Strategic Planning & Competitive Advantage: A Report on Fineotex Ltd.

This report provides a strategic analysis of Fineotex Chemical Ltd. (FCL), an India-based specialty chemical manufacturer. It begins with an overview of FCL, including its business, partnerships, and awards. The report defines strategic planning and its importance, highlighting key elements such as internal strengths/weaknesses and external opportunities/threats. A PESTEL analysis examines the political, economic, social, technological, environmental, and legal factors impacting FCL. An internal SWOT analysis identifies the company's strengths, weaknesses, opportunities, and threats. Porter’s generic strategies (cost leadership, differentiation, and focus) are discussed, with a recommendation for FCL to pursue a cost leadership strategy due to the competitive landscape and resource constraints in the Indian chemical industry. The report outlines the implementation and evaluation process for the chosen strategy, emphasizing internal operations, resource utilization, and alignment with company objectives. Finally, it touches upon competitor analysis and strategic benchmarking, concluding that FCL operates in a highly competitive industry where a cost leadership approach is currently the most viable option, paving the way for future differentiation as the industry matures. Desklib offers this and similar solved assignments to aid students.

Strategic
Planning

Overview
Fineotex Chemical Ltd. (FCL) is an India based company which has its
headquarter in Mumbai.
It is in the business of manufacturing Specialty Chemicals and Enzymes for
Textile and Garment Industry, Leather Industry, Construction Industry, Adhesives
and many more.
The plants of FCL are situated in Navi Mumbai and Selangor in Malaysia.
In the year 2015, it was awarded as the Star Export House.
It has done partnership with European founded Specialty Chemical
Manufacturing company in the year 2011.

Strategic Planning - Introduction
Strategic Planning can be defined as a process through which companies define
their strategy or direction and take decisions by distributing its resources to
achieve the desired outcomes (Michael, 2005).
It can also be involved in controlling the mechanism for guiding the
implementation process used by the strategy.
It forms an important part of Strategic Management and is executed with the
help of strategists or strategic planners.
These planners involves various parties and sources for research in order to
analyze the organization and its relationship with the environment.

Cont..
Strategic Planning provides inputs for thinking strategically which is helpful in
creating the actual strategy.
The four main elements in the formulation of a competitive strategy are:
 Strengths and Weaknesses of the company
 Personal Value of the key personnel who will implement the strategy
 Opportunities and Threats of the industry in which organization is working
 Broader expectations from the society.
The first two factors are internal and next two forms the external environment
of the organization (John, 2013).

External Environment Analysis
(PESTEL)
Political
 Risk of Military Invasion
 Intellectual Property Protection regulations need to be followed
 There are some mandatory benefits which need to be provided to employees.
Economic
 Need to have high skill level labor force which is not present in the country
 Infrastructure quality in chemicals is a major concern
 Efficiency of capital markets is quite high.
Social
 Health and Environmental consciousness is not very high in the country.
 Education standards are not up to the mark.

Cont..
Technological
 Rate of Technological diffusion is quite high
 There is a huge impact of technology on offerings of the products
 Company is into technological developments in the chemical sector.
Environmental
 Weather is quite diverse resulting into favorable conditions for chemicals.
 Air and water pollution regulations are not efficiently implemented.
Legal
 Data Protection Law is not so stringent in the country
 Health and safety law has been developed to protect customers and employees in this industry

Internal Environment Analysis
(SWOT)
Strengths
 Diversified manufacturing base
 Competitive core industries
 Good R&D base and quality human resources
 Large Domestic Market
Weaknesses
 Cost of Power
 Cost of Finance
 Infrastructure
 Low investment in R&D and technology

Cont..
Opportunity
 Market in the developed country is opening up
 Close vicinity to Petrochemical producing regions or countries
 Large number of products going off-patent
 Climatic conditions are favorable
Threats
 Reduction in import tariffs
 Lower chemical cost of China
 Bilateral trade agreement
 Threat of extinction

Porter’s Generic Strategies
Cost Leadership Strategy
Following are the two ways to achieve cost leadership:
 Increase in profit due to cost reduction and charge industry- average prices.
 Increase in the market share due to lower prices and making reasonable profit on
each sale because of reduced costs (Bradford, 2013).
Differentiation Strategy
 Making products and services different and attractive from other players in the
market.
 This requires good research, development and innovation.

Cont..
Focus Strategy
 Concentration on niche markets by understanding the market completely.
 Development of uniquely low cost or well-specified products or services by
understanding the unique needs of customers.

Competitive Advantage of
Chosen Strategy
The strategy chosen for FCL is cost leadership strategy.
The reason behind this is because India has still not reached to its full potential
as far as chemical industry is concerned.
There is a huge competition in the Chemical Industry with a large number of
small and medium-scaled players in the market.
Also, the chemical industry in India is not profitable and its revenues are
declining rapidly. This is making it difficult for the companies to raise funds for
any sort of research and development project (Patrick, 2011).

Cont..
India’s infrastructure condition is also not so supportive of any advancement
and development in chemical industry.
The cost of production is quite high with a number of taxes and regulations
imposed on the industry players
Cost leadership will allow the company to maintain industry-average revenues
and profitability levels which will help them in funding any research and
development initiatives within the company.
With the time, company can shift its focus from cost leadership to
differentiation strategy. This would require chemical industry to be more
mature, open and robust.