9th Jan, 2014
CE 726
SPECIAL TOPICS IN STRATEGIC MANAGEMENT OF
CONSTRUCTION COMPANIES
FALL 2013-2014
FINAL EXAM
(due on 23rd January 2014, till 17:30)
YOU SHOULD SUBMIT A PRINTED REPORT (HARD
COPY)
SUBMISSIONS MUST BE MADE TO
PROF. DR. IREM DIKMEN TOKER
AT THE RESEARCH COORDINATION OFFICE, 6TH
FLOOR OF THE METU PRESIDENCY BUILDING
PART 1. ABOUT STRATEGIC INTEGRATION (20 pts)
Based on the ideas generated in the paper which is entitled as “Strategic integration:
Competing in the age of capabilities” by Fuchs et al., please answer the following
questions:
1. Comprehensiveness: Positioning capabilities and execution capabilities must fit
together. There are 5 major elements of the strategy model set forward by the
authors;
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Direction
Product/market focus
Resources
Operational capabilities
Organisation/culture
QUESTION 1.1: Please give examples from the construction industry for each
element. You can specify hypothetic or real construction companies to explain
how each element is relevant to construction companies (note that the writers of
the paper gave specific company examples from the paper industry, and now you
are required to generate appropriate examples from the construction industry to
illustrate the applicability of each concept in the construction business). (A total
of 5 examples)
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2. Alignment: Fitting the pieces together. Modes of alignment defined within the
paper are as follows;


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Element alignments
Group alignments
External alignments
QUESTION 1.2: Failures of positioning and execution alignment may prevent firms
from exploiting their competencies. Give an example from the construction industry
that can demonstrate how poor “group alignment” may lead to failure. Similarly,
please give an example to explain how misalignment of environment and company
may lead to failure of construction companies. (A total of 2 examples)
3. Strategic theme: Thematic emphasis that reflects the right mix of elements and
alignments. There are 10 strategic themes defined within the paper; cost leadership,
innovation leadership, quality leadership, mass market leadership, custom service
leadership, image leadership, SBU integration, value chain integration, marketplace
integration, geographic integration.
QUESTION 1.3: Discuss the similarities/differences between the Porter’s generic
strategies (from positioning school) and the strategic themes defined within the
model.
PART 2. SWOT ANALYSIS (40 Pts)
Company X is a construction company which has been operating within the Turkish
construction market for more than 20 years. The total volume of domestic
construction works completed till now amounts to around 350 million US $.
Company X has not completed any construction works in the international market.
The major areas of activity are mass housing, building (schools, hotels etc.) and
infrastructure projects (seaports, airports etc.). In 90% of the projects completed till
now, government organisations (TOKI etc.) have been the client whereas in the
remaining 10%, client was the private sector. When asked about their major filed of
expertise, the company managers claim it to be mass housing projects (construction of
houses after the earthquake etc.). Company X is a family owned and managed
company. Apart from the construction works, they are diversified into the tourism
sector where they own and operate two 5* hotels in Antalya. The objective of the
company is to grow. However, they give higher importance to maximisation of shortterm profitability when compared to long-term profitability. They are planning to
carry out a SWOT analysis to decide which growth pattern to follow: staying in the
construction business (in the mass housing market), finding a new market niche in the
construction market (eg. transportation projects), entering into international markets
(eg. housing sector in Dubai), diversification (related or unrelated) etc. In order to
choose the strategy, they have to identify opportunities and threats in target markets.
Following are some of the strengths and weaknesses of the Company X (code of each
item is shown within the paranthesis);
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Strengths: Rapid construction/low price (C1), client relations (with government
organisations, basically TOKI) (C2), financial resources (C3), experience in housing
projects (C4), good marketing (C5)
Weaknesses: Managerial ability (C6), organisational structure (C7), quality of
services (C8), funds for R&D (C9), international market experience (C10).
Neither a strength nor a weakness: Technical capability/resources (C11), human
resources (experienced staff) (C12).
The following graph shows how each competency/resource of Company X is valued
by the client in the mass housing sector.
Value given by client
C2
C1
High
C4
C11
C8
C3
C12
C6
Medium
C7
C5
C9
Low
C10
Low
Level of competitiveness of Company X
Medium
High
QUESTION 2.1: What can you say about the competitive strategy and scope of the
Company X regarding its current strategic position (according to Porter’s generic
strategies)
QUESTION 2.2: Based on the competitive rules/client’s priorities prevailing in the
mass housing market and Company X’s strategic capabilities, give example(s) for
each of the following items;
 Threshold resource
 Unique resource
 Threshold competency
 Core competency
QUESTION 2.3: You are required to carry out a SWOT analysis for Company X.
For this purpose, please identify the following;

First, identify at least 5 environmental factors (opportunities and threats). At least
one of the opportunities should be an international market opportunity. At least
one of the opportunities should be a national market opportunity. Among the
opportunities and threats, please try to identify PESTEL factors that may affect
Company X’s strategic position in its current markets and target markets.
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


Second, identify at least 10 strengths/weaknesses that are related with the current
and target markets of Company X. You are not limited with the 12
strength/weakness factors defined previously (as shown in the graph), you can add
new ones/delete some of them provided that they are relevant to opportunities and
threats defined by yourself. For example, if one of the opportunities is “increase
in tourism demand”, you can identify a strength factor like “experience of
company X in the tourism sector”. Please state your assumptions clearly.
Construct a SWOT matrix, decide on the sign convention (number of +/- you are
going to use) and fill in the appropriate cells based on your sign convention.
Propose competitive and scope strategies for Company X as a result of SWOT
analysis.
PART 3. STRATEGIC PLANNING AND PERFORMANCE
MANAGEMENT (40 pts)
Assume that there is an international large-size Turkish contractor (acts also as
investor) that is involved in various type of projects (infrastructure, housing, EPC,
BOT contracts etc.) and operational in various international markets.
In their strategic plan, the stated objectives are ;
1. Increase organisational learning
2. Increase technological innovations
3. Enter new markets (in developing countries in Europe)
4. Reduce financial risk in their project portfolio
5. Improve the construction value chain (process improvement)
Considering the above 5 objectives,
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
Identify at least 5 strategies for each objective
Identify at least 3 performance measures for each objective (prepare a
scorecard)
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