Graduate papers
  
Description of the graduate paper
Form of studies Professional Master
Title of the study programm Business Administration
Title in original language Cenu stratēģijas izstrādāšana un ieviešana SIA Nordic Homes
Title in English Development Strategy for Nordic Homes LTD
Author Andis Ločmelis
Department 01B00 Riga Business School
Scientific advisor A.Dzedons
Reviewer A.Koliškins
Abstract The purpose of the Thesis is to analyze Nordic Homes business model, strengths and weaknesses and explore opportunities and threats in order to select appropriate business strategy and process changes that conform with the company's mission and values and deliver above-than-average return from investment. The literature review shows the main strategic planning steps to develop appropriate business strategy are selection of mission and major goals, analysis of external and internal environment, selection of appropriate business strategy and taking advantage of external opportunities. The Authors have based the Thesis on the following research tools and methods: review and analysis of literature; strategy development tools; interviews; on-site research; and analysis of financial statements and publicly available information. Nordic Homes produces fully finished timber-frame house modules. There are no direct competitors in the Latvia market but, according to Porter’s Five Forces, competition in the market is evaluated as high due to substitute products. Potential buyers in market are not familiar with wood-frame module construction type and this causes precariousness. Despite to rapid economic growth (average 4.4%) and population’s welfare improvement, construction industry in Latvia is stagnating and major construction volumes are “driven” by individual housing, thus limiting abilities of Nordic Homes in Latvian market to exercise its main advantages – price, speed and quality. Nordic Homes production facilities are located near Jelgava. Nearest harbor located only 40 kilometers from production facilities giving potential for exporting due to low transportation cost. The main advantages of Nordic Homes products are speed, cost and quality. The construction speed increases by almost 50%, but quality and cost are functions of low open-air construction time. The cost dimension is especially relevant for foreign markets where cost of construction personnel is higher than in Latvia. The main weaknesses of the company are weak financial situation, lack of sufficient sales capacity and un-balanced process capacities. The authors suggest to apply focused differentiation strategy which implies creating the value to the particular market/segment by differentiating it by some specific feature provided to the customer which is speed and quality and to broaden geo-presence in Scandinavia. As a functional level strategy is suggestion to work on operational process improvement in order to attain throughput balance reaching production capacity 4 modules per shift. Project’s NPV at discount rate 9% is EUR 1.7 billion, project’s IRR is 26%, and project’s payback time is 3 years.
Keywords Stratēģijas izstrāde, moduļu mājas, darbības procesu uzlabošana, caurlaides spēja, ārējā analīze, iekšējā analīze
Keywords in English strategy develpment, modular houses, operational process improvements, thoroughput rate, external analysis, internal analysis
Language lv
Year 2016
Date and time of uploading 19.05.2016 14:05:19