Situational Analysis

SARAWAK INFORMATION SYSTEMS SDN BHD (SAINS) Contents SARAWAK INFORMATION SYSTEMS SDN BHD (SAINS)1 CHAPTER ONE4 1. INTRODUCTION4 1. 1. Mission, Vision and Core Values of SAINS4 1. 2. Core Competencies5 2. CHAPTER TWO6 2. 1. SAINS Environmental Analysis6 2. 2. SAINS Key Drivers of Change8 2. 3. SAINS Value Chain8 2. 3: 5 M’s of Marketing11 2. 4. Porters 5 Forces of SAINS12 2. 5. Internal analysis and External analysis13 2. 6. Applying Direct Policy Matrix16 2. 7. Potential Strategic Challenge/Issues17 2. 8.

SAINS Marketing Objectives19 3. CHAPTER THREE22 3. 1. ANSOFF MATRIX22 Market Penetration22 Market Development23 3. 2. SAINS Marketing Mix24 Product / service24 Promotion24 Price25 Place26 People26 BUDGET AND FINANCIAL FORECAST FOR NEXT 3 YEARS28 CHAPTER FOUR33 4. RECOMMENDATION33 Value33 Rarity33 Imitable33 Organizational Knowledge33 5. CONCLUSION34 CHAPTER ONE 1. INTRODUCTION Sarawak Information Systems SDN BHD (SAINS) is a leading ICT System Integrator and Solution Provider in the state of Sarawak, Malaysia.

Relevant materials: Corporate Communications

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SAINS Integrated Court Solution (ICS) won the United Nations’ World Summit Award in 2009 as one of the World’s Best e-Content Application products in the E-Government and Institutions Category. This achievement was the outcome of evaluations by eminent experts from 34 countries on 545 finalist submissions from 157 countries (SAINS. com. my. , 2011) In fulfilling their commitment to their clients, SAINS operates a 24-hour Call Center and Data Centre, servicing over 18,000 users for over 200 Business Applications, Hardware and Network Support. 2. 1. Mission, Vision and Core Values of SAINS

SAINS Mission statement is to be the long term ICT Solution and Service Provider based on mutual value creation and trust. They are set out to make SAINS the preferred IT solutions provider by providing and supporting project management services on IT solutions services to achieve project implementation that is within a defined scope, schedule, budget and achieving customer satisfaction. SAINS Vision statement aims to envision, innovate and advance the quality of ICT software and services in the region. SAINS Core value is the passionate pursuit of excellence in IT services.

Fig1-1: SAINS Core Value SAINS Pursuit of Excellence Trust in People Customer Orientation 2. 2. Core Competencies In making out core competencies, a company has to make a contribution to the customer’s benefit of the product which is difficult for the competitors to imitate. This could be more attainable when companies focus on internal development. SAINS core competencies are as follows: 2. 3. 1. Specific services SAINS provides major services across Sarawak. Services include; * Data Conversion and Digitization * Geographic Information System Applicant Software Development & Integration * IT project Management * IT Training * Management Services * Call Centre 2. CHAPTER TWO In recognizing a company need there have to be a creative process, an organized thinking, disciplined mind and a looking out for challenging situations. In other to know exactly what is needed, the situation have to be analyzed. 3. 3. SAINS Environmental Analysis This sector focuses on the market environment so as to identify the needs and to analyze specific marketing and business problems in SAINS. 3. 4. 2. PEST Analysis of SAINS Political Aspect SAINS is protected by the regulations and policies formulated by Sarawak government * SAINS formulate their own protection strategies against governmental restrictions and limitations * The organization has been able to adapt to the policies given by each government to make sure that the company will be able to conduct business operations successfully and effectively. * The political environment of Malaysia is not really that stable, the government of Malaysia makes the countries plan for the future and also for most business. SAINS is also affected by the every 5 years plan that is made by the government. Government task just like every other company in Malaysia SAINS is also entitled to paying all government task to keep the business running not withstanding that the company is also funded by the government. Economic Aspect * SAINS has a steady and successful economic stability being the leading ICT System Integrator and Solution Provider in the state of Sarawak. * Despite threat that SAINS encounter in different parts of Sarawak, their management sees to it to struggle and strives to have better economic condition. * The rate at which interest rate affects SAINS will be very low since it’s the best in providing Sarawak with all I.

T services and being funded by the government it would be less affected by interest rate. Social Aspect * SAINS considers it as a compulsory factor to possess good reputation and relations in the society that they belong. * Kuching is well open to new IT development and changes which SAINS provides. * SAINS tries harder to make sure that each ethnicity in Kuching is given equal chances to take advantage of the resources given by the organization. * SAINS is a company that employs both the Malays and Chinese people with no issues of what religion you serve.

This shows the point that SAINS and the Malaysian government proves its point on the SATU MALAYSIA (one Malaysia) showing that the government of Malaysia has a good view on culture and religion required for SAINS effectiveness. * Despite different cultural context, SAINS uses a common language of English and Bahasa Malay which quells communication barriers. * With the convergent aid of growing technology, SAINS have been able to make lots of innovations on its products. * SAINS is currently Providing ICT training secondary school students in Lawas, Limbang, Betong, and Asajaya areas.

They are also promoting the use of e-government services such as applying for jobs, scholarship, paying bills, and many more. Technological Aspect * The Malaysian government has recognized that ICT would serve as a foundation condition that would transform Malaysia from a P-based economy to K-based economy. * Partnership with companies such as, Hp, cicso symmantec, oracle and Microsoft help the company to drive towards innovation and development in their services. The partnership enabled relatively stronger research and development in their service 3. 4. SAINS Key Drivers of Change

Demographic Shift SAINS focus has shifted not only in Kuching but also to other parts in Sarawak. However they can still shift focus on other lower economic countries such as Indonesia where competition is less. Disruptive Innovation SAINS must create a new market and value that surpasses that of any substitute company. With increase of technology, changes develop in the IT world as things become less complex and more dynamic. SAINS will be forced to evaluate new market options that will best exploit and fit into the requirement and uniqueness of their capability. Reshaped Global Power Structure

This demands that SAINS have to take the bull by the horn by being selfless in their marketing, not just by providing what customers wants but also putting it in a way that can’t be merely comparable or imitable to that of competitors. Government regulations could become less strict and attracting for foreign ICT firms to enter thus creating intense competition for SAINS. However with the liability of foreignness, SAINS has a competitive edge. 3. 5. SAINS Value Chain Value chain is a chain of activities that required bringing a product from its conception to its final consumers (McCormick & Schmitz, 2001).

The value chain provides an important construct that facilitates the understanding of the distribution of returns from different activities on the value chain (Kaplinsky & Morris, 2001). SAINS using ICT consuming services has put their services into informative, integrative and interactive. However, informative is the basic form in which the ICT is used by the society in Kuching. In this form, SAINS uses the internet as a medium for disseminating information through their website but have failed to increase this information to a broader reach via Media.

The interactive serves as a two way communication mode whereby SAINS do not only use the internet to disseminate information, but also to collect information. The medium becomes more transactional in nature. In this context, the internet is used by SAINS to offer better services to their customers at minimized cost taking into account the preferences and desires of every customer. Fig 2. 1: Interactive use of ICT in SAINS Sourcing/collecting Information SAINS Interface to customers Networking with branches Information Dissemination

There are several components in the above chain, each of which is likely to be affected by a host of factors: Fig 2. 2: Value Chain in SAINS services flow Design Product development Dissemination / Distribution ICT SAINS use Information and Communication Technology as weapon to react to competitive threats, or to seek new opportunities by offering new services. SAINS uses ICT to * Reduce the costs of information exchange * Collect data to better understand their customers’ behaviour * Offer new products or services * Improve their performance 2. 3: 4 M’s of Marketing

In setting SAINS Business problems right, the 5 M’s of marketing will be conducted. These include Mission, Money, Message, Media and Measurement. Mission Since SAINS Mission is to be the long term ICT Solution and Service Provider based on mutual value creation and trust, it has to choose an advertising means that proves them right. The advertising objective has to be persuasive, informative and reminding. SAINS target audience are wide ranging from IT students, IT related businesses down to Government agencies, thus their advertising mission must conform to six buyer readiness stages in the figure below.

Fig 2. 4: Buyer Readiness Stages cited by Awareness Purchase Conviction Liking Knowledge Preference Message Message contains appeals and themes designed to produce desired result. SAINS advertising message must transfer generic, pre-emptive, unique selling proposition, hyperbole and comparative meaning to the target audience. At the same time, the advertisement should portray some personal values such as self-fulfilment, comfortable life, happiness, security and in most cases inner peace. Media There are two ways of choosing Media; Personal communication method and Non-personal communication channel.

The personal communication method includes face to face, phone, mail, and internet chat. However, Non-personal communications will be more effective for SAINS to use. This includes the use of media, atmosphere and event. Knowing SAINS target audience and media habits, a communication method that can reach out to them frequently with positive impact and proper exposure of SAINS services will be best fitting. The most effective media coverage will be Internet, television and Kuching’s popular newspapers such as Borneo Post. Measurement

Exposure and awareness is what advertising does, but it is not how success is evaluated. The purpose of advertising for SAINS is not just to create awareness but also to produce a measurable response that advances a sale over a period. In doing so, SAINS will be able to quickly identify those tactics that aren’t working and make a change to it. 3. 6. Porters 5 Forces of SAINS Threat of new entry There has been a very positive development within the information and communication technology industry in Malaysia. Malaysia, in general has developed a strong and diversified ICT industry.

However, SAINS partnerships and alliances with leading technology firms and its connection with government entities have created a strong market thus causing entry barrier to be high. New emerging ICT Company must have such strong advantage or will be squeezed out of the picture. Threat of substitutes With advance rapid technology, the web hosting business might be the biggest threat of substitute for the server products in the world where organizations can make their own website accessible through the World Wide Web.

The advantages of web hosting include low cost, tech-support, easy to manage and low switching costs. Also, the advanced personal computer might be another threat which could possess software that makes some of SAINS services accessible to clients. Bargaining power of customers In recent years customers have a strong bargaining power since IT business services have grown rapidly but since there are few substitute in Kuching, SAINS gains an advantage given that customers are in a weak bargaining power. This as a return creates an ideal competitive environment.

Bargaining power of suppliers SAINS has no bargaining power over their suppliers since the company has its contract and business to business agreement with their suppliers, this agreement is based on innovation and creating of new opportunity and software programs for their business services and switching suppliers would be very expensive for the company. Intensity of competitive rivalry SAINS being recognized as a leader among government in Kuching for cost effective deployment and efficient utilization, faces low intensity of competitive rivalry.

However, its branches outside Sarawak must be conscious of other IT providers such as VADs, IBM, and MSC. 3. 7. Internal analysis and External analysis Fig 2. 5: Internal and External SWOT analysis Situation Analysis Internal Analysis External Analysis Strength Weakness Opportunities Threats 3. 8. 3. SAINS Strength Strength – SAINS 24 hour Call centre SAINS operates a 24 hour Call Centre and Data Centre resulting in a public access anytime and anywhere. This provides room for customers to pass and receive useful information at any urgent time of the day regardless of time differences.

Strength –Own major branches in Sarawak SAINS operates its Business Development & Corporate Communications Unit, Training Centre and Call centre in two different locations in Kuching. Also they have branches within major parts of Sarawak which are Betong, Bintulu, Kapit, Limbang, Miri, Mukah, Sarikei, Sibu and Sri Aman. Strength –Own market power Having a solid mainstream technology and a recommendable recognition with Sarawak government, SAINS have achieved a maximum market power in addition to few substitutes in Kuching. Strength –Control both Government and public contract

SAINS gets contract from both Governments and public as they operate business to business and business to customers with effective deployment of IT services. Strength –Partnership and alliance with leading technology firms SAINS has good partnership and alliances with leading technology firms and hardware manufacturers in the industry which allows them to achieve their goal. These partners include Sun, Hp, Cisco, Symantec, 3com, APC, Mlabs and Damatation SDN BHD, Microsoft, Lotus, Autodesk, Trend Micro, Adobe and ESRI (Sains. com). 3. 8. 4. SAINS Weakness

Weakness – Lack of motivation resulting to dissatisfaction of workers It is difficult for employees to carry out their basic duties when they are dissatisfied. This often results to poor productivity not only on the part of the employee but also on the part of the company at large. Weakness – Limited advertising Advertising is an important means for facing competition. A limited advertising therefore limits the chances of SAINS to confine Kuching IT market as competitors position the opportunity of having an upper hand. Weakness – Lack of Transparency

SAINS annual report is not accessible to the public thus blocking transparency that causes complexity. Complexity can hide the reality about financial condition. This leads to huge doubt in the minds of investors and can cause absurd behaviour among potential stockholders. 3. 8. 5. SAINS Opportunity Opportunity -Training the illiterate local into the IT field SAINS have a developed ‘right program’ to support and grow the use of ICT among communities in rural Sarawak using the current State ICT organizational infrastructure; and ultimately, better the lives of those living in rural ommunities through the use of ICT. With knowledge and skills well transferred, SAINS has potential IT gurus leading the IT world to the next level Opportunity –Expansion to other states 11 Divisions of SAINS all around Sarawak and still growing into new locations. SAINS recently signed an MOU with Multimedia University (MMU) to pave the way for greater collaboration between the two organizations in the area of Medical Information Technology or Health Informatics. 3. 8. 6.

SAINS Threat Threat – Challenges of external Market Growing outside the state of Sarawak and going global could pose few threats to SAINS as they will find it tough to respond to the challenges of the global market, changes, complexity and competitions. 3. 8. Applying Direct Policy Matrix This matrix measures the health of the market and their strength to pursue it. The results indicate the direction for future investment. The recommendation may be to invest, grow, harvest or divest.

Looking at SAINS 5 porters, it is seen that the company having high entry barrier, few substitutes in Kuching, weak bargaining power of customer and low intensity of rivalry has therefore created an ideal attractive market. Also, with its Business strengths showed in the SWOT analyses and less weaknesses shows that SAINS business strength level is on a high side. Consequently, an analysis of SAINS position is on ‘Invest’ in view of the fact that there is high market attractiveness and high business strength. SAINS 5 porters SAINS transparency Product/ Services Quality Customer Loyalty Experience Fig 2. : Self-sketch on SAINS Direct Policy Matrix High GROW INVEST Market Attractiveness HARVEST DIVEST Low High Business Strength Low This conveys that those factors in ‘Invest’ are the ideal quadrant. SAINS strengths are focussed at a highly attractive market. It’s best advisable for SAINS to Invest their best resources in those parts which are in the invest quadrant. Having established and operating for 20 years, SAINS must put more effort as to maintain and sustain experience which is an attribute that creates a competitive advantage over competitors.

SAINS transparency lies in an uncomfortable quadrant of growth in the sense that its financial details are kept confidential with an attractive market potential but fails to exhibit the company’s confidence to the public and potential stockholders to see. SAINS customer loyalty needs an upgrade in order to be sustained since it lies in the harvest quadrant indicating high strength in a market but has lost its attractiveness in terms of future potential. Customers in this position may be loyal due to weak bargaining power and few substitutes.

Therefore, it is recommended that SAINS increase customer loyalty not just to provide satisfaction but also benefits. 3. 9. Potential Strategic Challenge/Issues Every company begins with the intent of making revenue and gratifying consumer’s want but however some ignored issues or unchecked practices have placed them in a long run to failure. Despite SAINS leading power, the following are marketing issues it will face in the nearest future. From the above analysis, it’s clear what the future is likely to offer but the question lies on whether SAINS has seen ahead of this already?

What have they done so far to prevent these marketing issues in the next 12-36 months? Decline due to less Advertising SAINS has less expression and communication as it does not advertise which is an advantage to its competitor’s. This is an issue because advertising is one of the many marketing tools that are used to attract attention of prospective customers to a business or its products or services. The more effective of an advertising campaign, the more customers it draws, and with greater frequency (Anthony Samuel, 2007). SAINS saves a lot of money by not advertising a cost which its competitors reclaim in the price of their services.

It is well known that advertising helps a business to be more known and increases sales, then why haven’t SAINS taken it very severe? The sketch below shows SAINS lack of advertising future using the Product Life Cycle (PLC) Fig 2. 7: Self-sketch of PLC on SAINS lack of advertising Maturity Advertisement of competitors Unawareness by distant costumers New Kind of Customer

Growth present Decline Future: Advertising in 12-36 months Limited advertising decrease demand, reduce markets and limit sales of existing products. Limited advertising in the long run hinders SAINS from generating new customers and entering into new markets. Advertising is helpful in introducing new products by creating awareness and gain their acceptance.

With limited advertising, SAINS would be unable to inform consumers about any new development in product and services thus quelling customer’s interest and persuasion. Consequently, limited advertising will gradually reduce the level of awareness and acceptance as it limits the chances of persuading and getting customers interested in their service. Poor productivity due to poor Employee morale A company’s success frequently depends on the performance of the employee, and performance appraisal of employee should be conducted regularly which will lead to improvement of work quality.

When employees are not recognized and valued by SAINS, the employee’s morale becomes low resulting in high employee turnover cost thus leading SAINS into low productivity. By implication therefore, if employees are dissatisfied, there would be a drop in their level of productivity as well as that of the organization which is not profitable for the latter. High Employee turnover cost SAINS stands the chance of losing their employees in the next 12-36 months to another company especially for those workers after intrinsic motivation. This in return would incur more expenses on SAINS such as training expenses and hiring of new employees.

In addition to this high turnover does not allow for continuity and this can have negative effects on the SAINS performance. 3. 10. SAINS Marketing Objectives SAINS goal is to imagine, innovate and advance the quality of ICT software and services in the region. SAINS objectives to achieve this goal must point out the SMART criteria. In achieving these goals in passionate pursuit of excellence, SAINS has to develop an increase awareness strategy of 40% via advertising in the next 12 months. From fig (2. 2) indicates SAINS potential decline due to limited advertising. This will boost up awareness and recognition from the public at large.

Malaysia being a mixed economy, give SAINS more privilege to involve the government and major multimedia corporations to promote their awareness plan through advertising. This could be done by appointing recommended and experienced people with good skills in advertising and designing. This awareness should be conveyed through posters, TV, radio and Press editorial. SAINS has to extend Staffing and Training program to 2% in the next 12 months since they are dealing with servicing clients which are People and considered a crucial aspect. The employees have to get full understanding and agreement on where SAINS is aiming to go.

This could be done as on-the-job training which would be supervised by SAINS superiors or managers. SAINS should further their Customer loyalty to 3% so as to meet up with clients expectations thus encouraging customers complaint which serves as a service providers barometer. This is required so they can put at ease and give explanation to client complains and reduce the chances of them complaining to someone else with appropriate corrective action to prevent a recurrence. SAINS aims to achieve a market share of 30% by 2012. This action must be carried out by changing price or offering incentives to customer.

This means that every month market share targets can be measured against SAINS goals. Advertisement has to be measured from the very beginning. In measuring and recording advertisement effectiveness, SAINS must ensure that every enquiry is greeted at some stage with question ‘How did you find us? ’ or ‘How did you hear about us? ’ TV or radio advertisement can be measured via the use of unique phone number, special offers or reference to a specific department to call for information. Again, when those calls come, SAINS call centre must be prepared to record the information so results could be tallied for the particular spot.

Increase employees Hierarchy of needs to 5%. This builds motivational plans of satisfying and reaching their employees needs while at the same time attaining their desired goals. It will be difficult for SAINS to achieve its goals if employees are less motivated. This could be done by increasing Job security, encouraging employees to have a sense of achievement and recognition. According to Maslow (1943) all employees that have job satisfaction are high performers in their respective. Also, Public relation effort could be measured by the number of article written about SAINS in newspaper and magazines.

This can be done in 12 months time with government budget allocated to SAINS, their resources with 11 branches and 3 major subsidiaries in Sarawak. It must be noted that a plan will not happen by itself, thus SAINS manager need to be responsible for monitoring progress and following up on overdue activities. Better R;D and innovation is required to strengthen the effectiveness and capability for SAINS to easily sustain in the market through increased quality control and de-risking. 3. 11. 7. Assumption SAINS has plans of uniqueness and being the preferred IT providers in Kuching.

With this in mind, they hope to expand awareness, sending the right accepted message to the potential clients in many ways freely available than before. This will increase their market share from 15% to 30% all over their Sarawak branches if advertisement remains constant. Indonesia having a total population of 238million people will eventually become the sole profitability of SAINS by year 2014 since Indonesia is a country that is blessed with incredible mineral riches, such as copper and gold mines but are not well endowed with advance technology like that which SAINS has to offer.

With a good assumption that economic condition remains balanced, SAINS will be able to leverage its business insights and technological capabilities to drive innovation in business models and across customers, markets and channels in order to create growth and sustainable advantage. SAINS strategy evident improvement will attract competitors into imitating new product and services before the end of the first year. 3. CHAPTER THREE 4. 11. ANSOFF MATRIX The Ansoff matrix outlines the options that SAINS has if they are willing to grow, improve profitability and revenue. Fig 3. 1: Ansoff Matrix

Market Penetration Product Development Market Development Diversification Existing Product New Product Existing Market New Market Market Penetration Market penetration occurs when a company penetrates a market with its current products. It is important to note that the market penetration strategy begins with the existing customers of the organization (Ansoff, 1957). SAINS can apply this strategy is to increase sales without wandering from the original product market strategy.

This is done by gaining competitors customers, improving customer relationship and convincing current customers to use more of the company’s product, with the use of marketing communications tools like advertising. It is necessary that SAINS abide to this strategy because retaining existing customers is cheaper than attracting new ones. The outcomes of the quality of relationship interactions are satisfaction, profitability, and positive evaluations of service provider, intentions to generate referrals, and the ability to compromise or bargain fairly (P. , Sorce. 2002).

This is why SAINS ought to engage in relationship marketing activities to retain their high lifetime value customers. Interpersonal customer relationship must be present between SAINS and their clients and personal customers. SAINS tries to maintain relationship with their customers through their 24 hour call centre service. However, they can also improve relationships with customers through the introduction sales force automation, personalizing a web site experience; and lastly, direct mail. Market Development In this section, SAINS has to find new markets for its existing IT product and services.

This could be done by identifying users of different market such as IT students in a new geographic market with similar needs of existing customers. Also, SAINS can create a new use of their multi-media production by working alongside with major film producers and sponsoring Malaysia international movies. 4. 12. SAINS Marketing Mix The marketing mix increases the three drivers of market share which are share of preference, share of voice and share of distribution. From these drivers, SAINS market share can be increased by changing the variables of the marketing mix. Product / service

Product / service are asset for any organization that can make or break the company’s revenue situation at least in the short run. Therefore success of the product is very important. SAINS offer wide range of IT services to all its clients both the Sarawak government and its publics. SAINS have a great quality of uniqueness in their service packages ranging from all types of IT service. Despite these good attributes, SAINS also can integrate its activities by signed contracts it has with few technology and software producing companies like HP, Cisco, Microsoft and Oracle.

With this they will have a competitive edge over its rivalries. Furthermore, with an experienced and resourceful management team, SAINS can build a track record of achievement dedicated towards producing enterprising solutions and services for its clients. The firm can also provide other advanced IT solutions to always stay strong in the industry by improving the performance, quality ; reliability of its clients’ businesses through designing, developing, deploying and integration of other necessary high tech custom-made application systems.

With more focus on continuous research and development, SAINS will be able to come up with better products/solutions to meet the ever changing needs of their clients in a fast and advancing information and communication technology industry. Promotion Promotion represents all of the communications that a marketer may use in the marketplace. Promotion has three distinct elements: advertising, public relations and sales promotion. Developing a strong relationship with their customers and understanding their business objectives and IT needs are principles the company carry from day one.

SAINS focus on developing and retaining its relationship with their customers by adding value through a comprehensive understanding of our customers’ current business needs and future direction. SAINS initiates ICT camp for students in Limbang. The 3-day ICT camp is a platform to create awareness among the younger generation on the importance of ICT in daily life. With a combination of lectures, demonstrations, group case studies and quizzes, students are exposed to ICT tools and software resources.

The organizers hope that the event would also draw interested parties such as government bodies, corporate bodies and local network-groups to join in the campaign to promote and source funding for ICT development and organize more ICT programs in the rural area of Sarawak. Furthermore, In order to maintain its strong imagine as the leading ICT Company in Sarawak Malaysia, SAINS need to promote its services through online presence such as Advertising through Face-book, Yahoo, and Twitter. SAINS can delve into sponsoring Malaysian international

Film and Festivals. They can also promote its services through media by using popular celebrities such as “Lee Chong Wei” as their spokesperson. This will help to boost the image of the company. SAINS needs to implement Discount strategies such as giving 10% discounts to its customers. This will be a great advantage to the company, because such discounts will attract new customers to the company and such strategy will help them gain more edge over its competitors. Price Price is an important component in consumers’ assessment of value.

Consumers often seek reasonable cost in relation to quality. Low QUALITY High Low PRICE High Fig 3. 2: Price Strategies Matrix ECONOMY SKIMMING PENETRATION SAINS PREMIUM SAINS charge their price for each service based on the hours spent in developing each client’s software and also networking and data based installations. SAINS can implement a differentiation strategy and focus more on innovation and quality. This brings out the uniqueness of their services which justifies SAINS premium prices.

Premium pricing is used where a substantial competitive advantage exists. However, SAINS needs to take advantage of its new technologies and high cash flow by giving Penetration prices for new products. This will help them have a more market dominance over its competitor and a more reliable and constant customer. Place In recent years, SAINS has extended its reach to all part or Malaysia by opening offices within Sarawak to make their offices available to all. In good implementation of creating recognition and aim of becoming a global I.

T company, in 2005, SAINS established its presence in Brunei Darussalam partnering with a prominent local IT service provider known as Zimac Silicon Technologies thus expanding more opportunities and giving rise to new valued clients. However, operating in prominent parts of Sarawak and moving into Brunei is not enough to envision, innovate and advance the quality of SAINS IT software and services in the region. SAINS will have to look in to moving in to countries with potentials like Indonesia, Philippine, Vietnam, and India.

Moving into these countries will help SAINS attain recognition in Asia and gradually around the world yielding to higher revenue. SAINS could exploit the advantage of cheap labour in Vietnam and India, providing their unique and core services to foreign Multi-National Corporation needing secured assistance with their business operation. Also, SAINS should begin an E-online customer blog, where customer feedbacks and complains along with open inquiries can be seen and accessed.

This will also help in measuring market share and business strategies which are of more or less importance to clients. People People are the most important element of SAINS services as they are the customers, investors which are required to make profit. SAINS has to bear in mind that since People deal with sensitive human views, SAINS services, attitude, skills and appearance of staff has to be first class. Since customers love doing business with friendly people, SAINS should get to know their customers closely.

One of the best ways of building such close relationship between SAINS and its customers is to impress and show them unconditional attention giving them a phone call even after their sales had been made. Also with good warranty, Customers are more secure on a company’s services. In making improvement on adding value, SAINS has to upgrade their training and development skills of training and customer services. Every new individual working for SAINS must undergo training to be acquainted with policies and approaches to deal with customers.

For an achieving company such as SAINS, ‘Off the job’ is most suitable. Attitude is very crucial as the way customer complaint is handled determines whether the customer is retained or loosed or even jeopardizing SAINS image as an IT service company. | Jan| Feb| Mar| Apr| May| Jun| Jul| Aug| Sep| Oct| Nov| Dec| Cash Flows| RM| RM| RM| RM| RM| RM| RM| RM| RM| RM| RM| RM| Salaries/Wages| 2. 5mil| 2. 5mil| 2. 5mil| 2. 5mil| 2. 5mil| 2. 5mil| 2. 5mil| 2. 5mil| 2. 5mil| 2. 5mil| 2. 5mil| 2. mil | Payroll Taxes| 1 mil| 1 mil| 1 mil| 1 mil| 1 mil| 1 mil| 1 mil| 1 mil| 1 mil| 1 mil| 1 mil| 1 mil| Bonus| 3,200| 3,200| 3,200| 3,200| 3,200| 3,200| 3,200| 3,200| 3,200| 3,200| 3,200| 3,200 | Primary Research| 41,667| 41,667| 41,667| 41,667| 41,667| 41,667| 41,667| 41,667| 41,667| 41,667| 41,667| 41,667| Advertising| 12,500| 12,500| 12,500| 12,500| 12,500| 12,500| 12,500| 12,500| 12,500| 12,500| 12,500| 12,500| Websites| 1,500| __| __| __| __| 1,500| __| __| __| __| __| 1,500| Events| __| __| __| 115,000| 111,000| __| 70,000| __| __| __| __| __| Customer loyalty| 29,166| 29,166| 29,166| 29,166| 29,166| 29,166| 29,166| 29,166| 29,166| 29,166| 29,166| 29,166| Training/Development| 25,000| 25,000| 25,000| 25,000| 25,000| 25,000| 25,000| 25,000| 25,000| 25,000| 25,000| 25,000| Telephone| 10,000| 10,000| 10,000| 10,000| 10,000| 10,000| 10,000| 10,000| 10,000| 10,000| 10,000| 10,000| Electricity| 9,000| 9,000| 9,000| 9,000| 9,000| 9,000| 9,000| 9,000| 9,000| 9,000| 9,000| 9,000| Rent | 7,000| 7,000| 7,000| 7,000| 7,000| 7,000| 7,000| 7,000| 7,000| 7,000| 7,000| 7,000| Internet| 2,800| 2,800| 2,800| 2,800| 2,800| 2,800| 2,800| 2,800| 2,800| 2,800| 2,800| 2,800 | Water| 1,000| 1,000| 1,000| 1,000| 1,000| 1,000| 1,000| 1,000| 1,000| 1,000| 1,000| 1,000 | Govt Revenue. | 10 mil| 10 mil| 10 mil| 10 mil| 10 mil| 10 mil| 10 mil| 10 mil| 10 mil| 10 mil| 10 mil| 10 mil | Services Revenue| 1. 91mil| 1. 91mil| 1. 1mil| 1. 91mil| 1. 91mil| 1. 91mil| 1. 91mil| 1. 91mil| 1. 91mil| 1. 91mil| 1. 91mil| 1. 91mil| Sales Revenue| 1. 47 M| 1. 47 M| 1. 47 M| 1. 47 M| 1. 47 M| 1. 47 M| 1. 47 M| 1. 47 M| 1. 47 M| 1. 47 M| 1. 47 M| 1. 47 M| BUDGET AND FINANCIAL FORECAST FOR NEXT 3 YEARS TABLE 3. 1: ACTUAL OPERATIONAL BUDGET OF SAINS (RM) FOR THE YEAR 2011 TABLE 3. 2: PROJECTED OPERATIONAL BUDGET SAINS (RM) FOR THE YEAR 2012 | Jan| Feb| Mar| Apr| May| Jun| Jul| Aug| Sep| Oct| Nov| Dec| Cash Flows| RM| RM| RM| RM| RM| RM| RM| RM| RM| RM| RM| RM| Salaries/Wages| 2. 7mil| 2. 7mil| 2. 7mil| 2. 7mil| 2. 7mil| 2. 7mil| 2. 7mil| 2. 7mil| 2. 7mil| 2. 7mil| 2. 7mil| 2. mil| Payroll Taxes| 1 mil| 1 mil| 1 mil| 1 mil| 1 mil| 1 mil| 1 mil| 1 mil| 1 mil| 1 mil| 1 mil| 1 mil| Bonus| 4,000| 4,000| 4,000| 4,000| 4,000| 4,000| 4,000| 4,000| 4,000| 4,000| 4,000| 4,000| Primary Research| 41,667| 41,667| 41,667| 41,667| 41,667| 41,667| 41,667| 41,667| 41,667| 41,667| 41,667| 41,667| Advertising| 13,500| 13,500| 13,500| 13,500| 13,500| 13,500| 13,500| 13,500| 13,500| 13,500| 13,500| 13,500| Websites| 1,500| __| __| __| __| 1,500| __| __| __| __| __| 1,500| Events| __| __| __| 115,000| 111,000| __| 70,000| __| __| __| __| ___| Customer loyalty| 30,000| 30,000| 30,000| 30,000| 30,000| 30,000| 30,000| 30,000| 30,000| 30,000| 30,000| 30,000 | Training/Development| 25,000| 25,000| 25,000| 25,000| 25,000| 25,000| 25,000| 25,000| 25,000| 25,000| 25,000| 25,000| Telephone| 10,000| 10,000| 10,000| 10,000| 10,000| 10,000| 10,000| 10,000| 10,000| 10,000| 10,000| 10,000| Electricity| 9,000| 9,000| 9,000| 9,000| 9,000| 9,000| 9,000| 9,000| 9,000| 9,000| 9,000| 9,000| Rent | 7,000| 7,000| 7,000| 7,000| 7,000| 7,000| 7,000| 7,000| 7,000| 7,000| 7,000| 7,000| Internet| 2,800| 2,800| 2,800| 2,800| 2,800| 2,800| 2,800| 2,800| 2,800| 2,800| 2,800| 2,800 | Water| 1,000| 1,000| 1,000| 1,000| 1,000| 1,000| 1,000| 1,000| 1,000| 1,000| 1,000| 1,000 | Govt Revenue| 10 mil| 10 mil| 10 mil| 10 mil| 10 mil| 10 mil| 10 mil| 10 mil| 10 mil| 10 mil| 10 mil| 10 mil | Services Revenue| 1. 97 M| 1. 97 M| 1. 97 M| 1. 97 M| 1. 97 M| 1. 97 M| 1. 97 M| 1. 97 M| 1. 97 M| 1. 97 M| 1. 97 M| 1. 97 M | Sales Revenue| 1. 57 M| 1. 57 M| 1. 57 M| 1. 57 M| 1. 57 M| 1. 57 M| 1. 57 M| 1. 57 M| 1. 57 M| 1. 57 M| 1. 57 M| 1. 57 M| TABLE 3. 3: TOTAL PROJECTED BUDGET OF SAINS (RM) | 2012| 2013| 2014| Cash Outflows| RM| RM| RM| | | | | Salaries/wages| 30,200,000| 30,400,000| 30,600,000| Payroll Taxes| 3,200,000| 3,400,000| 3,600,000|

Bonus | 12,080,000| 12,160,000| 12,240,000| Primary Research | 500,100| 450,000| 300,000| Advertising | 162,000| 152,000| 142,000| Websites | 4,500| 3,500| 2,500| Events | 296,000| 196,000| 96,000| Customer loyalty | 330,000| 270,000| 240,000| Training/ Development| 300,000| 290,000| 280,000| Telephone| 120,000| 120,000| 120,000| Electricity| 108,000| 108,000| 108,000| Rent | 84,000| 84,000| 84,000| Internet| 33,650| 33,652| 33,653| Water| 12,005| 12,010| 12,015| | | | | Total Cash Outflows| RM 47,430,255| RM 47,679,162| RM 47,858,168| | | | | Cash Inflows| 2012| 2013| 2014| | RM| RM| RM| Govt. Revenue| 10,000,000| 10,000,000| 10,000,000|

Sales Revenue| 18,955,900| 19,050,500| 19,100,000| Services Revenue| 23,670,550| 24,670,550| 25,670,550| Total Cash Inflows| RM 52,626,450| RM 53,721,050| RM 54,770,550| TABLE 3. 4: INCOME STATEMENT | 2012| 2013| 2014| | RM| RM| RM| Revenue| | | | Govt. Revenue| 10,000,000| 10,000,000| 10,000,000| Sales Revenue| 18,955,900| 19,050,500| 19,000,000| Services Revenue| 23,670,550| 24,670,550| 25,670,550| | | | | Total Revenue| RM 52,626,450| RM 53,721,050| RM 54,670,550| | | | | Expenses| | | | Salaries/wages| 30,200,000| 30,400,000| 30,600,000| Payroll Taxes| 3,200,000| 3,400,000| 3,600,000| Bonus | 12,080,000| 12,160,000| 12,240,000| Primary Research | 500,100| 450,000| 300,000|

Advertising | 162,000| 152,000| 142,000| Websites | 4,500| 3,500| 2,500| Events | 296,000| 196,000| 96,000| Customer loyalty | 330,000| 270,000| 240,000| Training/ Development| 300,000| 290,000| 280,000| Telephone| 120,000| 120,000| 120,000| Electricity| 108,000| 108,000| 108,000| Rent | 84,000| 84,000| 84,000| Internet| 33,650| 33,652| 33,653| Water| 12,005| 12,010| 12,015| | | | | Total Expenses| RM 47,430,255 | RM 47,679,162| RM 47,858,168 | | | | | Net Income| RM 5,196,195| RM 6,041,888| RM 6,912,382| Fig 3. 3: SAINS 3 Years Income Forecast CHAPTER FOUR 4. RECOMMENDATION It’s apparent that SAINS has a firm financial resource through the next three years.

However, for SAINS to survive and make increased revenue by 2014, its services have to go beyond threshold capabilities and emerge into more uniqueness. SAINS core competences can increase by applying VRIO framework (G. Johnson, et al. 2005) Value SAINS pursuit of happiness, trust in people and customer orientation has succeeded in developing financial and human resources which can be used to utilize its external opportunities having a good connection to Sarawak government. Nevertheless, SAINS must meet up to the demand of Kuching customers. Rarity The support and rapport SAINS share with the government body is a rare advantage. This alone challenges SAINS to be more flexible and savvier in innovations.

SAINS must ensure that their services are rare with distinctive codes of superiority. Imitable SAINS should ensure that their services are inimitable or expensive to imitate. SAINS could go further into producing services that meets customer’s dependent needs. They must keep competitors naive on their next moves. SAINS can shift their pricing strategy mix more from ‘Premium’ to ‘Penetration’ thus reducing price and increasing cost of imitation to competitors. Organizational Knowledge With experience over the years, SAINS must be able to sense changes in the environment both internally and externally. They must be updated with their software and technical services.

This will make the company more built as creativity spreads and knowledge broadens among workers. 5. CONCLUSION The antidote to complexity is transparency. High uncertainty avoidance may arise for SAINS where customers cannot tell the difference between those organisations which can meet their financial obligations and those which cannot. SAINS must bear in mind that the initial remedy to future crises is greater transparency in the form of stronger reporting requirements to the public. SAINS meeting up the satisfaction of both their customers and employees will increase their level of performance which would help attain their long term goals.

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