A)

Johnson, Scholes, and Whittington on the range or scope of strategic decisions

Eight range of strategic decisions identified in Johnson, Scholes and Whittington model are discussed below within the context of SLC.

 Deciding/defining the scope of the entity’s activities. What businesses should SLC be in? Determining the scope of SLC’s operations involves making strategic decisions about the types of businesses the entity should engage in. In this regard, SLC strategically decided to commence business with only two products, engineered wood and aluminum profiles. However, due to poor performance of aluminum profiles, it was subsequently abandoned. Further, SLC introduced new product lines, including stone and quartz surfaces, accessories, fittings, and related services, reflecting the company’s commitment to meeting evolving market demands and diversifying its offerings. Finally, the company plans to introduce hard glass (tempered glass/toughened glass, laminated glass, insulated glass and annealed glass) commonly used in the construction of windows and doors.

Relating the activities of the entity to the environment in which it operates. The company must ensure that there is a strategic fit between its internal activities and the dynamics of the external business environment. SLC’s growth into new markets has been primarily guided by customer demand. Again, in response to market conditions and some customers’ expectations, SLC revised its business strategy to adopt a cost leadership strategy in addition to differentiation strategy. Finally, the decision to discontinue the aluminum profiles was driven by underperformance and a lack of customer demand.

 Ensuring that the entity has the ‘resource capability’ to operate in its selected areas of activity. The company must build resources and capabilities in making strategic decisions. The company has invested in state-of-the-art machinery, including cutting and edging machine, to ensure the delivery of high-quality products and services. The MD also leveraged on his IT skills to build a comprehensive dashboard in Excel that assist him monitor the performance in key areas of the business. SLC places special emphasis on retaining core staff who operate essential machinery. This approach helps mitigate the impact of high staff turnover on critical operations. Through the trust it has built over time, SLC has secured extended credit terms from its suppliers, ranging from 60 to 120 days. This arrangement enhances the company’s cash flow flexibility by allowing it to procure materials and settle payments at a later date.

 Allocating resources to the different business activities. There should be an efficient allocation of resources to the strategic business units in the company. The purpose of allocating resources is for effective implementation of strategies. The company ensures that each product line within its portfolio is adequately supported by allocating financial resources for the procurement of sufficient stock. SLC has made investment in modern machinery, including four wood cutting machines, three automatic edge banding machines, one automatic stone and quartz cutting machine, a grooving machine, and a spindle molding machine.

 Providing a high-level (strategic) framework for more detailed decision-making at an operational level. SLC’s corporate strategy regarding the scope of its product and service offerings has a direct influence on its operational structure, including the number and specialization of employees required to support production, sales, and service delivery. SLC’s business strategy of differentiation is reflected in its operational practices, particularly in how it engages with customers. By prioritizing exceptional customer service and tailored solutions, the company reinforces its unique market position and enhances customer loyalty. In preparation for its proposed expansion into the Ugandan market, SLC plans to strategically reallocate key human resources.

 Reflecting the values and expectations of the individuals in positions of power within the entity. The individuals in position of power in SLC are the two shareholders, the Jamesons. The company is deeply committed to establishing a sustainable and enduring enterprise that reflects the values of its founders. This includes fostering a culture of integrity, resilience, and excellence across all levels of the organization. SLC’s shareholders are dedicated to responsible business practices that minimize environmental impact and promote long-term value creation. The company actively integrates sustainability into its operations to ensure that its growth benefits both current and future generations.

 Deciding the long-term direction that the entity should take. Strategic decisions generally concerned with or affect the long-term direction of an organization. The company’s proposed entry into Uganda and other African markets is a strategic move designed to broaden its geographic footprint in the long-term. Again, SLC adoption a cost leadership (for some products) with product differentiation for other products strategically changes the long-term direction of the company from a single business strategy (i.e. differentiation) to multiple business strategies, cost leadership and differentiation.

 Strategic decisions call for implementation of change within the entity so that it adapts successfully to its changing environment. Post inception, the company has made and implemented some changes to adapt to the changing environment. The company introduced a cost leadership approach by offering affordable products tailored to the needs of artisans and commercial developers. In response to rising levels of bad debt, SLC revised its credit policy to better manage financial risk and improve cash flow stability. This change reflects a proactive approach to maintaining financial health in a challenging credit environment. SLC introduced an online customer ordering platform to enhance convenience and streamline the purchasing process. However, the implementation has faced challenges, and the system has not yet delivered its intended benefits due to poor execution.

B)

Explanation of Michael Porter’s Value Chain Analysis with reference to

Operations, Outbound Logistics, Human Resource Management, and Firm Infrastructure by highlighting two key weaknesses respectively.

 Operations – these activities transform these various inputs into the final product or service through performance of the activities such as machining, assembly, packaging, equipment maintenance, testing (quality control and assurance) and process control (monitoring and optimizing production process). The main weaknesses in the company’s operations are o Dependence on foreign technical expertise. SLC faces a significant operational risk due to the lack of local expertise for the maintenance and repair of its critical machinery. The company currently relies on foreign engineer, which incurs high costs and poses a vulnerability, particularly in scenarios where international travel is restricted, as experienced during the recent COVID-19 pandemic. This dependency could disrupt operations and affect service delivery. o High operating gearing/leverage. The company operates with a high level of fixed operating costs, including expenses related to consumables, spare parts and depreciation. In contrast, many competitors maintain leaner operations with lower cost structures. The high operating gearing increases sensitivity of SLC’s operating profit to fluctuations in sales, making the company high risk. If sales rise, profits will grow rapidly. But if sales fall, those fixed costs remain, and profitability could decline sharply.

 Outbound Logistics – these are activities associated with collecting, storing, and physically distributing the product or service to buyers/customers. Example of activities include finished goods warehousing, order processing – managing customers’ orders, order picking and processing, delivery vehicle operations, and scheduling deliveries. The following are the weaknesses of SLC in outbound logistics: o Rising cost from aging delivery trucks. Aging delivery trucks result in rising maintenance costs, frequent repairs, and declining reliability. o Challenges with online customer ordering system. The introduction of online ordering system intended to give the company a modern image has not been successful because it is not reliable, customers consider it as complex and the cloning of the company’s website by internet scammers and fraudsters. o Poor change management with online system. The online system has also faced resistance from workers because they were not sufficiently involved in the change process and workers remained comfortable with the manual system.

 Human Resource Management – activities involved in recruiting, hiring, training, developing, compensating, and (if necessary) dismissing or laying off personnel. The following are weaknesses in these activities: o High labor turnover among non-core factory workers – the company has to always train new staff and does not promote stability in the company. o Low levels of or poor remuneration – this situation is essentially responsible for the high staff turnover among non-core factory workers. o Discriminatory treatment of workers – the MD is said to pay special attention to core staff who operate the machines in the factory thereby making those core staff special. This discrimination may affect teamwork and spirit in the company, which may affect productivity. o Labor compliance and legal risk exposure. SLC currently does not provide formal employment contracts to most of its factory workers, based on the perception that these employees are primarily focused on remuneration. However, this practice constitutes a breach of labor laws, which mandate that employment relationships be governed by formal contracts. The absence of such agreements exposes the company to potential legal liabilities and reputational risks, underscoring the need for improved compliance with employment regulations.

 Firm Infrastructure – Activities, costs, and assets relating to general management, planning, finance, accounting, legal, government affairs, and quality management that support the entire value chain. o Uncompromising management style of COO – the COO is less approachable and places strong emphasis on strict compliance with company hierarchies, policies and procedures. This management approach is one of the factors accounting for high labor turnover in the company. Perhaps, this approach needs to be changed. o Conflicting management styles of the two top executives, the MD and COO – the MD’s management style is one of teamwork, collaboration, approachable, accommodating, and open to dialogue while the COO’s approach involves strict compliance with company hierarchies, policies and procedures. This conflicting approach can create confusion as to the direction of the company. o Adoption of generous credit terms at the inception of the company – this situation created bad debts which negatively affected the liquidity and cash flow position of the company prompting a change in the policy.