Strategic Analysis of DHL International

8/17/2019 Strategic Analysis of DHL International

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Strategic Analysis of DHL International

Introduction

Organisations are increasingly keen to communicate and develop a set of corporate values

that defines the way that the organisation operates. Of particular importance are theorganisation’s core values. These are underlying principles that guide an organisation’s

strategy, and are based on an organisation’s overall business culture and values. Strategic

business planning involves developing the appropriate strategy that interfaces directly with

the organisation’s purpose and mission. An organisation’s strategy should provide adequately

for the development and strengthening of that organisation’s market position, enhance profit

maimisation, and contribute to the continuous development of the organisation’s product

offering !"ynch, #$$$%. &owever, implementing the wrong strategy can lead to a bad image,

which potentially affects its financial position or lead to bankruptcy.

This paper discusses the concept of strategic planning in relation to '&" (press, a wholly

owned subsidiary of 'eutshe )ost A* which completed a +$$ purchase of the company in

#$$#, it is present in over ##$ countries and territories across the globe, making it the most

international company in the world !'eutsche )ost '&", #$+-a%. According to 'eutsche )ost

'&" !#$+-a%, the company employs /0,$$$ employees in more than ##$ countries of the

world, providing a wide range of services to customers from parcel delivery to cargo delivery

targeting both 12usiness to 2usiness’ and 12usiness to customer’ clients.

Task 1

a.

'&"’s vision is to be 3The "ogistics 4ompany for the 5orld6, and it intends to achieve this

by transforming the logistics industry, and aiming to deliver beyond customer epectations.

'&" mission is to be the first choice for logistic services around the world by harnessing

scale and eperience, its mission statement states7

• 5e want to simplify the lives of our customers8

• 5e make our customers, employees and investors more successful8

• 5e make a positive contribution to the world8 and

• 5e always demonstrate respect when achieving our results !'&", #$+0b%

To achieve its vision and mission statements, '&"’s strategy is to pursue three key

ob9ectives, namely7

• To become the provider of choice for customers8

• To become the employer of choice for our staff and prospective employees8 and

• To become an attractive investment for shareholders !'&", #$+0a%.


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:n #$+, the company’s primary focus was to increase profitability and generate cash, and to

ensure that these ob9ectives are achieved and that there are no digressions from these

ob9ectives, progress on the achievement of ob9ectives are regularly measured with the aid of

financial ratios which help to measure and control performance !'&", #$+0a%.

'&"’s core competencies lie in providing global air and ocean freight, customi;ed logistics

solutions and pro9ect forwarding, backed by outstanding information technology systems and

e


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implementation of the strategy. A strategic plan is a set of procedures that are undertaken with

the aim of developing a range of strategies that will contribute to the achievement of

organisational direction !Tapinos et al., #$$0%. :n essence, strategic plans define an

organisation’s mission and direction, and its short and long term targets within the contet of

its internal and eternal environments. :n formulating strategic plans, it is important toanalyse the organisation’s environment with the aid of tools such as Ansoff matri, S5OT

analysis, )(ST(" analysis, )orter’s >ive >orces model among others !?im and =auborgne,

#$$0%.

The S5OT analysis technique helps an organisation to identify its Strengths, 5eaknesses,

Opportunities, and Threats to be fully aware of its potentials for growth as well as that of

failure, and with such awareness, an organisation can develop a strategy that helps to separate

itself from competitors !>errell and &artline, #$+#%. The )(ST(" analysis technique

describes a framework of macro


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Source7 )rahalad, 4. ?. and &amel, *. +$. The 4ore 4ompetence of the 4orporation.

Prahalad, C. K. and Hamel, Gary, The Core Competence of the Corporation (!!"#. Har$ard

%usiness &e$iew, 'ol. ), *ssue +, p. !-! DC!-% /('(F, G)S, THT and others !=usiolik, #$+#%. &owever, according to

=usiolik !#$+#%, '&" can still access further markets where it is not currently operating by

entering into cooperative relationships with other smaller local parcel services which can

deliver goods for '&" in hinterland areas.

=arket development is a core issue for '&"8 this is because it allows the company to have a

global direction that enables the company to epand further and present new customer groups

with the services it offers !=usiolik, #$+#%. &e eplained that although there are potential

markets in underdeveloped and developing countries as well as emerging markets in the

developed countries8 there is also ample opportunity for '&" to epand its market in current

markets.

)roduct development for '&" is still quite possible for '&"8 notwithstanding, it already

covers a vast area of the logistics market, and a total redevelopment of the market is not

likely at this stage !=usiolik, #$+#%.

Iegarding diversification, '&" engage in hori;ontal diversification by acquiring some

service providers which offer industry


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:n conclusion, the most potent strategy which '&" can follow is market penetration, with

continuous innovation, such as improvement in its business processes or new service

offerings, the company beat its competitors in the market place by guaranteeing efficient

service all the time every time.

1.! Different "lanning tec#ni$ues

There are different techniques that management can use to aide strategy planning and they

include7

a. 24* matri

b. ):=S

c. S)A4(

d. And directional policy matrices !2ob and Ion, #$+$%.

Figure %: &'( Matrix

24* matri is often used to analyse organisation’s product portfolio, as a courier and

logistics company, '&"’s senior management is responsible for developing the strategy that

is used to position the business to take advantage of future business opportunities. Other

issues that the organisation’s managers need to establish include decisions on whether the

organisation needs to venture into new markets and to determine which product is worth

investing in and which product or market they should eit. These strategic decisions will

directly affect the logistics of the '&" as a company. The company’s product and market mi

can be analysed with the aid of the four quadrants in the 24* matri which include7 Star,

'og, Juestion mark and cash cow.


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According to )fohl !#$$%, the 2*4 matri uses market growth data as its environmental

component and relative market share, comparing this with the market share of the strongest

competitor as its corporate component. A product that is regarded as dog will not be worth

investing by '&" because their mission is to be an attractive company for investors to invest

in and to be the employer of choice for the talents. &owever, there are many organisation thathave several product portfolio that have the presence of dog on and but many organisation

would want to keep such product, perhaps for strategic reason, maybe it the product the

organisation start with and they feel it won’t be nice to discard such product.

A star is a market or service that '&" must nurture and develop these must have the prospect

of becoming a cash cow, these are products whose growth feasibility is easily conspicuous. A

product that is regarded as star if not manage properly, could turn to a dog and would become

liability to the organisation. Therefore, sufficient funding must be set aside to provide

stability for the market or service. :n markets or services that are regarded as question mark,

the organisation should select only those products with potential, and adopt costor instance, in maintaining customer and supplier relations,

the lowest cost saving approaches should be adopted, while inventory management and

valuation must be rigorously eecuted.

)orter fi*e forces: )orter five forces is used to scan the environment and to see how the

environment is conducive for '&" to operate. A market that has strong market force won’t be

conducive to operate and '&" must device strategic plans to outrun these forces.

Ansoff +atrix: '&" can use Ansoff matri to quarantine which market or product or any

new opportunity to invest on. :t help organisation like '&" to know where they are, wherethey want to go and how to get there. There are different ways organisation could use to

epand their business plan and to meet its goals and ob9ective in the marketplace !"ancaster

and =assingham, #$+$%.

"O # !+%

,rganisation audit for DHL

Organisational audit is an independent, ob9ective analysis of an organisation which is

intended to add value and improve an organi;ation@s operations !&ouston, #$+$%. According

to &ouston !#$+$%, organisational audit involves the evaluation of the internal factors of the

an organisation, and it helps an organisation to achieve its aims and ob9ectives through the

application of systematic approach for the evaluation and improvement of risk management

effectiveness, control and governance processes. An internal analysis of '&" involves the

analysis of eisting strategies whether they are suitable for the achievement of the

organisation’s ob9ective or whether there will be a need for an ad9ustment in the strategies.

)roduct or Ser*ice -uality7 The quality of a product can be established through a

benchmarking process in which the product or service is compared with a specific standard

within the industry or that of competitors !2ergman and ?lefs9K, #$+$%. Aaker and

=c"oughlin !#$+$%, argued that the only way to evaluate the quality of a product is actually


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when it is used, and 2ergman and ?lefs9K !#$+$% highlighted several dimensions through

which a product or service can be analysed in terms of quality.

Figure !: -uality Di+ensions of goods and ser*ice

Source7 2ergman, 2. and ?lefs9K, 2. #$+$. uality from Customer Needs to Customer

/atisfaction, ed. "und, Sweden., Studentlitteratur A2.

2rand Association7 2rand association is another approach toward organisational audit, and it

is 9udged by customers that have come in contact with the product and have relative

eperience of using the product !>errell and &artline, #$+#%. A positive association can

contribute to the reputation of an organisation and a negative association can damage it

altogether. &owever, Hadin and 5illiams !#$+#% suggested that by conducting a survey of its

brand associations, an organisation can understand the perception of its product and services

from the customers’ perspective, which provides them with an opportunity to improve on

both.

'&" Juality of Service7 '&" prides itself as the world’s largest logistics company, and its

ma9or service is to deliver goods, parcels and mails all over the world. :n facilitating the

delivery of services, '&" employ local staffs who speak the languages spoken within thelocal market to ensure communication and feedback. >or instance, in the (uropean countries

in which '&" has terminal business centres, local staffs are engaged in logistics management

to ensure convenience and efficiency service delivery. According to "iu and 5en !#$+#%, si

main factors can influence '&" service delivery7 :ndividual skills and knowledge,

organisational system, equipments, technological processes, measurement and testing,

working condition. Over the years, '&" has made these of high importance in its strategy

implementation.

:t employs high quality staff through its talent identification and management programme,

implements an efficient logistics management system, and procured a vast array of equipmentto facilitate its service delivery. :t also procures cutting edge technology with the installation

ReliabilityDurabilityAccess

Communication

Safety Quality

Environmental

impact

Credibility

Responsiveness


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of the latest hardware and software for package registration, identification and tracking

system. :t also ensures the implementation of strategic human resource management

processes which will make happy employees. "iu and 5en !#$+#% highlighted that '&"

deployed a proactive solution which enables the company to respond faster and dynamically

to marketing and customer requirements, this has led to shorter delivery times, low costsupply chain process and transportation improvement.

2ut then, '&" service is perceived as epensive compared to its competitors, and this has

been attributed to ports management and transportation facilities, urgent flight charters, its

epensive cutting edge logistics management technology, although, a positive aspect of this

technology is that mails will not get missing as long as it is logged into the computer. '&"’s

Air freight logistics has assumed an important position in its supply chain management, and

this helps the organisation to keeping up with the pace of a dynamic market, while also

ensuring that there are no costly backlogs or that they are kept to a minimum !"iu and 5en,

#$+#%. Also, "iu and 5en !#$+#% eplained that '&"’s global forwarding manages --$ oceanfreight offices around the world and it developed a long


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'&" is global leader in the international epress and logistics industry, it specialisation

involves the provision of innovative and customised solution through one single source.

(valuating '&"’s strategy using the )orter’s >ive >orces involves analysing the level of

rivalry in the market, by eamining buyer’s bargaining power, supplier power, the threat of

substitutes, and the threat of entry !)orter, +C$%.

Le*el of ri*alry in t#e +arket: These concerns the questions on how intense competition is

among the competitors in the market, and depending on the level of maturity of the market,

two types of rivalry can be identified7

• Gnsaturated market E in this situation, there is enough space for all

competitors in a market that is relatively unsaturated, all firms develop

together !"ynch, #$$$%.

• Saturated market E in this market situation, there is intense struggle for market

share by market participants, and they engage in poaching usually through

price war.

There is intense rivalry between the participants in the international logistics and delivery

industry, apart from '&", there are participants such as >ed( which has successfully

established itself mainly in the GS and made a foray into the international market in +C,

subsequently went on an epansion strategy through a series of acquisitions. G)S is also in

the market as the largest competitor to >ed( in the GS and +/0 other countries, there is also

THT which is struggling to catch up with these ma9or players.

&uyer )o0er7 4ustomers want to receive value for their money, at a low price with very

high quality and functionality, however, different constraints face a market participant such as

customer satisfaction and choice of supplier !Ieynolds and "ancaster, #$$0%. Switching

barriers notwithstanding, customers still have the liberty to choose among suppliers !"ynch,

#$$$%. According to "ynch !#$$$% there are high and low switching barriers, low switching

barriers refer to those regulations which put the customer in a strong position as switching

between competitors is relatively easy with no impediments, however, high switching barriers

involve strong impediments to changing between competitors such as costs or term contracts,

however in the international logistics industry, there is intense competition among rivals in

the market, they constantly strategise to reach every warehouse and store house to retain themas regular markets.

Su""lier )o0er7 According to )orter !+C$%, suppliers can eert bargaining power on

industry participants by increasing prices or reducing the quality of the good or service, hence

powerful suppliers can therefore squee;e profitability out of an industry that is unable to

recover cost increases in its own prices. Supplier in the international logistics market include

aircraft suppliers such as 2oeing and Airbus, &eavy *oods Lehicle !&*L% suppliers such as

Lolvo, 'A>, =ercedes and Ienault, suppliers of packaging materials and so on. All of these

have varying bargaining power to the logistics industry, for instance, the cardboard bo

suppliers have the lowest power given that the equipment for manufacture can be easily

acquired and '&" will manufacture its own cardboard boes. Aircraft and &*L and motor


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vehicle suppliers have higher bargaining power since '&" cannot concern itself with that

industry.

T#reat of Substitutes: Other products or services constitute a threat when they are

alternative products that cost lower or perform better and serve the same purpose. Substitutes

can potentially attract a significant portion of the market share and therefore reduce amount

of sales for current players, this also applies to complementary products Bohnson et al.

!#$$C%. Apart from other competitors, substitutes do not particularly pose a threat to '&"

especially due to the level of trust required to break into the international logistics and courier

industry.

T#reat of ntry: The will be intense competition within an industry if it is relatively easy for

new entrants to enter the industry !)orter, +D%. A new entrant could pose a threat by

changing some ma9or parameters in the market environment such as market shares, prices,

customer loyalty, and so on, at any time. "atent pressure for reaction and ad9ustment among

eisting players would either result in positive or negative outcomes for participants in the

industry. The international logistics and courier industry operates on the basis of scale

economics, threat of entry can mainly occur through take


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operates in. The following are reasons for '&" to be concerned about political environment

because of the potential to affect its business strategy7

• An unstable political system can affect market appeal8

• *overnment always has a duty to protect public interest, and government legislationsaffects the relationship between the firm and its customers8

• *overnment actions will always affect the economic environment8 and

• *overnment is a main customer in the consumption of goods and services !=akos,

#$+0%

cono+ic en*iron+ent7 Several factors within the economic environment affect '&"’s

operations in any of the countries it operates in. These include7

• :nflation rate which affects the disposable income of consumers within the economy,

and which reduces the quantity demanded of available goods and services, a high

inflation rate leads to uncompetitive prices of goods and services, and hence poor

financial results for organisations.

• Gnemployment levels can affects business operations adversely, a high

unemployment rate means that fewer people than normal are working in the economy8

hence very few people in the economy can afford to purchase the goods and services

that are available in the economy.

• "abour costs7 A high labour cost translates to high operations costs, and this makes a

firm’s products to be more epensive compared to others especially imported goods

that en9oy government support in their home countries.

• "ow levels of disposable income can adversely affects the quantity demanded of

goods and services in any economy, and at the same time income a large disparity in

income levels can favour firms producing in the economy.

• :nterest rates affect the ability of businesses to borrow money from banks to finance

their business, this has potential effect on unemployment levels and disposableincome as well as a ripple effect back on the economy.

• =onetary and fiscal policies refer to instruments used by governments to control the

amount of money in circulation, while fiscal policies consists of instruments used to

redistribute wealth among the population

• >oreign echange rates affect the prices of imported goods and services and the ability

of the local consumers to purchase them, a lower foreign echange will make prices

of imported goods affordable for local consumers while government also needs to

watch out for the potential of encouraging dumping of substandard goods !Aaker and=c"oughlin, #$+$, Bohnson et al., #$$C, ?o;ami, #$$#%.


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'&" needs to be concerned with these and other factors to their minute detail in any

economy in which it operates because of their potential to derail its strategic plans, these

factors control the directions of any economy towards favourable or unfavourable economic

environment in which '&" has to operate.

Socio2cultural en*iron+ental forces: These refer to the forces and institutions that affect

the societal preferences, values and behaviours in a country !?o;ami, #$$#%. According to

?o;ami !#$$#%, these include the various cultures which affect behaviour within the country,

gender and other connected issues, social lifestyles, domestic structures, levels of education.

According to =akos !#$+0%, one of the most recent socioacebook,

*oogleplus, :nstagram. These are powerful media that can affect the survival of any business

organisation. All of these determine the social and cultural structure of any society, especially

attitudes, opinions, and interests, and all of these affect the consumption of products and

services. >irms usually take advantage of socioor instance, '&" needs to regularly consider that social costs within the society

must be weighed against its obligations to comply with taation laws, complying with aircraft

noise laws, and emissions control standards, it must be seen to make concerted efforts

towards considering these issues always and every time.


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All these factors will affect the strategic positioning, hence adequate and timely analysis of

these environmental factors is essential, since they are mainly eternal uncontrollable factors

that create both threats and opportunities for '&", and there are no other alternatives than to

develop strategies for mitigating the risks arising from each one of them

L, % 3%4

Significance of Stake#older Analysis 0#ile for+ulating 5e0 Strategy in DHL

Stakeholder analysis involves the evaluation of the effect of stakeholders on an organisation’s

strategic direction. 5eiss !#$+% eplained that stakeholder analysis is a pragmatic way of

identifying and understanding multiple and often competing claims of the various

constituencies surrounding an organisation. Specifically, stakeholder analysis enhances an

understanding of the relationships that eist between an organisation and these groups of

individuals and constituencies, and these relationships may be voluntary or involuntary, and

are either internal or eternal to the organisation, but they are all potential beneficiaries and

risk bearers of the organisation’s profits and losses !)ost et al., #$$#, 5eiss, #$+%. >urther,

the interest of each stakeholder and their roles in are documented along with the relative

amount of influence wielded by each one of them in the affairs of the organisation, and since

such information are usually sensitive and confidential in nature, they should not be included

as part of the overall strategy formulation document but rather acknowledged.

There are diverse stakeholder groups in '&", and these include customers, employees,

investors, suppliers, subcontractors, policymakers, administrative bodies and government

regulators, the public, opinion leaders, the media and H*Os8 the organisation maintains

continuous dialogue with these stakeholders with the ob9ective of developing deeper

understanding of their views and epectations, as well as to resolve current and emerging

social and business challenges !'eutsche )ost '&", #$+-b%. To sustain this ob9ective, '&"

adopted a systematic approach toward stakeholder involvement8 hence regular materiality,

inclusivity and responsiveness analyses are conducted in line with principles advanced by the

international organisation AccountAbility with the overall ob9ective of developing a

Stakeholder Ielations policy. A stakeholder map !see >igure 0% has been developed which is

used to hold determine the constituencies and individuals with who regular dialogue events

are held as stakeholders of the organisation, input from stakeholder relations activities

contribute to '&"’s strategic focus in that it helps to define the thematic focus of itscorporate responsibility reporting. This activity fulfils the environmental scanning aspect of

strategic management.

>igure 07 'eutsch )ost '&" Stakeholder =ap


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Source7 'eutsche )ost '&". !#$+-b%. Maintainin0 1 2eepenin0 the /takeholder 2ialo0ue

MOnlineN. )aris, >rance, 7 'eutshe )ost '&"

L,% 3!4

)resent a ne0 strategy for t#e c#osen business based on organisational audit and

stake#older analysis

2ased on the above analysis, a strategic direction is suggested as follows7

To steer the organisation in a new strategic direction, it is suggested that '&" from this point

into the future increase its 3strategic agility6 using a three pronged approach, namely7

systematic simplification and reduction of compleity, fleibility in internal structures and

processes, and innovation and continuous orientation to changing market requirements

!?arlshaus and Ieckling, #$+#%. The concept of strategic agility refers to the 3ability to


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continuously ad9ust and adapt strategic direction in a core business, as a function of strategic

ambitions and changing circumstances, and create not 9ust new product and services, but also

new business models and innovative ways to create value for a company6 !'o;, #$+%.

According to 'o; !#$+%, the core capabilities which facilitate strategic agility include three

main strong points7 the first is strategic sensitivity which refers to both sharp perception, andthe intensity of awareness and attention8 second is resource fluidity which is about the

internal capability to quickly reconfigure business systems as well as redeploy resources

rapidly, and collective commitment which is about the ability of top teams to make bold

decisions.

The systematic simplification and reduction of compleity involves the simplification of

structures processes and systems since compleity in these areas of operation reduces

response to unstable changes in the market, hence reduction of compleity enhances

adaptability in strategic positioning which creates new challenges and opportunities in

strategic planning !?arlshaus and Ieckling, #$+#%. According to ?arlshaus and Ieckling!#$+#%, fleibility enhances adaptability to continuous change and volatility, and this is an

essential for strategy formulation and implementation. 5hen strategy is fleible, scenarios,

stress tests and continuous forecasts enhance strategic planning and risk management, and the

output is a robust strategy that allows the organisation to constantly realign resource

allocation, and thus be able to face whatever situation arises in the market and the economy

in general !'o; and ?osonen, #$$C%. "astly, continuous innovation enhances an

organisation’s market power8 in addition, a rapid and fleible supply chain boosts an

organisation’s competitive edge since it is able to ad9ust its operations according to changing

market dynamics and requirements !?arlshaus and Ieckling, #$+#%. This is further enhanced

by the continuous identification and confronting of potential risks and opportunities that have

been identified from relevant trends !?arlshaus and Ieckling, #$+#, ?otter, #$+%.

'&"’s previous operating performance has been based on strengthening its performance in

three main areas, namely increasing customer satisfaction rates, developing share price

values, and motivating employees all over its four main divisions7 mail, epress, global

forwarding and freight, and supply chain. Through a strategy of combining operational

growth, market developments and harnessing global trends, the organisations has witnessed

positive growth in these divisions in the past years !'eutsche )ost '&", #$+#b%. According

to 'eutsche )ost '&" !#$+#a%, through a sustained outlook towards strengthening its supplychain to further its competitive advantage in this aspect of the industry, '&" has adopted a

close cooperative management of its divisions, and the increasing growing online market

place continues to present strong opportunities since this avenue has continued to drive

demand, thus increasing turnover in its parcel network. Through increased understanding of

its environment, '&" has been able to assess its position with regards to economic, political,

socio


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nobody epected the #$$/#$$C global recession at the time it landed or its enormity and

ripple effects. That crisis sent several organisations and countries into a red balance with their

creditors, and '&" was not left out, hence '&" needs to stabili;e its operational and

financial performance to bring itself back to pre


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the strategy is to create a monopoly, then government will consider overriding public interest

and block the strategic move.

Li+ited gro0t#7 This is also known as stability strategy in which the organisation attempts

to hold and maintain its present si;e or to slowly grow !"ussier, #$+%. "imited growth

strategy, an organisation will engage in activities such as market penetration which involves

deliberately increasing market share by targeting new customers, promoting the product,

consolidating the business to protect the market, repositioning the brand or changing it

entirely with a view to increasing revenues, but the product basically stays the same ! 'e 5it

and =eyer, #$$%. Also 'e 5it and =eyer !#$$% stated that the organisation can also engage

in market development by opening up new opportunities with different customers by

etending the range of products with a view to epanding the business with eisting

customers. )roduct development is another area the organisation can foray into, and here it

etends the range of products in order to epand the level of business with eisting

customers. A limited growth strategy will be favoured by an organisation because growth isregarded as a primary indication of success, because a growing organisation increases it share

of the market and is usually epected to apply this increased volume to increase revenue and

greater profits as well as return on equity, however, some managers hesitate, and avoid

growing too quickly but rather prefer to adopt a more limited growth strategy !Bohnson et al.,

#$$0%.

Another advantage of limited growth strategy is that organisations avoid the high debt profile

that characterise rapid growth strategies

due to the fact that some managers go borrowing to finance organic growth !=ayer, +%.

=ost managers often find rapid growth to be quite burdensome since they have to balance

eisting operations while they also have to manage epansion into new markets and regions

!Bohnson et al., #$$0%. Also, enormous financial and logistical challenges involved in rapid

growth are rather complicated for skilled managers and much more for those with average

skills to efficiently manage, hence an organisation that was once lean and agile is forced to

adopt a business model with higher cost profile than it is used to !'e 5it and =eyer, #$$%.

"imited growth strategy discourages economies of scale as well as the savings that accrue

from a more elaborate growth strategy, and restricts the organisation’s ability to take

advantage of quantity discounts !)un and 5hite, #$$0%. Also, )un and 5hite !#$$0%

suggested that organisations adopting a limited growth strategy may face high daily operatingcosts which could have been spread over bigger epense items had the growth been more

aggressive. Another disadvantage of limited growth strategy is that competitors may acquire

the proposed market share with their own rapid growth strategy before the organisation

makes its own move !)un and 5hite, #$$0%.

6etrenc#+ent Strategy7 Ietrenchment strategy is basically a divestment strategy which is

aimed at reducing investment levels or market share !"ussier, #$+%. According to Thompson

!#$$+%, retrenchment strategy begins with the consolidation of an organisations operations,

either as a basis for turnaround of an organisation facing difficult times, or it is linked to the

divestment of non


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or a bankruptcy option !"ussier, #$+% "ussier !#$+% provided the reasons for which an

organisation will go into retrenchment strategy, namely7

• Iestructuring the organisation8

• (liminating businesses or branches that contribute insufficient value to the business8

• (roded markets8 and

• (vading the eposure of assets to political risks !"ussier, #$+%.

Organisations adopt the retrenchment strategy due to various symptoms being noticeable

within the organisation, these include but are not limited to reducing profitability, falling

sales, reducing market share and increasing debt profile, !?o;ami, #$$#%. According to Bauch

and *lueck !+CC%, an organisation will adopt a retrenchment strategy in the following

situations7 The firm’s performance has reduced drastically such that it will be a waste to in9ectany more funds8 the firm has failed to meet its ob9ectives implementing or attempting one or

all the other grand strategies in turn, and stakeholders are mounting pressure for the

organisation to improve performance8 the environment is regarded as volatile, and its internal

strengths are insufficient to meet the problems8 better opportunities in the environment are

perceived elsewhere, where a firm@s strengths can be utili;ed.

L, ! 3b4

An A""ro"riate future strategy for DHL

The presence of '&" in ##$ countries of the world has been supported by an aggressive

acquisition strategy with which it was able to boost its presence in the marketplace. To

support this strategy, the organisation intensified customer focus, delivered consistently

ecellent service, etended capabilities, became attractive to talents, socially proactive and

relentlessly pursued efficiency in its entire operations !"iu and 5en, #$+#%. Thus far '&" has

been able to sustain its competitive advantage with the combination of resources and

development of competencies and capacities. 5ith this, '&" is able to harness and apply its

resources by differentiating itself from competitors, operate more profitably through increase

in market share, this it has been able to achieve through its lean supply chain which is

concentrated on value delivery. :n view of these achievements, the limited growth strategy issuggested for '&". This strategy is appropriate for '&" in view of its 3Strategy #$+06 as

presented by 'eutsche )ost '&" !#$+#b%, which focused on 3becoming a provider of choice

for customers, be an attractive investment for shareholders and the employer of choice for our

staff6 !'eutsche )ost '&", #$+#b%.

:n implementing the limited growth strategy, should concentrate on market penetration and

development, innovative product development, forward integration all combined into a stable

growth strategy which are based on a strong approach towards divisional focus towards it

main divisions7 mail, epress, global forwarding and freight, and supply chain. :t should also

implement enterprise wide initiatives that are applied to harness operations along the four


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divisions, as well as leverage operations in a unified manner. The advantages of the limited

growth strategy far outweighs its disadvantages, hence, it should embark on positive

adaptation of market networks to changing market conditions while ensuring that costs are

fleible enough to compete with alternatives in the market. There should be regular review of

its :T architecture with a view to regular updates to support free flow of sorting equipmentand make the parcel delivery networks more fluid. :ts :T architecture should also synchronise

the 5orld 5ide 5eb to enhance customers’ access and facilitate interactive services that have

been developed for their use which patronising the company on the internet.

5ithin the limited growth strategy, the organisation should engage in employee motivation

strategy since employees constitute the industry’s main competitive advantage, regular

training programmes that help employees to improve their skill set must be made available

and appraisals must be geared more toward talent development rather than assessing

productivity. To guarantee sustained profitability, strategies geared toward customer loyalty

should be adopted and first hand customer opinion must be regularly collected and updated,especially their opinions on newly developed and deployed customer solutions. >or its freight

forwarding division, '&" needs to continuously epand its network with a view to

optimising its operations across the +C# countries it serves8 regular reviews must have the

ob9ective of optimising the networks. Also, its supply chain division needs to be structured in

such a manner that the organisation continuously improves its business with a view to

achieving profitable growth throughout the organisation. >inally, the organisation needs to

develop a database of customer eperience with which new employees can be trained so that

the culture of customer service ecellence can be sustained

L, 314

6es"onsibility and roles for strategy i+"le+entation

The various levels of management within an organisation are engaged in different roles and

responsibilities during the implementation of strategy within an organisation. According to

Sadler !#$$-%, there are three key roles in strategy implementation, namely7 envisioning the

future strategy, structuring the organisation toward delivering the strategy and embodying

change. (nvisioning the future strategy refers to the focus of the strategy and the ob9ectives it

is intended to achieve, these are then communicated to everybody concerned with the

implementation of the strategy on an enterprise


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Sadler !#$$-% identified top and senior management, middle level managers and operational

managers as having responsibility for strategy implementation. The top management is

responsible for setting the long term vision and setting the strategy, they are involved in

making sense of the strategy, making ad9ustments where necessary, interpreting the strategy

and communicating it down to senior management who supervise the deployment ofresources that are necessary for the strategy implementation. The middle level management

set medium term strategies that are necessary for achieving the long term strategies and

monitor the operational managers during strategy implementation. Operational managers are

the lower level management and are responsible for operational implementation that support

the strategies, supervise lower level staff and communicate implementation progress back to

middle level management who then pass same to senior management. (ternal stakeholders

such as government, suppliers, resellers and consumers all have their roles in strategy

implementation. 4ommunication and feedback are both essential aspects of strategy

implementation.

L, 3%4

6esource re$uire+ents needed for strategy i+"le+entation

Specific resources are usually required for strategy implementation8 they usually differ

among organisations and are based on the nature of business, organisational requirements and

the business environment Bohnson et al. !#$$C%. Iesource requirements for strategy

implementation in '&" are financial, human, organisational, and environmental resources7

a. Financial resources: Strategy is usually supported by a budget that shows the

financial outlay over a specific period of time. 5ithout finance, a strategy will 9ust be

a mere piece of paper, and cannot be converted to physical activities. >inancial

resources can involve using retained earnings, issue of shares or obtaining bank loans.

5ith its vast operations in +C# countries, '&" requires vast amounts of financial

resources to implement its varying strategies in its four divisions.

b. Hu+an resources: &uman resource is important for strategy implementation since

they are in charging of converting strategy into actions through their acquired skills

and competence. '&" is in an industry that is human resource intensive, and it will

need to regularly asses its current workforce to know if they need training or whethernew employees are needed.

c. ,rganisational resources: These are infrastructure which includes warehouses and

other mobile assets including other physical assets such as :4T framework which

support the operations of the company, and buildings that are used for administrative

support works. There are also inter and inter


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'ontributions of SMA6T targets to t#e ac#ie*e+ent of strategy i+"le+entation

Targets or goals are an important aspect of the strategic planning and implementation process

since they help organisation managers to highlight the connection between strategic visions

and achievable reality !4assidy and ?reitner, #$$%. According to 4assidy and ?reitner

!#$$%, to be realistic, targets need to foster commitment, and enhance motivation, hence they

must be S=AIT !Specific, =easurable, Achievable, Iealistic, and Time

Strategic Analysis of DHL International

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