1.Select a well-documented construction company (e.g. FTSE 100) on which to carry out a strategic case study.
a.You are a consultant employed by the company to investigate, analyse, and recommend a new strategic direction and report back on your findings.
b..Produce a professional strategic options paper
2..Briefly summarise the company’s current strategy
3.Critically analyse the main challenges and opportunities facing the company using simple strategic analysis (e.g. PESTEL/SWOT /Five forces). Tables of analysis should be placed in an appendix and cross referenced in the narrative of the report.
4.Identify and appraise 2 new potential strategic options to increase competitive advantage
5.Make appropriate recommendations for the future direction of the company and evaluate these (e.g. using the suitability, feasibility, and acceptability framework proposed by Johnson & Scholes).
Strategic and General Management of Simon Construction
This research paper seeks to articulate and describe the principles of strategic and general management of Simon Construction Limited Company. This report paper seeks to assess the processes involved in developing a new company strategy, evaluate and analyze Simon Company information and make informed decisions concerning the future success of the company, and to summarize the principles of strategic and general management in the construction company. Some of the subtopics discussed in this report include the summary of the current strategy of the Simon Construction Company, opportunities and challenges facing the company using simple strategic analysis, new potential strategic options to increase competitive advantage, and recommendation for the future direction of the construction company.
Simon Construction Company is a commercial building envelope contractor that focuses on construction management services, steel building construction, and commercial construction services. The construction portfolio for this Simon Construction includes agricultural buildings, sports arenas, places of worship, educational buildings, warehouses, manufacturers, municipalities, business, veterinary clinics, outpatient clinics, professional offices, and multi-family housing. Strategic management in the Simon Company deals with the success and long-term direction of the construction company and covers issues that are normally of primary concern to the top and senior management (Bennett, 2012).
The strategic and general management of Simon Construction is closely related to the planning function of the management, and entails decisions on which aims to pursue within a given duration, and how the objective should be attained. This decisions in this construction company revolve around the choices of selection goal, services, and products to be offered by the company, and how the firm competes in its product market within the UK or globally. The general and strategic management of Simon Construction can be characterized by three major features. These features can be summarized as:
- A long-range exterior perception on creating innovative adaptations to the changes in the environment which may significantly and positively affect the future of the Simon Construction.
- Formulation of strategic change decisions which must permeate in the whole of the company, synonymous with the management concept itself.
- A holistic approach, aiming at the totality of the well-being of the company as a socio-politico-cultural and economic organization(David, 2010).
The process of strategic and general management of Simon Construction incorporates two complementary aspects, majorly strategic decision making and strategic planning. Strategic planning provides an organic flow which gives an opportunity to the strategic planning as shown in the figure below:
The five basic steps involved in the process of strategic and general management of the Simon Construction are explained below:
Step 1: This step involves the analysis of the existing status of the construction company in the identification of mission of the company. This would involve an evaluation of the past and current strategies determined through the performance of the company in the construction sector in the UK. The mission of Simon Construction is to build its reputation through the provision of quality work and completing the projects from the start to finish with the highest integrity (International, 2010).
Figure 2: Strategic and General Management Process of Simon Construction (Kagioglou, 2009)
Step 2: Evaluation of the future prospect to set objectives that are long-term. This is carried out through careful analysis of both internal and external environment of the construction company. The internal environment majorly entails the employees working in the construction company together with its resources. The external environment majorly entails the factors that directly or indirectly affect the performance of the construction company such as competitors, market, and political stability.
Challenges and Opportunities facing Simon Construction
Step 3: This step entails making a decision on the strategy to attain the set objectives. This is carried out by comparing alternatives of strategic options. The set objectives of this construction company are to building its reputation through the provision of quality work and completion of projects from the beginning to the end (Langford, 2012).
Step 4: Implementation of the strategy. In this stage, the strategy that the construction company has come up with after comparing alternatives of strategic options can then be implemented in the organization.
Step 5: Control and evaluation of strategy. The performance of the strategy after its implementation on the company would form a basis for future options of the strategy (Langford, 2009).
The major challenges and opportunities facing the Simon Construction can be critically analyzed using the SWOT strategic analysis. SWOT analysis entails identified the weaknesses and strengths of the capabilities of the Construction company and any threats and opportunities that may be faced by the construction company. Once all these have been identified, the assessment on how to capitalize on the strengths, reduce the impacts of the threats, make and the majority of any opportunities. The critical analysis begins by defining the objectives of the construction company and identifying the external and internal factors that are critical to attaining the objectives (Langston, 2013).
Strengths and weaknesses are normally internal to the company while threats and opportunities are normally external. These can be plotted in the simple confrontation matrix as shown in Appendix 3. The following are some of the challenges and opportunities facing the Simon Construction:
One of the most important strengths that the Simon Construction is its reputation. This company is one of the reputable specialized commercial construction company that is known in the whole of United Kingdom through the provision of quality work and completion of projects from the beginning to the end with the highest integrity. The company also has an experience of 35 years in the field of construction making it well advanced to the current building techniques compared to the other construction companies that have recently joined the field after Simon Construction (Langston, 2013). The Simon Construction also has a strength of countrywide coverage with numerous branches in many cities within the United Kingdom. This geographical coverage of the company within the country is one of its strength compared a number of other construction companies that are only located in specific cities in the UK (Loosemore, 2012).
There are numerous construction projects that have been constructed or are under the construction of the Simon Construction within numerous cities in the United Kingdom. Many contractors are used to working with this construction company and are encouraging their clients to select this construction company due to their reputation and geographical coverage. The Simon Construction also has the knowledge of the local market. This makes it easy for this company to compete with other local and international construction companies when it comes to delivery of projects to satisfy the taste of the locals (Loosemore, 2014).
New Potential Strategic Options to Increase Competitive Advantage
One of the weaknesses faced by the Simon Construction is high necessity cost resulting cost-cutting and subsequently issues of profitability, cash and project quality issues. This is normally as a result of the current high cost of construction brought about by the high cost of construction equipment, this has forced the management to come up with ways of cutting the cost. When the cost of project construction is being minimized, there is need of reducing the quality of the project and the profit for the company. There is also some notable resistance of some staff to changes within the organization. These changes include those that require the staff to implement the current technologies in carrying out construction projects (Lumpkin, 2009).
The culture of complacency among some staffs and management which has resulted in some critical strategies to be ignored or changed by the management despite these issues having some positive impact on the performance of the company. Some of these issues include adopting the current technologies in construction to enhance project delivery. There is also the problem of inefficiencies to the procurement of construction projects. Numerous projects have not been awarded to the Simon Construction due to inefficiencies during the process of procurement of these projects by the company (Naoum, 2011).
One of the opportunities of the Simon Construction is the project quality improvement through the shift to an entrepreneurial culture. The construction company can as well improve the quality of its projects without spending on extra cost by simply shifting to the culture of entrepreneurship. The construction company also has an opportunity of expanding its market to the overseas market so as to cover a wider market than their competitors (Porter, 2010). Simon Construction which is currently based in the UK has the opportunity of expanding its market overseas to other countries which have similar construction policies similar to those of United Kingdom. The company can as well reduce the cost of operation through rationalization of its structure which will results in effective management and minimization of the number of employees also wedges (Porter, 2009).
The major threat facing Simon Construction is the decline in the market brought as a result of a huge number of construction companies that are currently operating within the UK. The number of construction projects has also significantly declined due to the rise in the cost of construction in the country. The competition between the construction company with other construction companies within the country and external companies is also fierce. This has led to the Simon Construction failing to secure procurement some of the projects within the country. The company is also facing current operational problems, especially with management due to lack of effective coordination and culture of complacency resulting to change of strategies by the management (Retik, 2011).
Potential Strategic Options
There are two new potential strategic options that can be adopted by the Simon Construction so as to increase their competitive advantage. These potential strategic options include the linear strategic model and adaptive strategic model. These two new potential strategic options are explained below:
Recommendation for the Future Direction of Simon Construction
Linear Strategic Model
In the strategic option of the linear model, the strategic management is viewed as setting goals and making decisions which will attain the goals desired. The process of making the decision is considered as a systematic and analytical process entailing selection of a course of action from every alternative available and then implementing that action in a profit-oriented and rational construction company. The following are some of the assumptions made in linear model:
- The strategic management process is done in a defined way, with every phase separated and distinct by time lag from others.
- The top decision-makers and management are all-knowing and rational.
- Attainment of the goal is attainable through modification of construction service delivery and markets to fit the needs of the client effectively.
- The logical strategies established by the top management of the construction company can be explained to the employees who will readily implement the strategies and who are considered to be rational.
- The environment can be predicted and has low effect on the strategies of the company, hence strategies established now can be implemented will few minor changes over the anticipated life of the strategy(Porter, 2010).
Adaptive Strategy Model
In the strategic option of the adaptive model, a strategic view advocates a complex presentation of the construction company and the environment. This model considers strategy as the match between the skills and resources of the company, and the environmental risks and opportunities it faces and the goals it wishes to attain. Developing strategies and monitoring the environment to respond to potential and current changes in it, results in action-interaction, adaptive, short-duration realignment of the company and the environment to take place on a frequent basis (Porter, 2009).
This strategic option may be either reactive (action was taken following changes to the environment) or proactive (action is taken to influence the changes in the environment). The primary basis of the adaptive strategy is the recognition of the environment as a cause of the action by the company. In this respect, there is monitoring of the environment and changes in strategies made continuously and simultaneously (Retik, 2011).
The first recommendation for the Simon Construction is the change in management which is of basic significance for the long-term survival of the construction company. The system should be put in place to enable analysis and gathering of information to enable accurate and regular monitoring of the organization for effective management. The senior management team and CEO should effectively respond to the external drivers of change such as technical innovation, competitor strategies, and government regulations. The improvement of performance of the Simon Construction also depends on changing the role culture in which the staff efforts are normally limited to tasks laid out in their work description and to the requirements of the divisions or departments in which they operate (Robert, 2008).
A useful way of looking at criteria for evaluation is to asses them as falling into three categories, namely, acceptability, feasibility, and suitability. These evaluation criteria are explained below:
Suitability: One of the major aims of strategic analysis is to acquire a clear understanding of the construction company and the environment in which it is operating. Suitability is a criterion for evaluating the extent to which a strategy proposed fits the identified situation in the strategic analysis, and how it would improve and sustain the company’s competitive advantage (Schultmann, 2010). The following are some of the questions that need to be asked about the strategic option:
- Does it fit in with the purpose of the construction company? For example, would the action attain growth expectations or profit target?
- How far does the strategy overcome the problems noted in the strategic analysis (environmental threats and resource weaknesses)? For example, is the action likely to promote the competitive standing of the company or resolve the liquidity problems of the organization?
- Does the strategy exploit the strength of the company? Such as provident environmental opportunities(Songer, 2012).
Feasibility: The evaluation of the feasibility of a strategy involves whether it can be successfully implemented. The changes proposed should be achievable in terms of the resources within the construction company. The questions that need to be asked when evaluating the feasibility include:
- Can the necessary services and materials be acquired?
- Will the technology be available to effectively compete?
- How will the company make sure that the skills required at both operative and managerial level are available?
- Can competitive reactions be coped with?
- Can the market options necessary be attained?
- Is the company able to perform to the level required?
- Can the strategy be funded?(Sunindijo, 2015)
Acceptability: This is the third criterion alongside feasibility and suitability. Acceptability is related strongly to the expectations of the people and hence the issue of whom it is acceptable to needs the analysis to be thought carefully through. The strategy performance, in this case, is determined in terms of stakeholders, risk, and return reaction. The following are some of the questions that will assist in the identification of the likely consequences of any strategy include:
- Will the strategy be acceptable to the environment of the company?
- Will the relationship of the company with the outside stakeholder (customers, unions, government, and suppliers) need to change?
- Will the function of any individual, group, or department significantly change?
- What will be the effect of capital structure?
- How will the financial risk change?
- What will be the financial performance of the organization in terms of profitability?(Wysocki, 2011)
Simon Construction Company is a commercial building envelope contractor that focuses on construction management services, steel building construction, and commercial construction services. The process of strategic and general management of Simon Construction incorporates two complementary aspects, majorly strategic decision making and strategic planning. The major challenges and opportunities facing the Simon Construction can be critically analyzed using the SWOT strategic analysis. One of the most important strengths that the Simon Construction is its reputation.
One of the weaknesses faced by the Simon Construction is high necessity cost resulting cost-cutting and subsequently issues of profitability, cash and project quality issues. One of the opportunities of the Simon Construction is the project quality improvement through the shift to the entrepreneurial culture. There are two new potential strategic options that can be adopted by the Simon Construction so as to increase their competitive advantage include the linear strategic model and adaptive strategic model. The first recommendation for the Simon Construction is the change in management which is of basic significance for the long-term survival of the construction company.
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