Ncc Construction Danmark (A): Back To Profitability SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Ncc Construction Danmark (A): Back To Profitability
This two part case series describes the transformation challenge faced by a European company, NCC Construction Danmark A/S (NCC DK), belonging to one of the oldest industries in the world - construction. Even though the context is construction, the lessons that this case provides should appeal to other European companies and industries as they simultaneously seek to reposition themselves for the new times and new opportunities in Europe and beyond.Case A describes NCC DK's fight back to profitability from the brink of bankruptcy after the residential construction bubble burst in Denmark in 2006. After becoming the CEO of NCC DK in October 2006, Torben Biilmann and his top management team led a three-phase transformation that led the financially troubled company back to prosperity: Stabilization (2006-2007); Efficiency and Sustainability (2008-); and Business Development (2009-). The storyline has many of the elements to be found in a classic transformation, including restructuring, renovation and renewal. Case A provides a platform for exploring how Biilmann and his leadership team put NCC DK back on the road to profitability by concentrating on five Must-Win Battles (MWBs). A four part video (total runtime 21' 44'') supplements the case. The first (7' 17'') is an interview with Torben Biilmann (CEO, October 2006 - May, 2012) and Martin Manthorpe, Senior Vice President (Strategy) on the tough restructuring and renewal described in Case A. The second (5' 19'') is an interview with the same two executives on the role of VDC in moving the construction industry to the 21st century and creating new opportunities for NCC DK. The third (7' 4'') is an interview with Klaus Kaae (the company's CEO since June 2012) and Manthorpe on the concept of "Co-Creation" and the opportunities and challenges for the company in driving this concept. The final part of the video (2' 4'') is a short reflection by Biilmann on the lessons for other European companies from NCC DK's experience. Learning objectives: Provide a basis for senior executives (especially from European companies) to discuss company and industry transformation so as to sustain profitable growth even in maturing industries. Even though the context is construction, the disciplined approach to execution of NCC DK and its proactive approach to strategic renewal can offer pointers to other European companies as they battle industry maturity. The case can also be used in MBA class rooms to address restructuring and renewal.
Swot Analysis of "Ncc Construction Danmark (A): Back To Profitability" written by Bala Chakravarthy, Sophie Coughlan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ncc Dk facing as an external strategic factors. Some of the topics covered in Ncc Construction Danmark (A): Back To Profitability case study are - Strategic Management Strategies, and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Ncc Construction Danmark (A): Back To Profitability casestudy better are - – cloud computing is disrupting traditional business models, there is increasing trade war between United States & China, increasing household debt because of falling income levels, wage bills are increasing, increasing inequality as vast percentage of new income is going to the top 1%, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization,
increasing energy prices, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Ncc Construction Danmark (A): Back To Profitability
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Ncc Construction Danmark (A): Back To Profitability case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ncc Dk, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ncc Dk operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Ncc Construction Danmark (A): Back To Profitability can be done for the following purposes –
1. Strategic planning using facts provided in Ncc Construction Danmark (A): Back To Profitability case study
2. Improving business portfolio management of Ncc Dk
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Ncc Dk
Strengths Ncc Construction Danmark (A): Back To Profitability | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ncc Dk in Ncc Construction Danmark (A): Back To Profitability Harvard Business Review case study are -
Analytics focus
– Ncc Dk is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Bala Chakravarthy, Sophie Coughlan can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Highly skilled collaborators
– Ncc Dk has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Ncc Construction Danmark (A): Back To Profitability HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Leadership & Managing People field
– Ncc Dk is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Ncc Dk in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Ncc Dk digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Ncc Dk has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Innovation driven organization
– Ncc Dk is one of the most innovative firm in sector. Manager in Ncc Construction Danmark (A): Back To Profitability Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Ncc Dk has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Effective Research and Development (R&D)
– Ncc Dk has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Ncc Construction Danmark (A): Back To Profitability - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of Ncc Dk
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Ncc Dk does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the Ncc Construction Danmark (A): Back To Profitability Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Training and development
– Ncc Dk has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Ncc Construction Danmark (A): Back To Profitability Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
High brand equity
– Ncc Dk has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Ncc Dk to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Ncc Dk is present in almost all the verticals within the industry. This has provided firm in Ncc Construction Danmark (A): Back To Profitability case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Weaknesses Ncc Construction Danmark (A): Back To Profitability | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Ncc Construction Danmark (A): Back To Profitability are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Ncc Construction Danmark (A): Back To Profitability, in the dynamic environment Ncc Dk has struggled to respond to the nimble upstart competition. Ncc Dk has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of Ncc Dk products
– To increase the profitability and margins on the products, Ncc Dk needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As Ncc Construction Danmark (A): Back To Profitability HBR case study mentions - Ncc Dk takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Slow decision making process
– As mentioned earlier in the report, Ncc Dk has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Ncc Dk even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Ncc Dk supply chain. Even after few cautionary changes mentioned in the HBR case study - Ncc Construction Danmark (A): Back To Profitability, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Ncc Dk vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
Ncc Dk has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Interest costs
– Compare to the competition, Ncc Dk has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Increasing silos among functional specialists
– The organizational structure of Ncc Dk is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Ncc Dk needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Ncc Dk to focus more on services rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Ncc Dk is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Ncc Construction Danmark (A): Back To Profitability can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Capital Spending Reduction
– Even during the low interest decade, Ncc Dk has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
No frontier risks strategy
– After analyzing the HBR case study Ncc Construction Danmark (A): Back To Profitability, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Opportunities Ncc Construction Danmark (A): Back To Profitability | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Ncc Construction Danmark (A): Back To Profitability are -
Leveraging digital technologies
– Ncc Dk can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Ncc Dk can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Ncc Dk can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Ncc Construction Danmark (A): Back To Profitability, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Buying journey improvements
– Ncc Dk can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Ncc Construction Danmark (A): Back To Profitability suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Ncc Dk to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Creating value in data economy
– The success of analytics program of Ncc Dk has opened avenues for new revenue streams for the organization in the industry. This can help Ncc Dk to build a more holistic ecosystem as suggested in the Ncc Construction Danmark (A): Back To Profitability case study. Ncc Dk can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Ncc Dk can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Ncc Dk can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Developing new processes and practices
– Ncc Dk can develop new processes and procedures in Leadership & Managing People industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Ncc Dk to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Ncc Dk to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– Ncc Dk has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Ncc Construction Danmark (A): Back To Profitability - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ncc Dk to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Ncc Dk in the consumer business. Now Ncc Dk can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Ncc Dk to increase its market reach. Ncc Dk will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Low interest rates
– Even though inflation is raising its head in most developed economies, Ncc Dk can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Threats Ncc Construction Danmark (A): Back To Profitability External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Ncc Construction Danmark (A): Back To Profitability are -
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Ncc Dk can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Ncc Dk can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Ncc Construction Danmark (A): Back To Profitability .
Regulatory challenges
– Ncc Dk needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Leadership & Managing People industry regulations.
Environmental challenges
– Ncc Dk needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Ncc Dk can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Ncc Dk with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Ncc Dk high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Ncc Dk in the Leadership & Managing People industry. The Leadership & Managing People industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Ncc Dk needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Ncc Dk.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Consumer confidence and its impact on Ncc Dk demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Increasing wage structure of Ncc Dk
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Ncc Dk.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Ncc Dk in the Leadership & Managing People sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Ncc Construction Danmark (A): Back To Profitability Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Ncc Construction Danmark (A): Back To Profitability needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Ncc Construction Danmark (A): Back To Profitability is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Ncc Construction Danmark (A): Back To Profitability is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Ncc Construction Danmark (A): Back To Profitability is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Ncc Dk needs to make to build a sustainable competitive advantage.
