COMPONENT 2: STRATEGY ANALYSIS AND PROPOSAL DEVELOPMENT)

Component 2 (Strategy analysis and proposal development)

1. Introduction

The most successful companies in the world often gather most of their focus on the consumption of energy resources. In this study, the main focal point is the implementation of operative management in order to save energy resources. The competitive strength of Thermax Ltd. relates to its effective management that mostly reflects in its energy generation process. It has been done for a better understanding of the study regarding the strategy analysis and proposal development of Thermax Ltd.

2. Assessing the competitive advantage of Thermax

It is important for any company to save energy and power for its future generations. Moreover, the natural resources that are used in the energy producing company such as Thermax can face a great threat in the future if not controlled the waste of natural resources (Hosseini et al. 2018). However, Thermax has taken the initiative to save energy for its future generation and choose an alternative option for its natural resources such as solar energy. As a result, this company has decided to produce heaters, solar power, baby boilers, process cooling, etc.

Figure 1: Waste management of Thermax

(Source: Kumar et al. 2017)

Thermax is known to be operated by certain kinds of resources for the expansion of its organization. However, the business development of Thermax is considered to be productive as well as operative. As per the view of Gürlek and Tuna (2018), Thermax does not use a wide range of areas for its business operation. Therefore, business operation within a short area minimizes the cost of the company that is helpful in terms of profit generation. On the other hand, in order to expand the business of Thermax outside its national boundaries it has taken the initiative to develop its business area in the globe.

Figure 2: Resources of Thermax

(Source: thermaxglobal.com, 2020)

However, the company has been facing tough competition amongst other engineering companies in the world. As a result, few competitors of Thermax such as BHEL, Voltas Delhi, Alstom, Fontus Water, etc. have created tight competition in the business sector. However, with the help of current resources Thermax has decided to produce energies. On the other hand, this company has taken the initiative for identifying its competitive advantages along with saving energy and power for the future generations (Vargas-Hernández and Garcia, 2019). This kind of decision that has been taken by Thermax has set an example for the initiative of saving energies and power for the future generation. However, few unique competitive advantages that Thermax applies in its business process are as follows:

• Technology:

Thermax applied its technology as its prime resource that is intangible. This company has improved its strength in terms of technology that has been beneficial to the company in its competitive advantages (Ariyani and Daryanto, 2018). As a result, Thermax is known to be an organization that uses strong technology in its business process and was supported by the British business platform. Therefore, technology has helped Thermax to develop its business management in the most effective way. Moreover, enhanced technology has helped Thermax to initiate its research and development process in the most effective way.

• Finance:

The next prime resource of Thermax is its financial factor that is tangible and is considered to be another major competitive advantage of Thermax. In order to succeed in the financial management system, Thermax needs to utilize its capital in its business development process. Therefore, Thermax will be able to improve its financial strength and that will help the company to develop its competitive advantages. On the other hand, this company needs to be free from debt; otherwise, the burden of debt will make obstacles in its business development as the earned profit will be utilized to pay off the debt. However, the main target of the company needs to be cost cutting in order to deliver products to the customers at a reasonable price (Buzatu et al. 2019). Best products at a low price help a company to get more profit along with strengthening its competitive advantages. At the end of a financial year, the net profit and revenue are evaluated in the financial analysis of Thermax.

• Physical:

The other prime resource in the competitive advantages is physical resource. Physical resources of Thermax refer to the workers, employees as well as the management team of Thermax. However, this resource can be considered as the most important resource of the company in order to develop its business process (Demir et al. 2017). This resource is tangible and the purpose of a physical resource is to produce maximum products for the consumers and make profit for the company. On the other hand, the physical location of the company has benefited its business development process.

2.1   VRIO

The VRIO framework has been mentioned below in order to make an analysis of the business trends and performance of Thermax based on its resources:

Table 1: VRIO framework of Thermax

(Source: thermaxglobal.com, 2020)

The above VRIO framework of Thermax suggests the internal and external analysis of the company in terms of its business strategies. According to the above mentioned VRIO framework, the financial resource and technical resources of Thermax has provided the company with high competitive advantages (Ocasio et al. 2018). On the other hand, the competitive advantages from human resources of the company are medium. Lastly, the networking resource of Thermax has given low competitive advantages.

2.2 Porter’s Value Chain Model

Porter’s value chain refers to the total 9 steps that are followed from the beginning of production to the end of the production. The total 9 steps are divided into two different activities such as primary activities and secondary activities. The primary activities of Porter’s value chain include the first 5 steps that are inbound logistics, operations, outbound logistics, marketing & sales and service. On the other hand, the next 4 steps include procurement, technology development, human resource management and infrastructure. As stated by Shujahat et al. (2017), Porter’s value chain can be enhanced by establishing good communication among all other departments in a company. Therefore, Porter’s value chain can be helpful in terms of understanding the entire product development process of Thermax Company clearly.

Figure 3: Porter’s value chain

(Source: Brondoni et al. 2019)

The inbound logistic suggests that improvement of borrowed raw materials can improve the productivity of Thermax. In the operation process, the raw materials are converted to finished goods. Outbound logistics suggests the process of delivering finished goods from the manufacturing company to the supplier or Retailer Company. The sales & marketing process helps to make advertisements of the products in the market (Bergh et al. 2017). After that, the most important step in the primary activities of Porter’s value chain suggests that a bad service can restrict the sales of a particular product. Apart from the primary activities of porter’s value chain the procurement of raw materials by the vendors is an essential part. In terms of technology, it is very important for Thermax to update its product in order to sustain in the business market. After that, the human resource department of Thermax can identify all the problems and make solutions that will be helpful for the company. Finally, a proper infrastructure of the organization along with legal support is the most supporting factors of Thermax.

2.3   Determining the issues and developing strategic options that address Thermax

• Green portfolios have been made in order to reduce environmental pollution in a company. Therefore, the government of the UK has focused on those organizations that have maintained the green portfolio. However, Thermax has failed to produce pollution-free products and therefore, it is facing several problems from the government of the UK. The company has been deprived in terms of getting any kind of governmental support as it has not succeeded in maintaining the green portfolio. As a result, Thermax has lost its productivity and faced a threat for closure. However, it is important for any company to focus on the environment (Daspit et al. 2017). Therefore, it is necessary for Thermax to find out a solution for this particular problem in order to avoid the consequences that it is facing due to non-maintenance of a green portfolio.
• Thermax has faced another issue in its business process due to a constraint in the capitalization of fossil growth. Fossil is a natural resource that needs to be utilized in such a way that it does not get wasted (Pisano, 2017). However, Thermax has failed to make use of limited fossil growth. However, limitations in the growth of fossils have generated several issues for Thermax and that has impacted the profit margin of the company. Therefore, Thermax needs to focus on this issue and the human resource team of the company needs to address the solutions for the company. As a result, Thermax will make more revenues by solving this issue.
• Improper location of Thermax has generated problems for the company in terms of its number of sales and profit margin. On the other hand, the lack of advanced technology has generated many problems for Thermax in terms of producing trending products. Therefore, in terms of producing energy, Thermax needs to shift to the application of solar energy (Nunes et al. 2019). As a result, the company will be successful in terms of cost cutting and introducing a unique practice in energy production.

2.4   Proportion matrix

Table 2: Proportion Matrix

(Source: Created by Author)

Table 3: Resources of Thermax Company

(Source: Created by Author)

2.5   RACES Framework

RACES framework is used as a strategic tool in order to address the participation of a company in digital marketing. In addition, this strategic tool helps a company to allow the development of the action plan. Moreover, it allows the action plan according to the purchasing stage of the users. The RACES model defines Resource, Acceptable, Consistent, Effectiveness and Sustainability. In this study, the RACES framework defines the Resource, Acceptable, Consistent, Effectiveness and Sustainability of Thermax (Makarius et al. 2020). Therefore, Thermax requires identifying the alternative energy sources in order to solve the above mentioned constraints.

Figure 4: RACES model

(Source: Ranängen, 2017)

Therefore, shifting to solar energy will help Thermax to secure its future business sustainability. As a result, this approach can help the company to bring a revolutionary change in the energy industry. However, it is important for Thermax to apply this alternative energy source in order to develop its operational efficiency (Sommerfeldt and Yang, 2017). Therefore, Thermax needs to invest in the advancement of technology and adapt solar energy in order to improve its competitive advantages. However, partnership and collaboration can help Thermax in operational research in order to help in the advancement of technology. Moreover, this action will help in taking initiatives for strategic modification. Henceforth, through the above mentioned resources as well as capabilities Thermax will be benefited in its competitive advantages in the future.

3. Stakeholder group

The group of stakeholders plays an important role in the operational and partnership management of an organization. Contribution of each stakeholder makes the business of Thermax successful. The partners and stakeholders of Thermax have made great contributions in the business development process of the company. On the contrary, lack of cooperation from the stakeholders and business partners can lead Thermax to closure of business. Therefore, Thermax needs to keep a friendly relationship with its business partners and stakeholders. The three parameters that are responsible for the involvement of the business partners and stakeholders in Thermax are profit, people and plant (Xia et al. 2018). In addition, the company needs to follow the green portfolio in order to attract other stakeholders in its business organization. Moreover, increased business partners and stakeholders will help to increase the business capital and thus the business productivity. Therefore, it can be said that maintaining a good relationship with the shareholders and business partners can secure the future business sustainability of Thermax.

4.   Proposed Strategic direction

Strategic direction helps to identify the various issues in a particular organization and it further helps the company to fulfill its vision and mission. In this study, Porter’s value chain has been proposed for understanding the whole management process of Thermax. Moreover, this model has helped to understand the step by step stages of the company in terms of its internal and external analysis of business production (Oppong et al. 2017). On the other hand, this model can be beneficial for Thermax in order to address its digital marketing involvement in the energy industry. After that, a VRIO model has been proposed to recognize the various resources of the company that is responsible for the competitive advantages. Apart from that, RACES framework has been mentioned to identify the threats and provide an idea to choose the alternative resources for sustaining the business in future.

5. Conclusion

It can be concluded that strategy operation and partnership of Thermax have been discussed in the study. In this study, an analysis of competition advantages has been done in order to evaluate the operational strategies of the company. VRIO framework has been included in this study to analyze the competitive advantages of the company. Moreover, the assessment of Porter’s value chain has been done for analyzing the entire business process of Thermax in the marketplace. However, several issues that the company is currently facing have been mentioned and few solutions for the problems have been mentioned. On the other hand, proportion matrix and RACES framework have been given in this report to evaluate the involvement of Thermax in digital marketing. In addition, the role of shareholder group in the operation and partnership strategy of Thermax has been included. Moreover, it can be concluded that few strategic directions have been proposed to the company in order to solve its various issues.