Strategic Management Analysis of John Keells Holding PLC (JHK) Report

This report offers a comprehensive strategic management analysis of John Keells Holding PLC (JHK). It begins with a critical evaluation of the company's past strategic direction and thinking. The report then delves into an industrial analysis using Porter's Five Forces model and assesses JHK's competitive advantages through the VRIO framework. Furthermore, it examines the alignment of JHK's mission and vision statements with market demands and evaluates changes in its business strategic capabilities, particularly in light of evolving industry dynamics. The analysis includes an industry life cycle graph, and the report concludes with recommendations. The report covers the analysis of the strategic management of John Keells Holding PLC, its past strategies, industrial analysis, competitive advantages, and future direction.

Running head: STRATEGIC MANAGEMENT
Strategic management
University Name
Student Name
Authors’ Note

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Table of Contents
Introduction:...............................................................................................................................4
Discussion:.................................................................................................................................4
Task 1:........................................................................................................................................4
Critical analysis of strategic direction in the past:.....................................................................4
Critical analysis of strategic thinking in the past:......................................................................5
Strategic direction of John Keels holding Plc:...........................................................................5
Task 2:........................................................................................................................................6
Industrial analysis of John Keels holding Plc:...........................................................................6
Critical analysis of competitive advantage of John Keels holding Plc:.....................................7
Industry life cycle graph of John Keels holding Plc:.................................................................9
Task 3:......................................................................................................................................10
Critical assessment of whether mission and vision statements of JHK are aligned to market
place demands:.........................................................................................................................10
Changes in business strategic capability:.................................................................................11
Task 4:......................................................................................................................................11
Task 5:......................................................................................................................................14
Conclusion and recommendation:............................................................................................16
References list:.........................................................................................................................17

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Introduction:
The report is prepared for critically analyzing strategic direction and strategic thinking
of chosen organization in the past five years. A detailed analysis of industry is conducted by
the application of porters five forces model and evaluation of competitive advantage of
company is done by using the VRIO framework. Moreover, strategic capabilities of
organization are analyzed in terms of mission and vision statements. John Keells holding Plc
is a consumer service and business that offers services of hotel management. Some of the
services that are offered by company involve financial services, aviation and airline services,
providing cinnamon resorts and hotels, business process outsourcing, information technology
services, property development services, shipping services, holiday and tour consulting,
integrated logistic services, commodities and plantation (Keells.com 2018). Moreover, John
Keells also provides marine services to IT solutions, real estate applications, manufacturing
of beverages and foods to a running supermarket chain, tea broking and stock broking
(Keells.com 2018). Report also demonstrates the application of model of blue ocean strategy
for discussing the possible strategies that should be implemented.
Discussion:
Task 1:
Critical analysis of strategic direction in the past:
In the past years, importance of information technology was acknowledged by group
as strategic tool for maintaining competitive advantage and there was reviewing of some
information technology process on ongoing basis. For ensuring business sustainability in its
area of operations, various strategic corporate social responsibilities were carried out by JHK.
Resort sector of group makes strategic management of yields for optimizing revenue. The
long-term competitive advantage of business is evaluated by close evaluation of competitive

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forces, business risks, critical success factors, competencies and value drivers of business.
Furthermore, the annual cycle plan of companies and strategic planning process was based on
holistic approach and it involved building of integrated strategy for considering all the
aspects of triple bottom line (Wheelen et al. 2017). Stores of retail business of group are
expected to roll out in in strategic locations.
Critical analysis of strategic thinking in the past:
JHK used to build their sustainability basis by undertaking corporate social
responsible projects as they perceived serving communities for gaining competitive
advantage. Group used to carry out their business activities in strategic locations that would
drive revenue. Stores of retail business are thought to be roll out continuously in strategic
locations with a bigger format. Overall positioning of business is perceived to improve by
five years strategic mapping exercise. Challenges in transportation and logistics sector was
faced by strategic designing of projects for development of skills, knowledge and attitude and
thereby leading to development of much needed resource base of professionals (Arikan and
Stulz 2016).
Strategic direction of John Keels holding Plc:
JKH employed a differentiation strategy that led to production of products that are
different from competitors. Some of the differentiation strategies used by the group are
technological superiority, innovation of new products, comprehensive customer service,
reliability and product quality (Dälken 2014).
Technological superiority- Upgrading of equipment and machineries are done by
quality and modern technology and it incorporates modern semi automated machineries and
conforms to international standards of safety and hygiene.

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Comprehensive customer service- Delivering excellent service is the passion of
Keells that ensures that it is a customer centric organization. Group have implemented
consumer initiatives that are highly focused that help in gaining insight into the perception of
customers.
Reliability and product quality- One of the factors that play a pivotal role in
retaining loyalty of customers is providing them with consistent quality. Keells provide this
promise of higher quality via the strategic investments made in technology and this has been
instrumental in industry revolution.
Innovation of new products- The market leadership position of Keells is sustained
through strengthening of market share and undertaking range of market activities. Innovation
and high brand has been driving by company by formulation of new products that helps in
fulfilling expectation of customers.
Task 2:
Industrial analysis of John Keels holding Plc:
Industrial analysis of John Keels holding Plc is done by the application of Porters five
forces.
Threat of substitutes- The Keells production capabilities, which renders economies
of scale benefits and super brand equity, might have to run out by its competitors in order to
create a substitution. Requirement of maintenance of high quality standards like Keells super
might render it difficult to substitute (Baumgartner and Rauter 2017). Therefore, threat of
substitute could be low.
Bargaining power of suppliers- Since, Keells are core industries and premium
brands are particular about their quality of items and suppliers, bargaining power of supplier

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appears to be high. However, cost of switching suppliers would not be low, as supply chain
of company will be considerably impacted by it.
Bargaining power of buyers- Bargaining power of buyers faced by Keells would be
higher as they can easily shift to any consumable convenient and super market chain with
very little cost of switching.
Threat of new entrants- In Sri Lanka, convenient food industry is highly saturated
and new entrants in the industry will add to new capacity of business. Irrespective of size of
product portfolio offered by Keells, cost disadvantage to new entrants in the industry would
be considerably higher. The competitive landscape of industry is likely to be stable because
of higher cost of entrants.
Threat from rivals- Rivals from existing firms in super market chains can be
considered high for Keells. This is mainly in regards to its close competitors that are Cargill
Plc outnumbering the company with its wide network of distribution.
Critical analysis of competitive advantage of John Keels holding Plc:
The competitive analysis of John Keels holding Plc is analyzed using VRIO model
that helps in evaluation of strength of resource profile that helps in determining the degree of
competition among its direct competitors. VRIO analysis is a strategic analysis framework
that helps in determination of competitive advantage of organization. The elements involved
in this particular strategic tool incorporate value, rarity, degree of imitability and the way
resources are organized (Nieves and Haller 2014).
Value- One of the vital sources of competitive advantage for John Keells group is
intellectual capital. Strategic management process of group involves dynamic management of

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its intellectual capital. It is perceived that in long term such capital would add value premium
for JKH.
Rarity- JHK is the largest conglomerate of Sri Lanka with seven industrial sectors
having seventy companies. Company does allocation of resources strategically and the
cornerstone of resource allocation is building of businesses that are leaders in the region.
Assessment of businesses and verticals in the industry are done on key dimensions such as
bargaining power, customer orientation and concentration of suppliers.
Degree of imitability- The degree of imitability of JHK is medium, as many sectors
of group such as hotel have opted for aggressive promotional offers along with lower grade
hotels commencing operations in city for attracting the leisure market segments that are price
consciousness. An improvement was recorded in the resort sector of group in terms of its
performance by the adoption of volume driven strategy (Nerur et al. 2016).
Way resources are organized- The potentiality of organization of its rare, valuable
and costly for imitation of capabilities and resources helps in sustaining competitive
advantage. Governance framework of group is designed in a way that it enables high
accessibility to employees at management level (McKiernan 2017). Moreover, organization
ensures efficient employment of its capital for aligning its business portfolio with growth
sectors of economy.

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Industry life cycle graph of John Keels holding Plc:
The strategic plan of organization is likely to be affected by its current state in
industrial life cycle. There are three stages in industry life cycle that is introduction, growth,
maturity and decline. From the analysis of strategic process and resource and capabilities of
JHK, it can be inferred that organization is currently in maturity stage of industrial life cycle.
Sales of JHK are expanding and there is apparent competition from new entrants and existing
players in the industry. In order to separate the product from other low cost offerings, JHK
compete on quality basis. Moreover, in this particular stage, the continuing factor for success
of organization is learning and innovation activities (Dess et al. 2016).
JHK Plc

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Task 3:
Critical assessment of whether mission and vision statements of JHK are aligned to
market place demands:
Mission and vision statements are formulated for describing the foundations of
organization and it is not required to make any changes to such statements if there is no
change in business or organization.
The vision of John Keells holding is to internationally recognize itself as best produce
broker in the world. Mission of group is to retain its pre-eminent position as the leading tea
and rubber broker of Sri Lanka. Upholding the ethics and traditions into the rubber and tea
trades is the group mission. It is always ensured by group that superior customer service is
maintained through motivated and dedicated workforce.
Vision of John Keells is to build businesses that are leaders in the region and the
business model incorporates the business vision. Strategy of group is implemented by
capabilities, competencies and experience of employees. It encompasses the motivation for
improving the processes and ability to collaborate and lead. This helps in generation of
profitable business through efficiency and improved productivity. Group is evaluating
significant investment opportunities across its industry group and investment in consumer
retail and food business have been fruitful that has helped in meeting growing demand of
food business in country. In the latest year, JHK has become conscious of the need to
maintain an appropriate mix of experience and skills in board by reviewing composition that
it is in alignment with future and current needs of business. It is believed by group that the
vital component for sustainable and long-term value creation is implementation of sound
natural capital management strategy (Theriou 2015). As such, the commitment of group to
establish policies and procedures would enable sustainable and efficient business operations

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whilst result in bottom line growth. The comprehensive environmental management system
of group focuses on optimization of water usage and reduction of carbon footprint,
biodiversity conservation and efficient waste management (Pinto 2015).
Changes in business strategic capability:
John Keells Plc has been a corporate benchmark of brand excellence, quality and
good governance for more than hundred years. The mission of group is to retain the pre-
eminent position as the leading rubber and tea broker of Sri Lanka. It can be seen from annual
report that total revenue of the group has declined in financial year 2017 and this decline is
mainly attributable to the lower profit generation from transport sector. In the first half of
year 2016, slow growth was experienced by global economy. Growth of economy is mainly
driven by expansion in industry and service related activities amidst contraction witnessed in
agriculture sector (Tavassoli 2015). However, there was considerable increase in
transportation and financial services activities and there was recovery in mining, construction
and quarry activities. This made John Keells enhance their activities of transportation and
financial services and thereby contributing to total revenue of business. Therefore, the
mission statement needs to be changed to retain their position in transportation and financial
services activities, as there is capability change of group towards such sector. In light of
changing activities of business, there needs to be change in vision statement of group.
Task 4:
The information technology services sector of group focus on core areas such as
products targeted at the leisure and aviation industries and software engineering services.
Core area of research of JHK is renewable energy generation, advanced materials, energy
storage, nanotechnology, biotechnology and synthetic biology. From the analysis of annual
report of JHK, it can be seen that group requires making some modification in their business

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activities in light of changing economic environment of Sri Lanka. Application of blue ocean
strategy model would help group in addressing the issues and defending core strategies of
group. Blue ocean strategy is a systematic approach that would help in making competitive
environment irrelevant and outlining of tools for capturing and creating their blue oceans. An
organization can create value innovation based on blue ocean strategy considering factors that
would help in raising the business above industry standards (Siegel and Teece 2015). Factors
should be created that are unique to industry. Moreover, such factors should be reduced that
are below the industry standard. Furthermore, JHK should also to eliminate the factors that
industry has competed for long. Economic growth in financial year 2016/2017 is supported
by growth in industries growth and slowdown in economic growth affected the business and
consumer sentiments and this lead to certain moderation of business activity (Hubbard et al.
2014).
The strategic value innovation of JHK can be explained below:
Eliminate-
 Eliminating equity and debt infusion in the cinnamon project due to long gestation
period.
 Eliminating excessive consumption of energy in plantation services sector as it
contributed to 3% of group carbon footprint.
 Eliminating less efficient standard air conditioner in hotels with inverter type air
condition unit that are energy efficient.
Raise-
 There should be certain modification of business activities in light of economic
growth slowdown along with focusing on service related activities (Lasserre 2017).

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For sustainable value creation of group, focused should be placed on natural capital
management strategy.
 Dynamic management of intellectual capital and integrating them into the process of
strategic management.
 Systematic execution of brand strategy of Cinnamon.
 Increasing the volume of production in the consumer food sector and making
continuous improvement in efficiency of carbon.
 Optimal performance of operational activities across all sectors of group so that
consumption of resources is reduced (Frynas and Mellahi 2015).
Create-
 Addressing the ever-evolving trends of travel and leisure industry by creating
diversified offerings to customers.
 Expanding the portfolio of products offered in the consumer food sectors.
 Widening portfolio offerings to customers and creating growth platform by increasing
production capacity (Morschett et al. 2015).
 Capitalizing retail sector of group on low penetration of modern retail and thereby
creating strategic expansion of its retail footprint (Kim and Mauborgne 2014).
 Completing round trip offerings of hotel sector portfolio.
 Implementing responsible sourcing practices across significant value chain process of
different sectors of group.
Reduce-
 Reducing risk level associated with each areas of operation of business.
 Reducing cost of operations and environmental impact due to operational activities of
JHK group.