Timber Frame House Construction In New Zealand By Paramount Development LTD

Demand for Timber Frame Houses in New Zealand

Question:

Discuss about the Transport Times In the Planning Off Site Shipment.

Recent  development in the construction of timber frames as well as the paradigm shift of the human need for cost effective means of living along with the regional, social and environmental reasons has given stimuli to the timber frame construction services (Gibbs & O’Neill, 2015). When it comes to timber frame house construction, then New Zealand is one of the countries that has largest customer base. With the ever increasing demand for the timber frame houses in the country, various firms has germinated since 1980s in the country’s economy, which are providing excellent services to satisfy the demand of the customers (Flexner et al., 2015). Among them, one of the prominent players in the market is Paramount Development LTD. It is one of the fastest growing timber frame producer in the New Zealand. With experience of more than 17 years in the field of timber frame construction, it is service most of the customers in the Auckland region and providing considerable amount of share in the country’s GDP (“Paramount Pacifix Property Development Limited – business information”, 2018). Not only this, the organisation has been generating employment for most of the people in the Auckland region as well as conveying above average class service to their customer, making itself one of the best firm in the country.  However, according to applied business research project it can be seen that though there is substantial rise in the demand of the wooden frame houses; there is considerable amount of rigidity in the case of large projects.  As the applied business research project suggests, people from the New Zealand believes that there is considerable amount of risk in the large wooden houses and buildings due to the fact that New Zealand is located in an earthquake prone are (Rahimian et al., 2017). However, abundance of the large timber stock has influenced the history of the timber houses in the country. Since 1980, there has been substantial rise in the demand of the timber houses in the country due to excelling importance of the timber frames and its potentials. For instance, it has been seen that timber frame houses cost less and besides this, it is easily moveable in the case of the earthquake (Diyamandoglu & Fortuna, 2015). This business strategy report is meant to analyze and propose prospective strategies in order to make the business more lucrative.  In addition to this, the report will highlight practical as well as theoretical tools to assess the problems and opportunity in front of the business. Besides this, the report will provide outline regarding the expected return from the selected practical and theoretical tools.

Considering the finding of the pilot research done in Applied Business Research Project, business implementation strategies for the Paramount Development ltd. are as follows:

Historically there is misconception regarding the quality, sustainability and durability of the houses made out of wooden frame; however, in present day, engineered wood has changed the whole scenario (do Vale, Abreu & Marques, 2016). According to the pilot research done in the Applied Business Research Project, more than 41% of people from Auckland believe that timber houses are good to live. However, one major issue still persist is that, most of the respondents believe that timber houses are goods option for small housing and it is not suitable for large projects (Rabbat, 2017). Thus Paramount Development ltd. needs to bring in promotion plan and provide more and more resource on their website regarding the usage and benefits of using timber wood frames. Both online and office value assessment tool and promotion through books, media magazines would be ideal.

Paramount Development LTD: A Prominent Player in the Timber Frame Construction Market

One of the major concerns found from the research regarding the Paramount Development ltd. is that quality of service is essential factor that influence the customers (Kotler, 2015). Thus, the firm need to excel in their customer service. Moreover, customer feedback analysis and performing the sales process according to the figure 1 will be beneficial for the firm. It will help the firm to ensure service quality and time will also be maintained. Attracting, customers with the offers and lucrative contract options can be proved to be beneficial for the firm.

Innovation is the key factor that gives any organisation sustainability, durability and profitability both in the long run and in the short run. Pilot research on the Paramount Development ltd. highlights that there is lot of scope in front of the Paramount Development ltd. to do. For instance, with innovative mechanism of manufacturing the wooden frame house, the firm can bring in production efficiency and reduce the time and cost of production too.

Figure 2 highlights the proposed revamped production and construction process for the Paramount Development ltd. If the firm implement the proposed structure, then it will guide the firm from inception of the project to its completion (Ahmadian et al., 2015). It is expected to reduce time and cost of production and provide much needed freshness in the industry to attract more customers.

Considering the condition of the Paramount Development ltd. as highlighted in the previous pilot research, implementing marketing mix strategy is highly essential. It will help the firm to putting the right goods and services at the right place. Marketing mix strategy for the Paramount Development ltd is as follows (Helm & Gritsch, 2014):

Timber houses are tangible product, which has its own characteristics. The firm need t highlight the same and promote it to the customers in such a way that it provides an appeal to them.

Pricing is important for any product; and so does in the case of timber wood houses too. Considering the market condition of the Auckland, where the Paramount Development ltd operates it can be stated that the firm need to set aggressive pricing policy if they want to establish monopoly power (Tomczak, Reinecke & Kuss, 2018).

As the initial operating place the Paramount Development ltd operates in Auckland. However, it is advised that the firm enhance its operation and go beyond the local boundaries because expanding is the key element for the success.

Promotion as mentioned earlier, should be one of the main strategies for the Paramount Development ltd because it will lead them to new customers and reduce the misconception of the prospect buyers regarding the scope of timber houses (Carter, 2017).

Business Process Reengineering or BPR is one of the useful strategies for the firms like Paramount Development ltd. to bring in growth while solving the persistent problems in the industry (Chen, Yang & Tai, 2016). According to the pilot research, the firm lacks in the case of large project and has sustainability issue if there is lack of wood in the country. Using the BPR framework as mentioned in figure 3, the firm can bring in parity in their work and go beyond their limit of small projects in Auckland area.

Challenges and Misconceptions Associated with Timber Frame Construction

The pilot research report has showcased that time is one of the main factor that leads the customer towards the wooden frame houses. Thus it is utmost important for the Paramount Development ltd.  To reduce the time of production and maintenance, otherwise larger amount of time can drag the customer to substitute product or to the rival, considering the rival firm can provide service in less time (Vanus et al., 2017).

Considering the figure 4, maintenance framework of the firm can be revamped in this way. It will not only promote hassle free service, moreover reduce the time of service largely while addressing all the requirement of the client (Karari? & Završki, 2012).

Time and quality are the major factors that influence the timber houses as mentioned by the pilot research. Thus reducing the time of production utilizing the proposed revamped production strategy and ensuring quality with durability will make the Paramount Development ltd. sustainable.

Timber houses are advantageous in nature due to the fact that recycling, reuse possibility is higher and the waste generation potential is comparatively lower than the concrete houses. Besides this, the pilot project has mentioned that the prefabricated housing has ability to reduce the cost of customization as well as up keep cost is comparatively lower (Korhonen et al., 2016). However, one of the major concerns is availability of the raw materials in long run; in case of scarcity the cost of these houses can god sky high leading the business to shutdown. Thus, Paramount Development ltd. needs to focus on the sustainability frontier and introduce ‘buy back’ policy to recycle and re-fabricate the old timber houses for re-usage; it will bring in sustainability and waste management potential for the firm (Lindblad, Schauerte & Flinkman, 2016).

Paramount Development ltd. is a growing organisation, which has been servicing the people of Auckland since past 17 years. However, once the firm allows the above mentioned strategies to implemented in the work frame of the firm, then the business scenario of the organisation is ought to change. In that scenario, addressing the risk and the opportunity in front of the Paramount Development ltd. is necessary for proper and smooth implication of the strategies as well as provide the firm sustainable growth in future (Slovic, 2016). Considering the firm’s environment, mode of operation and business cycle it is advised that SWOT analysis and Porter’s Five Force analysis practical tools will be beneficial on behalf of the firm to assess their threat and opportunity (Anton, 2015). Coming to the theoretical tools, it will be beneficial for the firm to consider analysis of key factors for success along with the monitoring and control mechanism analysis to address the opportunity and risk. Theoretical and practical analysis of the business problems and opportunities for the Paramount Development ltd. are as follows:

SWOT is tool, which is being used by the business managers to assess the strength, weakness, opportunity and threat on behalf of their firm (Bull et al., 2016). This practical tool for threat and opportunity assessment is being widely used by various industries due to their simple framework, easy implementation and cost effective features (Santos & Laczniak, 2015). Using the SWOT framework, mangers of the Paramount Development ltd. can perform survey and assess the present market scenario on behalf of the firm and take necessary steps to reduce the threats while enhancing the opportunity. SWOT analysis of Paramount Development ltd. is as follows:

Strategies for Paramount Development LTD’s Growth and Profitability

Observing the growth of demand of the timber wood frame houses along with considering the result from the pilot research done earlier in Applied Business Research Project, it can be stated that, the firm has high potential to grow in coming days. Besides this, monetary assistance provided by the government is providing much amount stimuli to the firm, which is proving to be beneficial (Maxwell, Woods & Robinson, 2016). Moreover, input cost is lower for the firm due to abundance of wood in the Auckland area, which has helped the firm to earn higher amount of profit. Along with this, lower labour cost is helping the firm to attain higher profit compared to the rival firms in other regions (Dorn et al., 2017).

Though presently there is abundance in raw materials for the timber wood frame production, it can be stated that due to lack of plantation programs, the firm is expected to face higher input cost.

Wooden frame houses are one of the trending businesses in New Zealand (Potter et al., 2015). If the firm can come up with latest design discontinuing their old models that provides an appealing touch with cost effectiveness, then the firm can be a huge hit in coming days. Growth rate over the last five years for the firm is consistent and it has been raising at a steady rate that highlight the firm has potential to grow subject to introduction of new products and services. For instance, the firm can involve itself in large projects and make the customer aware of the same through promotion (Birchmore et al., 2017).

Considering the trend of wooden frame demand in New Zealand, various new firms are opening.  It can reduce the market share of the firm and lead it to earn only normal profit compared to the present situation of supernormal profit.

Porter’s Five Force analysis is another practical tool for addressing the risk and opportunities for the firms. Using this tool of competitive analysis managers of Paramount Development ltd. can trace the threats due to new entrants and viability of future growth while judging the bargaining power of the producer and buyer simultaneously (Dobbs, 2014). Besides this, Porter’s Five Force framework will aid the firm to perform the analysis of buyer’s bargaining power, seller’s bargaining power and rivalry among the existing firm. Depending upon the intensity of these various forces determine the expected level of profit on behalf of the industry. Forces of the Porter’s Five Forces model are inversely related with the price and profitability of the firm (Brege, Stehn & Nord, 2014). For instance, if there is high amount of competition among the firms then it can act as the threat in front of the firm, while lower amount of threat will lead to ease of doing business with higher amount of profit. Thus, banking upon this practical tool for threat assessment will aid the firm to decide how much scope it has and the magnitude of the threat in front of the firm. Porter’s Five Force analysis of the Paramount Development ltd. is as follows:

Business Process Reengineering

Bargaining power of buyer depends upon the goods and services the firm is providing. Besides this availability of the service provider largely affect the bargaining power on behalf of the buyers. Considering the variables of buyer’s bargaining power, it can be stated that Paramount Development ltd. faces substantial amount of buyer’s bargaining power due to the fact that, availability of substitute goods and services is largely available in the market. Besides this Paramount Development ltd. operates in an oligopolistic market, which allows the buyers to shift their preference from one supplier to another supplier easily (Birchmore, Roger & Tait, 2015).

Considering the Auckland market structure of timber frame, it can be stated that Paramount Development ltd. has sufficient amount of bargaining power. However, it is also true that due to the oligopolistic market structure; the firm fails to influence the market completely with price alteration (Porter & Heppelmann, 2014). Besides this, brand preference is another factor that harms the firm’s bargaining power. Coming to the positive side it can be state that the firm operates in Auckland area, where large number of buyers of timber frame believes it is safer, time and cost effective mechanism for living, which provides the firm substantial amount of bargaining power (Su, 2016).  Along with this, if the Paramount Development ltd. can bring in new technology to provide sustainable multi-storeyed building out of timber frame, it will give them high bargaining power due to their uniqueness in service.

There is always threat from new entrants in the market. Paramount Development ltd. operates in the Auckland, where the market is oligopolistic in nature. If the number of service providers increase in market, it will hamper the market share of the existing firm. Thus, the threat level from new entrants is high in front of the Paramount Development.

Substitutes of the timber frame houses are widely available in New Zealand, however according to the pilot business research done earlier has showcased that 41% of people believe that timber frame houses are worth for living compared to the houses made out of concrete houses. Thus, the threats from substitute are lower in front of the Paramount Development ltd (Birchmore, Roger & Tait, 2015).

Paramount Development ltd. operates in Auckland of New Zealand, where the market is oligopolistic in nature. However, the number of buyers is limited in this area that makes the rivalry among the competitors high (Porter & Heppelmann, 2014).

When it comes to risk assessment, then monitoring and control is one of the most important element for every organisation. Systematic monitoring of various stages of the production and controlling the same can give an organisation competitive edge by reducing the cost of production, reducing the wastage level and bringing in higher efficiency (Stacey, 2016). This process is mixture of utilisation of theoretical and practical ways for assessing the risk. For proper monitoring and controlling of the Paramount Development ltd, mangers need to chalk out the feasible ways to determine how smoothly the above mentioned strategies can be implemented. Feedback formation along with bringing technological changes in the organisation and gathering data of customer demand and firms productivity can aid the firm to assess its risk and opportunity (Hasan et al., 2015). Judging the gathered data, if any risk and opportunity are observed, then the mangers can alter their production or marketing or the whole business framework to provide the firm sustainability and ability to withstand demand as well as supply shock.

Marketing Mix Strategy

Timber frame construction business has different characteristics, depending upon the nature of the project (Cuadrado et al., 2015). Thus, to analyse the risk and opportunities is necessary to provide the firm sustainability; and analysing the key factors for success, the firm can be able to achieve the same. Analysis of the key factors for success can be done in three parts, which are as follows (Karari? & Završki, 2012):

• Determining the value of sales
• Provision of investment of the client

• Preparing the action plan prior to initialising the task
• Arranging all the required inputs
• Coming up with quality finished work

• Providing maintenance service
• Feedback from customer

Depending upon the information gathered, Paramount Development ltd. can assess their market demand and threat observed in the Applied Business Research project earlier easily. Besides this, the firm will be able to judge how well the new strategies have been implemented and the post implementation of the strategies can also be judged using these above mentioned practical and theoretical tools.

The pilot research work done earlier in the Applied Business Research Project has showcased that there is optimistic response from the users of timber frame houses. Most of the people has highlighted that timber houses are more preferable than the concrete houses or other available mode of living in New Zealand. The report has also portrayed that timber frame houses are huge hit due to their cost effectiveness and lower upkeep cost as well as lower time of construction (Marsono & Balasbaneh, 2015). However, one of the major concerns that have been conveyed by the people of the Auckland regarding the timber frame houses is that, they still do not find it beneficial and sustainable option for the large construction likes multi-storeyed building, office complex and others. This business implementation report has provided strategy to address this issue and previously it has mentioned various theoretical and practical tools to judge the implementation of the same. If the mentioned strategies are implemented properly, then through the use of above mentioned risk assessment tools, Paramount Development ltd. can envisage higher business opportunity along with greater amount of bargaining power. Besides this, the practical tools will give them opportunity to collect raw data from both the manufacture’s point of view and the buyers’ point of view for assessing (Rothaermel, 2015). Analysing the same, theoretical tool will aid the firm to highlight the present situation on behalf of the firm and showcase its sustainability. Small housing industry of New Zealand is the targeted market for the Paramount Development ltd. thus with the strategies mentioned above will help the firm to bring in more profitability as well as sustainability. With the SWOT analysis, Paramount Development ltd. can assess the present market scenario and identify the loopholes in their operation. Business is a never ending process that evolves over the time depending upon the customer demand, subject to availability of the technology, resource and capital. Thus, utilising the SWOT tool, Paramount Development ltd. will have the scope to find their opportunity to enhance their business even after implying the new strategies (Madhavaram, Hunt & Bicen, 2017). Porter’s Five Force analysis will guide the firm to address their level of bargaining power and threats from new entrants. Moreover, it will aid the firm to judge whether there is any risk in case of substitutable product become available in the market and portray the bargaining power of the buyers. Using these practical tools, Paramount Development ltd. will become able to assess the risk and opportunity of the firm and collect raw data to perform analysis (Dalken, 2014). Theoretical tools like managing and control and assessment of key success factors plays crucial role in any business. It will help the Paramount Development ltd. to address what more need to be done once the new strategies are implemented to address the risk of the firm. Opportunity frontier of the firm can be explored with greater amount of penetration rate and the magnitude of success will be much higher in case of utilising these tools. Monitoring and control will aid the Paramount Development ltd. to check how well the new strategies are being implemented and assessment of the key success factors will help the firm to find out the feedback and chalk out the proper plan for construction in further works (Grant, 2016). Utilising this tools, the firms can also assess how well they has mitigated the risk and weakness found in the Applied Business Research Report; leading the firms towards sustainability.

Conclusion:

This business strategy report was meant to analyse and provide various strategies to address the issues of timber frame houses found through the Applied Business Research Report.  Besides this the report has been made to provide various theoretical and practical tools to address the implementation of the new strategies and another section has portrayed the expected outcome of the new strategies. The report has chalked out various strategies to mitigated the issue of the Paramount Development ltd. and provide the firm a revamped business model in order to cope up with the evaluating small housing industry of New Zealand. The report has found that, though the Paramount Development ltd. operates mainly in the small timber housing project, if it can bring in new services, then it would be beneficial for the firm. For instance, the report has suggested that if the firm can produce multi-storeyed building and indulge itself into the large projects, then it would bring in more profit and market controlling power to the firm. The report has found that though the time of constructing timber frame houses is considerably low compared to other housing options, it would be beneficial to bring in new technologies that can give the efficiency in production, reduced cost of operation as well as reduced time of construction. One of the major concerns for the customer of Auckland is durability of the timber houses; thus the firm need to provide durable houses and let the customers aware of its durability to reduce the misconception while enhancing the demand of the same. The report has mentioned practical and theoretical tools to assess the implementation of the strategies mentioned at the initial stage of the report and portrayed expected return from the same. According to the expectation, if the managers of the firms can utilise the tools, then it will guide them to have raw data regarding the market demand of the goods and services of Paramount Development ltd. and besides this customer feedback. Analysing these available data, the firm can easily judge their present market situation and forecast the future business trend on behalf of the firm. To conclude the report it can be said that, timber housing is one of the rising industry and most of the people who have used it are fond of it. Due to its cost and time effectiveness and easy maintenance, timber frame houses are widely popular around the world and in the case of New Zealand; abundance of the wood and low labour cost has acted as stimuli for this business. If the firm operates according to the strategies mentioned above, it can get sustainability as well as profitability too.

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