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Development of Management Strategy for Growing Company

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Introduction

Nowadays technologies are growing so fast that if we will not be able to adopt them in time, than our company becomes non-competitive. This project was done with an aim to apply gained knowledge's in engineering and management course, to analyse how selected firm can be developed from engineering and management sides. Engineering studies will help from the one hand to apply engineering knowledge's, but from the other hand to get known new technologies and how they make our life better. Universities experience in management and marketing studies will help to do analyses of rival companies and make clear how company's management can be improved or adopted from existing successful companies.

There are two important processes in building construction, foundation and roof. Both constructions are equally important for building wellbeing. Foundation need to be designed and build up right in the beginning of construction, but roof need to be carry during all buildings life period. It means that roofs are every sequenced time of period that depends on material, need to be overlaid or repaired. On this theory was born project's engineering part. For project's object was selected a construction firm that focused on roof construction, its technologies and sheet metal works.

By exploring roofing market will be determined its growing technologies with an aim to adopt them to selected firm. Exploring major roofing companies management, will help to improve chosen firm current way of management.

Generally this project is based on roof technologies, management marketing research. Gained experience will be applied to chosen firm development in all directions.

Aim

Develop management strategy for a small company.

Objectives

1. Literature review of management prescriptive strategy development:

* Analysis of environment

* Analysis of resources

* Development of company's vision, mission and objective

* Types of management strategies

2. Choose a company with an aim to apply management strategy

3. Literature review of chosen company

4. Develop management strategy to the chosen company

5. Develop additional management improvements

6. Conclusion

Strategic Management

Essence of Strategic Management

According to the Emergent view there are strategist that suggest that it is hard to predict future and strategy need to be more dynamic with an element of risk.

The Prescriptive view Strategic management is about defining a purpose and plans of organisation and work out the actions to achieve desired purposes. The essence of Strategic Management consist from two levels that are shown in Figure 1 and described below :

* General corporate level - Decision making process depends from in what type of business company belong. The leadership and culture of corporation are very important strategy management.

* Individual business level - Decision making process generally based on competing for customers, generating value from tangible and intangible business resources and focus on resources that can bring competitive advantage. Strategy is about relations of internal capabilities and external relationships.

Figure 1 Essence of Strategic Management (Lynch, p5, 2010)

(Lynch, p5, 2010)

Approaches to Strategic Management

There are exist two different approaches to strategy: Prescriptive and Emergent approach.

The prescriptive approach

Approach is based on idea that future is predictable and strategy development begins from "Where-we-are now" and all objectives and steps how implement ideas are developed. The prescriptive theory have three core areas: Strategic analysis, Strategic development and Strategy implementation. All three areas are closely related sequentially. The prescriptive strategy development process shown in Figure 2.

Figure 2 The prescriptive strategic process (Lynch, p19, 2010)

The emergent approach

Approach is based on view that strategy emerges and developed during further period of time based on unpredictable environment. The final objective of emergent approach is unclear and objectives are developed during its realisation. Strategic analysis, Strategic development and Strategy implementation are interrelated. But because strategy is implemented by improvisation and allow mistakes, it is not need to make clear distinction in development and implementation phases. The prescriptive strategy development process shown in Figure 3.

Figure 3 The emergent strategic process (Lynch, p19, 2010)

Analysis of Environment

Analysis of environment is a research of everything and everyone in external environment. It includes suppliers, customers, competitors, government, technologies etc. There are exist nine different tools how environment can be analysed and they are shown in Figure 4.

Figure 4. Environment analysis tools (Lynch, p74, 2010)

Environment basics

There are three basic things that should be analysed:

* Market definition and size - Question need to be asked in this area is "What is the size of market?". It is important to know market size because it will help to design strategy objectives. Market size usually shown in annual sales.

· Market growth - After establishing market definition and size need to evaluate how much the market has grown in particular period of time, usually in a year. Market growth rate will influence strategy objectives. Organization that would like to grow quickly will be interested in fast growing market

· Market share - It can be defined as ratio of all sales in a market that is detained by particular company. There are different ways how market share can be measured, but most important of them are "Sales revenue" and "Sales volume". (tutor2u)

(Lynch, p79, 2010)

Degree of turbulence

It is important to evaluate external conditions of organisation, specially dynamic of environment. In strategy environment will have high degree of turbulence it will be hard to apply analytical techniques. Environmental forces that influence organisation:

* Changeability - Degree of environment changeability that shows rate how external factors likely to change. Changeability splits further in such factors:

o Complexity - Degree of complexity of such factors as internationalisation, technological, social and political.

o Novelty - Degree of how often new situations influence environment.

* Predictability - Degree of how changeable environment is predictable. Predictability is subdivided in two categories:

o Rate of change - How fast environment changes. Usually rated from slow to fast.

o Visibility of future - Based on previous experience determine how predictable is future.

Figure 5. Dynamics of environment. (Lynch, p81, 2010)

After doing analysis of factors above will be possible see how stable will be strategy for particular environment. In predictable environment with low turbulence can be used prescriptive approach. In case of high turbulence better to use Emergent approach because of high rate of change where designed objectives can lose their value in short period of time.

PESTEL analysis

PESTEL is checklist type analysis that is widely used to analyse environment in different directions. Analysis rely on past experience and events that after listing can be used to forecast future or apply them on company improvement design. Factors that need to be discovered in PESTEL analysis:

· Political:

o Government policy

o Regulations

· Economical

o World trends

o GDP

o Inflation

o Unemployment

o Energy costs

· Social

o Changes in lifestyle

o Demographic

o Customer demand

o Population

o Culture

· Technological

o Patents and products

o Technology development

o Speed and change of technologies

o Innovations

· Environmental

o Public opinion

o Green issues

o Recyclability

o Renewable energy

· Legacy

o Law

o Health and Safety

(Lynch, p82, 2010)

Industry life cycle

Entity of strategy will change as company move from one life cycle phase to another. In the Introduction phase, company try to attract interest in new product. As product became more recognizable and increase in demand than industry moves into next phase called Growth and with demand increase amount of competitors. Over time when market is saturated and most customers are satisfied with product life cycle proceed to Maturity phase where growth is slowed down. Few competitors may join in this phase, but hard to survive because of high competition. After Maturity phase cycle start to Decline. Whole process is shown in Figure 6.

Figure 6. Stages of industry cycle. (Lynch, p87, 2010)

Company have more opportunity to survive and gain more profit in life cycle early ages while entry barriers are low and there are only few competitors. But it is hard to determine the beginning of life cycle because if its unpredictable duration.

(Lynch, p87, 2010)

Key factors for success

The Japanese strategist Kenichi Ohmae argue that for successful strategy organisation should define key factors for success that will help to define objectives more correctly. Key factors are resources such as skills, labour, experience or attributes that can bring competitive advantage to organisation. Key factors can be determined not only from internal advantages but also designed based on external environment. There are three factors need to be analysed:

· Customers - What exactly customers want? Who are they? Are there any special segments? Why they buy from us? Need to be evaluated (Lynch, p95, 2010):

o Price

o Service

o Product or service reliability

o Quality

o Technical specification

o Branding

· Competition - What factors help company to compete successfully? Who are our competitors? What factors influence competition? Need to be evaluated (Lynch, p95, 2010):

o Cost comparison

o Price comparison

o Quality issues

o Market dominance

o Service

o Distributors

· Corporation - Companies technologies, organisational ability and marketing? Key resources of our competitors? Need to be evaluated (Lynch, p96, 2010):

o Low-cost operations

o Economies of scale

o Labour costs

o Production output levels

o Quality operations

o Innovative ability

o Labour/Management relations

o Technologies and copyright

o Skills

(Lynch, p94, 2010):

Porters five forces

One of the most important organisation analysis that need to be performed is evaluating environment forces that influence particular company. Such evaluation will help to gain better competitive advantage than rivals. Professor Michael Porter provide model (Figure 7) that helps evaluate forces that will help to understand organisation opportunities.

Figure 7. Porters five forces model (Lynch, p95, 2010)

The bargaining power of suppliers - Every organisation require raw materials to produce product or service it mean that organisation depend from raw material suppliers. There are shown how suppliers can influence organisation:

* If there are few suppliers it means that it is hard to switch to another supplier in case supplier is exert its power.

* There are no substitute raw materials that supplier provide.

* Organisation costs depend from suppliers price. If supplier increase price for provided material than costs will increase and organisation need decide: increase product price or not. Increased price can lead to lose of competitive advantage but if price stay the same that profit will be smaller.

The bargaining power of buyers - To make a profit organisation sell their products or service to customers. Every customer have need, wants and own opinion about particular product. Organisation should make customer power analysis to understand who have more influence over other. There are some issues:

* There are only few buyers. Organisation have weak position and generally depend from customers and want to attract them as more as possible. In this case customers can easily influence organisation.

* Product or service is undifferentiated. Customer can easily switch to product offered from other organisation.

The threat of new entrants - Entrance of new rivals is possible whet profit margins are attractive and entry barriers are low. Porter argue that there are seven factors that influence entry barriers:

1. Economies of scale - Production cost are reducing when product volume significantly increased. These cost reductions provide entry barriers, because company entered in such market forced to keep small price to be competitive.

2. Product differentiation - Brand, level of service, attracted customers provide entry barrier because by entering in such market will lead to spend extra funds and time to make new brand more recognizable and establish in the market.

3. Capital requirements - Entrance in some markets require investment in technologies equipment, distribution etc.

4. Switching costs - When customer is satisfied with provided service or product he is not thinking about other products and it is hard and require high investments to influence customers opinion.

5. Access to distribution channels - Production need to be effectively distributed. It takes long time to establish own distribution channels and make it work profitably.

6. Cost disadvantages independent of scale - Already established companies invested hardly in infrastructure and gained mayor buyers in the market. It becomes hard for new company to find what to start with, because infrastructure is already established and it is hard to involve changes.

7. Government policy - Government tend to secure local companies and publish law that defend them.

The threats of substitutes - Substitutes is something that can replace a product or service usually provided for smaller price. Things that need to be analysed relative to substitutes:

* Customer ability to switch to the substitute

* The possible threat of obsolescence

* What costs will provide switching to substitute

Rivalry among existing firms - Some markets and companies are more competitive than others. There are thing that need to be analysed (Model of competition):

* Number of competitors

* Size of competitors

* Growth rate

* Product differentiation

(Lynch, p97-101, 2010):

Four links analysis

Most organisations links together to perform better with other companies help. Co-operation can lead such factors:

* Reduce costs

* Increase organisations sustainability

* Open new market sectors

The Co-operation usually divided in four subgroups that help more clearly define co-operation type and how it might be improved:

· Informal co-operative links and networks - The organisation links and co-operates together on mutual basis without contract. The analysis need to be made to find out what opportunities will provide such link. Usually analysis contain from strengths and weaknesses. Need to pay attention by forming mutual contract because in case fraud it will be hard to prove that particular company is right.

· Formal co-operative links - Formal co-operation is linked with legal contract. The difference from informal co-operation is in degree of formality. Such links usually form alliance or joint ventures that works together for many years to gain competitive advantage over rivals and take more market share.

· Complementors - The Complementors are companies that supply products that add value to final product. Usually such co-operation is based on several companies that provide different skills and resources that work together on manufacturing of one product. Such organisations have interdependence between themselves.

· Government links and networks - The organisations that have linkage with government.

(Lynch, p102-105, 2010)

Competitor analysis

In most markets there are more than one competitor. It is hard to evaluate each of them and because usually it is done by taking few companies and making narrow evaluation. It will help to understand what advantages and disadvantages compare to organisation rivals have. Broad analysis of competitors and their power helps to find their forces. Basic analysis will consist from making competitor profile based on such issues:

· Objective - An analysis of competitors objectives help to forecast its strategy. If competitor tend to gain market share then probably will start to implement aggressive strategy. If seeking profit growth than possibly competitor will invest hardly in new plant or improve technologies. Every objective can help to forecast rivals action. Companies annual statements can be useful in evaluating but need to be analysed wit attention because of factor of bluffing.

· Resources - The type, size and amount of resources that provide competitive advantage to company need to be analysed.

· Past record of performance - Can provide company's successful performance that can be adopted.

· Current products and services -

· Links with other organisations - Evaluate links, alliances and other types of co-operation than deliver competitive advantage.

· Present strategies - Innovation, customers, investments, market share, product range etc. Evaluate how such things used for strategy purposes.

Customer analysis

Customer is crucial resource of company profit income. Any company will always be interested in as more as possible customer attraction. There are measurements that can be used in customer analysis:

* Identification of the customer and market

* Market segmentation and its strategic implications

* The role of customers service and quality

Previously market was based on "Mass marketing" theory where one product was sold to all customers. Nowadays is used "Targeted marketing" where company aims on particular market segment and provide product or service only for this segment. Market segmentation can deliver more opportunities to strategy:

* Particular segments can be more profitable than others

* Some segments can have less competitors that can provide competitive advantage

* Some segments can have higher growing rate.

(Lynch, p107-108, 2010)

Analysis of resources and capabilities

Analysis of resources and capabilities gives not only opportunity to look how resources provide competitive advantage but also help understand two important things:

* How resources can provide higher profit and better service

* Which resources provide competitive advantage and how they can they be improved all time.

There are two way that goes interdependent: Value added and Sustainable competitive advantage (Figure 8).

Path of resource analysis (Lynch, p119, 2010)

Resources and Capabilities

Resources and capabilities analysis aim is to recognize where is value added resources and explore what resources deliver competitive advantage to company. There are four questions need to be addressed to company with regard to resources and capability analysis (Lynch, p122, 2010):

1. What kind of resources and capabilities company own?

2. Why organisation have these resources?

3. Why they are important and what advantage they deliver to company?

4. How they can be improved?

Figure 9 Sequence of resources and capabilities analysis (Lynch, p122, 2010)

Analysis of resources and capabilities starts with full range analysis of resources. It is hard because of some resources are hard to measure. Resources and capabilities can be divided in three categories (Lynch, p123, 2010):

· Tangible resources - Are physical resources that contribute to companies value added. These can be modern equipment, location, etc.

· Intangible resources - Resources that have no physical presence. It can be companies recognisable brand name, culture, skills level etc.

· Organisational capabilities - Such resources as management or leadership that manage tangible and intangible resources.

Value added

The role of resources in company is to add value and gain profit. The value adding process shown in Figure 10 and can be defined as the difference between product output price and the costs of input.

Figure 10. Add Value process (Lynch, p130, 2010)

The Value chain

The value chain is a value of all activities that is linked with functional parts. Each part makes contribution in value add process. Company perform two types of activity that add value to product or service: Primary activities and support activities. Primary is activities that process itself. Support activities are performed by management and human resources. Porter designed company's value chain process that is shown in Figure 11. Where "margin" is difference between Total Value and Cost of performance

Figure 11. The value chain (Lynch, p132, 2010)

The primary activities add value to company by its own way and they are(Lynch, p132-133, 2010):

· Inbound logistics - The areas that related to receiving raw materials and goods from suppliers, storing them till they will be required, moving and carrying within company.

· Operations - The production area where products or services being produced.

· Outbound logistics - The distribution of final product to customers. It is about transportation, warehousing, wrapping etc.

· Marketing and sales - Analysis of customers needs and wants and deliver to customers information about what product or service company offer.

· Service - It is about before product selling pre installation or after selling service.

The support activities:

· Procurement - The person or department that is responsible for purchasing raw materials or goods. The goods need to be purchased for as low as possible price and highest quality.

· Technology development - The important are that need to be updated all the time.

· Human resource management - Training, recruitment, management improvement, employees motivation is important for companies success.

· Firm infrastructure - Background planning and control of system.

The value system

Every company have own value chain and at the same time belong to wide system that involve supply and distribution chain and customers chain. The competitive advantage can deliver suppliers that supply better goods to you rather than rival organisations. The value chain need to be evaluated and improved.

Sources of competitive advantage (Lynch, p147, 2010):

* Differentiation - The development of exclusive feature or service that could appeal particular market.

* Low costs - Development of low cost product or service can attract more customers.

* Niche marketing - Concentration on particular market and distinguish and provide all necessary to appeal customers from this market.

* High performance or technology - Improved performance and customers needs satisfaction better than competitors will provide growth in the market share.

· Quality - Provide quality that competitors not able to match.

* Service - Provide service that competitors not able to match.

* Vertical integration - The backward acquisition of raw material suppliers can increate competitive advantage.

* Synergy - The combination a parts of business that together could deliver better result success and profit than separate.

* Culture leadership and style of an organisation - The way how company is organised and managed. The good managed company will lead to employees satisfaction and improve their attitude to company. It will improve service, quality and deliver good environment for innovation.

Resource based sustainable competitive advantage

There are seven resource elements that can deliver sustainable competitive advantage:

· Prior or acquired resources - Easier to create value on already available to company strengths rather than start from beginning.

· Innovative capability - The innovation is important because it can deliver competitive advantage and improve entity.

· Being truly competitive - Identify resources strength and opportunity is not enough because they need to be comparatively better than competitors as well.

· Sustainability - Resources are more competitive if they don't have and cannot be substituted.

· Appropriability - Resources must deliver success only to individual company, but not shared among others.

· Durability - Good resources should last as long as possible. There is no reason to identify a competitive resources if they are not sustainable.

· Imitiability - Resources should be hard to imitate.

Defined resources need to be classified in hierarchy of resources (Figure 12) by their importance and delivered competitive advantage.

Figure 12 Hierarchy of resources (Lynch, p151, 2010)

Improving competitive advantage

There are three methods how resources and capabilities can be improved (Lynch, p158-160, 2010):

* Benchmarking - Compare practice and experience with other companies and identify what improvements can be performed. The compared industry can be perform another kind of job, need to be copied only companies principles of operation.

* Leveraging - Exploit companies resources fully. That method can be subdivided in 5 prescriptive routes:

1. Concentration - Focusing company's resources on the key objectives.

2. Conservation - Exploit every resource or aspect available to company.

3. Accumulation - Evaluate fully resources of company and use it where appropriate.

4. Complementarity - Analyse resources with an aim to combine them. New combination can deliver competitive advantage.

5. Recovery - Make sure that all resources generate produce as quickly as possible.

* Upgrading resources - The resource analysis can show that an organisation is losing its competitive advantage, so resources and technologies need to upgraded.

Vision, Mission and objective of the company.

Strategy purpose is explored by established mission and objectives of company. To identify mission and objective need to be evaluated why company exist and how value adding can be generated? Additionally need to be explored company's vision based on opportunities and how it can be evaluated.

The purpose of the organisation

The purposes of organisation need to be defined clearly otherwise it will be hard to establish proper strategy. To define purpose more clearly need to be considered six questions (Lynch, p221-226, 2010):

1. What is our activity and what should it be?

· Need to be considered the area of activity - is it business or non-profit organisation?

· Evaluate what company is focused on - should company concentrate on the purpose or it can be broad?

· Do company focuses on profit or diversifying? That issue can be defined broad or narrow.

· Usually strategists define purposes based on the competitive resources of company.

2. What kind of organisation do we wish to be?

· The company usually chose one of two areas:

o Culture and style - Organisations chose this area based on previous experience and developed history.

o Challenges to be posed to members of the organisation.

3. What is relative importance of shareholders and stakeholders?

· Some companies purpose is to satisfy shareholders wealth.

4. Do we want to grow organisation?

· Is company growth is included in purpose or it should stay the same size?

5. What is our relationship with our immediate environment and with society in general?

· The purpose need to be considered with environment within which company perform. In immediate environment need to be assumed such factors as turbulence, competition etc. Society in general is about pressures that influence company.

6. How do we bring all these consideration together?

· The summary of purposes need to be stated in few sentences that will specifically describe.

Vision for the future

It is imagination of company that stakeholders, shareholders or owned would like to see it after a period of time. There are two views on the values that need to be explored to develop a strategy:

* The irrelevance of strategic vision - For approaching short-term goals - strategic vision can be not performed.

* The value of strategic vision - "Vision is a challenging and imaginative picture of the future role and objectives of an organisation, significantly going beyond its current environment and competitive position" (Lynch, p227, 2010). There are a lot of reasons to develop a strategic vision and most important is that the vision is going far in future than organisation is and help to develop purposes how to get there. New vision can help to develop mission and objectives.

The mission

"The mission of an organisation outlines the broad directions that it should and will follow and briefly summarises the reasoning and value that lie behind it" (Lynch, p236, 2010). The mission need to be defined based on previously explored purposes. In prescriptive strategy mission is set to be realised in next few years. The role of mission is to develop direction which company will follow and try to realise. There are five elements of the mission statement that need to be explored and chosen appropriate:

1. Explore the nature of the company. In this case can be asked such questions as "What business are company in?" and "What is desired business for company?"

2. The mission should be developed from customers point of view rather than company's.

3. The mission should show the basic values and beliefs of the company.

4. The elements of sustainable competitive advantages need to be shown in the mission.

5. The mission need to show the particular reason for its choice to realise.

The objectives

Objectives are the aims that need to be realised to implement the mission. This process cover what and when is need to be done. In most cases objectives should be quantified and measurable, but sometimes such objectives as ethic, employee or customer satisfaction is hard to measure. Company should apply any measurements to hard measurable objectives with an aim to get a feedback how successfully they implemented. Usually companies set objectives in two areas:

1. Financial objectives - Such as profit, cash flow, earnings per share etc.

2. Strategic objectives - Such as customer satisfaction, market share, product quality etc.

(Lynch, p242, 2010).

Strategy options development

When the purpose of company is defined need to develop a strategy options how to achieve it. After options development need to chose more suitable and that will bring advantage.

SWOT analysis

As a starting point of strategy options development can be summarising current position using SWOT analysis. SWOT is analysis that helps to find company's internal Strengths and Weaknesses, and external Opportunities and Threats.

There are some factors that can lead to enhance the quality of the analysis:

* Make a brief description of each idea in bullet point style

* Relate internal factors (Strengths and Weaknesses) to the company's key factors for success.

* Internal factors need to be defined in competitive terms, where possible.

* Analysis should show the realistic gap between "Where are we now?" and (Where are we want to be?).

(Lynch, p302-303, 2010).

Environment based options: Generic strategies

The generic strategies involve three basic strategic options of differentiation, cost leadership and focus that is open to any business. The theory argue that every company need to choose one of the options to gain successful competitive advantage. All three options can be explained based on two aspects:

1. The source of competitive advantage - There are two sources of competitive advantage. These are Low costs and differentiation.

2. The competitive scope of the target customers - It is possible to focus on the broad target or on the narrow target.

Figure 13 Generic strategic options (Lynch, p304, 2010).

Low-cost leadership

Is an industry that has built and maintain plants, work, labour costs and equipment that provide the lowest costs in particular market or industry. Competitive advantage to the such company brings low cost production and distribution. In practice, such company eliminates all procedures that do not add value to the product in a value chain that helps to reduce product price.

Differentiation

Product differentiation gives opportunity to charge a price that is higher than average in the market. Organisation is identifying the group of potential customers that can respond differently. Some customers can pay more for the products that are aimed on their needs or wants. Porter argue that price of differentiated product should be higher than ordinary, for example, to advertise it. Differentiation strategy can lead to two problems:

1. It is difficult to forecast that will the differentiation costs be recovered by charging customers higher price.

2. The successful differentiation can lead to competitors attraction that can easily copy product or service and enter the market.

Focus strategy

A focus strategy is when company is focused on a specific niche and provide product or service that is developed for particular market segment. By targeting on particular market segment, company can gain higher profit by charging an extra price for specially provided quality.

Environment based options: The market option matrix

The market option matrix shows the product and market options that are available for company. Matrix shows not only possibility of launching new product but also explores ways of withdrawing from the market with an aim to move into unrelated market segments. The market segment type is based on product/market options that is shown in Figure 14.

Figure 14 Market options matrix (Lynch, p304, 2010).

Withdrawal

There are some reasons why companies withdrawing from the market:

* To avoid profit losses when product or service life time is declining.

* Overextension of the product on the market.

* Raise funds with an aim to invest them elsewhere.

Demerger

The demerging is one of the way of withdrawn from the market that also have positive impact. For example demerger companies shares can cost more merged. This strategy is used to increase underlying asset value of the company.

Privatisation

It is about privatise government owned companies.

Market penetration

This option involve a customer attraction directly from competing market. It can be performed by offering better quality products or higher level of service along the promotional activity. It will be expensive in short term, but in long run it deliver benefits. It is more easier to penetrate a growing market, because most customers could be still searching for the most suitable product.

Market developments

In this option company moves beyond its immediate customers to attract new potential customers for existing product or service. Company is looking of new ways of exploitation of existing product, new geographical areas and development of new segments.

Product development

The product development aim is to develop significantly new product in existing market. There are some reasons that could justify this option (Lynch, p316, 2010).:

* To utilise excess production capacity

* To exploit new technology

* To maintain the company's position as a product innovator

Diversification: related markets

When company choose diversification strategy is goes out of its present market and product into new segment. It is high risk to make a step into unknown market, but it can be minimised by moving into related market. There are three types of diversification of related markets:

1. Forward integration - The company start to be involved in its outputs, such as distribution, logistics and transport.

2. Backward integration - The company start to be involved in its inputs, such as raw material supply, plant and machinery.

3. Horizontal integration - The company start to be involved in areas that are closely related to its existing activities.

Diversification: unrelated markets

The high risk is provided when company wants to move into unrelated markets, because of lack particular knowledge and experience in new area.

(Lynch, p313-318, 2010)

Environment based options: The expansion method matrix

The expansion method matrix shows the methods by which the market opportunities related with strategy can be achieved. The company's internal and external expansion opportunities appraisal can be established methods how company can be expanded. In addition it is important to examine the methods how expansion can be achieved.

Figure 15 Expansion method matrix (Lynch, p319, 2010)

Acquisition

The reasons for such method of market expansion is associated with especial assets of the company that represents the reasons for acquisition: Market share, Core competencies, Brand and required technologies. Acquisition can be performed in competitive reasons. For example, in a static market it can take more time and high costs to enter the market from beginning.

Mergers

Mergers seems the same to acquisition in sense of two companies unite. The difference is that in acquisition one company acquire another, but mergers is more about combining two companies to be more competitive over rivals.

Joint ventures and alliances

A joint venture is the creation of a company whose shares are owned by two parent companies. Such joints is made to attack competitors.

Franchise

A franchise is a licensing agreement where contractor provides permit with a pre-formed package of activity. Usually it is a brand name, technology, technical service and advertising assistance.

Resource based options: The value chain

The development of strategy is based on resources that company possess.

Identifying sources of value added: upstream and downstream

Value can be added early and later to the product. Detecting how and when value is added will help to generate strategic option.

* Upstream activities - Activities that add value to the product in the beginning. To add value in this period company should acquire raw materials in large amount for less price and involve changes and innovations in production that will reduce it costs.

* Downstream activities - Activities that add value to the product in later procedures. Such activities can rely on differentiated products where can be charged extra costs. Downstream value is also can be added by patenting, advertising, market positioning and development.

Resource based options : The resource based view

The identification of most important resources that bring competitive advantage will be the start of developing of strategic options.

Finding resource based options: architecture , reputation and innovation

The resource based view argues that company should have an distinctiveness over competitors. The option development can be made based on some kind of test of resources against the criteria or innovation, architecture and reputation. This test will show on what resources company should focus further.

Finding resource based options-core competencies

Core competencies are the group of skills and technologies that can enable an company to provide a particular benefit to customers. Options that don't provide a core competencies provide less contribution into strategy. There is one way to generate strategic options on core competencies, is to build a "hierarchy of competencies", starting from down where is low individual skills and rise through the whole organisation to the top where are highly skilled individualities.

Strategic options based on the resource based view

There are no detailed structures how to perform examination of resource based view because all companies are different and there no fully similar company in the world. Hence it is need to inspect every area of the company for its resources with an aim to find which areas deliver competitive advantage and which are contribution to value added. There is designed checklist in Figure 16 that can be applied to the most companies.

Figure 16 Resource checklist (Lynch, p329, 2010)

Resource based options: cost reduction

The company as an option also should think about cutting its operation in order to reduce costs. There are main routes that can be used for cost reduction:

Designing in cost reduction

In some industries cost reductions can be made before product reach the factory. It can be gained by more carefully designing a product and simplifying that can lead to time and cost reduction.

Supplier relationship

Negotiation with supplier about lowering product or raw material price. That can be realised in one of two ways:

* Closer relationship with supplier

* More distant relationship with supplier

Economies of scale and scope

Economies of scope is an extra cost savings that can be obtained when separate products sharing some facilities.

Economies of scale is an extra cost savings that can be obtained by higher volume production. Economies of scale are available out of production as well:

* Research and development

* Marketing - In case of massive order large companies can demand discount from media.

* Distribution - Loads can be grouped and stored more effectively and specially designed routes between fixed destinations can reduce costs.

The experience curve

Gained experience and knowledge can involve an ideas how to reduce costs. It is relationship between unit cost and total amount of unit ever produced and showed graphically in Figure 17.

Figure 17 The relation of experience with cost lowering (Lynch, p333, 2010)

The experience curve involve such things as:

* Technical progress

* Greater learning about production

* Greater experience and skills by doing particular process for a long time

Capacity utilisation

It is a level of plant and production technology in operation that is shown in percentage of produced goods on particular plant.

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General roof technologies

Roof starts from its support construction that depends on roof material used further. There are three common used materials for support construction: timber, metal and concrete (Chudley, p214, 1999). After supports are constructed properly, roof design can be developed.

Before starting roof construction, need to be decided the pitch and type of roof that should to be stable in different factors (Chudley, p213, 1999):

* Protect from wind, snow, rain and dust.

* Avoid heat loss during cold period of time (winter).

* Keep construction in cool environment in hot period of time(summer).

* Protect from all stresses impact.

* Avoid damage due cyclical humidity and temperature change.

* Protect walls.

* Avoid penetration and spread of fire.

The roof framework

Chapter is based on (Seeley, p130, 1995)

Framework need to be relatively strong to be able to carry in own weight, weight of roof material and superimposed weight such as human, snow, rain and ice. Additional roof loads are specified by BS 6399-3:1988. The roofing coverage need to able resist such unsafe conditions as atmospheric pollution. By choosing roof need to be assumed wind pressure by BS 6399-2:1997 standards. The highest wind suction perform on slopes below 15, lowest at 30 degrees, and the highest suction areas are roof edges. High wind can provide pressure that will exceed the weight of roofing material and can tear roof away.

Decking materials

Before roof laying need to be designed and chosen decking material. Decking material depends from roof type and specification. Usually this specification is given in standards or provided with material.

Timber

Based on (Chudley, p214, 1999)

Generally used to make lathing for roof. Also can be used to produce softwood boarding, plywood, oriented strand board or chipboard. Roof timber decking need to be designed based on standards BS 5628:2006 or requirement provided from chosen material manufacturer. Chosen timber should be durable and antiseptized against fungal and insects. Additionally ventilation need to be provided to avoid decking moisture that can result fungal attack. Joist should be at least 19 thick mm, planed and properly nailed. Joining of timber to support or wall need to be fixed accurately that allow decking movement, and space for ventilation need be made between decking base and wall.

Wood wool slabs

Based on (Chudley, p214, 1999)

Slab should be produced in compliance with BS 1105:1981, that will provide quality and strength in 1,200 mm span with a various length and 610 mm wideness. Thickness of slab should exceed 50 mm. To avoid threat of condensation need to be applied suitable insulation over slabs with a vapour control layer. Joining of slab to support or wall need to be fixed accurately that allow decking movement, and space for ventilation need be made between decking base and wall.

Compressed straw slabs

Based on (Chudley, p214, 1999)

Made for a standard size 1,200 x 2,400 x 58 mm, using patent method by heat and pressure selected straws. This size and technology gives sufficient strength to slab to 600 mm span.

Plywood

Plywood roof decks need to be produced with accordance of BS 5268:2006. Decks can have squared form or tongued and grooved. All joints should be on the centre line of supporting joist only. If it is not feasible, than additional support need to be added under joining. Sheets need to fixed using shank nails at 300 mm centres. There are two shapes plywood decks made: tongued and grooved or square edged. Plywood decks rigidity depends on ply grain direction. Before sheets installation they need to be checked on moisture content. Best content of moisture is 14% - 18%. Greater than 18% sheets, should not be laid. During construction plywood base need to be protected from rain, to avoid moisture increase. In case plywood affected by moisture, sheet fixing need to delayed to let dry.

Profiled metal decking

Profiled metal decking need to be designed and constructed in accordance with BS 6229:2003. Allowed permissible deflection for metal decking is 1/325. Before laying mastic asphalt, decking need to be laid with additional rigid sheet layer to secure decking profile.

Material and slope of the roof must be considered. Usually material selection depends from roof pitch. As example we can assume that plain tiles must be installed on slope more than 40 degrees.

By fire regulations roof need to resist the spread fire to other buildings and over the roof. In this case materials, chosen for roof cladding, need to be approved by regulation (BS 476).

There are a lot of different roof types available in the market and choice depends from different factors.

Roof insulation

This chapter is based on (Attic Ventilation, 2009)

Roof insulation is important for buildings environment, because it is operate to avoid heat looses and help building save comfort environment. In summer insulation protect building from hot weather, that helps to reduce costs for building cooling. But in winter help to prevent heat looses. Good insulated roof can assist with moisture elimination, condensation and lead soundproofing qualities. The way how roof insulation perform is shown in Figure 18.

Figure 18. Roof insulation (Attic Ventilation, 2009)

Exist different types of roof insulation, and choice depends from type and gradient of roof and required insulation level. Insulation ability can be determined by looking at their R-value, coefficient which shows resistance to heat flow. The higher coefficient will lead to higher level of insulation.

Generally insulation splits in two main categories: bulk and reflective.

Bulk insulation

McGee and Mosher argue that bulk insulation can prevent the transfer of conducted heat, relying on blocked air in structure. That structure have bad conductivity (Figure 19), that helps to avoid temperature change and help to keep desired environment.

Figure 19. Bulk insulation performance (McGee and Mosher)

All types of bulk insulation are shown in Figure 20.

Figure 20. Bulk insulation types (McGee and Mosher).

Reflective insulation

Chapter is based on McGee and Mosher.

Reflective insulation have low absorption and high reflectivity that helps to refuse radiant heat flow. It relies on occurrence of an at least 25 mm air layer, between insulator and source of heat. Usually reflective insulation have foil lamination on plastic or paper that is produced as concertina-type, multi-cell butts and thin sheets. Thermal flow resistance and insulation performance determined by three factors:

Emissivity

Ratio of radiant energy that being emitted by a surface to that of a black body at similar temperature, with same area. Coefficient of emissivity is between 0 and 1, where the higher ratio mean the greater emissivity.

Reflectivity

A measure of amount of radiant being reflected by insulation material. Coefficient of reflectivity is between 0 and 1, where the higher ratio mean the greater insulation reflectivity. The angle of heat flow strikes the reflective insulation. Better performance shows perpendicular angle.

Insulation's performance measured in Total R-value. Before choosing type of reflective insulation, suppose to perform environment appraisal to chose right insulation. During insulation installation and maintain need to make sure than no dust is on the reflective surface, because it greatly decrease its performance. Performance of reflective insulation is shown in Figure 21.

Figure 21. Reflective insulation performance (McGee and Mosher).

Figure 22 shows how good reflective insulation perform.

Figure 22. Radiant barrier insulation performance (Radiant Barrier Insulation).

All types of reflective insulation are shown in Figure 23.

Figure 23. Types of reflective insulation (McGee and Mosher).

Composite insulation

Great opportunity to use composite insulation that combines pluses of reflective and bulk insulations (Figure 24).

Figure 24. Types of composite insulation (McGee and Mosher).

Roof ventilation

Roof ventilation is important part of building and its inhabitants. Proper ventilation helps to avoid condensation under particular roof type, keep ceiling dry and away from blue stain fungus. Roof thermal insulation is very important in premises with high moistness saturation, in such areas as swimming polls.

There are wide range of different sources of moisture at building, from the everyday domestic things consuming to building materials. Warm air consist more moisture than cold air and this moisture generally brings problems in cold period of time in attic. When it's getting cold, warm air start to get cooler that condense into water drops. Main problem it delivers is getting insulation and decking materials wet that will reduce efficiency of insulation.

In wet environment will cause multiplication of blue stain fungus, mildew and rot.

During the summer period of time attic ventilation is important because of high temperature generated there and attic ventilation will be used for another purpose. Closed attic will generate enormous heat that will cause further house flats or room with hot, dry and not comfortable environment. Roof ventilation will help to aerate attic space. How ventilation help to sustain building environment is shown in Figure

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The minimum amount of attic ventilation, to prevent house from conditions mentioned above, is specified in building codes. But if to be not so correct, recommended minimum attic ventilation is about 1 square foot of fresh air for every 150-200 feet of space.

 

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For good roof ventilation need to be two type of vents: Intake and Exhaust vents.

Intake vents

Generally Usually installed along soffit to let fresh air get into attic. For additional ventilation there are exist widely used three types of intake vents:

* Gable vents - Triangular vent installed in the gable wall, below the roof. Recognized as least effective vent, because it operates only near the gamble and air flow is limited.

* Static vents - Roof line or widely known as eyebrow vents. By making holes they installed directly on the roof. Consist metal cylinder with metal hood and a flashing collar that provides protection from the snow and rain. Their effectiveness depends from amount installed. Greatest disadvantage of this type of vents, that they may start to leak.

* Soffit vents - It is aluminium panel with louvers punched to avoid insects penetration. Installed simply by making holes in the soffit and adjusting them.

Exhaust vents

installed on the top of roof or one third from roof top to let air escape from attic. Two types of exhaust vents are used:

* Static vents - Holes on the top of the roof that let air to escape. Located under roof apex.

* Ridge vents - located on the roof top, along ridge.

* Power ventilators - A non-electrical ventilator that mounted with metal vents that use force of wind that spin vents around and by pressure increase amount of air sucked out from the attic. For its operation require wind speed at least 5 mph. It effectiveness decrease when wind is not blowing.

* Fan-driven - Powered by electricity and controlled by sensor installed in the attic. From the one side they are very effective, but from other side they require electricity that will provide extra costs.

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Built-up roofing felt

Chapter is based on Chudley, p215-216, 1999.

Almost all roofing felts in its base content glass fibre or polyester reinforcement, soaked with a hot bitumen. Waterproof bitumen composite is made from both sides of felt. During manufacture outer side is covered with a sand while it hot and sticky. The underside is not covered with a sand, it left sticky, but covered with thin polyethylene to avoid dust and sand stick.

BS 747 offer two types of roofing felts:

* Polyester reinforced

* Glass fibre reinforced

There are three layer need to be laid on flat roof. First layer must be laid at right angle, starting from down of the slope. If felt laid on timber decking, than it need to be fixed with flat-head nails and all joints bounded with hot bitumen. This is necessary for pouring of hot bitumen or it will be under layer for unrolling sheets.

Vapour control layer/membrane

Chapter is based on Stirling, 2009

Built-up roofing felt is not a permeable material and it will not prevent condensation. Because for most roof is advised to use vapour control layer that helps to avoid condensation in attic ceiling. Membrane is located over the roof frame and below laid roofing material.

With accordance to BS 5534 membrane should provide such things:

* If used slates or tiles as roofing material than perform as a barrier for wind and decrease tile uplifting.

* Secondary barrier for snow, rain and dust.

* Provide weather protection before primary roof covering will be installed.

Membrane is made from single ply or laminated spun bound polypropylene or polyethylene. It have fibrous structure that provides vapour one way penetration. Drops of water will soak in this material and will stay in other side, where will roll down or be ventilated out. This technology reduce need for additional ventilation.

There are exist two types of Vapour control layers:

* High water vapour resistance - Designed to provide water resistance more than 50 MNs/g

* Low water vapour resistance - Designed to provide vapour resistance less than 0.25 MNs/g

Gutters and Downspouts

According to "Rain gutters", Rain gutters was invented to avoid water falling from roof edge. Without gutter huge amount of rain water will flow down the roof slope and fall on the ground. This process will erode soil and splash sulphates around foundation. If foundation is made from cement than during long period of time, rain drops will make grooves in the basement. Gutter is a drainage system installed on the down edge of the roof where flow all rain water get caught and removed using downspout system. Size of gutter system and amount of downspouts are closely related to roof area. Increased amount downspouts will lead to better gutter performance in heavy rains.

Types of gutters ( according to "New gutters"):

· Wood gutters and galvanised downspouts - This type of system was traditional construction system previously and nowadays used very rarely. Gutter was made from old cedar that is expensive and almost not available nowadays. Galvanized downspouts are out of market because of new products that are better quality and longer life.

· Continuous Aluminium Gutters and Downspouts - Nowadays widely used product. It can retain more rain water than wood gutter. Disadvantage of aluminium gutter is easy deformation due transportation, installation and by leaned ladder against gutter.

· Vinyl and Plastic Gutters and Downspouts - Widely used in do-it-yourself case. Can be bought in most construction stores and installed in short period of time. Can be easily carried, cuted and installed. Plastic gutters are not durable as metal and should not be used in commercial construction because of applied environmental stress gutter will break while metal will deform. Advantage of plastic gutter is rigidity to rot and rust.

· Integral gutters - Most popular gutter in 1960's and sometimes used nowadays as well. Gutter is installed almost on the end of roof. This type of gutter have advantage to retain more water than other types and in winter perform as snow barrier. But if integral gutter will start to leak than water will damage roof frame, sheeting and insulation. This factors add maintenance costs because of obligatoriness of inspection in every 5-10 years.

· Steel and Aluminium Gutters - Can be used for any type of building. Steel gutter is durable to external environment and can resist leaned ladders, weight of snow and fallen tree branches.

Roofing materials

Roof material generally depend from roof slope. Choosing roofing material need rely to roof slope and better to install roofing materials in greater slope than minimum. Such materials as wood shingles need to be laid on greater slopes than minimum, because the water delayed on the roof will start to collapse it. Slates and Tiles can be laid a the minimum slope, but the lap need to be increased. Minimum slopes for each type of roof is shown in Figure 25.

Material

Slope (degrees)

Plain tiles

40,0

Pan tiles (Double clay interlocking)

22,5

Concrete single lap tiles (interlocking), clip fixing, 75 mm lap

17,5

Natural slates, green and blue (minimum 300 mm wide)

20,0

Natural slates in diminishing courses

30,0

Fibre reinforced cement slates (larger sizes)

17,5

Thatch

45,0

Profiled materials (protected metal)

15,0

Wood shindles (with 125 mm gauge)

30,0

Membranes

<10

Metal roofing

15,0

Figure 25 Minimum slope for roof coverings. (Seeley, 1995, p. 137)

Roof types

Figure 26. Compilation of widely used roof types

Roof Tiling

Slates and tiles are widely used as waterproofing materials.

Tiles

Based on "The tile doctor"

Plain or double lap tiles generally produced from concrete and clay in a different colours. Clay tiles maintain their colour for a longer time than concrete tiles.

Ceramic tile main component is clay. It can be made using machine technologies and as it was done a long time ago can be handmade. Materials using for tile manufacture need to be produced in lime-free environment, that makes tile more stronger. There are several processes how tile are formed:

* Dust press process forms almost dry compounded materials using extremely high pressures.

* Extrusion method forms tile using pressure what forced through nozzle slightly wet ingredients.

* SLUSH MOLD or WET POUR. Wet ingredients moulded in desired shape and let them dry up.

* RAMPRESS. This process seems to look like Dust press, except the size using for this process are much larger. When ceramic tile is formed it should have not more than 6% moisture. After forming ceramic tiles goes though firing process in kiln under temperature higher than 1000 degrees C. There tiles must be dried to 1% of moisture, if moisture content will not be dropped down it can explode, because in tile pores moisture getting boiled and became as pressured gas. By firing tile in a kiln once, it will have tarnished look. By doing firing twice it will get glazing look.

There are different kilns exist since a long time ago for tile firing:

* Beehive kilns, is the oldest and slowest.

* Tunnel kiln is more faster and modern kiln, where tiles placed on the line what is moved through the kiln in about 8-10 hours.

* Roller hearth kiln is nowadays mostly used where tiles goes through in about 1 hour.

Concrete tile is generally made from cement. Concrete tiles drying up without fire, they are usually going through process called hydration. Forming processes for concrete tile are the same as for ceramic tile except dust press process.

Fibre-cement tiles

According to "Fib


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