CHAPTER 5: RECOMMENDATIONS
5.3 STRATEGIC ANALYSIS
The new BEE codes require the firm to obtain 65% score of which the firm has been able to achieve 40% from the equity ownership, management and social development (SETA Newsletter, 2005). In order for the firm to achieve 65% it must include the skills development and employment equity categories of the BEE codes. The firm does not rely on suppliers and therefore would be unable to target the preferential procurement categories. The skills development would ensure continuous learning and development of the semi - skilled workers and artisans.
Technical skills shortages are a major threat facing AMS. The skills shortages and Eskom's expansion would create lucrative opportunities for the firm's artisans and technicians to obtain employment at the larger companies. These companies would be able to provide the incentives and the security required by the artisans. AMS would be unable to retain and attract suitably qualified and experienced artisans because it is a small to medium enterprise. It is therefore recommended that AMS continue to utilise the semi - skilled workers on the plant. A proper training programme must be developed to ensure that the semi - skilled workers are competent. The training programme must be customized to the power station process, technical systems and be able to enhance the employees ability to perform tasks without supervision. This also affords AMS the opportunity to retain the low cost advantage of utilizing semi - skilled workers.
Contractors within Eskom power generation are required to adhere to the environmental laws. The firm does not adhere to these laws. It is therefore recommended that AMS train the supervisors and directors on the subject of the environmental requirements and develop an environmental management system which must be implemented throughout the organisation to ensure legal compliance.
The firm is legally required to ensure a safe working environment for all the employees.
The analysis in Chapter Four indicates non - compliance to safety regulations. The company currently regards safety as a non - core function. AMS could lose the contract due to non - compliance and legal action could be taken against the direetors and
management. It is therefore extremely important for the directors to implement the safety management system throughout the organisation to ensure the safety of workers, customers and directors. It is recommended that safety management become a core business function and that the required legal safety officer and safety representative appointments are made.
The analysis in Chapter Four has indicated the threat of the new maintenance techniques of online condition monitoring which reduces the amount of time based maintenance.
The time based maintenance is a core business function for AMS. The power generation industry has been slow to adopt these new techniques. The older power stations will most probably adopt these new techniques because of the need to reduce maintenance costs and extending the life cycles of the equipment and machinery. The company is therefore recommended to monitor the customer buyer behaviour with respect to the online condition monitoring techniques.
The AIDS epidemic is a huge threat in South Africa which affects labour productivity.
Companies in the near future will be required to provide compulsory medical subsidies to the employees. AMS must therefore monitor these future requirements and initiate strategies to include medical benefits as a cost to prepare for the future.
The industry analysis has revealed that the contract maintenance industry is gomg through a growth phase created by the return to service of the previously mothballed power station. These contracts have been contracted to Roshcon which is a subsidiary of Eskom and receives preference over other companies. The existing power stations have also begun to contracting some of the maintenance functions to existing employees.
AMS has been unable to target the growth due to imperfect market conditions. The company has been positioned as a preventative maintenance solutions provider and has been targeting the other power stations with the current services to achieve growth. The other competitors such as Roshcon would be able to build resources, capabilities and core competencies and compete with AMS over time for the Majuba contract. It is therefore recommended that the firm repositions itself in the market to achieve growth and a competitive advantage. The s.ervices offered by the firm are easily imitated. This
is because the services being offered are generic and can be provided by the other smaller contractors. The strategic choice section will indicate the recommendations with respect to the strategic choices the firm must make.
The competitor analysis demonstrates the increased competitiveness in the near future within the generic contract maintenance industry. The competitiveness is created by the growth in demand for contract maintenance within the power generation industry. The imperfect market conditions place AMS in a weaker competitive position for the near future. If AMS continues to provide the current services in the near future the fum is positioned to lose the current contracts. It is recommended that AMS change its strategic position to remain competitive and protect the current contracts. The firm must provide services and products which the competitors are unable to provide.
The stakeholder analysis has indicated the director's inability to perform strategic analysis and planning. The directors must therefore monitor the customer trends and requirements, the strategies of competitors, and political or legal regulations on a continuous basis. The customers currently seek contract maintenance services at a low price with highly differentiated quality and safety management systems to ensure a reduction of maintenance costs. It is therefore recommended that AMS include safety and quality as core business functions to ensure a reduction of plant failures.
Functional capability and resource analysis indicates that AMS provides a breakdown approach to maintenance. The approach is not aligned to the strategic position chosen by the firm to provide a preventative maintenance service. Quality and safety are not implemented throughout the organisation. The current low cost strategy of utilising semi - skilled workers is not aligned to the process of AMS providing a differentiated preventative maintenance service. The semi - skilled workers and artisans are unfamiliar with the plant process, technical systems and the quality and safety management systems. The company currently has many integration problems with the engineering and operating departments. The root cause analysis is controlled by the engineering department which lack the urgency, as this is seen as a maintenance function. The planning function is redundant and does not add value to the customer. The structures in
the following sections on strategy implementation will provide the recommendations on how the firm must resolve the above problems.