.
Strategic thinking
VADS Berhad works with the objective of maximising business values for its customers
and clients. With this, it has gained huge market share in information technology industry of
Malaysia. The dept and breadth of activities of the entity has improved in last 5 years that
assisted it to work with huge dedication in the field and expand its customer base and margins of
profit. Moreover, it is also analysed that the company has hired competent professionals that
have huge knowledge about the field and their decision making helped it to accomplish its
objectives (Chakrabarti and Mitchell, 2016).
TASK 2
Choices as well as use of appropriate framework for strategic analysis
Strategic analysis
It is said to the process which comprises researching business environment in which the
firm operates. It is important for devising strategic planning in context to decision making
addition to smooth working of entity (Coelho and Et. Al. 2012). It is also essential for business
which has goals, mission and vision for themselves. In case with VADS Berhad, strategic
manager uses framework of PESTLE Analysis for strategic analysis as it is best model that assist
the about external factors and their impacts on entity.
PESTLE Analysis
It is widely and most suitable framework that is used as strategic analysis technique. It is
said to the framework adopted for scanning macro environmental components related to external
strategic analysis. With this framework, strategic manager of VADS Berhad finds out issues that
are beyond organisational control, identifies impacts of each factor and many more. The
PESTLE Analysis of VADS Berhad is as follows:
Political: Malaysia is politically stable nations that have people with good command as
well as high values in IT and technology field. Moreover, the government of the nation is also
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making huge attempts for helping businesses to diversify their activities which operate in it. In
case with VADS Berhad, political system impacts positively on its operations as government
supports the activities and services of the entity through opening routes for working with foreign
clients and following trade laws (Davis, Miller-Tate and Texter, 2018).
Economical: Malaysia is considered as one of open economies in world. Its openness to
trade, investment and many more are instruments for creating employment and growth of
income. This impact positively on VADS Berhad as the company is able to attract huge investors
in technological industry and manage its performances along with contributes in development of
economic infrastructure of the country.
Social: In Malaysia, population belong to different cultures lives and each group have
retained their own religion along with way of life in respective manner. Moreover, population of
the country also have huge preferences for technological services that positively impacts on
activities of VADS Berhad. It is because preferences of citizens for IT services enhances demand
for the business activities and when all demands are promptly satisfied then it enhances business
sustainability for longer duration.
Technological: Malaysia is a hub for businesses that outsources their manufacturing as
the country has well established technological infrastructure addition to well equipped workforce
that are competent, productive and skilled (Dayan, Heisig and Matos, 2017). VADS Berhad is
the company that provides large number of information technological services including hosted
managed services, managed desktop services disaster recovery solution et. It also introduces new
technologies that provide internet connectivity to all the citizens.
Legal: This factor covers changes in legislation related to employment, safety, heath,
ethical standards and many more by government of nation. In Malaysia, common law system are
followed which protect citizen rights of the nation. In case with VADS Berhad, the company
have implemented various legislations, for example, Minimum wages act, Data protection act,
Heath and safety act etc in its business operations that protect its people from any
discrimination, accidents and so on.
Environmental: Ecological system of Malaysia is deeply impacted from pollution,
deforestation and any more elements (Dichmont and Fulton, 2017). To protect the environment,
the government has taken initiatives in which VADS Berhad contributes as maximum as
possible. In present duration, businesses are more conscious for reducing their activities that
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causes negative influences of the environment. VADS Berhad has objective of reducing carbon
footprints to maximum proportion as possible.
Critical discussion on organisational competitive advantage among direct competitors
Porter’s five forces
It is the effective tool which assists in analysing competitive benefits that are with an
organisation among its direct competitors (Hill, 2017). In case with VADS Berhad, it works in
extensive competitive industry that is IT and technology. By using the model, managers of
VADS Berhad are able to analyse competitive environment of firm and the advantages that are
enjoyed by it among key rivals. The five forces are as follows:
Threat of new entrant: IT and technology industry is attractive for new comers due ot
its speedy growth as well as appealing custeomr base. Along with this, it is also unattractive for
new entrant as significant capital amount is required and existence of cost advantage large scale
players existences. It gives low threat of entrant to VADS Berhad as it is among key players that
have well established image which gives it competitive advantage s in the industry.
Threat from substitute: In IT and Information industry, limited or not much threats
from substitution is available as there is no true substitute for IT services (Hitt, Ireland and
Hoskisson, 2016). VADS Berhad offers seamless as well as cost effective information
technological solutions that do not needs any substitute and this creates less substitution threat to
the entity resulting in attaining large number of advantages from rivals.
Competitive rivalry: IT and Technology industry is popular for effectiveness, rapid
growth along with competition. Large entities in the sector are Friendster, Jaring, MIMOS eta
that creates high competitive rivalry for VADS Berhad. It is seen that the entity has huge tactics
which provides it competitive benefits from economies of scale that are valuable and hard to lose
for it.
Bargaining power of supplier: Suppliers are the mediums that help the company to
acquire materials at low rates and high quality. IT and Technology industry, inputs required for
services and products are pretty standards as well as differences being memory, speed and many
more. In case with VADS Berhad, suppliers are important to provide required information,
material or other elements for changing along with improving technologies. However, the entity
has relations with multiple suppliers which gives low bargaining power to suppliers and
competitive advantages to entity (Laursen and Thorlund, 2016).
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Bargaining power of buyers: Within IT and Technology industry, buyers have large
options for single products due to existence of large companies in the sector offering similar
products which give same benefits to customers. However, services offered by VADS Berhad
are unique and resourceful that are important for its success. It is analysed that customer are
sensitive for prices but in context to IT services they are willing to spend huge money on
effective service that helps the business in achieving competitive edges from rivals.
Probable industry scenarios facing the entity in existing marketing domains
Scenario analysis
In context to VADS Berhad, it is analysed that the entity faces huge changes in current
market domains of IT and Technology sector. The industry has evolved changes due to changing
perceptions, needs and wants of customers with passage of time. In current marketing domain,
the company is facing situations related to complexities in understanding market needs, varied
opportunities, probability of generating more money and enhancing proportions of profits (Lee,
2017). Moreover, the entity offers diverse IT services in the existing domain of its targeted
market and investigates about clients requirements so that all the workings and executed timely
resulting in making huge money and enhancing proportions of profits.
TASK 3
Mission and vision statement of company are aligned to demands of marketplace
Alignment of Mission and Vision with market demand
VADS Berhad was established with mission statement of “To bring together technology,
methods and people for enabling more dynamic along with effective use of IT services and
solutions”. It has been argued that the firm may change its mission statement so to respond
towards new market opportunities as well as changes in market conditions. It is also seen that the
company is making huge efforts for integrating people and technology for cost effective
solutions in market. Moreover, the demand for its services is high among customers and clients
which are met by entire team of the business promptly (Revilla and Saenz, 2017).
Vision statement of VADS Berhad is “To create most compelling IT and Technology
entity through combining knowledge related to technology and experience”. VADS Berhad’s
vision still aims to become leader in the IT and Technology sector. It has been analysed that the
company has aligned its operations with market demands which has resulted in shifting towards
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knowledge based economy (Sarker and Faiz, 2016). It is also committed as well as dedicated for
examining current business requirements of customers and meeting then successfully.
Organisational strategic capabilities
SWOT Analysis
SWOT Anlaysis of VADS Berhad is as follows:
Strengths Weaknesses
 VADS Berhad have large number of IT
services to offer and meet needs of clients
and customers on time.
 The company has skilled personnel that
looks towards global issues related to
technology and solves them effectively
that set it apart from rest.
 The services that the company offers
are not affordable by small business
or customers belonging to lower or
middle income group that restrict its
customer base enhancement
(Schaltegger, Burritt and Petersen,
2017).
 The market penetration of VADS
Berhad is limited in world.
Opportunities Threats
 VADS Berhad has opportunity to expand
in untapped market through online
platforms and little investment in order to
have presence in international market.
 By reducing or lowering down prices for
IT services to meet requirements of small
business can result in maximising
customer base (Testa, Boiral and Iraldo,
2018).
 Changing requirements of customers
for IT services is major threat for
VADS Berhad.
 Increasing number of companies that
offers similar services in market is
another threat for the entity as it
becomes quite impossible to manage
its customers with it.
VRIO Analysis
To analyse capabilities of company, VRIO analysis framework is mostly used by the
business managers. In context to VADS Berhad, VRIO Analysis is below:
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Organisational
capabilities
Valuable Rare Imitable Organised
Brand Image ✓ X X X
IT services ✓ X ✓ X
Employees ✓ ✓ ✓ ✓
Valuable: The valuable capabilities are those one which exploits opportunity addition to
mitigate threat for company in marketplace. In context to VADS Berhad, valuable resources are
brand image, IT services and employees. The brand image is valuable as the company made
huge sacrifices to build string brand image that helps it grab diverse opportunities of enjoying
competitive advantages. Moreover, IT services that are offered by the business are valuable as
they helps in meeting requirements of clients in time (Vishnevskiy, Karasev and Meissner,
2016). Employees of VADS Berhad are skilled and have knowledge to manage the business that
differentiates from the rest in the industry.
Rare: Rare capabilities are that which are absolutely unique among current or potential
rivals. Having rare capabilities with organisation aids in leading competitive advantage. In
relevance to VADS Berhad, the rare capabilities are IT services and employees. The IT services
which the business provides in market are not available with other companies and it makes it
rare. At same time, employees of the organisation belong to different part of globe and have huge
knowledge in technology and information sector that other company fails to hire.
Imitable: Imitable capabilities are those which competitors finds difficult of costly to
imitate. Employees as well as IT services of VADS Berhad are costly to imitate by other entities
and these capabilities provide first mover advantages within the sector and gaining competitive
edges. With its IT services and manpower, wide opportunities to increase customer base are
achieved by the entity (Testa, Boiral and Iraldo, 2018).
Organised: At the time, above mentioned capabilities are realised then the next is to
organise the firm for exploiting resources. In association to VADS Berhad, employees are
organised through effective training, development, compensation and career opportunities that
help the organisation in enjoying duration of sustained competitive edge.
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TASK 4
Discussion on possible strategies which can be followed by the entity for defending its core
business
In the competitive scenario, it is important for an organisation to defend its core business
through adoption of certain strategies (Chakrabarti and Mitchell, 2016). In context to VADS
Berhad, strategic manager can follow possible strategies as defined by Michael Porter in Porter’s
Generic model in order to defend core business activities.
Porter’s Generic model
It is most important framework for business in the competitive environment. The model
defines the ways in which an organisation can protect its core operations across selected market
scope. There are three strategies through which managers of VADS Berhad could make attempts
for defending itself in the industry. The strategies are as follows:
Cost leadership strategy: The strategy is majorly adopted by the enterprise for
becoming lowest cost producer within the sector where it works. It could be followed in VADS
Berhad for providing IT Services on large scale that will result in exploiting economic scale
leading to defending core business.
Differentiation strategy: The strategy is used for targeting much wider market as well as
attaining competitive edges via differentiation across entire industry (Dichmont and Fulton,
2017). In VADS Berhad, differentiation strategy could be followed through charging premium
prices which widely covers additional costs and also gives clear reasons to customers for
preferring its services over competitive leading towards protecting key operations in the industry.
Focus strategy: This is of two types, one is cost focus and other is differentiation focus.
Cost focus strategy is about developing lower cost benefits within small market segment only.
The offerings are generally basic, similar to average market leading and are acceptable by
sufficient number of population for defending core business (Armstrong and Taylor, 2020). At
same time, differentiation focus is about developing product differentiation within single or
limited market segment. Managers of VADS Berhad could follow focus strategy for defending
core business in small segment through developing unique IT services that can be provided at
against undifferentiated services as compared with other companies.
By adopting the effective strategy from the mentioned ones, strategist of VADS Berhad
can continue the practices in profitable manner. Along with this, effective strategy adoption
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benefits the business in many ways such as maximising revenues, enhancing customer base etc
resulting in defending core business.
TASK 5
In light of discussion in Task 1 to 4, analyses and evaluation of resource implication of
recommendations which the entity has to address
As per the above discussion, VADS Berhad is recommended to follow differentiation
strategy as it will benefit in targeting larget market segments and meeting their requirements with
differentiated services. The strategy requires resources including monetary resources, human
resources, technological resources etc in order to sustain profits or defending core business. these
resources are needed so that the company can properly analyse choices and demand of market
for its offering or other ones so that some differentiation services in IT and technology field can
be developed and offered to customers with the hope of meeting their requirements timely.
Differentiation strategy is directly connected with required resources as these resources have
huge potentials to introduce unique innovation in market and assisting the business to attain
successful outcomes as determined earlier (Revilla and Saenz, 2017). These resources are easily
obtainable in the market. For example, VADS Berhad can obtain human resources from job
portals or other sourcing agencies. Moreover, financial resources can be obtained from financial
institutions, relatives and from family members. By implementation differentiation strategy,
VADS Berhad will be able to address demands of market in unique manner that will differentiate
it and its services along with enhancing competitive advantages in the industry.
CONCLUSION
From the mentioned report, it is concluded that strategic management is essential for an
enterprise to become successful in dynamic and competitive environment. Implementation of the
concept helps an organisation in enhancing employee productivity, external threat awareness,
understanding competitor’s strategy, reducing problem avoidance and resistance to change. An
organisation becomes successful through devising, implementing and following strategic
directions that guides them in whole business procedures. PESTLE Analysis and Porters five
force model are used for strategic analysis as well as understanding competitive advantages with
a firm among its rivals. The key organisational capabilities are analysed through VRIO Analysis.
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Possible strategies that can be pursues by a company with the hope of defending or safeguarding
core business includes strategies of Porter’s generic model.
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REFERENCES
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Online:
VADS Berhad. 2020. [Online]. Available through: < http://www.vads.com/>
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