Date post: | 05-Apr-2018 |
Category: |
Documents |
Upload: | carlos-martin-alvarez-bautista |
View: | 216 times |
Download: | 0 times |
of 35
7/31/2019 j&j Strategic Analysis
1/35
Group 1
Spring 2010
7/31/2019 j&j Strategic Analysis
2/35
7/31/2019 j&j Strategic Analysis
3/35
Industria en crecimientoRegulado por las ciudades y losestados
La innovacin tecnolgica moderadaCambio en el sector de lacontratacin, debido a la economa
Fragmentado
7/31/2019 j&j Strategic Analysis
4/35
RivalsJ & J, Buck Electric, Power
Plus!, Daniels ElectricalConstruction Co., McBride
Electric, and ChampionElectric, Inc.
NuevosCompetidores
Energiasalternativas
SustitutosContratistaselctricos nolicenciados
Compradoresindustria, edificios
comerciales,oficinas,instituciones
educativas, sector pblico y privado
ProveedoresMayoristaselctricos
Bargaining Power
Of buyers: High Of suppliers: Medium
Intensity of Rivalry
Very high
Threat of Substitutes
None
Barreras deentrada
Bajas
Poder deNegociacin
De compradores: AltoDe proveedores: Medio
Intensidad dela rivalidad
Muy alto
Amenaza deSustitutos
Ninguno
7/31/2019 j&j Strategic Analysis
5/35
7/31/2019 j&j Strategic Analysis
6/35
SuccessFactors
Weight Rating Product
Management 15 0.7 10.5Financial
Strength
10 0.4 4.0
CustomerService
25 1.0 25.0
Brand Image 35 0.7 24.5
Marketing 20 0.5 10.0Totals 100 - 74.0
7/31/2019 j&j Strategic Analysis
7/35
7/31/2019 j&j Strategic Analysis
8/35
Intense competition- Low barriers to entry- Many competitorsBasis of competition- Price [esp. public sector]- Quality
- Reputation
7/31/2019 j&j Strategic Analysis
9/35
A few very large national competitorsBut they go after large contracts
More direct competitors include BuckElectric, Power Plus!, DanielsElectrical Construction Co., McBrideElectric, and Champion ElectricBuck Electric specializes in solarphotovoltaic
Most competitors are doingresidential construction field,whereas J & J Electric is focusedmore on commercial and public sector[classrooms]
7/31/2019 j&j Strategic Analysis
10/35
The target market is allresidential, commercial, industrial,and public-sector electrical-contracting work in the InlandEmpire Price-sensitivity is high,especially in public-sector bidding
Growth rate was high in residential
construction in mid-2000s Current customer needs are: quality,price, on-time completion, initialinstallation, bringing publicbuildings up to code, and energyconservation incentives
7/31/2019 j&j Strategic Analysis
11/35
Declining of commercial and industrialconstruction, due to recession of early 2000sEnergy Policy Act of 2005 was passed and, asa result, State and local government
legislation increasingly addressed codeupdates for older buildingsPopulation growth was increasing, creatingmore potential jobsGreater affordability and demand foralternative-energy installations such assolar photovoltaic, fuel cells, andmicroturbine-power plantsGreater demand for networked installations
and security systems
7/31/2019 j&j Strategic Analysis
12/35
0
1
2
3
4
5
6
2001 2002 2003 2004 2005
7/31/2019 j&j Strategic Analysis
13/35
0
50
100
150
200
250
300
350
400
450
500
2001 2002 2003 2004 2005
7/31/2019 j&j Strategic Analysis
14/35
0
1
2
3
4
5
2001 2002 2003 2004 2005
7/31/2019 j&j Strategic Analysis
15/35
00.1
0.2
0.3
0.4
0.5
0.60.7
0.8
0.9
1
1.1
2001 2002 2003 2004 2005
7/31/2019 j&j Strategic Analysis
16/35
-50
0
50
100
150
200
250
300
350
400
450
2001 2002 2003 2004 2005
7/31/2019 j&j Strategic Analysis
17/35
0
10
20
30
40
50
60
70
80
2001 2002 2003 2004 2005
7/31/2019 j&j Strategic Analysis
18/35
Safe Zone
7/31/2019 j&j Strategic Analysis
19/35
The company is in strong financialcondition, but NIAT is declining and ACP
is too high
In 2005
Revenues increased 2.62% Current ratio is 2.82good working capital Debt-to-equity ratio is 55%good financial
leverage Cash is $108Mgood for future investment
Z2-Score is 8.57well in the safe regionHowever NIAT declined 20% to $136.9K ACP is 63.3 days
7/31/2019 j&j Strategic Analysis
20/35
Strong reputation for integrity,responsibility, and reliabilityStrong working relationships in the privatesectorAdditional estimator/project manager enabledJ&J to bid on larger projectsMaster Builder software allowed for moreprecise biddingAhead in the experience curveRevenues increased 2.62%Cash is $108 MillionZ2-Score is 8.6
7/31/2019 j&j Strategic Analysis
21/35
Capability Is thiscapabilityvaluable?
Is thiscapability rare?
Is thiscapabilitycostlytoimitate?
Is thiscapabilitynon-substitutable?
Competitiveconsequences
Performanceimplications
MasterBuilderSoftware
Yes Yes Yes No Sustainablecompetitiveadvantage
Above-averagereturns
Public-SectorProjects
Yes No No No Competitiveparity
Averagereturns
CustomerService
Yes Yes No Yes Temporarycompetitiveadvantage
Above-averagereturns
Criteria for Sustainable CompetitiveAdvantage
7/31/2019 j&j Strategic Analysis
22/35
Not competitive with price wars in privatesectorLimited geographic expansion into differentmarkets
Low hit rate in public-sector bidding (1 in15)Declining NIATVery high ACP because of high A/R in public-
sector projectsHigh ratio (9:1) of public- to private-sectorprojectsNo technical expertise in low-voltageapplications, alternative-energy-sourceinstallations, or system wiring
7/31/2019 j&j Strategic Analysis
23/35
Low barriers to entryIncreased price of raw materials
Supply shortages
7/31/2019 j&j Strategic Analysis
24/35
How can J&J
expand into private projects?
expand into other sectors and othergeographic areas? keep up with its competitors?
7/31/2019 j&j Strategic Analysis
25/35
Should J&J reduce its ratio of public to
private projects?
pursue more community-college anduniversity bond projects? become a general contractor? broaden its services offered to
include home-audio or securitysystems, low-voltage installations,or installation of alternative-energy-power sources
expand into other high-growth areas
7/31/2019 j&j Strategic Analysis
26/35
1. Reduce ratio of public/private
jobs2. Expand geographically
3. Offer advanced technicalservices
7/31/2019 j&j Strategic Analysis
27/35
Become more selective in pursuing public projectsBut pursue the lucrative community-college anduniversity bond projects
Get more residential-remodeling and commercialworkDo more market research within the growth areasForm strategic alliances with corporatedevelopments
Hire a marketing consultant to help promote thecompanys name in the private sector
Continue working closely with other generalcontractorsContinue the companys culture of outstandingservice and ethical operationsContinue current programsIncrease market shareFinance through cash and debt
7/31/2019 j&j Strategic Analysis
28/35
Expand to other high growth areas in SouthernCaliforniaExpand into Northern CaliforniaIncrease market shareOpen new locationsone at a timein developingparts of the Inland EmpireAcquire small 13 person firms in the rightlocations that have the right skill setsContinue bidding on school and community-collegeprojectsbut now in an expanded areaImprove the hit ratio through better estimation offuture costsContinue the companys culture of outstandingservice and ethical operationsContinue current programsFinance through cash and debt
7/31/2019 j&j Strategic Analysis
29/35
Begin offering high-tech services such as home-audioor security systems, low-voltage installations, oralternative-energy-power sourcesIncrease market shareSeek and hire individuals (not all at once) with the
experience and expertise to install both systems andalternative-energy-power sourcesForm strategic alliances with manufacturers ofalternative-energy-power sources and telecom/networksystems
Cross-train employees in these new areasContinue current programsContinue the companys culture of outstanding serviceand ethical operationsFinance with cash and debt
7/31/2019 j&j Strategic Analysis
30/35
7/31/2019 j&j Strategic Analysis
31/35
Increase revenues 15% and NIAT 10%Increase market shareAquire resources necessary to advancetechnology
Raw materials and operation equipmentHire individuals who are experienced inboth new and current systemsImplement training and developmentprogramsMarket to new and existing customersContinue the companys culture ofoutstanding service and ethical operations
Maintain customer loyalty
7/31/2019 j&j Strategic Analysis
32/35
If competition is severe in offeringnew advanced technical services,causing revenues to lag projectionsby 15%, then J&J should intensifyits marketing efforts
7/31/2019 j&j Strategic Analysis
33/35
Increase revenues 20%/yr and NIAT 15%/yrIncrease market shareOffer price incentives for first-timecustomersMaintain customer loyaltyForm strategic alliances with manufacturersof alternative-energy-power sources andtelecom/network systemsCross-train employees in these new areasStay current with the latest technologicaladvancesContinue the companys culture of outstandingservice and ethical operations
7/31/2019 j&j Strategic Analysis
34/35
If copper-wire costs increase, causingNIAT to lag projections by 15%, thenJ&J should use R. F. Romex wireinstead of electrical conduit
7/31/2019 j&j Strategic Analysis
35/35