Strategic Analysis of Barratt Homes

This report analyzes the strategic position of Barratt Homes, a leading UK house builder, using various frameworks like PEST analysis, SWOT analysis, Porter's Five Forces, McKinsey 7S, and Ansoff's Matrix. It examines the company's overview, strategic choices, and actions to achieve its organizational goals and maintain its market position.

Assessment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Company Overview.....................................................................................................................1
Strategic position.........................................................................................................................3
TASK 2..........................................................................................................................................10
Strategic Choices.......................................................................................................................10
TASK 3..........................................................................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES................................................................................................................................1

INTRODUCTION
Strategic analysis is a process which involves in the researching about the organisation's
nature, business and its environment (Jones and Schilling, 2014). It is considered as an essential
element which help managers to formulates strategic planning in order to take necessary
decisions which help in the smooth working of an organisation. In help organisation to achieve
its organisational goal on time. It is a long term task which requires a systematic and continuous
planning along with resource investment. To understand the use of strategic planning following
report contains the detailed analysis of Barratt Homes and all the various strategic planning
which was made by them to achieve its position as one of the UK's leading house builders. This
report contains the details analysis of various strategies used by them, it also reflects the strategic
position of Barratt Homes, their various strategic choices and the strategic actions which they
used in order to achieve their organisational goal and take advantages over its competitors. This
report reflects the detail analysis of various techniques used by them to identify the need of their
customers and deliver their product in order to meet the customers satisfaction of their customer.
TASK 1
Company Overview
Overview
Barratt Homes is a brand which works under
the company named as Barratt Development
PLC. Barratt Development PLC is one of the
largest company dealing in the residential
property development located in United
Kingdom (Barratt Homes. 2019).
Founder
It was founder as Greensitt Bros. in 1958 and
was later controlled by Lawrie Barratt (Barratt
Homes. 2019). Originally company's
headquarter was located in Newcastle upon
Tyne later it was shifted to Coalville, England,
United Kingdom.
Listing
In 1968 the company got listed itself on
London stock exchange and now it is a
constituent of the FTSE 100 Index (Barratt
Homes. 2019). Barratt Homes deals in building
a high quality new homes since 1958, they deal
Product line
Their product line varies from apartments ideal
for the first time buyers of property to a large
spacious homes for growing families. The
vision statement of Barratt Homes is t lead the
future of housebuilding by putting customers at
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in various house building with a variety of
homes suitable for various different ranges of
requirements and budgets.
heart of every thing they do (Barratt Homes.
2019).
Offers on Product
They also provide several offers to help the
buyers to purchase their dream homes. These
offers include the 5% deposit which is
combined with equity loans which is provided
by government, part exchange where company
help buyers to organise and sell their current
homes (Barratt Homes. 2019).
Acquisition
In 2007 they acquired Wilson Bowden PLC
and currently they have a network of 27
housebuilding divisions spread all over Britain,
which sell new homes Barratt Homes, David
Wilson Homes and Ward Homes (Barratt
Homes. 2019).
Market capitalization
The current market capitalization of the
company is 6.32 billion, annually company pay
dividend at the rate of 4.44%. current the
chairman of Barratt Development Plc is Mr
John Allan and the CEO of the company is Mr
David Thomas (Annual report of Barratt
Homes. 2019).
Location
Currently Barratt Homes is providing their
products across all over United Kingdom it has
spread its business in London, South East
England, South West England, Yorkshire and
The Humber, North West England, West
Midlands, East of England, North East
England, East Midlands, Wales and Scotland
(Annual report of Barratt Homes. 2019).
Awards and Recognitions
The company has many awards in the past 10
years they won NHBC Pride in the job award
for the 14th time in a row every year they join
with the experts in home building industry to
judge their 16000 site mangers in the nation.
Their 24 managers have won the seals of
Excellence award (Barratt Homes. 2019). They
have also won the HBF customer Satisfaction
award providing a 5 star rating for the 10
consecutive year. They have also won the
Home builder of the year award in 2016. in the
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year 2018 they won the Management Today
Britain's Most Admired Companies Award as
the Britain most admired House Builders.
Strategic position
Strategic position is an impact on strategy from
the external environment, competences an
internal resources, and influence of
stakeholders and their expectations (Wheelen
and et.al., 2017). Collectively the strategic
capability, consideration from the
environment, the purposes and the expectations
within the political and cultural framework of
an organisation in order to provide the proper
understanding of an organisation.
In order to define the strategic position
companies uses various tools which help them
to identify their strategic position that whether
they are good or need some improvisation.
Companies uses various techniques as disused
Strategy Map: A strategy Map is a diagram
which shows organisation's strategy to achieve
its organisational goal on a single page (Hu, B.,
Leopold-Wildburger, U. and Strohhecker, J.,
2017). This type of strategic position is
considered as a great strategy as it is used
when a plan is to be communicated quickly to
everyone in the organisation. The strategy map
of Barratt Homes is as under which shows the
strategic position used by them.
Interpretation: The above map shows that
how the company can achieve maximum
revenue and increase it profit by reducing their
price. In order to improve its financial position
company can reduce its cost of product by
To increase their profit company should
improve its customized customised experience,
which will result in the increase of profit as the
customers are more satisfied with the product.
Customized customer experience can be
increased by improving internal business
processes which include increase in the
acquisition of new business, increase in the
knowledge which can help mangers to consult
their customers to achieve the customized
experience (Annual report of Barratt Homes.
2019). It can also be achieved by improving
their product or service offerings. In order to
achieve customized customer experience
Barratt Homes uses various innovative idea by
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improving their internal efficiency in
delivering product. By improvement in their
production the task will be achieve in less time
and less money.
delivering their homes in a sustainable
environment with a variety of homes and it can
be customized as per the need of their
customers. Which helped them to be the UK's
one of the leading home builders. With the
help of this strategy map they have
successfully delivered their products to their
customers increasing their satisfaction level.
PEST analysis: A PEST analysis is an
analysis of external factors which can affect
the company's financial position and its
performance (Sammut‐Bonnici and Galea,
2015). These external factors are beyond the
control of any firm these factors affect every
firm in the same industry. With the change in
the external factors it can bring new
opportunities for the firm and some thing they
Economical: These are the factors which
affect the companies economical growth these
factors arise due to the change in the economy.
Due to the increase in the unemployment rate
in UK the individuals have less money to
spend and are utilizing their resources in the
necessary items (Barbara and et.al., 2017). This
have affected the Barratt Homes revenue as the
economy is still struggling with the downturn
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can bring in new threats companies perform
this analysis to check that whether they can
tackle these changes or not or these companies
have to implement some new strategies to over
come these problems. The PEST analysis of
Barratt Homes is a follows:
Political: Political decisions are the decisions
which determine the regulatory and economic
policies which are considered by the
companies in formulating strategy to achieve
their organisational goal (Shabanova and et.al.,
2015). The government’s Home Owners
Mortgage Support Policy Scheme will help
home owners to purchase their own home who
have met certain criteria and failed to meet
their mortgage dues to pay off their mortgages
by providing up to 80% of total guaranteed
interest. This policy will help the mangers to
determine the part of Barratt’s strategy as the
more people who can afford mortgages, the
more houses they can sell and achieve their
market growth.
Social: Social factors also affect the strategies
Barratt Homes adopts because change in living
pattern of consumers may dictate that which
type of house is more in demand, whereas
changing laws and regulations also have to be
satisfied in the course of carrying out their core
business activity.
effect. Due to the investing in the essential
commodities the high end market where
Barratt Homes usually target their customers
are affected. In this situation government also
has made changes to ensure that more credit
will be available to people through the banks
by issuing bailout funds. Due to this
uncontrolled economic environment Barratt
Homes had to sell their stock of built houses at
prices which is lower than they were originally
estimated, through this it can help to raise cash
and improve liquidity.
Technological: Technological factor is a factor
which indicates the change in technology
which can affect the production of the
companies and improve their efficiency to
deliver the product or services before time.
Barratt Homes used the technological
advancements in order to maintains its
position as a UK's one of the largest House
Builders. Technological advancement help the
company to deliver its product more efficiently
and to adopt new marketing techniques (Aithal,
Shailashree and Kumar, 2015).
Value Chain Analysis: Value chain an Secondary activities: this is important for
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Analysis which is used by the companies to
identify the activities which are involved in
changing input for a particular product into an
output to provide value to the customers and
improve the efficiency of every step involved
in the production process (Savino, Manzini and
Mazza, 2015). The value chain analysis of
Barratt Homes is as follows:
Primary activities: with the help of a primary
activities analysis Barratt homes can improve
its performance explained as below:
 Inbound Logistics: This is considered
as an important part for every company
as they have to maintain a good relation
with their suppliers (Koc and Bozdag,
2017). It includes the procuring raw
material, storing it and distributing it to
the various departments to start
production.
 Operations: It is important for company
for analysing its operations, it starts
when raw material is arrived at the
company's store and is ready to process
this into finished goods.
 Outbound Logistics: It includes the
activities related to the delivery of
product to customers which passes
thorough various intermediaries.
Barratt Homes pay specific importance
on their outbound value chain activities
as it is important for them to ensure
Barratt Homes to support, coordinate and
facilitate their primary activities (Goetsch and
Davis, 2014). The analysis of its secondary
activities is as follows:
 Firm Infrastructure: Firm infrastructure
includes a various range of activities
such as accounting, financing, quality
management, planning and strategic
management (Koc and Bozdag, 2017)..
By analysing it Barratt Homes can
improve and control is overhead cost in
order to gain the competitive advantage
in the market.
 Human Resource Management: Barratt
Homes analyse their human resource
management by evaluating various
aspects involved in HR such as
recruiting, selecting, rewarding,
training, performance management and
other personnel management activities
which help them to improve the
efficiency and quality in the work as
they hire experts in every step of
production to deliver the valued
products to their customers (Koc and
Bozdag, 2017).
 Technology Development: In this
Technological era every process
involved in the Value-chain are
dependent on the technological support.
Barratt Homes have divided their
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quick delivery to their end customer.
 Marketing and Sales: While analysing
their marketing and sales Barratt
Homes highlights the differentiation
which are offered by their products in
order to influence their customer that
product which is being offered are
better than their competitors.
 Services: The post and pre sales
services which are offered by Barratt
Homes plays an important role in
developing the brand image in the
minds of customer making them loyal
to the company (Savino, Manzini and
Mazza, 2015)..
process and product technological
development in various activities which
include automation software, data
analytics and technology-supported
customer support (Savino, Manzini and
Mazza, 2015).
 Procurement: The procurement in value
chain involves various process such as
purchasing of Raw materials, supplies,
equipment and machinery and other
various necessary items which are
required in the process of producing a
finished goods. Barratt Homes carefully
analyse its procurement process in
order to deliver goods on time.
Porter's five forces Model: It is a model used
which analyses and identifies the five
competitive forces which are used to shape
every industry, it also helps in determining an
industry's strengths and weaknesses (Mathooko
 Bargaining power of Buyers:
Customers are the king of a market and
to tackle the demand of every
individual, company need to focus on
taste and presence of target market. It
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and Ogutu, 2015). The five forces are as
follows:
 Threat of new entrants: In the market
where Barratt Homes operates it is very
difficult for new entrants to enter the
market as these existing large firms
have cost advantages. The economies
of scale of this market is difficult to
achieve as it increase the production
cost and make it even more costlier for
the new entrants (Mathooko and Ogutu,
2015). As this sector requires the huge
capital investment and a large number
of product differentiation this makes
the threat of new entrants weak for this
industry.
 Bargaining Power of Suppliers: In
this industry the bargaining power of
the suppliers I weak as the number of
buyers are less than the number of
supplier which makes the bargaining
power of suppliers a weak force
(Grundy, 2006). Also they have a
strong position in the market as the
suppliers dealing in the raw material,
these raw material does not have any
substitute available.
clarifies all role as bargaining power is
one of them which showcase how a
customer deal in market to purchase a
merchandise (Grundy, 2006). The
customers has a vital role in finding an
appropriate deal in market as to focus
on bargaining concept which come-up
with many challenges in front of an
individual. It defines as an enormous
function to enter into a deal of a
customer and tackle a market to get
ahead of the pack.
 Threat of Substitute: As in this
industry the substitute available for the
products which are produced by Barratt
Homes are very limited (Mathooko and
Ogutu, 2015). The limited substitute are
available within the same industry
which are very expensive as compared
to the products which are offered by the
company which reduces the risk of
substitute, which indicate that the
buyers are less likely to switch the
products.
 Rivalry Among the Industry: The
company faces very few threats from
the existing rivalry as the industry in
which they are working the number of
competitors are very less and are very
large, which means if they will have
any changes it will be noticed by other
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rivalry firms (Grundy, 2006). This
make the rivalry among the industry
forces a weak force.
SWOT Analysis: SWOT analysis plays a vital
role for a company as it talks about various
aspect related to strength, weakness,
opportunity and threats of a particular
organization (Bull and et.al., 2016). It is used
to find out the internal and external impact on
company's performance. It clarifies role of a
company in an appropriate manner which helps
in identifying various aspect which is as
follows:-
 Strength: Reliability on supply chain
management as it helps in creating a
market with a proper goodwill (Bull
and et.al., 2016). Strong leadership as
to create a culture in between various
distributor. Strong brand in market
which helps to get every attraction from
market.
 Weakness: Investment is low as
compare to the competitors because of
which future stability is in danger (Bull
and et.al., 2016). Update in technology
is needed by which it can complete the
proper work on a given period of time.
Spending high ratio of money in
training and development with an high
attrition rate gives a big loss for
company.
 Opportunities: The market can
dissolve in future and Barratt has
opportunities to develop place in
market which can create a goodwill in
the eye of customer (Bull and et.al.,
2016). Stability can me maintained as
low inflation rate is running in market.
Adopting new technology bring an
effective and efficient work for
company.
 Threats: Legal rules and regulation
which creates a problem in future and
rising pay level in market bring more
problem for company (Bull and et.al.,
2016). Growing a stability and strength
in local distributor is much more
9

difficult in front of company in future.
TASK 2
Strategic Choices
Strategic Choices: Strategic Choices involves
a complete process through which companies
take decision from various available
alternatives (Wang and et.al., 2017). For
selecting a best strategy various methods are
available with the companies to through which
it can select
McKinsey 7S analysis: McKinsey 7S model is
a framework which is used by the
organisations to check the organisational
effectiveness which states that there are seven
factors internally in an organisation which
needs to be focused upon to achieve its
organisational goal (Ravanfar, 2015).
McKinsey 7S analysis of Barratt Homes is as
follows
Strategy This states the strategy which is used by the companies to achieve its
sustained competitive advantage which involves competition, customers and
environment (Ravanfar, 2015). The strategy used by Barratt Homes to
achieve its market sustainability is their land investment strategy and their
Diversity and Inclusion strategy. With help of this they identified a broad
targets in the area in order to improve their diversity and inclusion.
Structure This S states the complete organisational chart of the company. It is a way
in which various units of an organisation relate to each other. The structure
followed by Barratt Homes is Divisional structure as they are working in
various regions and authorities are defined to every manger of a particular
division (Barratt Homes. 2019).
Systems This includes the system through which important work is done in an
organisation which include the promotional, financial and information
system (Annual report of Barratt Homes. 2019). Barratt Homes uses
effective planning system, energy efficiency system which helps company
to lower the cost of energy fro their customers giving them competitive
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edge over its competitors.
Staff This S involves the types and number of employees working in an
organisation and how they are recruited, trained, rewarded and motivated.
In Barratt Homes it currently employed approx 6214 employee which
include department head, technical experts and regional heads which help
company to achieve its organisational goal (Barratt Homes. 2019).
Style This S focuses on the style through which a company is managed by top
level management and how they interact with their staff and also what
actions they take to achieve the company's objective. Democratic and
strategic leadership styles are followed by the top level of manger to take
necessary decisions (Ravanfar, 2015).
Skills This step explains the distinctive ability of the personnel and their
competencies which help them to achieve their goal. Barratt Homes have
employed very skilled professionals in order to deliver the value to the
customer who support and train their subordinates and help them in
achieving their goal (Annual report of Barratt Homes. 2019).
Shared values This S tells the values, mindset, beliefs and assumptions which help in
shaping the organisation (Barratt Homes. 2019). In Barratt Homes they uses
employee engagement in which they invite the suggestions given by its
employees.
Ansoff's Matrix: Ansoff's Matrix is a strategic
marketing planning tool which is used by
companies to link their marketing strategies to
their general strategic decisions which given
the four alternative growth strategies in a
matrix (Howson, 2016).
Ansoff's product/market growth is a matrix
which suggests that how a business should
attempt to grow its business depending upon
that whether the company should market their
existing or new product in existing or new
markets (Howson, 2016).
Existing Product New Product
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Existing Market Market Penetration: it is a growth
strategy where the companies
focuses on selling the same product
in the existing market (Ivory
Research Co Ltd.). In this companies
tries to increase or maintain their
market share of the existing product.
This is highly recommended growth
strategy for Barratt Homes as they
are increasing their market share
with new plan such as part exchange
schemes.
Product Development: This is a
growth strategy where the company
aims to introduce new product into the
existing market. In this the company
uses its brand image to launch new
product and capture the market with
this new product.
This is possible for Barratt homes to
switch new products in the market as
their financial condition is stable and
they can possibly a look on specialist
retirement homes market (Ivory
Research Co Ltd.).
New Market Market Development: In this
growth strategy company seek new
ways to sell their existing product
into new market (Ivory Research Co
Ltd.). This strategy is considered as
more risky than as company tries to
expand its business into totally new
market.
As in this case Barratt Homes should
consider the economic climate and
take opportunities to enter new
market.
Diversification: It is a growth strategy
where the company takes their new
product to a completely new market
and tries to establish its brand. This
strategy is considered as the most
riskiest strategy as the company enters
a new market in which they have little
or no experience.
This strategy is unlikely for Barratt
Homes as they should have more
focus on the existing product (Ivory
Research Co Ltd.).
TASK 3
Strategic Action
From the above various strategies it the
strategic action which Barratt Homes has is
Market Penetration. They should develop their
Barratt Homes can come up with new various
innovative ideas which allows customer to
customize their homes as per their own choices
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new product in order to increase their market
share and take competitive advantage over its
competitor.
which makes customer think that they are the
king and improve brand loyalty. With this type
strategies companies can take competitive
advantage and improve their efficiency in
producing their goods.
CONCLUSION
From the above report it can be concluded that it is important for the companies to take
strategic decision which can help them to take competitive advantage. The above report also
shows the importance of the strategic position and the choices which companies have while
implementing new strategies to improve the efficiency of their business. This report also focuses
on the various options and actions company can implement to improve their market position. It
also focuses on the various strategic tools which companies can consider while taking effective
decision for the benefit of the company.
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Online
Annual report of Barratt Homes. 2019. [Online]. Available through:
<http://www.annualreports.com/Company/barratt-developments-plc>.
Barratt Homes. 2019. [Online]. Available through:
<https://www.barratthomes.co.uk/Footer/About-us/Rich-content---About-us/>.
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Ivory Research Co Ltd. 2019. [Online]. Available through:
<https://www.ivoryresearch.com/writers/mark-franks-ivory-research-writer/>.
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