Question:
Question 1
© Linguis International Institute 2016 US 27771 (v2) Student Assessment Guide Page 5 of 9
Developed by Donald Brian Simon
There are two parts to this question: Parts A & B. (1.1)
In Part A you are required to evaluate the implementation of a strategic plan against a set of given variables.
In Part B you are required to evaluate the implementation of the plan against organizational requirements
Part A:
With reference to the variables listed below (a-h)
Evaluate the actual performance of the organization in the case study in terms of the alignment with its strategic plan.
The variables are:
a) Time
b) Cost
c) Deliverables (project outcomes)
d) Functions
e) Use of resources
f) Risk management
g) Variations
h) Recommendations for change
Part B:
Using data on your organization’s performance, evaluate the strategic plan in terms of how well it meets the requirements of the organization.
Your answer should cover the following requirements:
a) Organizational purpose and/or direction
b) Organization policies and processes
c) Compliance: legislative/legal, health and safety
d) Risk management
e) Sustainability
Question 2 (1.2)
© Linguis International Institute 2016 US 27771 (v2) Student Assessment Guide Page 6 of 9
Developed by Donald Brian Simon
Evaluate the effectiveness of the strategic plan in achieving its intended outcomes.
(i) Identify at least three intended outcomes and their respective performance criteria in each case used to measure achievement.
(ii) Evaluate the effectiveness of the strategic plan in achieving at least three outcomes on the basis of the organization’s performance against its performance indicators.
Question 3 (1.3)
Based on your evaluation, identify at least three potential improvements you would make to any future strategic plans and their implementation.
Answer:
Part A
Strategic planning is the process of continuous development from the present to the future look of the organization. The process requires a concrete understanding of an enterprise and its environment of operation. Nuplex has been a global leader and manufacturer of resins since 1952. It is used in coatings, paints and other materials required for decoration, refinishing products, flooring of wood and furniture’s and other coatings for protection and care. The Company sells its products over eighty countries and is developing continuously and consistently to grow and establish itself as the leader of the coating resins. (business dictionary, 2017)
Its actual performance in terms of alignment with strategic plan with reference to certain variables, are described below:-
Time
The strategic plan of Nuplex was to attain huge growth and development across the globe.
The performance has been impressive and the actions undertaken by the company has gained momentum and has put the company in such a position, which will help it in delivering huge returns in the future years
| Budget time | Actual time | |
| Capacity expansion | Vietnam project 2012
12 months |
2012 |
| China project 2013 | 2015 | |
| Indonesia reactor upgrade 2014 | 2015 | |
| Acquiring Australia 2011 | 2011 | |
| Acquiring Europe 2011 | 2011 | |
| Acquisitions | European company 2013 | 2013 |
| Divestments | By the end 2013 | 2014 |
Cost
| Activity cost | Budgeted cost | Actual cost | Variations |
| Goods cost | 2010-1160million
2011-1225million 2012-1260million 2013-1295million 2014-1070million 2015-1085million |
2010-1111million
2011-1236million 2012-1279million 2013-1314million 2014-1069million 2015-1067million |
2010-49million less
2011-11million more 2012-19million more 2013-19million more 2014-1million less 2015-18million less |
| Safety cost | 2010-8 million
2011-9 million 2012-12million 2013-14million 2014-14million 2015-14million |
2010-8.4million
2011-9.3million 2012-12.3million 2013-14.4million 2014-14.5million 2015-14.2million |
2010-0.4million more
2011-0.3million more 2012-0.3million more 2013-0.4million more 2014-0.5million more 2015-0.2million more |
| NuLEAP | 2010-
2011-2million 2012-2million 2013-2million 2014-2million 2015- 2million |
2010-
2011-1.8million 2012-1.8million 2013-1.9million 2014-1.6million 2015-1.9million |
2010-
2011-0.2million less 2012-0.2million less 2013-0.1milliopn less 2014-0.4million less 2015-0.1million less |
(springer, 2016) Hence, it can be concluded that, the cost had been managed as the actual amount did not go up from the budgeted one in the years, 2014 and 2015
Table 1: Budgeted cost of goods sold
(Source:Nuplex.com, 2016)
Table 2: Achieved cost of goods sold
(Source: Nuplex.com, 2016)
Deliverables
| Activities | Budgeted | Actual | Variations |
| Sales | 2010-1500
2011-1580 2012-1630 2013-1680 2014-1370 2015-1400 |
2010-1460
2011-1575 2012-1616 2013-1665 2014-1355 2015-1375 |
2010-40 less
2011-5 less 2012-14 less 2013-15 less 2014-15 less 2015-25 less |
| Profit | 2010-65million
2011-70million 2012-71million 2013-72million 2014-73million 2015-75million |
2010-64million
2011-67million 2012-63million 2013-45million 2014-52million 2015-71million |
2010-1millio less
2011-3million less 2012-8million less 2013-27million less 2014-21million less 2015-4million less |
| Cost | 2010-1160million
2011-1225million 2012-1260million 2013-1295million 2014-1070million 2015-1085million |
2010-1111million
2011-1236million 2012-1276million 2013-1314million 2014-1069million 2015-1067million |
2010-49million less
2011-4million more 2012-19million more 2013-19million more 2014-1million less 2015-18million less |
(investopedia , 2016)
The company viewed acquisitions and development of new products and services all across the world.
There were development and process innovations like:
Reactor cleaning processes, waste streams for separating, conversion of heater to gas from diesel, projects on waste reduction and management. Also, the environmental friendly wood coatings and other coatings required for special treatments of equipment’s were innovated and introduced in the global market.
1. Functions
| Strategic plans | Functions | Achievements |
| -Financial | Develop and implement plans and budget to achieve the targets and measures sales, profit in currency amount. | The annual sales of the company have been increased from year 2010 to 2013 constantly and started decreasing afterwards till 2015. |
| – Innovation | Research on new plans; modify existing products and product development to build leadership positions in key global product area. | From year 2010-2015, Company has achieved Net benefit of $15 million, Innovation of sag control agents 2011, Eco friendly wood coatings 2014, Setalux ultra fast curing automotive refinish system in 2010, Acure the new coating technology in 2015 and product modification in 2011.
|
| -Safety | Focus on ‘Zero harm’ to achieve safety goals. Supervise safety operations. | LITFR was 1.1 hours per million, TRIR was 3.8 hours per million, In the end of the year 2015:
|
| -Capacity expansion
|
Building and commissioning of products to increase capacity by 50%. | Acquisition project of Europe and Vietnam project was started in 2011 and completed within scheduled-time frame of 12 months. China site was started in 2012 and completed in 2015, New Reactor project of Indonesia was commenced in 2015 and finished in 22 months and restructure and capacity project of Australia and New Zealand was started early than scheduled time and started in 2011. |
| NuLEAP programs in Australia and New Zealand | Implement NuLEAP programs which focus on improving sales, operations, Logistics and network efficiencies to generate benefits of $42 million. | The NuLEAP program has achieved $33 million profit in 2011-2013. It was more than the company expected that was $30 million and $14 million profit in 2014. |
| -Divestment | Selling and distribution of Nuplex specialties for $160 million. | The sales of NuLEAP specialities and master match target of divestment objectives was achieved only by $127 million but it was expected $160 million, which was not as per the schedule plan |
| -Acquisitions | Acquire and integrate the company | According to the company’s achievement table acquisition objective of Australian site and Europe site was achieved as per schedule plan and performance was also improved in the region. |
Use of resources
The plan consisted of adding certain number of members for carrying of certain operations, safety, capacity and other programs, they are described below:
| Year | 2013 | 2014 | 2015 |
| Operations, innovation & safety (no of members) | 600 | 640 | 655 |
| Expansion of capacity (no of members) | 170 | 155 | 155 |
| Nuleap& Divestment (no of members) | 60 | 60 | 60 |
Table 3: Planned number of resources
| Year | 2013 | 2014 | 2015 |
| Operations, innovation & safety(no of members) | 617 | 636 | 655 |
| Expansion of capacity (no of members) | 170 | 155 | 155 |
| Nuleap& Divestment (no of members) | 63 | 63 | 63 |
Table 4: Actual number of resources
From the above data, we can measure the performances of Nuplex, the planned and actual data is in synchronization, which means the company has an effective and efficient control over its plans and management system .
- Financial resources
| Financial resources | Year | Budget plan ($ millions)
|
Achievement plan($ million) |
|
Selling Expenses |
2010
2011 2012 2013 2014 2015 |
235
238 242 257 196 200 |
254
242 241 274 212 218 |
Shareholders’equity |
2010-2015 |
160 |
159 |
Physical resources:
| Strategic plans | Human resources budget(average) | Actual resources used(average) | Variations(members) |
| -Operations
|
400 members
|
410 members
|
From 2010 to 2014 Nuplex has used more members than their human resources budgeted. So, the variations were higher. |
| -Innovation | 92 members
|
92 members
|
For innovation strategy, the number of human resources was according to the budgeted resources for 5 years. |
| – Safety | 103 members
|
102 members
|
For the safety strategy, for the first 4 years the variations were high and human resources were fluctuating throughout the all five years. |
| -Capacity expansion
|
158 members
|
158 members
|
There were no variations in the strategy of capacity expansion for six years.
|
| -NuLEAP programs in Australia and New Zealand | 50 members
|
53 members
|
For NuLEAP programmes variations for all years were higher but they were just minor changed from 1 to 3 members. |
| -Divestment | 10 members
|
10 members
|
There were no variations in the strategy of divestment for six years. |
Risk management
The company plans to keep its risk and related securities in place, which can help it to sustain the hard times faced in future, due to the high competitiveness.
The risk management is actually in place, as the policy has resulted in an appropriate working of Treasury management, which secures the company from liquidation problems. Also, safety and other measures of risks such as LTIFR is in place, 1.1 hours per million as per the working hours (allnex, 2014)
Variations
| Activities | Budgeted time | Actual time | Variations |
| Capacity expansion | Vietnam project 2012
(12 months)
China project 2013
Indonesia reactor upgrade 2014
Acquiring Australia site 2011
Acquiring Europe site 2011 |
Vietnam project
2012
China project 2015
Indonesia reactor upgrade 2015
Acquiring Australia site 2011
Acquiring Europe site 2011 |
No time variation in Vietnam project
Time variation of 2 years late in china project
Time variation of 1 year late in Indonesia reactor upgrade
No time variation
No time variation |
| Acquisitions | European company Acquisition 2013 | European company Acquisition 2013 | No time variations |
| Divestments | By the end of 2013 | By the end of 2014 | No time variations |
| Goods cost | 2010-1160million
2011-1225million 2012-1260million 2013-1295million 2014-1070million 2015-1085million |
2010-1111million
2011-1236million 2012-1279million 2013-1314million 2014-1069million 2015-1067million |
2010-49million less
2011-11million more 2012-19million more 2013-19million more 2014-1million less 2015-18million less |
| Safety cost | 2010-8 million
2011-9 million 2012-12million 2013-14million 2014-14million 2015-14million |
2010-8.4million
2011-9.3million 2012-12.3million 2013-14.4million 2014-14.5million 2015-14.2million |
2010-0.4million more
2011-0.3million more 2012-0.3million more 2013-0.4million more 2014-0.5million more 2015-0.2million more |
| NuLEAP project | 2010-
2011-2million 2012-2million 2013-2million 2014-2million 2015- 2million |
2010-
2011-1.8million 2012-1.8million 2013-1.9million 2014-1.6million 2015-1.9million |
2010-
2011-0.2million less 2012-0.2million less 2013-0.1milliopn less 2014-0.4million less 2015-0.1million less |
| Sales | 2010-1500
2011-1580 2012-1630 2013-1680 2014-1370 2015-1400 |
2010-1460
2011-1575 2012-1616 2013-1665 2014-1355 2015-1375 |
2010-40 less
2011-5 less 2012-14 less 2013-15 less 2014-15 less 2015-25 less |
| Profit | 2010-65million
2011-70million 2012-71million 2013-72million 2014-73million 2015-75million |
2010-64million
2011-67million 2012-63million 2013-45million 2014-52million 2015-71million |
2010-1millio less
2011-3million less 2012-8million less 2013-27million less 2014-21million less 2015-4million less |
| Safety | Lost time injury frequency rate to 1.0 hours per million working hours
Total reportable injury rate to 3.0 hours per million working hours
Greenhouse gas rate to 2.40 CO2 equivalent per ton of production |
Lost time injury frequency rate to 1.1 hours per million working hours
Total reportable injury rate to 3.8 hours per million working hours
Greenhouse gas rate to 0.243 CO2 equivalent per ton of production |
0.1hours per million working hours less
0.8hours per million working hours more
Greenhouse gas was reduced very less and left 2.157
|
Recommendations for change
1 The company is moving in a great pace and the recommendation is to grow and develop in the same manner, with increase in innovations.
2 The shareholder have to invest more in the organization in order to stable the financial condition and the liquidity ratio of the assets of the organization.
3 In order to reduce the expenses of the organization , optimum utilization of human resources, improvement in the cost structure and cost of goods should be made.
Part B
Nuplex has achieved great heights by globalization and is in process to further improve and grow itself to get the recognition of a leading Coating company.
Organizational purpose
The Company aims at innovating and supplying the world class quality resin coatings across the globe and achieving excellent earnings and benefits for the stakeholders and public. In order to achieve its goals and purposes, the company must inhibit a culture of excellence in operations like speediness, urgency, integration and collaboration.
Nuplex has been achieving its goals and objectives since its startup. The annual growth of Nuplex in sales has been about 3% in the years 2012 to 2015. Also, the net profit after tax has been 5%, which is a promising one towards the achievement of its goals and objectives.
Organization policies and processes
A company’s policies and processes must embrace within itself, methods which would increase the strength of its operational activities. Nuplex takes into consideration, policies of strengthening the operations, presence and volumes of its products globally i.e. in different regions .The major policies to be followed as per its strategic plan are:
- The expansion of fundamental processes and reduction of the non fundamental activities
- Identifying regions which would prove to be a profit centre, and developing them in order to make them a leader of the resin market.
- To excel its performances through innovation and development
Nuplex has been successful in achieving its policies:
- Creation of environment friendly coats and automotive refinish systems
- Innovations like: projects on reduction of waste, cleaning process of reactors, conversion to gas from diesel and many more
Compliance Procedures & Risk Management
As per the strategic plan of Nuplex, procedures to maintain health and safety are:
- Effectiveness in leadership, participation of employees, communication and improvement in a continuous manner
- Achievement of Zero harm by reduction in LTIFR, TRIR and GGER
At the end of 2015:
- The actual LTIFR (Lost time injury frequency rate) was 1.1 hours, too near to the expected 1 hour, which means the company is successful in maintaining the strategy.
- The actual TRIR (Total Reportable injury rate) was 3.8 hours, near to the expected 3 hours; it means that the company is managing its plans and strategies
- The actual GGER (Greenhouse gas emission rate) being 0.24 CO2 per ton, too less than the expected 2.4 CO2 per ton, which means the emissions are too less due to the inclusions of the environmental friendly products and structures .Also, the following are to be managed:
Limit the exposure of credit risk to $435 million, which resulted to $430 million in 2015
Cover the risk of currency as:
| Years | Budgeted | Actual |
| 3 months | 80-100% | 91.3% |
| 4-6 months | 50% | 4.7% |
| 7-12 months | 25% | 29.2% |
Table 5: Currency risk cover
Thus, the coverage of risk is in line with the strategy of the company.
Sustainability
To attain sustainability, it has been focusing on the growth in selected regions and markets around the globe.
As per the plan, it has taken steps to increase the regional capacity of Asia, by creating new sites in China and Vietnam.
Question 2 (i)
Nuplex has an intention to achieve a leadership in the global market, which it has been able to do by implementing and following a set of strategic plans and objectives. There are various intended outcomes of a company and also various criteria’s are used in measuring the performances, achievements of the company.
Three of the intended outcomes and their respective performance criteria in each case used to measure achievement are discussed below:
Innovation and Development of Products:
Nuplex has been a leader of resin coatings all across the world, and to maintain such status, it has continued to expand high developed quality coatings for supporting the industries of automotive and other protective industries.
Nuplex had focused on the research and development strategies by embracing equipment’s and materials for the research and development. (allnex, 2014)
Increase in trust of Stakeholders:
Nuplex aims at increasing the trust and earnings of the stakeholders through the reduction of debts. Two of the businesses, Nuplex Specialties which is an agency and distribution business and the other one which is Nuplex Masterbatch, a plastic additive manufacturer were decided to be sold off.The two businesses were sold to Axieo Pty limited, and have acquired a strong position of leveraging which has led to the increase in the earnings and trust of the stakeholders of the leading company.
Productivity (NuLEAP)
The productivity of an enterprise increases by implementation of programs which will lead to an increase in the effectiveness and efficiency of an organization’s goals and management Objectives .
NuLEAP program implemented by Nuplex has increased in the productivity of the company. It has achieved benefits of around $3, $14 and $16million for the years 2011, 2012 and 2013 respectively. Also, for the years 2014 and 2015, NuLEAP II was implemented which resulted in benefits of $14 and $4 million respectively.
Question 2 (ii)
Performance indicators of a company help in the understanding of the performance measures undertaken by a company. It must be well defined and thoroughly communicated throughout the organization, at all levels and department. Nuplex has also defined various performance indicators; three of them included in the strategic plan is discussed below:
Financial Standards
Net Profit is the effective measures of understanding the successfulness of an organization.Profits determine the generation capacity of an organization and cost helps in finding the best ways in reduction and management of overheads.
Nuplex had determined the growth of profits from $73 to $75 Millions, and it grew from $52 to $71 million for the years 2014 to 2015 respectively. Though, the company did not meet the budgeted requirement of $73 million in the year 2014, in 2015 it managed to bring up its annual profits to $75 million. Thus, the efficiency of the management was proved by the company.
Stakeholders Standards
The successfulness of an organization depends on the satisfaction and faith, showed by The stakeholders, on the organization. The stakeholders are the main owners of a company, and their unsatisfied comments may lead to de motivation and decrease in the company standards and status.
The sites in Asia were expanded by increasing the Vietnam site and also by creating a new site in China. Also, the divestment policies of selling off two of its businesses, lead to increase in the earning potential of the Company.
Employee Satisfaction and management
The human resources are the most important asset of the company. Their satisfaction is the major consideration for a company to gain achievement in the growth and development of the company
There has been an efficient use of resources in the company, which means that the company does not involve itself in wasting resources.
Question 3
As per the above discussions, the company is improving as per the required strategies and policies but still; there is always scope of improvements, which is discussed below:
Recommendations:
1 Project Management
After the implementation of the strategic plan, there may be challenges which may evolve out in the near future. Thus, these challenges must be identified to guarantee the success of the company’s strategic plans. Also, the projects must be carried on as per the prioritization, i.e. highest priority first and so on. Thus, the involvement and commitment level of the employees and management should be very high to achieve the objectives well, and on time. Thus, the management of the project is a major requirement of securing the future of the company.
2 Culture
The culture of the organization represents its values, beliefs and attitudes of the resources. Like diversity in the personality of individuals, an organization’s culture is unique and diversified in nature. The employee’s perspective decides the worthiness and capabilities of an organization .
Hence, the employees should be trained to perceive the changes in a positive manner, rather than fearing them. Fearing leads to haphazardness whereas, if the employees find it worthwhile, the growth and development of the organization increases.
The communication should be in a top down manner, which is the sharing of the plan with employees by the senior management. Thus, the communication process will lead to a better efficient and effective organization.
3 Innovation
The innovation procedures must be efficient and effective to ensure successful growth and development of the company. The management creates strategies and policies for the new products, which include redesigning, reshaping and other such innovations. Sometimes, the strategies do not meet the demands of the market. Hence, the strategies must be redefined and redesigned in a constant manner, to drive the new product.
References:-
allnex. (2014). Retrieved from www.nuplex.com: http://www.nuplex.com/Corporate/responsibility
allnex. (2014). Retrieved from www.nuplex.com: http://www.nuplex.com/Corporate/innovation/our-innovation-centre
business dictionary. (2017). Retrieved from www.businessdictionary.com: http://www.businessdictionary.com/definition/strategic-planning.html
investopedia . (2016). Retrieved from www.investopedia.com: http://www.investopedia.com/terms/d/deliverables.asp
springer. (2016). Retrieved from link.springer.com: http://link.springer.com/chapter/10.1007%2F1-84628-335-3_2#page-1
