Strategic Analysis of Barratt Developments Plc: A Report

This report provides a comprehensive strategic analysis of Barratt Developments Plc, a major residential property development company. It begins with an introduction to the company and its business model, followed by an examination of its strategic position, including an analysis of its core competencies. The report then delves into the internal and external factors affecting the company's strategy, using SWOT and PESTLE analyses to assess its strengths, weaknesses, opportunities, and threats, as well as the political, economic, social, technological, legal, and environmental factors influencing its operations. The report then focuses on the impact of emerging technologies in the construction industry, such as BIM and 3D printing, on the business and develops a suitable strategy. VRIO analysis is used to evaluate the company's resources. Finally, a practical plan for implementing the strategy is presented, followed by a conclusion and references. The report highlights the importance of adapting to technological advancements and maintaining a strong strategic position in a dynamic business environment.

Assignment
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Contents
Introduction......................................................................................................................................3
Task 1 Strategic Position.................................................................................................................3
Critical analysis of strategic position of organisation..................................................................3
Task 2 Strategy Formulation...........................................................................................................6
Impact of emerging technologies on the business of organisation and development of suitable
strategy.........................................................................................................................................6
Task 3 Strategy into Action.............................................................................................................9
Presentation of practical plan.......................................................................................................9
Conclusion.....................................................................................................................................10
References......................................................................................................................................11
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Introduction
Strategy refers to that plan of action which is focused on efforts to achieve what is targeted.
It usually aims at long-term development (Darkow, 2015). Barratt Developments Plc has been
taken as chosen organisation for this project report on strategy development. It is a residential
property development company. It owns three consumer brands: Barratt Homes, David Wilson
Homes and a commercial business brand Wilson Bowden. In this project, internal and external
factors affecting its current strategy are considered. New and emerging technologies in
construction industry are discussed and then strategy is designed over implementation of that
technology.
Task 1 Strategic Position
Critical analysis of strategic position of organisation
Strategic position refers to a company’s relative position within the industry it operates. It is
reflected in choices that a company makes, in accordance with the value it aims to create for its
customers that is able to create competitive advantage for it (Teh and Corbitt, 2015). Barratt
Developments Plc places high-quality customer service and build quality as its tool to create
value over rivals. It envisions to lead the future of construction of houses, putting their
customers’ interest at the forefront. It is observed that company has adopted joint venturing as its
strategy to help finance new projects. When its business model is analysed with respect to its
internal and external environmental factors, its current strategical position can be analysed.
Figure 1 Business Model, 2020
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Core competencies – It refers to those capabilities of business that creates strategic
advantages for it. Company runs on one of the shortest land banks in the industry and operates on
a fast build and sell model. Benchmarking refers to the process of measuring product
performance of company against best in industry standard. Barratt has developed its own process
to be benchmark in its segment in UK construction industry around global standards. They
maintain a strong and resilient balance sheet and also has a clearly defined operating framework
with a focus on cash generation. This has created a strategic advantage for the company. Also, its
strong and experienced workforce is benchmark in industry and creates a competitive advantage
for it.
There are various tools through which a company can analyse its current strategic position.
One such model is SWOT Analysis which helps a company assess its internal factors and
external impact assessment as well. SWOT for Barratt Developments Plc is as following:
Strengths – Those factors, aspects or resources which help company generate competitive
advantage are known as its strength (Berman and Dalzell-Payne, 2018). Two biggest strengths of
Barratt Development Plc are its stable finances and its strong customer connect. Because of
customer trust only, was it able to generate profits even during recession period to maintain its
sustainability. Also, company has variety in its product portfolio that includes traditional
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Ill
ustration 1: Financial achievements, 2020

housing, commercial property and apartments which, not just help it diversify revenue sources
but also help in diversification of risk management.
Weaknesses – These are the factors which are able to cause hindrances in the sustainable
performance of the company. For example, company is market dependent for its demand and
cannot do much alone to instigate or increase customer demand such as the period of credit crisis
caused by economic uncertainty because of corona virus pandemic. Company is not able to do
much and had to incur losses. It decreases its year end net cash available to settle debt.
Opportunities – These are the factors which are able to create chances of growth and
development for the company. Government of UK is promoting affordable housing which is
great opportunity for Barratt Developments Plc to exploit backed by its strong financial
resources and strong market connect. Also, with stability in its operations, company can try
various new technologies that are emerging in the market, are popular among new tech-savvy
generation and also cost and environmentally efficient in both domestic as well as international
market.
Threats – These includes those factors which are possible of presenting obstructions for
company’s finances, performance, operations and stability (Liedtka and Kaplan, 2019). Unstable
economic environment of UK is the biggest threat for company because housing is a big
investment and when there are uncertainties in finances of individuals, they tend to put large
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Illustration 2: Financial performance

investments on hold. At such times, customer confidence shakes which leads to decrease in sales.
Also, such uncertainties posed like Covid-19 lockdowns all over the world, can pose serious
threats for domestic and international expansions.
Along with SWOT analysis to know about capabilities of company’s internal resources to
create a competitive advantage, company must undertake PESTLE analysis to understand the
factors that are present in its external business environment.
Political – It includes all the factors related to political environment of the UK which are
capable of having impact over company operations. Lack of governmental reforms has negative
impact over Barratt’s performance. For example, government subsidised rental houses to those
who fall under affordable housing plans which led to dip in demand for economical housing for
sale. Rise in deregulation of credit market has led to rise in demand of houses but has also
resulted in increased recession in UK which ultimately reduces demand.
Economic – It includes economic factors like interest rate, debt availability, market
conditions, etc. which have impact over operations of the company (Kitsios and Kamariotou,
2019). Credit crisis in UK has not helped company’s case for not stabilising rate fluctuations by
government has influenced customer’s disposable income and in turn, their demand for
purchasing house. There are strict rules and regulations which related to funding availability in
market for buying a house. This decrease in mortgage or debt availability has reduced demand
for houses.
Social – It includes societal factors that have effects over operations and performance of
the company. One such factor is geographical location i.e. location related demand such as
demand for housing in London, Oxford, etc. does not see a dip but in country area, it does
decreases when debt availability is lesser. Also, during difficult times like credit crisis and
recession which increases unemployment, customer confidence shakes and lesser number of
people apply for loan to buy a house and pick for rental property.
Technological – There are various upcoming technologies in the construction sector that
present both opportunities and threats for the Barratt Developments Plc. Government is also
promoting smart housing and people are increasingly demanded for intelligent building models
in both public and private housing constructions. Increasing implementation of such technologies
can improve customisations and delivery time of the company. Also, automation in technologies
like in supply chain management can significantly reduce both cost and time of the company.
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Legal – These are the factors which are related to legislations that are applicable on the
company (Lai, Melloni and Stacchezzini, 2016). Company must be having necessity for applying
general business laws like labour laws, Equality Act, etc. which if not implemented properly can
lead to litigations against it. Other specific laws like environment laws are also applicable over
company and company shall try to minimise its environmental impact.
Environmental – Those factors which are capable of having an impact over environment
are included in it (Rasoulkhani and et.al., 2020). Barratt Developments Plc is a construction
company and while developing properties must be generating lots of pollution and carbon
footprint which is cause of concern of not just environmentalists but also government and aware
citizens. Therefore, company must implement smart technologies that are able to reduce its
carbon footprint and causes least pollution generation.
Task 2 Strategy Formulation
Impact of emerging technologies on the business of organisation and development of suitable
strategy
Business world is increasing becoming digital and the new technologies are changing
performance and operations at an ever-increasing speed. New technological trends in
construction industry of UK are:
 Information technology – Technology like big data helps company analyse and pick
patterns and probabilities related to construction risks so that new projects are completed
without much pitfalls (Tan and et.al., 2015). Sensor machine can be used on site to show
various processes of project management to develop best critical path of planning
activities and also to perform repetitive tasks without tiring out. Also use of artificial
intelligence is being taken to develop better designs, better financial planning and
increased safety and productivity. For example, BIM Technology – Building Information
Modelling.
 3D Printing – It is a revolutionary technology for material sourcing as it offers
capabilities to either prefabricate offsite or directly on-site. It also helps reducing
materials wastage and saving of production sampling time. It also offers cost benefits,
time benefit, energy saving and sustainability development support in the construction
sector (10 Construction Technology Trends Impacting the Industry in 2020, 2020).
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Before developing an appropriate strategy that incorporates necessary technological
advancements, a company must identify all the resources that are its competitive strength. One
such model which helps a company in knowing its advantages is VRIO analysis. It is an
analytical technique which helps a company in evaluating its resources and their efficiency in
creating a competitive advantage for them. VRIO for Barratt Developments Plc is as following:
Valuable – Those resources which enables a firm to explore opportunities and defend
against threats are considered valuable (Opoku, Cruickshank and Ahmed, 2015). This analysis
reveals that strong and stable financial resources of the Barratt Developments Plc are its highly
valuable resource. Another valuable resource of the company are its employees. Its workforce is
highly competent, trained, loyal and productive. Therefore, employee turnover level of company
is also less. Company also has many registered patents which are good source of revenue for it
from licensing. Networking and customer trust are also highly valuable as it helps company
turning its promotions into sales. But its cost structure and research and development cannot be
termed as its valuable resources. Both of them are slightly disadvantageous in comparison to
rivals and act as competitive disadvantage for the company.
Rareness – Such resources which only few companies possess are rare. They help gain
competitive advantage. Financial resources, patents and employees of the company can be
treated as rare resources in the industry Barratt Developments Plc operates. Combination of
stable and strong financial resources and highly skilled staff which know how to increase the
value are rare for rivals to obtain. Patents and another rare resource i.e. its distribution network
help it generate an edge over others as it would take long time for rivals to come up with better.
Imitability – Ability of being copied is known as imitability. Those resources which are
hard to imitate act as competitive advantage for the company (Mårtensson and Westerberg,
2016). In the VRIO analysis, it has been found that financial resources of Barratt Developments
Plc have been acquired over years and are therefore, very costly to imitate by new entrants and
rivals. Patents and distribution network of the company are also very costly to imitate for patents
cannot be copied legally and licensing requires payment of fees to company and network have
been developed gradually over years and would take a lot of time and customers’ trust for others
to imitate it. However, employees of company are not costly to imitate as others can also train
their staff with such skills and can also poach employees from Barratt by offering better
packages and opportunities.
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Organisation – Such resources which are well organised by company to capture value
are included in it. Primarily, Barratt Developments Plc organises its financial resources to
capture value for stable finances encourage enables other value additions. This has by far proved
to be sustained competitive advantage for the company as it enables it to invest in right places,
exploit opportunities and combat threats. Company also organises its distribution network to
capture value for business and customers both. It has provided means to reach to maximum
customers and convert marketing into sales. However, it has been analysed that company is not
using its patents resources to its fullest. Company can make better use of them before they
expire.
A new and emerging technology for which strategy can be developed by the Barratt
Developments Plc is BIM technology which can help it in growth, expansion and brand
development. BIM is a 3D modelling tool and supports engineers and architects to plan, design
and modify building infrastructure (Baumgartner and Rauter, 2017). It involves modelling,
document management, coordination and simulation during the project life-cycle.
 Strategy mapping – Company offers both residential and commercial properties. This
strategy will help company streamline and advance its processes. Also, it will be able to
create an edge for company over competitors and will help it gauge more tech-savvy
customers. SWOT Analysis – SWOT of current strategy has already been made earlier. For this
strategy, it is as following:
Strength – Company’s strong finances and skilled employees with the help of appropriate
technology will be able to deliver 3D modelled projects for the company.
Weaknesses - This technology is new for company so to implement it; company would
need to incur extra cost for implementing the process and training its employees (Fang
and Chen, 2016).
Opportunities – As discussed earlier, this would help company gauge new market and
customers and with diversified processes, revenue options increases.
Threats – Though company has constantly been updating its processes, all its ventures
were in 2D models, this is a 3D technology which is not forte of company employees and
might create business losses for the company.
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Task 3 Strategy into Action
Presentation of practical plan
In case, management of the company approves it, it can implement effective strategic plan in
below mentioned manner:
 Business goals – Company has customer in its mission and with economic uncertainty in
market, this strategy will help company gain new customers and diversify its business
processes (Dodgson, 2018). This strategy must aim at developing itself as a separate
portfolio for revenue generation for the company within various others product delivery
methods of the company.
 Departmental goals – For implementing this strategy, finance department shall develop
new budgets, marketing department shall undergo market research to understand
opportunities for this technology, HR department shall arrange for training of employees,
sales department should arrange for revised sales estimates while operations and IT shall
prepare for necessary changes that they will have to incorporate.
 Set short-term objectives – Implementing this strategy will develop new streams for the
company in long-term but for short-term company must aim at developing 15% of
company’s total projects in a year using this 3D technique of Building Information
modelling. All departments must adjust their activities according to this target.
 Key Performance Indicators (KPI) – For successful implementation of this strategy, IT
department, sales and marketing department and operations department shall come
forward to take lead for this technology. Another mention is board which needs to
supervise and HR department which needs to train all personnel so that they act
appropriately.
 Staffing, budgeting and financing needs – As discussed earlier, company would be
requiring performance of above-mentioned personnel. Along with them, finance
department of the company would need to divert the funds to this implementation and
marketing of this process and will also need to arrange with necessary supply chain
participants.
 Needs of customers – For any new venture or process to be successful, company needs
to identify the potential customers of this process (Soltanizadeh and et.al., 2016). This is
the responsibility of the sales and marketing department of the company to identify,
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target and market this new process to target customers so that it can achieve its short-term
objectives.
 Competitors – Competition and competitor analysis is another responsibility of sales and
marketing department of the company (Govindan, Shankar and Kannan, 2016). Company
should identify which of their rivals is using this technology and which is in process of
adopting it and how they are funding it, to develop a better strategy, to outline them and
maintain its market leader position.
Conclusion
From the above report, it can be concluded that a strategy provides a direction to the
company. It was also concluded that a company needs to understand dynamics of its internal and
external environment to know about the effectiveness of the strategy. There are various new and
emerging technologies that are able to generate to competitive advantage for the company and
company’s policies shall be inclusive enough to incorporate such changes.
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References
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Dodgson, M., 2018. Technological collaboration in industry: strategy, policy and
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Fang, S.C. and Chen, H.K., 2016. Strategic intent, organizational environment, and
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Govindan, K., Shankar, K.M. and Kannan, D., 2016. Sustainable material selection for
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Liedtka, J. and Kaplan, S., 2019. How design thinking opens new frontiers for strategy
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Mårtensson, K. and Westerberg, K., 2016. Corporate environmental strategies towards
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Online
10 Construction Technology Trends Impacting the Industry in 2020. 2020. [Online]. Available
through:< https://ukconnect.com/construction-technology-trends/>
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Business Model. 2020. [Online]. Available through:<
https://www.barrattdevelopments.co.uk/about-us/what-we-do/business-model>
Financial achievements. 2020. [Online]. Available
through:<https://www.barrattdevelopments.co.uk/investors/financial-performance/
financial-achievements>
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