Horton Contracting is a sole proprietorship licensed in the state of Arkansas as a general contractor. The company has been in business since 1992. Horton contracting began with the business of building agricultural buildings such as poultry houses, barns, and small shops. They began with a single shop in Arkansas and since their beginning, have expanded their business to Missouri and Oklahoma. They have expanded their products as well to include commercial buildings, residential homes, and concrete projects. They serve as a sub-contractor for other construction companies such as excavators and masons.
Currently Horton Contracting fluctuates between 10 and twenty employees, depending on work volume. Due to their success, Horton Contracting has been experiencing growing pains. Their business volume is currently expanding faster than their current facility and resources will allow. Inventory and Equipment continue to increase and at this time all tracking is done manually. As a result, minor supervisory problems are beginning to occur.
The company's most pressing need is that of its currently inadequate facility. The company's second most pressing issue is that the bookkeeping and office functions are currently located in the Horton's home. This is inconvenient for the Hortons and customers alike. Office functions need to be located in a different facility. The third issue is that inventory and bookkeeping needs to be computerized as the manual methods are too cumbersome with the increased volume. The company needs office equipment to continue to operate efficiently. The final situation, which needs addressed is that with an increasing number of employees and contracts to handle. Mr. Horton will no longer be able to handle shop supervisory tasks in addition to job bids and proposals for new work. It will be necessary to hire a shop manager to take over routine production tasks, freeing Mr. Horton to continue to expand the business.
It is the company's plan to continue to improve the operating efficiency of the current operations. The company will increase its profits by improving efficiency and by lowering costs associated with the current system. In the next seven years, Horton Contracting will open a retail division, providing metal building supply. This division would specialize in the specialty items needed for metal buildings. It would carry screw guns, other hand/power tools, various types of screws, closures, and trim. This will begin small and then work up to carrying the metal and other materials needed for the steel trusses and supports. They will explore the possibility of becoming a distributor for the larger companies, offering pre-fabricated buildings. Horton construction would offer assembly crews to build the building for the customer.
3.0 Market analysis
Currently, the non-residential construction industry is operating at a record volume, according to Jay Bryson, an economist with the North Carolina based First Union Corp. He feels that the non-residential construction sector should not be impacted by the recent economic slow-down, especially if the slow down is short-lived. Bryson expects a 5% decline in the beginning of 2002 compared to the beginning of 2001. He does not expect this decline to be severe. [Construction Writers Association, 2001]
According to the U.S. Census Bureau, an estimated $91.2 billion dollars was spent on non-residential construction in 1992. This excluded buildings of 1,000 square feet or less, and industrial, agricultural and buildings owned by the government or public utilities. [U.S. Census Bureau, 1999] In the 2001 Arkansas Economic Report issued by the Arkansas Department of Economic Development, overall construction in Arkansas is expected to increase 8.32% by 2005, 15.62% by 2010, and 22.35% by 2015. Non-residential construction accounts for 4% of the total construction in the state.
The target market for Horton's construction consists of small to medium businesses and residential customers. Most of the customers served by Horton's Contracting will depend on the buildings provided to help sustain their own business. Typical residential customers use the buildings primarily for storage.
Although price is important to Horton contracting customers, quality is more important to them than price. They want a durable building, which will be functional for their needs. The customers are willing to pay a slightly higher price for Horton's buildings compared to their competitors due to two factors. Horton's is the only supplier within two hours of their current location. Shipping materials for their product can be quite expensive. Horton's has a reputation for quality, and customers are willing to pay more for the perception that they are getting a better product and better service.
4.0 Competitive analysis
Horton's primary competitors are companies of the same size as themselves, but located more than two hours away. Horton's business has been built on the concept of concentrating on and attracting local business.
Several nationwide chains offer the same products. However, their prices are higher and they do not give the personal service and quality that is offered by Horton's. The major stores offering similar products are Lowe's Building Supply, HQ Home Improvement, and Builder's Square. These companies offer the supplies to build similar buildings to Horton's as well a building plans and some technical advice, but do not construct the buildings for the customer. This limits the major stores customers to people who have the skills, capability, and time to building the building themselves. Most people do not have the desire to building the building themselves as time is valuable to them and them like that confidence in the reputation in quality for which Horton's is known.
The only threats to Horton's business would be the threat of a new business moving into the area who was in direct competition. Even if a major chain moved into the area, Horton's could still retain a large portion of the market share. Its prices would be lower and they offer personal service and stand behind their work. People still prefer this type of service to mass marketing. A major chain would be a threat simply because of name recognition. Every marketer knows that people tend to go with the familiar over the unfamiliar most of the time. This could be overcome be an advertising campaign to get more name recognition by Horton's .
22.0 Our key competitive advantage is their past reputation and the fact that there is no local competition. This gives them virtually unlimited access to the local market and has given them the ability to expand into similar locations in Missouri and Oklahoma.
23.0 Their key weakness is the current lack of material shortages and space issues. They need more space and a computerized office functions. They cannot expand business under the current situation. There is not enough room to expand.
Their strategy involves a long-term plan to expand the existing services that they currently offer. They also seek to increase profits by lowering our costs by increasing efficiency through the purchase of equipment, such as a computer, and by streamlining production processes. They will expand into a retail market through opening a metal building division.
24.0 Implementing this strategy will take place over a seven-year period. The issues with the company will be resolved in order of importance in this seven-year plan.
Horton's primary products are agricultural buildings such as poultry houses, barns, and small shops, commercial buildings, residential homes, and concrete projects. They serve as a sub-contractor for other construction companies such as excavators and masons.
Their products are of similar quality as their competitors. However they gain an advantage over their competitor by backing up their product with excellent service. Horton's prices are slightly higher than their competitors. However, this is still lower than the shipping and transportation costs that their customers would have to pay if the bought the same products from competitors.
Future expansion into the metal building area will gives them a greater advantage, as it broadens their product offerings. Metal buildings would be bought by the same customers who purchase the buildings offered to their current customers.
25.0-7.0 Marketing and sales
Horton's Contracting will continue to use referrals to attract new business. This has been effective in the business-to business end of customers. An advertising plan will have to be implemented in the retail end to boost sales in that area.
When the time comes to expand the retail sales and introduce the new line of metal buildings, this will be advertised by a campaign which consists of running an ad in the local newspaper, They will also take out a large ad in the local phone directory. Occasionally they will run sales on our tools and metal buildings, which will be advertised via the local newspaper.
There will be major changes in the both the number of key personnel operating the business and their duties. The key personnel currently are Mr.…