Business Strategy: Management and Analysis

Introduction

Most of the companies and organizations around are putting more efforts in managing their own business strategy. The prime focus narrows down to business strategic planning denotes the art of managing business activities across the highest level of the organization. Largely, managing business strategy appreciates the sociological scope that points at the significance of human interactions as well as relations within an organization. Based on the preamble on managing business strategy and strategic analysis, the discussion will point the background details, basis competition, strategic group analysis and culture of the company among many other details.

Background

FLIR Systems is regarded as one of the global largest commercial companies that have specialized in designing as well as producing thermal imaging components, cameras and the imaging sensors. The company is based in Wilsonville, United States. The company is said to have been found in the year 1978. FLIR Systems, based on the kind of products and services it handles on a daily basis, is a stock listed technology as well as commercial company that realized $1.8 billion turnovers in the year 2018. The name of the company is an acronym for Forward-Looking InfraRed. The company is known for facilitating holistic solutions from thermal sensing, visible cameras to the most significant integrated systems. Some of the solutions offered by the company include automation, machine vision, unmanned application, radar, navigation, software, CBRNE and AI. The company carries with it a significant range of the target markets such as government and defense, industrial usage as well as commercial and home usage. FLIR systems largely aim at enhancing the perception of people as well as bolster awareness in areas accurate detection of people and animals, measuring temperature, seeing through obscurants and enhance long range imaging among others (Tarin & Rotolante, 2011). The FLIR System’s CEO, Jim Cannon, once said that the company is evolving from just being a sensor company to a significant decision company. Based on the CSI market report, there can be more competencies which can be defined as highly innovated and as of high quality based on a long heritage. However, more competitors are streaming into the market as they offer lower prices, flexible products and wider ranges which can respond to the demand in the market and the subsequent dynamics. This also defines the kind of challenges the company is facing over the time.

Product market mission of the company

FLIR carries with the most comprehensive and innovative mission statement, which indicate the lucrative use of technologies, which can increase awareness and insights that can help professionals in making more informed decisions, which can save lives as well as livelihoods. This is also aligned to the company’s product market mission, which entails developing market leading thermal as well as sensing technologies that can enhance the everyday life. FLIR is believed to make a real difference by shifting from saving energy to a significant course of saving lives.

Basis of competition

While assessing the situation of the market, the report focuses on analyzing the competitive environment surrounding the FLIR systems. First, the report chose to conduct Porter’s Five Forces, the Bowman strategy clock and Porter’s generic strategies. In this context, the analysis points at the chances of FLIR systems in adopting some of the strategies and how they will impact its performance in the market.

Porter’s Five Forces

Threat of New Entrants: For companies to remain competitive in the market, the company should carry with it competitive advantages, the electronic equipment production space, cost efficiency strategies, reliable suppliers, and technology and high capital amounts. However, the industry is said to be mature, requires huge capital amounts and has low margins. However, the threat is said to be low.

Threat of suppliers: Most of the manufacturers of the electronic equipment would end up buying a range of essential components needed for the production process. Such components are not limited to wire harnesses, cables, semi-conductors and even different forms of plastic. It is worth noting that most of the products are never expensive to create and the industry has a range of suppliers internationally and domestically. Most of the companies in the industry bear the incorporate versions linked to vertical integration along the supply chain process (Tarin and Rotolante 2011). This is due to the cost of manufacturing which is shadowed by cutting out most of the third party suppliers. The threat of suppliers is essentially low as a result of integrated supply chain processes, low cost of manufacturing as well as the number of manufacturers in the industry.

Threat of Buyer: Buyers in the market are believed to share smaller segments. Given the number of smaller buyers, this attracts the tendency of a lessened threat of buyers. It should equally be noted that buyers are fond of contracting their suppliers for a long period of time. The fees linked to termination of the contracts are always high, which is a condition that ruins the flexibility of buyers (Hensgens et al. 2008). Therefore, the threat of buyers is moderate due to the room they are given to notify the supplier before switching.

Threat of substitutes: Most of the key players in the industry are protected in a number of ways. First, companies are largely protected via the competitive advantages. This is expressed in terms of the efficiency noted in the course of the production process, the relationship they have with buyers and the bulkiness of the orders embedded under the long term contracts. Secondly, companies are protected through patents as well as other intangible assets. Despite having means of protecting the company against substitute, the threat is never eliminated entirely.

Competitive Rivalry: The electronic equipment industry is characterized by high level of competition. Perhaps, the cost of production is decreasing with time and technology has improved (D'Elia et al. 2018). This means competitors can easily acquire market shares thereby decreasing the margins as a result of the increased numbers.

Bowman Strategy Clock

It is always convenient for companies to collect information and data regarding the market position in the face of notable competitors. The strategy clock is regarded as a marketing model where the company has an opportunity of analyzing its position in the market. The clock was created by David Faulkner and Cliff Bowman. According to these two developers, it is more powerful to have a competitive advantage because it is always a distinctive element than just a cost advantage. In line with the competitive position held by FLIR Systems, the report will develop the Bowman strategy clock based on the following elements.

Low added value and low price: This position is never competitive within the clock and the product or service is never differentiated as customers are of the perception that the goods are of very little value. The only option for the company to remain competitive is by keeping the prices low. This is not a possible position for FLIR Systems because its products are expensive and competitive (Holloway 2018). FLIR Systems is a strong brand that has to maintain high costs and this position can compromise its normal operations.

Low Price: Firms found at point are said to produce in large quantities and products are significantly valued. Commonly, products would be sold at relatively low prices thereby leading to almost low profit margins especially on individual products (Haselwanter et al. 2016). At the same time, high volumes of the output can equally attract high profits. The position is highly considered by cheap market leaders who concentrate on cheap as well as fast production, cost minimization and applying economies of scale. This is a position that is likely to be considered by FLIR Systems in some circumstances (Ruiz et al. 2015). At some point, while leading the tech race, FLIR Systems noted that some of its solutions were copied as well as their market shares were being swallowed by other bigger competitors.

Hybrid: This position can be considered by firms that are fond of product differentiation. In this case, the products and services are commonly highly valued. Companies found in this position concentrate on low price. Consumers are convinced that there is good value addition that genuinely benefits them. This position of the clock is effective and the value is consistent. FLIR Systems prefers product differentiations that are aligned to three divisions. These include government and defense, commercial contracts and industrial contracts. These divisions have added value to the brand released in the market.

Differentiation: Players in the electronic equipment industry are likely to adopt the differentiation strategy for the purposes of achieving high quality that can attract an average price. This means that companies in the industry would wish to provide their customers with the highest perceived added value. In this context, FLIR Systems concentrates on the product quality and branding while trying to retain customers (Altuntas et al. 2015). Despite having long term contracts with the buyers, FLIR systems would rarely take advantage of this but rather choose to be innovative and integrate technological advances in the course of the production process. While trying to be the industrial leader, FLIR has consistently encountered competitive pressure from such small firms like Boeing and Raytheon. This compels the company to rigorously enhance research and development.

Focused Differentiation: This section points at the positioning strategy in which the exclusive and luxurious brands aid quality products provided at high prices. Firms are largely attracted to making use of targeted segmentation, distribution and promotion thereby leading to higher profit margins. Competitors are believed to be in the same group and they ultimately keep tracking prices set by other players (Sonenshein et al. 2017). FLIR is consistently in pursuit of high quality as far as imaging equipment is put into consideration. While FLIR may not improvise the entire focus differentiation, competitors such as Harris and L-3 Communications have consistently been keeping the company under check in terms of prices and performance of the brand.

Risky high margins: When a firm makes use of this strategy, it would end up charging high process in which consumers tend to perceive the value of the products as mediocre. In the long run, the move is likely to attract more risks and jeopardizes the position of the company in the market. Consumers, in this context, have a tendency of cutting their losses as well as look for good quality within the same price range (Desai 2019). FLIR Systems would consistently be concerned about the quality and the reasonable prices offered to the loyal consumers. Notably, FLIR Systems would avoid any circumstances and conditions that are likely to attract mediocre prices.

Monopoly Pricing: It is worth noting that the strength of firms said to position themselves as monopolies in the market lies behind their capacity in offering a unique product within their segment. As a result, the companies would not express any fear of competition. The available choice for consumers is to either take the products or not. A revisit on the threat of new entrants in the electronic equipment industry points at huge capital upfront, the saturated market and the low margins (Echchakoui 2018). Despite being an industry leader, FLIR systems would rarely wish to take advantage of the monopolistic powers at its disposal.

Loss of market share: perhaps, this may not be enviable for any competitive firm that wishes to survive in the market. This implies that a firm stands little chance in offering the product or even the service valued by customers. If the prices are too high, most of the consumers would tend to stay away. Companies falling under this segment would go for a standard price for the products that tend to be competitive. It is worth noting that FLIR generates revenue from bulk orders tapped from the domestic as well as foreign government contracts (Aithal 2017). The company also relies on global shipment, contracts and defense spending. However, the attempts of FLIR to stand out as an intermediary would make it lose its market share as far as the supply chain processes are put into consideration.

Strategic Group Analysis

Strategic Group Analysis focuses on the player’s positions within the competitive environment as well as the underlying factors said to determine the firm’s profitability. This is aligned to the competitive dynamics across the electronic equipment industry. The notable players are likely to fall into strategic groups, which can be chosen on the basis of the industry structure, project issues and the profitability factors (Hyder et al. 2010). The creation of the strategic groups in the industry can be aligned to such dimensions like specialization, push vs pull, product quality, technological position, channel selection, vertical integration, price policy, government relationship and financial or operating leverage.

FLIR Systems has a pool of competitors that compete on large scale and small scale as well. The SGA considers mapping strategic resources, power ranking, and identification of strategic groups, Venn diagram of conflicts and the sequential pattern analysis. Some of the factors used while mapping the companies include the range of employees, revenues accrued; range of market served and evens the type.

The map below shows the position of the group of competitors

The map shows that FLIR system has a wide range of products and has little resources when compared to such giants like Lockheed Martin, Raytheon, General dynamics and Boeing Co among others. However, this does not imply that FLIR Systems has few resources in the practical sense but scores a lesser ratio when compared to other companies in the Electronic Equipment Industry. Firms such as Textron Inc, Ingersoll-Rand Plc and Thomas $ Betts Corporation have more resources but are ranked below FLIR systems because they score less in terms in terms of the market size and the range of the products or the strength of the brand. Perhaps, this denotes the fact that FLIR Systems has improved in terms of marketing and promoting its own products. Sifco Industries Inc and Sorl Auto have more resources but still fall under Group 7 in terms of the Rank power (Hyder et al. 2010). This implies that the involved firms have invested less in terms of branding or marketing the products thereby leading to low performance hence less rank power as compared to the group that carries FLIR Systems. However, the SGA can change with time as a result of the market dynamics and entry of the small scale firms that can introduce the substitutes.

Activities and Resources of the Company

FLIR Systems is known for developing and producing products for the three business units known as government and defense, commercial and industrial. The instrument division, categorized under the industrial business unit, is essentially managed from Taby. The place also hosts the largest development operation known to cover product development as well as research based activities. There is also the final assembly of camera as well as the advanced manufacturing facility aligned to optical element. Taby equally hosts marker-focused and customer-based operations, which also support key functions like Information Technology, human resource, quality and finance. FLIR systems equally pay a significant attention towards materials and substances as far as pollution is put into consideration. This can be aligned to the energy resource and emissions. The company delivers cameras with the help of air freight, which also consumes a lot of energy. FLIR, through its departments is working out every means to reduce the energy consumption. In terms of human resources, the company has the best working environment and the best workforce while providing everyone with equal opportunities. The workforce is more brave, ambitious, ready and bold at the same time.

Company’s Organizational Culture

FLIR does not have a clear organizational culture that shows the organizational culture. However, FLIR still has in possession a strong design culture. The culture is known for guiding all the business segments around the world. The unique design attributes are said to have boosted brand recognition while securing the FLIR design rights. Apparently, customer insights form part of the natural part of the essential innovation process (Cromwell and Banks 2012). The portfolio for FLIR product avails the low learning threshold as well as the greater ease of use. This subsequently would make the products easier to n market as well as sell. The design strategy has attracted major savings for the company as far as the efficiency of the design process is put into consideration. This is commonly denoted as the design investment in the face of the design culture (Hollander and Baghai 2012). The company, as a result of the design culture, has emerged as a leader in terms of the innovative design. In the face of the design culture, the company has managed to influence the world-class perception as well as increased awareness of the devices. With the recent performance of FLIR, the company is aligning the operating segments towards its culture for the purposes of impacting the long term growth.

Stakeholders of the Company

The stakeholder analysis points at the significant process involved in assessing the system under consideration to ascertain potential changes associated to the interested parties, who are also the stakeholders. The information is applied in assessing how the significant interests of the stakeholders can be addressed in a given program, project, plan and even actions among others. For FLIR Systems, it is good to consider the primary, secondary and even tertiary stakeholders. For the primary stakeholders, this is the most affected lot as a result of the organizations actions while the secondary ones constitute the intermediaries. The tertiary ones are normally affected the least. With the help of the power interest matrix, FLIR can identify the following elements as indicated in the figure below.

Before developing the stakeholder mapping for FLIR Systems, it is good to identify the stakeholders aligned to the company and the kind of power each has, the kind of resources assigned to the stakeholders, control strategic resources, special knowledge and skills and the negotiating position. The ones regarded to be of high importance and yet they have low influence to FLIR systems include the directors, partners and the upper tier sponsors (Hyder et al. 2010). The ones regarded to be of high importance; high influence and can make a difference include the consumers, contractors, employees, suppliers and the security departments. The ones regarded to be of low importance and low influence include the low tier sponsors, banks, shareholders and the community, which is more concerned about the environment. The ones regarded to be of low importance but have high influence include the media, competitors and research departments. The table below shows the stakeholder mapping for FLIR systems based on the analysis above in Figure 2.

Conclusion

The report has conducted a strategic analysis and evaluation for the FLIR systems. The background revisited the history of FLIR systems, which is perceived as the global largest commercial company that dwells in imaging sensors, thermal imaging components and cameras. Further observation of the basis of competition was supported by the Bowman strategy clock and the porter’s five forces. The analysis noted that the threat of new entrants is low while suppliers have less bargaining powers. The threat of substitutes is low as well but the industry remains highly competitive. The Bowman’s clock proposed on both the pricing and differentiation strategy while aiding development of high quality products. The discussion further noted the competitive position FLIR Systems takes in the market. Further comparison of resource led to the fact that the industry has giant players said to challenge the position of FLIR systems. Furthermore, a recheck on the stakeholder analysis established the power interest matrix for the company.

Dig deeper into Business Success Through Consumer Needs and Delivery with our selection of articles.

Recommendations

While the company has established long term goals, most of them have not been achieved as a result of the market dynamics and the rise of consumption trends. This has led to the recommendation of the following

FLIR Systems needs to establish a comprehensive differentiation strategy for the purposes of developing more unique products as noticed from the Porter’s five forces

FLIR systems needs to work on its pricing strategies to address the loopholes noted in the Bowman’s strategy clock

References

Tarin, M., and Rotolante, R. 2011. NDT in composite materials with flash, transient, and lock-in thermography. FLIR Systems, Inc, 1-4.

Hyder, A., Syed, S., Puvanachandra, P., Bloom, G., Sundaram, S., Mahmood, S., Iqbal, M., Hongwen, Z., Ravichandran, N., Oladepo, O. and Pariyo, G., 2010. Stakeholder analysis for health research: case studies from low-and middle-income countries. Public health, 124(3), pp.159-166.

Hensgens, J., Van Bruggen, J., Spoelstra, H., Rusman, E., De Croock, M., Burek, G., Braidman, I., Smithies, A., Trausan-Matu, S., Rebedea, T. and Dessus, P., 2008. D3. 1 Use cases, scenarios: guidelines & existing services.

Hollander, M.B. and Baghai, S., 2012. Interfacing devices and systems. U.S. Patent Application 13/385,759.

Cromwell, B. and Banks, C., FLIR Systems Inc, 2012. Infrared camera filter wheel systems and methods. U.S. Patent 8,223,206.

Holloway, S., 2018. Changing planes: A strategic management perspective on an industry in transition. Routledge.

Aithal, P.S., 2017. Industry Analysis–The First Step in Business Management Scholarly Research. International Journal of Case Studies in Business, IT and Education (IJCSBE), 1(1), pp.1-13.

Ruiz, S.N., Castro, H.N., Berra, A.V. and Perez, M.G., 2015. Recycling of Waste Electrical and Electronic Equipment as a Strategic Line Tangential of Circular Economy. European Scientific Journal, 11(7).

Haselwanter, S., Muskat, B. and Zehrer, A., 2016. Strategic Planning in Micro Businesses: Adapting the Strategic Clock for Micro Firms.

Echchakoui, S., 2018. An analytical model that links customer-perceived value and competitive strategies. Journal of Marketing Analytics, 6(4), pp.138-149.

Desai, C., 2019. Strategy and Strategic Management. In Management for Scientists (pp. 65-84). Emerald Publishing Limited.

Sonenshein, S., Nault, K. and Obodaru, O., 2017. Competition of a different flavor: How a strategic group identity shapes competition and cooperation. Administrative Science Quarterly, 62(4), pp.626-656.

Altuntas, M., Rauch, J. and Wende, S., 2015. Strategic Group Performance and Dynamics under Different Economic Conditions. The Geneva Papers on Risk and Insurance-Issues and Practice, 40, pp.47-65.

D'Elia, G., Umberto, M., Mucchi, E., Bart, P. and Patrick, G., 2018. Drives power reduction procedure to fill in the multiple-input multiple-output random control reference matrix. In ISMA-USD Noise and Vibration Engineering Conference 2018 (pp. 1-11). P. Sas.