Strategic Management: XYZ Construction

Subject: Strategic Management
Pages: 15
Words: 2296
Reading time:
9 min
Study level: PhD


The current business environment is characterized by numerous changes emanating from internal and external sources. Managers have the ability to influence changes originating from internal sources. However, changes arising from demographic, economic, environmental, and political forces are beyond the managers’ control.

This paper outlines the various aspects that XYZ Construction will take into account in its quest to attain competitiveness. The firm will adopt effective management practices in order to attain the desired objectives. One of the elements that the firm will focus on relates to the cost of construction.

The firm’s management team is of the opinion that the low cost of construction will attract a large number of customers’ hence promoting the firm’s level of profitability. Secondly, the firm intends to improve its competitive advantage through domestic and international market expansion. The firm intends to source money from the public through an IPO in order to facilitate its market expansion. However, the firm’s competitiveness and attractiveness to investors will be influenced by how well it undertakes various strategic management aspects, which include marketing, workforce and operational management, internal control and evaluation, leadership, information and technology, compliance and legal considerations, international operations, financial and accounting management, and implementation of an effective organizational structure.

Analysis on strategic issues; Marketing

XYZ Construction is focused on attracting a large number of potential investors through its IPO. However, the firm should ensure that the target investors are adequately informed about the firm and its operation. XYZ will integrate different marketing communication tools, which include print media such as brochures, flyers, and newspapers. The message on the print mediums will be effectively developed and designed in order to achieve the desired objective.

First, the target investors will be informed of the firm’s background such as when it was established, the location of its headquarters, and the areas of operation. Secondly, the target investors will be informed about the firm’s construction activities by outlining the various construction activities that it has undertaken.

Atler (2005) asserts that the cost of marketing communication can be prohibitive especially for start-ups. Therefore, it is imperative for organizational managers to consider adopting the most cost-effective marketing communication channels. XYZ Construction will integrate Internet-based marketing communication channels such as websites and social networking tools. Creating awareness of these issues will influence the credibility of the firm’s existence. Additionally, providing such information will play a remarkable role in the target investors’ decision-making process on whether to purchase the firm’s shares. For example, the investors will base their decision on the firm’s previous successes on the outlined construction projects that the firm has successfully completed.


XYZ is focused on attaining a high level of competitiveness by improving its market performance. Most of the firm’s operations are project-based. Subsequently, projects are broken down into small tasks, which are assigned to project teams. The firm’s success in completing a particular project is dependent on the effort of the respective project teams. Bryde (2003) argues that the quality of human capital influences the effectiveness and efficiency with which project tasks are executed.

The firm will nurture a high level of organizational identification in order to minimize employee retention. A high level of organizational identification minimizes the likelihood of voluntary turnover. In its pursuit of organizational identification, XYZ Construction will integrate effective organizational leadership. Kusters and Versendaal (2013) emphasize that leadership has a remarkable influence on the rate of the degree of organizational identification and employee retention. XYZ Construction will adopt a transformational leadership style in order to develop a high level of collaboration amongst its employees.

Bryde (2003) asserts that transformational leadership contributes towards the development of a high level of trust and unity. Transformational leadership style will improve the effectiveness with which project team members collaborate with each other. Thus, the firm will attain synergy in the completion of various construction projects.

Workforce and operations management

XYZ Construction will invest a substantial amount of its resources in improving the level of employee satisfaction in order to enhance productivity. This will be attained by investing in integrating workforce management practices. XYZ will invest in:

  • Reward management
  • Performance management
  • Time management
  • Career and succession planning
  • Employee training

The reward system will be comprised of monetary and nonmonetary rewards. Employees will be compensated adequately and fairly for their effort. Non-monetary compensation will aid in satisfying the employee’s psychological needs, for example by recognizing the employees’ performance. Continuous performance evaluation will be conducted to assess the employees’ performance. This will aid in identifying gaps in the employees’ capability. In addition to the above elements, XYZ Construction will invest in employee recruitment and selection in order to ensure that the organization has the right number and type of employees. The firm’s employees will be comprised of people from different cultural backgrounds. Subsequently, the firm will invest in diversity management in order to enhance collaboration in its workforce.

XYZ Construction will also invest in effective operations management strategies in order to attain a high level of efficiency in delivering the required output. For example, the firm will invest in effective project scheduling in order to ensure that the projects are completed within the right time.

XYZ Construction intends to penetrate the international market. The Asian market is one of the markets that the firm targets to venture into. The firm’s decision to invest in the Asian market was informed by the high market potential. Asian countries such as China, India, Japan and Singapore are undergoing a high rate of economic growth and development. Subsequently, these economies are investing in different construction projects such as roads, airports, bridges and the construction of various public utilities. Furthermore, the countries’ labor markets are characterized by available and cheap labor. However, the level of diversity in the countries labor market is remarkable.

XYZ Construction will invest in effective employee recruitment and diversity management strategies. The firm should invest in a comprehensive employee recruitment program from the external labor market. This move will increase the likelihood of the firm developing a strong workforce because of the competitive nature of the labor market. However, only the qualified and relevant candidates should be selected (Staliński, 2012).

XYZ’s management team will ensure that its employees are not discriminated against based on their cultural background, sexual orientation, gender, religion, race, and age amongst many other demographic variables. This will enable the firm to develop a diverse workforce.

Organizational structure

Developing an effective organizational structure is paramount in organizations’ effort to attain efficiency in the decision-making process. Organizational structures influence other areas such as internal communication, marketing, allocation of responsibilities, and procurement of raw materials. Subsequently, this might affect the organization’s ability to deliver the desired output.

The firm will adopt the project management organizational structure in order to create an internal environment that fosters collaboration and interaction amongst the project team members. Project organizational structure will enable the firm to minimize conflicts, uncertainty and disruptions in the completion of projects.

The project-based structure will enable the employees to understand their position in the organization. The project structure will also aid in the establishment of relationships amongst various stakeholders such as project managers, the team members, project beneficiaries, the project and other stakeholders. Therefore, the project organizational structure will enable the firm to establish open and effective internal communication.

XYZ will take into account a number of factors in the process of designing and implementing its organizational structures. These factors include

Specialization; the level of specialty required in executing the projects.

Coordination; the desired level of coordination in order to promote unity amongst the various project elements and a comprehensive work breakdown structure will be integrated.

Internal controls

  • XYZ will adopt effective internal control policies and procedures by focusing on;
  • Protecting the organization’s resources against inefficient utilization, fraud and wastage;
  • Ensuring a high level of accuracy and reliability in the financial reporting and accounting processes;
  • Promoting compliance with various internal and external operational policies.

The firm will ensure that its operations comply with the standards and policies stipulated by various construction stakeholders such as the government. The firm will also undertake a continuous evaluation of its performance in order to establish its success. XYZ will focus on various elements, which include

  • The control environment
  • Risk assessment
  • Monitoring
  • Information and communication

The control environment will focus on various factors, which include nurturing a high level of integrity and ethics, adherence to effective organizational leadership, organization and development of the workforce and commitment to competence. The risk assessment will entail evaluating the various risks facing the organization (Annamalai & Jain, 2013). XYZ Construction will invest in comprehensive market research in order to identify possible risks that might emanate from the external environments. The internal control systems implemented will be continuously monitored in order to determine their efficiency in evaluating organizational performance. Internal control will also entail ensuring that pertinent information is communicated to the relevant stakeholders.

Information Technology

XYZ Construction will integrate continuous technological improvement as one of its strategic management practices. This will be attained by investing in emerging information technologies. Some of these technologies include communication technologies and other engineering technologies.

The firm will also integrate information technology in its designing and construction processes. One of the information technologies that the firm will adopt includes intranet, the Internet and other web-based data exchange systems (Rosacker & Rosacker, 2010).

These technologies will enable the organization to improve the effectiveness with which information is exchanged between the various teams during the construction processes. The success of architecture, construction and engineering activities is dependent on the degree of interoperability developed. Information technologies will improve the interoperability in XYZ’s operation. The firm will also invest in Electronic Data Interchange technologies in order to improve the effectiveness with which documents are exchanged. Other information technologies that the firm will invest in include Enterprise Resource Planning systems, Web-Based Project Management Systems.

Investing in information technology will not only improve the effectiveness with which projects are completed but also enable XYZ to minimize the cost of construction. Furthermore, investing in information technology will enable XYZ Construction to foster optimal management practices such as knowledge management and interaction amongst employees.

Compliance and Legal Considerations

Managers have an obligation to ensure that their organizations comply with the stipulated legal requirements. XYZ Construction understands that changing its ownership structure will influence its operation. Subsequently, the firm will undertake a comprehensive evaluation of the legal environment in order to understand the diverse legal requirements. Such an understanding will enhance the firm’s future growth. The firm will evaluate various laws and their impact on its operation. Some of the laws that the firm will consider include:

  • Environmental laws
  • Anti-trust laws
  • Copyright and patent laws
  • Consumer laws
  • Occupation laws
  • Diversity laws
  • Public interest laws

Compliance with the various legal requirements is critical in an organization’s effort to source financial capital by participating in an IPO. Subsequently, XYZ’s managers will ensure that the various legal procedures involved in IPOs are observed. This will safeguard the firm against liabilities, which might arise because of ineffective documentation. The firm will seek legal advice on IPOs from the capital market. One of the aspects that the firm will consider includes determination on the price of the share. This will safeguard the firm against the oversubscription of shares. Upon attaining the required capital, the firm will cease issuing additional shares.

International operations

XYZ Construction is committed to attaining a high rate of growth by entering the international market. The firm has identified emerging markets such as China, Singapore, India and Japan amongst other Asian countries. These markets are characterized by a high rate of economic development. Subsequently, the likelihood of the firm succeeding upon entering such international markets is high.

To succeed in the international market, XYZ Construction will integrate foreign direct investment as its core market entry strategy. The decision to adopt this strategy is informed by the nature of its operations. The firm will establish operational plants in the target market. This will aid in minimizing the cost of operation in the international market.

In order to succeed in its international operations, the firm will undertake a comprehensive analysis of the political, economic, legal, cultural and geographical influences. This will enable the firm to be acquainted with international market operations. The firm will source its workforce from the host country in order to gain acceptance in the international market. Furthermore, the firm will also outsource the services of local construction agents during the initial market entry phase. The agents will aid the firm in its effort to understand various issues associated with the international market.

Financial and accounting management

The firm will invest in effective financial and accounting management practices. This will be achieved by complying with the financial reporting standards. First, the firm will ensure to disclose its financial performance to the public. Subsequently, the firm will periodically develop different financial reports such as balance sheets, income statements, cash flow statements and statements of retained earnings. These statements will enable investors to understand the firm’s financial performance.

In order to improve the effectiveness of financial and accounting management, XYZ will integrate optimal internal control mechanisms. Some of the aspects that the firm will focus on relating to internal and external audits. The decision to integrate the audit system is informed by the need to enhance the credibility of the financial and accounting reports issued to the public. Secondly, the firm will implement the Integrated Financial Management Information System [IFMIS]. The IFMIS will enable the firm to undertake effective and efficient financial data management. For example, the firm’s budgeting process will be improved. Subsequently, XYZ will be able to minimize gaps in its budgeting process. By integrating such controls, XYZ will be able to nurture a high level of transparency. This will increase the investors’ level of confidence in the firm.

Reference List

Annamalai, R., & Jain, N. (2013). Project finance and investments in risky environments: evidence from the infrastructure sector. Journal of Financial Management of Property and Construction, 18(3), 251 – 267.

Atler, S. (2005). A broad view of systems analysis and design: implications for research. Communications of the Association for Information Systems, 15, 981-999.

Bryde, J. (2003). Project management concepts, methods and application. International Journal of Operations & Production Management, 23(7), 775 – 793.

Kusters, J., & Versendaal, J. (2013). Horizontal collaborative e-purchasing for hospitals: IT for addressing collaborative purchasing impediments. Journal of International Technology and Information Management, 22(1), 361-372.

Rosacker, K., & Rosacker, E. (2010). Information technology project management within public sector organizations. Journal of Enterprise Information Management, 23(5), 587 – 594.

Staliński, P. (2012). Contemporary management concepts. Journal of Entrepreneurship, Management, and Innovation, 8(2), 78-95.