Lafarge Tarmac Essay
1.1 Strategic context of Lafarge Tarmac
When it comes to the construction business there are two main things that come in mind noise and risks along with the high costs and professional skills. However there are some construction companies in the world that are committed to their work so much that they have found a way to do the construction in a sustainable and environmental friendly way. United Kingdom is one of finest constructed countries in the world on a macro level, and the construction companies of the UK are also very good at their work. Lafarge Tarmac is one of those names in the United Kingdom which are not for their dedication for the construction business (Lafarge, 2014). Lafarge Tarmac follows a very simple strategy make a goal and follow the direction as per the strategy in order to achieve it and remove any difficulty that comes in that way. The company is well known in the entire United Kingdom for their role in construction business. The company joined forces in the year 2013 to be an Ultimate Solution company for the entire construction sector (lafargetarmac.com, 2014).
Basic vision of the company is very simple and dedicated to the sustainability, along with the great dedication to the safety on the construction sites. The values of the company are very diverse but united under a common set (lafargetarmac.com, 2014). Role of strategy is very important part of the business cycle. As per the annual report of the Lafarge tarmac for the year 2013 the company stated very clearly that safety is their uttermost priority and they will focus on the safety before anything even before profits and revenue. The commitment of the company is to improve the health in the construction sector continuously by doing right things in a right way at right time. Along with the health the company is also involved with the improvement of the construction company’s performance towards the environment. Lafarge Tarmac is registered under various acts and it is their duty to maintain the standards of those acts and to make sure that all the companies they work with also follow their respective standards (Lafarge, 2014).
Visions, Objectives and Goals of the company
As per the marketing of the Lafarge Tarmac the company has very simple vision that is to understand the needs of the customers and make sure that the customers get the same goods and services as they require, in order to achieve the target as per the vision of the company, the employees at the company works at their highest level, however there are some other visions of the company as well. One vision of Lafarge Tarmac is dedicated to the safety of the people at the construction sites, as per the health and safety of the company the goal of the company is to operate in such a way that it becomes a zero harm business (lafargetarmac.com, 2014). If under any case the harmful situation arises the workforce of the company is always willing to tackle it and do not walk by under any circumstances. The other objective of the company is to protect the environment, the basic vision of the companies for this is to operate in such a way that the environment get least affected due to the operations of the company. The company tries to prevent pollution during the construction activities and improvement in the field by any means. In case the company needs to be defined in one word Lafarge Tarmac will be known as the sustainable and sustainability is what they operate for as per the objectives of the company (lafargetarmac.com, 2014).
1.2 Issues in Strategic Planning at Lafarge Tarmac
Planning is the basic duty of the manager as no activity can be done without doing a proper planning. However there are some issues for the managers during the planning processes and setting up the targets of the organization (James, n.d.). The targets for the Lafarge Tarmac are very different from any other construction company in the United Kingdom as unlike Lafarge Tarmac almost 80 percent of the construction companies just do their tasks and do not take the safety and environment as their responsibility at all. During the strategic planning of the Lafarge Tarmac the environment of the operative area is analyzed very thoroughly and plans are made according to the results. Being a construction solution provider it is also a responsibility for the company to be updated about any new technology that can improve the construction in an eco friendly manner (lafargetarmac.com, 2014). The Thinking of the company’s managers is also very important as the needs of the customers of the company are different the company will also have to make the strategy in such a way so that it can keep the advantage point to itself in the market. In order to formulate the strategic plan the Matrix given by the Ansoff is a great tool.
According to the matrix the strategy can be made by performing four activities (James, n.d.). Market penetration is done for understanding the needs of the customers and tries to grow its existing roots in the market. Lafarge tarmac has used this technique as they have tried over and over to give the best product and services by improving their products. Market Development on the other hand is done in order to enter the new markets and expand the business. Lafarge Tarmac is one of the largest construction solution providers in the United Kingdom and they have tried to reach the customers by opening up the branches in almost every part of the UK. Product Development is done for growing in the existing markets by introducing the new products and services or by re-launching the existing products and services with increased performance. One of the best example for the Lafarge Tarmac is instead of a long and lengthy process at the construction site they came up with readymade concretes that are buy ready to be used in construction. Diversification is done to introduce in the new offers in the market. It is very important and risky stage for any company as in order to do this all three activities of the matrix needs to be done properly in order to perform the diversification.
Lafarge Tarmac was started by making a deal among the American Anglo and Lafarge for the construction material supplier but now the company has made the deal with the other companies as well and soon it will be the largest producer of the cement in the world. Portfolio analysis is also an issue for the manager while making strategies for the organizations as the growth rate of the construction market is constantly changing in the market and the rate for the Lafarge Tarmac is very constant. One other major issue for the company is to decide as what kind of plan needs to be made by the organizations as there are different kind of plans like upside down plan, top down plan, bottom up plan, informal plan and every other plan in the book. However the mangers of the Lafarge Tarmac came up with something new which was a combination of every aforesaid plan.
1.3 Planning Techniques in context with Lafarge Tarmac
There are many techniques that can be used by the Lafarge Tarmac in order to develop their strategic plan the following are few tools that can be used by the organization.
Directional Policy Matrix
According to this tool of strategy formulation there are two elements that are important for the strategy formulation, first is the position of the business in the market, which is also known as the capability of the market, broadly the company can be defined as weak, average or strong in the market (McDermott, 2014). The other element is the position of the sector under which the business is involved which can be categorized as Unattractive, average or attractive and the strategy can be formulated by using the given Matrix. For Lafarge Tarmac which is a strong competitor in the market and has the range of average and attractive products for the customers being a leader and growing in the market is a great strategy as per the directional policy matrix.
It is one of the best methods for reverse engineering. There are four quadrants of this strategy that defines the nature of the strategy that needs to be made, the strategies can be Aggressive, Competitive, Defensive and Conservative, it depends on the customer of the organization that what kind of strategy the company should opt for (maxi-pedia.com, n.d.). An example of the matrix for the Lafarge Tarmac is given below. As said already that Lafarge Tarmac is a leading construction solution provider and that is why it is a dominating company and being aggressive is the finest option for the company.
2.1 Organizational Audit for Lafarge Tarmac
Benchmarking is the process under which the business performance and processes of an organization is compared with the best practices in the industry or market used by the other companies (Doucet, 2010). Usually the elements of the operations like time costs and quality of the organization is measured by this kind of auditing. Under the benchmarking auditing the comparison of the company’s processes is made with the best processes which exist in the market creating a high level of opportunity for the organization to grow up. For Lafarge Tarmac the benchmark auditing is a great auditing tool as they can learn about the new ways to give the solutions to the construction sector. However it must also be noticed that Lafarge Tarmac is already a leading company as a construction solution provider so there are not many things that are better than that of what is practiced in the company.
SWOT is an abbreviation for four key factors of the organizations Strengths, Weaknesses, Opportunities and Threats. Strengths of Lafarge Tarmac are their products serving as the key solutions for the construction sector in United Kingdom, cement and ready concrete cement is best examples of the products of Lafarge Tarmac. Weaknesses of the company comes forward when it comes to the new technologies and variety in products as the company is serving one of the best quality products in the country but sometimes the demand and requirement of the consumers is completely different from others. Opportunities for the Lafarge Tarmac are countless as under the construction sector there is constant improvement in the technology so as develop the construction sector and make work easier and safer. Threats for the Lafarge Tarmac are not very much as the company already has an advantage and a very strong position in the market. The only threat that the company faces is regarding the safety on the construction and competition from the other companies.
Value Chain Analysis
Value chain analysis model is a very useful tool to evaluate the maximum value for the customers. I order to do the value chain analysis first of all the activities of the Lafarge Tarmac needs to be analyzed and then the value for every step in the production should be evaluated as if it is at its maximum potential, and lastly when the managers gets sure of the fact that changes can be made it needs to be identified that whether these changes would be beneficial or not. The model of the Value Chain for Lafarge Tarmac is given following, under which the primary functions and secondary functions for Lafarge Tarmac are given and after summing up all the values in Lafarge Tarmac the margin is added for the company and the final value is given to the customers.
Inbound Logistics are the raw material for the Lafarge Tarmac which is tons of Limestone for cement production in addition to this many dozens of trucks are also required for transportation. The main operation of Lafarge Tarmac is production of cement which is made by following the production plan of the company. Outbound product of Lafarge Tarmac is cement which is very high in volume but at the same time the product is very sensitive too so the warehousing is done very efficiently by Lafarge Tarmac.
Marketing and sales techniques of Lafarge Tarmac facilitates the transfer of the products produced in the company to the consumers. Service is the process in which the values of the product increases as Lafarge Tarmac makes products like cement and other construction material as per the specification of the customer and what matter is that the product is delivered in the same form and quality as required by the customer.
Scenario planning or scenario analysis is used by the organizations in order to make the long term plans for the business, it is a very difficult kind of auditing to be done for Lafarge tarmac as the construction sector in UK is changing rapidly and new technologies are being introduced and plans cannot be made for long run on the basis of the existing technology and materials.
Strategic Positioning of Lafarge Tarmac
There are many tools that can be used by the organization in order to evaluate the position of the existing strategy of the company, Ansoff matrix is one of the key tools for this purpose and that can be used very effectively in case of Lafarge Tarmac. As per the Ansoff Matrix there are four tasks that are to be carried out in the market (Reeves, 2014). First is Market Penetration which is done in order to increase the share of the company in the existing markets with the existing products, it has been done very effectively by Lafarge Tarmac as it has signed the deals with Holcim Ltd a gigantic company in cement industry so as to be the largest cement producer of the world. Second part of the matrix is market development which is done in order to expand in the new markets with the existing products and services this has been done by Lafarge Tarmac since the beginning as the company was formed by Lafarge and American Anglo so as to be the construction solution provider in UK (lafargetarmac.com, 2014).
Third part of the matrix consist of Product development which means the development of existing products by launching new products in the existing markets or by re-launching the product after making improvements Making of the readymade concrete and cement was a evolution of Lafarge Tarmac as a product development. The fourth and last quarter of the matrix is diversification which in simple terms can be defined as the combination of all the other three parts of Ansoff Matrix, as of Lafarge Tarmac no bigger diversification can be expected from a company which was formed in 2013 and which becomes the largest cement producer in 2014.
2.2 Environmental Audit for Lafarge Tarmac
A business has to be maintained under many environments every part of the environment is important for the business in order to make sure that the business will run smoothly.
The term PESTLE is used to define the group of environments that makes impact on every business, the given is the pestle analysis of Lafarge Tarmac. Political Environment creates a very adequate impact as any new policy for the construction sector made by the government will make impact on the business of Lafarge Tarmac for example in case the government makes some new policy of taxation for the construction sector it will make a significant impact on the company (Doucet, 2010). Economic environment is also a very crucial part of the business as the economic condition of the UK will decide how much construction work is to be done and that will decide how much business UK can generate for the Lafarge Tarmac, for example during the period of recession not much work of construction is done but at the time of boom the construction demand reaches the heights of the sky. Social environment also plays a very important role in the business as the society is the factor for which the business operates there will not be any customer for the Lafarge Tarmac if they do not consider the social environment of UK.
Society is the ultimate consumer for Lafarge Tarmac and the company has understood this fact very well that is why they have set up the issue of safety at their utmost priority. Technological environment is yet another important factor for the Lafarge Tarmac as the rapid change in technology in the construction sector makes it difficult for the organization to cope up however still the company has to manage in one way or another. Any new machine for the construction sector which can reduce the costs at the construction sites can prove out to be a game changer for Lafarge Tarmac. Legal environment is a very strict environment under which all the rules and regulations are given which needs to be followed by Lafarge Tarmac.
In UK there are many rules and regulations as per the Acts which are necessary to be followed by Lafarge Tarmac for example rules of taxation and rules for the Accounting records. Environment is the last factor that affects business as being the part of the environment it is the responsibility of Lafarge Tarmac to save the environment and over the time the company has been doing this brilliantly. Lafarge Tarmac has a separate policy for the environment under which the company tries extremely hard to use the resources in such a manner that it doesn’t affect the environmen (OGC, 2007)t.
Porter’s Five Forces Model
As per the porter’s five forces model there are five forces that affect the business, same logic applies for the Lafarge Tarmac. First force is the threat of the competition by the new entrants, being the leader by example Lafarge Tarmac turned the construction sector in its favor so as to be the leading construction solution provider. The second force is the threat of competition from the existing companies; Lafarge Tarmac has achieved so much in so little time which is why the existing companies try to take advantage over company. Third force is the bargaining power of the customer under democracy customer is the king of the market and Lafarge Tarmac has constantly tried to keep up to the expectations of the customers (Mind Tools, n.d.).
Fourth force is the bargaining power of the suppliers as it has already been discussed that Lafarge Tarmac is the ultimate solution provider which means that they needs regular supply of the materials in order to make their products which is possible only when they can maintain a healthy communication with the suppliers. Last and fifth force is rivalry, Lafarge Tarmac was started in the year 2013 and in 2014 it become the leader as construction solution providers this has created the feeling of rivalry among those companies who are in the business for years and always wanted to be in the place where Lafarge Tarmac is today.
2.3 Stakeholders Analysis
Stakeholders are the people who have the keen interest in the organizational activities. Broadly stakeholders are divided into four groups which also known as the Stake holder’s significance grid, same is shown below for Lafarge Tarmac (Mind Tools, n.d.).
The name of the group and the standard strategies to be opted for them are given in the above matrix strategies (Schmeer, n.d.). Stakeholders mapping is yet another technique in order to manage the stakeholders under which the stakeholders are divided into groups and then the strategies are made for them it is similar to the Stakeholders significance grid as shown above. The given is the example of Stakeholder’s Mapping (Stakeholdermap.com, n.d.).
Growth is one important factor for the organizational survival, it is important for the organization to grow in one way or another whenever possible. Broadly there are many ways under which the organization can grow in the market. In this part of the assignment various limited and Substantive growth strategies for Lafarge Tarmac has been discussed which can be tried by the company as an alternative for its current strategy (Lafarge, 2014). In the final section of this part of assignment the very best strategy out of the discussed strategies will be suggested for Lafarge Tarmac to be adopted in future.
3.1 Alternate Strategies for limited growth, Substantive Growth or retrenchment for Lafarge Tarmac Cement is the basic necessity for the growth as every time a new building or other construction sites. Growth in the cement industry has also been constant in the past few years. However for the Lafarge Tarmac the growth is not only an opportunity it is also a form of strategy. Some of the strategies for Lafarge tarmac are based on the limited growth some are for substantive growth while at the same time some are based on the retrenchment of the growth.
Strategy for Limited Growth
Growth is one of the key factors in evaluations of In a rapid changing environment of construction business instant growth can turn out to be a huge risk for the Lafarge Tarmac hence it is beneficial for the company to grow as per a limit and do not take high risks instantly. Lafarge Tarmac is a new company which came in the existence in 2013 and it is a huge success for the company that in 2014 it has signed a deal with a gigantic cement company in Switzerland to be the largest cement producer of the world (Sherman, 2014). However as an alternate strategy for the company it can try to be growing as per limit so that no financial burden comes on the organization. In case the company grows by limit it will also not be a problem of costs for the organization but what is more important than the costs is that after the five or six years the organization will have more money to grow instantly than their competitive organizations.
As said already Lafarge Tarmac is a new company and do not have the enough experience to handle things on a large scale so it can be very complex for them to handle the business on a large scale however it will not be a problem for the company if they opt for the Limited growth Strategy (Dransfield et al., 2004). One plus point of the current strategy of growth adopted by the Lafarge Tarmac is that it has signed to be in ventures with the two giant companies in cement industry. Joint ventures are also a technique of the limited growth as under the joint ventures different organizations share their powers. The share of the company in the venture is decided on the basis of the mutual agreement of organizations (Reader, n.d.).
Strategy for Substantive Growth
Substantive growth is also a very successful way to grow in the market. Substantive growth can prove out to be very beneficial for Lafarge Tarmac as it can cover up many deficiencies of the company. If Lafarge Tarmac takes on the strategy for the substantive organization the company will be having more growth opportunities as compared to the other organizations in the future. Lafarge Tarmac is a new company it is not beneficial for it at all to stand against the giant companies of the construction sector (Reader, n.d.). Rather it is beneficial for Lafarge Tarmac to grow substantively for few years and when the organization has enough experience to tackle any other name in the construction sector they can even try to go for the instant growth. Merging and acquiring the other companies are the most commonly practiced techniques of the substantive growth.
Till now the company has not acquired any other company but the decision of the company to merge with the Holcim Ltd. has been the best growth for the company as Holcim is a giant in the cement industry and after forming Lafarge Holcim it will be completely in favor of Lafarge to gain the market advantage as Holcim is already on the heights of the success. But when these two organizations will merge a new and biggest producer of the cement will emerge.
Retrenchment Strategy/ Disinvestment strategy
Retrenchment generally means cutting up the processes in the organizations so that the organizations can become more stable financially but for the Lafarge Tarmac costs has never been the issue, however there is one more fact that can prove out to be interest worthy for Lafarge Tarmac as the company is currently involved in every product for the construction site like concrete, cement, bricks and all (WebFinance, Inc. , 2014). However if the company will cut loose some of its products it can focus more on the cement. Merging with Holcim will make the organization more focused on the cement than any other product produced by the organization.
Expansion can be made for the growth of Lafarge Tarmac; Ansoff matrix provides the best model for the growth. Diversification is the key part of the matrix as when diversification is done the organization grows automatically. Integration is yet another strategy that can be used by Lafarge Tarmac as the organization already is producing multiple products for the construction sector it can add some more products or services to their existing list of products (OGC, 2007).
For example Lafarge Tarmac is a producer of cement for which limestone is a key ingredient hence the company can also start to sell the limestone to the other companies who produce cement. Strategic Alliance is the most advantageous strategy which is based on the mutual understanding of different organizations in sharing the resources. Licensing or franchising for the branches of the organization can also prove out to be a very effective growth strategy for Lafarge Tarmac.
3.2 Appropriate Future Strategy for Lafarge Strategy
Lafarge Tarmac already is under a joint venture and it has signed up to be merged with the Holcim Ltd. hence the best option for the organization will be to diversify in the countries other than UK. Hence diversification would be the best option of growth for Lafarge Tarmac. By diversification Lafarge will not only grow but at the same time the company will also gain the competitive advantage over its competitors. Diversification strategy is best suitable option for Lafarge Tarmac as under this strategy the company will be able to continue with their existing decisions and not much will be required to be changed.
The strategy of diversification is highly acceptable for company like Lafarge Tarmac which has been formed under JV of two big companies, who can take high risks (Turner, 2008). Resources has not been an issue for Lafarge Tarmac so far hence it s expected that addition resources after diversification can also be available easily, which means this strategy is highly feasible for the organization (Carttar, 2014).
4.1 Roles and responsibilities for Strategic Implementations Meaning of Strategy Implementations to the Business Operations Overall there are three basic influencers of the business operations in Lafarge Tarmac, i.e. Culture, System and Structure of Lafarge Tarmac. While implementing the strategy so as to achieve the desired objectives the values of organization can change completely. The impact of the strategy on business operations has been described using the table below.
(The impact on Strategy Implementation on the operations of Business) Culture
Rather than the strategy the culture of the business make more impact on the strategies of Lafarge Tarmac. By implementing the strategy the goals of the company will become more unified and oriented on one common objective.
There are three factors that are affected by the strategic implementation, i.e. communication, decision making and coordination among the different teams in Lafarge Tarmac. The behavior of the employees in Lafarge Tarmac is also expected to be changed in a positive way for the organization which will increase the productivity of the company.
Different kind of systems can be made in Lafarge Tarmac using the new strategy. This will create the impact on the output of the organization, the behavior of the employees and integrating system of the company.
The Strategy Practice Model
Evaluation for the improvements during the controlling function of management
Board of Directors
Defining mission Statements
After taking consideration of the market position of the organization and the overall performance of market
Using different methods of analysis like surveys and interviews
Evaluation of competitive Advantage
Analyzing the market on the basis of the financial reports and comparing the same with that of the organization’s
Any Volunteer from the management or
the manager of the team who will be affected most due to the strategy
Communicating the Strategic Plan
Communication in a confident level with deep understanding of the concept of the strategy.
4.2 Resource requirement in order to implement the new strategy in Lafarge Tarmac Type of Resources required
Access to/ Availability of Resources
Constraints to the implementation
Availability of finance has never been the issue of problem for Lafarge Tarmac as it is formed under the venture of two big companies, further the own assets of the organization are double the value of its liabilities During the days of recession the finance do becomes problem for the organization. IN other case where if one organization incurs losses the other company do not wish to contribute the entire share for the company with only half share in profits.
Human Resources are appointed in Lafarge Tarmac from many different ways, like through the educational institutes or from the other job offers to the experienced people The lack of interest in the new generation for the construction sector.
Infrastructure of the organization is a highly valuable asset for Lafarge tarmac, further the raw material for the products of the company is also available to the company easily. Variety of technologies creates confusion as what to be chosen for the company, further different quality of the raw material is also a constraint as sometime the desired quality of the limestone or other raw material is unavailable with the suppliers. Time for the reaction in the organization
Lafarge Tarmac tries a lot of things with its management team so it might take some time for the final results to emerge up. Sometimes the organization keeps on waiting for a positive response but as so much is going on in the organization the loss is not even noticed by the managers and time keeps on increasing.
4.3 Targets for achievements to monitor the strategy of Lafarge Tarmac
Tools of Evaluation
Targets to be evaluated
Compare the performance of the organization with the performance of entire construction solution providers in the industry Whether there is any company performing better in the area of evaluation and if yes then finding out how?
Analyzing the strengths, opportunities and weaknesses, threats for the Lafarge Tarmac. A strategy which increases the strengths of the company is said to be a good strategy while on the other hand if it increases the weaknesses or threats then it is not working well for the company
Evaluating the starting and ending position of the organization from the plan to the till date of evaluation and comparing the same with the targets. Whether the improvements has been satisfactory due to the new strategy and if not finding out the reasons for the same.
Key Performance Indicators
Evaluation of every process involved in the operations of Lafarge Tarmac Finding out the key process for the organization and improving the processes which are not working well for the company.
Lafarge Tarmac is one of the most successful organizations among the construction solution providers today. The company was formed in 2013 and within one year the company is on the edge of becoming the largest cement producer of the world. Under this assignment the strategic evaluation for Lafarge Tarmac has been done, including the strategic analysis of the company using various models, the current strategy has been evaluated and alternate strategies has also been advised for the company. In the last segment of the assignment, different affects of the strategies are shown with the help of tables and the roles of the stakeholders are made clear, in the end the tools for evaluation of the strategy has also been discussed.
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