Proposal for a company strategy for H Cumberbirch & Son Limited

construction company
BSV11700 Strategic Management (CW2)
Module Leader: Dr Linda Khaddour
By Roberto Peralta, 40672664

Brief description of the company

H Cumberbirch & Son Limited (HC&S) is a private company limited by shares incorporated in
England and Wales. It is based in Macclesfield in the northwest of the UK (Unit 6, Fence Avenue
Industrial Estate, Macclesfield, Cheshire, SK10 1LT). The company began trading in the year 1900
and was incorporated in 1949, it has taken on medium and small contracts in the area (up to 8
million pounds). It has a varied portfolio including residential projects, commercial and
industrial establishments, and work for institutional or public clients.
For reference, the company reported 29 persons employed for the year 2021 and 26 persons
employed for the year 2020. These reports do not include income statements but do give a
sense of the size of the company (less than 1 million £ total equity, H Cumberbirch & Son
Limited, 2021). In its website, the company describes itself as “a family business combining
traditional values, the very best quality and unrivalled customer service” (H Cumberbirch & Son
Limited, 2023). Public information about the company is limited. The company maintains a
website (https://www.cumberbirch.com) and some of its financial statements have been filed
with the Registrar and are publicly available.
Regrettably, in 2019 two bricklayers fell from a height of eight feet and were injured. The
company pleaded guilty to “breaching Regulation 4(1) of the Work at Height Regulations 2005.
It was fined £36,000 and ordered to pay costs of £2,824” (The Construction Index, 2022). A
Health & Safety Executive (HSE) investigation found poor planning and risk assessment of the
activity requiring work at height.
No corporate strategy is published in its website, which can mean there is not one defined or
that it is not a commitment made to the public by the leadership team. Either way, a useful way
to undergo a reputational crisis is to seize the opportunity to self-reflect and correct course.

Five components of Porters Competitive Forces Model

Porter’s five forces model is a tool for analyzing industries proposed by Harvard professor
Michael E. Porter in 1979. His seminal article “How Competitive Forces Shape Strategy” (Porter,
1979) revolutionized the field of competitive strategy. According to his theory when the five
forces are “strong” profitability decreases for players in the industry. Determining a competitive
advantage is an important angle to analyzing and formulating a corporate strategy.
Table 1. Porter’s Five Forces applied to H Cumberbirch & Son Limited position.

Porter’s Five Forces Applied to H Cumberbirch & Son Limited

position
This force is not strong in the sector of the
Bargaining power of suppliers: when this
construction industry that HC&S operates in.
force is strong, few powerful suppliers might
The projects they build are common
extract higher prices from competitors and
structures and at small enough scale that
eat into their profits.
specialty supplier of labor and materials are
not needed.
Bargaining power of customers: powerful This can be a strong force in an economy
buyers can make competitors fight each recovering from the COVD-19 pandemic. In a
other for price to lower cost. buyer’s market, the client has more influence
to squeeze margins from competitors.
Substitution of the product of general
Threat of substitute products: even
contracting is hard to achieve. HC&S seems to
established industries can be upended by
be flexible about the type of projects it can
new technologies and substitute products.
take on. And the company is experienced
For example, when the taxi industry was
enough to know its costs to make project
revolutionized by ride-hailing apps.
accurate project estimations, which lowers
risk.
HC&S must have seen plenty of competitors
come and go in its 123 years of company
history. However, companies that adapt to
Threat of new entrants: new competition can
modern construction methods can disrupt
make a huge impact on an industry.
the market HC&S operates in. Larger
Innovative players will bring new ideas, fresh
construction groups might be dangerous
capital, and talent.
players for a small company like HC&S.
However smaller companies learn to operate
relying on being more flexible and customer
oriented than some larger ones.
Competition between industry rivals: can
take many forms including “including price
discounting, new product introductions,
New technologies, smaller margins and rising
advertising campaigns, and service
costs make for a strong force diminish
improvements. High rivalry limits
profitability in the sector.
the profitability of an industry” (Porter,
2005).

(Peralta, 2023)
Identifying a distinct competitive advantage for HC&S is not clear from the publicly available
information. For a small construction company capable of executing high quality jobs, relying on
generating value for carefully selected clients and providing flexibility and innovation in project
delivery methods can provide a possible competitive advantage.

PESTEL Analysis
A PESTEL analysis is a tool used in strategic planning to analyze the external factors that can
influence a company or sector. The acronym stands for “Political, Environmental, Social,
Technological, Economic and Legal” factors influencing an organization. HC&S is an established
player in a relatively small construction market of a small town in northwestern England. Some
of the factors influencing the company will be more localized like the decisions and regulations
of the local government. Other powerful factors will operate on national and global scales.
Table 2. PESTEL analysis factors affecting H Cumberbirch & Son Limited

HC&S operates in the Northwest region of the UK. The company is

based in Macclesfield town in Cheshire, England. The whole of the UK
has seen political polarization in recent years debating the question of
Political
Brexit and its varied political and economical corollaries. The War in
the Ukraine is reinvigorating and straining the political unity of the
Western alliance.
Climate change and the move toward decarbonization is a challenge
for all actors in society. Construction companies will have to meet
Environmental
environmental standards and apply new construction methods and
materials to help everyone reach those objectives.
Modern UK society is undergoing challenges reeling from the
aftermath of the COVID-19 years. The decoupling of the European
Union following Brexit has forced the UK to rethink its place in the
global stage. Further societal challenges like the effects of climate
Social
change and changing patterns of immigration are forces that also
shape the UK’s future. The effects generational change exert on the
labor market are important challenges for the construction industry
(Archdesk, 2023).
Lean methods, automatization, AI, AR, BIM, novel off-site construction
methods are some of the technological advances that present
Technological opportunities for mid-size construction companies like HC&S. These
technologies are no longer reserved for extremely large projects or
specialized contractors.
The War in the Ukraine causes rising food and energy costs, while the
economy is recovering from the pandemic years. Higher interest rates
Economic
and material costs diminish demand for new housing and construction
(Dentons, 2022).
Legal Financial strain caused by economic slowdown might lead to more
 legal disputes for construction companies in the UK. New laws and
regulations like the Environment Act and the Future Homes Standard
will raise industry standards regarding climate change (Sood, 2023).
2022’s Building Safety Act following the Grenfell tragedy will generate
a more stringent regulatory regime to improve building and fire safety
in the construction industry (Ministry of Housing, Communities &
Local Government, 2021).
(Peralta, 2023)

SWOT Analysis
Analyzing a company to understand its strategic planning and learning from it usually focusses
on the company’s internal strengths and weaknesses and the external threats and opportunities
at hand: a SWOT analysis (Boddy, 2019). For HC&S taking stock of their current circumstances in
a pivotal moment in its history is an important step in the formulation of a corporate strategy.
Strategic thinking is characterized by reflection and looking ahead in the future to visualize
challenges and opportunities.
Table 3. H Cumberbirch & Son Limited SWOT Analysis

Strengths Threats
- Storied company history that dates - Inflation
back more than 120 years points to - High interest rates
long term resilience. - Economic slowdown
- Experienced team (leadership, - Competition that implements modern
operational management and methods of construction
specialist labor force), - Disruption of supply chains

Weaknesses Opportunities
- Traditional values and work methods - Digitalization
fail to provide the efficiency of - Advent of AI technologies to improve
modern methods of construction productivity.
production. - New modelling technologies for
- Not taking a holistic approach to constructability and BIM management
construction management that analyses
focusses on creating value for every
stakeholder in the chain of value. This
is reflected in their latest safety
challenges.
(Peralta, 2023)

Fundamentals of strategy
HC&S is general contractor that has operated since its founding in the year 1900. Throughout
the decades it has maintained a dedication to quality and the development of client
relationships. To have that long trajectory a company must have inherent values that guide it
through societal and economic times of upheaval. The lack of a formal enunciation of a
corporate strategy, missions, objectives, and values to be found in the company’s website or
publicly available documentation is significant in and of itself. It denotes that there is not a
public commitment by leadership to a corporate strategy and that perhaps that self-reflection
has not taken place.
However, from the company´s characteristics and publicly available information a set of
company values and tendencies can be inferred. The company describes itself as “a family
business combining traditional values, the very best quality and unrivalled customer service”.
While on the one hand these are noble, classic, and worthwhile company values. On the other
hand, there is not one mention of modern methods of construction or lean principles in the
company’s public documentation.
Lean production was developed since the 1940s by the Toyota Motor Company. Lean
production strives towards an ever-improving efficiency in their production and environmental
impact. The principles and practices condensed by lean theory have been applied to various
other industries and manufacturing sectors after making its impact in Toyota and the wider
automotive industry. This theory has been applied to the construction business with
encouraging results since the 1990s (Koskela, 1992) but has also been met with resistance by
entrenched habits in the industry. The challenges originating in the product design process in
the construction industry, the waste generated by the traditional tendering process, and a zero-
sum view adversarial stance between the stakeholders hold the construction industry back
(Sarhan et al., 2017).
Furthermore, and particularly relevant to the case at hand, the principles of modern
manufacturing and lean methodology strive towards a systematic and holistic approach to the
production of each deliverable. Following this logic, human resources, and the study of the
complex human interactions necessary for the success of a construction project have taken a
preponderance in modern construction management. Turning to the core principles of lean
construction as a “respect and relationship-oriented holistic project design and delivery
process” (Bhawani et al, 2021), one can find the underlying lesson of the importance of human
resources theory and safety.
An incomplete view of lean methodology would be to look to optimize processes without
considering the human elements that interact with the process along the way. A properly
applied lean methodology will look to create happier and healthier more efficient workers. A
rested, concentrated worker will produce better production and safety results than an
overworked stressed one. Indeed, some authors list waste of human potential as one of the
areas where lean methodology must strive to be more effective (for example Koskela, 2004).
There are obstacles to applying these lessons. As Koulikoff-Souviron and Harrison (2007) state,
human resources and operations management are routinely analyzed separately. This is folly, as
a successful HR strategy can provide a competitive advantage over competitors. As HC&S´s
failure to plan appropriately plan for the safety of its workers in the 2019 incident shows, a
“making do” approach to the process design of any construction activity can exacerbate waste
and maximize negative externalities like injuries.
One cornerstone of lean methodology is to include crew and team members in decision making
and planning. Innovations like the Last Planner System seek to gain value and information from
experience tradesmen and subject matter experts that can better craft a decision or a solution
for the project’s planning than a strictly top-down implementation. This principle can very well
be applied to the process design and risk assessment of a construction activity, specially in
activities with high-risk conditions like heights, fire, explosives, drowning, underground and
confined spaces.

Mission
A mission statement provides a company with a clear overarching objective that should
fundamentally influence strategic decisions taken by the leadership team. In the case of HC&S,
the following mission statement intends to build upon their traditional family values, quality
assurance and “client first” orientation.
We create maximum value for our clients while reducing waste and
negative consequences for all. Since 1900 our family company has helped
our community grow, our mission is to continue doing so with a
fundamental commitment to lean production, quality, safety and the
environment.
While placing the client in the forefront, the first sentence is also a clear nod to lean production
methods. Every client understands that creating value is the main desired outcome of
contracting with HC&S. It also signals to the clients and all stakeholders that HC&S are good
stewards of their resources with a focus on reducing waste. Instead of the word “externality”
which for the public at large can feel like a euphemism, the word “consequence” is used. Clients
understand that their projects can have negative consequences on neighbors, on traffic, on
waterways, etc., and are interested in minimizing these whenever possible if only for public
relations reasons.
In the second sentence HC&S long history is mentioned to remind coworkers and clients of the
tradition and experience the company has and should be known for. Lean principles are then
explicitly mentioned in the mission statement. As concluded from the Five Forces analysis
above, HC&S’s competitive advantage could be found in being an experienced and established
small-sized general contractor but at the same time leveraging the productivity and nimbleness
lean methods provide, which are necessary to compete in a today’s construction market and
current economic conditions.
Moreover, three central corollaries of lean methodology are enumerated: quality, safety, and
care for the environment. Quality assurance is one of the traditional values at HC&S, with lean
methods it can be standardized and tailored to avoid waste and generate value for the client.
Safety is then clarified to be one of the central objectives of the company. This is a correction
from past corporate strategy (at least as one can gleam from the company’s official website).
The 2019 incident can be understood as stemming from safety being a blind spot in the
company’s process. Part of managing a reputational crisis is recognizing past mistakes and
showing corrections are made.
Lastly, damage to the environment is also a possible negative externality of the construction
industry. And, positively, new ways of building are a necessary element of a healthier
relationship of human societies to the environment. More practically, as seen in the PESTEL
analysis, the legal factors are trending in the direction of more stringent regulations for safety
and environmental hazards.

Goals and objectives

Corporate strategies should be condensed into corporate objectives that accompanied by
measurable results. These key performance indicators (KPIs) are ways to quantify progress of a
company strategy, and prove that it is not only a shallow concession to PR. The directors will
decide which of this information will be made available to the public to drive public facing
communication.
An example of a successful corporate strategy and its associated values and KPIs can be found in
Balfour Beatty’s Annual Report and Accounts (2022).
Table 3. Corporate strategy objectives proposal for H Cumberbirch & Son

Area Objective Key Performance Indicators (KPIs)

Safety Accident-free projects - Track Lost Time Injury Rate
(LTIR)
Environment Meet industry emissions standards - Total emissions by £ revenue.
Lean Reduce waste and create - Net cash.
implementatio - Underlying Profit/(Loss).
n
Digitalization Paper free by 2025. - Number of processes that
involve paper.
Off-site Reduce percentage of work on site. - % of time and resources spent
manufacturing on site by project cost and area.
(Peralta, 2023)

Conclusion
Times of crisis are opportunities for a company to rethink itself. More than just a PR stunt to
deal with the reputational fallout of this case, defining a corporate strategy is an exercise in self-
reflection about the guiding principles and objectives for an institution. This process of
formulating and analyzing corporate strategy will allow all stakeholders to benefit and learn
from the errors that brought about the crisis.
The proposed fundamental of strategy proposed above are appliable to other companies that
face similar struggles to implement lean methodologies and modern methods of construction
production and their logical consequence of the primacy of safeguarding the well-being of
construction workers.
The corporate objectives proposed with their accompanying KPIs provide measurable outcomes
for the strategy envisioned. Rather than let a good crisis go to waste, HC&S will surely renew
itself and learn from this unfortunate and dangerous event.

References

- Abdelhamid, T. S. & Salem, S. (2005). Lean Construction: A New Paradigm for Managing
Construction. International Workshop on Innovations in Materials and Design of Civil
Infrastructure. Cairo, Egypt.

- Archdesk (2023) 73 UK Construction Statistics and Trends. Available at:

https://archdesk.com/blog/construction-statistics-2023/ (Accessed 24 July 2023).

- Balfour Beatty (2022). Building New Futures: Annual Report and Accounts 2022.

- Bhawani, S., Messner, J., and Leicht, R. (2021) Key Planning Steps Enabling Systematic Lean
Implementation on Construction Projects. Lean Construction Journal 2021.

- Boddy, D. (2019). Management. 8th Edition, Pearson International Content

- Cheng, R., and Johnson, A. J. (2016) How and why IPD and Lean Lead to Success.

- Dentons (2022) Supply chains in an inflationary environment. Available at:

https://www.dentons.com/en/insights/articles/2022/august/2/supply-chains-in-an-
inflationary-environment (Accessed 24 July 2023).

- Dentons (2022) The Building Safety Act is now in force. Available at:
https://www.dentons.com/en/insights/articles/2022/may/5/the-building-safety-act-is-now-
in-force (Accessed 24 July 2023).

- Forbes, L. H. and Ahmed, S. M. (2011). Modern Construction: Lean Project Delivery and
Integrated Practices, 2011.

- H Cumberbirch & Son Limited (2012) About Cumberbirch Construction. Available at:
https://www.cumberbirch.com/about-cumberbirch-construction/ (Accessed 24 July 2023).

- H Cumberbirch & Son Limited (2021) H Cumberbirch & Son Limited Unaudited Financial
Statements for the Year Ended 31 December 2021.

- Health and Safety Executive (2019) Details for Case No. 4696864. Available at:
https://resources.hse.gov.uk/convictions-history/case/case_details.asp?SF=CN&SV=4696864
(Accessed 24 July 2023).

- Koulikoff-Souviron, M., Harrison, A. (2007) The pervasive human resource picture in

interdependent supply relationships. International Journal of Operations & Production
Management, Vol. 27 No. 1, 2007, pp. 8-27.

- Koskela, L. (1992). Application of the new production philosophy to construction. Center for
Integrated Facility Engineering (CIFE), Stanford, CA, 2010.

- Koskela, L. (2004) ‘Making-do-- The Eighth Category of Waste’, Proceedings for the IGLC-12,
Elsinore.

- Ministry Of Housing, Communities & Local Government (2021) Outline Transition Plan for the
Building Safety Bill. Available at: https://www.gov.uk/government/publications/building-
safety-bill-transition-plan/outline-transition-plan-for-the-building-safety-bill#why-is-the-
building-safety-bill-needed-and-what-will-it-do (Accessed 24 July 2023).

- Sarhan, S., Pasquire, C., and King, A. (2017) The concept of Institutional Waste within the
Construction industry: A potential theoretical framework. Lean Construction Journal 2017 pp
12-24.
- Porter, M.E. (1979). How Competitive Forces Shape Strategy. Harvard Business Review, 57,
137-145.

- Porter, M.E. (1980). Competitive Strategy. The Free Press.

- Porter, M.E. (2008). The Five Competitive Forces that Shape Strategy. Harvard Business
Review. January 2008.

- The Construction Index (2022) £36k fine for height safety failings. Available at:
https://www.theconstructionindex.co.uk/news/view/36k-fine-for-height-safety-failings
(Accessed 24 July 2023).