The discipline of competitive intelligence

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Chapter Two Case Background and Study Context

 Introduction

This chapter deals with the context and orientation of the study, specifically the background to the case and sub-cases. The research problem and question delineated the issues included in this chapter, leading the researcher to review and select appropriate secondary source material for inclusion. The researcher further refined the secondary material through insights gained from the data collection stage. Views that were obtained during the preliminary investigation from key informants supplement the secondary evidences. Meanwhile, all of the information included in this context chapter is based on claims by higher officials of the case company and on statements issued officially by the corporation through its different dissemination media, such as corporate and industry magazines, brochures, newsletters, corporate and industry websites and other open sources.
The researcher conducted the current study in a state-owned, military-run vertically integrated conglomerate. Its strategies are directly derived from the country’s Growth and Transformation Plans (GTP I and GTP II; each GTP runs for five years). The conglomerate, therefore, has already identified the economic priorities in relation to the GTPs. Furthermore, the government has provided guidance in the form of mission statements for the conglomerate to accomplish government’s strategic priorities.
In line with the purpose of this study, it is critical that the conglomerate requires quality CI to improve the quality of its SDM. Such CI will strengthen decision-making related to, among other issues, technology selection and transfer, choice of strategic alliances for joint production and turnkey arrangement, capacity development and learning, benchmarking, value chain improvement, licensing and negotiations during acquisitions and other corporate expansions (Corporate Magazine, 2013; Corporate Bulletin, May 2012; Corporate Strategy and Organisation Manual, 2010). As noted in Chapter 1, the study aims to discern how CI practices in the conglomerate are enhanced, bearing in mind that the strategies are already prescribed by the GTP I and GTP II.
A FW for CI in SDM in an Ethiopian Conglomerate—by Tolla BB, DBL, UNISA, 2019 Page 17

 Conglomerate’s background

The conglomerate is the biggest of its kind in Ethiopia. It is viewed as a market and innovation leader in Ethiopia because of its strategic purposes, core competencies, size and the advantages it gets from fulfilling its government mandate.

 Establishment and purpose of the conglomerate

The conglomerate was formed by grouping together nine national missions of the Ethiopian government. Thus, the strategies of the case are directly derived from and aligned to national industrialisation, economic development, import-export development, technology transfer and national capacity development policies, as well as defined strategies of the present government. The conglomerate was established publicly by the Council of Ministers and reports directly to the Prime Minister’s Office of Ethiopia, given its strategic positioning. It is also required to report its performances to the FDRE Parliament once in a year and when called upon for extraordinary reports.
The corporation became a conglomerate through the merging of five of the former military engineering industries. Additionally, publicly owned business enterprises and different private business establishments (even hotels and ships) were also included. Emulating the experiences of South Korea and Taiwan, the conglomerate thus cumulatively incorporated close to 70 state-owned enterprises within the engineering sector. Presently, the conglomerate runs more than 100 factories under its 15 subsidiaries (industries) and 2 sub-industries. From a vertical integration side, the conglomerate also established several new businesses in the metal and engineering sector in Ethiopia.
Vision: Conglomerate’s vision is to ensure that Ethiopia prospers through industrialisation.
Mission: According to the FDRE’s Council of Ministers Regulation to the Corporation (FDRE Council of Minister Regulation No. 183/2010), the conglomerate was given the following prescribed mission statements. (Note that only the first five statements, in italics, are integral to the study and were rearranged as the first five, for the purpose of the study.)
1. To design, manufacture, erect and commission manufacturing industries;
2. To engage in maintenance and overhauling of manufacturing industries;
3. To manufacture industrial machinery, capital goods and industrial spare parts;
4. To expand and enhance engineering and technological capabilities through creating partnership for the entrepreneurship for the integration and interfacing industrial resources;
5. To build technological capabilities of the country’s defence force through identifying existing and potential needs based on research and development;
A FW for CI in SDM in an Ethiopian Conglomerate—by Tolla BB, DBL, UNISA, 2019 Page 18
6. To undertake production, manufacturing, maintenance, overhauling and upgrading of weapons, equipment and parts useful to defence and security forces for combat and war operations;
7. To sell its products of weapons, equipment and parts to domestic and overseas buyers in conformity with the law;
8. In line with directives and policy guidelines issued by the Ministry of Finance and Economic Development aimed at ensuring macroeconomic stability, to sell and pledge bonds and so negotiate and sign loan agreements with local and international finance sources; and
9. To engage in any other related activities necessary for the attainment of its purposes
As can be learned from the above mission statements and other sources, though there is no
specific legal framework to establish a ‘conglomerate’ business in Ethiopia, the Government
gives the conglomerate special considerations and privileges like the special support given in
the ‘model’ countries, for example Korea, Japan, Taiwan and China (Corporate Magazine,
2013). Detailed discussions are presented in Chapter 4, 4.2.2 (CI in Asian ‘Model’ Countries).

 Conglomerate’s core businesses, product lines and markets

Core businesses of the conglomerate: According to the corporation’s publications, the conglomerate’s core business is to design and manufacture products and facilities for the benefit of the public and the private sectors. The conglomerate specialises in the integration of engineering capabilities through the production of selected products, machines and the installation of industrial facilities.
Though the conglomerate produces both commercial and military products, the current study focuses on the industries producing commercial products. Some of the conglomerate’s subsidiaries produce both types of products and so it is necessary to see the broader product lines of the conglomerate. Such products are part of the larger product value chain strategy of the integrated conglomerate.
As seen in the above table, the Corporation is engaged in the production of industrial machineries, generators and transformers, construction and agriculture machineries, vehicles, high-tech products, weapons and other metal engineering equipment.
Product Lines and Markets: The conglomerate is engaged in the production of generic machinery, generators and transformers, construction and agriculture machinery, vehicles and other metal engineering equipment. The subsidiaries focus on the design and production of heavy-duty capital goods and products that the private sector in Ethiopia is unable to supply, at least in the short term.
The conglomerate competes with foreign products through manufacturing import-substitute products for the local market. These are mainly heavy industry machines, fabrications and high-tech products. The analysis of national markets takes place within the context of global competition. The conglomerate responds to this analysis.
Production and technology in the conglomerate (production strategies): According to officials of the conglomerate, the Corporation focuses entirely on the production of capital A FW for CI in SDM in an Ethiopian Conglomerate—by Tolla BB, DBL, UNISA, 2019 Page 20 products (mainly technologies and heavy machinery) and not on service and trade activities. Capacity building and technology transfer are central to the major strategies of the conglomerate and are integral to the overall national technical and technological capability development strategies of the country.
The conglomerate’s expertise in design includes every step in the product management life cycle. This include concept development, sketching, modelling, simulation, prototyping, production process design and testing, new product development and product improvement. Industries of the conglomerate design turnkey projects that are specifically customised to the precise needs of the customer.
As one is able to see from the introductory paragraphs, the case conglomerate is the first large conglomerate in Ethiopia. According to certain consulted officials of the conglomerate, the corporation engages in business by identifying any market failure/gaps and then works towards filling in these areas/gaps. By doing this, the conglomerate continues to find future market gaps and satisfies these gaps by taking advantage of its ongoing learning and experiences. The conglomerate has closely integrated subsidiaries in its value chain strategy. The conglomerate considers the integration of subsidiaries as one of the key advantages it has in the local market. The management and staff also consider the conglomerate as a technology leader in the country.

Leadership and business philosophies of the conglomerate

Leadership as well as management and business philosophies are critical points to consider in this study since they are interdependent and interrelated. These dimensions affect the CI strategy of the conglomerate. Conglomerate’s leadership evolves from the goals and missions prescribed at corporate level.
Leadership is the expression of the tone at the top and the executive vision of the conglomerate. Leaders lead, but also manage since management involves the translation of the leadership ethos into more operational outcomes. As is shown below, the style of leadership creates close kinship with management.
Leadership and management in the conglomerate: As officials of the case conglomerate say, the conglomerate believes in collective leadership, where each member of the conglomerate brings innovative ideas, shares knowledge and takes part in decision- making. This collective decision-making is cascaded from the top (CEO’s Office) to the bottom (level of workshop teams). Thus, free thinking and idea-sharing are highly valued in the conglomerate and its subsidiaries.
According to certain officials who were consulted, the corporation’s approach is to create a problem-solving environment that includes staff who participate actively in problem-solving. The corporation’s participatory leadership approach promotes two-way communication, knowledge sharing and freedom of thinking, which enables a more critical problem-solving environment.
The conglomerate’s semi-autonomous companies focus on their own individual responsibilities while they all work together striving to achieve the common goals. Thus, almost all operations and decisions in the conglomerate and subsidiaries are made in teams. Team work at the conglomerate is not limited to the internal boundaries of the corporation. It includes teaming and collaborating with partners, suppliers, customers, academia and stakeholders. Effective team work starts with trust. Team members, by engaging with one another on a personal level, create trust and build better business relationships. These strong business relationships, built upon trust, foster an environment of increased productivity, better communication and fewer conflicts among team members. According to certain consulted officials, the participatory leadership approach facilitates the achievement of team work, trust and strong business relationships.
The conglomerate has a motto that distils its essential vision: “We are building our capacity while working; and we are working while building our capacity.” The tone of this motto emulates the “Do-Learn-Improve” motto of the Korean conglomerates, which serve as a model for the conglomerate in Ethiopia (Corporate Magazine, 2013).
Business philosophy of the case: Unlike business enterprises that focus mainly on profitability, the strategy of the conglomerate focuses on filling gaps in the market, or addressing the market failure, which cannot otherwise be satisfied by the private businesses. The conglomerate has a desire to work with the private sector and believes that, after a few years, the private sector will widely engage in the present works of the conglomerate (Corporate Magazine, 2013).
One of the core businesses of the conglomerate is to lead industrialisation, technology localisation, heavy machine design and customisation. According to the Director of the conglomerate, the conglomerate believes in government-led industrialisation, which is a philosophy of many fast-developing economies of Japan, China and Korea in East Asia.
The strategy of the conglomerate ranges from joint production to marketing. Filling market gaps and/or addressing domestic market failures are part of the major strategies of the conglomerate. The conglomerate’s high-ranking officials say that the conglomerate (and its industries) do not directly compete with local private firms, unless these firms keep on importing foreign-made metal and engineering products that add no value to the country’s industrialisation. The conglomerate, however, has a policy to leave such markets to be adequately served by the private firms in the long run.
The conglomerate was established to lead and realise the industrialisation and technology development process of the country. To achieve this, working with all internal and external stakeholders is important. The conglomerate believes in the importance of creating a production network with both internal and external operators in its subsidiaries/industries. Thus, the corporate and market philosophy of the conglomerate is to work in partnership with all local producers by establishing an industry network throughout the country (Corporate strategy and organisation manual, 2010).
As mentioned previously the conglomerate promotes and practices participatory leadership, open communication and freedom of thinking. The conglomerate believes that innovative ideas are crucial to innovation and problem-solving. This philosophy directly facilitates and encourages knowledge sharing and transfer in the conglomerate.

Strategy and strategy development in the conglomerate

The portfolio approach to corporate strategy is often associated with the conglomerate organisational model. According to the Portfolio Perspective, each ‘strategic business unit’ (SBU) must develop a specific strategy according to its goals and be highly responsive to the competitive dynamics of its specific business (Kemp, 2006). The corporate centre has the liberty to involve itself in the business; select a portfolio (slate of offerings and workings) of business; keep tight financial control and allocate and redirect available capital (Hirt, Smit & Yoo, 2013).

Chapter One: Introduction and Problem Statement 
1.1 Introduction
1.2 Problem statement
1.3 Research questions
1.4 Purpose of the study and specific objectives
1.5 Overviews of research methodology
1.6 Acronyms/abbreviations and key definitions
1.7 Scope of the study
1.8 Contributions of the study
1.9 Thesis structure
Chapter Two: Case Background and Study Context 
2.1 Introduction
2.2 Conglomerate’s background
2.3 Subsidiaries’ or sub-cases’ background
2.4 Background to the selected subsidiaries
2.5 Chapter conclusion (case contexts)
Chapter Three: Theoretical Foundations and Conceptual Framework 
3.1 Introduction
3.2 The discipline of competitive intelligence
3.3 Placing CI in context
3.4 Strategic decision-making (SDM) and strategic intelligence
3.5 Competitive intelligence and strategy alignment
3.6 Strategic decision making in context
3.7 Competitive intelligence in context
3.8 Contexts of SDM and competitive intelligence (conclusion)
3.9 SDM levels at multi-business companies
3.10 Formality and location of CI in multi-business corporation
3.11 Conceptual framework of the study
3.12 Chapter conclusion
Chapter Four: CI Application in SDM Situations and its Organisation in Multi-Business Corporations
4.1 Introduction
4.2 CI—the global experience
4.3 CI in Ethiopia—the status
4.4 The role of CI in the SDM process 122 4.4.1 The role of CI in strategy formulation
4.5 Strategic value of CI for selected strategic issues (case’s strategy context)
4.6 Positioning CI in the conglomerate structure
4.7 Designing and implementing CI (programme) in a corporation
4.8 Shaping and improving the CI programme
4.9 Chapter conclusion
Chapter Five: Research Methodology and Design 
5.1 Introduction
5.2 Research methodology
5.3 Research perspective (paradigm)
5.4 Research method—mixed method and logic of inference
5.5 Case research strategy
5.6 Case study procedure, case selection and units of analysis
5.7 Instrument design, data collection and sources
5.8 Data analysis and interpretation
5.9 Methodological norms and quality
5.10 Ethics
5.11 Chapter conclusion
Chapter Six: Data Analysis and Findings 
6.1 Introduction
6.2 Respondents’ background information (questionnaire data)
6.3 Competitive intelligence—presence, maturity, location and objectives
6.4 Key intelligence topics for SDM
6.5 Competitive intelligence collection and availability for SDM
6.6 Decision-making using CI
6.7 SDM Using CI
6.8 Tactical and business decision-making using CI
6.9 CI in the conglomerate–structure, coordination and sharing
6.10 Challenges in applying and using CI (quantitative data)
6.11 CI recommendations for implementation
6.12 Sub-case comparison conclusions
6.13 The constructed middle-range theories
6.14 Linkages between the conceptual framework and empirical evidences
6.15 The crafted CI programme implementation structure (model)
Chapter Seven: Conclusions and Recommendations 
7.1 Conclusions
7.2 Recommendations
7.3 Limitations of the study
7.4 Future research directions
References 
Appendices
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