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21st century is the era of technological advancement and organisational growth towards sustainability (Castells 2014). With ever increasing number of competitors in the market, the magnitude of the competition is getting aggravated day by day. Thus to managing business efficiently and properly in order to lead it fulfil the organisational goal as well as met the social goal, business management takes an important role. Business management is a continuous process due to the fact that with ever rising competition among the firms leads them towards problematic situation (Chang 2016). To overcome this one of the best tools is business management because whenever a firm goes on perpetually, management takes the control to drive the firm away from the situation. Traditional business model is mainly driven by the pre specified goals and plans to attain them while ensuring optimized usage of the production factors like, land, labour and capital. However, at present day in the era of 21st century, business model has changed largely, where discontinuous and dynamic change is required in organisational decision making process while keeping space with the dynamically evolving business environment while fulfilling the personal as well as the organisation goal (Miller, McAdam and McAdam 2014). today’s business world is more on research centric rather than defining the aims and plans at pre process level, thus with the change in the business environment, business management has become evident for the smooth and efficient growth of any organisation. This report is meant to discuss the nature of challenges that an organisation faces from the perspective of the business management with the help of the relevant management theories. Besides this, the report will select an organisation and perform external as well as the internal organisational analysis with the help of the management models like PESTEL, Porter’s Five forces, SWOT, VIRO and others to redefine the management challenge in micro level. To conclude, the report will provide effective recommendation for the perspective of the firm in order to overcome its long term and short term challenges and lead the business towards sustainability.
Identification of the industry:
This report has chosen the Aurecon Group Pty Ltd for its analysis due to the fact that it is one of the rising firms that have been facing stable growth since its introduction. It came into existence back in 2009, with the merger of Connell Wagner, Africon and Ninham Shand merged with each other to form the Connell International Group Limited, which is the parent company of the Aurecon Group Ltd (Ibisworld.com.au, 2018). All these firms are multi disciplinary organization, which specialize in infrastructural consultancy. This report is meant to analyze the management challenge that the firms face in the changing organizational structure in micro level. Thus, Aurecon is the idle firm for this report because it is a medium size firm and growing rapidly, which can be seen from its annual financial report. According to the financial report of the Aurecon Group Pty Ltd, it has earned revenue of 811,735 AUD during the year 2012 and it rose to 993,046 AUD by the end of the year 2016 (Torre and Scarborough 2017). If the total revenue of the group is concerned, then the figures are as high as 999,980 AUD during the year 2016 (Ibisworld.com.au, 2018). According to the same source, number of the employees of the firm was 4,276 during the year 2012 and it rose to 6,492 at the end of the 2016. From the above statistics, it can state that the firm is one of the growing industries and it is ideal for this report.
External analysis of the selected organisation:
External analysis is the one of the best tools using which a brand can remain on the top of the organisation trend and assess the future trend of the industry. As the method of external analysis, PESTEL and Porter’s Five Forces analysis are the best methods. In order to understand the organisational challenges of the industry, a brief detail regarding the external analysis of the Aurecon Group Pty Ltd has been given below.
In order to remain in the market as one of the strong competitors, it is highly important for the firm to look into the macroeconomic environment of the industry. PESTEL analysis is the framework that aids the firms to analyse the external environment factors of the market that can affect the performance of the firm. PESTEL is the acronym of the Political, Economic, Social, Technological, Environmental and Legal analysis of the firm. Being one of the international organisations, it is highly important for the Aurecon Group Pty Ltd to perform PESTEL analysis because it will provide the firm ability to understand its business environment in world arena (Vintila et al. 2017). Details regarding the PESTEL analysis of the Aurecon Group Pty Ltd are as follows:
Political factors –
Aurecon Group Pty Ltd is one of the renowned brands that have been that has been operating in Australia since 2009. During 2016 it has increased its business beyond its geographical boundary and landed itself on the land of Singapore, where it is acknowledged as one of the most famous consultancy firm in the case of the infrastructural development (Rahim 2015). With the merger of Aurecon Group Pty Ltd and AUP consultants, the brand has enhanced its range of business beyond the boundary of Australia to the Asian countries. As one of the main strategy to enhance their business, the brand has developed strong inter bonding with the local leaders of the Singapore. It has helped the brand to become where it is now in the Singapore and political stability of the country has provided stimuli to the brand to face growth. Though there has restriction in the case of the free speech, however it doesn’t apply to the Aurecon Group Pty Ltd because the rule is applied to the opposition parties (Ngo 2016). In addition to this, persistent fear of law suits against the violators of the rule restricts the growth of democracy in the country. However, when it comes to the Aurecon Group Pty Ltd, the brand has strong connection with the political leaders of the countries that provides them an upper hand to grow their business freely. Positive tax framework along with international trade agreement between the Aurecon Group Pty Ltd and Singapore has aided the firm to increase their business smoothly (Jiang, Cheng and Hawkins 2017).
Economic factors –
Singapore is one of the fastest growing markets among all the Asian economies. The country has highest amount of per capita income among the ASEAN countries that highlights the economic condition of the country. Though most of the share of Singapore’s GDP comes from the primary sector, recently the government has taken rigorous reformation plan to change the situation (Fozer et al. 2017). Plans to diversify the economy have been taken and it has given boost to the tourism, infrastructure, pharmaceutical and various other industries in the country. It has helped organisations like Aurecon Group Pty Ltd to place their foot on the ground of the Singapore. Competitive market of the Singapore provides considerable amount of competition to the Aurecon Group because the number of consultancy firm in infrastructure development sector. However, being a new kind of service in Singapore, probability to have high profit is considerably high. Besides this, public investment of Singapore is also rising that will certainly help Aurecon to enhance its research and development programs (Marques 2015). Though there is lack of skilled labor and labor cost is high, with the stable economic structure of the Singapore and balanced growth mechanism by the government Aurecon Group Pty Ltd is expected to face a versatile market scenario in recent future.
Social factors –
Singapore is one of the countries that follow the traditional social framework of the eastern Asian countries. It has high literacy rate and income level is moderate that provides them good amount of disposable income (Ho 2014). Thus, business firms faces higher amount of purchasing power from the population of the Singapore and grows with a moderate growth rate. When it comes to Aurecon Group Pty Ltd, then the brand is providing a new kind of service to the Singapore market and thus it is expected to have higher demand from the market (Sahin 2017). Besides this, the firm always tries to maintain social factors, wherever it enhances its business. In addition to this, the brand has taken initiative to reconstruct the Golden Pagoda Buddhist Temple, which is expected to give a boost to its social acceptance of the firm.
Technological factors –
Singapore is a developing nation that has shown praise worthy performance in the recent days. Penetration rate is 70% for the household broadband connection and eB2C models of business have flourished comparatively over the time (Heise et al. 2015). Along with this, the government has enhanced ecommerce business and IT infrastructure of the country has evolved towards modernization over the time. In this scenario economy of Singapore is willing to absorb new service that can not only enhance the economic performance of the country moreover make it sustainable. Aurecon Group Pty Ltd is aimed to provide best in class service to their customers, thus the level of R&D is high in the firm. Moreover, being an ISO 9001 certified company; the firm always takes risk management, planning, project control and mobilization seriously to reduce the scope of management risk (Ibisworld.com.au, 2018).
Environmental factors –
Singapore maintains strict environmental policy in order to control biodiversity. It has more than 30% of mangrove area out of its total greenery. This mangrove not only provides significant amount of GDP, moreover aids the economy to have better sustainability. When it comes to Aurecon Group Pty Ltd, then the brand believes in sustainable and vibrant dream. They are aimed to produce community based outcome, which are beneficial for environment of the Singapore (Ou, Nto and Nwadighoha 2017). Thus Aurecon Group Pty Ltd is highly agile to cope with the Singapore’s environment plans.
Legal factors –
Singapore has strong governmental control in the market and there are various infringement laws that restrict the new firms to enter into the market. Intellectual Property Rights, along with the Electronic Transactions Act the government is aimed to bring in transparency in the market (Carlson 2017). Thus, for the Aurecon Group Pty Ltd it would be beneficial for the firm to perform their business smoothly. However, there is certain amount of management risk that the firm can have due to the strict government policies.
Porter’s Five Forces analysis:
Porter’s Five Forces analysis is one of the best tools to determine the magnitude of the competition among the players in the industry. This tool will help the Aurecon Group Pty Ltd to find out its management risks in Singapore and assess their market control.
Threats from entrants – medium
According to the Porter’s Five Forces analysis, Aurecon Group Pty Ltd has medium amount of threat from the new entrants. Though there are less numbers of players in the market that provide services like the chosen brand, however once the new entrants start to come into the market it will saturate the economy (Dobbs 2014). In this case the Aurecon Group Pty Ltd will lose substantial amount of market control and their profitability will be limited.
Threats from substitute – Low
Aurecon Group Pty Ltd provides one of its kind services and their versatile as well as diverse range of services will help the firm to remain in the market for a long time in future. Besides this, if there is any service provider who provides same service as the Aurecon Group Pty Ltd, then the firm can apply their monopolistic power to stop the new entrants (Yunna and Yisheng 2014).
Bargaining power of supplier – High
Aurecon Group Pty Ltd provides wide range of service with quality assurance. Moreover, there are very limited amount of competitors in the market that provide same kind of service that provides the firm monopolistic advantage. Thus, the bargaining power of the firm is high in Singapore.
Bargaining power of buyer – Low
Aurecon Group Pty Ltd operates in a monopolistic competitive market where very few numbers of firms provide similar service as the chosen organization. Thus, bargaining power of the selected organization is high and on the other hand bargaining power of the buyer is comparatively low (Mathooko and Ogutu 2015).
Industry life cycle analysis:
Industry life cycle analysis is a management tool that aids the firm to assess and forecast its introduction, growth, maturity and decline. From the perspective of the Aurecon Group Pty Ltd, it can be seen that the firm was introduced back in 2009 and since then it has been growing at a moderate rate (Ibisworld.com.au, 2018). According to the financial report of the Aurecon Group Pty Ltd, the brand has grown substantially since 2012, which can be marked as the growth period. Being a new firm in the Singapore, the chosen organization can be considered to be still in the growth stage, where it is facing rising amount of demand as well as the increasing cost of operation (Cabeza et al. 2014). According the firm’s plan, the brand is expected to gain maturity by the end of 2025 in the Singapore and when it comes to declining, then it depends upon the subsequent planning of the firm. With the rise in substitute services, the Aurecon Group Pty Ltd is expected to enjoy a lower amount of demand and market share. However, with the proper assessment of the management risk and adequate amount of reformation programs, the firm can enjoy better amount of sustainability in future.
Internal analysis of the selected organisation:
Internal analysis of the Aurecon Group Pty Ltd is as follows:
VIRO analysis is the assessment of competitive advantages and weakness of a firm. VIRO stands from Value, Rareness, Imitability and Organization using which, the risk management assessor performs the risk management of the firm (Chen and Kodono 2014). According the figure 1, there is strong global presence of the Aurecon Group Pty Ltd and has sustainable competitive advantage. Besides this, the brand has various specialties and strong management to realize competitive parity (Rashid and Yusoff 2015). From the VIRO analysis it can be seen that the firm provides rare and valuable upscale atmosphere. In addition to this, this internal analysis has realized its temporary competitive advantage over its rival organizations.
Figure 1: VIRO analysis of Aurecon Group Pty Ltd
Source: (Jurevicius, 2018)
With the less amount of scope of immutability, risk of sustainability of the Aurecon Group Pty Ltd is low. Besides this, the firm provides valuable service to the Singapore that makes it sustainable firm.
SWOT stands for Strength, Weakness, Opportunity and Threat that helps the firm to analyse its internal performance. Details regarding the SWOT analysis of the Aurecon Group Pty Ltd are as follows:
The firm enjoys high profitability in the market of the Singapore and the average revenue is sustainable in nature. It gives stimuli to the firm to have robust and enhanced scale of the sales networks. Skill development program introduced by the firm will help it to employ more amounts of labours from the Singapore and reduce its cost of operation (Bull et al. 2016).
Aurecon Group Pty Ltd is a new firm in the Singapore and being a comparatively new in the industry, it has high cost of operation. For its research and development, the firm incurs high interest rates which reduce the final profit of the firm.
The firm is new in the Singapore’s market that provides diverse and versatile service to the country’s economy. The firm operates in monopolistic market that allows it to have various scopes to enhance its business and engage itself into continuous research and development (Shi 2016).
Singapore has increasing rate of interest that affects the firm’s intention to develop its business in the country. New entrants provide substantial amount of threat to the organisation and the tax structure of the country provides much amount of threat to the firm.
Management challenge of the selected organisation:
Aurecon Group Pty Ltd is one of the new yet leading players in the market that provides consultancy in the infrastructural development. From the figure 2, the operational optimization of Aurecon Group Pty Ltd can be seen, where it uses PESTEL analysis and geographical review to perform its GeoRisk, which helps the firm to assess its technological advancement over time. Besides this, risk profiling, risk trending and asymptotic risk optimization, help the firm to achieve its operational optimization (Van et al. 2015). From the analysis above, it can be seen that the firm is potent enough to manage its risk. Though there is moderate amount of risk from the new entrants and the firm faces high amount of operation cost, it can be prove to be a barrier in front of the firm to become the market leader.
Figure 2: operational optimisation of Aurecon Group Pty Ltd
Source: (Wyk, 2018)
Besides this the above analysis has shown that that the firm follows the local policies and laws while keeping good relation with the government that aided it to become where it is now. One of the main management risks is the high interest rate and low availability of skilled labor in the Singapore. According to the Simon Van Wyk, Risk advisor of Aurecon Group Pty Ltd, the firm can become sustainable in the foreign market with the help of the proper intelligence regarding market and with proper predictability (Wyk, 2018).
The report has found that Aurecon Group Pty Ltd is one of the rising firms in the consultancy of infrastructural development program. It has strong holding in the market of the Singapore and various other places around the world that has made it to become where it is now. According to the external and internal analysis of the firm, it is clear that the firm has strong internal as well as external balance that has helped it to face positive and sustainable growth in the recent days. Moreover, risk management team of the Aurecon Group Pty Ltd is potent to assess the market properly, which has provided stimuli to grow at a faster rate compared to its competitors. Though there are some drawbacks in the case of intelligence gathering and planning section, however with proper foundation of smooth transformation, the firm has enabled itself to become one of the largest consultancy firms in the Singapore. Risk management has aided the firm to properly assess the market and surpass its geographical boundary and reach to various other countries within a short span of time.
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