Assignment

Emerging Business Themes

Module Code: UOWBABU006G

Submitted by Usman Saeed

Student ID: STU18243

Submission Date: 28 April, 2010

Words Count: 2,882 words

Usman Saeed
STU18243
 Table of Content
S.N. Topic Page No.

Question 1

1.1. Intorduction to MSEC 3

1.2. Introduction to Business Intelligence 3

1.3. Effects of BI on MSEC 3

1.4. Costs of Adopting BI 5

1.5. MSEC Current Plan to deal with Issue 6

Question 2

2.1. Conflict of Interest 7

2.2. How to assess conflict of interest 7
2.3. How can Conflict of Interest be resolved 8

Question 3

3.1. Strategic Alliance 11

3.2. Knowledge Management & Intellectual Capital 12

References 15

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Question 1

1.1. Introduction to MSEC

MSEC (Mediterranean Sea Engineering Construction) is a Libyan German construction company
with head office located in Tripoli and Projects Departments in Tripoli, Sirte and Benghazi.
Company has several projects in Tripoli, Sirte and Benghazi.
In construction company communication, availability of information and coordination of
activities are vital in decision making and successful execution of projects and in MSEC all these
factor for decision making and performance improvement are weak and have been affecting the
company’s performance for last three years. As company has completed many projects in last
three years and got only one new project. It has also affected the execution of projects and
performance of internal service centers. Hence it need of the time for MSEC to adopt Business
Intelligence.

1.2. Introduction to Business Intelligence

Business Intelligence is a system based on modern technologies and techniques for collecting,
storing, analyzing and providing access to data and information in order to make better
decisions by the users. At the present MSEC lacks Business Intelligence.

1.3. Effects of Business Intelligence on MSEC

By looking at current technological infrastructure, process and performance of MSEC there is no
doubt that if Business Intelligence is adopted, it will show many positive effects on the MSEC as
whole organization and on the performance of internal service centers and on projects. Some of
important effects on organization, internal service centers and Projects are as follows.

1.3.1. Effects of BI on MSEC:

 Business Intelligence will help in strengthening the coordination and
communication between stakeholders.
 It will narrow the gap between different levels of management
 Real time information will be available to every one.
 BI will be sustainable because of less paper work and there will be no significant
increase in electricity consumption as computers are already in use of most of
the people.

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 1.3.2. Procurement Department:
Business intelligence will improve performance of procurement department.
a. It will give them facility to communicate directly with requester of material as of
at present the communication between procurement department and
requester is through long channel e.g. if some information has to be sent or
some inquiry about requested material is to be made, the procurement
department will send information/inquiry to central store in Tripoli which then
will send it to store at location of requester, from there it will be transmitted to
project manager or supervisor and then to requester. The answer will follow
same channel back.
b. It will also allow better and faster information exchange with suppliers.
c. It will be helpful in tracking order status, managing information, analyzing
information, in better decision making and improving performance.

1.3.3. Stores
MSEC has three stores each in Tripoli, Sirte and Benghazi. All the stores are using about
15 year old MS DOS based store system which does not connects all three stores and
this sometimes makes double stock of same material e.g. If some material is required in
Tripoli, Sirte or Benghazi, they will send requisition to purchase department for
purchasing without inquiring whether the material is in stock in some other store. This
creates double stock of same material.
Through Business Intelligence system, store staff at any of stores can check and locate
the requested material in any of stores and this will help in better inventory control and
management.

1.3.4. Mechanical Technical Department.

Mechanical Technical Department (MTD) maintains equipment fleet and makes this
equipment available to projects for execution of work. MTD performance is also not up
to marks because database for equipment does not exist and monthly reports are
prepared in MS. Excel. Also there is no information sharing between branches in three
cities which one of main cause of under performance e.g. if one machine is ideal in
Benghazi and same machine is required by a project in Tripoli but people in Tripoli

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 doesn’t know whether there is any machine in Benghazi that is free neither people in
Benghazi know that their ideal is required by some project in Tripoli. In this situation
performance of projects will be affected.
Hence Business Intelligence can help in maintaining database of equipment and history
of equipment maintenance. It will also provide a platform for information sharing within
MTD and with other Service Centers and Projects management.

1.3.5. Projects
Business Intelligence will help project management to align and prioritize project
activities with other departments and also it will help in better coordination in the
project. MSEC have infrastructure project in Benghazi which is spread over the area of
1200 hectare and the project includes the foul water and storm water network, laying of
main and sub drinking water supply networks, and also construction of paved roads
network and street lights. On this project many teams are working on different locations
so the coordination between the teams and real time information is crucial and that can
be over come by business intelligence.

1.4. Costs of Adopting Business Intelligence:

 Financially the cost of developing such BI system is very high.
 MSEC will have to upgrade its current IT hardware facilities.
 MSEC will be required to train its staff which will be costly.
 All organization’s management structure has to be restructured and duties and
responsibilities have to be redefined.
 Company might have to get rid of people that does not have knowledge of computer
and does not fit in new organization structure. This will concern and get opposition from
the government.

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1.5. MSEC’s current Plan to deal with issue
Currently in MSEC there is not much focus on how to improve performance by IT also the
currently available facilities are under used because most of people are not aware of how to use
these technologies. The investment in software is viewed as cost e.g. in 2008 Plant dept.
Manager Mr. Klaus Volkmar felt that the system used in store is outdated as it is based on MS
DOS platform and decided to develop new system for store and procurement dept. and this
project was cancelled after the feasibility report because its cost was high. But there is
increasing awareness that company does need such a system. Like, for last 3 to 4 months
procurement department has started using Google documents to share the important
information with stores.

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Question 2

2.1. Conflict of Interest.

A Stakeholder is a person, group or organization who has direct or indirect interest in the
organization. Conflict of Interest rise between the stakeholders when interest of particular
stakeholder is under threat by some other stakeholder. Each stakeholder has different interest
from other stakeholder. For example some of major interests of different stakeholders are as
(Tutor2u):

Stakeholder Interest / Expectations

Shareholder Good interest on investment
Employee Fair pay and working conditions
Suppliers Regular business and prompt payment
Customer Fair price and safe product
Local Community Jobs and minimum disruption
Government Employment for local community and taxes
Environment Less pollution and sustainability

In this century the most concerned conflict will be over sustainability issue. With the increasing
awareness of social and environmental issues in general society has raised concerns about
sustainability in the minds of customers.
In Australia, Gunn Limited a logging giant, is planning to build a AUS$ 2.2 billion native forest
based, chlorine-bleaching pulp mill in Tasmania, Australia. The pulp mill is currently one of the
most controversial issues in Australia and is opposed by the majority of people. The pulp mill is
opposed due to its social, environmental and economic impacts. The Federal government has
not given approval to Gunn Ltd. to run pulp mill and they have been given until March, 2011 to
complete further research. (Bank Track)

2.2. How to assess conflict of Interest

It is always better to identify conflict as soon as possible. The methods of assessing conflict of
interest are varying depending on industry, size and structure of organization, type of
customers, etc. conflicts of interest can be assessed by analyzing financial reports, customers
feedback, survey, polls, media surfing, CRM, etc.

2.2.1. CRM (Customer Relationship Management)

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 CRM is a system used by organizations to attract potential customers and maintain long
term relationship with them. CRM is not solely a technology based system but it involves
people and technology to bridge the gap between organization and customers. CRM is
also considered as a strategic process that helps to identify customer’s need and meet
those needs. Through CRM management can get information about customer’s
expectations. This information gained will give management the idea whether
organization is meeting the requirements of customers and information can be used in
resolving any conflicts that exits.

2.3. How can conflict of interest be resolved

The fact that conflict of Interest exists, however, is not necessarily a bad thing: As long as it is
resolved effectively (Mind Tools).

2.3.1. Stakeholder Analysis Matrix

Stakeholder analysis is one of important tools that can be used to balance conflict
between different stakeholders depending on power and influence of different
stakeholders over the organization.
The process involves first identifying key stakeholder, identifying their power and
influence and identifying their expectations.

Cross-Cutting Tool Stakeholder Analysis -

http://assets.panda.org/downloads/1_1_stakeholder_analysis_11_01_05.pdf

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 Identifying stakeholders influence is very important as the strategy is based on this
factor, e.g. In MSEC one of the shareholders Mr. Ali who holds majority shares in MSEC
and also in Gardabia Co. and Gardabia Co. is also customer of MSEC. In 2007 MSEC
completed the projects but Gardabia did not paid the invoices over 20 million. Due to
strong influence of Mr. Ali MSEC management were not able to put any kind of pressure
on Gardabia even during 2008 when liquidity dried up in MSEC and company was facing
no cash scenario. Later in 2009 it was negotiated that Gardabia will pay in installments.
All the information that collected is being put in a matrix and a strategy is formulated for
each stakeholder to satisfy them.

Activities Influence Importance Expectations What need to

be done

Stakeholders

1. Shareholders

2. Customers

3. Management

4. Staff /
Employees

5. Suppliers

6. Government

7. Others

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 2.3.2. Balanced Scorecard
Balanced Scorecard is a system of measuring and aligning organizations performance
against the strategy. The conventional financial reporting only gives financial
performance perspective but balanced scorecard helps managers to focus on
performance while balancing financial objectives with customer, process, and employee
perspective. (Renato Calago, 2008)
The Balanced Scorecard considers four perspectives i.e. Financial, Customer, Business
Process, and Learning & Growth.

Financial

Business
Customer Strategy
Process

Learning &
Growth

 Financial Perspective: Includes measures profitability, return on investment, Operating

income, Growth, economic value added.
 Customer Perspective: Includes measures Customer retention, customer satisfaction,
and market share.
 Business Process Perspective: involves organization’s internal measures such as
procurement, logistics, production, etc.
 Learning & Growth Perspective: includes measures training, knowledge sharing, self
improvement, etc.

Due to consideration of these four perspectives organizations can formulate a more successful
strategy to avoid any conflict with stakeholders as inputs from all stakeholders are considered in
strategy formulation.

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Question 3

3.1 Strategic Alliance

3.1.1. Introduction to Strategic Alliance
Strategic alliances are an opportunity to accelerate corporate growth, tap new sources
of innovation and open new markets through effective partnerships (Norma
Watenpaugh, Hanoch Eiron, 2007). Organizations that provide similar products or
services join hands to use each others resources to grow and gain competitive
advantage. In developed countries it is long being practiced strategy by the
management but in developing countries like Libya it is one of the emerging themes.

3.1.2. MSEC and Strategic Alliance

Libya has faced long period of sanctions which kept Libya under developed and also
being socialist country Libya was closed economy. After lifting of sanctions by USA,
Libyan government also opened its economy in 2004 for local and international
investors. Looking up huge business opportunities in 2007, 2008 and 2009 thousands of
international companies entered in Libya. For MSEC it was important to establish
Strategic Alliance to keep the competitive advantage by reducing costs, fast
procurement, etc. But management failed to act in this direction and also could not able
to maintain existing unofficial alliance. For example.
African Gulf Company who is dealer of Hyundai equipment in Libya had kept MSEC in
top priorities list because of its reputation and size. African Gulf Company were
supplying spare parts and repairing our equipment on just a phone call without asking
any purchase order. In December 2008 unnecessary delay of 6 months was made, after
this event African Gulf Company has stop supplying spare parts to MSEC and 2 months
later matter was negotiated but with condition that in future African Gulf will only
accept MSEC’s orders with 50% of advance payment.

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 3.1.3. Conclusion and Suggestions
It is very important for MSEC to make strategic alliance with some key supplier to
guarantee cheap and timely delivery of spare parts for machinery and material for
construction sites. As most of spare parts and material is being imported from abroad
and some companies are also willing to keep stock in their store on MSEC’s behalf e.g.
Filters are frequently used in machinery and to import from abroad it takes more than 6
weeks to get filters. Highway Ltd offered that by signing an agreement they can keep all
required filters in their stock on behalf of MSEC’s and also with competitive prices. If
MSEC’s signs this agreement they can get any required filter in a single day.

3.2. Knowledge Management & Intellectual Capital

3.2.1. Introduction to Knowledge Management
Knowledge management is defined by Todd R. Groff (2003) as ‘the tools, techniques,
and strategies to retain, analyse, organize, improve and share business expertise.’ The
main idea of knowledge management is ‘doing right things’ instead of ‘doing things
right’. In today’s world knowledge management and Intellectual capital is one of the
most important asset and require effective and smart strategy to manage.
When Netscape went public in 1995, it was a $17 million company with fifty employees.
Yet after only the first day of trading, the stock market valued Netscape at $3 billion
(Barry Brinker, 2000). This shows that investors gave more value to the knowledge,
skills, ideas and talent of people working in Netscape than company’s actual tangible
assets.

3.2.2. Knowledge Management & Intellectual Capital in MSEC

In MSEC there is no yet realization of importance of Knowledge management at any
level of management hierarchy. If company adopts knowledge management it will solve
many problems the company is facing.
In 2008, the project manager of Head Quarters project in Tripoli left the company. And
no body from the rest of management knew how to handle this project activities and
how to deal with client. This later resulted in conflict with client and project ended in

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 loss. The situation could have been avoided if there was some kind of knowledge
management system should have been in place.
Another positive impact that company will get from knowledge management is
consistency in decision making and performing activities. Like in January 2009 the plant
Department manager Mr. Volkmar left the company and new manager Mr. Schmitz
arrived just two days before Mr. Volkmar was leaving. Mr. Volkmar was not able to
share his knowledge and experiences with Mr. Schmitz. So Mr. Schmitz took 6 months to
get basic know how of activities of department and he changed many procedures during
this period and some of them were reversed after failure.
Lessons learned from the world's greatest organizations show that even simple
technologies can generate great performance when empowered by smart minds of
motivated and committed humans (KMNetwork). MSEC is also failed to safeguard its
experienced human minds. About 70% people in management don’t have experience
more than 2 years in MSEC. and affected the company’s performance due to loss of
valuable knowledge and experience.
Another example of importance of knowledge and Intellectual capital is set by Strabag
AG company that entered Libya two years back. They have attracted and employed 80%
percent of the German management who have worked or were still working in Libya in
Bilfinger Berger Co. And all their systems and procedures are designed as they were in
Bilfinger Berger. This has changed the fortunes for both companies as Strabag AG are
have phenomenal growth and on the other hand Bilfinger Berger are on the steep
decline because Strabag has used the knowledge and experience of Bilfinger Berger and
the new people in Bilfinger Berger destroyed all the systems due to lack of knowledge
and experience.
If MSEC adopts knowledge management strategy it will show positive impacts over the
long term performance of company in ways like, company can use knowledge gained
from past projects in execution of current and future projects which help in better
management and cost reduction. If project is from same client than how to deal and
better satisfy them because of the experience gained from some pervious project. It will
also help in procurement department activities like negotiating on the bases of events
and performance of the suppliers. It also help in preventing from making failed decision
again and over again.

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 3.2.3. Conclusion and Suggestions
It is highly recommended to MSEC’s Strategic management to act urgently to plan for
knowledge management and preserving intellectual capital not only to make database
but also not to lose the experienced people in order to save from any further loss of
knowledge. The knowledge and experience are created over a long period of time.

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4. REFERENCES

1. Tutor2u, Stakeholders and business ethics, [online]

http://tutor2u.net/business/gcse/organisation_stakeholders_ethics.htm [Accessed: 24 April 2010]
2. Bank Track, ‘Gunn Pulp Mill Proposal Tasmania’ [online]
http://www.banktrack.org/show/dodgydeals/gunns_pulp_mill_proposal_tasmania [Accessed: 27
April 2010]
3. Mind Tools, Conflict Resolution, [online]
http://www.mindtools.com/pages/article/newLDR_81.htm [Accessed: 24 April 2010]
4. Renato Calago (2008) ‘Balanced Scorecard’ [online]
http://www.scribd.com/doc/7097668/Balanced-Scorecard [Accessed: 27 April 2010]
5. Norma Watenpaugh, Hanoch Eiron (2007) Strategic Alliance [online]
http://www.amanet.org/training/articles/Strategic-Alliances.aspx [Accessed: 24 April 2010]
6. Todd R. Groff (2003) ‘Introduction to Knowledge Management’ 1 st Edition, Butterworth-Heinemann.
7. Barry Brinker (2000) ‘Intellectual Capital: Tomorrow’s Asset, Today’s Challenge’ [online]
http://www.cpavision.org/vision/wpaper05b.cfm [Accessed: 25 April 2010]
8. KMNetwork ‘What is Knowledge Management’ [online] http://km.brint.com/#whatis [Accessed: 25
April 2010]

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