Strategy Selection, Implementation and Evaluation

Project 3:  Internal Environmental Analysis

Introduction

Quanta Services, Inc. hereby referred to as QS, is an American corporation that provides infrastructure services to industries, such as communication, electric power, and pipelines, among others. Over the years, the company has leveraged its capabilities in repair and maintenance, program management, design and installation, and resource planning (About Quanta, 2020). A focus on a host of areas has enabled the company to become one of the top providers of infrastructure services in the US. However, due to emerging threats, such as changing industry dynamics due to technological changes and the entrance of new players, the organization is experiencing key performance issues. In response, it needs to undertake strategic planning that will leverage its internal strengths, such as competencies and rich skill sets.

In addition, the industries that rely on technological tools to meet business performance have become too unpredictable. Technology is changing rapidly as developers eye providing businesses with the most recent and advanced technologies (Yeganeh, 2019). In light of this, it has become imperative that businesses providing infrastructure services focus on offering more options and choices for customers. It is a strategic feat that is poised to significantly influence the competitiveness of businesses in the industry that is currently facing a myriad of challenges. The following sections assesses QS internal environment and establishes how it can position itself for better performance through the exploitation of its internal strengths.

Corporate Level Strategies

Fundamentally, corporate-level strategies involve the top management’s desire or goals that essentially affects the whole corporation. The goal of this type of strategy is to increase the competitiveness of an organization through the exploitation of the internal capabilities. It is commonly referred to as the grand strategy as it describes the direction and orientation, exploits the existing resources, and is concerned with the flow of the company’s resources. In other words, it can be termed as the top-level degree of strategic decision-making. QS has a corporate level that comprises of individuals and teams tasked with the various tasks and responsibilities, such as human resources management, customer relationship management, and financial reporting, among others. However, though the teams seem distinct, they are focused on a single goal, which entails the development of robust infrastructure that meets the developmental changes, such as artificial intelligence, robotics, self-driving cars, changing energy mix, and mega broadband, among others. The corporate level has shown its commitment in directing the corporation in a manner that meets the changing dynamics.

It is imperative to note that QS corporate level provides leadership, guidance, and motivation to teams that do actually meet the performance goals. Since the company was founded, it has maintained a strong relationship between leadership and the junior workers who go to fields to work on pipelines, electric utilities, and telecoms, among others. The company holds that the worker is the most critical asset to the organization, and keeping them updated, motivated, and involved is critical to performance. In addition to keeping the close ties with the workers, the corporate level clearly communicates the vision, which must be understood by the population of workers that exceeds 39,000. It creates a uniform climate where each party understands its role in the realization of the desired goals.

To experience growth and competitiveness, the company must leverage its strengths and address its weaknesses, which are shown in the following table.

Strengths	Weaknesses
i. Strong brand portfolio ii. Highly skilled workforce iii. Adequate performance in new markets iv. Automation of services v. A committed corporate level that guides teams vi. A high level customer satisfaction	i. Inability to address threats posed by the new entrants. ii. High attrition rates in the workforce iii. Unable to effectively integrate firms with varying cultures. iv. Inadequate investment in research and development v. The organizational structure limits expansion.

The table above captures the exact scenario of QS. First, it has a strong brand portfolio and a committed corporate level, which helps it pursue strategic goals in a timely manner (Quanta Services, Inc., 2020). It is noted that the company has a high success when it comes to penetrating new markets, which is generally contributed to by the brand and the corporate level. The two strengths, consider the likely aspects that could help it pursue further goals and objectives. For instance, as more competitors deploy newer forms of technologies that are providing them with a competitive advantage, QS can develop or purchase systems that will make it go ahead of the competitors. Already, the company has automated a majority of the main business performance processes, such as customer relations management and business information. However, the organization has not exploited the various opportunities available to it. To do so, the corporate level’s willingness to pursue new ventures and the strong brand portfolio as well as the huge capital base should allow it to deploy more interactive digital technologies.

Today, there are digital platforms that are creating a more interactive environment that a business can engage its customers and work towards the desired solution. The interactions are helping meet a trend in the industry that most of the competitors have failed to achieve. The customers want a provider who works with them while finding solutions to the problems. It is a core trend where organizations are using the opportunity to improve learning and skills at the organizational level (Yeganeh, 2019). If Quanta can access such systems, it will be able to provide services that not only address the needs of the consumers, but also undertake activities in a manner that meets the interests of the customers, hence will experience higher levels of customer satisfaction.

The skill set of the organization offers a major aspect that enables it to stay ahead of the curve when it comes to human resources management. QS hiring and recruiting practices emphasize applicable skills as opposed to academic papers. Currently, it partners with Sam Houston State University (SHSU) to provide learners with hands-on skills and experience relating to the technology world (SHSU Partnership, 2020). Such partnerships provide the company with an access to the best young minds who are selected from a pool of thousands of students. The workers are responsible for promoting innovation and establishing a learning culture that creates shared learning as part of the overall organizational structure.

The above strengths together with additional strategies could be used for improving upon the weaknesses noted in the table. First, using its strong capital base can help the organization deploy more interactive technologies that will help suppress competition posed by the new entrants. As noted, the new industry players are equipped with scalable technologies that help them meet performance goals in a manner that fully satisfies the customers. The new entrants lack adequate human resource capability, hence relies on technology to drive performance goals. It is an understanding that QS needs work on, and invest heavily in digital platforms. Further, the company needs to invest optimally in research and development (Quanta Services, Inc., 2020). As noted, it does not put enough funds in research, which limits innovation and market responsiveness. Investing in research will create new avenues and improved approaches to meeting the needs of the customers. Also, investment in research can help it understand new measures and strategies that will enable it to lower the high attrition rates, which increases the overall cost of production. Finally, the company needs to adopt a matrix structure that will promote reporting. It will create a structure where the decision-makers are well-informed of any changes and developments in the industry.

An IFE Matric Analysis

An IFE matrix refers to a strategic tool used for auditing of the strengths and weaknesses (IFE Matrix, 2020).

Internal strengths	Weight	Rating	Weighted Score
i. Strong brand portfolio ii. Highly skilled workforce iii. Adequate performance in new markets iv. Automation of services v. A committed corporate level that guides teams vi. A high level customer satisfaction	15% 8% 6% 9% 10% 12	4 2 3 2 2 3	0.26 0.25 0.50 0.22 0.20 0.25
Internal Weaknesses i. Inability to address threats posed by the new entrants. ii. High attrition rates in the workforce iii. Unable to effectively integrate firms with varying cultures. iv. Inadequate investment in research and development v. The organizational structure limits expansion.	8% 12% 8% 8% 4%	3 4 3 2 1	0.38 0.33 0.38 0.25 0.25
3 major strength, 3 major weaknesses
Total Score	100%		3.25

The matrix was created through the identification of strengths and weaknesses. The highest weights were assigned to factors that were deemed important to the organization regardless whether they were strengths or weaknesses. A rating of 1 to 4 was assigned to all the factors and each factor’s weight was multiplied by its rating to get a weighted score of 3.25, which indicates a strong internal position as captured in the previous discussion. The analysis indicates that though the organization is unable to compete effectively with new entrants, it has a key internal strength, it can leverage and realize the desired goals.

A Grand Strategy Matrix

A grand strategy mix has become a very important tool for examining the most feasible strategies that an organization can focus on. The following Grand Strategy Matrix shows the feasible opportunities available for QS based on the internal analysis and the market information earlier outlined.

Note: The top part of the vertical arrow represents fast market growth, while the top part represents slow market growth. The left part of the horizontal arrow represents weak competitive position while the right part represents the strong competitive position.

When it comes to preparation of the matrix, the following was done. All strategies that are available to QS were listed. The goal was to exploit all the strategies that the company can pursue to attain a better position in the market. The listing was followed by setting up four quadrants that could accommodate each of the strategies. All strategies that involved a strong competitive position and fast market growth were placed in quadrant one. In quadrant two, those with weak competitive position and fast market growth were placed. In quadrant three, those with weak competitive position and slow market growth were placed. Finally, those with a strong competitive position, but slow market growth were placed in quadrant four.

The matrix indicates that there are feasible opportunities for the company. Due to the company’s position, strong brand, and capital base, it is more plausible to focus on the first quadrant. It can strategize on all or some of the strategies. The three strategies seem workable as they focus on integrating new firms, deploying digital technologies, and expanding the portfolio. The company is well-placed when it comes to implementing them. Also, the strategies align with the current market trends, especially when it comes to the consumer markets. They require more options to choose from, and also want to be part of the solution. The clients want to acquire information relating to infrastructural design, hence there should be a strategy for doing so.

The Strategic Role of the Internal Processes and Resources

Business-level strategies are the measures and strategies taken by a business to promote competitiveness in the market. The text (p. 184) stressed on the benefits and harms of being the first mover in response to a change in the markets. The key benefit is enabling the business to establish itself and attain a dominant position before other players can focus on a particular market. Currently, there are several areas that have not been exploited and QS can be the first mover, which will allow it to become a key player now and in the future. An example is the developing market that is seeing an influx of technology companies and other multinationals that are penetrating such markets. Estimations indicate that the developing economies will be the vital destinations of business corporations by 2035 (Yeganeh, 2019). Businesses that will be able to establish themselves in these areas will be a dominant force in the future.

Additionally, being a first mover will create more opportunities for the company. Currently, areas, such as design and installation are shrinking as most of the market are already saturated. The businesses that offer infrastructure design services are less likely to access a design and installation market, which limits the business functions that are met. Such opportunities can now be accessed in the emerging markets, which will reach their peaks in the next one and a half decade (Berggrun, Darcy, Mongrut, 2017). As such, it is imperative that QS makes such a consideration. However, though it seems a lucrative idea, it is imperative that the firm understands the risks that exist. For instance, some of the markets still face political and economic uncertainties, which may impact the sustainability of the business. QS must consider the risks before it sets out for the said emerging markets.

An additional business-level strategy entails the focus on more local markets as a means to promoting dominance. Locally, QS is facing competition, which may escalate if the right steps are not taken. The new entrants are leveraging technologies that are enabling them to satisfy customers who are mainly technologically-oriented. It was noted that QS can focus on the deployment of strong and interactive technological tools, but that may not be enough. The company has the right skill set and capital base that can be used for expanding its portfolio. There are emerging areas, such as cloud computing, robotics, mega broadband, and blockchain technologies that are expected to change the face of digital usability, business performance, access to information, and security of information, among others. QS needs to establish itself as a leader in these areas. It needs to invest heavily in research and development, which will enable it to create intellectual properties that will be used as the basis for competition with the rivals. QS has an advantage due to its strong financial and capital assets as well as the skilled workers who could help realize the goal. The two strategies will contribute to its performance in a manner that suppresses competition and other external threats, local or foreign.

To drive business-level strategies, leadership is very essential. Tsun-Yan and Sara Yik 2005 emphasizes that effective leadership presents a well-thought plan and framework for implementing strategy. It also communicates a vision that the teams will buy into and commit to (Mastering Strategic Management, 2016). In this respect, QS needs to foster a leadership that will plan and implement the business-level strategies that have been outlined.

Also, leadership is critical in the implementation of a functional-level strategies. These are the internal strategies that are mainly aimed at supporting the business-level and the corporate level strategies. In light of this, QS should have an internal system that is able to support the set business and corporate goals. One key area of supporting business and corporate level strategies is responding to the competitors’ moves as noted in the text (p. 192). The feat can be realized through the utilization of the following measures.

First, the company needs to reorganize its structure. As noted, QS has a dominating functional structure, which ensures that independent entities meet specific performance goals. However, this kind of structure impedes growth and expansion as the teams are used to a particular way of doing things, and is unlikely to go overboard and innovate. Though the structure has led to growth and development, it is time that QS focused on a structure that will promote growth and expansion. Notably, a matrix structure does not destroy the functional structure, but it creates efficient large-scale and project-like structures, which employs many members of the organization (Cokins, 2009). Such a structure will help promote reporting and consolidate more skill sets that will promote innovation and boost productivity.

In addition, the reorganization will have an impact on the operations. Currently, specific teams are supposed to meet particular activities and tasks within a specific period of time. It creates a situation where operations are specific to certain teams, which impedes shared and organizational learning, subsequently limiting innovation. However, a matrix structure will create a pool of teams that focus on certain goals, hence promote learning and innovation (Bradley, Hirt & Smit, 2011. It should be a new organizational culture where the teams and individuals are supposed to pursue common goals and achieve common results. The sense of cohesion and togetherness is likely to boost the employee satisfaction levels. Such an outcome will lower the high attrition rates that are currently experienced. However, the ability to lead the teams should be depicted by the top leaders and the middle-level management. As noted in the text (P. 40), leaders ought to use the vision as a tool for inspiring the people and teams. To establish a new culture, the leadership will communicate a new vision that entails the creation of an interactive environment that promotes employee interactions, innovation, and the establishment of easy approaches to performance. The workers will be willing to buy into the vision, but should be guided and motivated by the leaders and the management.

Additionally, research and development is an essential area that QS needs to set adequate resources for. As highlighted, the company has failed to invest in the area, which limits innovation and adoption of measures that could address the high attrition rates. The research creates intellectual property and helps an organization gain a better understanding of its human resources (Thompson, 2017). Also, the research provides an organization with new areas as the research processes, presents new information and skills when adequately funded. Also, it helps an organization to better understand its markets.

In terms of finance and accounting, QS needs to have a clear-cut plan for undertaking financial accounting that will enable it to drive its business and corporate level goals. Though the following sections depicts the financial performance of the organization, financial accounting and reporting are important internal processes that should promote the efficiency of the operations. Some approaches are recommended as follows. An accounting method that favors the efficiency of the organization can be adopted. For instance, an accrual method can be used as it enable easy follow-ups of financial performance (Kimmel, 2014). Also, a business organization needs to identify and implement the best practice internal controls. For instance, adequately-protected transaction systems can be implemented to prevent fraud. An additional recommendation is monitoring the receivables, which is deemed an effective approach to improving an organization’s cash position.

Strategic Financial Analysis

Strategic Financial Analysis for the Last Reported Fiscal Year

a. Leverage Ratios.

Cash coverage ratio = cash + cash equivalents / total current liabilities

= 164,798/2,263,049

= 0.07282

Long-term debt to assets ratio = long term debt / total assets.

= 1,292,195/ 8,331,682

= 0.15509

Debt to equity ratio = total liabilities / total equity.

= 4,277,851/ 4,050,292

= 1.05618

b. Liquidity Ratios

Net working capital = current liabilities - current assets

NWC = 3,830,986 - 2,263,049 = 1,567,937

Ratio = NWC/Total Assets

Ratio = 1,567,937 / 8,331,682

= 0.18819

The current ratio is calculated by dividing current assets by current liabilities

Current ratio = Current Assets/Current Liabilities

= 3,830,986 / 2,263,049

= 1.6928

c. Efficiency Ratios

Asset Turnover Ratio = Revenue / Average total assets

= 12,111,571 / (8,331,682 + 7,075,787/2)

= 1.572

Inventory turnover ratio = C.O.G.S / Average Inventory

= 10,534,925 / (55,719 + 107,732/2)

= 96.13

d. Profitability Ratios

Net Profit Margin = Net Profit / Total Revenue

= 610,773 / 12,111,571

= 0.0504

ROA = Net Income after tax / Total assets (or Average Total assets) = 340,716 / ((8,331,682 + 7,075,787/2))

= 0.0442

ROE = Net income after tax / Shareholder's equity

= 340,761 / (4,050,292 + 3,604,159/2)

= 0.0890

Composite Analysis

Key Factors	Alternative One: Acquire interactive digital tools	Alternative Two: Expand portfolio
	Weight Attractiveness total	Weight Attractiveness total
Strengths i. Strong brand portfolio ii. Highly skilled workforce iii. Adequate performance in new markets iv. Automation of services v. A committed corporate level that guides teams vi. A high level customer satisfaction	0.10 1 0.10 0.12 3 0.36 0.07 3 0.21 0. 11 4 0.44 0.10 3 0.30 0.06 2 0.12	0.12 2 0.24 0.10 3 0.30 0.06 3 0.21 0. 12 4 0.48 0.11 3 0.33 0.04 3 0.12
Weaknesses i. Inability to address threats posed by the new entrants. ii. High attrition rates in the workforce iii. Unable to effectively integrate firms with varying cultures. iv. Inadequate investment in research and development v. The organizational structure limits	0.15 1 0.15 0.10 2 0.20 0.13 1 0.13 0.17 1 0.17 0.10 3 0.33	0.10 1 0.20 0.13 2 0.26 0.07 3 0.21 0. 10 3 0.30 0.06 2 0.12
Totals	1.0
Opportunities New markets New taxation policies Decreasing cost of transportation Market development	0.15 1 0.15 0.09 3 0.27 0.15 2 0.30 0.11 3 0.33	0.17 1 0.17 0.08 4 0.32 0.15 2 0.30 0.10 2 0.20
Threats New entrants Rising compensation Changing consumer behavior New Technologies	0.14 2 0.28 0. 11 3 0.33 0.08 3 0.24 0.17 2 0.34	0.14 1 0.14 0.10 2 0.20 0.14 3 0.42 0.12 2 0.24
Totals	1.00
Sum Attractiveness	3.22	4.76

In order to prepare the matrix, a SWOT analysis was conducted. This was followed by an identification of two strategies deemed most effective in relation to the market changes. Each of the factors was accorded a different weight and score, based on how attractive it was in relation to the identified strategies. Attractiveness ranged from 1 to 4, where 1 was not attractive, 2 was somewhat, 3 was reasonably, and 4 was attractive. The value of attractive scores was derived from the product of the weight and the attractiveness. A sum total for the whole column was acquired. The total sum indicated that the expansion of the portfolio is a more attractive strategy.

The report showed that QS has a number of options that can be exploited. However, the analysis presented above indicates that QS should focus on expanding its portfolio. As noted, the company has a huge capital base, skilled workers, and financial assets that could help it drive the strategy. In driving the strategy, the company will penetrate more markets, which will broaden its customer base, and also help suppress the stiff competition that is being staged by the new entrants. However, this strategy will require the company to invest in human capital who will drive its goals and objectives in the new areas. Most importantly, it should hire skilled workers who will provide knowledge and skills that apply to the new areas. It will help the organization better understand the new markets. On the other hand, the organization should invest in research and development, which will also improve the understanding of the new areas.

Conclusion

In summary, QS has internal strengths that can be leveraged in its efforts to pursue growth, profitability, and suppress the competition posed by the new entrants. The organization has more internal resources and efficiencies than the competitors and should exploit them in a manner that shuns the escalating competition. As shown, the organization scores highly when the internal strengths are assessed. Also, its financial metrics indicate that it has requisite capital that could help it venture into new areas and also access better technological tools that will create a more interactive environment between it and the customers. To do so, it needs to adopt a matrix form of structure that will establish a cohesive working environment where teams can focus on common goals and objectives. Also, it needs strategic leadership that guides and sets out teams that will deliver the desired outcomes

References

About Quanta. (2020, March 17). Retrieved from Quanta Services: https://www.quantaservices.com/about-quanta/

Berggrun, L., Darcy, F., & Mongrut, S. (2017). Capital Markets and Firm Performance in Emerging Economies. Emerging Markets Finance and Trade 53(10), 2157-2158.

Bradley, C., Hirt, M., & Smit, S. (2011, July 16). Have you tested your strategy lately? Retrieved from McKinsey: https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/have-you-tested-your-strategy-lately

Finance.yahoo.com. 2020. Yahoo Finance. [online] Available at: <https://finance.yahoo.com/quote/PWR?p=PWR> [Accessed 25 April 2020].

Hsieh, T.-Y., & Yik, S. (2005, February 06). Leadership as the starting point of strategy. Retrieved from McKinsey: https://www.mckinsey.com/featured-insights/leadership/leadership-as-the-starting-point-of-strategy

IFE Matrix (Internal Factor Evaluation). (2020, April 24). Retrieved from Max-pedia: http://www.maxi-pedia.com/IFE+EFE+matrix+internal+factor+evaluation

Kimmel, P. (2014). Principles of Financial Accounting. New York, NY: John Wiley & Sons, Inc. .

Mastering Strategic Management. (2016). Minneapolis, MN: University of Minnesota Libraries Publishing.

Quanta Services Inc. (2020, February 27). Retrieved from Bloomberg: https://www.bloomberg.com/profile/company/PWR:US

SHSU Partnership. (2020, April 24). Retrieved from Quanta Services: https://www.quantaservices.com/training/shsu-partnership/

Thompson, J. (2017). Principles of Marketing. New York, NY: Larsen and Keller Education .

Yeganeh, K. (2019). Major Business and Technology Trends Shaping the Contemporary World (1st ed.). New York, NY: Business Expert Press.

Q2

Leverage unique capital

Focus on new markets

Use capital to advertise

Q4

Focus on new local markets

Leverage skill set

Train workers

Q1

Digital tools

Expand portfolio

Integrate new firms

Q3

Prioritize existing markets

Provide cost-leadership

Partner with external parties