Strategic Analysis of Chugoku Marine Paints Ltd: A Detailed Report

This report offers a comprehensive strategic analysis of Chugoku Marine Paints Ltd (CMP). It begins with an executive summary outlining the report's focus on business strategies and a SWOT analysis, examining CMP's strengths (employee commitment, profitability, technological development), weaknesses (moderate brand awareness, stagnant customer growth, environmental issues), opportunities (customer loyalty, innovation, eco-friendly products), and threats (increased competition, low-cost competitors). The report then recommends a market penetration strategy emphasizing Corporate Social Responsibility (CSR) and shared value, focusing on environmental preservation, responsible sourcing, community engagement, and employee well-being. The analysis also includes an academic review of CSR and its application to CMP. The report concludes with a discussion of the company's current strategies, evaluation of its marketing planning and strategic challenges, and suggestions for future growth and development, making it a valuable resource for understanding strategic management and its practical applications within the marine paints industry. The report also provides a detailed analysis of the external environment, including environmental concerns, technological integration, and post-pandemic uncertainties.

Strategic Management

EXECUTIVE SUMMARY
In the report presented, the business strategies have been mentioned. The SWOT analyses of the
company Chugoku Marine Paints Ltd has been performed in which the strengths, weaknesses,
opportunities and the threat concern has been analysed. The strategy which would be good for
the company in its application has also been discussed; it is believed that the strategy would help
the organisation in its growth and survival. Apart from this the academic analyses is also been
performed in which the articles which is related with the company’s activities are been analysed.

Contents
1. INTRODUCTION.......................................................................................................................1
2. SWOT ANALYSIS.....................................................................................................................1
3. RECOMMENDED STRATEGY................................................................................................4
4. ACADEMIC ANALYSIS...........................................................................................................8
5. CONCLUSION..........................................................................................................................12
6. BIBLIOGRAPHY......................................................................................................................13

1. INTRODUCTION
Strategic management can be termed as the managerial process of evaluating the internal
and external environment of an organisation and formulating plans and policies for future
expansion and development of business organisation and attainment of organisational objectives
(Ansoff, 2018). Chugoku Marine Paints Ltd. was established in the year 1917 and the company
has developed the marine paints as a core product of the company along with different range of
commercial and housing paint products (Anon., 2020). In the following report, internal analysis
of Chugoku Marine Paints is being done to find the opportunities and challenges for the
company and strategy for future direction and growth is being recommended based on the
internal analysis. At last, the report aims to critically evaluate the concept of Corporate Social
Responsibility with the help of academic literature for determination of strengths and weakness
and the manner in which best application of the concept is possible.
2. SWOT ANALYSIS
SWOT Analysis is a tool of strategic management which is used to identify the internal
strengths and weakness and based on the internal capability analysis, it aims to determine the
external opportunities and threats (Phadermrod, 2019). Analysis of the internal strengths and
weakness of Chugoku Marine Paints is being done in the following manner:
Strengths:
 Employee commitment
 Profitability in operations
 Technological development
Weakness:
 Moderate brand awareness
 Stagnant customer growth
 Environmental issues
Opportunities:
 Customer loyalty and referral
 Innovation
Threats:
 Increased competition
 Low-cost competitors
Strengths:
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A team of highly skilled and committed employees is one of the biggest strengths of the
company which provides strong competitive advantage as the organisation can leverage any
business opportunity by employee motivation and commitment. Chugoku Marine Paints have
enjoyed profitable operations since its establishment which has also helped in accumulation of a
strong base of financial resources providing strength to the company. Incorporation of advance
and latest technology to improve quality of products and services has been a core competency of
the company which is another important strength as technological innovation fosters productivity
(Uetake, 2017).
Weakness:
Despite the high quality of goods and services being offered by the company, public and
brand awareness is not very high for Chugoku Marine Paints which is one of the biggest
weakness of the company and as a result of low brand awareness, customer growth rate has not
shown any significant improvement in the past years and increasing the spectrum of customers
has been a weakness for the company. Production of marine paints is concerned with many
adverse impacts on the environment which are to be considered and mitigates to ensure a
positive image and goodwill which is another weakness in the functioning of the company
(Uetake, 2019).
Opportunities:
Customer loyalty is always desirable by the management of any organisation and the
customers of Chugoku Marine Paints have demonstrated loyalty and trust which can be used an
opportunity to attract more customers by implementation of customer referral programs.
Innovation and creative-thinking is another huge opportunity for the management of the
company since the readiness to adapt latest technological changes and innovate products and
services has provided many tangible benefits in the past as well. Increasing eco-friendly products
and services along with better production manuals to decrease the amount of carbon emissions
and adverse impacts on environment is a significant opportunity for the management of Chugoku
Marine Paints to take an early lead and improve the goodwill of the company and increase
market favourability (Uetake, 2019).
Threats:
Extent of competition has increased significantly in the marine paints industry with
innovation being the value proposition for many other competitors as well. This presents a
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challenge for the management to maintain competitive position of the company and provide stiff
competition to other rival firms. Many competitors of Chugoku Marine Paints have adopted low-
cost strategy while offering the same quality of products and service to capture market share
which is another huge threat that needs to be eliminated by the management with the help of
effective strategic policy formulation and change implementation.
External Environment:
Factors in the external environment and close proximity of Chugoku Marine Paints have
a large influence on the operations and decision-making of the company. Environmental
concerns and issues have put the onus on companies like CMP to reduce their carbon footprints
and emission of greenhouse gases to improve sustainability standing and goodwill. Integration of
technology has become more prominent than ever in every industry including marine paints
which is another external environment influence. There exists an uncertainty in the operations
and world trade situation post Covid-19 pandemic and it has been analysed that key to long-term
sustainable business performance is to improve the triple-bottom line that evaluates an
organisation beyond its profit and financial dimension and extends to evaluation of impact on the
society and the environment (Slaper, 2011). Legal constraints and complications have also
impacted the operations of the company and providing a safe and healthy working environment
is a legal compulsion and non-compliance can result into heavy fines and penalties for the
organisation. As a result, the management of Chugoku Marine Paints have shown commitment
for prevention of industrial accidents and ensure the safety of the workers.
Current Strategy:
Cost-reforms: In an environment which is primarily characterized by difficult earning
prospect due to increased prices of raw materials, the management of Chugoku Marine Paints
have planned to strategically implement cost-reforms and aims at minimisation of production and
other operational costs.
Marketing: The management also plans to review the current marketing strategy and
selling systems to improve the effectiveness of external communication and with the help of
market research, develop and innovate products which can provide stiff competition and pave
way for future success and growth.
Production structure: The management of the company has made provision for capital
investment into production technologies considering the future regulations under environmental
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concerns and optimise a global system of production which can increase capacity while ensuring
no harmful effects on environment (CMP, 2019).
Strategic Evaluation:
In continuation of the strategic policy and planning of the company, procurement
methods were restructured and factory costs were reduced by streamlining product
manufacturing operations. The company also formed a team for implementation of strategic
marketing planning. The management of Chugoku Marine Paints commenced shifting of some
production factories to other areas and deployed a team of professionals for planning future
production methods with an objective of creating positive impact on atmosphere. Cost reforms
and production redesigning have proved to be an effective strategy for the company that has
yielded positive results (CMP, 2019). However, marketing planning is evaluated to be a
strategic issue for the company. In an attempt of maximising profitability and aligning marketing
activities with the objectives, the company reported a decrease in its market share in many
territories below the targeted share which is a strategic challenge. By improvement of marketing
and the information which is being communicated to the external stakeholders of the company,
the company can leverage huge growth and development potential in the future.
3. RECOMMENDED STRATEGY
The management of Chugoku Marine Paints has many strategic options available for future
growth and development of the business organisation. On the basis of Ansoff’s Growth Matrix,
the management can choose among market penetration, market development, product
development and diversification. Market penetration is a future strategy which involves making
efforts for maximisation of sales and revenue without changing any products in the existing
markets of the company (Hussain, 2013). Market development refers to offering the existing
products and services in new markets which have not been explored before to increase sales and
maximise the revenue for the company. Product development is a strategic growth direction
which involves offering new products and developments in the existing markets and the risk
increases in this direction of growth as it involves a substantial investment into new technology
and product manufacturing plants (Collis, 2008). Diversification is a strategic direction for
growth available to the management of Chugoku Marine Paints where the company can offer
new products and services in new markets for growth and maximisation of revenue and this is
the riskiest option of strategic growth and business development for any organisation (Gyan,
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2017). Hence, the company can choose among the above mentioned directions or alternatives for
future growth and development. It can be recommended to the management of Chugoku Marine
Paints based on the evaluation of the company’s position and the external environment influence,
market penetration with the help of improving relationship with the society and environment is
the most suitable future strategic direction for the company. The following recommended
strategies can be considered by the management of Chugoku Marine Paints:
Corporate Social Responsibility and Shared Value:
Corporate Social Responsibility is a concept and responsibility of management to integrate
the environmental and social impact created as a result of business operations and stretches the
evaluation of business performance beyond economic dimension (Blowfield, 2014). It can be
comprehended as a manner or structure which allows a business organisation to attain the perfect
balance between economic, social and environmental objectives. Concept of Corporate Social
Responsibility extends beyond charity and donations even though these practices are very
important for reduction of poverty and mitigation of social evils. CSR activities of a business
organisation determine the relationship which the company builds and fosters with the society
and also helps in determination of goodwill and the reputation of the company. It is primarily
based on the responsibility of a business organisation to contribute to environment and society
development since it conducts the business operations by using natural and social resources (Tai,
2014). The management of Chugoku Marine Paints is recommended to focus on improving CSR
strategies and building better relationship with the society and the community to foster positive
image of the company and improve customer favourability and maximise revenue. Some of the
recommendations which can be considered by the management of Chugoku Marine Paints for
improving the CSR strategies are being discussed as follows:
Environmental preservation: Environmental concerns such as global warming and climate
change has become central in determining the CSR activities of an organisation. Creating a
harmony for increased business operations with the restoration of natural balance is an important
dimension of corporate social responsibility which is essential to be considered by the
management of Chugoku Marine Paints. The management needs to make reforms in the
production and manufacturing methods for mitigating harmful and adverse impacts on
environment. Reducing water and land pollution is important for improving environmental
aspect of business operations. Adverse effects of global warming can be curbed by promotion of
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energy saving systems and reducing the consumption of energy in logistics and transportation.
Sources of renewable energy should be considered by the management for environmental
preservation. Reduction in disposing of harmful substance and chemicals in the water resources
during the production and manufacturing activities is also an important step towards creating a
positive impact on the atmosphere. CO2 emissions and emission of ozone-depleting gases should
be minimised.
Responsible and ethical sourcing: For better implementation of CSR Strategies, the priority
should be laid on promoting procurement of green and sustainable products for manufacturing as
well as non-manufacturing requirements. For example, office supplies can be replaced with
green products. Encouragement and support should be provided to the local suppliers by
procuring products from them and placing orders with local suppliers which can increase the
favourability of the company and its products in the community.
Waste minimisation: Reduction in wastage of resources is very important for effective
implementation and execution of corporate social responsibility. By working is close association
with the local municipalities and other authorities, a strategy to recycle and reuse empty cans and
other materials which are currently being discarded after consumption can be prepared which
will help in minimisation of waste. Lean production system can be implemented in the
manufacturing units to ensure minimum wastage and optimum utilisation of resources. It is an
effective method of contributing to the society and its sustainable development.
Community relations and development: It is crucial to explore the community and develop
positive relations with the people and environment where business operations are being
conducted. The management of Chugoku Marine Paints should extend financial support in the
times of disaster and should contribute towards development of infrastructure in the community
in where it operates (Banks, 2016). For better relations, the employee retirement age can be
increased to 68-70 years as compared to 65 years which will help the old employees to maintain
supportiveness in old-age and reduce dependence on their family and peers. Active contribution
in elimination of social evils such as child trafficking and other social evils is also essential
considering the financial resources which are available for disposal for the management of
Chugoku Marine Paints. It will help in fostering better relations with the community.
Stakeholder engagement: At every step and stage of CSR activities, active engagement and
participation of stakeholders is essential to gain valuable feedbacks and suggestions on how to
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improve the effectiveness of policies being implemented by the management of Chugoku Marine
Paints for improving triple-bottom line and public image (Lim, 2017).
Safety and quality of products: Safety and quality of products which are being offered to the
customers should necessarily be ensured by the management of Chugoku Marine Paints as the
company uses chemicals and other substances in its products which may prove to be harmful for
humans and create a health risk. Human friendly technology and chemicals should be used in
wall-paints and other products to ensure that any contact with the product or exposure to any
chemical doesn’t create any health complication.
These are some of the strategies which are being recommended and should be considered
by the management of Chugoku Marine Paints for improve CSR practices and foster a better
image of the company. Arguments in favour of focusing on developing better relations with the
society and environment with the help of CSR practices are as follows:
Improving operational effectiveness: Focusing on CSR practices will help the
management of Chugoku Marine Paints to improve operational effectiveness and reduce the cost
incurred in production and manufacturing leading to improved profitability. CSR involves
minimisation of resource consumption and wastage which leads to operational productivity and
effectiveness (V. Kasturi Rangan, 2015). Emphasising on practices such as responsible and green
sourcing and making productional reforms improve the sustainability as well as effectiveness of
operations which is desirable by the management of Chugoku Marine Paints.
Better public image: In the today’s era of digital technology where information travels
rapidly, customers have become more aware about the ethical and sustainable practices of a
brand or business organisation and it also determines the purchase decision-making of the
customers (Rangan, 2012). Corporate Social Responsibility practices can help the management
of Chugoku Marine Paints to improve the public image and goodwill of the company which will
improve the market favourability and maximise the sales of the company.
Increased brand awareness: One of the biggest disadvantage of the Chugoku Marine
Paints is the low brand awareness which also restricts the ability of management to attract more
customers through its marketing and promotional strategies. With the help of effective CSR
practices, the management can build a strong brand image and increase brand awareness since
information with respect to social responsibility of business organisation is transmitted to
consumers by media agencies and publication houses. With the increasing media clutter, CSR
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activities creates a landing page in the minds of target customers leading to increased and
enhanced brand awareness fostering more sales and revenue.
Reduces competition: Increasing competition with many firms offering similar products
at low-cost is another threat and challenge for the management of Chugoku Marine Paints which
can be eliminated with the help of development of better social relations and creating a positive
environmental impact through effective CSR. It will foster brand loyalty and the company can
consolidate its competitive position in the industry and any effect of increased competition will
have no significant impact on the long-term sustainable business performance and growth of
Chugoku Marine Paints (Kemper, 2013).
Hence, it can be evaluated that focusing on CSR as a main priority for the management of
Chugoku Marine Paints is a justifiable strategic growth and direction that can establish a
platform for maximised revenue generation with enlargement of the customer spectrum for the
company.
4. ACADEMIC ANALYSIS
A critical evaluation of the concept of Corporate Social Responsibility with the help of
academic literature to determine the strengths and weaknesses is being done as follows:
Strengths:
Improvement in financial performance: Effective CSR policy implementation and
execution helps in improving the profitability and the financial performance of the company.
Exploration of different production systems, reducing wastages and minimising the consumption
of energy are some of the dimensions of CSR which helps in creating a positive impact on
environment and at the same time, reduce the operational and production costs of the
organsiation which leads to improvement in profitability (Fauzi, 2009).
Enhanced brand image: In the competitive business environment of today’ era, image of
a brand is not only determined by the quality of products and services which are being offered
but the extent of overall positive impact created by the business operations largely influences the
brand positioning and image in the minds of the customer (Wu, 2014). With the help of CSR
strategy, company can build a strong image in the market and it provides strength to the business
organisation as it helps in increasing market competitiveness and supportiveness.
Increased customer loyalty and sales: Reputation of being a good corporate citizen helps
an organisation to attract and draw more customers towards the products and services which are
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being offered. Increasing environmental concerns have made the customers more cautious of the
impact of their purchase decisions on environment and the customers prefer to associate
themselves for long-term with a brand which is ethical and sustainable (Pérez, 2015). Hence,
CSR strategy will help a business organsiation to improve customer loyalty and maximise
revenue with the help of repetitive sales.
Sustainable development: Sustainability is a major determinant and influencer of
operations in business organisations in today’s business environment. Efforts are being made to
increase the pace of economic development with sustainability as a key factor. One of the biggest
strengths of CSR strategy is that it promotes the pace of sustainable development in the economy
which is crucial for restoring natural balance and reducing adverse impacts on environment
while at the same time ensuring that more and more economic activity is initiated for social
upliftment and better standard of living (Kolk, 2016).
Contribution towards society: CSR is a very considerate and practical approach of giving
back to the society and integrating the social interest with the business interest. With the help of
CSR strategy, a business organisation contributes to the greater good of the society and the
concept of community development attains practical implementation.
Weakness:
Costs and Expenditure: Cost and expenditure acts as both strength and weakness for the
concept of Corporate Social Responsibility. Embedment of CSR strategy and practices in the
organisational operations requires expenditure in the form of initial research and the actual
implementation where production methods are reformed (Izzo, 2012). Expenditure is also
incurred in programs and activities dedicated for the upliftment of the society. Hence, the biggest
weakness of implementing CSR strategy is the huge amount of cost and expenditure associated
with it which might be difficult for small and medium enterprises to follow with.
Conflicting with profit motive: One of the most prominent argument as a weakness of
CSR strategy is that it conflicts with the business objectives and goals. Primary objective of a
business organsiation is to earn profits and maximise revenue and the concept of CSR requires
business organisation to consider the people and environmental aspect of business operations
which extends beyond the profit objectives. Dilemma of profit-making business opportunities
with respective impact on environment and society is a major weakness of CSR practices (Wang,
2014).
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