NTD Architecture: Strategies of Architecture Management...characteristics of leadership and...

NTD Architecture: Strategies of Architecture Management

Item Type text; Electronic Thesis

Authors McBrien, Brandon James

Publisher The University of Arizona.

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Link to Item http://hdl.handle.net/10150/244435

http://hdl.handle.net/10150/244435

( NTD ARCHITECTURE:

STRATIi\ IES OF ARCHITECTURAL MANAGEMENT

Approved by:

Dr. Steven Boivie

By

BRANDON JAMES MCBRIEN

A Thesis Submitted to The Honors College

In Partial Fulfillment of the Bachelors degree With Honors in

Business Management

THE UNIVERSITY OF ARIZONA

MAY 2 0 12

Eller College of Management

STATEMENT BY AUTHOR

This thesis has been submitted in partial fulfillment of requirements for a degree at The University of Arizona and is deposited in the University Library to be made available to borrowers under rules of the Library.

ABSTRACT

Award-winning jazz musician, Dave Grusin said, "Outside-the-box thinking works best if you know what's inside the box first:' When applied to the defining characteristics of leadership and management, this philosophy reveals how business, ideas, and profits are propelled forward through a clear understanding ofthe qualities of strategic management. This thesis sets out to analyze business situations of an architectural firm in order to obtain a unique point of view of a firm's operational actives, structure, and policies.

In order for this research to be of most value to the participating architectural firm, this thesis will result in a detailed report that includes an evaluation of its industry structure, an assessment of the firm's resources and capabilities, as well as a set of detailed recommendations designed to help the firm improve its competitive position.

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Last updated: Nov 15, 2009

• RANDON c : RIEN

• USINESS ANAGEMENT

N T D Architects

Strategies -.-. Arch itectu ra Management

Ell er COLLEGE OF MANAGEME T

THE UNMRSlTY OF ARIZONA.

Thesis Chair: Steven Boivie

Honors Thesis University of Arizona

Spring,2012

ARCHITECTURE

JJiA, THE UNIVERSllY .. OF ARIZONA ..

Arizona's First University.

MGMT 498: Honors Management Thesis

Student:

Brandon McBrien

University of Arizona

Phone: 949.322.9991

Email: [email protected]

Thesis Chair:

Steven Boivie

Assistant Professor

Eller College of Management

Phone: 520.621.5857


Course Description:

The University of Arizona, in order to better prepare their graduating seniors for the real life business environments, offers a thesis

research project to their Honors students to learn about organizational management and leadership. This thesis examines strategic

problems or issues of concern at a NTD Architecture from the point of view of practicing managers.

Abstract:

Award-winning jazz musician, Dave Grusin said, “Outside-the-box thinking works best if you know what’s inside the box first.”

When applied to the defining characteristics of leadership and management, this philosophy reveals how business, ideas, and profits

are propelled forward through a clear understanding of the qualities of strategic management. This thesis sets out to analyze business

situations of NTD Architecture in order to obtain a unique point of view of the firm’s operational actives, structure, and policies.

In order for this research to be of most value to the participating architectural firm, this thesis will result in a detailed report that

includes an evaluation of its industry structure, an assessment of the firm’s resources and capabilities, as well as a set of detailed

recommendations designed to help the firm improve its competitive position.

Topics of Research:

� Profit Sharing

� In-house vs. Outsourcing

� Corporate Image

i

Top 36 Architecture Firms in Tucson

Business Address City State Zip Phone

Swaim Associates, Ltd . 7350 E. Speedway, Ste. 210 Tucson AZ 85710 (520) 326-3700

M3 Engineering & Technology Corporation 2051 W. Sunset Rd., Ste. 101 Tucson AZ 85704 (520) 293-1488

Seaver Fra nks Architects, Inc. 2552 N. Alvernon Way Tucson AZ 85712 (520) 795-4000

BWS Architects 261 N. Court Ave . Tucson AZ 85701 (520) 795-2705

GLHN Architects & Engineers, Inc. 2939 E. Broadway Tucson AZ 85716 (520) 881-4546

Line & Space, LLC 627 E. Speedway Tucson AZ 85705 (520) 623-1313

The Architecture Company 2625 N. Silverbell Rd. Tucson AZ 85745 (520) 622-4506

WSM Architects, Inc. 4330 N. Campbell Ave ., Ste. 268 Tucson AZ 85718 (520) 408-1044

ABA Architects 1001 N. Alvernon Ave ., Ste. 175 Tucson AZ 85711 (520) 881-4512

Acorn Associates Architecture, Ltd. 4400 E. Broadway, Ste. 505 Tucson AZ 85711 (520) 881-0731

GDA Southwest, LLC 250 S. Craycroft Rd ., Ste. 200 Tucson AZ 85711 (520) 326-6951

HDR Architecture Inc. 5210 E. Williams Cir. Ste. 530 Tucson AZ 85711 (520) 584-3600

NTD Architecture 2940 N. Swan Rd .. Ste. 214 Tucson AZ 85712 (520J 784-0975

STG Design 1820 E. River Rd., Ste 230 Tucson AZ 85718 (520) 577-9511

Advantech Facility Design, Inc. 3280 E. Hemisphere Loop, Ste. 110 Tucson AZ 85706 (520) 806-0903

CDG Architects, Ltd . 2102 N. Country Club Rd ., Bldg. 9 Tucson AZ 85716 (520) 629-9752

Design Build Collaborative, Inc. 315 S. Convent Tucson AZ 85701 (520) 792-0873

DLR Group / KKE 177 N. Church Ave ., Ste. 755 Tucson AZ 85701 (520) 882-0698

Earl Kai Chann Associates, Ltd. 3050 N. Country Club Rd . Tucson AZ 85716 (520) 325-5847

Herschman Architects, Inc. 2210 E. Ft. Lowell Rd., Ste. 100 Tucson AZ 85719 (520) 545-7161

Johnson Smitthipong & Rosamond Associates, Inc 4067 E. Grant Rd ., Ste. 203 Tucson AZ 85712 (520) 547-7904

Liza rd Rock Designs, LLC 1640 E. River Rd., Ste. 206 Tucson AZ 85718 (520) 882-4484

Repp Design + Construction 2502 N. First Ave . Tucson AZ 85719 (520) 791-7035

SBBL Architecture + Planning, LLC 1001 N. Alvernon Way, Ste. 105 Tucson AZ 85711 (520) 620-0255

Sears Gerbo Architecture 4539 E. Ft. Lowell Rd. Tucson AZ 85712 (520) 722-5079

Krebs Carhuff Architects, Inc. 3149 E. Prince Rd ., Ste. 151 Tucson AZ 85716 (520) 577-4560

Robinette Architects Inc. 1670 E. River Rd., Ste. 112 Tucson AZ 85718 (520) 323-3979

Sakellar Associates Architects & Planners, Inc. 100 E. Sixth St. Tucson AZ 85705 (520) 622-4166

Smitthipong & Rosamond Associates, Inc. 4067 E. Grant Rd ., Ste. 203 Tucson AZ 85712 (520) 547-7904

Engberg Anderson, Inc. 2 E. Congress St. Tucson AZ 85701 (520) 882-6900

HJ Krzysik, Architect 7301 E. 22nd St. Tucson AZ 85710 (520) 327-4846

Klimatic Architecture 6375 E. Tanque Verde Rd ., Ste. 130 Tucson AZ 85715 (520) 352-0145

Lanning Architecture 1202 E. Broadway Blvd, Ste. 104 Tucson AZ 85719 (520) 792-0265

Rick Gonzalez, Architect 3004 E. Adams St. Tucson AZ 85716 (520) 209-2521

SDG Architecture LLC 10501 E. Seven Generations Way, Ste. 201-05 Tucson AZ 85747 (520) 829-5188

ii

Contact List

Contact’s Name: Alan Scott

Title: Associate

Company: NTD Architecture

Address: 2940 North Swan Road, Suite 124

City, State, Zip: Tucson, AZ 85712

Phone: 520-784-0975

Fax: 520-784-0964


Contact’s Name: Dana Myers

Title: HR Manager

Company: Fluor

Address: 4120 Dublin Blvd, Suite 200

City, State, Zip: Dublin, CA 94568

Phone: 925-307-1200


Contact’s Name: Steven Boivie

Title: Thesis Chair

Company: Eller College of Management

Address: PO Box 210108


Phone: 520-621-5857


Contact’s Name: Erin Adams

Title: Coordinator

Company: The MI Group

Address: 2010 McGraw Avenue

City, State, Zip: Irvine, CA 92614

Phone: 949-475-0088


Contact’s Name: Donna Szarwark

Title: HR Senior Vice President

Company: FRCH Design

Address: 311 Elm Street, Suite 600

City, State, Zip: Cincinnati, OH 45202

Phone: 513-362-3372

Fax: 513-214-3000


Contact’s Name: Mary Hardin

Title: Associate Dean

Company: University of Arizona CALA

Address: 1040 North Olive Road


Phone: 520-621-6752


Contact’s Name: Judy Graham

Title: Senior HR Consultant

Company: HR-3D / HR Solutions

Phone: 703-298-5991


Contact’s Name: Robert Miller

Title: Director

Company: University of Arizona CALA

Address: Director


Phone: 520-621-6752


iii

Contact’s Name: Drew Tucker

Title: Architect

Company: Fors Architects

Address: 2810 East 4th

Street


Phone: 520-891-0137


Contact’s Name: Tom Powers

Title: Principle Architect

Company: Powers Architects

Address: 183 6th

Avenue


Phone: 520-360-4070


Contact’s Name: Alyssa Baz

Title: CALA Student

Company: University of Arizona

Phone: 520-399-5162


Contact’s Name: Karen Costello

Title: CALA Student


Phone: 323-359-4952


Contact’s Name: Kenneth Molfetta

Title: Intern Architect

Company: Fors Architects

Address: 2810 East 4th

Street


Phone: 520-795-9888


Contact’s Name: Susan Shoemaker

Title: Profit Consultant

Company: Plante Moran Financial Advisors

Address: 225 West Washington Street, Suite 2700

City, State, Zip: Chicago, IL 60606

Phone: 877-622-2257

Fax: 312-726-3262


Contact’s Name: Sharon Garrison

Title: Professor of Finance

Company: The Eller College of Management

Address: PO Box 210108


Phone: 520-621-1261


Contact’s Name: Rich Michal

Title: Assistant Professor of Architecture


Address: 1040 North Olive Road


Phone: 520-247-2752


ARCHITECTURE

TABLE OF

- Overview & History 1 - Target Market & Products/Services 2 - Financials & Corporate Affairs 5

- Five Forces

- Competitive Advantage

7

9 12

CONTENT

13 15 16

1 | P a g e

NTD Architects Company Profile

NTD, Headquarters

9655 Granite Ridge Drive, Ste. 400 San Diego, CA 92323-2676 United States Phone: 858.565.4440 Fax: 858.568.3433 http://www.ntd.com NTD Architects, Tucson

2940 North Swan Road, Ste. 214 Tucson, AZ 85712-6016 United States Phone: 520.784.0957

Total Employees: 325 Year Founded: 1953 State of Incorporation: California Company Type: Private D-U-N-S: 045233715 Facility Size: 27,000 sq. ft. (Corporate)

3,573 sq. ft. (Tucson) Facility Type: Rents Industry: Architectural & Engineering Services SIC Codes: 87120000 - Architectural services NAICS Codes: 541310 – Architectural Services

Overview

NTD Architects is a full service integrated design firm. Generally speaking, NTD belongs to the broad industry of Architectural and Engineering Services. However, the immediate external environment surrounding NTD is the Commercial Architectural Industry, which specifically deals with public and government buildings and private business buildings1. Narrowing the industry scope of NTD provides a more accurate illustration of specific industry conditions, structure, and competition, and will provide the foundation of systematically testing NTD’s external environment, internal resources and capabilities, and measuring their overall sustainable success. Looking at NTD more closely, the firm provides an extensive range of services primarily in the Western United States, including architectural services, interior design, master planning, engineering services, education funding services, and healthcare consulting. As a result of the wide scope of expertise, NTD has earned its reputation within three primary segments: Healthcare, Education, and Civic Architecture. These operating brands offer a diverse scope of expertise that uniquely qualifies NTD to serve the needs of cities, counties, and specialty districts, as well as state and federal agencies. NTD values the concerns of government agencies, especially those of local government.

History

Originally founded in in 1953 in San Diego, California as Neptune Thomas Associated, NTD has gone through numerous mergers and acquisitions over the last 60 years. Exhibit 1 is a graphic timeline that illustrates the various mergers, acquisitions, and notable expansions.

1 http://www.designforward.net/glossary.shtm

2 | P a g e

2

2 NTD Architects: ntd.com

11953:

~989:

~TA ~nerged with Davisuhalme Associates. avis' practice was

ikno\~'n fo r its innovative Is~rv l.ces to publ ic school

~~Istnct~ , expertise

1994: NTD merges with Jordan Knighton, to merge in Auburn , Californ ia. The combination of Jordan's highly ,technical medical projects with ~TD 's vast experience in school

jN"eptunc Thomas r ssociated

r SWbilShed

n public education unding programs,

EOIllPrehcnsivc rnasterplanning, Il:Iemographic mapping, nnd architectural 1 . f crvlces. The merge r [ esulted in a name change to Neptune [!:"omas Davis (NTD).

Idesign gr~atl y broadened the firm 's I IgeograPhlC market. ~

r1965: ~TA <l~ded <l second rffi~e In .San Diego,

r li fornla, which now erves as the company leadquarters.

NTD Architects Timeline

TD merged with The St ichler Group. The Stichler Group placed a strong foe liS on research

lanning, and design of ' healthca rc faci lities. Thi s

erger further enhanced the rm 's depth of experience

'n healthcarc and also added the first out-of-state offi ce 'n Phoenix, Arizona. The

crger was also marked wi th another name chanoe th is rime to NTDSTICHLER

rchitecnlre.

ICurrent:

12010:

~TD Architecture cqui res HBFL rc h i tect~ to strengthen rescnee In California's

Cemfal Coast

N TO Architecture's history reflects strategic mergers and acqu isitions that have contributed to the company 's growth and success over the years.

an office in Arizona

eSlablllSh a local

and support needs.

~-mJ7: TDSTICHLER merged wi th Spencer! oskins+associates to further enhance

he finn 's higher educat ion specia lties. he firm opened an office in Visa lia,

California to better support the needs of the rapid ly growing Central Va lley.

~dditionaIl Y' NTDSTICHLER rchitecture officially changed back to

he finn 's parent company name of NTD

r rchitecrure

3 | P a g e

Target Market

NTD’s target market focuses on small to midsized clients that often fall below the radar of larger competitors. Growth in population is one of the major attractions for NTD Architecture. As a company, NTD seeks out opportunities in locations that have experienced an increased demand for services and an amplified desire to develop community partnerships that support the creation of shared-use projects. The following detail the three specialty market segments NTD targets:

Healthcare Unit:

NTD’s Healthcare Design Services provide collaborative design solutions that focus on ideal healing environments for patients, families, and healthcare workers. The unit is noted in the healthcare field for employing innovative strategies and sensitive design solutions to a variety of healthcare projects3. The core client base for this unit consists of private sector agents, along with city, county, and municipal districts. The unit offers strategic planning, master planning, programming, complete replacement of hospitals, hospital expansions, and several other services. The unit specializes in consulting in women's health, cancer treatment, and emergency room services4. Education Unit:

NTD’s Education Design Services focus on both K-12 and higher education facilities, with the former consisting of 75% of this unit’s revenue5. The unit is widely recognized within the educational community as a top-ranking provider of design solutions that encompass planning, program, architecture, feasibility analysis, funding support, architecture service, and design consulting. Core clients of this unit span nationally across the private and public sector of childcare, middle schools, universities, and community colleges.

Civic Unit:

NTD’s Civic Design Services concentrate planning and design within the public sector, emphasizing civic opportunities which strengthen a community’s connectivity and cultural experience. This unit embraces clients with a community-based vision for programming and design which include: community & regional libraries, community recreation centers, public administration facilities, public safety facilities, and aquatic facilities for recreation, fitness and competition6.

Products & Services

NTD specializes in providing privatized services to public and government agencies. The firm’s clients include state and local governments, school districts, and various private businesses predominantly located in California, Arizona, and other western states. NTD is organized into market-driven practice groups that provide extensive knowledge and experience to their clients7. NTD's unique set of integrated competencies, in addition to its well-established relationships and experience in navigating the public sector, have enhanced NTD’s ability to win projects and expand its customer relations into new markets across the Western United States. The following details the six service segments NTD offers: Architectural Services:

NTD’s architectural services account for the majority of services employed. The scope of services within this department consists of a wide range

3 NDT Architects: Healthcare Consulting Services: www.ntd.com

4 NDT Architects: Healthcare Consulting Services: www.ntd.com

5 Interview with Alan Scott, NTD Principle – Meeting on 9/20/2011

6 NDT Architects: Civic Market: www.ntd.com

7 NDT Architects: General Services: www.ntd.com

4 | P a g e

of design solutions that include feasibility studies, project financial analysis, conceptual design, architectural design and documentation, building information modeling (BIM) & conflict analysis, state and local agency approvals, specifications, models and renderings, and cost estimating8. Competitors to this department include Ashen and Allen, M3, Delawie Wilkes, Gensler, HMC Architects, Johnson Fain, KPA Associates, Langdon Wilson, Perkowitz and Ruth, RBB Archtes, and WWCOT910. Interior Design Services:

NTD takes a holistic approach to interior design solutions that strictly coordinate equipment, telecommunications, data and power infrastructure, and building systems with interior architecture, lighting design, finishes, furniture, artwork, plants, signage, and graphics. The department’s primary services include: healing and health enhancing environment design, interior architecture, interior finishes, interior master planning, on-site interior survey, way-finding design, furniture selection and specification, furniture procurement, artwork program, donor recognition program, interior signage coordination, interior plant-scaping coordination, and tenant improvement11. Major competitors with this unit include: Hartman Design Group, LPA Inc., and Brown Design12. Engineering Services:

Encompassing a variety of disciplines within the mechanical and electrical engineering field, NTD Engineering Services provide comprehensive facility analysis, utility rate structure analysis and strategic planning, facility energy audits and energy modeling, thermal energy systems and distribution, campus utility infrastructures, central utility plants, master planning, fire protection systems, BIM (3D) modeling & conflict analysis, cogeneration evaluations, emergency power systems, life cycle costing, commissioning, OSHPD and title 24 compliance, power needs analysis, lighting needs analysis, communication and data systems evaluations, and building automation systems evaluations13. NTD seeks inclusive solutions that provide resource management, energy efficiency, resource conservation, and sustainability services to both private industry and public agencies. This department of NTD is only offered in select offices. The unit’s primary competitors include: Charles Abbott & Associates, Bureau Veritas, Harris & Associates, Psomas, RBF Consulting, Tetra Tec, Stantec, Michael Baker Corporation, TRC Company, AECOM, Technology Corporation, CH2M Hill, and Jacobs Engineering Group14.

Education Funding Services:

NTD's public Education Funding Service department offers consulting services to school districts in the forms of economic impact analyses, facility financing plans, and special district formation. The primary purpose of this department is to assist school districts in obtaining State approval and funding for the construction and modernization of education facilities. NTD’s financial services also performs economic analyses of fee and rate studies, facility financing plans, economic impact assessments, bond funding, and infrastructure analysis. Additionally, the department provides a full range of funding support services, including applications to the Department of Education for site and plan approvals as well as establishing eligibility and obtaining funding for projects with the Office of Public School Construction (OPSC)15. To date, the department has worked with over sixty school districts throughout the U.S. in obtaining over $1.5 billion in State and Federal funds, resulting in the

8 NDT Architects: Architecture Services: www.ntd.com


10 Hoovers.com – Competition Overview

11 Bloomberg BusinessWeek : NTD Architecture, Inc. - Company Overview


13 NDT Architects: Engineering Services: www.ntd.com

14 Hoovers.com – Competition Overview

15 NDT Architects: Funding Services: www.ntd.com

5 | P a g e

construction and modernization of nearly 450 facilities16. The unit’s primary competitors include: David Taussig & Associates, Harris & Associates, NBS Government Finance Group, and Ernst & Young17. Master Planning Services:

This department within NTD focuses on planning for education and healthcare facilities. From an understanding of the complexities of orchestrating within an existing context, services in this department offer planning, community processes, environmental review, design and construction at project inception, and critical path processes streamlining. Healthcare Consulting Services:

NTD'S Healthcare Consulting services include service line design development, product integration, and service line development. NTD provides strategic planning and programing within operational-line development for healthcare facilities that offer competitive positioning on a national scale. NTD also works with clients who wish to expand their existing health service-line by offering a more comprehensive healthcare program18.

Financials

General Financials16:

• Annual Sales as of December 2010: $14.4 Million

• Considered low risk by Hoovers.com Prescreen Scoring NTD plans to continue to diversifying its revenue base by five main initiatives: 1) Entering new markets and building new lines of business such as structural engineering and landscape architectural services, 2) Leveraging its established client base and relationships to cross sell services, 3) Pursuing larger, longer-term projects and contracts, 4) Generating work with local governments, and 5) Continued focus on growth, profitability, and cash flow from operations and expense management. NTD hopes that these initiatives will assist in generating sustained profitability and achieve a market share growth.

Corporate Affairs

NTD maintains a corporate culture that commits to improving the human condition with a strong devotion to clients, the firm, and each employee19. NTD continues to openly and quickly confront barriers in meeting commitments and to generate solutions to overcome those barriers. Furthermore, NTD is strongly predisposed to readdress and redesign concepts and action plans within the company, so as to remain committed to core values and objectives. As a company, NTD sets challenging and competitive goals, and centers its corporate identity on characteristics of integrity, responsibility, and accountability. NTD strives to create a work environment that rewards innovation and fresh perspectives. Staff are carefully selected, trained, and rewarded based on their ability to demonstrate their creativity and knowledge20.

16

California State Budget – Sunshine Review 17

Hoovers.com 18

NDT Architects: Consulting Services: www.ntd.com 19

Meeting with Alan Scott, NTD Principle – Meeting on 9/20/2011 20

Meeting with Alan Scott, NTD Principle – Meeting on 9/20/2011

6 | P a g e

External Analysis Five Forces Analysis

As mentioned above, the immediate external environment surrounding NTD is the Commercial Architectural Industry, which will be enlisted in performing the external analysis. The external analysis is the first important step in assessing possible actions that NTD can consider in its given industry. The Commercial Architectural Industry is considered to be a moderately unattractive industry21. This typically means that the industry is characterized by few firms with high profit margins. An “unattractive industry” label merely indicates that individuals and organizations looking toward entering this industry may face several difficulties in turning initial profits. This is determined through analyzing five fundamental characteristics: Rivalry, Threat of Entry, Supplier Power, Buyer Power, and the Threat of Substitutes22. Industry Trends: Recognizing trends within Commercial Architectural Industry gives a firm a competitive advantage and is vital for long term success. Below are the major trends that are currently penetrating the Commercial Architectural Industry:

• Building Information Management (BIM): BIM is defined as the process involving the production and management of a digital representation of physical and functional characteristics of a facility23. This technology was originally developed for power plant engineers. Allowing for the small tolerance margins within power plants, this software made it possible for engineers to digitally construct the building at a level that had been previously unseen in the market place. BIM is making its way into the design field through comprehensive design firms.

This new technology allows information to be shared throughout the design, construction, and entire life of the building. In essence, BIM technology assimilates all processes in building design and operation in real time. The number one BIM software on the market today is Revit, by Autodesk. The adoption of this software allows architects, developers, structural engineers, construction managers, and every other participant in the design-build process to catalog and design within the same digital infrastructure. The shift from AutoCAD to Revit is moving quickly, with many States adopting legislation to require construction documents to be executed with BIM software.

• Sustainability: The sustainable movement can be traced back several decades. Recently, however, pop culture has boosted awareness to make “sustainability” a household buzzword, at least within the industry and within architecture at large. Historically, sustainable design has been primarily focused on environmental sensitivity. More recently, architects and designers have begun to realize the importance of taking a holistic approach to sustainability by incorporating socially and economically sustainable solutions in their architecture. Furthermore, with the increases in efficiency of sustainable technology, many public buildings are being designed with sustainable elements. This trend is only going to increase within the Commercial Architectural Industry. In order to remain profitable, architecture firms are going to have to incorporate these design ethics in their corporate culture.

21

Moderately Attractive: This is due to the fact that rivalry and buyer power are deemed to be high. The severity of these two industry characteristics offset

the low levels of entry and supplier power. See Appendix 1 22

See Appendix 2 for general definitions of each force. 23

Wikipedia- Building Information Modeling

7 | P a g e

Rivalry: High Within the Commercial Architectural Industry, the market is relatively un-concentrated, with hundreds of firms offering architectural services on a global scale. Due to advances in technology, architecture firms are no longer restricted to commissions within their immediate neighborhoods or communities. Now, firms of all sizes compete on national, and even global, scales. This increase in competition, coupled with the fact that many projects in this industry are generated by public authorities, make firms extremely competitive with respect to price. Many government organizations within the Commercial Architectural Industry require commissions be given to the lowest bidder. Severe pricing competition has resulted and, in many cases, firms lose a great deal of money on public projects. Primary Competitors within the Industry: Swaim, Gensler, HDR Architects, M3, ABA, and AECOM.

Threat of Entry: Low. With the Architectural and Engineering Industry still feelings the effects from the last recession, many firms are shifting resources to the Commercial Architectural Industry. This is primarily due to the fact that government agencies have become the primary funders of development, and since most public buildings are open to all bidders, many architecture firms that did not focus on the Commercial Architectural Industry are now entering this arena. Despite the fact that many firms are seeking opportunities within this industry, it would be difficult to attain a position similar to that which NTD has achieved. This makes the Threat of Entry relatively low. Furthermore, new firms are less likely to enter into this market, as the scope of most projects within the Commercial Architectural Industry are too large to be handled by start-up or boutique firms. Supplier Power: Low. In looking at supplier power, it is important to be aware of the scope of the supplies needed to establish a comprehensive design firm. Suppliers within the Commercial Architectural Industry consist of software providers, print services, and in some cases, model material providers. These supplies are easily accessed by numerous vendors, and are, therefore, relatively stable in their price points. This results in suppliers having very little power to extract high premiums for their services and/or products.

Buyer Power: High. As mentioned above, the nature of the Commercial Architectural Industry is that architecture firms primarily receive commissions from public agencies. Due to policies of these public agencies, price is the primary influence on which firm receives a commission. Furthermore, many public agencies, such as school districts, provide detailed price lists which dictate how much architecture firms can charge for specific services. All-in-all this gives buyers tremendous power over a firm’s profitability and is a main reason for the industry’s classification of moderately unattractive.24 Threat of Substitutes: Nonexistent. There is no currently feasible alternative to providing the basic need of shelter without the use of the build form.

24

Meeting with Alan Scott, NTD Principle – Meeting on 9/20/2011

8 | P a g e

Internal Analysis VRINE Model

In order to understand NTD’s past success and to examine the sustainability of its competitive advantage, an internal analysis is used to illustrate NTD’s key resource and capabilities. Basically, this analysis will identify NTD’s overall strategy and the building blocks that hold that strategy in place. The internal analysis will also systematically examine NTD’s competitive advantage based on: Value, Rarity, Inimitability, Non-substitutability, and Exploitability (VRINE).

Strategy:

In general, a strategy is the process of deciding what to do25. Michael Porter, the Bishop William Lawrence University Professor at Harvard Business School, has become a leading authority on company strategy by developing the theory of Industrial Organization Economics26. Porter’s Theory suggests that a company will employ one of two main strategies: a differentiation strategy or a cost leadership strategy. A differentiation strategy is one wherein a firm sets out to develop a product or service with unique attributes that are valued by customers, and which are perceived better or different by customers than those products or services from the competition27. One key indicator of a differentiation strategy is a firm’s ability to charge a premium for their product or service. A cost leadership strategy is one where a firm sets out to develop a given product or service at a lower cost for a given level of quality28. With this strategy, the firm reduces costs in order to sell their product or service at the industry price, thereby gaining higher profits, or at a lower price, to gain a larger market share. No firm employs solely one strategy; however companies do lean more toward one of Porter’s strategies than the other. Based on research and interviews with key staff, NTD is considered to have a low-cost strategy, which is a more focused29 strategy of cost leadership (See Appendix 3). Due to high rivalry and high buyer power in the Commercial Architectural Industry, NTD has remained profitable due to their ability to reduce costs and compete on price. NTD does employ differentiation strategies by offering comprehensive design solutions; however, these differentiations do not allow NTD to charge a premium for their services, thus, still fostering competition within the cost leadership arena. Most architecture firms would consider themselves to have a differentiation strategy, however, full service design firms typically employ low-cost strategies. Specialty firms, such as Frank Gehry Partners, Zaha Hadid Architects, or Richard Meier & Partners would be considered firms with differentiation strategies. These firms produce “high design” architecture and are able to extract extremely high premiums for their services compared to firms within the Commercial Architectural Industry. Understanding that NTD, as with most of their competitors, operate with low-cost strategies is important when looking at a firms’ resources, capabilities, and competitive advantage.

Resources & Capabilities:

The three most important resources NTD has are: skilled staff, state-of-the-art technical resources, and local offices rooted in their communities.

• Skilled Staff: NTD employs approximately 300 architects, engineers, interior designers, and support staff throughout seven offices across the US. Recruiting, retaining, and developing skilled staff are all extremely important to NTD. In their general offices, they maintain, on

25

MGMT 471 – Lecture 1, Dr. Steve Boivie, 2012 26

Strategic Management, Second Addition. Carpenter and Sanders & Wikipedia ( Michael Porter) 27

Business Dictionary. “Differentiation Strategy” 28

QuickMBA. "Porter's Generic Strategies." 29

A focused strategy concentrates on a narrow segment within a market. NDT is focused on commercial architecture within the Architectural and Engineering

Industry. Reference Reading: Competitive Strategy: Techniques for Analyzing Industries and Competitors. Porter, Michael E.

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average, higher ratios of licensed professionals than their competitors within those regions30. Appendix 4 for example, shows that NTD’s LA office holds the second highest percentage of licensed architects to general staff of 60%. NTD also boast executive leadership of seasoned architects, licensed with the AIA, many LEED accredited31.

• State-of-the-art Technical Resources: Being that NTD employs a low-cost strategy, it is important to streamline processes and eliminate costly errors in the design process. Along with skilled staff, this is primarily done by integrating advanced IT resources. NTD was one of the first firms to quickly adopt BIM technology, which allows NTD to share information and identify costly mistakes throughout the design and construction phases. Also, NTD software licensing allows them to produce visual aids for their clients during committee design reviews at lower cost than physical modeling.

• Local Offices: NTD prides itself on developing strong connection within their communities. NTD demonstrates their commitment to the communities in which they maintain offices by engaging in a variety of CSR initiatives. Their Tucson office is a major contributor to the University of Arizona, helping students with research projects and contributing funds to design build projects for low-income families.

• With respect to resources, NTD’s greatest would be its reputation in the industry. NTD is said to be recognized by its clients for responsiveness, extensive technical expertise, integrity, and strong commitment to excellence32. These characteristics allow NTD to financially accelerate past the competition within its core market segment. Furthermore, through decades of experience navigating the public sector, and with over 60 years of developing relationships, reputation, and expertise, NTD’s business model has secured longer-term projects and diversified greater revenue sources.

Competitive Advantage:

In order to understand NTD’s competitive advantage, the VRINE model mentioned above will provide insight into the firm’s ability to retain and grow its market share over the competition. The VRINE model also suggests how a NTD might use its resources and capabilities to differentiate its services in valuable ways. Exhibit 2 details NTD’s resources and capabilities with respect to each element in the VRINE model33.

EXHIBIT 2: VRINE MODEL

Type

Skilled Staff

Resources Description Answer

VRINE

Elements

Value

In 2012, nearly 82% of revenues reported by AIA members came from building types included in the Commercial Architectural Industry34. Being that these building types require, by law, that designs be produced by licensed architects, it can be concluded that NTD’s high percentage of licensed and skilled staff offer them tremendous value.

Yes

Rarity

The AIA estimates that there are 104,301 licensed architects in the United States. Of these, nearly 85% practice in an architecture firm35. Therefore, it appears that it is not rare for NTD to have skilled staff nor is skilled labor considered scarce in meeting demand.

No

30

Los Angeles Business Journal, 2012 31

wwwNTD/profile/leadership.com 32

NTD website. 33

Appendix 5 Illustrates detailed definitions for each VRINE element. 34

Facts, Figures, and the Profession. AIA.org 35

Facts, Figures, and the Profession. AIA.org

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Inimitability

NTD is not the only firm that seeks mechanisms to recruit, retain, and train skilled staff. Therefore, it is extremely easy for competitors within the industry to employ a higher percentage licensed architects if desired.

No

Non-

substitutability

There is no substitute for architectural services. Yes

Exploitability

Until executive or senior level status is achieved, the majority of architects are paid on an hourly basis. This allows firms to exploit value out of the work that is done by their staff. When an architect works on a project, their hours are logged under a particular job category, and those category hours are directly billed to the client. Unless critical mistakes take place, NTD is able to extract profits from employee’s work by directly billing their clients for the hours spent by the employee as well as charging an industry premium on each hour.

Yes

Type

Technical


VRINE Elements

Value The sheer speed at which designs can be produced using digital software allows NTD to meet their market demand as well as continue to effectively bid on new contracts.

Yes

Rarity BIM software and other programs such as AutoCAD do not offer restricted licensing. Therefore any firm can obtain access to these types of software.

No

Inimitability Autodesk and other design products often come in “off-the-self” packages, making it very easy for firms of all sizes to obtain these products.

No

Non-

substitutability

The only substitute that a competing architecture firm has to digital software is to utilize hand drafting. This is not a plausible means for IT systems.

Yes

Exploitability

Although the initial cost of software licensing is high, the rate of return in streamlining design, producing drawing sets, and built-in intelligence within the software allows NTD to exploit high profits from this resource.

Yes

Type

Local Offices


VRINE

Elements

Value

Having an physical presence where NTD conducts a majority of their work holds value in understanding the urban landscape, climate, community, vendors, and reducing costs for projects of long duration. However, local offices are not a necessity for obtaining new contracts, and many of NTD’s competitors do not hold offices in areas like Tucson.

Moderat

e

Rarity With respect to NTD’s competition, it is not rare to have a local office in regions that hold revenue opportunities on a continued basis.

No

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Inimitability In order for a competitor to imitate this resource, all that would be needed is to secure office space and hire one licensed architect. In general, this can be easily and quickly accomplished.

No

Non-

substitutability

Telecommuting allows for firms in the Commercial Architectural Industry to substitute physical presence. AECOM, one of NTD’s main competitors, has completed several projects throughout Southern Arizona without having any local offices established36.

No

Exploitability

For the duration of a project within a region where a local office exists, NTD is able to exploit value from having a physical presence. Furthermore, having a physical presence allows NTD to stay abreast of new projects that may result in commission opportunities. However, during times when work is slow, it is difficult for NTD to extract value from their physical presence. This often results in high fluctuations in staff between projects.

Not

Always

Type

Reputation

Capability Description Answer

VRINE Elements

Value NTD’s good reputation can be leveraged to secure more business. During RFPs, if NTD is not the lowest price, clients may still chose NTD as their provider based on their reputation.

Yes

Rarity

Reputation is a difficult thing to earn. In the Commercial Architectural Industry, NTD’s competitors all boast having a reputation as leaders in their industry. This makes it seem that, relative to demand, NTD’s reputation may be perceived as widely possessed by many firms; however, when thinking in a regional or even national context, NTD’s good reputation is indeed rare. It is important to distinguish this since NTD compete on a national scope.

Yes

Inimitability

It would be very difficult for a firm to imitate NTD’s reputation. Time is the number one factor in building a reputation so competitors cannot quickly establish a reputation that parallels NTD perpetual good reputation.

Yes

Non-

substitutability

NTD’s reputation cannot be substituted in any other form by its competitors. Yes

Exploitability

As mentioned above, NTD can leverage its reputation to earn repeat business. Although it does not allow them to extract a premium for their services, it does allow them to maintain a competitive advantage in the industry.

Yes

Competitive & Performance Implications:

The different resources and capabilities of NTD all build up its value. The firm’s ability to compete on price is something that allows NTD to meet normal profits37, take advantage of new opportunities, and offer value to their customers. The amount of skilled staff, technical resources, and local offices that NTD employs are considered a table resource, one that meets the minimum

36

Aecom.com - Locations 37

Profits that cover the cost of all inputs, including capital. Strategic Management second Addition. Carpenter & Sanders.

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required to compete within the Industry38. Although NTD may rank high in its skilled staff ratio, these resources are not contributing to a competitive advantage for the firm. Employee training programs and experimental technology licensing may allow NTD to capitalize on these resources to a greater extent. Any competitor in the industry can recruit more skilled labor or begin using BIM systems, and many of them already have. Unfortunately, this makes NTD’s resources imitable39 and substitutable40. The one resource that would be considered inimitable would be NTD’s strong local presence. It would take a great deal of time for competitors to achieve the strong roots that NTD has within its local communities. Individually, these resources and capabilities may be duplicated by industry competitors and not hold much differentiated value. However, it is NTD’s ability to use them collectively that creates a competitive advantage. The only way this advantage can be sustained is if these resources and capabilities are being exploited by NTD in a way that their competitors are not. Due to the fact that many firms are able to exploit these resources just as effectively as NTD, it may be time to consider adding additional services and expertise to the firm to differentiate it within the industry.

38

Strategic Management second Addition. Carpenter & Sanders. 39

Imitable: The ability for competitors to imitate resource and extract value from said resource. Strategic Management second Addition. Carpenter & Sanders 40

Substitutable: The ability for competitors to substitute a resource and remain competitive. Strategic Management second Addition. Carpenter & Sanders.

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Management Strategies

The competitive advantages gained from the resources and capabilities listed above offer tremendous value for NTD. However, these distinctions can be become threatened, and as the VRINE analysis illustrates, these resources and capabilities only offer a temporary competitive advantage. It is important that NTD maintain and improve upon these competencies in order to achieve a sustained competitive advantage in their industry. Below are some strategies on how to sustain NTD’s competitive advantage in the long term.

Profit Sharing

With a primary strategy of NTD as a cost leader within their industry, developing a profit sharing plan can allow NTD to further build off their skilled work force. A good profit sharing plan can foster an environment where employees are conscience of the firm’s performance, and in turn, can encourage staff to reduce costs at all levels of operation. There are countless types of profit sharing plans, each with the ability to be customize for maximum benefit. Below are three types of profit sharing that would work well for NTD. Variable Earnings:

Variable earning plans are those which take a percentage of the annual profits and distribute it to employees in the form of cash bonus contributions. Variable earning plans tend to be the most cost effective plans to implement. This form of profit sharing allows employees to experience the rewards of company profits in a more immediate timeline. 41 Thus, due to the direct correlation to profits and immediate cash, this type of plan tends to unit employees towards a common goal: the success and profitability of the company. Furthermore, this plan tends to enhance employee commitment to the organization; promoting a decrease in employee turnover.42

Although variable earing plans are inexpensive to implement and give the most immediate return to employees, there are several downsides to this type of reward system. Since bonuses fluctuate with profits, the pay for each employee moves up or down together; making it difficult for individual distinctions for merit or performance. This can cause Social Loafing43 to occur within different department44. Also, with all employees united with the common goal of success and profitability, quality can sometimes be sacrificed. Since NTD prides itself on providing quality architectural services, this type of plan would need to be altered to ensure not expense of quality occurred.

Additionally, variable earning plans sometimes prove to be difficult in small firms where drastic variations in earnings can make bonus structure unpredictable and unsettling for employees. Since regional offices within the Commercial Architectural Industry tend to experience swings in earnings, it may be more beneficial to institute a companywide variable earnings plan. However, with steady earnings, employees can become accustomed to a predictable bonus plan and begin to expect a cash increase each year. Also, FLSA requires employers to recalculate each worker's

41

Compensation: &Incentive Plans: Profit Sharing. www.hr-guide.com 42

IMAGE: Gainsharing or Profit Sharing: The Right Tool for the Right Organization an article by Robert L. Masternak 43 The tendency of individuals to put forth less effort when they are part of a group. Because all members of the group are pooling their effort to achieve a

common goal, each member of the group contributes less than they would if they were individually responsible 44

Understanding and Managing Organization Behavior. George & Gareth.

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"regular rate" of pay. To overcome this limitation, NTD may restrict this type of compensation to exempt employees45.

401K Contributions:

401K contribution plans are where employers contribute shares of profits to employee retirement or pension plans. These types of plans offer the greatest form of flexibility for both employees and employer, as contributions are strictly discretionary and tax deductible. However, these plans also come with higher administrative costs and can be viewed as favorable for only those employees who are already compensated at a high rate. Furthermore, this type of plan does not allow the employee to feel the immediate effects of a firm’s success, so there is difficulty in in creating a culture of shared goals. Overall, these plans can be extremely complicated to understand which makes motivation and cost saving efforts for NTD more difficult.

Gain-Sharing:

Gain-Sharing is a hybrid model of profit sharing, and viewed by some as a completely different form of reward systems. Under this plan, employees receive a percentage of annual profits only when specified targets are met by the organization. Thus, gain-sharing plans tend to focus on achievement of operational goals and allow clear perspective of how each department contributes to the overall success of the company. Typically, gain-sharing applies to a single facility, site, or stand-alone organization so there is a tremendous amount of flexibility depending on its

implementation46. Gain-Sharing also keeps a close line-of-sight for employees as they do not become accustomed to regular annual bonuses as with variable earning plans, but rather have a clearer anticipation regarding how and when they receive bonuses. Overall, gain-sharing in noted for its ability to reinforce behaviors that promote improved performance.47 48

One of the major drawbacks to gain-sharing is its effect on morale. When profits decrease or targets are not met, employees can feel these financial setback acutely and become discourage or frustrated. Also, if it becomes clear that a target will not be met by the year end, employees may become less motivated. Partial bonuses and strategic leadership in this situation is vital to continue the success of the gain-sharing programs.

Recommendation: Institute Gain-sharing

Based on the research above, gain-sharing is the best reward system that can be used as a tool to heighten the level of employee awareness, help develop the feeling of self-worth, builds a senses of ownership and identity to the organization, and motivate employee behavior to reduce costs and waste. Appendix 6 illustrates the primary differences between gain-sharing and profit sharing and why this plan is the recommended option for NTD and the Tucson office.

• Cost: There is very little monetary cost associated with gain-sharing. Gains are generated only with improvements in performance or cost savings occur. The only real potential cost is in employee motivation if goals are not met and in time spent by management to go over benchmarks.

• Profitability: Since payouts are based on a paid-for-performance model, profitability is based on net gains and generated by saving improvements. All of this makes it difficult to predict profitability with gain-sharing plans. A recent article in the Ivey Business Journal,

45

U.S. Department of Labor - Wage and Hour Division 46



IMAGE: Gainsharing or Profit Sharing: The Right Tool for the Right Organization an article by Robert L. Masternak

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by Jody Heyman and Magda Barrera, showed that one company was able to reduce cost by 12% in the first year of instituting a profit sharing plan and double its sales from $17M to $35M over seven years.49 The profitability of the plan is all based on correctly incentivizing employees to reduce costs and improve productivity.

• Implementation: The plan would be based on operation measures of productivity, quality, spending, and service achieved by each office and/or department. These operation measures will be set though historical standards and desired performance targets. Rather than annual payouts, cash bonuses will be set on a quarterly basis to maintain high levels of motivation and to allow for progress check throughout the year. Therefore necessary adjustments to spending, marketing, and productivity can be established on a consistent basis.

Engineering Services

One of the major ways in which architecture firms compete in the Commercial Architectural Industry is through offering comprehensive design solutions. This typically entails architectural, engineering, and master planning services. Currently NTD offers all of these services and more, however not every one of NTD’s locations houses each service within their office. In regions like Tucson, NTD outsources many of their services to other specialty firms. Developing engineering services in-house at NTD’s Tucson office may allow the office to reduce cost and extract higher profits through a more streamlined service.

Recommendation: Continue Outsourcing Engineering Services In looking at whether to adopt engineering services in-house at the Tucson location, the main criteria to evaluate is whether bring in engineering would align with NTD’s overall strategy as a cost leader. At first glance, it seems intelligent for NTD to offer engineering services in all NTD locations; especially if it assists in securing potential contracts. However, when considering all the additional costs that accompany in-house services, it is recommended that the Tucson office continue to outsource their engineering needs. Since the Tucson location is one of NTD’s smallest offices, it may be more burdensome to acquire engineering services in-house. Research shows that as a particular location grows to reach 1,000-10,000 employees, the need for outsourcing and cost associated with in-house operations drop significantly. The following graph shows the relationship between company size and potential need for outsourcing, and thus costs.50 To further asses the recommendation to continue outsourcing engineering services, below is a sample cost analysis which estimates the financial impact to the Tucson office.51

49

How Businesses can profit from Raising Compensation at the Bottom. Ivey Business Journal by Jody Heyman and Magda Barrera 50

In-house Vs. Outsourcing: www.kmaone.com 51

All numbers are estimates.

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In-house Outsourced

Item Cost Item Cost

Employee wages & benefits $3,450 Outsourcing fee $1,750

Employee technology costs(computer lease) $20

Telecommunications costs $175

2 days backup coverage (1 vacation / 1 sick) $304

Total Monthly Cost $3,949 Total Monthly Cost $1,750

From this example it is clear that NTD’s Tucson office experiences a greater cost savings from continuing to outsource their engineering services by nearly 55%. This savings aligns with NTD’s overall strategy through direct cost savings as well as costs associated with employee benefits, employee turnover and replacement, or locating and training backup coverage.

Corporate Image

Corporate image is sometimes easily overlooked in strategic management. A favorable corporate image allows firms to more easily recruit skilled employees as well as develop good rapports in their communities. Since NTD’s primary resources and capabilities are its skilled laborers and offices rooted in their communities, it is imperative that NTD maintain and improve upon their company image to achieve sustained competitive advantage. To better understand NTD’s corporate image, this thesis conducted research through LexisNexis Academic, LIWC, and surveys based on three sets of criteria:

• Exposure: Based on research conducted through LexisNexis Academic of all major world publications, prior to 2010, NTD has maintained similar levels of print exposure to that of its five major competitors: AECOM, M3, Gensler, HDR, Swaim, and ABA. After 2010, NTD has significantly less print exposure compared to its top five competitors. NTD’s exposure, although similar in quantity, is very different than that of its larger competitors of AECOM and HDR. These two competitors are featured in worldwide publications such as New York Times and Architectural Record. NTD’s primary print exposure happens on a local level and within industry related periodicals. To help boost NTD’s awareness with commercial clients, it is recommended that they seek exposure with Architect, Architectural Record, California, AZ Star, Crit’s, Archi Times, Dwell, and Design Intelligence

52.

52

Top architectural print magazines and news based on survey from architects, AIA, and architecture students. See Appendix 10

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• Tone: The overall tone rating of NTD’s current media exposure is considered 74% positive, 13% negative, and 13% neutral by LIWC53. With respect to their five major competitors, NTD is considered slightly below average regarding overall tone. An average of their five major competitor’s exposure from all major world publications reveals that 81% of their media accounts were considered positive, 18% negative, and 1% neutral.

• Impression: From a survey of local practicing Tucson architects, AIA members, professors at the University of Arizona, and architecture students, it was determined the NTD Tucson has a positive knowledge base within the community. 82% of parties interviewed have heard of NTD in some regard, however most indicated that they only know of them through their competition. In order to more accurately influence the community regarding their corporate image, it is critical that NTD begin to take marking into their own hands.

Recommendations: Development of Network Based on the information above, it is recommended that NTD begin to develop a strong social and media network by gaining exposure through the major industry publications, social networking websites, and hiring marketing personnel. Many clients within the Commercial Architectural industry receive both good and bad media exposure from their project. Knowing that NTD is proactive in marketing efforts of their current and past projects could attract new clients that may even pay a premium for the gained positive exposure. The most cost effective way that NTD can achieve this is to hire interns to manage their marketing efforts. The Tucson office is located in close proximity to the University of Arizona, where students from both The College of Architecture and Landscape Architecture as well as The Eller College of Management are great resources for inexpensive or free labor.

• Cost: The cost of student interns and social media sites can range from no cost to $9/hour.

• Profitability: It is difficult to assess the profitability of corporate image marketing. In a recent article in Bloomberg BusinessWeek, McKinsey Consulting conducted a study to quantify corporate image. The study showed that Target stock, on average, ranked $7 dollars higher than Wal-Mart due to their image as a socially responsible retailer54. For NTD, the major profitability would develop out of a sustained competitive advantage from their major capability: reputation.

• Implementation: Social networking sites are the primary way in which the majority of firms mass-market today. NTD already has Facebook, Twitter, and LinkedIn profiles; however compared to their competitors these networks are slightly underdeveloped. For example, NTD currently has 75% less “Likes” on Facebook compared to their top three competitors with Facebook sites (HDR, Gensler, Swaim), and significantly less people talking about their posts. In today’s economy, social media is a cost effective way to get NTD’s brand and message out to potential customers. As of February 2012, 56% of consumers are more likely to recommend a company that they “liked” on Facebook to a friend55. Having a strong following by employees, the community, and the industry can propel NTD into achieving more contracts and more profits.

53

Appendix 7 54

Bloomberg BusinessWeek: “Emerging Giants” 55

Social Media Guide. http://thesocialmediaguide.com/

NTD’s Text

Positive emotions 0.74 2.7 2.6

Negative emotions 0.13 2.6 1.6

Overall cognitive words 1.39 7.8 5.4

Major Competitor’s Text




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Department of Labor. Web. 19 Apr. 2012. <http://www.dol.gov/whd/flsa/>.

Vanden Bos, Peter. "How to Build a Profit Sharing Plan | Inc.com." Small Business Ideas and Resources for Entrepreneurs. Inc, 19 Apr. 2010.

Web. 17 Jan. 2012. <http://www.inc.com/guides/2010/04/profit-sharing-plan.html>.

Wahby, Dave. "Key Financial Ratios and Indicators for Engineers & Architects | Axium411." Axium Software | Project Management Software for

Architects and Engineers. Web. 17 Jan. 2012. <http://www.axium.com/blog/?p=2213>.

Weber, Cheryl. "Employee Benefits Often Are in Danger When Firm Revenues Erode - Compensation, Business - Residentialarchitect Magazine."

Residentialarchitect Magazine: Home Building News, Home Design Ideas and Building Products for Architects. Residential Architect, 22

Oct. 2010. Web. 17 Jan. 2012. <http://www.residentialarchitect.com/compensation/sharing-the-profits-and-the-penalties.aspx>.

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Appendix 1 Five Forces

Industry Classification: Moderately Attractive: This is due to the fact that rivalry and buyer power are deemed to be high. The severity of these two industry characteristics offset the low levels of entry and supplier power

Appendix 2 Five Forces Defined

The Five Force Analysis was developed by Michael Porter. Essentially, this model is considered the framework for evaluating a firm’s industry structure according to five different forces. General definitions for each of the five forces are listed below. Definitions derived from Carpenter’s and Sander’s Strategic Management, Second Edition.

Five Forces Definitions

Rivalry Intensity of competition within the industry. Usually characterized by firms competing on price rather than on reputation. In assessing rivalry, it is important to look at elements such as the number of competitors, firm growth rates, economies of scale, diversity and depth among competitors, and information complexity.

Barriers to Entry This element consists of both treats of new entire and exit barriers for firms considering entering a particular industry. It is important to remember that the degree of these barriers is subject to a new firm’s ability to achieve the same status as the firm which is being analyzed. In assessing barrier to entry, it is important to look at factors such as brand control, government regulation, cost of abandonment of products, rivalry, and capital requirements

Supplier Power This element considers the degree of power a supplier has to dictate terms, set pricing, and extract profits from a contracts and dealings. It assessing supplier power it is important to look at elements such as switching costs, number of suppliers, degree of labor solidarity, and the ratio of prices to supply costs.

Buyer Power Buyer Power looks at the degree of power a customer(s) has to dictate purchase agreements and influence price. In looking at Buyer Power it is important to assess elements such as market concentration, buyer volumes, switching costs to buyers, and substitutes.

Threat of Substitute This force primarily deals with a product or service from another industry being able to satisfy demand in the industry in question.

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Appendix 3 Porter’s Generic Strategy

Porter’s Generic Strategy

Target Scope Strategy

Broad (Industry Wide) Cost Leadership Strategy Differentiation Strategy

Narrow (Market Segment) Low-cost Strategy (Focused) Differentiation Strategy (Focused_

Target Scope Results from Strategy

Broad & Narrow Low Cost Product Uniqueness

Generic Strategy with Five Forces

Industry Forces Strategy

Cost Leadership Differentiation Focused

Rivalry Better able to compete on price Brand loyalty from customers Competitors cannot meet customer needs

Barriers to Entry Ability to cut price deters potential entry from new firms

Customer loyalty deters entry from new firms

Development of core competencies that can deter entry

form new firms

Supplier Power Protects against powerful suppliers

Able to pass on supplier price increases to customers

Better able to pass on supplier price increases to customer

Buyer Power Ability to offer lower prices to powerful buyers.

Buyers have less power to negotiate due to few alternatives

Reduces competitors ability to provide similar alternatives which

decreases buyer power

Treat of Substitutes Defends against substitutes based on price

Customer loyalty discourages the use of substitutes

Specialized products and core competencies protect against

substitutes

Source: http://www.quickmba.com/strategy/generic.shtml

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Appendix 4 Skilled Staff Data

Top 25 Firms in

Los Angeles

Licensed

Architects

Total

Employees

Percent of

Licensed

Professionals

HDR Architecture Inc. 15 110 14%

Perkowitz+Ruth Architects 22 123 18%

DLR Group WWCOT 22 120 18%

Gruen Associates 12 61 20%

HOK 32 128 25%

HNTB Architecture 20 80 25%

Johnson Fain 16 55 29%

RTKL Associates Inc. 33 111 30%

Nadel Architects 18 60 30%

Lee Burkhart Liu Inc. 20 65 31%

HMC Architects 16 48 33%

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ZGF Architects LLP 26 76 34%

HGA Architects 11 31 35%

Leo A Daly 16 45 36%

CO Architects 27 74 36%

Gensler 61 162 38%

Cannon Design 27 70 39%

NBBJ 18 42 43%

Langdon Wilson International 14 30 47%

HKS Architects Inc. 14 30 47%

RBB Architects Inc. 17 36 47%

Perkins+Will 31 61 51%

NTD Architecture 17 30 57%

AECOM 37 50 74%

Source: Los Angeles Business Journal, 2012.

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Appendix 5 VRINE Elements Defined

Elements The Test The Competitive Implication The Performance Implication

Valuable Does the resource or capability alloy the firm to meet a market demand or protect the firm from market uncertainties?

If so, the company is able to compete in an industry, but value by itself does not convey advantage

Valuable resources or capabilities have the potential to contribute to normal profits (profits that cover all inputs)

Rarity Assuming that the resource or capability is valuable; is it scarce relative to demand or is it widely possessed by competitors?

Valuable resources that are also rate contribute to a competitive advantage, but that advantage may only be temporary.

A temporary competitive advantage can contribute to above-normal profits, at least unit the advantage is nullified by another firm.

Inimitable and/or

Non-substitutable

Assuming that the resource is both valuable and rate, how difficult is it for competitors to imitate or substitute another resource and capability that yield similar benefits?

Valuable and rare resources had capabilities that are also difficult to imitate or substitute can contribute to sustained competitive advantage.

A sustained competitive advantage can contribute to above normal profits for extended periods of time.

Exploitability If the resource or capability satisfies any or all of the preceding criteria, can the firm actually exploit it?

Resources or capabilities that satisfy the first four VRINE criteria but cannot be exploited do not convey competitive advantage. In fact, they may increase opportunity costs.

Firms that control but do not exploit VRINE resources and capabilities generally suffer from lower levels of finical performance and depressed market valuation.

Source: Strategic Management, Second Edition. Carpenter & Sanders. Page 79

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Appendix 6 Gain Sharing Vs. Profit Sharing

Gain-Sharing Profit Sharing

Purpose To drive performance of an organization by promoting awareness, alignment, teamwork, communication and involvement.

To share the financial success of the total organization and encourage employee identity with company success.

Application The plan commonly applies to a single facility, site, or stand-alone organization.

The plan typically applies organization-wide; companies with multiple sites typically measure organization-wide profitability rather than the performance of a single site.

Measurement Payout is based on operational measures (productivity, quality, spending, and service), measures that improve the “line of site” in terms of what employees do and how they are compensated.

Payout is based on a broad financial measure of the organization’s profitability.

Funding Gains and resulting payouts are self-funded based on savings generated by improved performance.

Payouts are funded through company profits.

Payment Target Payouts are made only when performance has improved over a historical standard or target.

Payouts are typically made when there are profits; performance doesn’t necessary have to show an improvement.

Employee Eligibility Typically all employees at a site are eligible for plan payments.

Some employee groups may be excluded, such as hourly or union employees.

Payout Frequency Payout is often monthly or quarterly. Many plans have a year-end reserve fund to account for deficit periods.

Payout is typically annual.

Form of Payment Payment is cash rather than deferred compensation. Many organizations pay via separate check to increase visibility.

Historically profit plans were primarily deferred compensation plans; organization used profit sharing as a pension plan. Today we see many more cash plans.

Method of Distribution Typically employees receive the same % payout or cents per hour bonus.

The bonus may be a larger % of compensation for higher-level employees. The % bonus may be less for lower level employees.

Plan Design &

Development

Employees often are involved with the design and implementation process.

There is no employee involvement in the design process.

Communication A supporting employee involvement and communication system is an integral element of gain-sharing and helps drive improvement initiatives.

Since there is little linkage between “what employees do” and the “bonus,” there is an absence of accompanying employee involvement initiatives.

Pay for Performance Plan

versus Entitlement

Gains are generated only by improved performance over a predetermined base level of performance. Therefore, gain-sharing is viewed as a pay-for-performance initiative.

Profit sharing often is viewed as a entitlement or employee benefit.

Impact on Behaviors Gain-sharing reinforces behaviors that promote improved performance. Used as a tool to drive cultural and organization change.

Little impact on behaviors since employees have difficulty linking “what they do” and their “bonus.” Many variables outside of the typical employee’s control determine profitability and the bonus amount.

Impact on Attitudes Heightens the level of employee awareness, helps develop the feeling of self-worth, builds a senses of ownership and identity to the organization.

Influences the sense of employee identity to the organization, particularly for smaller organizations

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Appendix 7 LIWC

NTD’s Text




Major Competitor’s Text




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Appendix 8 Interview with NTD

Meeting 1: September 20th, 2011 Alan Scott The main objective of this meeting is to gain a better understanding of NTD’s core business strategies and industry characteristics. Additionally, this meeting serves as an introduction to my project whereby I may discover ways to curtail my research to most benefit NTD. Interview Questions

General:

1. Does your location offer all of NTD services? 2. How would you describe the culture of NTD? What are NTD’s core values? 3. How large is NTD, both in terms of revenue and number of employees?

a. Corporate Office: 300 or 145 Employees, Annual Sales of $14.4 Million b. Tucson Office: 7 Employees, Annual Sales of $950K

Organizational Structure:

1. How is your organization structured? 2. How centralized and formalized is your organization? 3. Describe the role of ownership at NTD. What role do principles play compared to owners? 4. What type of training does NTD provide their employees?

Competition:

1. What keeps NDT ahead of its competitors? 2. Who do you think NTD’s major competitors are?

Internal Strategies:

1. How do you know what to charge for your services? 2. Describe your feedback cycle and Quality Check processes. How do you know if you have performed a service well? 3. Is NTD (Tucson location and/or companywide) currently facing any strategic issues or actions? 4. How would you describe NTD’s brand identity? 5. What are NTD’s major strengths? 6. What are NTD’s major challenges? 7. What area’s do you feel NTD could improve upon? 8. What are some interesting new growth areas in your business? 9. What are some new trends shaping the marketplace?

What are some of the most compelling new developments that NTD is currently facing?

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Appendix 9 Interview with NTD

Meeting 2: January 17th, 2012 Alan Scott

The main objective of this meeting is to review the information I have gathered regarding strategies for profit sharing, in-house services, and corporate image. Interview Questions

Profit Sharing:

1. Can you provide me with an Income statement, balance sheet, and P&L? 2. What goals are NTD hoping to achieve by considering profit sharing? 3. Do you have a profit sharing model already outlined? 4. Would profit sharing be reserved for principles and senior management, or would it be made available to lower level employees as well? 5. How many participants would be included in the profit sharing model? 6. How much profit would you estimate would be shared, and how would you allocate the units to each eligible employee? (Seniority, years

of experience, performance, monetary contribution, job title, etc.) 7. Out of the models presented, which are likely to be plans that NTD would consider?

Outsourcing vs. In-house:

1. How is this service handled in other locations? (Engineering) 2. Would it include mechanical, structural, or both (Engineering) 3. Is the estimated average cost per additional employee correct? 4. Average consulting cost for this service? 5. Do you have an established partnership/alliance with an engineering firm or do you cost out pricing per individual bid?

Corporate Image (Tucson)

1. Any additional questions you would like me to ask in the survey?

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Appendix 10 Corporate Image Interview Questionnaires


Corporate Image: Interview Questions

Academic:

1. Please state three characteristics you look for in recommending employment to alumni and students at an architecture firm.

2. Have you ever worked for NTD Architecture?

3. Please Rank on a scale of 1 to 5, 1 being the lowest and 5 being the highest: a. Your overall knowledge of NTD Architecture

i. Please briefly describe your impression of NTD Architecture?

b. Your knowledge of their past projects in Tucson

c. Your knowledge of their current projects in Tucson

4. Please list three architecture firms you are familiar with in Tucson.

5. Please list three architecture firms you are familiar with nationwide.

6. Have you seen NTD Architecture or the their projects featured in any of the following publication (Circle all that apply):

i. Architect, Architectural Record, California Construction, Engineering News-Record

7. Do you subscribe to any of the following publications? (Circle all that apply)

i. Architect, Architectural Record, California Construction, Engineering News-Record, AZ Star, Crit’s, Archi

Times, Dwell, Design Intelligence, AZ Central.

8. Do you subscribe to any other publications other than the ones listed above?

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Student:

1. Please state three characteristics you look for in seeking employment at an architecture firm.


3. Please Rank on a scale of 1 to 5, 1 being the lowest and 5 being the highest:

a. Your overall knowledge of NTD Architecture






9. Have you seen NTD Architecture or the their projects featured in any of the following publication (Circle all that apply): i. Architect, California Construction, South West Engineering News-Record





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AIA:

1. Please state the criteria used to rank architecture firms.



b. Your overall knowledge of NTD Architecture


c. Your knowledge of their past projects in Tucson

d. Your knowledge of their current projects in Tucson



11. Have you seen NTD Architecture or the their projects featured in any of the following publication (Circle all that apply): i. Architect, Architectural Record, California Construction, Engineering News-Record





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Corporate Image: Interview Questions Professional:



a. Your overall knowledge of NTD Architecture






5. Have you seen NTD Architecture or the their projects featured in any of the following publication:

13. Have you seen NTD Architecture or the their projects featured in any of the following publication (Circle all that apply):

i. Architect, Architectural Record, California Construction, Engineering News-Record



Times, Dwell, Design Intelligence, AZ Cental.

BUSINESS MANAGEMENT

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