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Analyzes The Strategic Environment Of Babcock International

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Questions:

1. Consider the strategic environment within which the organization operates using any conceptual framework that you think is appropriate. What are the industry’s Critical Success Factors and what are some good Key Performance Indicators for the firm?

2. Draw the schematics of organization and then construct four scenarios that could help them improve their strategy over the next 20 years. Which strategic priorities do you recommend at the corporate level under each scenario? 

3. Evaluate the existing and design the ideal future structure of the entire organization. Please justify your choice.

4. Identify areas in the value chain of the organization where slack resources could be salvaged to create incremental or radical innovations. Provide at least 3 such cases and describe the innovations.

 

 

Answers:

Executive Summary

Strategic decision making is the main process of every organization. This report also discusses the strategic decisions that the Babcock International has taken to survive in this competitive environment. This report initially gives a brief detail of the organization and also analyzes the strategic environment of the organization. The report discusses that there are four values that Babcock focuses on that are value for people, value for shareholders, value for customers and value for service. The report discusses the level of strategies that Babcock utilizes; Corporate, functional, business and global strategies.  The report also analyses the strength, weakness, opportunities and threat of the organization that helps the organization sustain in the competitive world. The critical success factor of Babcock is based on long term relationship and customer focused. Succession planning is the key focus of Babcock. Through this process, Babcock eliminates the confusion in the organization. Four different scenarios like sustainability issue, climate change, centralized controlled system and supply chain management scenarios have been analyzed. Then the report recommends to make the present process more systematic by implementing quality control that would help to focus on the above four issues that might be barrier to the organization. The report is concluded by giving a brief of overall discussion.

Introduction

Effectual strategic decision making of business brings the actual and appropriate resources at the right time for the right market. The decision making quality of an organization helps to gain benefits over the competitors in the market. This report identifies the decisions taken by Babcock international to survive in this competitive world. The report would discuss few scenarios that would help to understand the organization to improve the strategies. The report is concluded by giving a brief of overall discussion.

Overview Of The Organization

Babcock International Group is one of the leading companies of engineering support services of UK. Babcock, till now, has been delivering the critical assets to various sectors like education, telecommunication, defence, energy and transport by managing their crucial assets. They have around 28,000 skilled personnel who help to maintain, operate, manage, build and design the organizational assets for providing the best service to their customers both overseas and UK. Babcock is the most trusted partner for delivering the best services. This has helped the organization to gain the reputation.

 

1. Strategic Environment Of Babcock

Babcock effectively manages their assets by ensuring their operational activities are aligning with the objectives of Babcock. They manage their asset portfolios by implementing proper technical skills and also encouraging flexibility in the accepting the changing needs. Babcock’s business strategy focuses on four different values:

  • Value for customer: Babcock works closely in partnership with the customers and also delivers their objectives in collaborate. Babcock tries to understand and identify the mutual interests and also meet the desired outcomes.
  • Value for Service: By measuring the key metrics of the organization, they try to build the reputation of the organization and strong relationship with the customers.
  • Value for People: Babcock covers various spectrum of apprenticeship training for developing the graduate professional. They have developed partnership with Strathclyde Business school and have also created a Babcock Academy which would help the professionals to enhance and refresh their skills, knowledge and attitude.
  • Value for Shareholder: By using honest and open approach with the shareholders, Babcock have build the confidence in their shareholders that, investing in Babcock would give better returns as they are confident of meeting the profits and growth revenues. For example, people who have invested in Babcock have seen rise from 5.2pence to 62.2 pence earning per share in 2012-13 year.

Conceptual Framework

In order to understand the strategic environment of Babcock, the SWOT analysis and strategic level of Babcock would help to have thorough understanding of their strategies.

Level of strategies:
  • Corporate Level Strategy: The organization concentrated on the ability of the firm to emphasize on their specific businesses which maximizes the organization’s profitability for long term. Babcock is able to maintain the long run profitability and also persist to grow in the engineering service industry as it produces its best to its customers and also innovates and improves its services and products.
  • Business Level Strategy: This strategy encompasses the overall positioning in the engineering service market. Babcock is staying competitive in the market because of its various services, high quality services, cost leadership and diverse industry segment.
  • Functional Level Strategy: This strategy is all about improving the organization’s operations effectiveness. Babcock is employing this level of strategy within its service processes, marketing and support services. Thus for improving the customer services, the Babcock strives to characterize the highest and better quality service standards within the engineering support industries and thus in way tries to develop the good relationship with the customer around the globe.
  • Global Strategy. This strategy focuses on the addressing the needs of the organization for expanding its operation in both international and domestic markets. Babcock is applying this strategy by expanding to UK, Brazil, Deutschland and Australasia.

Swot analysis:

Strength:

  • The business model build by Babcock mainly focuses on business relationship
  • The organization have a strong establishment towards research and development
  • The Babcock International has strong features towards the customers through satisfaction, dependability and quality for receiving greater customer loyalty.
  • The organization mainly focuses on the brand image and brand trust.
  • The market position of the organization is also very strong as it is one of leading engineering support services in UK with revenue of £3.5bn in 2014.

Weakness:

  • In this industry there is less bargaining power of customers and suppliers. This reduces different possibilities for controlling in the future.
  • As the organization focuses on diverse industries, it may highly depend of the raw material. This increases the risks against fluctuations of price.
  • In order to remain competitive in the industry, Babcock focuses on high R& D, which requires skilled engineers. Thus this organization is likely to face issues related to recruitment of highly skilled engineers.

Opportunities:

  • Increasing strategic partnerships, mergers and acquisitions and clusters would help Babcock to develop large companies so that the organization can engage in various innovative activities and R&D process for improving economies of scale.
  • The use of latest technology and high energy efficient solutions can improve their services and also reduce the cost of production and innovation.

Threat:

  • The rapid demographic changes and skills shortages are creating barrier in the engineering support industry.

Critical Success Factors 

Babcock’s critical success factor is based on long term relationship and customer focused. They are working in collaboration with their customers to support better services. They have planned 5 year extension with the Canadian Government for supporting the Class submarines of Victoria. They also have an integrated engineering system and also better technical expertise which help Babcock to deliver better projects. It has around 2500 qualified engineer in their Marine division and also it is the largest nuclear service organization of UK (Babcockinternational.com, 2015).

Key Performance Indicators

Succession planning is the key focus of Babcock. Through this process, Babcock eliminates the confusion in the organization. This helps Babcock to align their strategic goals and also their human resources for enabling the right people at the right time in the right place for achieving the better business results. This helps the individuals to realize their career plans in the organization. Further, by providing leadership stability, they are able to sustain high public services and also are able to make sure uninterrupted service delivery (babcockinternational.com, 2013).

 

2. Schematics Of Organization

Four Scenarios

Identification of the four issues

Babcock International Group can face these four scenarios over the next 20 years. The exogenous events that can impact Babcock have been discussed. The factor that has been focused on includes issues related to sustainability, implementation of a centralized control system in the organization, stabilizing the relationship with the sub cons tractors by supply chain management.

1. Scenario 1

Climate Change

Climate change can be a major issue affecting the engineering firm in the next 20 years. The crucial need of the engineering concern is to adapt to the changing conditions of the climate. Climate change will threaten the economy as well as the infrastructure. A holistic approach has to be taken by the engineering organizations to mitigate the harmful effect of climate change on their economy.

Strategic Priorities

Innovation in the field of engineering is necessary to address to the changing needs of the climate. The issue of climate change can be addressed in two ways – dealing with the long term effects of climate change and dealing with the energy issues that can arise as a result of climate change (climatenorthernireland.org.uk, 2015).

2. Scenario 2

Sustainability

In the next 20 years, sustainability can be a major issue affecting the engineering organizations. Babcock can face the same issue. The engineering companies have to respond to a range of pressures and expectations by developing a business strategy which is sustainable.

Strategic Priorities

The companies can address the issues by actively engaging themselves with the range of stake holders to understand the risk and opportunities of the business. The engineering concern must not limit itself to a compliance driven approach as they will miss the wider opportunities that sustainability presents (Constructingexcellence.org.uk, 2015).

3. Scenario 3

Supply Chain management - Relationship with the sub-contractors

The engineering firms in UK are under constant pressure for the improvement of the margins and the reduction of the costs. This will help them to improve the predictability. It is essential to resolve the disputes with the strategic suppliers.

Strategic Priorities

Management of supply chain is crucial for the success of the organization. Babcock should motivate their contractors to become pro-active. They must be innovative in maintaining relationship with the supply chain (Industry issues, 2015).

4. Scenario 4

Implementation of centralized control system

Babcock provides engineering support service to the defense, energy, telecommunication, transport and education sector. It provides critical support to a range of sectors.

Strategic Priorities

 It is essential for Babcock to implement a centralized control system so that all the sectors can be managed efficiently. This will make the process of work flow smoother. Babcock will be able to provide enhanced service to the customers over the range of sectors.

3. Future Structure Of Babcock

 
The current business structure of the organization aims at value maximization of the organization (Babcockinternational.com, 2015). They operate in a complex business environment and operate through output based contracts. They develop innovative engineering and support solutions to ensure that the customers achieve maximum efficiency. They ensure professional development for the employees by creating a safe working environment for the employees. The organization creates value for the customers by building long term collaborative relationship (Babcock International Group PLC Annual Report and Accounts 2014, 2014).

Ideal future business structure for Babcock International Group plc

 
The new business structure of Babcock International Group Plc will be include a quality assurance and control program for all the projects that has been undertaken by the firm. The services that are provided by the organization will be reviewed periodically in order provide services that are free from error. A systematic manner will be adopted for reviewing the structural elements of the business. Addressing the key environmental issues will be the major plan of the organization. Climate change is a major issue faced by the organization. The organization will address the issues of climate change. The organization will implement an integrated database management system for tracking the flow of information within the organization. There will be conceptual planning to turnover. There will be a project management team that will provide range of services including meeting the client needs, administration of contract and construction review. The project management team will be involved in providing new facilities to the business, renovations and repairs and remodeling of the business. The engineering services at Babcock will be supported by forensic engineering services to identify the causes of the failure of the organization.

4. Value Chain Of The Organization

The value chain of an organization is as shown below:

Source: (Walters and Rainbird, 2004)

Radical innovation is the major source for gaining better competitive advantage in the firm. The radical innovation demands a reconfiguration of capabilities and skills of Babcock. Thus, Babcock need to create radical innovation by mobilizing their extra resources and increase novel capabilities, develop new markets and incorporate new technologies (Troilo, De Luca and Atuahene-Gima, 2013).

Since, Babcock’s success mainly focuses on technology expertise, human resources and also sales of the organization. They are the most important slack resources that the organization needs to focus on for better performance of the organization.

Case 1: Technology Development

Babcock’s main strategy should be to help the clients to change the innovative performance by combining the knowledge of technology of various expertises in the creation of product or service, strategy, development of the organization and also development of the technology process.

Babcock should innovate, new footprint methodology that would diagnose the risks and barriers against the successful delivery of services and products. This would ensure that the organization is able to align the operating models and it’s R&D with different teams of the organization and offer processes and tools for accelerating the delivery and also “time to market” for meeting the needs of the customers (Qi, Shen and Dou, 2013).

Further, in order to use the latest technology and improve their technological expertise, Babcock needs to use open innovation which would help to create clear approach and deliver productivity gains and growth opportunities.

 

Case 2: Human Resources

Customer Satisfaction, profitability, productivity and quality largely depends on the staff motivation, coordination and training. However, inadequate management of people may hinder the overall process of Babcock. Thus, to stop this hindrance, Babcock need to implement few HR technologies that would help to emphasize on their collaboration with the employees and also give clear picture to the employees about their performance (Jianwu and Xiangqian, 2013). Like, Featherlight, this will help the Babcock employers to manage one-to-one meetings, real time performances of the employees and also help the employees towards continuous learning. Further, for making the performance review more effective, Babcock can use Weekdone application that would help the managers of Babcock, to monitor the challenges, accomplishments and goals of the organization (Huhman, 2014).

Mentoring is also another process which, Babcock needs to implement in their process. It is a powerful tool that would facilitate knowledge transmission and retention in the enterprise. This would help to increase the satisfaction level and also increase the commitment and staff retention of the company. Since, Babcock already focuses on the development of their employees by partnering with the schools, the organization need to continue with this process, as there are circumstances like communication gap, dissatisfaction of job and labor disputes need can hinder the objective of the organization. Thus, Babcock should assess and evaluate the problems and conflicts for strengthening continuous improvement.

Case 3: Marketing and sales

Babcock International, should focus on their Unique Selling proposition. The organization should emphasize on how the offerings are benefiting the customers, are the offerings satisfying the needs of the customers and also understand their perception about the services of Babcock. Further, the organization should also focus on the promotional activities that would help the organization to expand overseas (Harden and Heyman, 2011). For this, the organization should measure the return on investment and also measure the sales lead cost. Also, the organization should use the latest sales tools that would help the organization to improve their performance in future.

 

Conclusion

In conclusion, this report highlights the strategic environment of Babcock. It is analyzed that the strategies of Babcock, mainly emphasizes on value for their customers, shareholders, people and services. To, analyze the strategies further, report implements the level of strategies and also SWOT analysis. The report analyzed that the customer based business relationship and succession planning are the critical success factor and key performance indicator of Babcock International. Four different scenarios like sustainability issue, climate change, centralized controlled system and supply chain management scenarios have been analyzed. Then the report recommends to make the present process more systematic by implementing quality control that would help to focus on the above four issues that might be barrier to the organization. Before, the report highlights the radical innovations for Human resources, technology development and marketing and sales that would help to salvage the slack resources of value chain.

 

References

Babcock International Group PLC Annual Report and Accounts 2014. (2014). 1st ed. [ebook] pp.1-15. Available at: https://www.babcockinternational.com/media/552302/ara_2014_final.pdf [Accessed 31 Jan. 2015].

babcockinternational.com, (2013). Babcock International Group PLC Annual Report. [online] Available at: https://www.babcockinternational.com/media/462758/babcock_ar_2013_final.pdf [Accessed 31 Jan. 2015].

Babcockinternational.com, (2015). Strategic Objectives | Babcock International Group PLC. [online] Available at: https://www.babcockinternational.com/about-us/strategic-objectives/ [Accessed 31 Jan. 2015].

Babcockinternational.com, (2015). Strategic Objectives | Babcock International Group PLC. [online] Available at: https://www.babcockinternational.com/about-us/strategic-objectives/ [Accessed 31 Jan. 2015].

climatenorthernireland.org.uk, (2015). Climate Change  Risks & Rewards for Construction Industry. [online] Available at: https://www.climatenorthernireland.org.uk/cmsfiles/resources/Events/Liam-McEvoy_Climate-Change-Risks--Rewards-Construction-Industry_Henry-Brothers-Ltd.pdf [Accessed 31 Jan. 2015].

Constructingexcellence.org.uk, (2015). Constructing Excellence | SustainabilityZone | Sustainability in Construction. [online] Available at: https://www.constructingexcellence.org.uk/zones/sustainabilityzone/sust_con/ [Accessed 31 Jan. 2015].

Harden, L. and Heyman, B. (2011). Marketing by the numbers. New York: AMACOM-American Management Association.

Huhman, H. (2014). 5 Ways HR Technology Can Improve Performance Reviews. [online] Entrepreneur. Available at: https://www.entrepreneur.com/article/235797 [Accessed 31 Jan. 2015].

Industry issues. (2015). 1st ed. [ebook] p.1. Available at: https://www.pwc.co.uk/engineering-construction/issues/index.jhtml [Accessed 31 Jan. 2015].

Jianwu, C. and Xiangqian, Z. (2013). Study on the Enterprise Knowledge Management Strategy Based on Human Resource Management. Information Technology J., 12(16), pp.3560-3565.

Qi, E., Shen, J. and Dou, R. (2013). The 19th International Conference on Industrial Engineering and Engineering Management. Berlin: Springer.

Troilo, G., De Luca, L. and Atuahene-Gima, K. (2013). More Innovation with Less? A Strategic Contingency View of Slack Resources, Information Search, and Radical Innovation. Journal of Product Innovation Management, 31(2), pp.259-277.

Walters, D. and Rainbird, M. (2004). The value chain. [Bradford, England]: Emerald Group Pub.

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