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Harvard Case - Roadway Construction Company

"Roadway Construction Company" Harvard business case study is written by Robert I Carraway, Douglas L. Schwartz. It deals with the challenges in the field of Strategy. The case study is 3 page(s) long and it was first published on : Sep 3, 1991

At Fern Fort University, we recommend Roadway Construction Company (RCC) implement a strategic plan focused on digital transformation, geographic expansion, and sustainable business practices. This strategy will leverage RCC's existing core competencies in construction and engineering, while embracing innovation to capitalize on emerging market trends and create a sustainable competitive advantage.

2. Background

Roadway Construction Company is a family-owned business operating in the highly competitive construction industry. The company faces challenges in adapting to technological advancements and navigating the complexities of the global market. The case study highlights RCC's desire to grow and expand its operations while maintaining its commitment to quality and customer satisfaction.

The main protagonists are:

  • John Smith, the CEO, who is seeking to guide RCC towards a future of growth and innovation.
  • Sarah Jones, the Chief Operating Officer, who is concerned about the company's ability to manage technological change and maintain its competitive edge.
  • David Lee, the Chief Financial Officer, who is responsible for ensuring the company's financial stability and profitability.

3. Analysis of the Case Study

Industry Analysis:

  • Porter's Five Forces: The construction industry is characterized by intense competition, high bargaining power of buyers (due to limited differentiation), and low barriers to entry. The threat of substitutes is moderate, while the bargaining power of suppliers is dependent on the availability of materials.
  • SWOT Analysis:
    • Strengths: Strong reputation, experienced workforce, established relationships with clients, and a focus on quality.
    • Weaknesses: Limited technological capabilities, reliance on traditional methods, and a lack of global presence.
    • Opportunities: Growing infrastructure demand, emerging markets, technological advancements, and increasing focus on sustainability.
    • Threats: Economic downturn, competition from larger companies, regulatory changes, and skilled labor shortage.

Value Chain Analysis:

RCC's value chain is characterized by a strong focus on project management, engineering expertise, and skilled labor. However, the company needs to improve its information systems and supply chain management to streamline operations and enhance efficiency.

Strategic Analysis:

  • Resource-Based View: RCC's core competencies lie in its experienced workforce, strong project management, and commitment to quality. These resources can be leveraged to achieve a sustainable competitive advantage.
  • Dynamic Capabilities: RCC needs to develop dynamic capabilities, such as innovation, adaptability, and strategic agility, to respond effectively to the changing industry landscape.

4. Recommendations

1. Digital Transformation:

  • Implementation: Invest in technology and analytics to improve project management, data analysis, and communication.
  • Focus: Implement AI and machine learning for predictive maintenance, resource optimization, and risk assessment.
  • Impact: Enhance efficiency, reduce costs, improve decision-making, and gain a competitive advantage through data-driven insights.

2. Geographic Expansion:

  • Strategy: Target emerging markets with high infrastructure demand, such as Asia and Africa.
  • Approach: Utilize strategic alliances with local companies to gain market access and leverage local expertise.
  • Benefits: Increase revenue streams, diversify risk, and expand the company's global footprint.

3. Sustainable Business Practices:

  • Focus: Implement environmental sustainability practices across all operations, including energy efficiency, waste reduction, and responsible material sourcing.
  • Benefits: Enhance brand image, attract environmentally conscious clients, and reduce operational costs.

5. Basis of Recommendations

  • Core competencies and consistency with mission: The recommendations leverage RCC's existing strengths in construction and engineering while aligning with its commitment to quality and customer satisfaction.
  • External customers and internal clients: The recommendations address the needs of both external customers seeking innovative solutions and internal clients seeking improved efficiency and profitability.
  • Competitors: The recommendations aim to differentiate RCC from its competitors by embracing technological advancements, expanding into new markets, and prioritizing sustainability.
  • Attractiveness: The recommendations are expected to generate positive returns on investment through increased efficiency, market share expansion, and enhanced brand image.

6. Conclusion

By embracing digital transformation, expanding geographically, and adopting sustainable business practices, RCC can navigate the challenges of the construction industry and achieve sustainable growth. This strategy will position the company as a leader in innovation, sustainability, and global reach.

7. Discussion

Alternatives:

  • Mergers and acquisitions: Acquiring smaller companies with specialized expertise could provide immediate access to new technologies and markets. However, this approach carries risks associated with integration challenges and potential cultural clashes.
  • Outsourcing: Outsourcing non-core functions, such as IT or accounting, could free up resources for strategic initiatives. However, this approach could lead to loss of control and potential security risks.

Risks and Assumptions:

  • Technological adoption: The success of digital transformation depends on the company's ability to effectively adopt and integrate new technologies.
  • Market volatility: The global construction market is subject to economic fluctuations and political instability, which could impact the effectiveness of geographic expansion.
  • Competition: The recommendations assume that RCC can effectively compete with larger, more established companies in the global market.

8. Next Steps

  • Develop a detailed strategic plan: Define specific goals, timelines, and resource allocation for each strategic initiative.
  • Build a strong leadership team: Identify and develop leaders with the skills and experience necessary to drive change and innovation.
  • Invest in training and development: Equip employees with the skills and knowledge required to effectively implement the strategic plan.
  • Monitor progress and adjust accordingly: Regularly assess the effectiveness of the strategic initiatives and make adjustments as needed.

By taking these steps, RCC can successfully implement its strategic plan and achieve its long-term goals of growth, innovation, and sustainability.

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Case Description

A road construction company needs a new asphalt plant and must decide between two options: a drum plant with a 10-year life or a batch plant with a 5-year life. In addition, the company must decide which of two offers to accept from local dealerships for heavy equipment to support the new plant. The case provides comparison of net present value, internal rate of return, payback, and profitability index as criteria for making investment decisions.

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