Strategy Selection, Implementation and Evaluation

A Tool Analysis

A Tool Analysis

An Industry Analysis

As indicated in chapter three (p. 74), the environment refers to the set of conditions and forces that have the potential of influencing an organization. It is imperative that an organization understands its environment as that helps guide functions, such as access and utilization of resources. To find out more information about a particular industry and the factors that directly impacts the performance of an organization, tools, such as PESTEL and Porters Five Forces inform the aspects of the environment. The Porter’s Five Forces are defined in the following section and used to detail the environment currently faced by Quanta Services, Inc.

The first force is the rivalry among the competitors in the industry. Competitors that create similar services and products use a variety of moves, such as advertising and price cuts to outmaneuver one another in a bid to attract customers. Due to the fact that businesses, mainly serve in the same markets, the levels of competition are likely to become intense (p. 89). However, it is worth noting that business organizations are required to employ measures that are within the confines of healthy competition. Applying measures that are unhealthy may lead to legal issues. Rivalry with competitors is one of the most significant barriers that an organization must overcome in order to dominate the markets.

Quanta Services, Inc. is in the engineering and construction industry and faces stiff competition from other players that include; MYR Group, Fluor, PSC, and Jacobs among others (Quanta Services, 2020). Because these companies usually sell services to their clients and have a business-to-business model of performance, competition is characterized by the quality and cost of service. Quanta has established itself as a key player through provision of quality services at competitive prices, which has helped it grow the portfolio. Also, Quanta has a more diverse service portfolio, hence can access wider markets, a strategy that helps suppress competition.

The second force is the threats of substitutes. As noted in the text, the managers and executives must not only be aware of the direct competitors but also the providers of substitute products and services (p. 92). Such providers can attract the customers that an organization has, hence such players need to be known. In the engineering and construction industry, there are numerous organizations that offer infrastructure design and services to clients. Mainly, these organizations offer virtual services, where the client is guided on how to attain a particular objective. Such services are cheaper because they are not hands-on.

Quanta Services needs to address this threat and ensure that virtual services can be provided to the thousands of clients that span across the world. Online interactions need to be established. It is an option that should be provided to the clients in order to stop them from accessing the online services elsewhere. Also, this should be followed by competitive pricing of scalable services as a means of suppressing the competition staged by the providers.

The third force is the power of the suppliers in an industry. Typically, the suppliers provide the industry with the required inputs that are then used to create the goods and services that are then sold to the customers (p. 93). Quanta Services mainly outsources support technologies and software that help facilitate the overall performance and productivity. It continually outsources the software because it deems in-house development of such technologies as time consuming and costly. This puts the organization under the threat of rising supplier power.

Quanta Services usually avoids any performance issues through ensuring that it enters into contractual agreements with the suppliers. It is an essential measure that has led to the avoidance of supplier issues that may lead to delayed performance. Contractual agreements ensure that every party to the contract meets its end of the bargain. It is a trend that is now taken by most organizations, especially in the engineering and construction industries (Yeganeh, 2019). Such contracts need to be approached in a manner that ensures that the suppliers lack any loophole that they may wish to exploit.

The fourth force is the power of the industry buyers or clients. As noted in the text, the relative bargaining power between the competitors and the customers usually shape the profitability of the industry. In other words, if the customers have more leverage, it means that the profits are low and vice versa. In the engineering and construction industry, it is evident that the businesses have more leverage than the customers. The service industry is different from other industries as the quality of a service varies from one player to the other. As such, customers are less likely to shift from one provider to the other. It is the feat that providers the companies, including Quanta Services with substantial leverage. However, the company should be finding new strategies for promoting its leverage as that means more profits and a larger market share.

Finally, the threat of new entrants is usually felt in nearly all industries. As the text says, the new entrants are new firms in the industry that do not necessarily compete, but might do so in the future (p. 91). There are new players that are joining the industry, but are unlikely to compete effectively due to the nature of the industry where the customers are unlikely to shift from one provider to the other. However, there is a threat of overseas companies that are entering the US market from countries, such as Canada. Such companies have a substantial portfolio and may compete in the future. Quanta Services does not consider such players as major competitors because most are offering a limited number of services. It is a trend in the industry where new firms are more focused on a narrow range of services due to a lack of resources.

A Competitive Analysis

Quanta Services faced three major competitors, which are a Matrix Service Company, EMCOR Group, and MYR Group. Matrix service Company (MSC) provides engineering, infrastructure, construction, and maintenance services to several industries, including agriculture, mining, power, gas, oil, and petrochemical. It is a publicly-traded company with an annual revenue of about $1. 4 billion (Quanta Services Competitors, 2020). The EMCOR Group offers mechanical, construction, and industrial infrastructure and services to clients who span across the various industries. It has an annual revenue of about $9.2 billion (Quanta Services Competitors, 2020). On the other hand, MYR group which was founded over 120 years ago provides electrical and infrastructure design services to commercial and industrial markets. It is publicly-traded and has an annual revenue of about $2.1 billion (Quanta Services Competitors, 2020). The three are considered the company’s essential competitors.

The three are considered major competitors because of three major reasons. First, they are publicly-traded, which means they have an access to resources that can be exploited and promote their performance. More so, all the three were founded at least 26 years ago, hence they understand the markets and have already established themselves as major players. Further, the companies’ major focus is engineering and construction services, meaning they are direct competitors of Quanta Services, Inc.

The strategic management process typically refers to the choices made by managers in a bid to achieve better organizational performance (Strategic Management Process, 2020). More importantly, the choices and decisions made need to align with the critical success factors to make an organization meet the needs of the market. The engineering and construction industry has numerous critical success factors (CSF) as follows.

Team competence is one of the CSFs that an organization needs to show. At most times, attending to clients’ needs require team performance in a bid to promote performance. If such teams do not exhibit competent skills and synergy, it is challenging for the desired goals to be attained. Also, the organization must show an additional CSF, which is planning skills. These skills help create an environment where the needs of the client are attended to with minimal pressure.

Additionally, project risk management skills are considered a core CSF. Some clients provide work directions with significant levels of risk, hence it is the duty of an organization to identify and minimize the risks. It is usually done through designating teams that assess risks at the start of the project and also during the course of the project. Quanta services hires risk managers who are deployed to the various work stations.

Top management support is considered a CSF as it notes about the involvement of the top managers in the critical activities. It is a core CSF as it ensures that any issues that arise are addressed before they affect performance, such as the lack of enough resources. At Quanta, the middle-level management is tasked with ascertaining that the top managers are aware of any developments on time.

Employee retention rate is an essential CSF as the companies in the industry offer services. The talented employees must be retained so that a company can sustain its quality of services. Low rates of employee retention mean that an organization is losing special and talented workers, which could affect the quality of performance. Also, such an outcome means an organization may be losing its competitive edge.

Contractual policy is deemed a significant CSF, which indicates how an organization progresses in relation to contracting and tendering. Success needs to be achieved in order to avoid undesirable outcomes, such as the failure of the supplier. It is in line with the Richard Rumelt’s Kernel of Good Strategy that includes having a guiding policy that helps an organization overcome possible obstacles.

Employee diversity is also considered a key CSF. Organizations with a diverse workforce is more likely to realize quality goals (Tsiga, Emes & Smith, 2016). It explains why most organizations in the industry focus on the recruiting and selection of employees who are diverse in terms of age and gender. It creates a positive working environment that makes all the workers feel valued and appreciated, hence contributing to higher retention rates.

Finally, project managers’ competence is an essential CSF as it indicates whether a team will deliver quality results on time. The role of a project manager is central to the results that will be realized. As such, a company in the engineering and construction industry must have project managers who can exhibit the desired traits and deliver quality results.

To show the positions of the two companies in relation to the position of Quanta Services, a competitive profile Matrix (CPM). To do it, the following procedures were followed. All the CSFs were identified. Factors that covered the three companies were selected. The ratings and weights were assigned in a bid to compare the best and worst performing companies. The results were then compared to find the strengths and weaknesses of the companies.

	Quanta Services, Inc.	EMCOR	MYR
CSF	Weight	Rating	Score	Rating	Score	Rating	Score
Team competence	0.20	4	0.80	3	0.60	3	0.20
Planning Skills	0.10	3	0.30	4	0.40	3	0.60
Risk Management skills	0.10	2	0.20	3	0.30	3	0.30
Management Support	0.05	3	0.15	4	0.20	2	0.40
Retention Rate	0.20	2	0.40	4	0.80	3	0.15
Employee Diversity	0.1	3	0.30	4	0.40	4	0.40
Project Manager’s Skills	0.20	4	0.80	3	0.40	4	0.30
Contractual Policy	0.05	4	0.20	2	0.15	3	0.60
Totals	1.00		3.15		3.25		3.00

A Partial SWOT Analysis

The engineering and construction industry is facing a host of threats and opportunities due to the changing market factors. The threats and opportunities are as shown in the following table.

Threats	Opportunities
· Slow innovation	· Foreign markets
· Foreign-based competition	· New technologies
· The rising wage level	· Low costs of transport
· Changing customer behaviors	· Expanding skills market
· Economic Challenges	· Expanding service portfolio

From the table above, it is evident that the company has a number of opportunities that it can exploit. First, there are rapidly growing industries in markets, such as China that the company can focus on. The construction industries in most developing countries are on the rise mainly due to the improved financial disposition of the middle class (Wheatley, 2019). These countries are urbanizing at a high rate, which means that the engineering and construction industry has many opportunities.

Additionally, the rise of new technologies means that businesses can now focus on the exploitation of opportunities that require the extensive use of the current technologies. For instance, artificial intelligence technologies are being used for better management of resources enabling business organizations to predict the markets and consumer behavior (Berggrun, Darcy & Mongrut, 2017). The technologies present a huge opportunity for all businesses, regardless of their respective industries of operation.

Expanding skills market following the thousands of individuals who are joining the job market every year means that the company can access a wider and richer pool of human resources. Quanta Services Inc. performance and brand are entirely driven by the human resources, which design and implement strategies that meet the needs of the market. However, current trends indicate that the organization is experiencing some challenges as customers’ tastes are changing rapidly. There are consumers who are influenced by the technical disposition of the service providers as that is deemed to have a direct impact on the kind of service that is delivered (Yeganeh, 2019). It means such organizations first assess the technical abilities of a provider before buying their services.

On the other hand, there are threats that are faced by the organization following the rising globalization that has enabled the free movement of labor. Also, the advanced technological tools are enabling the clients to acquire services from external entities that actually provide the services at low costs via digital platforms. Also, the rising wage-level following new legislations at the state level means that the cost of production and operations will go high. Such an outcome will impact the profitability of the company. Also, the slow innovation process makes the company lose a competitive edge. New entrants are mainly specializing in particular areas, hence can invest more resources in such areas, which promotes innovation.

External Factor Evaluation Analysis

Quanta Services Inc., is well positioned when it comes to the opportunities that currently exist in the market. First, Quanta is well-placed in relation to the foreign markets, the company can take an advantage because it has a strong brand and enough resources that can help it expand abroad. More so, the company has a skilled pool of workers who can be deployed in the country of destination. Additionally, the company has a talent development and management program, which can tap into the expanding skills market. Such a measure will help the organization address the slow innovation issue that threatens its competitive edge.

Further, due to the financial position of the company, it can acquire new and better technologies for managing its functions, and meet the needs of some clients who are driven by the technical abilities of an organization. It will help the organization overcome a growing brand problem. Also, new technologies will enable the organization to understand the markets in a better way, hence strategize and lay down plans that will exploit the current and additional markets local or abroad.

However, Quanta services, Inc., is facing significant threats resulting from the economic challenges that are likely to impact the financial performance of the organization. For instance, the current pandemic has slowed economic operations, and it is estimated that the problem may escalate in the next few months. Further, the rising wage levels at the state level may also impact the operations of the organization. Adjusting the company’s budget to accommodate such changes may hurt its profitability, which confirms that it should focus on expanding to foreign markets whose labor costs are low such as China.

Key Factors	Weight	Rating	Weighted Score
Threats
· Slow innovation	0.15	4	0.60
· Foreign-based competition	0.05	1	0.05
· The rising wage level	0.10	3	0.30
· Changing customer behaviors	0.05	3	0.15
· Economic Challenges	0.10	3	0.30
Opportunities
· Foreign markets	0.10	2	0.20
· New technologies	0.10	3	0.30
· Low costs of transport	0.15	4	0.60
· Expanding skills market	0.05	2	0.10
· Expanding service portfolio	0. 20	1	0.20
totals	1.00		2.30

The matrix shown above shows the positioning of the company, while showing the strengths and weaknesses. It was prepared through the following processes. The key external factors were listed and each was assigned a weight (0-1.0). Also, each of the factors was assigned a rating with a range (1-4). The weight of each factor and the rating were multiplied and summed up. The results indicate the company has a lot to do in order to remain a major player in the industry.

Conclusion

The external environmental analysis indicates that Quanta Services, Inc. is one of the key players in the engineering and construction industry. It performs optimally due to its strong brand and resource disposal. However, the use of tool of analysis used indicate that its competitors are performing efficiently and may present very stiff competition in the near future. In response, the company needs to put in place strategies that will ensure it can compete more favorably.

References

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

Gaeta, G. (2013). Opportunities in Emerging Markets: Investing in the Economies of Tomorrow . New York, NY: Wiley.

Quanta Services competitors. (2020, April 08). Retrieved from Craft: https://craft.co/quanta-services/competitors

Quanta Services Reports First Quarter 2019 Results. (2019, May 02). Retrieved from Prnewswire: https://www.prnewswire.com/news-releases/quanta-services-reports-first-quarter-2019-results-300842492.html

Quanta Services's Competitors, Revenue, Number of Employees, Funding and Acquisitions. (2020, April 05). Retrieved from Owler: https://www.owler.com/company/quantaservices

Rumelt, R. (2011, July 11). The perils of bad strategy. Retrieved from McKinsey: https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-perils-of-bad-strategy

Strategic Management Process - Meaning, Steps and Components. (2020, April 09). Retrieved from Management Study Guide: https://www.managementstudyguide.com/strategic-management-process.htm

Tsiga, Z., Emes, M., & Smith, A. (2016). Critical Success Factors For The Construction Industry. PM World Journal 5(8), 1-12.

Wheatley, J. (2019, July 16). Does investing in emerging markets still make sense? Retrieved from Financial Times: https://www.ft.com/content/0bd159f2-937b-11e9-aea1-2b1d33ac3271

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