Strategic Management Report: John Keells Group's Business Strategies

This report provides a comprehensive strategic management analysis of the John Keells Group, examining various aspects of its business operations. The analysis includes an overview of the company's strategic approach, mission, and vision, with a focus on its competitive advantages. The report delves into the bargaining power of suppliers, the threat of substitutes, and the competitive rivalry within the industry. Furthermore, it explores the application of the Blue Ocean Strategy to drive innovation and value creation. The report also addresses the need for organizational change, emphasizing the importance of technological advancements, employee skill development, and customer-centric approaches. Additionally, the report examines the allocation of resources, the role of intellectual capital, and the implementation of sustainable practices, offering a holistic view of John Keells Group's strategic management practices and recommendations for future improvements and adaptations to changing market conditions. The report also emphasizes the importance of aligning the company's strategies with the economic conditions of Sri Lanka and other global factors.

Running head: STRATEGIC MANAGEMENT
Strategic management
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Authors’ Note

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Introduction:

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The group maintained the sustainability of competitive advantage by acknowledging the
importance of information technology. The process of updation of information technology is
done on an ongoing basis.
JHK has also carried out various strategic corporate social responsibilities activities in its
several areas of operations and for ensuring the sustainability of their business. Implementation
of strategic capabilities is done in an integrated way for enhancing the business operations
sustainability (Keells.com 2018). Group also makes employment of holistic approach in the
process of strategic planning and the business cycle. It was perceived by group that placing their
stores in strategic locations would help in driving revenue for business and the five-year strategic

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mapping exercise of business. Projects relating to logistics and transportation sector would be
developed by enhancing skills and knowledge of employees. Group also relied on differentiation
strategy by way of innovation of products, technological superiority, reliability, comprehensive
customer services and quality of products. Therefore, JHK undertook strategy of differentiation
in the past years for gaining competitive advantage in the industry.
Innovative thinking has always been the core strategic thinking of JHK for enhancing
product development and therefore, efforts have been taken in terms of creating product
innovation and meeting changing requirements of customers.
In the initial years, locating retain stores in strategic location was done with smaller
format. However, with the changing time, there has been placing of stores in such locations with
bigger format for gaining higher market shares. Technology implementation in recent years was
to maintain international standards hygiene and safety in the products. It has been done by the
employment of modern automated machineries that also contributed to cutting down of the cost

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of operations. Keells has been the customer centric organization as the group is inclined towards
delivering excellent services to its customer base (Goetsch and Davis 2014). Moreover,
providing customers with quality products have always been the core business practice of Keells.
New product formulation forms the part of innovative ideas that helps in retaining customers and
building brand loyalty. One of the key strategies that is pursued by business is to locally source
raw materials and thereby leading to purchase cost optimization and ensuring that social license
of operation is maintained. Strategy for implementing sustainable practices in the value chain
process and at retail stores is entrenched. Offering customers with unparalleled services is one of
the objectives of group in every sector and focuses on building long-term strategy (Frynas and
Mellahi 2015).
Task 2:
Bargaining power of suppliers for John Keells is high and the reason is attributable to
increased demanding on customer front that put pressure on long-run profitability of company. In

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order to deal with such higher bargaining power, Keells is required to expand their customer base
and streamline their sales and production process (Nerur et al. 2016). Moreover, rapid product
innovation should also be incorporated in the strategy of group.
Threat of substitute is considered low when the value proposition of products in uniquely
different from what is being offered in industry. Substitute threat of Keells could be low as
requirement of maintaining higher quality standard of products might create difficulties for its
competitors to substitute (Fisk 2014). However, substitute threat can be handled by making the
group more service oriented along with product oriented. Moreover, switching cost of customers
should be increased by way of implementing suitable strategies.
Suppliers in dominant position can reduce the profit margins earned by Keells
considerably. Suppliers can use their negotiating power for extracting higher prices and
therefore, it is required by the group to build efficient supply chain with many efficient suppliers.
Product design should be experimented by using different materials so that if raw material price
from one supplier increases, they can easily switch to other suppliers (Kim and Mauborgne
2014).
The lower pricing strategy employed by John Keells group would be pressurized if there
is higher rate of new entrants in the industrial sectors of Sri Lanka. In order to safeguard the
competitive edge of business of Keells, strategic capabilities should be build.
Rivalry threat faced by Keells can be regarded as high and this can be dealt by building
sustainable differentiation. In extreme case of competition, group can opt for collaboration with
competitors for increasing the market share by increasing market size (Knott 2015).

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Intellectual capital is regarded as one of the crucial value factors and the dynamic
management of intellectual capital is the part of strategic management of group. Strategic
allocation of resources is the rarity factor along with assessing the verticals of business.
Sustaining competitive advantage by making it costly for competitors to imitate its valuable and
rare resources is the imitability factor of group. Volume driven strategy is one of the ways in
which keels does the strategic allocation of resources (Engert et al. 2016).
Task 3:

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The business model of John Keells is formulated in such a way that it incorporates vision
and hence, mission and vision are at the core of business. Mission statement of the group is to
retain its pre eminent position as rubber and tea broker of Sri Lanka. Significant investment
opportunities are being evaluated by the group and its investment in consumer and retail business
have been fruitful. However, in light of changing economic conditions of Sri Lanka, it is
perceived by the group to revise its mission statements. There should be increased investment in
transport and airline services due to increased demand. An appropriate mix of skills and
experience in board is done by reviewing the composition and aligning it with the current and
future business needs (McKiernan 2017). In recent years, the group is committed to carry out its
business in an efficient way and ensures establishment of procedures and policies. Commitment
of group is also driven towards serving communities by reducing the impact of their operations
of environment.

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Slow down of global economy have contributed towards low profit generation in sectors
such as transportation. Business sentiment and behavior of consumers was impacted by
economic growth slowdown. Increase in global commodity prices affected the consumer food
sector and in relation to group, the impact was not regarded as material.
Task 4:

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The core areas of operation of business are advanced materials, energy storage,
nanotechnology, biotechnology, renewable energy generation and synthetic biology (Husted et
al. 2014). In light of changing economic conditions of Sri Lanka, it is required by group to make
some modifications in the process of business activities. In order for business to defend its core
strategies, it is required by John Keells to formulate appropriate strategies that would help in
addressing such operational areas.

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The application of model of blue ocean strategy would help in creating innovation that
are value based and help in considering of the factors that should be addressed effectively and
factors that should be eliminated. The factors that are involved in the framework of blue ocean
strategy are elimination, reduction, raising and creation. Value innovation can be created by
organization using the blue ocean strategy framework by creating factors that are unique to
industry. The factors that are below the industry standards should be reduced while raising the
factors that are above the industry standards. Moreover, the factors that are competed in the
industry for long should be eliminated by organization. Therefore, in this regard, the factors that
are competed for long in the industry should be eliminated. Elimination of such factors would
help in lowering cost by reducing scale of operations complexities. Group should raise factors
that are above industry standard and this involves involvement of high degree of retail stores and
introducing unique events.
The factors that should be eliminated, raised, reduced and created by John Keells are
explained by implementing blue ocean strategy.

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Elimination factor-
 In hotel sector, there should be elimination of less efficient standard air conditioner and it
should be replaced with type air condition unit that are energy efficient.
 Consumption of energy in plantation services sector should be eliminated
 In the cinnamon project, equity and debt infusion should be eliminated due to long
gestation period.
Reducing factors-
 In different sectors, energy consumptions should be reduced
 In several areas of business operations, associated level of risks should be reduced
 Reducing requirement of water by way of recycling of treated effluent and bringing it to
quality that is acceptable.
 Reducing impact on environment due to its operational activities and associated
operational cost.
Creating factor-
 Completing round trip offerings of hotel sector portfolio.
 Product portfolio in the consumer food sector should be expanded
 Creating strategic expansion of retail footprint by way of capitalizing retail sector of
group on low penetration of modern retail.
 Creating growth platform by increasing production capacity and Widening portfolio
offerings to customers.
 Creation of diversified offering to customers by addressing the ever-evolving trends of
travel and leisure industry.