KCI Case Study


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KCI Case study

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  • 10/03/13 19:08 © 2007 Microsoft Corporation. All rights reserved. Microsoft, Windows, Windows Vista and other product names are or may be registered trademarks and/or trademarks in the U.S. and/or other countries. The information herein is for informational purposes only and represents the current view of Microsoft Corporation as of the date of this presentation. Because Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information provided after the date of this presentation. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.
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  • KCI Case Study

    1. 1. Prepared by: Victoria Gnatoka RBS, Riga, March 26, 2013
    2. 2. Porter’s 5 force analysis External analysis Internal analysis SWOT History of KCI Problem definition and alternatives Strategy selection and implementation
    3. 3. $131 million revenues in 2009 900 employees Operates out of 12 states Provides consulting, engineering and environmental construction management services
    4. 4. Founded in 1955 in Baltimore County, Maryland In 1977 and in 1987 the company was purchased In 1988 iniciated employee buyout and became a majority employee-owned company In 1998 became 100% employee-owned
    5. 5. Political and Legal Forces • Tenders are highly regulated and government projects are very price-sensitive. Economical Forces • Engineering skills are already in short supply in many regions creating pressure on labour costs. •The economic downturns affect the industry very much. Global Forces • Rapidly increasing numbers of engineers from Asia and India in the global workforce, who work at lower cost.
    6. 6. Social Forces • Demand for engineering services is growing rapidly and the human capital with the correct skills is in short supply. • Flexible high school education system. • Young engineers can not compete on a global level. Technological Forces • Infrastructure is aging, and needs renovation. • Technology development.
    7. 7. Capital productivity through deferred federal and state tax payments; Employee productivity through increased motivation as a part of the ESOP; Experience accumulated over 50 years; Broad range of management capabilities and expertise in each discipline; Full-service management – provides clients with a single resource for all their engineering and surveying needs related to building and infrastructure projects.
    8. 8. Chosen by customers not on low bid but on qualifications; Provides customer oriented compliance services because of:  Vast knowledge of federal and state laws and environmental regulations;  Perfect and various technical skills;  Analytical abilities; A high qualified team of GIS experts, database analysts, enterprise system architects, programmers, technicians; Supported by state-of-art hardware and software
    9. 9. Project managers serve as an extension to the owners staff; Can offer customers better design and budget by:  Identifying potential problems ahead;  Providing effective solutions;  Considering technical and budgetary alternatives;  Anticipating and avoiding future disputes;  Improving maintainability, operability and reliability
    10. 10. Innovative constructing process and methods for:  Design-bid-build delivery system  Public-private partnership Cost effective strategies grounded in sound science; Top-high qualified team of environmental scientists and engineers in-house:  Ensures scientific approach to subsurface, geophysical investigations, soil/water permitting, environmental compliance;  Specializes in environmental and land use planning, terrestrial and aquatic assessment, wetland creation and mitigation design, stream restoration, permitting, fish passage design, environmental construction management
    11. 11. Differentiation and narrow specialization for each project Helping to lower costs for customers through efficient processes and scientifically based technologies Word of mouth and references from previous projects
    12. 12. Effective capital productivity and employee commitment to the company Effective use of newest scientific achievements in compliance with superior quality to meet best customer needs and expectations Unique capabilities in each discipline company is operating in
    13. 13. Strengths Weaknesses Company’s 50 years experience and reputation Commitment to innovation Strong position in public sector Intellectual capital: employees knowledge and expertise Quality-focused , customer-oriented company Low ROCE (5-6%) 80% of revenues comes from public sector Business processes are not standardized Very technical marketing Opportunities Threats Create partnerships and expand in US and abroad Aging infrastructure could create demand for KCI services Move to private sectors Capture new talents from emerging economies High competition within the industry Reduced governmental and private sector spending Price sensitive customers Competitors creates partnerships and alliances
    14. 14. Regions are very protective of their resources and don’t think for the good of the company Employees do not quite understand the need in coming reorganization Economic uncertainty
    15. 15. How to keep business sustainable in changing environment
    16. 16. Change the company structure from geographical to discipline based Pros HQ is already functioning discipline based Accounting is discipline based Shared resources for the whole company Cons Services provided are very local Might loose the local presence
    17. 17. Seek for new markets outside US Pros Growth potential with current partners Can use current services virtually Cons Different legislation in different countries Also other markets are mature
    18. 18. Grow by acquiring competitors Pros Natural growth of market share Getting experienced employees Cons Different company cultures Load to financial resources
    19. 19. Current market share of KCI is ~0.2% - no risk to become dominating Can reduce company’s overheads Services require local presence Easy way to get additional experienced resources Mixed approach, but mostly growing by acquiring competitors
    20. 20. “Just announced that our stock price increased by 14% in 2012” “Industry is recovering: 427 out of 500 firms reported domestic profits with 256 firms reporting increasing backlog” “We had our best year in the last ten with revenues hitting $146 million and record profits” “Our biggest changes were the acquisitions of two firms, one in Texas and one in South Carolina”