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Harvard Case - Telling the Fortunes of One Belt, One Road: B+L Forecasts for the Construction Supply Industry

"Telling the Fortunes of One Belt, One Road: B+L Forecasts for the Construction Supply Industry" Harvard business case study is written by Marcus Schuetz, Ellen Orr. It deals with the challenges in the field of Strategy. The case study is 12 page(s) long and it was first published on : Jun 5, 2019

At Fern Fort University, we recommend that B+L implement a comprehensive strategy to capitalize on the opportunities presented by the "One Belt, One Road" initiative. This strategy should focus on leveraging B+L's existing strengths in data analytics, industry expertise, and global reach to provide valuable forecasting services to construction supply companies operating within the OBOR corridor. By developing a robust business model that incorporates digital transformation, strategic alliances, and vertical integration, B+L can establish a strong foothold in this emerging market and achieve sustainable growth.

2. Background

The case study focuses on B+L, a leading provider of data and forecasting services for the construction supply industry. The company is presented with a unique opportunity to expand its operations into the rapidly growing 'One Belt, One Road' (OBOR) initiative, a massive infrastructure development project spanning across Asia, Africa, and Europe. The OBOR project is expected to generate significant demand for construction materials and related services, creating a lucrative market for B+L's expertise.

The main protagonists are the B+L executives who are tasked with developing a strategy to capitalize on the OBOR opportunity. They must consider the complex political, economic, and cultural landscape of the OBOR region, as well as the competitive dynamics of the construction supply industry.

3. Analysis of the Case Study

To thoroughly analyze the case, we can utilize several frameworks:

  • Porter's Five Forces: This framework helps understand the competitive landscape within the construction supply industry. The analysis reveals:

    • High Threat of New Entrants: The OBOR initiative attracts new players, potentially increasing competition.
    • High Bargaining Power of Buyers: Large construction companies have significant leverage in negotiating prices.
    • Moderate Bargaining Power of Suppliers: The availability of raw materials and manufacturing capacity influences supplier power.
    • Moderate Threat of Substitutes: Alternative materials and construction techniques can exist, but are often limited by project requirements.
    • High Competitive Rivalry: Existing players are vying for market share, leading to intense competition.
  • SWOT Analysis: This framework helps assess B+L's internal strengths and weaknesses, and external opportunities and threats:

    • Strengths: Strong data analytics capabilities, established industry expertise, global reach, and a reputation for accuracy.
    • Weaknesses: Limited experience in emerging markets, potential lack of local market knowledge, and potential language barriers.
    • Opportunities: The OBOR initiative presents significant growth potential, demand for specialized forecasting services, and opportunities for strategic partnerships.
    • Threats: Political instability in some OBOR countries, potential regulatory hurdles, and competition from local players.
  • Value Chain Analysis: This framework helps identify key activities within B+L's operations and their contribution to value creation:

    • Primary Activities: Data collection and analysis, forecasting model development, report generation, customer service, and sales and marketing.
    • Support Activities: Technology infrastructure, research and development, human resource management, and finance.
  • Business Model Innovation: B+L can leverage its existing strengths to develop a unique business model for the OBOR market:

    • Value Proposition: Provide tailored forecasting services that help construction supply companies optimize inventory management, mitigate risk, and capitalize on market opportunities.
    • Customer Segments: Target both large multinational construction companies and smaller local suppliers operating within the OBOR corridor.
    • Channels: Utilize a combination of online platforms, partnerships with local distributors, and direct sales teams to reach target customers.
    • Customer Relationships: Build strong relationships with customers by providing personalized support, regular updates, and industry insights.
    • Revenue Streams: Offer subscription-based services, consulting fees, and data licensing agreements.

4. Recommendations

B+L should implement the following recommendations to capitalize on the OBOR opportunity:

  1. Develop a Targeted Strategy: Focus on specific sectors within the OBOR corridor, such as infrastructure development, transportation, and energy, where demand for construction materials is expected to be high.
  2. Invest in Local Expertise: Hire local staff with deep knowledge of the OBOR region, including language skills, cultural understanding, and market insights.
  3. Build Strategic Alliances: Partner with local construction supply companies, government agencies, and industry associations to gain access to market information, build trust, and leverage local expertise.
  4. Leverage Digital Transformation: Invest in technology infrastructure to enhance data collection, analytics, and forecasting capabilities. Develop user-friendly online platforms and mobile applications to provide customers with easy access to data and insights.
  5. Embrace Vertical Integration: Consider expanding into related businesses, such as logistics and warehousing, to provide a more comprehensive suite of services to customers.
  6. Develop a Strong Brand: Build a recognizable brand that resonates with customers in the OBOR region, emphasizing B+L's expertise, reliability, and commitment to providing value.
  7. Prioritize Corporate Social Responsibility: Engage in responsible business practices that benefit local communities and contribute to sustainable development within the OBOR corridor.

5. Basis of Recommendations

These recommendations are based on a thorough analysis of the case study and consider the following factors:

  1. Core Competencies and Consistency with Mission: The recommendations leverage B+L's core competencies in data analytics, forecasting, and industry expertise, aligning with the company's mission to provide valuable insights to the construction supply industry.
  2. External Customers and Internal Clients: The recommendations focus on meeting the needs of both large multinational and local construction supply companies, while also considering the requirements of B+L's internal stakeholders.
  3. Competitors: The recommendations aim to differentiate B+L from competitors by offering specialized services, building strong relationships with customers, and leveraging digital technology.
  4. Attractiveness: The recommendations are expected to generate significant return on investment, as the OBOR initiative presents a large and growing market with high demand for B+L's services.

6. Conclusion

By implementing these recommendations, B+L can position itself as a leading provider of forecasting services within the OBOR corridor. The company can leverage its strengths, adapt to the unique challenges of the region, and build a sustainable business that contributes to the success of the OBOR initiative.

7. Discussion

Other alternatives not selected include:

  • Focusing solely on existing markets: This option would limit B+L's growth potential and miss out on the significant opportunities presented by the OBOR initiative.
  • Expanding into unrelated businesses: This approach could dilute B+L's core competencies and increase risk.
  • Acquiring existing local players: While this could provide immediate market access, it carries the risk of integration challenges and cultural clashes.

The recommendations are based on the assumption that the OBOR initiative will continue to grow and generate significant demand for construction materials and related services. However, there are risks associated with this assumption, including political instability, economic downturns, and changes in government policy.

8. Next Steps

B+L should develop a detailed implementation plan with specific timelines and milestones to ensure the success of its OBOR strategy. Key steps include:

  1. Conducting a thorough market analysis: Identify specific sectors and regions within the OBOR corridor with high growth potential.
  2. Developing a comprehensive business plan: Outline the company's target market, value proposition, revenue streams, and operational plan.
  3. Securing funding and resources: Allocate resources and secure funding to support the implementation of the strategy.
  4. Building a strong team: Recruit and train local staff with the necessary skills and experience to support the company's operations.
  5. Developing a marketing and communication strategy: Promote B+L's services to target customers and build brand awareness within the OBOR region.

By taking these steps, B+L can effectively capitalize on the opportunities presented by the 'One Belt, One Road' initiative and achieve sustainable growth in this emerging market.

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Case Description

This case describes a business opportunity for B+L, a German firm that forecasts demand for construction materials. China's Belt and Road Initiative (BRI), a large infrastructure building program, could allow B+L to broaden both its product range and its client base. The protagonist is Martin Langen, the founder and chief executive officer of B+L. His firm produces forecasts for a range of construction materials in particular geographies. The forecasts are based on publicly available data. B+L adds value by creating models that contain a variety of factors and adjustments to produce forecasts that are standard and directly comparable across regions. This kind of forecast is unavailable elsewhere, and is highly valued by construction materials makers. When China announced the BRI, a plan to build infrastructure along the old silk routes through central Asia, Martin believed B+L could create new forecast products to estimate demand for construction materials in BRI affected markets. Since these markets were not always well developed, and there was a high degree of uncertainty surrounding the BRI projects, B+L would have to develop new techniques to create the new forecasts.

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