A study to evaluate the suitability of strategic alignment in a changing external environment : a case study of Moreland Developments (Pty) Limited.

Abstract

Moreland Developments (Pty) Limited is KwaZulu-Natal's leading land developer, consistently delivering on its vision of providing sustainable, quality developments across the spectrum of its operating portfolios. However, the changing external environment has recently presented new challenges to the company, raising the question of the appropriateness of the differentiated focus land-only development strategy. The assessment of whether Moreland's business strategy addresses the environments in which it operates is based on a theoretical model. An assessment of the internal operations of Moreland together with an examination of the external environment in which the company competes has uncovered a misalignment between these environments and the strategic direction pursued. The model is used to provide a more appropriate response to the management dilemma of eroding profit margins brought on by, in the main, an increase in infrastructure costs. The outcome of testing strategic options against current internal and external conditions has presented a compelling argument for the shifting of the strategic thrust of Moreland: from pursuing a focused land-only development strategy to one of concentric diversification. By Moreland extending its operations to related businesses and downstream activities, the company is better positioned to extract a greater return where value-added is greatest. Since Moreland does not possess all the core competences and resources in order to undertake the value-added downstream activities, partnering such an initiative with a company that does have such resources will bridge the gap between pure land-only development and property development. The net effect of the concentric diversification strategy will be to spread the risk that Moreland is exposed to and to generate returns that are commensurate with the level of value-added activities.