Formulation of a strategy for an engineering department

Abstract

The increased competitive pressure in the world steel industry is forcing ISCOR to become more cost competitive. In an attempt to attain this goal, a management consultant was commissioned to evaluate all business aspects of ISCOR. The methods used by the consultant caused concern at certain departments at ISCOR Vanderbijlpark. The Engineering Technology Development (ETD) department identified the lack of a well defined strategy as being counter productive in ISCOR's quest for continuous business improvement. In this script, the literature on strategic management was reviewed and applied to develop a practical and flexible model which can be used by a typical manager to determine and formulate the strategic options of his or her department or organisation. The model consists of the following main activities: • Assessment of the company's external environment, including both the competitive and general contextual factors. • Performing an internal analysis that determines ETD's internal conditions and capabilities. • Identifying the various strategic issues of ETD by considering the different strengths , weaknesses, opportunities and threats. • Connecting the different strategic issues to strategic themes. • Choosing appropriate grand strategies associated with each strategic theme. • Strategy formulation. • Defining the mission and vision for ETD. The model was successfully applied in an engineering department (ETD) at ISCOR Vanderbijlpark. ETD is directly influenced by the ISCOR Vanderbijlpark change initiatives. ETD identified different strategic issues to help develop their main strategies. The first set of issues had to do with ETD' s weaknesses and threats. The weaknesses that make ETD the most vulnerable to the various threats will receive high priority. The weaknesses with the highest priorities will be strategic issues for ETD. The first set of strategic issues that were identified are : • The low standard of overall business excellence • ETD' s weak market image • No strategy • No experience competing in the competitive marketplace.

ETD found it important to firstly address these strategic issues that originated from their weaknesses and threats. A turn-around strategy has been identified as the primary grand strategy in addressing the above mentioned issues. Concerted effort must be given to certain key aspects of the South-African business excellence model (SABEM). This will help improve the current status and effectiveness of ETD. The key aspects of the business excellence model which will receive immediate attention are: • policy and strategy, • customer and market focus, • processes, and • customer and people satisfaction. The second set of strategic issues had to do with ETD's strengths and opportunities. The strengths that have the highest impact on the various opportunities will receive high priority. The strengths with the highest priorities will be strategic issues of ETD. The second set of strategic issues are: • The pro-active management style present at ETD. • The current application of international standards and practices used when defining processes of operation. • ETD has an above average mixture of experience and youth to effectively implement a differentiation strategy. • The technical and project management skills of ETD have not been fully exploited. In supporting the main tum-around strategy ETD identified various other grand strategies to strengthen their current core competencies and position in the market. The following strategies were identified to support the main strategy: • a concentrated growth strategy, • a market development strategy, and • a product or service development strategy. ETD developed their mission and vision to reflect their intent in the market. This strategic plan addresses the factors influencing the daily operation of ETD. The strategic process identified a need for service departments, like ETD, to become more business orientated. The implementation of this strategic plan will have a positive effect on both the ISCOR overall business strategy and the industry in which ETD operates.