JB Grupo Empresarial faces a Strategic Decision case study
Carlos Ruiz Lopez 142859
Mary Gelly Armenta y Garza 139508
1. Evaluate the five competitive forces in JBGE’s current market or industrial sector.
1. - Rivalry among competing sellers (weak)
The competition in the civil construction repair industry for insurance companies is mostly at the local level, the most attractive markets are in Mexico City, Guadalajara, and Monterrey.
JBGE is one of the few competitors in its industry of a considerable size, the market of each one of these companies is still not as large as JBGE’s market.
2. - Potential new entrance (medium)
The high profit margins and ...view middle of the document...
A very important part of their strategy is to keep very good relationship with the three main customers (AXXA, GNP, QUA), as the participation of these in JBGE’s income are 90% of the company’s market.
3. Complete a SWOT analysis for JBGE.
Strengths: the main advantege of the company is the previous experience it have, the good and strong deal with insurance companies and its digital platform, cloud-based software which has accumulated an ample database that allows the company to provide quality service 24/7.
Weakness: Are mostly operational and due to economies of scale problems in providing service to all its locations, this has caused service cancellations, contract work in other locations when there is no team leader, lack of minimum technical knowledge required of the team leaders and financial capacity to make immediate payment, when there is no team leader, JBGE pays for services for which the contractors are not qualified to perform, such as photography or other administrative processes and slow contracting processes.
Opportunities: The market growth each year, the possibility of new insurance companies deals, make qualified all its workers to perform all the processes, improve all its areas to providing service to all its locations, work in locations where there isn’t a tem leader and complete all its contracts to increase its market.
Threats: stagnate with its strategy and on the marked that already have, cancellations of contracts that make it lose clients, possibility of a big new entrance company and the biggest threat the heavy reliance of it main clients like AXXA who generate the 47% of the company’s income.
4. Analyze each strategic alternative for JBGE and prioritize them based on the following criteria: profitability, risk, strategic adjustments/value chain in the current business and competitive advantage, etc.
Profitability: growth 35% in company operations
Risk: necessity to better refine the current business model, without a better business model current weaknesses could impede their projection estimates and entry into the Mexico City market means confronting an unknown territory especially concerning the level of aggression in the competition.
Strategic adjustments: requisite of this project would be working capital investments that would support contracting local services and indirect cost expenditures in order to contract team leaders and other services that JBGE must provide.
Value chain: presence in Mexico City would create better relationships with corporate management of these insurance companies and it would grant the company a more solid positioning at the national level, and eventually internationally
Competitive advantage: The market size may allow JBGE to access greater economies-of-scale and it would create better relationships with the biggest insurance companies.
Profitability: it will cost 2.7million pesos of investment and...