SWOT Analysis of MTR Corporation Hong Kong Executive Summary Transportation has played a part in human beings affairs over the years. It gave man a change to travel to different places. Transportation also provided man with the capability to transfer his/her goods, products, materials and belongings from one place to another without experiencing many difficulties. There are many kinds of transportation one of which is the modern railways. A company engaging in railway systems is MTR Corporation. The paper conducted a strategic analysis of the MTR Corporation and its strategic position. The paper performed a SWOT analysis of the company.
The paper Identified options for the future development of the organization. The paper evaluated the merits of potential future strategies. The paper also recommended courses of actions that will be implemented by the organization. The findings of the paper state that the company has two strategic options. One is resource led and the other is market led. Among the two options the market led strategic option is more desirable for the company. The paper found out that MTRC’s market led strategic option to increase its railway systems will help in accommodating the needs of the increasing number of tourists and residents of Hong Kong.
This option will help the company to maintain its good image in the industry. This option will give the company additional income. The strategic option to increase the railway system will also assist in maintaining the minimal incidents of traffic jams in the region. The market led strategic option has its limitation. . The main limitation of MTRC’s market led strategic option to increase its railway systems’ is the decreasing space allowable to create more railway systems. Executive summary Table of Contents 1. Introduction 2. Brief for the case object 3. Strategic Analysis * SWOT analysis Strategic Formulation * Strategic option * Evaluating Strategic Options * Strategic Implementation 4. Conclusion 5. References Introduction One of the distinct features of the strategy concept is the effort devoted to planning and control, so that all activities of an organization can and will work toward a common set of objectives against which their performance can be measured (Drejer 2002). The process of strategic management involves the systematic examination of a number of interrelated elements, which results in an explicit statement of company objectives and how they are to be achieved.
The ultimate purpose of strategic management is to secure competitive advantage of the organization in question (Drejer 2002). Strategies are made by businesses to be able to perform well in its industry and react well to the different problems they have encounter in their day to day operations. Companies use strategic management to maintain their standing in the market and attain some advantage over competitors. One company that makes use of strategic management is MTR Corporation. This company owns and operates the MTR system of Hong Kong and it engages in railways all over the world.
The paper will conduct a strategic analysis of the company and its strategic position. The paper will use various literatures to gather the needed data to analyze the company. The paper will perform a SWOT analysis of the company so that it can determine the company’s strategic position. Moreover the paper will identify options for the future development of the organization with regards to resource and market led strategic development. The paper will evaluate the merits of potential future strategies.
Lastly the paper will recommend specific courses of actions that will be implemented by the organization. Brief for the case object In Hong Kong the Mass Transit Railway (MTR) is a unified complex which carries throughout its entities a single semiotic system. The code preference system is uniform, but in the case of the MTR it is Chinese which is placed in the upper position, English in the lower (Scollon & Scollon2003). The Mass Transit Railway Corporation (MTRC) is one of the two government-based corporations at present operating the railway network system of Hong Kong.
At present there are 5 underground railway lines operated by the corporation serving mainly within the metro areas. They are the Island Line running along the northern coast areas of Hong Kong Island; the Quarry Bay Line running from the eastern part of Hong Kong Island through a submerged tube across the harbor to the central-eastern part of Kowloon. The Tsuen Wan Line running from Central of Hong Kong Island, then across the harbor and serves the western portion of Kowloon until it reaches Tsuen Wan. The Tung Chung Line runs from Central to the new town of Tung Chung at Lantau Island.
The last one is the Airport Express Line providing direct link from Central to the new airport at Chek Lap Kok (Council on Tall Buildings and Urban Habitat 2001). MTR Corporation belongs to the transport and property industry. It produces railway systems for Hong Kong and some other countries. The company currently underwent a merger with Kowloon-Canton Railway Corporation. The objective of the MTRC is to create and maintain an urban train system that will meet the transportation demands of the general public of Hong Kong. The company has no current competitor.
The organization will be partially studied; the study will be particularly on the operations of its railway system. Strategic analysis SWOT analysis In SWOT analysis, S represents an assessment of strengths, W weaknesses, O opportunities, and T threats. The framework is intended to provide balance by assessing both internal and external dimensions. SWOT is an accepted strategic management assessment methodology in business organizations. Used in an organization context, SWOT has a rigorous procedure associated with the analysis.
SWOT is largely based on notions of how the status quo fails to meet beliefs about what is demanded for success. Its orientation is superficial in that it treats perceived strengths and weaknesses in a generic sense as something that can be overcome by the act of planning, when in fact most strengths and weaknesses are given (Golembiewski 2000). The next figure will show the SWOT analysis of MTRC and its facilities. Strengths· The company has well maintained facilities that provide good service to clients. · The company is one of the most profitable public transport systems in the world. The company has different fares and ticketing systems for adults, students and the elderly. | Weakness· MTRC has not yet found a solution to reduce the client’s congestion during rush hour. · MTRC lacks public toilets especially in main line stations. · There are certain instances where accidents happen in the train, some client’s experience being hit by closing doors. | Opportunities· The main opportunity for the company is to expand the region it reaches and provide more services to people. An opportunity for the company is to make use of newer technologies that will provide better service to clients. · Increase public service utilities like toilets and service counters. | Threats· The main threat to the MTR and its railways system is terrorist attacks or bomb threats to its facilities and stations. · Another threat to MTR is some misunderstandings between the management and the personnel. Such threat if not solved immediately can give more problems to the company. | Strategic Formulation
Corporate strategy and its development can be considered both with respect to the general issues which are relevant to most firms, and also those which concern a decision to expand beyond national boundaries and go international (Tayeb 2000). Increased marketing and distribution efficiency as a result of supply chain management has been the focus of much of the strategic development of large retailers and their supply partners in the last decade, but retailer-supplier partnering is not only available to large organizations (Gillooley & Varley 2001).
Strategic development is a way for a company to change its focus and the strategies it uses so that it can minimize its problems. Strategic development reorganizes some of the aspects of the company so that it can perform better. Strategic development has its own current stream for development and it includes resource-led & market-led development. Strategic options A. Resource led The most effective business strategy in a period of economic concentration is to focus on the company’s core competency. The core competency may not be the product line that is creating the most revenue right now and it may not be the highest ticket item.
The core competency is what helps the company do better than everyone else. It helps them to be better than their current or potential competitors. Companies that are successful in times of concentration are those who strive to provide added value to their customers through increased focus on what they do best which is their core competency and do that by taking as much wasteful effort out of their internal system as possible (Carr ; Grantham 2002). Resource led strategic development/option focuses on changing the direction of the company and taking a look at the company’s core competency.
In this option the company’s choice of succeeding action will be based on what the environment needs, what the environment offers and what the company can afford. Since the railway system in Hong Kong is already developed, MTRC can think about focusing on property management. The company can use some areas within the region to develop properties and establishments that can be linked to their railway system. B. Market led In marketing practice, the ability to use as much detailed consumer input as possible as an aid in the strategic process is considered crucial, and thus drives significant marketing research programs.
A problem arises when the knowledge base gained from consumer research is to be translated for application to strategic planning and decision making (Olson ; Reynolds 2001). Traditional marketing research does not have a framework by which the understanding gained can be either directly assessed for the development of strategic options or can be specified in a consumer-based strategy format. The result of not having such a consumer-based strategy framework is undue subjectivity in the translation process of research findings underlying the development of advertising strategy (Olson ; Reynolds 2001).
An aspect in analysis is to consider the determinants of strategic options. A business needs to consider its characteristics that make some of its options infeasible without making major organizational changes (Proctor 2000). The market led strategic option focuses on what is needed by the market and what will create innovations in the market. In this strategic option the focus is on the company’s creativity, desire to reach the objective oriented and need to follow the theory. The market led strategic option for MTRC is to increase its railway systems to accommodate the needs of the increasing number of tourists and residents of Hong Kong.
The strategic option to increase the railway system will also assist in maintaining the minimal incidents of traffic jams in the region. Benefits of the options to the organization MTRC’s option of concentrating more on property management can help the organization to reach more markets and be familiarized with the needs of other markets. This option can open opportunities for the company in venturing to other related fields in other markets. The resource led option helps the organization to access how the railway system can be further improved to meet the requirements of correlation with the new establishments created by the company.
MTRC’s market led strategic option to increase its railway systems will help in accommodating the needs of the increasing number of tourists and residents of Hong Kong. This option will help the company to maintain its good image in the industry. This option will give the company additional income. The strategic option to increase the railway system will also assist in maintaining the minimal incidents of traffic jams in the region. This will help in making sure that the company will be able to maintain its social standing. Limitations of acquiring these options
MTRC’s resource led option of concentrating more on property management does not ensure that the company will gain a balance of expenses and profit. The property management option does not assure the company that it can get back the cost of creating establishments. The profits that will be gained might not be enough to cover the expenses. Another limitation of the resource led option is the time spent in getting permits for the creation of the establishment. The time spent in getting permits for the creation of establishments will be different from the time spent for the creation of railway systems.
The main limitation of MTRC’s market led strategic option to increase its railway systems’ is the decreasing space allowable to create more railway systems. The company will have difficulty in finding spaces in the region to place their railway systems. Among the two options the market led strategic option is more desirable for the company. The resources and time frame for the option Railroad companies could also benefit from combinations with corporations outside the business of railroading (Burns1998).
They could diversify their investment bases, secure new avenues of capital, and acquire competing modes of transportation. Diversified investment bases might allow rail carriers to withstand more effectively declines in rail traffic while obtaining needed capital from non rail holding companies or non rail subsidiaries (Burns1998). Reduced regulation, mergers with other transportation companies, and affiliation with huge diversified conglomerates helped railroads stem the decline in their share of intercity freight.
Rail carriers had access to new domestic and international markets through a booming inter modal industry, and a resurgence of the short line industry permitted the larger carriers regularly to abandon service over superfluous or marginally profitable line segments. As a result, railroads reported returns on investment at levels not seen in decades, and they boasted of highly advanced equipment and rights-of-way in first class condition. Through combinations with other systems, railroads formed the most efficient network yet realized for delivering freight to existing rail markets throughout the world (Burns1998).
Rail road systems have changed its course over the years. Due to the need to improve itself railway companies engaged in mergers to form new companies that will run the railway with much more capabilities and sources. The Rail road systems have changed in terms of the operations. Most rail systems are more automated wherein everything moves through a click of a few buttons. Rail systems have become faster and quicker in transporting people or products. Traveling using the rail systems last lesser than an hour for longer distances. Rail systems have increased security measures due to current threats on people’s well being.
Gadgets are installed in different Rail terminals all over the world. This ensures that acts of terrorism are prevented. Rail systems are now using devices that lessen waiting times. Machines have been made available that tend to provide faster way to get a ticket. The market led strategic option will require resources that include land or area to put the rail system, the materials that will be used to build the rail system, the people who will build the rail system, the safety and security devices for the system and some finance that will be used to fund the system.
If the resources will be completed, the strategic option would be completed after 3 to 5 years. Evaluating Strategic Options MTRC’s market led strategic option to increase its railway systems will help in accommodating the needs of the increasing number of tourists and residents of Hong Kong. The strategic option to increase the railway system will also assist in maintaining the minimal incidents of traffic jams in the region. The market led strategic option is sustainable since the company has a background on doing such option and it can determine what will be the problems that will be encountered as the option is implemented.
The market led strategic option is feasible and the company has enough finances to do such project. The strategic led strategic option is acceptable to both the society and members of the organization. It will not be the cause of internal or external conflicts. Strategic implementation The selected market led strategic option’s main problem at implementation will be how long each resource will be acquired. Not all the resources can be acquired by the company in one day; it will take some time and thus the other aspects of implementation will be delayed.
The critical success factors for the implementation of the option include the finances and the quality of the system. These two factors are important for the implementation of the option to be a success. The performance indicator for the implementation of the option includes the time frame of implementing the option. The length of time taken in implementing the option will serve as an indicator of how successful the selected market led strategic option is. Courses of action To implement the strategic option there are different courses of action that needs to be taken 1.
Gather the resources that will be used to implement the strategic option 2. Gradually use the resources to start the implementation of the option 3. Minimize errors so that the implementation would not take more time than expected. 4. Have alternative courses of action to make sure that problems will not hamper the progress of the implementation of the option. 5. Make sure that the option would be finished at the approximate time. Conclusion MTR Corporation belongs to the transport and property industry. It produces railway systems for Hong Kong and some other countries.
The company currently underwent a merger with Kowloon-Canton Railway Corporation. The objective of the MTRC is to create and maintain an urban train system that will meet the transportation demands of the general public of Hong Kong. The company has two strategic options. One is resource led and the other is market led. MTRC’s market led option focuses on concentrating more on property management; MTRC’s market led strategic option focuses on increasing its railway systems. References Banister, D 1995, Transport and urban development, E ; FN Spon, London. Burns, JB 1998, Railroad mergers and the language of nification, Quorum Books, Westport, CT. Carr, J ; Grantham, C 2002, Consumer evolution: Nine effective strategies for driving business growth, Wiley, New York. Council on Tall Buildings and Urban Habitat 2001, Tall buildings and urban habitat: Cities in the third millennium, Spon Press, New York. Drejer, A 2002, Strategic management and core competencies: theory and application, Quorum Books, Westport, CT. Gillooley, G ; Varley, R 2001, Retail product management: Buying and merchandising, Routledge, London. Golembiewski, RT 2000, Handbook of organizational consultation, Marcel Dekker, New York.
Olson, JC ; Reynolds, TJ 2001, Understanding consumer decision making: The means-end approach to marketing and advertising strategy, Lawrence Erlbaum Associates, Mahwah, NJ. Proctor, T 2000, Strategic marketing: An introduction, Routledge, London. Scollon, R ; Scollon, SW 2003, Discourses in place: Language in the material world, Routledge, London. Tayeb, MH 2000, The management of International enterprises: A socio-political view, Macmillan, New York. Read more: http://ivythesis. typepad. com/term_paper_topics/2010/05/swot-analysis-of-mtr-corporation-hong-kong. html#ixzz1P2orB29j
